The government has decided to impose a six-month ban on Completely Built-Up (CBU) vehicle imports due to a sharp incline in the import bill. The ban will be enforced from January 2022 to June 2022 along with increased Regulatory Duty (RD) and Additional Customs Duty (ACD) rates on multiple luxury products, including cars.
The total current account deficit (CAD) reached $ 5.1 billion in the first four months of the current fiscal year (FY2021-22), which is significantly more than the $2.3 billion that was approved by the National Economic Council (NEC) during the announcement of the 2021-22 budget for the entire FY 2021-22.
As per a media report, the Advisor to the Prime Minister on Finance and Revenue, Shaukat Tarin, has directed the tariff board to come up with a solution to the matter on an urgent basis and approve the revision of RDs and ACDs on luxury products and the ban on the import of CBU vehicles.
The media report mentioned that the government seeks to, “curtail its import bill to the tune of over $3 billion on annual basis,” by banning the import of CBUs.
Ali Khizar, a senior journalist from Business Recorder, critiqued the statement and argued that the imports are of little significance to the overall import bill.
”With the approval of a temporary ban on the import of CBU, the government wanted to curtail its import bill to the tune of over $3 billion on annual basis"
What on earth can save $3bn by CBUs ban when the total car CBUs imports were $255mn last year?https://t.co/pRQYQMlNO0 pic.twitter.com/ygMfS9dEQg
— Ali khizar (@AliKhizar) December 1, 2021
Even though the actual imports of CBUs are nowhere near $3 billion this year, it is undeniable that the new carmakers have been frequently importing CBUs to Pakistan. The government’s decision to ban CBU imports is likely to encourage automakers to deal in locally assembled vehicles only.