29th Jan, 2023. 09:10 am

Necessity over luxury

According to recent news reports, the government allowed car imports worth $1.2 billion during the first six months of the current fiscal year. Approximately 2,000 luxury cars, which include both new and used cars as well as high-end electrical vehicles, have been imported during this time period. The revelation comes at a time when a cash-starved Pakistan is battling to save its foreign reserves, even at the cost of restricting imports of essential consumer items and industrial goods. The only benefit Pakistan got from the import of 164 luxury electric vehicles during these months was earning Rs2 billion in tax duty. However, it spent a greater amount on purchasing these vehicles and paying their shipping costs. How difficult could the math get? As if the class divide itself wasn’t enough tragedy, the government’s decision to spend a hefty amount on an item of use only to the rich is an added insult.

As of now, the total number of containers carrying essential items stuck at ports due to non-opening of letters of credit (LCs) has run into thousands. The delay in the approval of shipping documents has also added to the importers’ woes. Among some crucial items rotting inside these containers include perishable food items such as gram pulses, ghee and oil, and frozen food items. Imports of finished medicines, raw materials needed by pharmaceutical companies and other manufacturing industries have also yet to be cleared, whereas equipment and machinery imports vital to keep both energy and agriculture sectors running have also been impacted. Meanwhile, importers have been crying hoarse over the accumulation of demurrage charges that have now exceeded the actual cost of imported goods.

The current crisis was eight months in the making – the day the government announced imposing a ban on non-essential luxury items under its ‘emergency economic plan’. The government had at the time argued that the ban was to keep the dollar outflow in check, and invigorate Pakistan’s exports. But, as is always the case with all our governments’ well-meaning ambitious actions, no scheme or strategy was provided. None of the stakeholders were taken on board. The mess that ensued eventually led to the government revoking the ban, and instead increasing regulatory duties on some luxury items – cars being the first on that list. However, the damage had been done, and the mismanagement continued unabated at all levels.

The government’s sheer inefficiency has now led to several companies announcing closure of industrial plants, adding to an ever-increasing rate of unemployment. With manufacturing plants shuttered, the exports Pakistan so badly needed to anchor its future economic security in have also almost gone down the drain. The country was in the throes of a severe wheat crisis a few weeks ago, and is now faced with a looming threat of ghee and oil shortage, with Ramazan only a couple of months away. On the other hand, the Khyber Pakhtunkhwa Textile Mills Association has complained of high demurrage and container detention charges. The spinning mill owners are finding it increasingly hard to keep their mills functioning amidst delays in clearance of textile consignments.

Many saw the disaster coming, and even warned the government about it. But the crisis still appears to have caught an entire flock of cabinet members unaware. The State Bank of Pakistan has finally risen from its deep slumber and issued a circular waiving the condition to seek prior approval for import goods that arrived before or on January 18. A move aimed at clearing the backlog of containers carrying industrial raw materials and other essential items stuck at ports. Banks have been advised to provide one-time facilitation to importers who can either defer their payment terms to 180 days or above, or arrange funds from abroad to settle their pending import payments. The facilitation is to be provided till March 31.


This is a welcome step, and will to a certain extent assuage the grievances of the business community. However, the government will need to come up with a sustainable long-term plan to keep trade functions running smoothly. The last thing the government should want for itself amidst the current polarizing political atmosphere is a people unsure of how to meet their basic needs.


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