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Sunday January 29, 2023

$1.2bn spent on import of cars, other vehicles in six months despite crisis

January 22, 2023
A Pakistani participant walks past vintage cars at the end of the Pakistan Motor Rally in Islamabad. — AFP/File
A Pakistani participant walks past vintage cars at the end of the Pakistan Motor Rally in Islamabad. — AFP/File

ISLAMABAD: Pakistan which is battling to save precious foreign exchange reserves by limiting imports has spent $1.2 billion (or Rs259 billion) on the imports of transportation items including luxury cars, high-end electric vehicles, and their parts during the last six months.

Pakistan is facing an acute shortage of dollars and has less than $5 billion in its reserves (with State Bank) which is hardly sufficient to finance three-week of its imports.

Although overall imports of these transportation vehicles and other items reduced over last year, still the heavy outflows for buying expensive luxury vehicles and unnecessary goods burdened the economy.

During these six months, the country imported completely built units (CBU), completely knocked down/semi knocked down (CKD/SKD) of $530.5 million equivalent to 118.2 billion.

Since CKD kits imports are not allowed, but still multimillion dollars of these kits are being imported, affecting the local industry and their production.

The economy is suffering, but hefty spending on cars and other vehicle imports is raising a lot of questions about the government’s policy of halting imports related to the industrial and commercial sectors.

Road motor vehicles (build units, CKD/SKD), $1.03 billion or Rs230.5 billion were spent during these six months. Last year in the same period, the spending on these vehicles was $1.87 billion, showing a reduction of 63 percent.

Under the completely built units (CBU) during July-Dec 2022-23 imports of buses, trucks and other heavy vehicles imports were $75 million (Rs16.6bn), motor cars with $32.6 million.

Under the CKD/SKD, imports of buses, trucks, and other heavy vehicles imports were $722.5 million (Rs161 billion), while motor car imports were recorded at $498 million (Rs111 billion). Motorcycle imports also stood at $27.6 million.

Besides, the parts and accessories imports stood at $188.6 million (Rs42 billion). Similarly, $47.7 million were spent on the import of aircraft, ships, and boats.

Only in December, the transport sector’s imports stood at $140.7 million (Rs31.6 billion). Of this, $47.5 million or 11.3 billion rupees were spent on the imports of cars, $27 million on parts and accessories, $3.6 million on motorcycles import, $25 million on buses, trucks, and heavy vehicles, and another $22.4 million on the import of aircraft, ships, and boats.

Reportedly, despite economic crises, the incumbent government has lifted a ban on the import of luxury cars recently. This is one of the major sources of dollar outflow from the economy.

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