The government has decided to impose a temporary ban on the import of CBU (completely built unit) vehicles for the next 6 months, effective from January to June 2022. In addition, the government will also jack up regulatory duty (RD) and additional customs duty (ACD) on other luxury items in order to curtail widening current account deficit.
The current account deficit had touched an alarming $5.1 billion during the first four months (July-October) of the current fiscal year (FY2021-22) against $2.3 billion, approved by the parliament and the National Economic Council (NEC) for the entire fiscal year. Now the government is worrying that with the existing pace, the deficit might cross $15 billion mark for the current fiscal year which is 6 times more than the initially approved cap.
The economic managers continued discussions with key stakeholders including ministries & divisions with the objectives to consider measures for curtailing the CAD. Initially, it was learnt that the Prime Minister’s Office issued instructions to slap a ban on 10 luxury items, but ministries/ divisions opposed the move and argued that there might be severe backlash from the World Trade Organization (WTO) and some bilateral trading partners.
In case, the government moves ahead with jacking up RDs and ACDs on remaining luxury items at the import stages such as cosmetics, pet foods, tires, diapers and some other items, the import bill is going to be reduced. According to an official, there was a need to ascertain repercussions for imposing a ban on a few items because if the other trading partner reciprocated in the same manner, then it would have a devastating impact on our narrowed export base.
Hence, the Advisor to Prime Minister on Finance and Revenues Shaukat Tarin has instructed the tariff board to hold its meeting immediately and grant approval on slapping a temporary ban on CBU of vehicles and increasing RDs and ACDs on selected few other luxury items.
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A 3d animation professional with over 20 years of industry experience having served in leading organizations & production facilities of Pakistan, an avid car enthusiast and petrolhead with an affection to deliver writings to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com