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Tariffs

Pakistan Approves Commercial Import of Used Vehicles Amid Concerns

Strategic Insights

— 2 min read

The Tariff Policy Board (TPB), led by Commerce Minister Jam Kamal Khan, has approved the proposal to allow the commercial import of five-year-old used vehicles with an additional duty of 40%. The decision, which needs final approval from the Economic Coordination Committee (ECC), comes despite strong objections from Pakistan's auto industry, which fears the move could harm local manufacturing, jeopardize jobs, and compromise efforts against money laundering and terrorism financing. The TPB's move aligns with Pakistan's obligations under the International Monetary Fund's Extended Fund Facility (EFF), which requires the gradual reduction of tariffs on used vehicles. The plan aims to harmonize Pakistan's tariff policy with global trade commitments while addressing environmental and safety considerations.

Key Takeaways:

  • The Tariff Policy Board (TPB) has approved the commercial import of five-year-old used vehicles with an additional duty of 40%.
  • The proposal will now be submitted to the Economic Coordination Committee (ECC) for final approval.
  • Pakistan's auto industry has raised concerns that the move could harm local manufacturing, jeopardize jobs, and raise concerns under FATF monitoring for money laundering and anti-terrorism financing.
  • The TPB's decision aligns with Pakistan's obligations under the International Monetary Fund's Extended Fund Facility (EFF), which requires the gradual reduction of tariffs on used vehicles.
  • The commercial import of used vehicles will be allowed without age restrictions from July 2026 onwards.
  • Used vehicles will fall under PCT 8703, with imports allowed only if they meet standards notified by the Ministry of Industries and Production or relevant authorities.
  • The plan aims to harmonize Pakistan's tariff policy with global trade commitments while addressing environmental and safety considerations.
  • Local automakers have repeatedly requested stricter regulations on used car imports, citing potential deindustrialization.
  • Pakistan's auto sector includes 13 major brands: Toyota, Honda, Suzuki, and Hyundai, with 1,200 auto parts manufacturers and employing around 1.5 million workers.
  • The sector attracts roughly US$5 billion in investment and produces cars, trucks, buses, tractors, and motorcycles.

Statistics:

  • 40% additional duty on imported used vehicles.
  • 5 years age restriction on imported used vehicles (removed from July 2026 onwards).
  • US$5 billion investment in Pakistan's auto sector.
  • 1,200 auto parts manufacturers in Pakistan.
  • 13 major brands in Pakistan's auto sector (Toyota, Honda, Suzuki, Hyundai, etc.).
  • 1.5 million workers employed in Pakistan's auto sector.
  • [Total growth in Pakistan's economy under IMF's EFF is 10% increase in revenue]

Sources:

  • Business Recorder
  • International Monetary Fund's Extended Fund Facility (EFF)

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