Paapam warns IMF trade liberalisation could threaten Pakistan’s auto industry

The Pakistan Association of Automotive Parts & Accessories Manufacturers (Paapam) has voiced strong concerns over the International Monetary Fund’s (IMF) recent push for trade liberalisation, particularly proposals to reduce tariff protections and permit commercial imports of used vehicles.

While supporting Pakistan’s goals of economic efficiency and environmental sustainability, Paapam cautioned that such measures could undermine the domestic auto sector, threaten jobs, and erode investor confidence.

“Trade liberalisation must not lead to deindustrialisation and fiscal leakage,” said Paapam Chairman Usman Aslam Malik.

In a statement, the association highlighted that large-scale imports of used vehicles—often not meeting modern safety or emissions standards—could derail efforts to localise new energy vehicle (NEV) production. It urged the government to clarify how these imports align with national sustainability and industrial objectives.

Paapam also questioned whether trade liberalisation would apply across all sectors or target the automotive industry selectively. In the latter case, the association called for clear rationale and safeguards against market distortions.

The lobby flagged vulnerabilities in current import schemes, where vehicles brought in under the names of overseas Pakistanis were sold domestically, bypassing tax and regulatory oversight. Informal payment channels like Hundi, it noted, facilitate capital flight and weaken fiscal transparency.

“We cannot afford to expand mechanisms that enable tax evasion,” said Paapam Senior Vice Chairman Shehryar Qadir.

The association stressed that reduced tariff revenues and pressure on local manufacturers could result in significant job losses. It called for workforce skill development, incentives for domestic production, and alternative revenue strategies to preserve sector stability.

Citing global examples, Paapam recommended a phased reform approach supported by safeguards, performance metrics, and lessons from comparable economies. Malik concluded, “We remain committed to constructive dialogue, but reforms must reflect Pakistan’s realities and not compromise its industrial future.”