Policies Must Be Proactive, Not Reactive

Since the Chairman PTI Imran Khan assumed Chief Executive’s office last year, the roller coaster ride of economy started to haunt the citizens and the governance issues that started to pop up on daily basis made it difficult for the PM to stay calm. The hodgepodge this government has been through, even Imran Khan couldn’t resist hinting at mid-term polls. Since August 2018, a number of appeals from various business platforms were published in the newspapers, a number of associations tried approaching Advisor to PM Razzaq Dawood, Finance Minister Asad Umar and Prime Minister Imran Khan. What is positive about the government is, they are responding to all such appeals. Resolving the issue is altogether a different matter but at least they pay heed to what stake-holders voice from their platforms. Pakistan Auto Parts Manufacturers Association (PAPAAM) and Pakistan Automotive Manufacturers Association raised questions on earlier moves by the finance ministry and federal board of revenue and paying heed to their concerns, plus in order to widen the tax net government came up with its own innovative solutions to boost foreign exchange reserves and curb money laundering.

Thus, another SRO was circulated earlier this month, this move has enabled the local car manufacturers and assemblers to form a cartel. It is pertinent to mention here that a total of 1 million cars are sold to local consumers in Pakistan. Out of these 1 million cars, 250,000 cars are supplied by local assemblers including, Honda Atlas, Toyota Indus and Pak Suzuki. The remaining gap is fulfilled by the imported cars, out of 750,000 imported cars over 90% of these have 660-1000 CC engine capacity. This illustrates the plight of middle class and lower middle class both, people belonging to this faction of population spend their life savings to buy one affordable car that gives them enough affordable mileage. Otherwise, locally assembled cars have no safety or fuel efficiency feature that can set them apart from the imported product line. As per the SRO#52(1)/2019 of January 15th, 2019, states, “all vehicles in new/used condition to be imported under transfer of residence, personal baggage or under the gift scheme, shall be paid out of the foreign exchange arranged by Pakistan nationals themselves or local recipients supported by bank encashment certificate showing conversion of foreign remittance to local currency, as under,

(a) the remittance for payment of duties and taxes shall originate from the account of Pakistani national sending the vehicle from abroad and;

(b) the remittance shall either be received in the account of Pakistani national sending the vehicle from abroad or, in case his account is nonexistent or inoperative, in the account of his family.”

If this SRO is implemented in true letter and spirit, then it means the nation shall have no way of buying these affordable imported cars. Not only the local assemblers which already increased prices of their cars three times in a year will be free to raise the price tag whenever and to whatever amount that pleases them, plus middle class buyers shall be forced to buy local cars, with less-affordable gas mileage costing them more than their disposable monthly income. By the virtue of this SRO, cars in cases other than gift scheme, personal baggage or transfer of residence, are not importable anymore. Blocking any other mode of import means blocking the revenue that government generates in form of taxes and duties through import of these cars, this amounts to 1 billion dollars annually. This means blocking the way of earning for thousands of people employed at imported car showrooms, this is going to affect thousands of households and shall dent the revenue generation big time for the government. It is quite positive that government pays heed to the hue and cry of industries but if it intends to manage the governance model more aptly then it’s time to take all stakeholders of the relevant and allied industries both on board before formulating the policies before anything goes for final implementation.

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