H.M. Shahzad is the
chairman of All Pakistan Motor Dealers Association, for the third
consecutive two-year term. He is also the chairman of S.N. Car Complex
which organized a car raffle for domestic air travellers at the
Quaid-e-Azam International Airport Karachi which let many people won a
new locally produced car. He has been involved in auto business for
many years and is regarded as the most vocal critic of the local auto
industry. He is also the vice chairman of Pakistan-Japan Business
Cooperation Committee of the Federation of Pakistan Chambers of
Commerce and Industry, of which he is also a patron member. He has
been involved in community works and is the senior vice president of
All Pakistan Memon Federation for the consecutive second two-year
term. He is also the president of Jam Nagar Memon Jamaat and a member
of the managing committee of World Memon Organization.
By Syed M. Aslam
June 17 - 23, 2002
PAGE:
You are the most vocal advocate of import of used cars in the country.
Why?
H. M. Shahzad:
Being a developing country, the low per capita income and the trends
show that Pakistan is primarily a used car market. However, the import
of used cars though not banned is subjected to discouragingly high
duties and taxes for the last eight years. The total impact of duties
and taxes on the import of used cars stands at a high 365 per cent of
the value thus making it impossible for any one to dare think
importing a used vehicle. In addition, used car segment of the market
far out numbers that of locally produced new cars. Some 35,000 new
cars are sold in the country every year compared to about 150,000 used
cars that change ownership nationwide each year, including about
70,000 units in Karachi alone and another 35,000 in Lahore. I must add
that the numbers of used cars changing hands each year is not going to
decrease in future, it will only increase due to economic realities
particular to all developing countries.
PAGE:How
many car dealers are there in Pakistan.
H.M.
Shahzad:
According to our estimates there are some 11,000 car dealers in the
country, both new and used. Of course not all of them are our members
— APMDA has some 6,500 members across the country, mostly in the
urban centers. Our members also include new car dealers, however, the
majority of our members are engaged in used car sales.
PAGE:
What used cars sales means for the government in term of the revenue?
H.M.
Shahzad:
As mentioned earlier some 65,000 used cars change ownerships in
Karachi alone each year. Government earns a revenue of Rs 800 on each
transfer of 800-1000 cc car while Rs 1,000 over 1000 cc cars under the
head of transfer fee. Thus transfer of used cars each year help the
Sindh provincial government earn a substantial revenue of about Rs 60
million each year alone in Karachi where some 65,000 passenger cars
change hand each year if the average fee is taken as Rs 900. The
provincial government also earns vehicle tax which amounts to Rs 1,000
on every 800-1000 cc car, Rs 1000 on every 1000-1300 cc car and Rs
3,000 on every car above 1300 cc. In addition, vehicles of 1000-1300
cc are also subjected to Rs 1,500 Income tax while those above 1300 cc
have to pay an income tax of Rs 1,300. The vehicle or road tax also
goes to the provincial government while the income tax goes to the
federal government. The federal and the provincial governments are
collecting a substantial revenue from Karachi which houses some
750,000 vehicles of all kinds, the biggest in the country.
PAGE:Have
you sent any proposals to the government for Budget 2002-03?
H.M.
Shahzad: Though
we have been sending written budget proposals to the government in the
previous years we have not sent one this year as we have been assured
of rationalization of the highly discouraging duties and taxes. We
have got the feelers that duties and taxes on the import of used cars
will be slashed to an affordable level of an all inclusive 100 per
cent impact of the value of the vehicle.
PAGE: If
the duties and taxes are lowered on the import of used cars how many
vehicles you think will be imported in the country? What it would mean
for the government in term of revenue?
H.M.
Shahzad: We
feel that the used car segment of the market, which in the last eight
years primarily revolves round the same number of used cars, is easily
capable of absorbing some 100,000 imported used cars each year easily.
We have assured the government that the reduction of import duty and
taxes to an affordable level will help it earn a substantial revenue
of Rs 9.5 billion annaully from the import of 100,000 used cars which
will not only give the potential buyers a choice of price but also
makes and models. However, I am keeping my fingers crossed despite the
assurances and the feelers.
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