IMF-backed tariff reforms raise concerns for Pakistan’s auto industry despite rising car sales

IMF-backed tariff reforms raise concerns for Pakistan’s auto industry despite rising car sales
A Police officer checks identity passes of the commuters entering Red Zone for their offices in Islamabad, Pakistan on May 25, 2022. (REUTERS/File)
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Updated 15 June 2025
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IMF-backed tariff reforms raise concerns for Pakistan’s auto industry despite rising car sales

IMF-backed tariff reforms raise concerns for Pakistan’s auto industry despite rising car sales
  • Government aims to cut overall tariffs by 4% over five years to promote export-led growth
  • Industry stakeholders warn removing regulatory duties could hurt local manufacturers

KARACHI: While Pakistan’s automobile manufacturers are still parsing the government’s new financial plan, industry experts on Friday said proposed International Monetary Fund (IMF)-mandated reforms, such as the rationalization of trade tariffs, could erode long-standing protections for local industry.

Finance Minister Muhammad Aurangzeb said the government plans to reduce the overall tariff regime by more than four percent over the next five years to steer the country toward an export-led growth model in line with the IMF program.

Under the National Tariff Policy 2025-30, the government aims to abolish additional customs duties (ACDs), regulatory duties (RDs) and provisions under the Fifth Schedule of the Customs Act, 1969. The goal is to simplify Pakistan’s tariff structure by reducing it to four duty slabs ranging from 0 to 15%.

The IMF-backed reforms are expected to lower Pakistan’s weighted average tariff by 3.2% points to 7.4%, said Shafiq Ahmed Shaikh, an automobile industry expert and former general manager of Pak Suzuki Motor Company Ltd.

“These tariff cuts will reduce protection to the auto industry along with reduction of the cost of vehicles,” he said. “It is a very sensitive point for industry… [and] must be discussed with the stakeholders for good, long-term and acceptable solutions.”

PARA-TARIFFS

Abdul Waheed Khan, spokesperson for the Pakistan Automotive Manufacturers Association (PAMA), said regulatory duties are designed to protect local industry and discourage unnecessary imports.

“The ACD too should gradually be abolished because such para-tariffs are not good,” he told Arab News.

Para-tariffs are taxes and duties levied in addition to standard customs tariffs, such as ACDs and RDs. While often introduced to curb imports or raise revenues, they are controversial because they can create complexity, raise costs and distort trade policy.

Pakistan’s federal budget also proposes raising the sales tax on 850cc small vehicles to 18% to bring parity between petrol or diesel-powered cars and hybrids.

“This would increase the cost of vehicles for middle income groups,” said Khan of PAMA, which represents the local operations of Honda, Suzuki, Toyota and 16 other manufacturers.

“This is not good for our Made-in-Pakistan policy as small vehicles will go costlier at a time when people’s disposable incomes are already not so good,” he continued, declining further comment on the budget.

CARBON LEVY

Pakistan’s automobile market, long dominated by Japanese firms like Honda, Toyota and Suzuki, has recently seen new entrants, particularly Chinese and Korean electric vehicle (EV) manufacturers like BYD, SAIC and Kia, operating through joint ventures.

“The existing industry will face good competition from EV and as we know, the future is of Electric Vehicles specially from China,” Shaikh, the automobile industry expert, told Arab News.

As one of the countries most affected by climate change, Pakistan also plans to introduce a carbon levy of up to Rs10 ($0.04) per liter on petrol, diesel and furnace oil over the next two years.

The move is intended “to discourage excessive use of fossil fuels and provide financial resources for climate change and green energy programs,” Finance Minister Aurangzeb said in his budget speech earlier this week.

Shaikh dismissed suggestions that the levy would raise car prices, arguing that consumers would instead begin shifting to EVs.

Prime Minister Shehbaz Sharif also announced plans to impose differential taxes on the sale and import of vehicles based on engine size to promote the adoption of two- and three-wheeled EVs and reduce oil imports and pollution.

Syed Asif Ahmed, general manager of marketing at MG Motors, said the “industry is seeking clarity on recent budget.”

He noted that while the finance bill was silent on hybrid electric vehicles (HEVs), social media was abuzz with reports that the government may raise the sales tax from eight % to 18 % next year.

“If true, this will jeopardize the huge investment done by almost all automakers on HEV,” Ahmed said.

The MG Motors executive also warned against reduced regulatory duties on used cars and commercial imports under schemes meant for returning expatriates.

“[The] used cars importers are abusing the gift, baggage and transfer of residence scheme for commercial trading,” Ahmed said.

