Summary The PAAPAM chairman requests urgent meeting with the finance minister to take up burning issues
LAHORE (Web Desk) - The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has urged the finance minister to remove imports of auto and auto parts industries from the ‘non-essential’ items’ list to rescue the sector from the financial crunch.
In an SOS, the association pleads that the auto parts manufacturers save valuable foreign exchange to the tune of $1.5 billion per annum through import substitution and contribute over five per cent of the country’s tax revenues.
PAAPAM chairman Munir Bana informed the minister that its members, the auto parts manufacturers, provide direct and indirect employments to over three million Pakistani workers, technicians, engineers and management professionals, who face layoffs as the entire sector is on the verge of closure.
All banks may kindly be directed to open all L/Cs for imports by genuine manufacturers, as the entire industry is currently faced with permanent closure, amidst rising inflation, devaluation of our currency and record high markup rate, making it impossible to maintain operations, Bana said in the letter.
The PAAPAM chairman observed that, unless immediate counter measures are taken to save the “mother of all industries”, a massive tragedy would unfold, as the entire auto parts industry would shut down permanently, leading to losses of millions of jobs, rollback of localization and repatriation of foreign investments by all the automotive assemblers.
“The auto industry needs support from the government and the State Bank of Pakistan through easing of restrictions on imports of CKD kits by assemblers as well as raw materials by parts makers.
“This would help recovery of volumes to a certain extent and assist the industry in sustaining its operations at a breakeven level,” he added.
Bana argued that the entire automobile industry needs approximately US$125 million per month to survive through breakeven capacity utilization.
He said that PAAPAM is the representative of 350 Tier-I and 1,200 Tier-Il auto parts manufacturers located all over Pakistan.
The PAAPAM chief emphasised that Pakistan is not just an automobile assembling country, as our members are manufacturers and suppliers of thousands of locally produced auto parts & components worth over Rs150 billion per year to all the foreign assemblers of passenger cars, light commercial vehicles, motorcycles, tractors, trucks and buses in Pakistan.
"Our members produce components as per global quality standards, tested and approved on Japanese, Korean and Chinese specifications.Despite our humble contributions to job creation, GDP growth and domestic value addition, our industry is currently facing a life and death situation."
The letter further states that due to the State Bank's policies, the commercial banks are not willing to open L/Cs for imports of PAAPAM members’ raw materials and CKD components of automobile assemblers. The situation has been persisting since May 2022 and has resulted in drastic reduction in production of all types of vehicles by over 70 percent.
As a consequence, there has been a severe financial impact on the auto industry, particularly the SME auto parts manufacturers. We have, therefore, been forced to downsize our operations and lay off our trained workforce.
The automotive assemblers and most parts makers are JVs with global companies with strong financial and technical resources.
The association in the written correspondence requested for an urgent meeting with finance minister Ishaq Dar to discuss the auto industry’s current fate.
