IMF Recommends Stricter Controls on Used Car Imports
The International Monetary Fund (IMF) has urged Pakistan to strengthen regulations governing used car imports for overseas Pakistanis, citing significant misuse of existing schemes. The call for reform comes amid growing concerns that the current system allows loopholes that are being exploited, impacting both revenue and the domestic auto industry.
According to official sources, the IMF has asked the government to revise eligibility criteria under three key programs, the Gift Scheme, Personal Baggage Scheme, and Transfer of Residence Scheme. These schemes currently permit overseas Pakistanis who have lived abroad for 180 to 700 days to import used vehicles into the country.
40,000 Vehicles Imported Under Used Car Schemes
During the 2024–25 fiscal year, an estimated 40,000 vehicles entered Pakistan through these import schemes. The large volume has raised concerns among policymakers about misuse, resale manipulation, and unfair competition for local manufacturers.
The Ministry of Industries and Production is now considering discontinuing all import schemes except the Transfer of Residence Scheme. This consideration follows the government’s recent decision to lift restrictions on the commercial import of used vehicles, which has already increased imports across the board.
Debate Among Government Ministries
Within the government, there is no complete consensus on how to move forward. The Ministry of Finance prefers tightening existing conditions rather than eliminating the schemes altogether. This approach aims to reduce misuse while maintaining facilities for genuine overseas Pakistanis.
Conversely, the Ministry of Commerce opposes ending these schemes, emphasizing their significance for expatriate citizens who rely on them for personal vehicle imports. Officials argue that these schemes serve as an incentive for overseas Pakistanis contributing to the national economy through remittances.
Proposed Revisions to Eligibility Criteria
In response to the IMF’s recommendations, Pakistan is now preparing to revise the eligibility requirements for importing vehicles under these schemes. The new proposal suggests increasing the minimum stay abroad under the Gift Scheme and Transfer of Residence Scheme from 700 days to 850 days within the past three years.
For the Personal Baggage Scheme, the existing requirement of 180 days abroad within the previous seven months is likely to remain unchanged. This structure aims to balance convenience for overseas Pakistanis with stronger safeguards against misuse.
Broader Consensus on Import Flexibility
Stakeholders have reportedly agreed that overseas Pakistanis should be allowed to import vehicles from any country, rather than being restricted to their country of residence. This adjustment would simplify import logistics and make the process more transparent.
Impact on Local Auto Industry
Pakistan’s local automakers have repeatedly urged the government to review the import policies for used vehicles. They argue that rising imports are reducing demand for locally assembled cars, thereby affecting the country’s manufacturing base.
However, industry observers point out that local automakers’ revenues continue to grow each year, even as they voice such concerns. Many consumers remain dissatisfied with the quality and pricing of locally assembled vehicles, which often lack the safety and performance standards found in imported alternatives.
Moving Toward a Balanced Policy
The IMF’s latest recommendations are part of its broader push for economic reforms aimed at improving transparency and reducing revenue leakages. Strengthening these vehicle import schemes could help Pakistan maintain a fair and sustainable automotive market.
As discussions continue between government ministries, policymakers face the challenge of protecting local manufacturers while supporting overseas Pakistanis who legitimately use these import channels. Striking the right balance will be crucial for long-term policy stability and public trust.
