Due to restrictions enforced by the State Bank of Pakistan, auto parts manufacturers and vendors have begun to face manufacturing issues (SBP). The industry claims it is experiencing a production problem as a result of the limits imposed by Circular #09 of 2022.
On May 20th, the SBP issued a circular implementing a process that needed prior authorization from the central bank for the import of specific products.
The circular also requires a letter of credit, contract registration/modification, advance payment, and authorization of transactions on an open account or collection basis.
According to Abdul Waheed Khan, the DG of Pakistan Automotive Manufacturers Association: “These restrictions are hurting original equipment manufacturers (OEMs) and auto parts makers. We need relief from the government and policymakers but instead we are being crippled through various kinds of measures.”
The SBP’s previous clearance is also required for all import dealings under HS Code 8703. (Completely knocked down units of motorcycles). Waheed Khan went on to add that “This is transforming into a serious crisis for the industry. OEMs and part makers, which were working overtime due to huge demand, are now finding it difficult to manage routine production.”
He said that the sudden application of limitations had disturbed the sector’s regular operations because suppliers and parts makers were encountering difficulties in importing CKD units. Furthermore, according to Waheed Khan, the policy change has affected the whole supply chain, including local vendors, dealers, and support entities.
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