Federal Board of Revenue (FBR) has reportedly recommended to the government to once again allow used car imports on commercial basis instead of depending on three schemes meant to facilitate expatriates, well informed sources in Engineering Development Board (EDB) told Business Recorder.
FBR's comments have come at a time when the Minister for Water and Power Khawaja Asif has almost finalised Auto Development Policy (ADP) 2014-19 to be considered by the Economic Co-ordination Committee (ECC) of the Cabinet anytime soon.
Khawaja Asif criticised local auto assemblers on a number of occasions for assembling substandard cars and over-pricing. When he took up this issue in the ECC last year, a committee was constituted under his convenership to prepare a new auto policy draft. "Although the existing two rates of depreciation (1 & 2 per cent) have been restored, the FBR's earlier proposals regarding opening up of used vehicle imports to commercial entities/ importers and removing the restriction on payments of duty by expatriate Pakistanis through regular banking channels are re-iterated," the sources quoted S. Ali Zaman Gardezi, Secretary (Customs Tariff-III) as saying in his letter to the Ministry of Industries and Production on a summary regarding a new auto policy. The sources said previously FBR had supported a reduction in age limit of used cars from five to three years on a condition that local assemblers will reduce their prices. However, local assemblers did not reduce prices as per the aspirations of different public sector stakeholders.
Ministry of Sciences and Technology, which administers the affairs of Pakistan Standards Quality and Control Authority (PSQCA), maintains that the automotive vehicles (with the exception of 2/3 wheelers) in Pakistan do not comply with some stipulated quality standards or safety requirements - a serious threat to the health and safety of passengers.
"There is a dire need to revitalise the process of standardisation in the automotive sector to develop national standards for automotive vehicles not only to meet our domestic requirements but also to build a better image of the country in case of a regional exchange of documents for the purpose of agreements and treaties such as MFN etc," said Engineer Mohib Zaman, Assistant Technological Advisor, Ministry of Science and Technology, in a letter to the Ministry of Industries and Production.
Furthermore, he stated there is a general impression that cars assembled in Pakistan do not meet standards of environmental and passenger safety. For instance, Japanese cars have everything at the price near to Suzuki Mehran. Everything means catalytic converters in silencer (which is compulsory in Europe and people remove it in Pakistan after choking due to dirty fuel airbags), ABS, motorised head lights and side mirrors. This thing needs to be addressed in the policy document.
Ministry of Communication maintains that there is no model phase-out policy by car assemblers in Pakistan and vehicle models older than 20 years are still being produced whereas these have long been phased out globally due to technology obsolescence.
As present, State Bank of Pakistan is allowing consumer financing to only car segment whereas individual consumers of HCH sector have to obtain a loan from open market at higher rates.
In order to facilitate the individual buyer of the HCV segment, the ADP envisages to extend the consumer finance facility to individual customers for commercial vehicles in line with the car segment financing scheme at the prevailing interest rates. This will help industry improve its production capacity, said Shahbaz Latif Mirza, Research Officer, Ministry of Communication.
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