'Hundi-Hawala being used to import used cars'.

LAHORE -- The prevalence of illegal money transfer methods, such as Hundi and Hawala, is taking a toll on Pakistan's local auto industry, with importers increasingly resorting to these channels for bringing in used cars.

Warning of the implications, former General Manager at HinoPak Motors Limited, Zafar Ali said this issue has far-reaching economic consequences, from weakening the domestic auto sector to draining foreign exchange reserves.

Ali emphasised the urgent need for comprehensive government intervention to address the problem. He suggests that the authorities should implement stricter regulations on used car imports and take measures to combat illicit financial activities.

In recent months, the Pakistani government, with the support of law enforcement agencies, has launched a crackdown against dollar hoarding and illegal money transfers. As a result, the local currency has appreciated by more than 4% within a month. The crackdown is expanding to include efforts against smuggling, with a particular focus on gold and oil smuggling.

Estimating the precise amount of money funnelled out of the country through Hawala-Hundi remains a challenge due to the absence of a paper trail. 'However, it is widely believed that these illegal channels account for a significant portion of foreign exchange outflows in Pakistan,' said Ali.

Hundi-Hawala are deeply ingrained in South...