In a poor economic situation, where the country is facing a shortage of dollars, import restrictions, difficulties in opening Letters of Credit (LCs) and scarcity of raw material, the industrial wheel has become virtually paralysed.
Traders and industrialists are becoming increasingly worried as containers have been stuck at port for weeks, which has stymied the supply of key inputs to many industrial concerns. Production of goods at an estimated 30% of factories has come to a halt.
Businessmen fear that if the government does not bring the situation under control quickly, trade and industrial activities will grind to a complete halt within the next 45 to 60 days. Apart from triggering a massive wave of unemployment, this will also send inflation to unprecedented heights.
The biggest fear on the cards right now is the looming food shortage and the resultant public unrest. Calling the release of containers ‘temporary relief’, the business community is insisting that the government come up with its next course of action.
They are of the view that the government should leave the rupee value to market forces so that exports and remittances can increase and the dollar crisis eases.
Talking to The Express Tribune, former Federation of Pakistan Chambers of Commerce and Industry (FPCCI) president Nasser Hyatt Maggo said that the economic crisis is gradually becoming more and more serious owing to a complete ban on imports without any planning.
As the country is facing a shortage of dollars, thousands of containers are stuck at ports, awaiting the clearance of LCs.
The import slowdown has created a scarcity of raw material for many goods manufacturers and even those who purchased the necessary inputs earlier and have stock are quickly running out. All major sectors, including food, textile, pharmaceuticals, chemical, machinery, steel, plastic and automobile are suffering from the decline in production.
“It is being said that currently 5,700 containers are stuck at the ports but in reality, the number is even higher than 9,000,” said Hyatt, lamenting that the government had also closed the Pakistan Single Window.
“In this dire situation, the trade and industrial sectors have started reducing their workforce. When people lose jobs, the law-and-order situation can deteriorate,” he cautioned.
Former Karachi Chamber of Commerce and Industry (KCCI) president Zubair Motiwala, while talking to The Express Tribune, dubbed the decision to release the containers as ‘an ad hoc measure’.
He urged the government to adopt an immediate strategy and chart its next course of action as the release of containers will only allow the industries to run for a month and a half only. “In any case, the country needs 60% of imported raw material,” he posited.
KCCI had provided a list of 2,550 containers with deferred payment facility to the State Bank and the port and shipping authorities, he revealed and suggested that in order to increase remittances and exports, the government should allow the rupee-dollar exchange rate to find its real value.
Wholesale Grocers Association Chairman Abdul Rauf Ibrahim commented that though Pakistan was an agricultural economy, many food items including wheat, edible oil and pulses were imported in significant quantities.
He pointed out that a huge number of containers carrying pulses worth $80 million were stuck at port.
Apart from that, detention charges of $160 million and demurrages of Rs250 million have already been imposed.
He urged the government to waive the detention charges and demurrages on food commodities, as importers were already finding it very difficult to pay extra costs. Ibrahim feared a food crisis approaching if new LCs were not opened and the stuck containers not released.
Besides pulses, over 150 containers of tea have been held up at the port for the past three months due to the delay in payments. According to Zeeshan Maqsood, a tea industry stakeholder, import restrictions and the ban on opening LCs have pushed tea imports down by 67%.
Not only are imports facing hard times, exports too have hit a stumbling block. Pakistan Fruit and Vegetable Importers and Exporters Association Chairman Waheed Ahmed disclosed that the dollar crisis had not spared exporters either.
“Fruits and vegetables exporters pay freight in rupees to the shipping lines, which convert them into US dollars – but Pakistani banks are turning down their requests,” he elaborated.
Originally published at tribune.com.pk