Sunday, May 03, 2009
Auto sector urges FBR to rationalise duty
By Moonis Ahmed
KARACHI: All Pakistan Motors Dealers Association (APMDA) has demanded of the Federal Board of Revenue (FBR) to rationalise the import duty on cars so that automobile importers could give healthy competition to local car assemblers.
Currently, the overall import duty is 260 percent while its was 130 percent in fiscal year 2007-08.
APMDA in its proposals for the budget 2009-2010, which would be sent to the government for consideration, has suggested that the regulatory duty on cars should be abolished.
Talking to Daily Times Chairman APMDA, HM Shehzad said the import duty should be rationalised as the locally manufactured cars are high-priced and the common man cannot afford them. He said that regulatory duty result in revenue loss, which can be verified from Collector Customs, therefore the duty should not be incorporated in the tariff. Overseas Pakistani residents may be allowed to import used cars of not more than 5 years old. Previously 50 percent rebate was allowed as the maximum benefit at 2 percent per month was revised to 1 percent per month.
He said that 2 percent rebate per month should be restored immediately and vehicles up to 5 years old be allowed to be imported.
The local auto industry is facing a tough time due to low demand and high prices of cars. The global economic downturn has left most of the large scale manufacturing industries in trouble and auto industry is one of them. Car sales during first 9MFY09 dropped by 49 percent, as it stood at 61,185 units as compared to 120,246 units in the same period of last year. However, industry experts believe that as the macroeconomic indicators are getting better and the economy is on the path of recovery the fiscal year 2009-10 may be better for the auto industry.
Continued decline in steel prices in international market and the expected decline in the interest rate helped manufacturers to reduce the prices, they added. Recently, two Japanese car assemblers cut down the prices of their vehicles by Rs 2,000 to Rs 100,000 to attract new costumers. The reduction in price is connected to the poor sales condition plus day-by-day falling purchasing power of buyers.
Shahzad said that the current reduction in prices by the local assemblers was an encouraging development, but the amount of cutback cannot be compared to the amount of increase the companies had made in the last few months.
What u say guys in this regard.