KARACHI: The import of used and old cars witnessed sharp decline of 69 percent during first nine months (July-March) of current fiscal year due to imposition of condition regarding payment of duty and taxes through foreign exchange.
The import of used and old cars in Completely Built Unit (CBU) condition declined by 69 percent to $64.8 million during July – March 2019/2020 as compared with $209.03 million in the corresponding period of the last year, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.
The commercial import of used or old cars is prohibited under prevailing laws of the country. However, in order to facilitate expatriate Pakistanis the government allows incentives to bring cars into the country.
The Federal Board of Revenue (FBR) allowed Pakistani nationals residing abroad including dual nationals, can import old and used vehicles into Pakistan under these schemes, included: Personal Baggage; Gift Scheme; and Transfer of Residence.
The cars not older than three years and other vehicles not older than five years can be imported under these schemes.
In the past these schemes were misused and bulk of imported cars brought into the country.
However, the ministry of commerce in February 2019 amended Import Policy Order, 2016 and made it mandatory for clearance of cars through foreign exchange, which should be certified by banks.
Since then the clearance of the cars has come to a standstill. Customs authorities said that a large number of imported cars were at the port but importer had failed to make payment as per procedure prescribed by the ministry of commerce.
However, in November 2019 a meeting of Economic Coordination Committee (ECC) decided to allow payment for duty and taxes for customs clearance of imported cars through local resources with condition that if foreign exchange becomes short due to currency fluctuations or change in duty and tax rates.
The overall import of CBU vehicles during first nine months of current fiscal year fell 59 percent. The import of heavy vehicles including buses and trucks has declined by 39.32 percent. While import of CBU motorcycles fell by 74 percent.
On the other hand the import of cars as Completely Knocked Down (CKD) condition also fell by 43 percent to $343.42 million during July – March 2019 as compared with $611.38 million in the same period of the last fiscal year.
Massive depreciation in the local currency during past couple of years had increased the cost of local car manufacturers. Further, the rates of locally assembled cars for end consumers also jumped up sharply.
These factors have reduced the productions of locally manufactured cars and subsequently reduced the import of cars in CKD condition.
The overall import of vehicles in CKD fell by 42.16 percent to $545 million during first nine months of 2019/2020 as compared with $942 million in the corresponding period of the last fiscal year.