LAHORE, (PRESS RELEASE): The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Chairman Abdur Razzaq Gauhar has deeply regretted the State Bank’s move to increase key policy rate by 250 basis points. He lamented that tight monetary policy along with rupee sharp depreciation will multiply the current woes of the autoparts manufacturers, who are already facing severe liquidity crunch owing to three-fold hike in cost of raw materials and sea freight.
He requested that the interest rate should be brought back to single digit to encourage industrial expansion and growth, which will bring in fresh investments and create jobs for millions of young people entering the job market every year.
“The 2.5% upsurge in the interest rate has shocked the autoparts industry across the country while incessant depreciation of rupee has further crippled the national economy in this prevailing political turmoil.
Abdur Razzaq Gauhar showed great concern for his fraternity, saying it would be hard to do business after this destructive policy in Pakistan. “We do not think any investor will veer to Pakistan under such economic uncertainties,” Gauhar added. An unprecedented and never-ending wave of inflation would force them to shift their operations seriously to business-friendly countries for survival. Inflated raw material, logistics, and energy would deeply affect the masses already struggling for the basics of life. The country has totally been left to IMF to suck the last drop of blood from the masses.
He appealed to the authorities to review these insensible people-killing monetary policies to ease the business community to enable them to move the wheel of the economy. He warned they were not far off the default if the corrective measures were not taken instantly.
Demanding the reversal of 2.5 percent increase in the interest rate, PAAPAM Chairman observed that this rise will lead to a crisis of unforeseen proportions for the industrial sector in general and the auto parts sector in particular. The auto parts manufacturers are currently struggling to survive under the impacts of rising cost of raw materials & freight, deterioration of rupee exchange rate, higher minimum wages, and expensive energy. Several industrial units have already been forced to shut down their plants. The State Bank’s step may prove to be the last nail in the coffin, stated Razzaq Gauhar.
He added that the governor of the central bank has negated the spirit of the initiative of promoting “Make in Pakistan” by raising the discount rate in Friday’s monetary policy statement. This increase in rate will reverse vital investments in the industrial sector and increase the defaulters’ list. He said that Pakistan automobile industry’s contribution to GDP is fairly substantial and it is providing employment/sustenance to over 4 million families. A very encouraging sign is that Pakistan parts have increased its share in the export market as well. Many new players have entered the 220 million population market, but limiting the cost of inputs is still a challenge for this autoparts industry. He stressed that import substitution and savings of foreign currency equivalent of billions of rupees have been achieved by our parts’ producers, through localization of imported items.
