IMPORT OF SECOND-HAND CARS - IDEA NOT UP TO THE MARK

BY TALHA BIN HISAAM
Apr 10 - 16, 2006

The last time the country decided to import reconditioned automobiles, we found ourselves on the receiving end of more junk than cars. If the government allows the import of reconditioned cars, there will inevitably be a vast difference between what is available to the consumer and what the consumer expects from this new market. Pakistan will become an importer of low quality automobiles rather than working towards becoming a producer or exporter of world-class cars, as envisaged by the manufacturers of today.

In New Zealand, the import of second-hand cars closed down domestic manufacturing. For a developing country like Pakistan, the results would be even more devastating. It is at such times that we need to take the long view that is think more like citizens and less like consumers. The local auto industry was planning to increase its production, which would indicate an upswing. However, by allowing poor quality automobiles into the country, it would not only hurt the industry, but also have an adverse effect on the government revenues since corruption invariably runs rampant in the reconditioned car business. Past experience has proven that instead of the documented tax and duty practices being followed by the auto and vendor industry, the second-hand car lobby will resort to under-invoicing and 'grey' imports.

Even presently, there is no absolute restriction on the import of new or used second-hand cars. These cars can be imported under the Personal Baggage Scheme or Gift Scheme. Under the Transfer of Residence Scheme, Pakistani nationals can bring in used automobiles as well. The second-hand lobby wants to import cars through false declarations and grey channels. Such practices are more than possible through the inadequate valuation/ITP system.

If the government doesn't refrain from repeating the mistakes of the past, even more damage awaits the country. Not only will we witness massive unemployment to the tune of tens of thousands, we will find low quality second-hand cars increasing pollution and raising the fuel and maintenance costs in the country. As mentioned earlier, the auto industry, also considered 'the mother of all engineering industries', will come to a staggering halt, and we can also expect the transfer of automobile technology to be reduced to a trickle. So, this potential auto catastrophe should be prevented.

In addition, the manufacturers are investing their retained earnings to improve production capacity and generate employment. If the auto industry is doing their part, why can't the government join them as partners for national progress?