Afghan transit trade big threat: new amnesty scheme to further hit auto industry

The decision of Federal Board of Revenue (FBR) to regularise non-duty paid smuggled vehicles under new amnesty scheme will further the crises of local auto industry while giving a cover to illegal business at the same time.
"It is very sad that the government is patronising the illegal trade to benefit few and to demolish the local auto industry thousands of people are associated with. This is beyond any comprehension," said Chairman, Pakistan Auto Manufacturers Authorised dealers Association (PAMADA), Iqbal Hussain Shah in a statement issued here on Thursday.
"If we recall the misuse of a similar sort of amnesty scheme given to ambulances it is sad to notice that those vehicles are nowadays used as commercial vehicles. The biggest threat is Afghan Transit Trade (ATT) as those vehicles now can easily be given the official status at extremely low duty rates," he said. For example, he said, everybody knew that as a result of unrestricted smuggling from Afghan border any latest vehicles could easily be smuggled and get official recognition by paying a small amount of duty. "This scheme has opened up another opportunity for thugs who have always misused government policies for their own interests."
FBR on Tuesday issued SRO 172(1)/2013 stating that the federal government is "pleased" to direct that smuggled or non-duty paid motor vehicles, having non-tempered engine or chassis numbers, which have been seized or voluntarily presented to customs on or before the March 31, 2013 shall be allowed release on payment of redemption fine along with duty and taxes.
The deplorable thing, he said, was that the scheme would also be applicable on the vehicles, having age beyond the period of five years, which is a clear attempt to jeopardise the local auto industry. "It is strange that the government is taking such steps and instead of supporting local industries they are out to destabilise the investment of billions of rupees," he added ruefully.
He further said the scheme was meant to help the influential of the country who were involved in that smuggling and doing a great damage to the economy. "A report citing the customs intelligence says that the scheme is to benefit 2.3 million non-duties paid smuggled vehicles. This would be a huge damage to the local car industry of the country."
This scheme has allowed 60 to 70 percent depreciation in value of used cars for assessment of duty in case of five-year-old used cars, while in case of more than five-year-old cars, five percent real depreciation in value per year for assessment of duty is allowed. Similarly, more than 14-year-old cars will be made subject to a flat rate of Rs 50,000 to Rs 100,000 depending on their make, while only one percent redemption fine will be imposed on used cars.
"At present the government allows import of only three-year-old used cars. However, the amnesty for smuggled vehicles has no age limit and could be used for legalisation of any car smuggled into the country through non-notified routes. Who is going to save the local auto industry from this blatant damage?" he questioned.
For example, he said, with minimum cap of $500 on 1800cc and below and $1000 for above 1800cc, a land cruiser of 1998 or 2000 model will just pay $1000 to get the status of officially duty paid vehicle. "This advantage will only be for a particular class - which has bought smuggled used cars in last few years and not paid any duty and were using fake number plates," he added.
He said how funny the estimation appeared which said that the amnesty scheme would yield Rs 8-10 billion for the government exchequer. "It is only because the government has ignored the fact that the local auto industry pays more than this amount only in terms of taxes. They are going to make themselves content on a small share of revenue through smuggled and illegal used cars' trade, at the cost of huge revenue the government receives from local auto industry. This is not sane on the part of the government," he observed.
It is beyond comprehension why the government has taken another unpopular decision ahead of general elections, and at the time when they are being criticised for their anti-investment policies in their five-year tenure, he said, adding "it seems the decision makers have lost their interest in making the country an investment friendly nation, which is quite evident from just one example of their policies they have adopted in their tenure to severely damage local auto industry."
It may be mentioned that this is the second amnesty scheme announced by the PPP-led coalition government. Last year, the government gave amnesty to those who wanted to whiten their black money by making investment in the stock market. Since, he added, the government had miserably failed to stop vehicles being smuggled into the country, they were launching such schemes at the expense of local industries which showed the short-sightedness of the policy makers of the government. "This amnesty scheme for smuggled vehicles has shown the world that the government itself is encouraging unlawful activities," he said.