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Profile H.M. SHAHZAD



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.