Pakistan proposes tighter conditions for car imports

Pakistan has imposed stricter restrictions on the import of vehicles by citizens living overseas as the government seeks to close loopholes that allow commercial purchases.

The Economic Coordination Committee (ECC) of the federal cabinet – Pakistan’s highest decision-making body – has tightened the conditions on the suggestion of the Ministry of Commerce.

Under the existing regime, overseas Pakistanis who have spent between 180 and 700 days abroad can import used vehicles into the country under the Gift Scheme, Personal Baggage Scheme, and Transfer of Residence Scheme.

The ECC has proposed the abolishment of the Personal Baggage Scheme and modifications to the conditions for the Gift Scheme and the Transfer of Residence Scheme.

Under the proposal, vehicles imported under the Transfer of Residence scheme must now be shipped from the same country as the sender's residence. This measure aims to eliminate long-standing misuse of the scheme through third-country shipments.

The restriction, however, will not apply to vehicles imported under the Gift scheme.

The duration of the foreign stay has been increased to at least three years – around 850 days – before they can import a vehicle under either scheme.

Under the revised framework, safety and environmental standards will apply to imported vehicles which can’t be sold for one year.

H.M. Shahzad, the President of All Pakistan Motor Dealers Association, raised concerns over the policy change regarding the origin country of the vehicle.

He said a majority of Pakistani diaspora lives in the Middle East, where left-hand cars are used, unlike Pakistan, where driving is on the right side.

If the restriction is imposed on the vehicle’s country of origin, it will affect the majority of overseas Pakistanis, he added.

Policy change

These recommendations emerged from extensive inter-ministerial consultations involving the Federal Board of Revenue (FBR), the Ministry of Industries and Production, the Ministry of Finance, and the Ministry of Overseas Pakistanis.

The Ministry of Industries advocated discontinuing both the Gift and Personal Baggage schemes due to massive misuse and foreign exchange losses, while the Ministry of Overseas Pakistanis emphasized their importance for expatriate welfare.

Ultimately, the Commerce Ministry proposed retaining only the Transfer of Residence and Gift schemes and discontinuing the Personal Baggage scheme.

The ministry also recommended applying the same safety, environmental, and regulatory standards that govern the commercial import of used vehicles.

The International Monetary Fund (IMF) has asked Pakistan to review the existing used car import schemes for overseas Pakistanis amid concerns of widespread misuse.