CAR SALES

While stakeholders have voiced concerns over policy shifts, vehicle sales continue to show signs of recovery.

Passenger car sales rose 31% in May to 11,119 units, while cumulative sales from July to May in the outgoing fiscal year increased 32% year-on-year to 94,388 units, according to PAMA data.

“[The] growth is supported by a more stable macroeconomic environment, lower interest rates, easing inflation and improving consumer sentiment,” said Myesha Sohail, an analyst at Topline Securities Ltd., in a recent research note.

Sohail expects this momentum to continue into the next fiscal year, driven by lower interest rates and a pipeline of new models across combustion, hybrid and plug-in hybrid categories.


Three million Afghans likely to return this year after Pakistan, Iran introduce new policies

Three million Afghans likely to return this year after Pakistan, Iran introduce new policies
Updated 10 sec ago
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Three million Afghans likely to return this year after Pakistan, Iran introduce new policies

Three million Afghans likely to return this year after Pakistan, Iran introduce new policies
  • Over 1.6 million Afghans have already returned from Pakistan and Iran this year
  • The figure already exceeds the UNHCR’s initial forecasts of 1.4 million for 2025

UNITED NATIONS: Three million Afghans could return to their country this year, a UN refugee official said Friday, warning that the repatriation flow is placing intense pressure on an already major humanitarian crisis.

Iran and Pakistan have introduced new policies affecting displaced Afghans, with Tehran already having given four million “illegal” Afghans until July 6 to leave Iranian territory.

“What we are seeing is the undignified, disorganized and massive exodus of Afghans from both countries, which is generating enormous pressures on the homeland that is willing to receive them and yet utterly unprepared to do so,” the

UNHCR representative in Afghanistan, Arafat Jamal, said during a video press conference from Kabul.

“Of concern to us is this scale, the intensity and the manner in which returns are occurring.”

Over 1.6 million Afghans have already returned from Pakistan and Iran this year, the large majority from Iran, Jamal added. The figure already exceeds the UNHCR’s initial forecasts of 1.4 million for 2025.

The office of the United Nations High Commissioner for Refugees now estimates three million coming into Afghanistan this year, Jamal said.

The UN agency said over 30,000 people per day have streamed across the Islam Qala border into Afghanistan, with 50,000 crossing on July 4 alone.

“Many of these returnees are arriving having been abruptly uprooted and having undergone an arduous, exhausting and degrading journey. They arrive tired, disoriented, brutalized and often in despair,” Jamal said.

The United Nations has taken emergency measures to reinforce water and sanitation systems intended to serve 7,000 to 10,000 people per day, as well as vaccinations and nutrition services.

Many who have crossed the border have reported pressure from Iranian authorities, including arrests and expulsions.


Pakistan issues flood warning for multiple provinces till July 17

Pakistan issues flood warning for multiple provinces till July 17
Updated 11 min 9 sec ago
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Pakistan issues flood warning for multiple provinces till July 17

Pakistan issues flood warning for multiple provinces till July 17
  • The development came after nationwide death toll from rains, floods rose to 90 since late June
  • Relief efforts continue in several areas, with tents, ration and blankets distributed among affectees

ISLAMABAD: Pakistan’s National Disaster Management Authority (NDMA) has issued a fresh alert and warned of potential flood and flash flood risks in various regions of Punjab, Khyber Pakhtunkhwa (KP) and Balochistan provinces from July 12 till July 17, with at least 90 people killed in rain-related incidents since late June.

In Punjab, widespread rainfall is expected across districts including Jhelum, Chakwal, Talagang, Mandi Bahauddin, Sargodha, Hafizabad, Gujranwala, Gujrat, Sialkot, Faisalabad, Lahore, Narowal, DG Khan, Rajanpur and Rahim Yar Khan.

This weather activity may result in medium to high flows in torrents of DG Khan and Rajanpur, while nullahs originating from the Pir Panjal range in northeastern Punjab may experience a significant rise in water levels.

Rainfall is expected in KP’s Dir, Swat, Besham, Abbottabad, Mansehra, Haripur, Karak, Kohat, Kohistan, Nowshera, Peshawar, Mardan, Malakand, Charsadda, Bannu, Buner, Swabi, and Waziristan. This may lead to increased flows in the

Kabul River and its tributaries, including Swat, Panjkora, and Kalpani nullahs. River Swat and Panjkora, along with their associated streams, may swell due to rainfall in their catchments. River Kabul at Nowshera is expected to reach low flood levels.

