PRO 12-12-2012_Layout 1 12/11/2012 11:51 PM Page 1
Wednesday, 12 December, 2012
Auto manufacturers blast FBR over misleading revenue figures g
IMF repayments may pressure C/A despite burgeoning remittances
Say government collects more revenues from auto industry g Disprove FBR’s revenue losses of Rs 17bn KARACHI
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STAFF REPORT
HE local car and auto parts manufacturers Tuesday appealed to the Standing Committee of the National Assembly on automobiles to cross check their facts on duties and prices of the used imported cars and locally made cars from the industry instead of relying on figures provided by, what they said, vested interests. The appeal was made by the members and officials of Pakistan Automobile Manufacturers Association (PAMA) and Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) here at a briefing Tuesday. Chairman PAAPAM Munir K. Bana said commercial import of used cars was officially banned but instead of prosecuting the flouters of this ban, the government bodies, including Federal Board of Revenue (FBR), were backing the criminals issuing forged and misleading figures. Bana alleged that FBR had wrongly claimed that age limit reduction of the used cars might cost the kitty Rs 17 billion per annum, based on duties/taxes collected during 12 months of 2011-12 on approx 56,000 imported used cars. “In fact, the revenue generated by the government on similar quantity of vehicles manufactured by the local industry would have been Rs 21.5 billion, exceeding the levy on used cars by Rs 4.5 billion per annum, an increase of 26 percent,” he said. Citing an example, he pointed out that on a Corolla manufactured in Pakistan the FBR was getting government levies equivalent to $5,568 while on similar imported car the total government revenue was only $4,400. The chairman PAAPAM said the foreign exchange component of a Corolla car was $5400 while similar five years old used car is imported at $10,682. “This means that the state not only loses on revenues but also in foreign exchange when any five years old car is imported,” he
added. In case of three years old used car the duty component was higher at $7040 but the foreign exchange component is also higher at $11600. Bana said the OEMs and burgeoning auto parts manufacturing industries, consisting of over 3000 SME units, the backbone of the auto industry ensuring uninterrupted supply of hitech auto parts for assembly of all kinds of vehicles, deposited around Rs 80 billion per annum into the government treasury. Sharing an example, he said the local addition in Corolla was equivalent to $4400 per unit. “These parts are produced by local auto vendors that provide jobs to thousands of workers whereas in case of used car there is no local component and every component is made in a foreign country thus the jobs are created outside Pakistan,” the chairman said. Bana said the above facts also belie the FBR claims where they state that no manufacturing existed in Pakistan and all auto parts were imported by the assemblers from Thailand, Japan etc. “It is also unfortunate that the FBR has also not even mentioned the colossal foreign exchange losses suffered by the government, as a consequence of imports of used cars. It is a known fact that import cost of CKD for a new vehicle is lower than 50% of an average C&F cost of a used vehicle,” he added. He said based on this apparent
gap, the import of 56,000 used cars in 2011-12 resulted in foreign exchange outflow of US$ 454 million as against US$ 218 million, that would have been incurred on similar quantity of CKD kits for local assembly of vehicles i.e. a saving of US$ 236 million. DG PAMA Abdul Waheed pointed out that the used car import was allowed so that the consumers could get automobiles at low rates. However, the statistics proved that the prices of used cars were comparatively much higher or same as that of Pakistan made new cars. “The price of brand new Pakistan made Corolla is $16900 while a five years old imported used car of same engine size is sold at $15100 and this small difference of $1800 is not worth driving a five years old car,” he said adding that a similar three years old car is sold in the local market at $18600. “Is it worth buying a three years old car at higher price than a brand new car,” he questioned? He said all the car manufacturers in Pakistan provide two years performance warranty of the cars they sell. Moreover they guarantee availability of all spares and repair of these vehicles at their dedicated workshops. In contrast, there is no warranty for the used cars. He brought to the notice of the National Assembly Committee that while even 20 years old Pakistani models are
still plying on the roads one would hardly see an imported used car surviving on our roads five years after import. “This is simply because the spares of most of these cars are not available locally and whenever a used car breaks down due to want of spares they have to be imported by air,” he said adding that the spares are costly as they cannot be imported in bulk making the maintenance cost of these vehicles exorbitant. Representative bodies of local OEMs and auto parts manufacturers said that It would be in the best interest of the government to encourage local auto industry, as both assemblers as well as APMs are fully documented industries and pay their fair share of taxes, besides providing employment to over 2 million persons. On the other hand, used car imports is not only a misappropriation of concessionary benefits meant for Overseas Pakistanis but it is a crime in the sense that the expatriates’ documents are misused to arrange commercial imports of vehicles in their names. The PAMA and PAAPAM members also appealed the government to trace and bring all the used car dealers into the tax net so that they become fully documented and pay their due share of taxes. Used car dealers’ association should also be registered with Directorate of Trade Organizations to prove which expatriates they representing and in what capacity they had been authorized to sell the cars gifted by them for their families’ p e r sonal use.
