Two major industrial units in Pakistan, Pak Suzuki Motor Co Ltd (PSMC) and Bannu Woollen Mills Limited have announced that they will extend the closure of their production plants till July 15, 2023, due to the shortage of raw materials. The companies have cited the difficulties in opening letters of credit (LCs) for the import of essential components and materials as the main reason for their decision.
The plant shutdowns have raised concerns about the impact of the raw material shortage on the country’s economy, especially in the sectors of automobile and textile, which are among the largest contributors to the GDP and exports.
Pak Suzuki, which is the largest car assembler in Pakistan, has extended the closure of its automobile and bike plant by another week on a “continued shortage of inventory level”, according to a notice issued to the Pakistan Stock Exchange (PSX) on Tuesday. The company had earlier announced production cuts from June 22 to July 08, 2023, which it has now extended till July 15.
The company said that it was facing challenges in importing and clearing its consignments of completely knocked-down (CKD) kits due to the new mechanism introduced by the State Bank of Pakistan (SBP) for obtaining prior approval for imports.
Bannu Woollen Mills, which is one of the oldest and largest manufacturers of woollen products in Pakistan, has also announced a production break till July-mid, blaming inventory shortages. The company said that it was unable to open LCs for the import of raw materials due to the current economic situation of the country. The company had previously shut down its production activities from March 25 to May 05, 2023, and from May 06 to May 12, 2023, for the same reason.
The shortage of raw materials has affected not only Pak Suzuki and Bannu Woollen Mills, but also other industrial units in Pakistan, such as Toyota, Honda, and various vehicle parts manufacturers. The shortage has resulted in reduced operational capacities, delayed deliveries, increased costs, and lower productivity across multiple sectors.
Plant Extension’s shutdowns by Pak Suzuki and Bannu Woollen Mills are a worrying sign for Pakistan’s economy, which is already facing multiple challenges such as low foreign exchange reserves, high inflation, widening current account deficit, and declining exports. The government needs to take urgent measures to address the root causes of the raw material shortage and facilitate the smooth functioning of the industrial sector. The government also needs to improve its trade balance and foreign exchange position by promoting exports and attracting foreign investment.
 and Bannu Woollen Mills Limited have announced that they will extend the closure of their production plants till July 15, 2023, due to the shortage of raw materials.){kind=link}