In Balochistan, an active weather system is likely to trigger isolated rains and thunderstorms from July 13 till July 17 in Ziarat, Quetta, Mastung, Kalat, Surab, Zhob, Barkhan, Musakhel, Loralai, Awaran, Khuzdar, Dera Bugti and surrounding areas, with a possibility of flash flooding in local streams and nullahs, particularly in the torrents originating from the Kirthar Range, according to the NDMA.

“Authorities are advised to ensure the readiness of emergency teams, availability of machinery, and clearance of drainage systems. Tourists should avoid high-altitude areas, while residents in vulnerable zones must secure valuables, vehicles, and livestock, and keep essential supplies,” the NDMA said in its alert issued late Friday.

“District administrations, especially in northeastern and central Punjab, should deploy dewatering equipment to manage urban flooding. Citizens are urged to avoid flooded roads, low bridges, and causeways.”

The death toll from monsoon downpours in Pakistan rose to 90 on Friday after three children died in rain-related incidents in the eastern Punjab province, according to the NDMA.

Punjab has reported 32 deaths, followed by Khyber Pakhtunkhwa with 30 deaths, Sindh with 16 deaths, Balochistan with 11 fatalities and one man lost his life in Azad Jammu and Kashmir.

Meanwhile, relief operations continue in affected areas, with authorities distributing tents, ration bags, blankets, sandbags, quilts, gas cylinders, mattresses, kitchen sets, mosquito nets, plastic mats, hygiene kits and food packets to affected families. Pakistan has also rolled out a location-based SMS alert system to warn citizens living in flood-prone areas about imminent weather threats.

Pakistan, home to over 240 million people, is consistently ranked among the countries most vulnerable to climate change. In 2022, record-breaking monsoon rains and glacier melt triggered catastrophic floods that affected 33 million people and killed more than 1,700.


US appeals court scraps 9/11 mastermind’s plea deal

US appeals court scraps 9/11 mastermind’s plea deal
Updated 33 min 50 sec ago
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US appeals court scraps 9/11 mastermind’s plea deal

US appeals court scraps 9/11 mastermind’s plea deal
  • Khalid Sheikh Mohammed was regarded as one of bin Laden’s most trusted lieutenants
  • He had spent three years in secret CIA prisons before arriving at Guantanamo in 2006

WASHINGTON: A US appeals court on Friday scrapped 9/11 mastermind Khalid Sheikh Mohammed’s plea agreement that would have taken the death penalty off the table and helped conclude the long-running legal saga surrounding his case.

The agreement had sparked anger among some relatives of victims of the 2001 attacks, and then-US defense secretary Lloyd Austin moved to cancel it last year, saying that both they and the American public deserved to see the defendants stand trial.

Austin “acted within the bounds of his legal authority, and we decline to second-guess his judgment,” judges Patricia Millett and Neomi Rao wrote.

Plea deals with Mohammed as well as two alleged accomplices — Walid bin Attash and Mustafa Al-Hawsawi — were announced in late July last year.

The decision appeared to have moved their cases toward resolution after years of being bogged down in pre-trial maneuverings while the defendants remained held at the Guantanamo Bay military base in Cuba.

But Austin withdrew the agreements two days after they were announced, saying the decision should be up to him, given its significance.

He subsequently said that “the families of the victims, our service members and the American public deserve the opportunity to see military commission trials carried out in this case.”

A military judge ruled in November that the deals were valid and binding, but the government appealed that decision.

The appeals court judges on Friday vacated “the military judge’s order of November 6, 2024, preventing the secretary of defense’s withdrawal from the pretrial agreements.”

And they prohibited the military judge “from conducting hearings in which respondents would enter guilty pleas or take any other action pursuant to the withdrawn pretrial agreements.”

Much of the legal jousting surrounding the 9/11 defendants’ cases has focused on whether they could be tried fairly after having undergone torture at the hands of the CIA — a thorny issue that the plea agreements would have avoided.

Mohammed was regarded as one of Al-Qaeda chief Osama bin Laden’s most trusted lieutenants before his March 2003 capture in Pakistan. He then spent three years in secret CIA prisons before arriving at Guantanamo in 2006.

The trained engineer — who has said he masterminded the 9/11 attacks “from A to Z” — was involved in a string of major plots against the United States, where he attended university.

The United States used Guantanamo, an isolated naval base, to hold militants captured during the “War on Terror” that followed the September 11 attacks in a bid to keep the defendants from claiming rights under US law.

The facility held roughly 800 prisoners at its peak, but they have since slowly been sent to other countries. A small fraction of that number remains.


