The State Bank of Pakistan (SBP) has eased the import restrictions on several essential items including Completely Knocked Down (CKD). In a circular, the SBP stated that the central bank has decided to withdraw the curbs from January 2, 2023. It will pave the way for acceptance of requests for import transactions already submitted to the SBP.
It is pertinent to mention that under circulars issued in May and July this year, the banks were required to take permission from the SBP’s Foreign Exchange Operations Department before initiating any import transactions. And this had led to different curbs and the auto industry was one of the most affected as the SBP had refused to open Letters of Credit (LCs) for CKD kits, essential for assembling cars in the country.
Restrictions Removed From SBP Chapters
The SBP has withdrawn the restrictions from HS Code Chapters 84,85 and certain items of Chapter 87. These chapters include:
- Power generating machinery
- Electric machinery
- Mobile Phone (CKD)
- Motor cars (CKD)
What Circular Says?
In the circular, the state bank stated “it has now been decided to withdraw restrictions from January 2, 2023. The central banks has asked the banks to priorities items from:
- Essential imports, related to essential sectors such as food (wheat, edible oil etc.) and pharmaceutical
- Energy Imports, related to petroleum group
- Imports by export-oriented industry, related to raw material, input goods and spare parts
- Imports for Agriculture, items required as input for agriculture (seed, fertilizer and pesticides).
Impact on Auto Sector
The removal of restrictions will ease the supply side tensions which the industry have been dealing with. This is a much-needed lifeline for the industry as it has resulted in production plants shutdown, reduction in CKD kits imports, laying off of work force from the industry and above-all no specific delivery time for the consumer.
The data shows that the five-month FY2022-23 sales volume is 31.52% lower year-on-year comparison to the FY 2021-22 over the same period. The industry experts believe that this ease in imports has not only saved the industry but also saved the jobs of thousands.
What do you think about the ease in restriction for CKD kits import? Do you think it would help auto industry? Please share your thoughts in the comments section.
