The current economic fiasco that the country is going through has left almost no business unscathed, not even those that amounted to the highest selling goods of the year. Despite the Toyota Indus Motor Company (IMC) posting a rise in sales of goods in June 2022, the company has faced several debilitating hurdles, to the point that it ignited rumours that the company may be shutting down in Pakistan.
Those rumours, thankfully, appear to be unfounded. However, that does not mitigate the gravity of the situation that IMC and the automobile industry in Pakistan find themselves in. IMC may not be shutting down but there are strong reports that the company is considering temporarily suspending its production and assembly operations for a few days in August. Despite billions of rupees accumulated in sales from customers, the IMC has not been able to timely deliver and is now trying to recover the reputational loss by offering refunds to customers facing delays in deliveries.
This is a complicated situation, and the automobile industry certainly shares a portion of the blame here for never localising their parts production and employing predatory price changes without any customer welfare in mind, despite being in Pakistan for years and having knowledge of the uncertainty of the rupee. However, this is indeed a time of crisis—with the unbridled inflation and the deep drop in the rupee, we need to enact urgent measures to keep our businesses afloat.
The government should be encouraged to fiscally conserve and cut down on imports but the measures must be proportionate to the impact. Tax rate hikes, increase in shipping costs, and import bans must not be imposed blindly but keeping in view the impact this could have on existing businesses in Pakistan, that currently provide employment and supply of goods, which controls inflation. The State Bank of Pakistan and other regulatory bodies are requested to keep the prevailing emergency in mind while implementing strict foreign exchange regulations and soften their approach in approving Letters of Credit (LC) to incentivise investors.