KARACHI STAFF REPORT
The worker remittances, which totaled at $ 5.98 billion during first five months of the current fiscal year ranging from July to November (FY13), are said to be a major supporting head on the country’s current account list. “The consistent upward trend in the remittances is providing support to the current account as during the 4MFY13 it was witnessed with the surplus of $258 million,” said Abdul Azeem, an InvestCap analyst. Overall, the analyst said, the decline of 25 percent was observed in total remittances to $1billion in November as during the month of October a huge remittance of $ 1.37billion was witnessed due to Eid factor. However, 5MFY13 remittances recorded growth of 14 percent YoY to $ 5.98billion. Saudia Arabia was the most prominent source, as its share reached to 27 percent, up by 0.9pps YoY during 5MFY12, thereby becoming the largest contributor to remittances. Home remittances coming in from the UK experienced massive growth of 42 percent YoY (+ $252mn) during 5MFY13. However, Abdul Azeem warned that the IMF payments were more than likely to exert pressure on the current account deficit. Moreover, he said, due to lower imports and rising exports, the trade deficit showed a diverging trend by posting 7 percent YoY decline in 4MFY13. Despite the global economic slowdown exports posted growth of 5 percent YoY in 4MFY13. The major contributor remained the textile group exports, which improved by 5 percent YoY, said he. Going forward, the analyst said, the textile exports were estimated to be the prime driver for the growth in exports as its cotton yarn segment posted colossal growth of 37 percent. The exports were being supported by the cotton yarn demand coming in from China and Hong Kong. On the other hand, declining in oil prices is one of the major reasons behind the declining in import bill.
World economic variations Comment HAssAn Ayub ‘The world has become a global village’; this has become more of a cliché now. Although this is true, however the duelers of this world have been experiencing the most variable economic conditions across the globe. Since the rise of Industrial Revolution and subsequently the emergence of the free market economy, the term Economic System has become move of a system of distributors and receivers forming the status quo. During the centuries of colonisation, the world powers collected the resources from around the world. It is interesting to note that the poorest nations of the world were the richest in natural re-
sources! The whole Industrial Revolution and the economics façade of the world economic powers was erected from the blood and sweat of the poor nations. Industrial Revolution and free market economy has promoted a system of the concentration of wealth .Amazingly only 20 richest people of the world have more than half wealth of the total world. The economic disparity has made this world, a world in which there are average per capita income is more than $13,000 whereas most of the central African an Sub- Saharan are living at an ebb of less than $200 per annum. The Economic war between the worlds corporate has made the poor countries a war ground and the poor a fuel. Take the example of Sierra Leon, a country rich with diamonds, yet the whole nation has been
facing an inferno of civil war for more than ten years. The diamonds which are sold are actually blood diamonds. The concept of trickle down system of economy, has decided the fate of poor nations; they only get, what rich has left. An American economist said “There is no such thing as a free lunch, someone has to pay for it.” The rich nations due to this economic variation have become debtors and the poor nations, the borrowers. This tender borrower relation has further caused an extreme disparity among the people of rich and poor nations. The race for capturing world economic resources among the powerful nations have left the macrocosm under a cloud of smoke, smoke that is emitted by the insinuated bodies of the poor. The free market economy has made
the rich further rich and poor penny less. This system of free market moves with a philosophy ‘feed the horses, so the birds would get their food! The world Institutions’ such as IMF and World Bank are also the contributors for this system of economic disparity and Variation. These Institutions are in actual Controlled by the rich nations; their policies and function manifest the desires of large rich Economies. The people of poor nations have been further squeezed through a control of their Internal Policies. The hard earned GDP of these poor nations is gulped by these Institutions in the name of debt retirement a debt that has never been utilised by these people. It is interesting to note that the poor nations of the world are the most populated
countries, and that makes these countries large consumer societies, the societies which are a market for these big corporates. The hard earned money is taken away by the large corporates through alluring and enticing techniques of advertisement. The free market economy and the corporates have become leaches, sucking the blood of poor nations. The plundering of resources and exploitation of needs has been further agar voting differences between different nations. Every year millions of terms of wheat and medicines are thrown into oceans, but the hungry people are left to face hunger and ailing are left to face death because free market economy does not allow free distribution which may cause market imbalance.