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Sunday, February 25, 2024

Auto industry seeks to lift import restrictions

The Pakistan Automotive Manufacturers (PAMA) and the Pakistan Association of Automotive Parts and Accessories (PAAPAM) have expressed concerns over the current situation faced by the automobile industry.

The two organizations have jointly submitted a letter to the Governor of the State Bank of Pakistan, highlighting the importance of the automobile industry to the country’s economy. The letter suggested that the automobile industry is the second largest contributor of tax revenue to the Federal Board of Revenue (FBR). It also represents almost 20% of the manufacturing sector and 80% of import substitution, which saves millions in foreign exchange annually. Moreover, the industry has created over two million jobs in various segments of the country.

According to the letter, the industry is facing extinction due to import restrictions by the State Bank of Pakistan (SBP) and the Letter of Credits (LC). This has resulted in a complete shutdown of various automobile companies, causing massive unemployment and loss of revenues. The direct and indirect control imposed on imports has further added to the industrial breakdown, which would now subsist at a minimum 50% capacity.

Read more: Toyota Motors shuts its power plant in Pakistan

PAMA and PAAPAM have requested an urgent appointment with the Governor of the SBP to submit their proposals and find a feasible plan to save the industry. The organizations asserted that immediate measures are necessary to protect the industry, which is an essential contributor to the country’s economy.

Challenges faced by the auto industry: 

Furthermore, scarce foreign reserves and import restrictions on raw materials, and completely knocked down (CKD) units have severely impaired the industry. The data released by the Pakistan Bureau of Statistics (PBS), the import of completely knocked down (CKD) kits for cars has reduced by 38 % to $ 499 million in the first half of the current fiscal year against $ 808 million last year. The depreciation of the local currency against the US dollar is the major contributor to the industry’s decline. Companies including Indus Motor Company, Honda Atlas, and Suzuki Motors have temporarily shut their production plants amidst economic uncertainty in the country.