KARACHI: Over 7,000 imported used cars are lined up at the Karachi port waiting to be picked up, while an equal number will reach in a few days, creating problems for port authorities to handle the cargo and the situation.
Importers, unwilling to pick up their cargo, say the gridlock at the port is a result of government measures taken in October to reduce car imports.
They claimed that Customs authorities do not have the finalised payment mechanism under which importers could get their cargo cleared. However, sources say that importers are willingly not picking up their cargo as they expect the government to retreat from its measures taken in October.
Duty on car imports unlikely to generate much revenue
“We have already requested the government to resolve policy issues to settle these problems,” All Pakistan Motor Dealers Association Chairman HM Shahzad commented.
Perturbed about the ballooning trade deficit, the government in the third week of October imposed regulatory duties on 356 essential and luxury goods. Similarly, it also changed some rules for used car imports in a bid to reduce the consumption of such goods and resultantly, reduce pressure on dollar reserves.
According to the new rules, the owners or local recipients of all new and used vehicles will pay duties and taxes supported by a bank encashment certificate, showing conversion of foreign remittances into local currency.
“The government should have devised some mechanism before implementing new rules for used car imports,” said Shahzad. “Now car importers have to pay heavy demurrages at the port.”
Car importers wanted the government to delay the implementation of SRO-1067(1) 2017, a circular issued on October 20, until December 2017. However, the Ministry of Commerce is stuck with its position and has not given any space to importers.
In November, Commerce Secretary Younus Dagha told The Express Tribune that the government did not stop the import of used cars and just wanted to discourage unnecessary imports at this time to curtail the growing trade deficit. For years, car importers have been importing used vehicles through three major schemes – personal baggage, transfer of residence and gift scheme.
The government believes this will significantly reduce imports of used cars in coming months because this way only genuine overseas Pakistanis could bring vehicles into the country.
Import of used cars only discouraged, not stopped: Dagha
Government officials are of the view that Pakistan is importing too many cars. If it succeeds in reducing used car imports for the next few months, it will help reduce the country’s trade deficit in the current fiscal year ending June 30, 2018.
Pakistan imports over 60,000 used cars a year worth between $300 million to $500 million. However, according to the calculations of local car industry officials, Pakistan is spending close to $750 million a year on used car imports.
Courtesy-The Express Tribune, January 16th, 2018.