Overview
Locally assembled car companies face hard though. They halted production plants for the next few days. Recently Toyota and Suzuki have closed production activities for the next unconfirmed days. According to t the report they have no work to do in the production plants due to the delay in LC approvals. They have noticed a number of Non-Productions Dyas (NPDs). Car prices are very high in Pakistan thus this can’t help companies survive. The devaluation of the rupee value against the dollar. Toyota is considering a refund of 100% to customers as it’s not a customer’s fault. This taught time on car companies also impacts the economic situation. Because Pakistan’s automotive industry is an important income of for the government.
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Reasons
The reason of NPDs is cleared that companies are failed to approve Letter of Credit (LCs) for CKD kits import and without the approval companies not able to import CKD kits and other raw material. The already stored material has been used and for new production to meet the demand they need approval first. State Bank Of Pakistan has made the approval of LCs important and this maybe the other way to control import.
Documents Against the Payments (DPs) and LCs can be only approved by the State Bank of Pakistan. Suzuki have plan to deliver the order till end the June but they failed to deliver and observe NPDs in the current month. Not only these two companies depending on approval. The other local car companies also surviving in this situation.
Recently, KIA has suspended the book of KIA Picanto AT and Sportage AWD and FWD and never confirm when the booking will reopen.
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What is Latter of Credit
Latter of Credit is necessary for businesses to approve importing of goods and its only approved by the SBP. This is necessary for all businesses. This is the new rule that has been implemented by the N-League. Id SBP reject it or delay companies are not able to import goods from other countries. These are the boundaries of importing goods in Pakistan.
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Conclusion
Stopped production is a big loss of companies because they are failed to meet the target sale. This is hard situation to close production plant due to the zero productivity. The unemployment will also rises in this situation. If companies fired the employees due to financial crisis it will be difficult for the government too to food these citizens.
