KARACHI: Pak Suzuki extended its plant shutdown from Jan 9-13 due to a continued shortage of imported parts and accessories. From August 2022 to date, PSMCL had kept its production activities closed for 30 days due to the State Bank of Pakistan’s restrictions for taking prior permission for imports including completely knocked-down (CKD) kits which had severely affected the clearance of consignments from the port causing parts and accessories shortages.

Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) and Lahore Chamber of Commerce and Industry (LCCI) expressed their concerns over the shutting down of operations by Millat Tractors for an indefinite period due to dwindling sales and held up sales tax refunds. Informed sources disclosed that the reasons for the closure of Millat Tractors were its obsolete technology and age-old models with the highest prices being charged. Hence, the dealers were fed up with diminishing demands in the market and they refused to take the Company stock for sale. On the other hand, the scandal of bogus claims of sales tax refunds from the government which was already dealt with by the Federal Tax Ombudsman (FTO) has exposed the notorious character of this windfall-earning assembler.

Suzuki had notified the Pakistan Stock Exchange that it will halt all production. This was the seventh time that Suzuki observed non-production days this fiscal year. However, in the first week of January first time, Suzuki halted production for both its automotive and motorcycle plants.Suzuki has cited insufficient inventory levels due to the State Bank’s restrictions on imports of completely knocked-down (CKD) kits as the main reason for its actions. In May, the State Bank issued a circular stating that it now possessed administrative oversight over the import of CKD units of cars being imported into the country.

 The State Bank’s announcement regarding CKD imports came only a day after the government imposed an import ban on luxury items in an attempt to stem foreign exchange outflows. Car CKDs were also banned by the government, but they did come under scrutiny from the State Bank. Essentially, the State Bank told car companies in Pakistan that they needed to seek permission before performing transactions in dollars for the import of CKD kits. Through this permission, the State Bank was now able to control how many cars were being imported and how many dollars were out-flowing. According to Aneel Mumtaz, a car mechanics analyst all the automobile assemblers in Pakistan were deceiving the consumers as well as the government simultaneously by non-localization of their products. They were simply importing CKDs and assembling the obsolete models in the country and earning huge profits by escalating the prices in a scot-free manner, while authorities of the Competition Commission of Pakistan (CCP) least bothered to check this trend. He cited an example of a recent comparison of Japan-manufactured Suzuki Alto Vs the PSMCL substandard locally assembled Alto being sold for Rs 2.22 million and said our bureaucracy was protecting them through illegal SROs and black marketing of the vehicles through “own” money syndrome.

Published in The Daily National Courier, January, 17 2023

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