KARACHI: Curbs on the import of raw materials have brought the production of Dawlance — a wholly owned subsidiary of Europe’s second-largest manufacturer of home appliances, Arcelik A.S. Turkiye — to “almost zero” since the beginning of 2023.

Speaking to Dawn on Wednesday, company CEO Umar Ahsan said the arbitrary import curtailment measures have “shattered the confidence” of the Turkish sponsor, which acquired the manufacturer of white goods in 2016 for $243 million.

The privately held company has joined a steadily growing number of firms that’ve either shut down their plants or scaled back operations because the country has run out of dollars to pay for the import of industrial raw materials.

Foreign exchange reserves of the central bank are hovering around $3.8 billion, barely enough for even one month of import cover.

Dawlance started facing import-related problems in May 2022 when banks refused to open letters of credit (LCs) for items under HS Code Chapters 84 and 85, which deal with mechanical and electrical equipment. This problem lasted until August 2022 when the central bank instructed the company to make do with a quota of 38 per cent of its preceding year’s imports.

The company claims it received even that “small quota” neither in full nor on time.

Subsequently, the central bank instructed all commercial banks towards the end of December that they prioritise the LCs for essential items like food and energy only.

“Each product that we make has hundreds of components. The entire production line comes to a halt if we’re out of even one of those components,” said Mr Ahsan.

The State Bank of Pakistan (SBP) and commercial banks resorted to a “pick-and-choose” exercise while deciding which of the LCs of Dawlance should be entertained, he said.

“Had they consulted us, we might’ve at least tried to limit the damage,” he said, noting that its production plants have been sitting idle for over two months now.

In a formal statement, the company also demanded that the government should consider it “a special case” as most of its products are essential for food preservation and hygiene.

Elaborating on this demand, the company CEO said the Turkish giant acquired the Pakistani firm seven years ago with a “stated objective” that its Pakistani units would be turned into “export hubs”. The Turkish firm sells its output in about 150 countries but maintains manufacturing operations in only eight, including Pakistan.

“Arcelik has been taking this company in that direction. That’s why we’ve not announced any dividend in the last six years despite profits,” he said, adding that randomly imposed import curbs will deter the foreign sponsor from turning the company into an export-oriented firm.Mr Ahsan said he made his case for opening raw material imports in a meeting of the Senate’s standing committee on finance on Wednesday. Committee chairman Senator Saleem Mandviwalla asked the SBP governor to “look into resolving the issues” faced by the Turkish investor, he said.

Published in Dawn, March 9th, 2023