In a letter to the Prime Minister, APMDA chairman HM Shehzad said that Commerce Division's SRO No. 52 (1)/2019 of January 15, 2019 has made a major change in Import Policy Order whereby it has been made mandatory that duty and taxes on all vehicles in new/used condition to be imported under transfer of residence, personal baggage or under the gift scheme, shall be paid out of the foreign exchange arranged by Pakistan nationals themselves or local recipients supported by bank encashment certificate showing conversion of foreign remittance to local currency in the following manner:
The other two conditions are: (i) the remittance for payment of duties and taxes shall originate from the account of Pakistani national sending the vehicle from abroad and; (ii) the remittance shall either be received in the account of Pakistani national sending the vehicle from abroad or, in case his account is nonexistent or inoperative, in the account of his family.
The APMDA has explained that the purpose of this SRO is to curb money laundering, outflow of foreign exchange through Hundi/Hawala and misuse of the mechanism of transfer of residence/personal baggage and gift scheme for the purpose of commercial imports. "In principle, we support any revision in the import policy which is in line with the national interest of Pakistan." However, the SRO is issued without taking all stakeholders into confidence and it will have more negative repercussions on national exchequer instead of any increase in revenues for the government.
HM Shehzad further stated that almost one million vehicles are sold in the market annually and among them local assemblers supply only about 250,000 vehicles. Besides, 95 percent of the used imported cars are of 660cc to 1000cc.These cars are highly economical and give a mileage of 25 kilometres a litre of fuel; moreover, these are not assembled by any local manufacturer. These cars fulfill the needs of the sender's family as well as the local market.
According to APMDA, transfer of residence, personal baggage or gift scheme is the only mechanism through which import of new/used vehicles are permissible in Pakistan. In absence of any other means for import of vehicles, by virtue of this SRO, import of vehicles which generates revenue of around $1 billion annually for the government in shape of import duties, levies and income tax is likely to be shut down completely; consequently, revenue will also reduce to zero.
He claimed that Toyota has increased prices of cars by Rs 600,000 during the last two years while Honda car prices have been increased by Rs 700,000 and prices of Suzuki cars have been increased by Rs 300,000 in the same period.
"In absence of any alternative for the import of vehicles, the public will be completely at the mercy of the local assemblers who will be at liberty to sell their products at more exorbitant prices in the absence of any competition," he said, adding that due to limited production capacity of local assemblers, the on-money or premium over the actual price of a vehicle which is up to Rs 250,000 would also increase manifold.
"If the government believes that present schemes are being misused, commercial imports may be allowed. The local assembler is already allowed to import new vehicles so why this is denied to other business enterprises," he said.