Pakistan Scraps Five-Year Age Cap on Used-Vehicle Imports; PAMA Warns of Gift Scheme Abuse

Pakistan's Ministry of Commerce, through an Office Memorandum (OM) issued on 30 October 2026, has clarified that the five-year age limit on commercial imports of Completely Built-Up (CBU) used vehicles does not apply after 30 June 2026. The clarification came in response to a query the Federal Board of Revenue (FBR) raised with the Commerce Ministry on 23 October. The OM states the age cap has effectively not applied since 30 June 2026, meaning the relief applies retroactively. Crucially, this is not a new policy. The original permission was already time-boxed to 30 June 2026 and carried a pre-agreed removal clause. The OM is therefore an implementation document, not a fresh concession. The legal mechanics are internally consistent and low-ambiguity, so the validity of the removal itself is not in question. What did not change matters equally. Environmental and safety conditions still apply, under Engineering Development Board (EDB) and Ministry of Industries standards. The door is open for importers, but vehicles must still meet prescribed standards. The real question is how strictly those standards will be enforced. FBR's 23 October query is itself a signal. It indicates that customs officials were uncertain about the post-30-June treatment, an operational limbo that the 30 October OM resolved. Analysts suggest some importers may have held shipments pending clarification, making a short-term import surge plausible. That is a low-confidence inference; no direct evidence is available. The real friction begins here. The Pakistan Automobile Manufacturers Association (PAMA) has opposed the easing in a letter to the Secretary Commerce. PAMA alleges the Gift Scheme is being used for commercial trade rather than personal use, and claims roughly 98 percent of all used-vehicle imports in September 2026 came under the Gift Scheme. PAMA has supplied figures to back the claim. Only 7 units were recorded under the Baggage Scheme in May 2026, against 2,238 units under the Gift Scheme by September 2026, a near-total migration of the import channel in four months. PAMA calls this channel arbitrage, a shift driven by procedural weakness rather than genuine demand growth. The allegation goes further. PAMA says overseas certification is being abused in a coordinated manner, with commercial consignments declared as personal effects. No independent investigation of this allegation has been made public, so it must be treated as an allegation. PAMA's second front is tariff reform. It argues that duty cuts and depreciation relief of up to 60 percent on CBU vehicles are narrowing the competitive space for domestic industry. On both fronts the association deploys a single argument: these measures run against industrialisation and import substitution. PAMA's strongest bargaining asset is its investment data. The association cites over Rs1 trillion invested in the domestic auto sector, 31 brands, 13 plants and roughly 60 percent localisation. It also points to an autoparts import bill of up to Rs60 billion a year, a direct signal of pressure on local manufacturing. The data is deployed strategically. PAMA is reframing a narrow customs dispute as national industrial policy, a standard tactic in trade debates where industry bodies use investment and employment figures as leverage. Notably, the letter went to the Secretary Commerce rather than FBR, suggesting the aim is a policy review rather than a technical fix. The stakeholder picture is mixed. On one side are domestic manufacturers, most exposed to risk. On the other is the Commerce Ministry, which holds rule-making authority and implemented the removal. FBR controls enforcement and customs. Used-vehicle importers are the clearest beneficiaries. Overseas Pakistanis are the intended users of the Gift and Transfer of Residence (ToR) schemes. The overseas Pakistani constituency is politically sensitive, electorally and emotionally, which makes a blanket restriction difficult. But if the perception of abuse persists, the cost will be reputational, with genuine beneficiaries also falling under suspicion. From a governance standpoint, the biggest risk is not the removal itself but scheme integrity. When the same concession is available through two channels and imports migrate almost entirely from one to the other within four months, that is a textbook signal of procedural abuse. The second risk is the enforcement gap. Removing the age cap shifts the entire burden onto environmental and safety standards. If those standards are being bypassed through overseas certification, as PAMA alleges, real scrutiny at the border weakens. On a risk matrix, the overall rating is high. Industrial risk: a used-import surge pressuring local manufacturing and investment, high probability, high impact. Fiscal risk: duty cuts and up to 60 percent depreciation narrowing domestic competitive space. Integrity risk: coordinated certification abuse. Environmental risk: standards bypassed as volumes rise. Forex risk: pressure on the import bill. Reputational risk: the line blurring between genuine beneficiaries and abuse. The base case is continued import growth under the Gift Scheme with rising PAMA-government friction. The worst case is a certification-abuse scandal forcing abrupt re-regulation, damaging both importers and policy credibility. A major caveat applies to the data. The import volumes and the 98 percent figure are both PAMA claims, not cross-verified against FBR customs statistics. That is a material evidence gap. It is certain the source is one-sided; the accuracy of the figures warrants only moderate confidence. In media-narrative terms, the structure is balanced, carrying both government facts and PAMA opinion. The evidence, however, is asymmetric, since all the quantitative alarm data originates with the complaining party. The absence of FBR-published import statistics in the article suggests the government has not yet publicly contested PAMA's numbers. The narrative pivot is the 98 percent claim, which converts a facilitation story into an abuse story. The government says the intent is to facilitate importers; PAMA says the scheme has become a channel for commercial trading. No independent data yet reconciles the two. The transmission chain runs as follows: upstream, foreign used-vehicle exporters and certification agents; midstream, importers, FBR customs and the Gift and ToR schemes; downstream, domestic manufacturers, autoparts, employment and investment; and at the macro level, industrialisation, import substitution, forex and the import bill. Impact varies by segment. Used-vehicle importers gain substantially in the short term. Domestic manufacturers lose substantially over the medium term. Autoparts face pressure. Employment and localisation are affected negatively. Consumers gain in the short term through lower prices. The policy thus trades a short-term consumer benefit against a medium-term industrial-capacity cost, the core tension running through the debate. What to watch: three signals. First, FBR's monthly used-import data; divergence from PAMA's 98 percent claim would require reassessing the abuse narrative. Second, the Gift Scheme review; new certification rules or SRO amendments would change import volumes and the OEM outlook. Third, National Tariff Policy revisions; further duty or depreciation changes would further alter domestic competitive space. The terminology matters. OM means Office Memorandum, an internal document conveying or clarifying a government decision. FBR is Pakistan's customs and tax authority. ECC is the Economic Coordination Committee of the Cabinet. SRO is a Statutory Regulatory Order, a subordinate legislative instrument. PCT code is a Pakistan Customs Tariff classification code. CBU means Completely Built-Up vehicle. The Gift, Baggage and ToR schemes are personal-use import concessions for overseas Pakistanis, allegedly being used for commercial trade.