Japan is the primary exporter of used cars in Pakistan. The number of cars that Pakistan imports is astonishing. As many as 30,000 cars are imported every year. The Government of Pakistan has decided to put a check on it and therefore has tightened the procedure on the import of used cars in the country.
Thoughts have been given to this decision in the light of discouraging misuse of Commerce Ministry’s schemes by commercial importers and encouraging new investment in auto industry. According to a report, a car which is used for 3 years in Japan is imported in Pakistan through informal and unofficial means. Federal Board of Revenue (FBR), however, insists and emphasizes on the import of used cars on commercial basis since they keep a lot of profit chunks in their pockets.
The import of used cars by the overseas Pakistanis is allowed according to the State Bank of Pakistan (SBP). As per the provisions specified under Appendix-E of the Import Policy Order 2013 whereby Pakistani nationals are eligible to import a vehicle under personal baggage, gift or transfer of residence scheme.
This scheme of practice is apparently being misused by individuals and commercial car importers in Pakistan since they are supposedly importing vehicles on the passports of overseas Pakistanis. One of the SBP source quoted that this practice has in fact defeated the spirit of the scheme.
Furthermore, without the consent of key players, the Government has approved the Auto Development Policy (2016-2021) which will be valid from 1st July 2016. The new policy states that the Ministry of Commerce would define certain Standard Operating Procedures (SOPs) under Import Policy Order for used cars to cease the wrong use of the practice. Ministry of Commerce has already started to seek suggestions from the concerned quarters, including Ministry of Industries and Production in this regard.
With the implementation of this system, Pakistanis living outside the country would be at ease. However it will dent the business of those individuals who were engaged in unfair means of importing used cars in the country. Moreover, it will also affect people who used to import cars on the passports of overseas Pakistanis.
In their budget proposals, Ministry of Industries and Production had recommended a massive increase in fixed duty on used imported cars in order to avoid misuse of the policy.
image credit: bigstockphoto.com