- Next month, there will be 10 working days, according to a representative of Indus Motor Company.
- Recently, the government has made an effort to limit imports.
- The action has had a domino effect on sectors that depend on imports.
Infosette (News) KARACHI: Toyota and Suzuki, Pakistan’s two largest automakers, intend to shut down portions of their plants next month due to a lack of raw materials due to import restrictions and fluctuating exchange rates, officials at both companies said on Wednesday.
Since the rupee has lost over 20% of its value this year as a result of declining foreign reserves, a weakening currency, and a growing current account deficit, the government has tried to reduce imports.
Industries that rely on imports to complete finished goods claim the central bank’s action has delayed the clearance of letters of credit, causing banks to run out of dollars and limiting their ability to import raw materials.
According to Ali Asghar Jamali, CEO of Indus Motor Company Ltd, which assembles Toyota vehicles in Pakistan, there will be 10 working days next month, but only if the central bank permits us to open a letter of credit based on the quota they promised.
Due to the lack of dollars in the country, he claimed that the company was offering refunds to customers who had experienced delays and markups on their payments. Deliveries were also expected to be delayed by at least three months.
Less than two months’ worth of imports can be covered by the $9.3 billion in reserves held by the central bank. Due to record-high imports, the current account deficit for the most recent fiscal year reached 5% of GDP.
The sentiment was echoed by Pak Suzuki, which assembles Suzuki vehicles locally and cited the central bank’s new system for prior approval for imports.
Shafiq A. Shaikh, the head of public relations for Pak Suzuki Motors, stated that restrictions had a negative impact on the clearance of import consignments from ports.
Shaikh warned that if the current trend continues, there will be serious issues starting in August 2022.
Requests for comments were not answered by the State Bank of Pakistan.
According to data from the Pakistan Automotive Manufactures Association, the sale of locally assembled cars in Pakistan increased by about 50% between July 2021 and May 2022 compared to the same period the previous year.