A great news for people suffering from the import ban in Pakistan on many items. Now, the government has lifted this ban to satisfy the IMF, so a bailout package could finally be given to Pakistan.
However, this lifting of the ban comes with a caveat. The finance minister has said that there will be heavy duties on the import of non-essential and luxury imported items to make it difficult for people to purchase them. This is being done to discourage their import to save dollars.
The government would instead want to use the same dollars importing cotton, edible oil, and wheat, instead of iPhones and luxury cars.
So, this will be short lived joy for the importers and consumers of these products. With the imposition of heavy regulatory duties (RD) on the CBU (completely built up) units, these cars, mobile phones, electronic items, and others are going to cost way more.
Impact on the Automobile Companies
It is not difficult to understand that the companies that are importing CBUs are going to suffer a lot under this proposed policy. Even the companies like Suzuki, Honda, Toyota, etc. that assemble most of their vehicles locally and import others are going to suffer. Due to the massive increase in CBUs’ prices, their sales will be affected significantly.
Popular CBUs of major automobile companies
| Honda | Toyota |
| Honda Accord | Toyota Prius |
| Honda CR-V | Toyota Corolla Cross |
| Suzuki | Toyota Rush |
| Suzuki APV | Toyota Camry |
| Suzuki Jimny | Toyota Land Cruiser Prado |
| Hyundai | KIA |
| Hyundai Santa Fe | KIA Grand Carnival |
| Hyundai Ioniq | MG |
| Staria | MG HS and HS PHEV |
| MG ZS and ZS EV |
Not just the CBUs, the CKD (completely knocked down) units prices will also be affected under this policy. In Pakistan, when one segment of cars prices go up, it affects the other segment as well. So, when the price of CBUs go up, they can jack up the prices of CKDs as well.
The cost of manufacturing cars locally is already under pressure from the State Bank of Pakistan. It is because the so-called locally produced cars are not completely localized. See the localization of the following cars.
- Alto (62%)
- City (70%)
To save the Dollar flight, the government has made it mandatory for auto manufacturers to first get permission from SBP before importing CKD kits. And SBP is not generous. This has increased the prices of CKDs in Pakistan. While lately their prices have started to come down a bit, it is largely due to their declining sales and a weakening Dollar.
Conclusion
Initially, many would welcome this news. However, the government has lifted the ban to satisfy the IMF. It still wants to save Dollars. For this, it proposes to levy heavy import duties on luxury and other non-essential items.
In the coming days, if this policy is adopted, imported items will become very expensive and only the selected few will be able to buy them. Which is exactly what the government wants.
As the new imported items become expensive, their availability in the used condition will attain importance. Due to this, many people might opt to buy used cars, mobile phones, and other imported items.
Visit the OLX Motors new car section for latest prices, specs, and features of cars in Pakistan.
What are your thoughts on this proposed policy? Share your opinions with us in the comments section.
Leave a Reply