Pak Suzuki latest to announce plant closure on import curbs

KARACHI: Pak Suzuki Motor Co. Ltd. (PSMC) on Monday announced closure of its production plant for five days in January, blaming an inventory shortage caused by import restrictions in the country.

In a statement to the Pakistan Stocks Exchange, PSMC’s company secretary notified that the State Bank of Pakistan had introduced a mechanism for prior approval for import, including CKDs (completely knocked down), and restrictions in that adversely impacted clearance of import consignments, affecting the inventory levels of PSMC.

“Due to shortage of inventory level, the management of the company has decided to shut down its plant for automobile as well as motorcycle for a period from January 02, 2023, to January 06, 2023,” the notification read. One spokesperson for PSMC said it was a critical time for the company due to import restrictions and also no future information on how much more time the curbs would continue. “Detention, demurrages, and kibor [Karachi interbank offered rate]+3 percent are really hurting our industry.”

The spokesperson stated that dealerships and vendors were disturbed with lesser sales and production respectively. He also requested the government to have a discussion with the industry to solve the matter at the earliest.

Pak Suzuki was the latest to halt production on import restrictions after the Indus Motor Company (IMC). Last week, the Toyota manufacturer announced a 10-day plant shutdown from December 20 to December 30, third time in the outgoing calendar year, on hurdles in import and clearance of consignments.

IMC had also mentioned the new mechanism of the SBP for obtaining prior approval for the import of CKDs kits and components of passenger cars, attributing it as a reason for delays in letters of credit that led to insufficient inventory levels.

PSMC has kept its production plant shut for many days during the outgoing year. In August, the company announced a two-day closure on August 18 and 19th, which was extend to another four days till August 26 first, and then from August 29 to 31st.

In September, its production remained halted for at least 12 days on the same reason of insufficient inventory levels. In October also, PSMC’s production plant was closed from October 24 to 26th.

The auto industry, highly dependent on imports, has been facing sever difficulties in the midst of restrictions by the government to reduce the country’s import bill, following a fear of default amid declining foreign exchange reserves.