KARACHI: The hundi and hawala business in Pakistan has crossed $15 billion a year mark, currency traders said citing conservative estimates.

In a recent meeting held at the State Bank with the exchange companies, the matter of hundi and hawala was discussed in detail.

“In our assessment as much as $15bn has been transacted through hundi and hawala in a year. The actual volume could actually be double the projected figure as reliable data is not available,” said Secretary General of Exchange Companies Association of Pakistan, Zafar Pracha.


Official figures show negligible import of gold while the commodity is available in abundance across the country


The government suspects exchange companies for such illegal payments system as volumes become shockingly high. Pracha said the government is well aware of the situation.

It was observed that the government was selective in dealing with elements involved. For example in case of gold, banks do not open letter of credit (L/C) and dealers manage to make payments by purchasing dollars from the kerb market.

However, in official data, imports of gold are shown in negligible quantity while the commodity is available in abundance across the country. It clearly implies that the payment for gold import is made through illegal channels.

Same stands true for imports from China which are reported to be much below than the actual volume of Chinese goods available.

The payments for Chinese products are at least 50 per cent more than shown in the import figures.

Import from China has persistently increased over the past few years. It went up to $7bn in the financial year 2015 from $4.7bn in FY-13.

Market watchers, however, believe the actual worth of imported Chinese goods should be over $10bn. In many cases, the banks do not open L/Cs and the payments are arranged through non-banking system while under invoicing is another issue.

In the case of Saudi Arabia, Pakistan paid $3.3bn for imports in FY-15. The import bill dropped due to low oil prices. Traders said that imports from the Saudi Arabia are much higher than the official data reflects.

The country is the biggest exporter of petroleum bi-products including plastic material, plastic grains, chemicals, paints and carpets made of artificial threads to Pakistan.

“We know our exports to Afghanistan have increased in the last couple of years but the import figures remain negligible.

Most of the payments are made through illegal channels,” said Pracha.

The money changers said the government has been pressurising exchange companies to check illegal transactions without dealing with the problem from its own end.

In a recent meeting, Minister of Finance Ishaq Dar announced that no import shipment would be cleared from Customs without proof of formal payments. However, this decision has yet to yield the desired results.

Published in Dawn, December 31st, 2015

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Kurram atrocity
Updated 22 Nov, 2024

Kurram atrocity

It would be a monumental mistake for the state to continue ignoring the violence in Kurram.
Persistent grip
22 Nov, 2024

Persistent grip

PAKISTAN has now registered 50 polio cases this year. We all saw it coming and yet there was nothing we could do to...
Green transport
22 Nov, 2024

Green transport

THE government has taken a commendable step by announcing a New Energy Vehicle policy aiming to ensure that by 2030,...
Military option
Updated 21 Nov, 2024

Military option

While restoring peace is essential, addressing Balochistan’s socioeconomic deprivation is equally important.
HIV/AIDS disaster
21 Nov, 2024

HIV/AIDS disaster

A TORTUROUS sense of déjà vu is attached to the latest health fiasco at Multan’s Nishtar Hospital. The largest...
Dubious pardon
21 Nov, 2024

Dubious pardon

IT is disturbing how a crime as grave as custodial death has culminated in an out-of-court ‘settlement’. The...