Auto sector fears production shutdown amid import curbs

Published June 5, 2022
Increasing number od plants are shutting down. — AFP/File
Increasing number od plants are shutting down. — AFP/File

KARACHI: The introduction of a mechanism for prior approval from the State Bank of Pakistan (SBP) for the import of goods has created hurdles in the arrival of completely knocked down (CKD) kits of vehicles and all major auto sector imports.

The delay in processing approvals for CKD kits import transactions would lead to a production shutdown for all major assemblers in the next week besides disrupting the entire supply chain including local vendors and dealers and leading to unemployment of contract and daily wage workers.

Director-General Pak­istan Automotive Manuf­acturers Association (PAMA), Abdul Waheed Khan informed SBP Governor Dr Murtaza Syed on Friday that the delay in payments gives an adverse impression to foreign suppliers and creates a huge business risk for beneficiaries for exporting goods to Pakistan which would adversely impact the auto sector in the long term.

The weekly foreign payments for import of HS code 8703 category CKD for motor vehicles are insignificant. This measure seems to have delayed weekly foreign payments of a maximum of $25 million. However, any further delay may result in a hit of $80m to the economy and a loss of $30m to the national exchequer every week along with creating unemployment.

He urged the SBP governor to kindly provide timely approval of CKD imports for the auto industry to avoid the impending plant shutdowns, protect the employment of the industry and restore foreign investors’ confidence in Pakistan.

Published in Dawn, June 5th, 2022

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