Presentation on commercial import of used cars: EDB sidelined?

Engineering Development Board (EDB), a subsidiary of the Ministry of Industries and Production (MoI&P) is said to have been sidelined with regard to preparation of a presentation on commercial import of used cars, well-informed sources in Planning Commission told Business Recorder.
The sources said Deputy Chairman Planning Commission Dr Nadeem-ul-Haq, along with members Pervez Butt and Samar Mubarakmand arrived at the EDB office wherein they questioned Secretary Industries and EDB officials for hours and took with them the summaries and presentation prepared by the Board so far.
"I guess the government has withdrawn the mandate of presentation on import of used cars from the EDB and now Deputy Chairman Planning Commission who believes in free market economy will give a presentation to the ECC in its next meeting," said one of the officials in Industries Ministry on a condition of anonymity.
ECC, in its meeting on July 1, presided over by Finance Minister Senator Hafeez Sheikh had deferred the decision on the summary of the MoI&P regarding reduction in tariff on import of new cars as well as commercial import of three-year old used cars. MoI&P had also been directed to bring a summary in the next ECC meeting with full information about profit/loss of different units in the automobile sector. There is heated debate in the official circles of Islamabad about the merits and de-merits of commercial import of used cars, which according to some of the analysts is not feasible for the local auto sector and vendor industry.
In July, before the ECC meting, MoI&P wanted to submit the summary on commercial import of cars but they were not given permission by some influential, including the Planning Commission's top brass. Federal Board of Revenue (FBR) and Finance Division are opposing import of second hand cars with the argument that the government will be deprived of Rs 35 billion revenue besides a loss of $1.608 billion foreign exchange.
According to recent presentation given to the government, Pakistani manufacturers are selling quality vehicles at competitive prices with India and Thailand. Toyota Altas is priced in Thailand at $28,857, in India at $26,929 and in Pakistan at $20,882. Suzuki Swift is priced in Thailand at $19,121, in India at $10,630 and in Pakistan at $12,281. Honda Civic MT in Thailand is priced at $16,192, in India at $30,450 and in Pakistan at $18,955. Honda Citi MT is priced at $11,467 in Thailand, in India at 21,109 and in Pakistan at $14,626.
Except for Mehran which is an obsolete model and no more in production since 1986 in Japan (P-33 of CCOP Report 2009) all Pakistani manufacturers are manufacturing state of the art and quality vehicles, according to a presentation made by local car manufacturers to EDB. Moreover, Toyota is selling in Pakistan at the lowest price among Asian countries like India and Thailand. Both the countries are technologically more developed than Pakistan.
The Ministry of Commerce, sources said, which is actively engaged in preparation of Trade Policy 2010-11 is supporting import of used cars. According to the Ministry due to high prices of locally assembled vehicles, the overseas Pakistanis may be allowed to import old and used vehicles from their own earnings abroad and duty and taxes be paid out of foreign exchange arranged by Pakistani nationals themselves or the local recipients supported by bank encashment certificates showing conversion of foreign remittances to local currency. This policy will be helpful in enhancing foreign remittances through banking channels.
Commerce Ministry further argues that vehicles more than five years old shall not be allowed to be imported under gift, personal baggage and transfer of residence schemes but this condition shall not apply to second hand or used bullet proof vehicles if imported under these schemes.