The import of used cars has seen a massive dip by 74 percent in the month of February 2019, becoming the lowest in the past five years.
SRO 52(1) 2019 takes its toll
According to the statistics revealed by the Pakistan Bureau of Statistics (PBS), the trend of importing cars in the country has dropped. In comparison to January 2019, when the import was around $37 million, it has dipped to $9.5 million which is a considerable drop of 74% within one month period. The import bill consists of completely built-up units usually known as CBUs which includes more than 90% of used cars from Japan. The drop in imports came right after the issuance of SRO 52(1) 2019.
According to it, the duties and taxes on all types of new and used imported vehicles falling under the category of personal baggage or gift scheme, are supposed to be paid in foreign exchange which could only be arranged by two types of people – Pakistani nationals or local recipients. The foreign exchange must be backed up by bank encashment certificate with proof of foreign remittance conversion to local currency. This particular condition for used car imports was initially implemented back in November 2017 which was soon lifted in February 2018 but revived again this year.
The remittances required for the payment of duties and taxes will now be strictly drawn from the account of the Pakistani national who is sending the vehicle to Pakistan. In case of a non-existent or non-operational bank account, remittances can be received from the account of a close family member. The decision came from the government in order to put a full-stop to the misuse of the import policy by the traders which result in the loss of foreign exchange reserves.
The import of vehicles has also seen a 64% year-on-year drop during the month of February 2019 as compared to the same month in 2018. While talking about the latest policy on the import of cars, the Chairman of All Pakistan Motor Dealers Association, H.M.Shehzad said that all the suppliers from Japan have suspended their shipments to Pakistan right after the implementation of the new policy. Moreover, only those vehicles that landed on the port before 15th January were cleared under the old import policy. He further told that it has now become almost next to impossible to import used cars in Pakistan and the government may also bear a loss in its revenue which was previously generated through the customs duties. He also accepted that the clearance of vehicles from the port has reduced considerably during the last month which used to be somewhere around 4000-5000 vehicles every month.
The Chairman also laid stress on the need for more localization, the lack of which has allowed a few assemblers to make hefty profits for the past several years.
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