Pakistan Plans $300M Used Vehicle Export Model Inspired by UAE
Pakistan is set to pilot a new Import-Refurbishment-Export (IRE) model aimed at creating a lucrative industry in the used vehicle export sector. Drawing inspiration from the United Arab Emirates’ successful Jebel Ali free zone system, the initiative seeks to import, repair, and upgrade used vehicles and auto parts before re-exporting them to international markets.
The government-backed plan is expected to boost exports, increase foreign investment, and generate employment opportunities across the automotive sector. The UAE model operates by allowing vehicles to be imported temporarily, refurbished to meet global standards, and then exported without entering the domestic market, a strategy that has helped the Gulf state establish a strong position in global automobile trade.
According to officials, the Pakistani version of the scheme will be implemented under the supervision of the Engineering Development Board (EDB) and backed by the Special Investment Facilitation Council (SIFC), which was formed in 2023 to attract foreign direct investment into key industries. The government has aligned regulatory frameworks under Pakistan’s Import Policy Order (IPO) 2022 and Export Facilitation Scheme (EFS) 2021 in preparation for the scheme’s launch.
An initial investment of approximately $30 million is anticipated, with potential to grow up to $300 million. The project is incorporated into the draft Auto Policy 2026-31, aiming to integrate Pakistan into the global automotive refurbishment and re-export value chain. Authorities emphasize that all imported used vehicles and parts must be re-exported within a specified timeframe, and none will be allowed to enter the local market.
The approval to run the pilot project was recently granted by the Economic Coordination Committee (ECC), allowing for amendments to existing import-export policies and enabling temporary imports under controlled operators. This includes a stringent condition that 100 percent of vehicles brought into the scheme must be re-exported, reflecting lessons learned from international best practices.
Despite the initiative’s potential, the plan faces challenges from local automobile manufacturers. Industry players such as Toyota, Honda, Suzuki, Hyundai, Kia, and Changan Automobile have historically opposed any form of used vehicle imports, citing risks to local production sustainability and potential factory shutdowns.
The government, led by Prime Minister Shehbaz Sharif, is exploring this pilot project as part of broader efforts to revive the country’s export performance, which has seen a decline of over 6 percent in the current fiscal year compared to the previous year. Success of the IRE model could mark a significant step toward diversifying export streams and fostering economic growth.
Discussions around the proposed auto policy and the IRE scheme continue with key industry associations, including the Pakistan Automotive Manufacturers’ Association (PAMA) and the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), though no final decisions have been publicly confirmed.