Oct 20 - 26, 2008

In the wake of depleting foreign reserves, depreciation in Pak rupee, pressure on the country's economy and impact of global financial crisis, business community and other circles in Pakistan have started demanding complete ban on import of vehicles and other items such as cosmetics, chocolates etc. to bail out the country from the existing economic crisis.

Pakistan Autoparts Exporters Association (PAEA) Chairman Javaid Malik told PAGE that Pakistan must learn a lesson from India which is not only paying full attention for safeguarding the interests of its indigenous industry but also its consumers. He was of the view that the government should either totally ban the imported vehicles or levy huge taxes and duties to discourage the trend of importing foreign assembled vehicles.

He said the auto part exporters are facing manifold problems due to high refinance rate, high transportation charges and increase in production cost. Things are difficult for exporters as well as businessmen and the need of the hour is to take some steps to help them to compete in the globalised competitive environment, he added.

The former chairman of Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) Nabil Hashmi said Pakistan is on its way to develop two automotive clusters at Lahore and Karachi each to achieve 500,000 cars production target by 2011-12. He said that Pakistan had reasonably good engineering manufacturing infrastructure including 1,600 auto part manufacturers, which employed 180,000 workers. He said that Pakistan exported engineering goods worth 625 million dollars last year and the engineering sector had the potential to increase its exports manifold if sufficient funds were made available to support the exports.

Hashmi said the government should take the following actions for the industrialists' confidence building to encourage new investments and revive the engineering manufacturing sector:

* Abolish five percent Federal excise duty: This increases the price of Cars + LCV's resulting in reduced sales and reduction in government revenues.

* Restrict import of used auto parts and vehicles: Import of banned items like used parts, dumpers, lorries etc should not be legalised by payment of 30 percent redemption fine.

* Depreciation on second hand cars should be discontinued in accordance with the international practices.

* Withdraw 35 percent letter of credit (L/C) margin: To reduce manufacturing cost, industrial inputs should be exempted from 35 percent L/C margin.

* Introduce transparent and stringent check on auto parts import for both commercial imports and OEM CKD imports.

* Announce stimulus package to stabilise falling volumes for cars and motorcycles as with tractors in Punjab.

* Deferred markup payments for auto vendors at least for the next two years or until such time the industry recovers to over 150,000 annual production volume.

* Special markup tariffs by the State Bank of Pakistan for auto vehicle loans, especially small cars, which are being utilised by the majority of Pakistanis.


The total liquid foreign reserves held by the country stood at $ 7,749.7 million on 11th October, 2008. The break-up of the foreign reserves position is as under: -

i) Foreign reserves held by the State Bank of Pakistan :

$ 4,335.3 million.

ii) Net foreign reserves held by banks (other than SBP):

$ 3,414.4 million

iii) Total liquid foreign reserves:

$ 7,749.7 million