Editorial: The End of the Road for ‘Passport Renting’?

On January 15, 2026, the federal government issued S.R.O. 61(1)/2026, a policy shift that has effectively abolished the Personal Baggage scheme for vehicle imports and significantly tightened the regulations for the Gift and Transfer of Residence (TR) schemes. 

Although originally intended to facilitate overseas Pakistanis, these schemes had become a major loophole for commercial imports, with Personal Baggage particularly prone to abuse by used-car importers. 

The government’s move aims to curb this widespread misuse, particularly given the observation that the vast majority of these imports were effectively commercial transactions executed via laborers’ passports.

This practice created an unregulated supply chain that local automakers have long argued undermines the domestic industry. Now, with the issuance of this SRO, the government has finally moved to address this misuse, or at least mitigate it, by abolishing the Personal Baggage scheme, which was the most frequently abused channel, while tightening regulations for both the Gift and Transfer of Residence schemes.

To understand the implications of this major policy pivot, we spoke with stakeholders from both sides of the spectrum: a renowned importer of used Japanese cars and the Vice Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), Shehryar Qadir.

The View from the Car Dealers

We spoke to a well-known importer of used Japanese cars to see if this ban would cause a shortage of cars in the market. Since the Personal Baggage scheme was the most popular way to bring cars in, it would make sense that supply would go down and prices would go up.

However, the importer, on the condition of anonymity, said this would not happen, or at least, might not disrupt the supply chain as drastically as expected. 

He admitted that while the Personal Baggage scheme was the most convenient route for dealers, the market is highly adaptable. According to him, dealers are already preparing to pivot primarily to the Gift scheme.

When asked if the supply constraints would lead to a price hike, the importer offered a surprising economic forecast. He argued that there would be no significant effect on the supply or demand of used Japanese cars. 

Even though the new procedure is more cumbersome and requires stricter documentation, he believes the volume of imports will remain consistent. Essentially, the channel may change, but the flow of vehicles is expected to continue.

A Step Towards Regularization

To understand the opposing view, we reached out to Shehryar Qadir, Vice Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), who expressed the local industry’s support for the new rules.

“Approximately 90 percent [of commercial imported used cars] were being imported through the personal baggage scheme, which has been abolished,” Qadir told PakWheels.

Furthermore, Qadir disagreed with the idea that switching to the Gift scheme will be easy. He pointed out that the new rules are much tougher. To use the Gift scheme now, you must prove the car is for a blood relative using valid NADRA documents. The Transfer of Residence scheme is also strictly for people actually moving back to Pakistan. He believes these requirements make it very hard to simply “rent” passports like dealers did before.

He believes these barriers will inevitably reduce the volume of commercial used car imports.

The Challenge of Enforcement

Despite the optimism regarding regulation, questions remain about enforcement. Critics have argued that the new one-year resale ban could be circumvented through legal instruments such as a Special Power of Attorney. 

Qadir acknowledged this reality, noting that whenever there is an intent to misuse, loopholes are often found. 

“When there is a genuine intention to misuse, any policy measure can be bypassed,” he noted.

He emphasized that the success of this policy relies heavily on vigilance from excise and taxation authorities to ensure the law is followed in letter and spirit.

“PAAPAM will observe future import data very closely,” Qadir noted, “and will assist the government wherever needed to ensure that misuse of the policy is not taking place.”

The “Irony” of Safety: Local Compliance vs. Import Exemptions

Qadir raised a critical point regarding safety, noting that as a signatory to the UNECE WP.29 regulations, Pakistan has 17 specific safety standards proposed for implementation. However, he called it “ironic” that these strict rules apply only to locally manufactured vehicles. “None of these are implemented on imported used or new vehicles,” Qadir pointed out. 

Consequently, PAAPAM has urged the government to enforce these environmental and safety standards on all vehicles “without distinction,” ensuring a level playing field for the local industry.

The Bigger Picture

Beyond the immediate tug-of-war between importers and local manufacturers, this policy highlights deeper structural issues in Pakistan’s automotive sector. 

Qadir highlighted that while the number of players in the local market has grown from three in 2016 to 25 today, the overall market size has not expanded. The market is saturated with new models, yet the consumer base remains stagnant: “All this has happened without an increase in the overall market size; Pakistan’s market stood at the same level last year as it did 20 years ago.”

He also said that stagnation is reflected in Pakistan’s motorization ratio, fewer than 20 vehicles per 1,000 people, which trails far behind regional peers like India and Vietnam. 

This is not merely an automotive failure but a macroeconomic one; without sustained GDP growth and financial stability, the demand base for vehicles cannot expand.

As the market adjusts to the latest used-car import policies, the coming months will reveal whether these policies effectively curb commercial abuse or if the market simply finds a new path to the same destination.