MG Responds After Govt Starts “Conspiracy Against Chinese Investment”

Public Accounts Committee (PAC) has instructed the Federal Board of Revenue (FBR) to re-investigate the alleged under-invoicing of Completely Built-Up (CBU) vehicle imports by MG.

FBR had closed the case after confirming that the reports of under-invoicing were false but has been ordered to reinvestigate the matter by the new regime.

Accusations

MG Motors Import Scam – Nexus between Azam Khan, ex-Secretary to the PM,  Tariq Huda, Member (Customs-Operations) FBR  and Javed Afridi (MG Motors)
During last year, around 10,000 luxury vehicles have been imported by M/S MG Motors, Pakistan.
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— Syed Kousar Kazmi (@SyedKousarKazmi) April 23, 2022

Following the order from PAC on Tuesday last week, several influential figures spoke out against the automaker such as senior journalists Syed Kousar Kazmi, Syed Talat Hussain, as well as the former Minister of Defense, Khawaja Asif.

I raised this issue in PAC. Grateful to chairman who called PAC meeting on my request on this single point Agenda.. https://t.co/edXZ15l7vg

— Khawaja M. Asif (@KhawajaMAsif) April 23, 2022

One of the journalists stated that the previous government forced the customs officers to under-invoice the vehicles. He added that, initially, the customs department cleared 1,000 MG units on verbal instruction of the member operations at a declared value of $11,000 per unit.

“Meanwhile, at Lahore Dry Port, the CKD kits of the same vehicle were being cleared at $16,000 per vehicle,” he claimed.

A senior journalist Kamran Khan suggested in his tweet — referring to a senior FBR official — that the pre-existing automakers are an influence behind PAC’s orders of re-investigation.

Speaking on alleged under invoicing in imports of MG vehicles in Pakistan, a senior FBR officials just informed that prima facie there’s no evidence of under invoicing, will further probe but “well entrenched market players are disturbed with new entrants in the sector” he said

— Kamran Khan (@AajKamranKhan) February 16, 2021

MG’s Response

The company has also broken silence regarding the matter. A senior company official has said that “the MG import scam is total disinformation to tarnish officers’ image and target Chinese investment in Pakistan negatively.”

He said that the company had faced the same probing sequence before and walked away clean. He highlighted that:

All the SUVs like Toyota Rush, Prince Glory, Proton, Changan have been imported and cleared at declared values whereas only the value of MG vehicles is enhanced and extra duties and taxes up to 1.1 billion have recovered from the importer of MG vehicles.

The company also shared some points to address the “misplaced assumptions” in the notice for re-investigation:

• The PAC is relying upon only 24 kits for its comparison between CKDs and CBUs, whereas the total number of CBU vehicles is over 10,000.
• The company imported CKD kits only as Pre-Production Vehicle (PPV) kits to assemble high-quality sample vehicles as proved by their import documents. The company is yet to begin the full-scale local assembly of its vehicles in Pakistan.
• The freight charges of these kits —as mentioned on import documents — are $1,400 greater than that of CBU vehicles.
• These kits have been imported in high-quality packaging which cost up to $900. The packaging is to preserve the kits for longer periods of time.
• The steep rise in the prices of microchips in the international market added up to $800. Hence, these facts demonstrate the price difference between CKD kits and CBU vehicles.

We welcome this & ready for any kind of investigation (court,pac,forums etc). We hv the right to defend ourselves & will prove that all transactions are absolutely legal/valid.By doing this you are also a part of conspiracy against chinese investment in Pakistan.Let truth prevail https://t.co/xoU3AN6QzC

— Javed Afridi (@JAfridi10) April 23, 2022

Javed Afridi has also spoken out in defense of MG, stating that he welcomes all relevant groups to conduct “any kind of investigation”. MG is ready to lock horns with the scrutinizers in the re-investigation of the under-invoicing case.