PJBF urges govt to safeguard industrial investment, local manufacturing

KARACHI: The Pakistan Japan Business Forum (PJBF) has expressed serious concern over the reported consideration of a significant reduction in import duties on Completely Built- Up (CBU) vehicles, as well as substantial reductions in duties on localized auto parts.

PJBF has cautioned that any major change in the existing duty structure for imported vehicles and localized parts could have serious and irreversible consequences for Pakistan’s local automobile manufacturing sector.

PJBF stated that, over the last four decades, Japanese and Pakistani companies have made substantial long-term investments in Pakistan’s automobile industry. These investments have contributed to the establishment of manufacturing facilities, development of local vendor networks, transfer of technical know-how, training of skilled manpower, employment generation, and significant contribution to national tax revenues. The continuity of a balanced and predictable policy framework has played a central role in enabling these long-term industrial commitments.

The Forum emphasized that a sudden and sharp reduction in CBU duties would place locally manufactured vehicles under severe pressure from imported new and used vehicles. Similarly, any major reduction in duties on localized auto parts would weaken the business case for local parts manufacturing and discourage further localization. Such policy changes could undermine the commercial viability of domestic manufacturing operations and adversely affect the wider supply chain, including hundreds of local parts manufacturers, dealers, service providers, and associated businesses.

PJBF further warned that if local manufacturing operations become unsustainable, investments made by Japanese and Pakistani companies in the automobile sector could be scaled down or even rolled back. Once manufacturing capacity, vendor infrastructure, technical capability, and skilled human resources are lost, rebuilding them in the future would be extremely difficult, costly, and time-consuming. Such an outcome would also weaken investor confidence and discourage future industrial investment in Pakistan.

The Forum highlighted that increased dependence on imported vehicles would place additional pressure on Pakistan’s foreign exchange reserves. A shift from local production to an import-based model would accelerate the outflow of foreign exchange and add further stress to the country’s external account. This approach would not be in Pakistan’s long-term economic interest, particularly at a time when the government is seeking to promote industrial growth, conserve foreign exchange, create employment, and deepen localization.

PJBF stated that Pakistan’s long-term economic interest lies in strengthening domestic manufacturing, promoting technology transfer, expanding local value addition, and developing a competitive industrial base. The automobile sector has the potential to play an important role in achieving these national objectives, provided that policy continuity, investment confidence, and a balanced duty framework are maintained.

The Pakistan Japan Business Forum urged the Government of Pakistan to safeguard foreign and local investment by maintaining a balanced duty differential for localized products, while retaining the current duty structure on imported finished vehicles.

PJBF also requested that any future policy measures concerning the automobile sector be finalized through a meaningful consultative process with relevant stakeholders, keeping in view the long-term impact on investment, employment, industrialization, localization, technology transfer, and foreign exchange sustainability.

PJBF reaffirmed its commitment to further strengthening Pakistan-Japan economic cooperation and supporting sustainable industrial development in Pakistan.

Copyright Business Recorder, 2026