By Staff Reporter
ISLAMABAD: The Ministry of Commerce has issued twin directives to break a deepening customs logjam at the country’s ports, granting a conditional one-time waiver on pre-shipment inspection requirements for used vehicles imported from Japan — a move that has drawn fierce opposition from domestic automakers who warn of a $180 million haemorrhage from the country’s foreign exchange reserves and a systematic erosion of consumer road safety.
The measures, addressed to vehicles imported under the Gift and Transfer of Residence schemes, come in the wake of SRO 61(I)/2026, introduced in January, which imposed mandatory pre-shipment checks on used cars entering Pakistan. A parallel dispute over whether inspection certificates from two private firms met regulatory requirements left a significant number of vehicles stranded at Pakistani ports, prompting Islamabad to intervene.
Sitting at the heart of the controversy is a sharply contested count. The government says slightly more than 300 vehicles fall within the waiver window. Pakistan’s domestic automotive industry flatly rejects that figure, placing it at approximately 15,000 — roughly the full-year sales volume of a major local assembler. The two sides are not merely disputing a statistic; they are contesting whether the policy amounts to a limited administrative correction or a structural blow to local manufacturing.
The ministry’s first measure, an official memorandum, resolved a separate impasse over inspection documentation. It confirmed that Pre-Shipment Inspection (PSI) certificates issued by EAA Company (Pvt) Ltd and Auto Terminal Pak (Pvt) Ltd through their respective principals in Japan are valid for customs clearance, following the formal registration of both companies with the Pakistan Standards and Quality Control Authority for automotive inspections. To foreclose fraudulent filings, the Federal Board of Revenue and customs authorities have been directed to cross-verify all such certificates directly with each firm’s local office, which will carry full legal liability for the declarations. Both local entities must also certify that vehicles meet environmental, safety and quality requirements consistent with international standards.
The second measure, a statutory notification issued under the Imports and Exports (Control) Act, grants a one-time exemption to vehicles shipped under a Master Bill of Lading between Jan. 16 and March 9, 2026 — the period during which SRO 61(I)/2026’s inspection mandate had not yet been fully operationalised. The government was explicit that the exemption does not constitute a blanket amnesty. Customs officials have been prohibited from clearing any vehicle graded on Japanese auction sheets as Below Average (Grade 3), Poor Condition (Grade 2), Repaired Accident (Grade R) or Minor Accident Repair (Grade RA) — restrictions framed as a bulwark against the dumping of hazardous or structurally compromised cars onto Pakistani roads.
Those safeguards have done little to mollify the local automotive sector. Industry representatives have labelled the waiver an ad hoc policy reversal that circumvents the safety and environmental benchmarks SRO 61(I)/2026 was designed to entrench, and that directly cuts against the country’s manufacturing base. They argue that regardless of the auction-grade restrictions, the sudden volume of arriving vehicles — if the industry’s estimates hold — will distort a market already under severe strain.
The economic stakes, as the industry frames them, are considerable. If the 15,000-vehicle figure proves accurate, analysts project the influx would channel approximately $180 million out of Pakistan’s foreign exchange reserves through unofficial payment routes, deepening an import burden that Islamabad has been attempting to contain under successive International Monetary Fund programmes. Auto parts manufacturers anticipate losses of around 22 billion Pakistani rupees, with an associated 8 billion rupee shortfall in government tax revenues as domestic component demand contracts.
The damage would compound an already brittle sector. Pakistani assembly plants are running at roughly half their installed capacity, squeezed by elevated borrowing costs, subdued consumer purchasing power and persistently high production costs. Industry analysts warn that abrupt and unpredictable policy shifts of this nature risk permanently fracturing confidence among foreign investors considering long-term manufacturing commitments in Pakistan’s automotive sector — a concern that carries particular weight as Islamabad seeks overseas capital to rebuild its industrial base.
The Ministry of Commerce did not provide an immediate response to the industry’s figures or to its criticism of the waiver’s design.
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