Government Mulling Over New Scheme for Importing Used Cars

The government is planning to introduce a new scheme or regulatory framework to allow the import of used vehicles. Only commercial importers will be allowed to do so with certain Quantitative Restrictions (QRs).

Sources revealed that Dr. Abdul Hafeez Shaikh, Adviser to PM on Finance and Revenue, will chair a meeting on Monday to discuss the import of vehicles under personal baggage, transfer of residence and gift schemes for overseas Pakistanis.

The meeting would discuss the possibility of introducing a scheme for commercial importers, taking into account the views of the Finance Division, Commerce Ministry and the Federal Board of Revenue (FBR).

Import Policy Order, 2016

According to the Finance Division, the Import Policy Order 2016 of the Commerce Division includes various vehicles import schemes e.g. personal baggage, transfer of residence and gift schemes for overseas Pakistanis. This regulatory instrument allows the import of new or used vehicles and is aimed to facilitate bona fide overseas Pakistanis.

Misuse of the schemes

The schemes have been reportedly misused by the commercial importers, who imported vehicles using overseas Pakistanis’ passports. Only around 5 percent of the cars were actually imported by genuine overseas Pakistanis. This led to an outflow of foreign exchange from the country through Hawala/Hundi and there was a need for corrective measures to deter this practice.

Amendment

Hence, the Commerce Division has prescribed a clear transaction mechanism to curb this practice and moved a summary for the ECC of the Cabinet, which introduced the following mechanism through an amendment in the Appendix-E of the Import Policy Order:

All vehicles in new/used condition to be imported under transfer of residence, personal baggage or under gift schemes, the duty and taxes shall be paid out of foreign exchange arranged by Pakistan nationals themselves or local recipient supported by banks encashment certificate showing conversion of foreign remittances to local currency, as under:- (i) the remittance for payment of duties and taxes shall originate from the account of Pakistani national sending the vehicle from abroad and; (ii) 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.

FBR’s Reservations

On the other hand, the Federal Board of Revenue (FBR) has reservations about this new mechanism and has forwarded a note for the minister of finance seeking permission for submission of the summary to the ECC of the Cabinet.

The Bureau is asking for, the simplification of the mechanism allowing any Pakistani national, other than the one sending the vehicle, to arrange and remit foreign exchange and that the recipient’s account could be of a customs clearing agent or notified party in the Bill of Landing and shouldn’t necessarily belong to the Pakistani national or his family member.

FBR and the Ministry of Commerce disagree on this policy. The former is of the opinion that the import of the vehicles under Personal Baggage, Transfer of Residence and Gift Scheme should be relaxed for the commercial importers to improve revenue. Also, restricting imports has implications for the competition in the local automobile market.


  • The incentives for the government are very different from those for ordinary people. The government would prefer higher imports because that means higher customs duties. They would prefer an overvalued currency so as to encourage imports and also so that the government’s foreign debt servicing burden is lower. That’s why the country has perpetual balance of payments problems.

  • There should balance between supporting Local assemblers and addressing Market needs. However government should allow ONLY HYBRID OR Electric cars since locals are not making these. This would also ensure fuel economy and affect environment.

    • First tighten the screws on local assemblers as they are also importing kits and taking the profits through legal channels thereby taking our revenue. Lowest class cars are sold in Pakistan, nobody localize products in Pakistan so the business is not done by Pakistanis, first they need to tie these japanese


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