Electric vehicles’ import in jeopardy over LC issues: envoy

ISLAMABAD: Import of EU-origin electric vehicles is in jeopardy as the State Bank of Pakistan (SBP) is declining to open letters of credit (LCs) through commercial banks, stated a letter of German ambassador Alfred Grannas to the federal minister for Economic Affairs of Division (EAD).

The letter also drew the attention of the EAD minister to a difficult situation of official importers of Mercedes-Benz, BMW, and Audi in Pakistan who identified electric vehicles best suited to the vision towards the environment protection and placed the orders accordingly. “However, the State Bank of Pakistan is constantly declining to open LCs,” it stated.

The German ambassador mentioned that a positive regulatory framework for electric vehicle imports had been a major step in that direction. “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 envoy in the letter stated that Germany had been the most significant and largest trading partner of Pakistan in the European Union by volume and value. The LCs issue could contribute in casting a shadow over the good and friendly business relations between the two countries, he feared.

The letter also mentioned that declining the opening of LCs was against a common spirit to boost mutual trade, and was strictly contrary to GSP+ and its unilateral benefits for Pakistan.

“Pakistan runs the risk of losing further on being benefited by GSP+ and its successor regime if German companies’ imports are blocked and this becomes known to an enlarged public.”

The German-Pakistan Chamber of Commerce and Industry (GPCCI) has also earlier written a letter to the SBP governor, sensitising that a false campaign was being run against the auto brands.

“Fabricated and inaccurate news is being spread that LC’s are being established for German automotive brands operating in Pakistan with ludicrous sums, which are far from the ground realities,” they said.

GPCCI stated that German brands were specifically being targeted with an agenda that could adversely affect the long-standing relationship between Germany and Pakistan. “As a result, official importers of Audi, BMW, and Mercedes-Benz are being humiliated by commercial banks in Pakistan,” they lamented.

The data about vehicle imports of the first six months of the current fiscal shows that 64.80 percent of ICE vehicles have been imported by the grey market, and 35 percent of electric vehicles imported by official distributors, and 0.2 percent of ICE vehicles by companies.

The letter to the SBP governor read that commercial banks operating in Pakistan were refusing to establish LCs (irrespective of the amount) for any imports of both vehicles and spare parts.