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The much hyped SRO has just come into the Second-hand car importation fraternity in Pakistan after many months of waiting. On January 15, the federal government officially issued a new statutory regulatory order, which renders the Personal Baggage scheme obsolete and introduces sweeping changes to the manner in which overseas Pakistanis are allowed to import used cars.

The ruling is likely one of the most dramatic changes to the import policy for used cars in recent years, and it will likely redefine market dynamics, altering vehicle prices and restricting speculative imports.

Personal Baggage Scheme Officially Removed

In the new SRO, the government has entirely eliminated the term Personal Baggage from the Import Policy Order, including the corresponding paragraphs and appendices.

This technically implies that imported used cars cannot be introduced into this scheme anymore, and this was previously among the most frequently used avenues for overseas Pakistanis.

The only schemes currently applicable to importing used cars are Gift and Transfer of Residence (TOR).

850 Days or Bust: Stricter Eligibility Introduced

The introduction of a mandatory 850-day waiting period is one of the most influential.

• Any person who has ever imported or gifted a vehicle has to wait 850 days, after which he/she is eligible again to resell the car.

• The countdown begins from the date the Goods Declaration (GD) of the previous vehicle was filed.

This substitutes the more lenient system of the past and severely limits frequent importers.

Transfer of Residence: Country Rule Tightened

One more outstanding loophole has been sealed by the government: the Transfer of Residence scheme.

• The imported vehicles should now be imported only within the same country in which the Pakistani is living as an overseas citizen.

• For example, a Pakistani resident of Dubai is no longer able to import a car directly from Japan or the UK.

Under these circumstances, the vehicle would need to be transported to the country of residence first, which could significantly increase costs due to additional logistics, duties, and taxes.

One-Year Ban on Resale or Transfer

The SRO imposes a one-year non-transfer limit in an attempt to stem the flipping of imported vehicles:

• Cars imported under Gift or TOR schemes may not be sold or transferred within a year.

• The limitation is based on the date of import, not on the date of registration.

This is to deter commercial abuse in the form of personal imports.

Commercial Safety Standards Now Mandatory

The other significant change is the use of commercial-level safety and environmental standards of imported used cars under the Gift and TOR schemes.

• The Ministry of Industries and Production (MOIP) or the Engineering Development Board (EDB) will notify these standards.

• Imported cars are now required to conform to the same regulatory, safety, and environmental standards as commercial imports.

Market Impact and Price Outlook

Industry observers believe that such changes will slow the supply of imported second-hand cars, particularly Japanese cars. The price of used cars in Pakistan is set to increase in the near future as compliance costs rise, waiting times lengthen, and the range of sourcing contracts narrows.

Key Takeaways

1. The Personal Baggage scheme is disbanded.
2. An 850-day waiting period is enforced
3. Imports are limited to the country of residence.
4. One-year resale restriction offered.
5. Now, commercial safety standards are used.

This SRO is broadly regarded as a paradigm-shifter - this is a move by the government towards stronger regulation, safer imports, and less exploitation of the market, although at the expense of higher consumer prices.