Indus Motors Company (IMC), the maker of Toyota vehicles, has decided to shut down its production plant in the country from December 20-30, citing a delay in import approvals from the State Bank of Pakistan (SBP).

In a letter addressed to the general manager of the Pakistan Stock Exchange, the IMC management said that the central bank had introduced a new mechanism for obtaining prior approval for the import of “CKD kits and components of passenger cars (HS Code 8703 Category)” for the auto sector.

“The aforesaid delay in the approvals for the company and vendors has created hurdles in the import and clearance of consignments for raw materials and components of the company.

“This has resulted in insufficient inventory levels and consequently has created an adverse impact on the supply chain and production activities,” the letter stated, adding that the company was hence unable to continue its production activities.

Earlier, a Dawn report said that auto assemblers had to undertake non-production days after May 20 onwards due to restrictions imposed by the SBP through which the bank introduced a mechanism of prior approval from SBP for the import of a few goods including CKDs.

Assemblers said that the decision had been causing a delay in payments to foreign suppliers thus creating huge business risk for local industry.

“These restrictions have so far delayed the foreign payments of about $25m resulting in loss of investor’s confidence in the Pakistani market, and any further delays in the approvals by SBP would result in the loss of $80m contribution to the exchequer,’’ they added.

They said development activities for various new models were in the process across the industry. For new technology vehicles and parts development, the assemblers and vendors need to import machinery, molds, tools and fixtures. For the smooth development of local parts, the trial activities are to be conducted months before the start of mass production.