Pakistan Halts Auto Parts Import Quotas for Japanese Carmakers Over Policy Violations, No Licenses Revoked

Pakistan’s has ceased the revalidation of the auto parts imports quota of three Japanese carmakers Toyota, Honda and Suzuki for violating the requirements of auto policy 2021-26. No license has been suspended.

They policy calls for localization of vehicles while these companies are importing over 75 percent from japan including engines.

Besides, the policy has also bound these companies to export 2 percent their produce in FY2023, but they failed in meeting these requirements. Their licenses have not been suspended.

An official of the Pakistani Ministry of Industries and Production said, that these major companies and eight new other market entrants also failed to meet the requirements. Their validated import quota has expired on 30 Sept 2023, and since then, the government has not revalidated it.

However, a senior official of the Engineering Development Board (EDB) also confirmed that no license has been suspended.

On Oct 23-24, 2023, the Executive Committee for Special Investment Facilitation Council (SIFC) of Pakistan held meeting to review the progress of various policy-level initiatives in the key sectors.

The SIFC has recommended to the ministry of industries to revalidate these auto manufacturers imports quota and extend it up to 90 days. However, directed the ministry to hold meetings with these manufacturers to ensure their compliance with localization and export obligations.

The official said that after the SIFC instructions, we hope to get the official instruction in a couple of days for validation and extension.

Recently, a Japanese carmaker Suzuki has announced to acquire all outstanding shares of the company and delist from the Pakistan Stock Exchange (PSX). The Company says that they took the decision as it facing challenges, losses and low share price.   

It is to be noted that in 2021, Pakistan launched the new five-year auto policy (2021-2026). It offers various incentives and also regulations that are applicable during this period.

Under the policy, in 2023, the required exports target was 2 percent, but these automakers failed to meet this requirement. For 2024, the target is 4 percent in 2025 it is 7 percent and in the final year (2026) of the policy, the target of their exports is 10 percent of their production.