PAAPAM Warns Against Deindustrialisation Amid IMF Trade Liberalisation Push Calls for Sector-Specific Safeguards and Fiscal Transparency

The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has voiced strong reservations over the recent recommendations by the International Monetary Fund (IMF) advocating trade liberalisation, particularly the proposed reduction in tariff protections and the commercial import of used vehicles.

In a statement issued on Wednesday, PAAPAM said that while it supports Pakistan’s broader goals of economic efficiency and environmental sustainability, the proposed measures risk undermining the domestic automotive industry, threatening jobs, and eroding investor confidence.

“We urge policymakers to avoid reforms that inadvertently weaken Pakistan’s industrial backbone,” said Mr. Usman Aslam Malik, Chairman PAAPAM. “Trade liberalisation must be pursued with strategic safeguards, not at the cost of deindustrialisation and fiscal leakage.”

The association highlighted that large-scale imports of used vehicles—many of which fail to meet modern emissions or safety standards—could derail Pakistan’s efforts to localize new energy vehicle (NEV) production. PAAPAM called for clarity on how such imports align with Pakistan’s environmental and industrial objectives, especially at a time when major investments are being made in NEV technologies. “We support the shift to sustainable mobility,” Mr. Malik added. “But importing outdated vehicles will only delay our transition and discourage local innovation.”

PAAPAM further questioned whether the liberalisation of used vehicle imports is part of a broader policy shift extending to other used goods such as electronics, appliances, and construction materials. If such policies are limited only to the automotive sector, the association urged policymakers to explain the rationale and outline measures to prevent market distortions and reduced local production.

The association also raised serious concerns regarding vulnerabilities in current import schemes, which are often exploited for illicit financial activities. Vehicles imported under the names of low-wage overseas Pakistanis are frequently sold domestically, bypassing tax and regulatory oversight. Informal payment channels such as hundi facilitate capital flight and erode fiscal transparency. “We cannot afford to expand mechanisms that facilitate tax evasion and capital flight,” said Mr. Shehryar Qadir, Senior Vice Chairman PAAPAM. “Fiscal integrity must be a cornerstone of any reform agenda.”

 

PAAPAM warned that reduced tariff revenues and pressures on local manufacturers could result in significant job losses across the supply chain. It emphasized the urgent need for workforce reskilling programs, incentives for domestic manufacturing, and alternative revenue strategies to preserve employment and sectoral stability. The association also cautioned that premature liberalisation could erode investor trust at a critical time when Pakistan is advancing its automotive and NEV sectors, and requested evidence from comparable economies demonstrating how trade liberalisation has been balanced with industrial growth.

Citing historical examples, PAAPAM stressed that abrupt liberalisation has destabilised nascent industries in the past. It urged that any reforms should follow a phased approach, supported by safeguards, performance metrics, and case studies from similar economies—particularly in light of Pakistan’s balance of payments challenges and dependence on remittances.

In its recommendations, PAAPAM called on policymakers and the IMF to provide sector-specific guidance on how used vehicle liberalisation will support NEV localisation and environmental goals, while simultaneously introducing measures to safeguard employment through retraining programs and incentives for domestic manufacturing. The association also urged stronger enforcement against tax evasion and illicit financial channels, insisting that fiscal transparency must accompany any reform agenda. Furthermore, PAAPAM pressed for evidence-based case studies from peer economies that have successfully harmonised trade liberalisation with industrial growth, and demanded a transparent, phased implementation plan backed by risk controls and performance benchmarks.

 

“We remain committed to constructive dialogue,” Mr. Malik concluded. “But reforms must be grounded in Pakistan’s realities—not imposed at the expense of our industrial future.