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Pakistan’s Auto Industry Risks Permanent Closure: PAAPAM

There appears to be no end to the tales of woe and misery emerging from Pakistan’s auto industry. After the prolonged shutdown series and price hike series, the episode may come with the worst conclusion. The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has made a distressing revelation that the country’s local auto industry is on the verge of permanent shutdown in the face of ongoing import restrictions inflicted by the State Bank of Pakistan (SBP).

In a letter written to the Federal Finance Minister Ishaq Dar, the association has appealed to lift the embargo on the import of car assembly kits and auto parts from the list of “non-essential items”.

They stated that car assemblers in the country manage to save foreign exchange of $1.5 billion per year through import substitution and contribute over 5% of the country’s tax revenues.

PAAPAM chairman Munir Bana stated in a letter that the car manufacturer provides employment to over 3 million Pakistani workers, including engineers, management professionals, and technicians, but the prevailing crisis may collapse all industries, laying off millions of workers.

He said, “Auto industry needs support from the government and the SBP through the easing of restrictions on imports of completely knocked down (CKD) kits by assemblers, as well as imports of raw material by parts makers.” 

“This will help improve volumes to a certain extent and assist the industry in sustaining its operations at the breakeven level,” he added.

While addressing the reservation, the association has emphasized opening all LCs as the industry is near to facing permanent closure in the face of burgeoning inflation, back-to-back price jumps, and rupee depreciation.

What do you think about the permanent shutdown of the local auto industry? Drop your thoughts in the comments section.

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