Pakistan discusses rice, meat exports with Malaysia amid push for export-led growth

Pakistan discusses rice, meat exports with Malaysia amid push for export-led growth
Updated 12 July 2025
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Pakistan discusses rice, meat exports with Malaysia amid push for export-led growth

Pakistan discusses rice, meat exports with Malaysia amid push for export-led growth
  • The two sides discussed enhanced cooperation during a meeting between Ishaq Dar and Anwar Ibrahim
  • Dar also addressed ASEAN Regional Forum where he called for global peace, justice and climate action

ISLAMABAD: Pakistan discussed expanding exports of rice, meat and other agricultural products with Malaysia on Friday during a meeting between Deputy Prime Minister Ishaq Dar and Malaysian Premier Anwar Ibrahim, according to an official statement.

Dar arrived in Kuala Lumpur on Thursday to attend the ASEAN Regional Forum, where he also interacted with other world leaders.

His three-day visit aims to deepen Pakistan’s engagement with ASEAN states and advance bilateral cooperation with key regional partners.

“Deputy Prime Minister Senator Mohammad Ishaq Dar called on Malaysian Prime Minister Dato’ Seri Anwar Ibrahim,” the foreign office said in a statement. “[The] DPM conveyed the good wishes of the Prime Minister of Pakistan for the leadership and people of Malaysia and reiterated Pakistan’s desire to further expand mutually beneficial bilateral cooperation in all spheres.”

“Expanding cooperation in the halal sector, including potential for export of meat and agricultural products from Pakistan, including rice was also discussed at the occasion,” the statement added.

Pakistan has been actively working to diversify its export destinations in recent years, seeking to promote agricultural goods, halal-certified meat, textiles and services as part of its broader strategy for export-led economic growth.

The Malaysian leader reaffirmed his country’s commitment to strengthening longstanding ties with Pakistan.

He said he looked forward to Prime Minister Shehbaz Sharif’s forthcoming visit to Malaysia.

During his visit, Dar also addressed the ASEAN Regional Forum, where he called for global peace, justice and urgent climate action in the face of escalating environmental and geopolitical challenges.


Pakistan calls militant presence in Afghanistan a ‘challenge’ amid renewed diplomatic engagement

Pakistan calls militant presence in Afghanistan a ‘challenge’ amid renewed diplomatic engagement
Updated 11 July 2025
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Pakistan calls militant presence in Afghanistan a ‘challenge’ amid renewed diplomatic engagement

Pakistan calls militant presence in Afghanistan a ‘challenge’ amid renewed diplomatic engagement
  • Islamabad says cross-border militancy remains key obstacle to improved ties, regional integration
  • The two sides have sought to reset relations after a tripartite meeting with China earlier this year

ISLAMABAD: Pakistan described the presence of militant outfits in Afghanistan as a “challenge” on Friday, calling it a critical hurdle in improving bilateral ties and advancing regional cooperation, even as both countries have tried to re-engage diplomatically in recent months.

Ties between Pakistan and Afghanistan have remained strained since 2023, when Islamabad launched a crackdown on undocumented migrants, mostly Afghans, citing security concerns.

Pakistan has long said militant groups staging attacks in its western border provinces operate from Afghan territory, a claim denied by Taliban officials.

However, the two sides have sought to reset relations recently, agreeing to appoint ambassadors following a tripartite meeting with China and holding additional secretary-level talks in Islamabad earlier this month.

“About the question of sanctuaries in Afghanistan, as I mentioned it remains a challenge, and we are trying to address it in the context of bilateral relations with Afghanistan,” foreign office spokesperson, Ambassador Shafqat Ali Khan, said during his weekly news briefing.

“This remains a critical impediment in preventing the relations to reach their full potential, and further impeding the full development of regional cooperation, particularly when other regions are moving toward greater regional integration involving businesses, investment, road and rail network,” he added.

Khan said the “issue of sanctuaries” was also discussed by the Afghan authorities in the recent talks.

“We stay engaged with the Afghan authorities and approach the dialogue with good faith,” he continued. “In terms of the commonalities between the two countries, two cultures, it should be the best of relationships. But the core point which you flagged remains sanctuaries enjoyed by the terrorists inside the Afghan territory.”

Islamabad has repeatedly urged Kabul to take action against groups such as the Tehreek-e-Taliban Pakistan (TTP), which it says uses Afghan soil to plan and launch attacks.

The Afghan Taliban, however, have always denied allowing any armed outfits to use their territory to target other countries.