Late last year, the government introduced a regulatory duty on more than 700 items to curb imports. Thousands of cars were stopped at the ports due to the sudden change in tax policy. Now, even though the government has taken back the tax change, imports were still halted for a portion of 2017. However, from the latest car import statistics, it seems that despite all that, vehicle import did not decrease at all.
Arshad Mehmood Awan, the Chairman of Car Exporter Association of Pakistan (CEAFP), says that more than 80,000 vehicles were imported in 2017 alone by the association. He added that due to the huge demand, this number will continue to grow in the upcoming months.
The chairman said that despite the strict import regulations, the demand for car import surged in the past year. Recently, 7,000 imported cars were held at Karachi port which were finally ordered to be released by the federal cabinet.
The reason behind this was that importers were misusing a scheme that government announced for non-resident Pakistanis. They were using this scheme to import cars at low tax rates and were selling them commercially. However, later things were sorted out and the units were allowed to clear the Karachi port.
The used car imports increased by more than 70% in just one year – from 2016 to the end of 2017. Around 38,676 units were imported in 2016 and that number has crossed 80,000 in value, the chairman said.
The main reason behind strict import policy was to decrease the trade deficit. Another reason behind this, according to Arshad Mehmood, is that government thinks that local auto manufacturers suffer when car imports increase.
However, this perception isn’t true at all as demand for local vehicles is at an all-time high and companies have failed to cater for those demands, Mehmood said. Companies shipped around 285,248 units last year against the demand of 450,000 units. The production by local companies has increased by 107%, however, they still aren’t able to meet the surging demands. The sales are surging as well with an increase of 15% year-on-year in February alone.
Adding on to his premise, Arshad Mehmood told that another reason behind high imports is the long waiting time by local auto manufacturers. People don’t like to wait for months before they can get their hands on new cars so they prefer to import them instead. Plus the imported cars come with better features than local ones and who doesn’t like that?
The Chairman further asserted that imported cars are good for the economy and government should make a lenient import policy. He told that car import business is the second largest contributor to country’s GDP. In the last two years, Rs 121.7 billion were added to the exchequer through used car imports with the number touching Rs 63 billion in 2017 alone.