In addition to the months-long incident that has severely damaged Pakistan’s auto industry, Hundi-Hawala has also been a curse that has devastated the country’s auto sector. Pakistan’s economy is currently experiencing a downward spiral.
Surprisingly, importers are using these channels more and more to handle the influx of secondhand cars. Zafar Ali, a former general manager of HinoPak Motors Limited, issues a warning about dire economic repercussions that include the depletion of foreign exchange reserves and the collapse of the indigenous auto industry. Ali calls for tough rules on the importation of secondhand cars as well as steps to stop financial malpractices and demands that the government take quick action.
Hundi-Hawala: An Obstacle:
The Pakistani government, supported by law enforcement, has been cracking down on illicit money transfers and dollar hoarding over the past few months, which has caused the local currency to appreciate by more than 4% in just one month. The crackdown is getting more aggressive to combat smuggling, with a focus on oil and gold.
There is no paper trail, so it is difficult to estimate the precise amount of money leaving the nation through Hawala-Hundi. However, these networks probably have a major role in Pakistan’s outflows of foreign currency.
Deeply ingrained in South Asian financial culture, Hundi-Hawala conduct business mostly outside of the official banking industry. These systems, which are built on trust-based transactions, depend on middlemen for international money transfers, which are especially advantageous to diaspora groups. Their simplicity, rapidity, and accessibility make them appealing, particularly to people who don’t have access to traditional financial systems.
The rise in imported secondhand cars is a worrying trend that is depleting foreign cash and endangering Pakistan’s economic stability. In Ali’s opinion, this outflow of money damages the nation’s economic base and diverts funds that could be used for other important areas.
Over 6500 old cars were imported into the nation in the fiscal year 20222023, with over 5200 of those vehicles arriving in only the months of July and August of this year.