Expressing concerns over FED that will hurt the industry, which keeps eyeing on achieving 500,000 units mark by 2021, they said that frequent changes in policy landscape would adversely affect the organic growth of industry besides discouraging new investments.
In response to the queries forwarded to the Indus Motor Company (IMC), Ali Asghar Jamali, CEO, IMC said that the government took unprecedented measures to help industry growth by removing ban on non-filers and as well as striving to increase the tax net and GDP growth rate but the imposition of 10 per cent FED had started reducing the demand and sales of 'Grande' and 'Fortuner'.
He said the issue had also been taken up with the members of the Senate's standing committee on production and industries, who visited IMC on the other day and requested them to look into the matter. Jamali termed the imposition of FED as a deviation from auto policy which would not only reduce sales of vehicles but would eventually dent the government's revenue collection.
As a result of the FED, the prices of locally assembled 1700 cc and above vehicles have increased that left the costumers with no alternative as the imports of used vehicles are virtually fallen into abeyance after the issuance of SRO 52(I)/2019 that restricts the importers of paying duty and taxes for the clearance of imported vehicles only in foreign exchange, said used car importers.
"Besides issuing SRO 52(I)/2019, which is aimed at mitigating pressure of Financial Action Task Force (FATF) and strengthening foreign reserves, the government should have provided viable options to the persons engaged in used car business for their survival," they said.
Furthermore, they said that the government through ad-hoc decisions trying to pacify the agitation of both local auto industry and used car importers but failed to do so. "Imposing 10 per cent FED on 1700cc and above vehicles has neutralized the relief provided to the local auto industry by lifting ban on non-filers. Similarly, the issuance of SRO 52(I)/2019 without consulting with stakeholders, who paid Rs 100 billion duty and taxes against the clearance of imported vehicles during last fiscal year, is now dragging this sector at the verge of disaster," they said.
Replying to a question, they said that the government despite having cognizance about the misuse of transfer of residence, personal baggage or gift scheme for years, has so far not come up with comprehensive business plan but keen to run this sector on ad-hoc basis, which is not only creating uncertain situation for the stakeholders but also depriving customers of their right of choice, adding that if this section was channelized, it could generate substantial revenue for the government.
They answered that installed capacity of local auto industry was around 285,000 vehicles per annum and the government instead of restricting used cars importers for paying duty and taxes in foreign exchange should have given them liberty to import used cars at least 20 percent of installed capacity of local auto industry, which would have not only formalized this sector but also curbed informal money transactions.
H M Shehzad, chairman All Pakistan Motor Dealers Association (APMDA), said that transfer of residence, personal baggage or gift scheme was the only mechanism for importing used vehicles in Pakistan and added that in absence of any other means for import of vehicles, the imports of vehicles after this SRO, which generated revenue to the tune of around US$ 1 billion annually on account of duty and taxes had completely suspended for last two months.
Furthermore, he claimed that after having no alternative, the public was completely at the mercy of the local assemblers who were now at liberty to sell their products at more exorbitant prices under no competition.
"If the government considers that the present schemes are being misused then commercial import of used vehicles may be allowed as the local assemblers are already allowed to import new vehicles so why this permission is denied to others," he added.