The general shipping method for used vehicles into Pakistan is either through RORO (Roll-on, roll-off) ships that land in Karachi. RORO is the cheapest way of shipping though a container can be arranged if requested.
There is no special test like JAAI required for Pakistan. Cars and vehicles Pakistan do not require anything apart from the standard documentation required for exporting out of Japan (export certificate). Provide Cars arranges this.
Generally the rule is that the vehicle must be less than 5 years old according to the date of manufacture. Provide Cars will give you this date when you bid.
The Commerce Ministry in 2010 increased the age limit of imported second-hand cars from three to five years under ‘personal baggage, gift and transfer of residence schemes’, which according to analysts would undoubtedly harm the local auto industry.
Sources told Business Recorder that decision was taken at an inter-ministerial meeting held in the Commerce Ministry under the chairmanship of Additional Secretary Shahid Rahim Shaikh. They said that the Economic Co-ordination Committee (ECC) of the Cabinet, in its meeting on December 7, 2010, presided over by Finance Minister Abdul Hafeez Shaikh, seemingly had directed the Commerce Ministry to immediately call a meeting and issue a Statuary Regulatory Order (SRO).
The meeting discussed the issue threadbare and directed the Commerce Ministry to issue SRO which would implement the decision. However, the SRO was kept secret, and probably would be made public on Thursday. The Commerce Ministry had proposed to increase age limit of cars to be imported under personal baggage scheme, gift and transfer of residence schemes from three years to five years. It had also recommended that depreciation should be increased to 2 percent, from one percent, to 24 months, as was the position till December 31, 2008. However, this was not approved by the committee.
For trucks, the age limit has been proposed to 7 years, from three years, under personal baggage, gift and transfer of residence scheme. For buses, seven years age limit has been recommended under personal baggage and gift schemes, and five years under transfer of residence scheme without any change in depreciation, which currently is 2 percent. Decision on both these proposals will be finalised by the ECC.
The Commerce Ministry was also of the view that since the prices of locally assembled vehicles have been rising sharply over the past years, vehicles imported under various baggage schemes had been providing healthy competition in the local market.
Overseas Pakistanis are bringing in less and less vehicles since the age limit of used cars imported under baggage schemes was reduced from five to three years in 2006-07 while in 2009 depreciation was slashed from two percent to one percent per month.
The increased cost incurred by the overseas Pakistanis due to these policy interventions reduced import of used cars from 43,280 in 2005-06 to 5641 in 2009-10 under different schemes. “This indicates that variation in age restriction and the changes in depreciation were major factors that affected the number of vehicles imported under these schemes,” sources said.
The Commerce Ministry is of the considered opinion that the reduced volume of imported cars under the schemes had negatively impacted the supply of cars in domestic market, decreasing the competitive pressure on local car manufacturers who keep on increasing prices and have Rs 14 billion to Rs 16 billion of buyers’ money at any given time, as a result of advance payments, premium, etc.
Sources said the ministry of Industries and Production submitted a summary to the Economic Co-ordination Committee (ECC) not less than half a dozen times suggesting extension in used cars import period, but each time it either remained undiscussed or was deferred for the next meeting. However, ECC meetings held during the last one and half months have nevertheless caused a serious concern in Japan embassy in Islamabad.
Hence, it is important to recall that Japan’s ambassador to Pakistan, Chihiro Atsumi, had sprung into action following media reports on possible extension to make the decision-makers feel that any such step would discourage his country’s investment in Pakistan’s auto sector. The ambassador in his meetings with the top government officials including Commerce and Finance Secretary held recently made his point forcefully.
He had a clear message for the policy-makers in the meetings that it appears that the Ministry of Industry was in favour of an extension in used cars period from three to five years as indicated from media reports. This, he said, would discourage Japan’s investment in Pakistan, including existing auto assemblers like Toyota Indus, Suzuki and Honda; and it could result in rolling back of these companies expansion plans to enhance their production to meet the domestic demand. Unfortunately, due to slowdown in economic growth these companies are now hurting as they had planned for six percent and above growth rate and they have invested in expansion and local deletion. Government has committed to restricting the import of used cars by limiting it to three years. The basic purpose of this policy was to allow assemblers to devise a long-term plan and give assurance to investors to earn a return on investment and simultaneously support local vending industry through technology transfer as committed in the deletion programmes. The proposal to extend the period from three to five years for used cars’ import policy is viewed by Japanese assemblers as the Government of Pakistan going back on a firm commitment.
Commercial importers of used cars are pressuring the government to change the policy. Powerful groups in connivance with the customs authorities under the used car policy rob the exchequer. Consumers also suffer on account of poor after sales service, resulting in increase in demand for all kinds of auto parts which only benefits the players thriving in the untaxed economy.