The Federal Government will be removing the import ban on “non-essential and luxury items” imposed on May 19 except two items – smartphones, automobiles and their CKD kits – that are going to remain on the banned items list due to their impact on the foreign exchange reserves.
According to Dawn, the Federal Government is removing the import ban on most of the non-essential and luxury items because of their lower foreign exchange costs and larger value addition and employment impact. However, the import ban on mobile phones and automobiles would remain in place due to their huge foreign exchange impact.
It is pertinent to mention that the Federal Government had imposed a complete ban on the import of 30 categories, including automobiles, mobile phones, home appliances, fruits and dry fruits (except Afghanistan), crockery, private weapons and ammunition, shoes, chandeliers and lighting (except energy savers), headphones and loudspeakers, sauces, doors and window frames, travel bags and suitcases, sanitary ware, fish and frozen fish, carpets (except Afghanistan), preserved fruits, tissue paper, furniture, shampoos, confectionery, luxury mattresses and sleeping bags, jams and jellies, cornflakes, toiletries, heaters, blowers, sunglasses, kitchenware, aerated water, frozen meat, juices, pasta, ice cream, cigarettes, shaving goods, luxury leather apparel, musical instruments, salon items like hair dryers, and chocolates.
However, the Federal Government has decided to lift the import ban on most of the items mentioned above, except the ban on import of automobiles and their CKD kits due to their high impact on foreign exchange. While, the ban on automobile and mobile phones may help save precious foreign exchange, it will negatively impact both of these industries.
Automotive companies are already closing down productions because of the inability to obtain Letter of Credits (LCs) by the State Bank of Pakistan (SBP) for the import of Completely Knocked Down (CKD) kits for the assembly of vehicles, which is causing a backlog of orders and high delivery times as well.
Toyota Indus Motor Company (IMC) has reportedly decided to shut production in Pakistan for an indefinite period and refund customers for already booked orders. However, the company will provide an option to wait for the delivery of vehicles and pay additional difference based on the fluctuations in foreign exchange.