Officials say the curbs on CBUs of automobiles, cellular mobile handsets, and home appliances will stay for now.
By Muhammad Ali
ISLAMABAD: There is still some time to go before the billion-dollar tranche from the International Monetary Fund (IMF) is disbursed, and the forex cushion is growing thinnner with every passing day, but the government has lifted most of the curbs imposed on imports this May to save foreign exchange to stay on the right side of the Fund and other donors.
The Economic Coordination Committee (ECC) approved the other day lifting the ban on the import of 33 luxury items and categories except for complexly built units (CBUs) of vehicles, mobile phones and home appliances.
On May 19, 2022, the authorities had slapped a ban on imports of 33 classes of goods covering more than 860 products and tariff lines to curtail the rising current account deficit (CAD).
However, imports for which Bill of Lading, Airway Bill, or Irrevocable Letter of Credit had been issued prior to the notification of the SRO were exempted from the ban.
Imports of raw materials, intermediate goods and industrial equipment and machinery required by industrial or manufacturing concerns and foreign grant-in-aid projects were exempted from the ban in order to safeguard the local industry.
The domestic business community raised their concerns over the curbs from the word go, many approaching the Ministry of Commerce for relaxation of ban and release of their held-up consignments.
The authorities have now allowed the release of shipments that reached any port in Pakistan on or before June 30, 2022 subject to payment of a penalty
The ban started showing results immediately after its announcement. In the two-month period between May 20, 2022 and July 19, 2022, imports of targeted items shrank from USD 399.4 million to USD 123.9 million – or by over 69 percent.
Major contributors to this saving to the tune of approx. USD 275.5 million were auto and mobile CBU imports with 79 percent share in the total saving. The remaining 21 percent reduction is spread over 810 tariff lines in multiple sectors of the economy, some impacting businesses representing foreign investment in Pakistan.
Officials say Pakistan’s major trading partners had raised serious concerns about the curbs that have sent waves of inflation across domestic supply chains all the way to the retail sector.
These curbs and their impact on the overall CAD situation came in for a review at the Ministry for Finance on July 26 in a meeting attended by Chairman FBR, Governor State Bank of Pakistan, and representatives of Ministries of Finance, Commerce and Industries.
The meeting recommended lifting the curbs for all items except completely built units of autos, cellular mobile handsets, and home appliances.
It however advocated allowing temporary import-cum-export of auto CBUs for exhibition, display, test or trial purposes or as required by international covenants like ATA Carnet and TIR Convention.
It also recommended allowing temporary import-cum-export of samples of mobile CBUs for mobile device manufacturers for research and development purposes, on the recommendations of Pakistan Telecommunications Authority;
Finally, it proposed to allow an exception for industrial appliances falling within the PCT Codes of home appliances, CBUs of appliances imported by government departments through vendors, and such imports by hospitals and registered charity organizations.
The ECC meeting the other day gave its asset to those recommendations.
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