LC restrictions open doors for smuggling of automobile spare parts

LC restrictions open doors for smuggling of automobile spare parts

KARACHI: Restrictions imposed on opening of Letter of Credit (LC) for import payment have given massive rise to smuggling of automobile spare parts.

Members of a delegation from Pakistan Automobile Spare Parts Importers and Dealers Association (PASPIDA have expressed deep concerns over stuck up containers and non-issuance of LCs.

They stated that the situation has triggered severe crises for the automobile sector as it has been discouraging imports through legal channels and paved way for massive smuggling of spare parts through illegal channels including blatant misuse of the Afghan Transit Trade, causing severe losses not only to legitimate traders but also to the national exchequer.

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“Although consignments remain stuck up at the ports yet the spare parts of all types of vehicles are easily available all over Pakistan as these are being smuggled into the country through illegal channels without any check,” said Sheikh Haroon Baksh, Leader of PASPIDA delegation during visit to Karachi Chamber of Commerce & Industry (KCCI).

President KCCI Mohammed Tariq Yousuf, Senior Vice President Touseef Ahmed, Former President KCCI Muhammad Idrees, Patron-in-Chief PASPIDA Arshad Islam, Former Vice President Qazi Zahid Hussain, PASPIDA delegation and KCCI Managing Committee Members attended the meeting.

Haroon Baksh, while stressing the need to bring down the exorbitant duties on imported spare parts, informed that nowadays the Custom Authorities were imposing duties as per weight of imported consignment regardless of considering the actual worth of consignment which was totally illogical as several spare parts, though heavier, were not so expensive but these go beyond the reach of buyers after imposition of exorbitant duties calculated as per weight.

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“In this situation, smuggling is thriving which is neither in favor of businesses nor the already ailing economy,” he added while requesting KCCI to take up these issues with relevant authorities.

Speaking on the occasion, Patron-in-Chief PASPIDA Arshad Islam appreciated the Karachi Chamber for all the efforts being made to get the LCs and stuck-up containers’ issues resolved by devotedly taking up not only with the authorities at federal level but also with all the shipping lines and terminal operators. “While anxiously waiting for relief, the traders of spare parts are fairly optimistic that this issue will soon be amicably resolved thanks to all the hard work being done by KCCI in an extremely challenging environment,” he added.

President KCCI Tariq Yousuf, in his remarks, stated that as facilitator, it was Karachi Chamber’s top most priority to get the issues promptly resolved so that businesses as well as industries stay operational.

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Keeping in view the overall economic crises being faced by the country, he advised PASPIDA members to look into the possibility of setting up industries in Pakistan for locally manufacturing automobile spare parts as under the prevailing circumstances, it was no more feasible to keep relying on imported spare parts.

“In order to reduce the Current Account deficit, it has become inevitable to go for import substitution. We have to realize that Pakistan’s economic prosperity depends on greater exports and lower imports which can only be attained through industrialization”, he added and urged PASPIDA members to set up spare parts manufacturing units whereas, the Karachi Chamber will always be available to assist them in case they face any problem in dealing with relevant departments.

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PASPIDA delegation members, while agreeing to President KCCI’s suggestion, stated that although they wanted to set up industries for locally manufacturing spare parts but were unable to do so due to several issues including high cost of doing business, poor infrastructure, electricity, gas & water crises along with unavailability of required raw material for manufacturing several types of spare parts. Inconsistent policies, bureaucratic hurdles and taxation issues further discourage businessmen to get into this business whereas Pakistan’s engineering sector was also not mature enough to produce several high-quality spare parts.

If the government provides an enabling business environment and a level playing field by bringing down the cost of doing business through reduction in taxes and tariffs in addition to announcing some kind of special incentives for automobile sector, many PASPIDA members would certainly set up units for local production.