Import of CKD kits: Auto sector seeks SBP intervention for opening LCs

ISLAMABAD: Auto manufacturers have sought intervention of the State Bank of Pakistan (SBP) for opening Letters of Credit (LCs) for the import of Completely Knocked Down (CKD) kits to avoid delays in car deliveries and further cost escalation.

During the briefing to members Public Accounts Committee (PAC) on Thursday, representatives of auto manufacturers (Indus, Honda, Suzuki) said their plants are running at 1/3 capacity so delays in car deliveries are imminent because of the non-availability of US dollars since May 31, 2022.

The companies have already issued notifications informing customers about delays in car deliveries that are being caused by issues pertaining to obtaining as well as a global shortage of semiconductor LCs for the import of CKD kits chips.

Indus Motor Company Chief Executive Officer (CEO) Ali Asghar Jamali asked the chairman committee to direct the SBP to provide them US dollars for obtaining LCs. He said the company had opened the last LC at Rs240 per US dollar.

Vice President Honda Atlas Cars Maqsood ur Rehman Rehmani told Business Recorder that the company was running on two shifts but delay in the import of auto parts was causing delay and affected company business that was running on 2.5 percent profit margin. Despite low production of cars, the company is paying three percent over the Kibor rate.

Earlier, the committee expressed its displeasure over the Ministry of Industries and Production and its subsidiary, the Engineering Development Board (EDB), over failure to control car pricing, implementing safety features in various brands, and transfer of technology.

Additional Secretary Industries said that the market determines the price of cars as there is no price control policy of the government.

Noor Alam Khan directed the PAC Secretariat to write letters to the Prime Minister, Special Assistant to PM, the Establishment Division over the poor performance of the ministry in addressing the public grievances against auto manufacturers.

At one point, the Chairman Committee remarked, “If auto manufacturers have no capacity to deliver vehicles on time then they should not book cars and the government should allow import for additional cars to meet demand.”

The Chairman Committee also directed the Auditor General of Pakistan (AGP) to examine the accounts of car manufacturers to determine the size of the amount deposited by consumers as advance deposit.

He further directed the Federal Board of Revenue (FBR) to provide details of custom duty paid on the import of auto parts as the AGP hinted that the audit officials were of the view that fewer units were imported against the volume of import of auto parts.

Earlier, Chief Executive Officer (CEO) EDB Raza Abbas Shah and Secretary Industries said that the car manufacturers did not provide the information for audit purposes despite sending several letters and officials of the AGP also said that the manufacturers did not provide relevant record despite sending four reminders.

CEO Toyota Indus Pakistan contended that they were a public listed company and the details of accounts are available at the website.

Copyright Business Recorder, 2022