German Ambassador in Pakistan, Alfred Grannas, wrote to the Federal Minister for Economic Affairs Division (EAD) that the State Bank of Pakistan (SBP) is refusing to open letters of credit (LCs) through commercial banks, threatening EU-origin electric vehicle imports.
The letter shed light on the difficult situation for the official importers of Mercedes-Benz, BMW, and Audi in Pakistan who deal in electric vehicles (EVs). It argued that the EVs are beneficial to the environment, yet, the SBP wouldn’t allow them to be imported.
The German Ambassador added that a positive regulatory framework for EV imports is a big step. “Additionally, this promises to reduce Pakistan’s reliance on imports of petroleum products which are nearly $22 billion, out of the country’s total import bill of $72 billion approximately,” the letter added.
The Envoy wrote that Germany is Pakistan’s largest trading partner in the EU by volume and value. He expressed worry, stating that the LCs issue could cloud business relations between the two countries.
A Counter Argument
As per the analysts’ and economists’ opinions, the German Envoy’s argument is lukewarm at best.
It is a well-known fact that the only German EVs that exist in Pakistan are from high-end carmakers such as Mercedes-Benz, BMW, Audi, and Porsche. Each EV costs a fortune and takes a massive toll on foreign exchange reserves.
Pakistan is currently going through the worst economic crisis in history, with numerous local industries observing intermittent shutdowns. The enablement of foreign exchange outflow would only hurt the local industries and economy more.
With that in consideration, opening LCs for high-end luxury EVs is not at all a pragmatic solution.