Global automobile company Honda has announced the closure of its plant in Pakistan. Honda Atlas Cars Pakistan, the company’s joint venture in Pakistan, has told that it has decided to keep the plant closed from March 9-31 due to a sharp fall in the currency value and higher taxes in the budget.
various media reports The company has been quoted as saying that it cannot continue production and the plant will be closed for the rest of March. In a notice sent to the Pakistan Stock Exchange, HACP said that there has been a major disruption in its supply chain and due to this the company had to take this step. The HACP explained, “Due to the current economic situation in Pakistan, the government has taken stringent measures. These include a ban on the import of Letter of Credit and Completely Knocked Down (CKD) kits. This has caused major disruptions in the company’s supply chain.” The company is not in a position to continue the production and due to this the plant will be closed from March 9 to 31.”
Before Honda, Pak Suzuki Motor Company (PSMC) and Indus Motor Company (IMC) also announced the closure of their factories. Pakistan’s automobile industry is heavily dependent on imports and is facing difficulties due to very weak currency and restrictions on letter of credit. Automobile companies have increased the prices of CKD models.
Pakistan is left with foreign exchange reserves of about $3.8 billion, which is not enough even for one month’s imports. The Government of Pakistan has appealed to the International Monetary Fund (IMF) for a loan. However, for this, he will have to accept strict conditions like increasing tax and electricity rates. Pakistan is likely to get one billion dollar fund from IMF. For the past few months, the people of Pakistan are facing difficulties due to the continuous increase in the prices of fuel and many other items. Pakistan owes billions of dollars of debt to the IMF and some countries, on whose payment there is also a possibility of default.
