Pakistan to become dumping ground of used vehicles if imports relaxed further

KARACHI: The Federal Cabinet is likely to discuss in its next meeting a proposal from Ministry of Commerce to allow commercial import of used vehicles, which is likely to be opposed by the industry and different government departments including Engineering Development Board fearing a total collapse of not only original equipment manufacturers (OEMs) but allied engineering base as well.

Sources at cabinet division have confirmed that the proposal rather surprisingly is an agenda item in next cabinet meeting as the government has already been facing criticism on import of five-year-old used cars available to customers at prices almost the same as those of brand new locally manufactured cars.

Now the car dealers have come up with an idea of brining in 10-year-old used cars that are considered junk all over the world. These cars would increase pollution levels in the country and would burden the consumers in long run due to non-availability of parts and local capacity for after sales service.

Sources pointed out that the government was misled by these very dealers to believe that the rates of locally produced cars are very high. They said that the car assemblers provided the government with authentic data to prove that the vehicle rates in Pakistan are in fact lower than many countries including India and Thailand, but the car dealers successfully tricked the government and resultantly the government relaxed the age of imported used cars up to five years.

The local car manufacturing Industry has been deeply perturbed by this new demand of the traders lobby which has asked the Federal Minister of Commerce, Amin Fahim, to further relax the age limit of used imported cars from five years to 10 years but also to allow the commercial imports of the same. “This will not only destroy the local industry but would make Pakistan a junkyard of foreign metal as well as resulting in huge retrenchment,” sources added.

Sources at local industry said that local car manufacturers are not only battling the fight for their survival but they are also trying their best to protect the local auto-vending base from the adverse impacts of the government’s decision to allow the import of ten-year old used cars. They said that the relaxation already given in import of the used vehicles is undoing the engineering development made so far in the country by the local auto-manufacturers and their vendors and further relaxation will completely destroy the same.

Prior to the relaxation in import policy, the auto industry (PAMA & PAPAAM) contribution to national exchequer amounted to approximately Rs 68 billion during 2009-10 whereas passenger cars and LCV sector contributed Rs 34 billion to national exchequer during 2009-10 out of total FBR collection of Rs 1.390 billion.

Imported cars are likely to influx shortfall in revenue collection as the government is depending on extremely unreliable department for the statistics, which in a recently revealed case of its incompetence has shown Pakistani total trade with China standing at $4 billion, whereas the Chinese government reported the trade to be more than $5 billion.

“To allow import of used vehicles commercially would be criminal,” said one industry analyst. He said no sane country having its local car industry allows import of used cars freely. He said that even when restricted import under change of residence is allowed, the duty rates are so high and environmental conditions so stringent that discourages import of used cars.

He further added that now the local market is flooded with used imported cars but their rates are extremely high considering their age. A used imported four-five years old Suzuki Alto with an engine of 650 cc is being sold in the local market at Rs 700,000 to Rs 750,000 whereas customer could buy brand new locally made Alto with 1000 cc engine against the same amount.

Similarly, a 5-year old Toyota Vitz costs a little over Rs 1.1 million while its parallel version Suzuki Swift of 2011 is marketed by local manufacturer at the same price.

He said that the government after observing the prices of used imported cars should have reviewed its decision to allow import of used cars. Instead, he regretted, the state is encouraging unscrupulous elements to fleece the unaware consumers. Daily Times