All Pakistan Motor Dealers Association (APMDA) has urged Prime Minister Shehbaz Sharif to allow the import of used vehicles, arguing that these items do not result in a loss of foreign exchange — the very reason the government placed the moratorium in the first place.
“Instead, foreign exchange comes to the country when overseas Pakistanis pay duties and taxes in dollars,” H.M. Shahzad, the APMDA chairman, told Business Recorder, referring to the Transfer of Residence (TR), Gift and Baggage schemes under which used cars are imported.
Shahzad claimed overseas Pakistanis paid $300 million as duties and taxes to the government while sending these cars through different schemes in fiscal year 2020-21. The official said 39,000 vehicles utilised this scheme during FY21.
"So far in 2021-22 (FY22), approximately 35,000 units have arrived, and this adds a similar amount as duties and taxes this year as well."
In its letter to the PM, a copy of which is available with Business Recorder, the APMDA urged the reversal of the ban, which was put in place to arrest the decline of Pakistan's foreign exchange reserves that have reached a critical level at less than 2 months of import cover.
“Not a single penny goes out of the country when overseas Pakistanis send a used car here. They pay to purchase the car from abroad and send duties and taxes in dollars from there,” Shahzad said.
"Used cars/vehicles, which are allowed to be imported by overseas Pakistanis under TR, Gift and Baggage schemes, should not be included in the said SRO as they are not commercial imports through L/C [letter of credit] and no foreign exchange of the country is utilized,” the APMDA stated in the letter.
Shahzad admitted that these vehicles, which arrive in Pakistan through different schemes, are sold in the used cars' market. However, he added that Pakistan’s auto sector has been marred with lack of options while delivery periods are as high as eight months, which are reasons for this flourishing market.
Import ban: Commerce ministry notifies list of 38 items
On May 19, the Ministry of Commerce banned the import of 38 items to control a bulging import bill and support appreciation of the local currency. The commerce ministry issued SRO598 to amend the Import Policy Order, and specified 800 Pakistan Customs Tariff (PCT) headings of banned items in 33 categories.
According to the list, ban has been imposed on the import of mobile phones CBU, home appliances, cosmetics, crockery, pet food, private weapons and ammunition, shoes, chandeliers and lighting (except energy savers), headphones and loudspeakers, doors and window frames, travelling bags and suitcases, sanitary ware, carpets (except from Afghanistan), tissue paper, furniture, shampoos, automobiles (CBU), luxury mattresses and sleeping bags, bathroom ware/toiletries, heaters/blowers, sunglasses, kitchenware, cigarettes, shaving goods, luxury leather apparel, musical instruments, saloon items like hairdryers and decoration/ornamental articles.
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