In recent weeks, there’s been a growing buzz in Pakistan about a new policy proposal that could allow commercial import of used vehicles — something that has never been officially permitted before. The announcement has generated both excitement and confusion, especially among overseas Pakistanis and car dealers. But what’s really going on behind the scenes? Is this a genuine reform, or just a policy gimmick aimed at pleasing international financial institutions?
To answer that, we need to first understand how Pakistan’s current import system for used cars works — and how the new commercial import proposal compares.
Existing Import Schemes
Pakistan already has a set structure for bringing in used imported vehicles, but it is limited to overseas Pakistanis. There are three official schemes:
- Baggage Scheme
- Gift Scheme
- Transfer of Residence (TR)
These aren’t commercial channels. They’re designed for personal use, allowing overseas Pakistanis to send or bring vehicles into the country under specific conditions. For instance, a Pakistani returning home after several years abroad may bring a vehicle under the TR scheme, while others might choose to gift a car to a relative back home.
Under these schemes:
- A car must not be more than 3 years old.
- A jeep can be up to 5 years old.
- The importer gets depreciation benefits, meaning the older the car, the lower the customs duty.
The New Proposal: Commercial Import of Used Cars
The government is now considering a shift — for the first time, it may allow showrooms and dealerships to commercially imported cars. This means:
- Businesses (not individuals) could place orders for used cars.
- No overseas status or passport would be required — just a registered dealership.
- Payments would be made through official banking channels.
On paper, this sounds like a significant liberalization of the car import policy. It could open up the market, increase availability, and maybe even bring prices down due to competition. But that’s only the surface-level picture.
The Depreciation Issue
Here’s where things get tricky.
Under the existing Gift, Baggage, and TR schemes, customs duty is reduced through depreciation, based on the age of the car. For example, a 3-year-old car could benefit from up to 60% depreciation, making it significantly cheaper in terms of import duties. However, no such depreciation applies to commercial imports under the new proposed policy.
Let’s break it down:
- A three-year-old car imported under the Gift scheme is declared as a personal gift. The declared value is depreciated based on age, and duty is charged on the reduced value.
- In contrast, if the same car is imported through a showroom as a commercial import, there is no depreciation. The full customs duty applies to the car’s assessed value.
This creates a massive pricing imbalance. Why would anyone use the commercial route when they can save money through the existing schemes? In conclusion, unless depreciation is addressed and duty structures are aligned with market realities, this commercial import policy may end up being more of a symbolic gesture than a real reform.
