Rs2.2 trillion spent on interest and defence
Govt ‘prepared’ to combat Covid variant
Cites lack of inventory because of State Bank’s LC restrictions
Pak Suzuki Motor Company (PSMC) has announced that its management has decided to shut down the company’s plant for automobiles as well as motorcycles for five days from January 2 to 6, 2023 due to the dearth of inventory.
PSMC is the second automaker after Indus Motor that has announced non-production days in the wake of restrictions on opening letters of credit (LCs).
The State Bank of Pakistan (SBP) has introduced a mechanism of prior approval for imports under HS Code 8703, which includes completely knocked down (CKD) kits, vide circular No 09 of 2022 dated May 20, 2022, the company said in a notification to the Pakistan Stock Exchange (PSX) on Monday.
“The restrictions adversely impacted the clearance of import consignment, which resultantly affected the inventory levels,” it said.
“It is very critical time for Pak Suzuki due to import restrictions and also no future information for how much more time these restrictions will continue,” PSMC Head of Public Relations and spokesperson Shafiq Ahmed Shaikh told The Express Tribune.
“Detention charges, demurrages and Kibor+3% interest rate are really hurting our industry.”
PSMC dealers and vendors were also disturbed as both sales and production had come to a halt, said Shaikh.
“Vendors are also opting for non-productive days,” revealed Pakistan Association of Automotive Parts and Accessories Manufacturers’ (Paapam) former chairman Abdul Rehman Aizaz. “Many have already lost jobs while more will follow, if restrictions remain in place.”
He was of the view that policymakers were viewing the automotive sector as a luxury, which was why they were concerned about the delay in car deliveries. However, “now because of therestrictionsonimports of parts, the industry’s idle capacity has gone above 50%.”
Import restrictions would continue until the SBP and the government eased them, which was unlikely, Aizaz said, adding that un- employment in the country was already high and such hurdles would result in worsening of the situation.
“Plant is shutting down for only a few days, so we do not see any job losses,” auto analyst Arsalan Hanif stated. “However, if this continues for a longer period, the operational staff will be at risk of losing jobs,” he said.
“As foreign exchange reserves fall, we expect the government to impose more strictcurbs,” remarked auto sector expert Mashood Ali Khan while talking to The Express Tribune. “The coming year seems to be worse for the auto sector.”
He called on political parties to come onboard with local businessmen for formulating a plan for the next three years, adding that no foreign business was willing to invest in Pakistan due to the prevailing situation.
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