According to a letter Alfred Grannas, the German ambassador to Pakistan, submitted to the Federal Minister for Economic Affairs Division, the State Bank of Pakistan (SBP) is refusing to establish letters of credit (LCs) through commercial banks, threatening imports of electric vehicles (EV) built in the EU (EAD).
The letter highlighted the challenging environment faced by Pakistan’s authorised Mercedes-Benz, BMW, and Audi importers that deal in electric vehicles (EVs). The SBP would not let the import of EVs, it was asserted, despite the fact that they are environmentally friendly.
A favourable regulatory environment for EV imports, according to the German ambassador, is an important development. Also, this will lower Pakistan’s reliance on petroleum imports, which make up nearly $22 billion of its $72 billion overall import bill, according to the letter.
The Ambassador claims that Germany is Pakistan’s top trading partner in the EU, both in terms of volume and value. He expressed worry, adding that the LCs issue will harm bilateral trade relations.
A COUNTER ARGUMENT
Defending Position
The German Envoy’s argument is at most lukewarm, in the analysts’ and economists’ estimations.
It is a well-known truth that only luxury automakers like Mercedes-Benz, BMW, Audi, and Porsche build German electric vehicles (EVs), which are the only ones available in Pakistan. Foreign exchange reserves are severely impacted by the exorbitant cost of each EV.
With various local sectors experiencing occasional shutdowns, Pakistan is presently experiencing its greatest economic crisis in history. The local economy and businesses would only suffer further if the export of foreign currency were encouraged.
Opening LCs for high-end luxury EVs is not at all a practical answer in light of that.