WORLD NEWS | Korean firms in Pakistan on verge of shutdown

Islamabad [Pakistan]February 19 (ANI): South Korean companies in Pakistan are on the verge of shutting down operations, mainly due to import restrictions and delays in customs clearance of containers stranded at ports, The Dawn newspaper reported.

Failure to issue letters of credit (LCs) for imports of raw materials has cost South Korean companies “millions of dollars” in sales, according to senior officials at the state-backed trade body and the local Korean Investors’ Chamber.

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According to Dawn, the Pakistani economy is facing a shortage of dollars, which has led officials to restrict most imports. A $7 billion loan program with the International Monetary Fund is still pending, drying up the central bank’s reserves, which now stand at $3.19 billion – a level not even enough to cover 20 days of the country’s import bill.

“I quarrel with the bank every day. Even a small (outward) remittance of US$20,000. Import advances are not cleared. The downstream industry is also getting worse,” said Jin Han Chung, of the Korea Investors Chamber of Commerce in Karachi chairman.

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According to Pakistani newspapers, at least 25 major South Korean companies have operated in Pakistan in recent years.

According to Sung Jae Kim, director-general of Kotra Karachi, the crisis among South Korean companies became severe three months ago and has worsened since then. This is despite the fact that the Governor of the State Bank of Pakistan (SBP) directed the bank in January to liquidate payments from containers stuck at ports.

“We ask the government to release all outstanding letters of credit issued by South Korean companies and their partners, while allowing them to open new letters of credit to continue operations,” he said, adding that Islamabad should issue a “clear policy statement” to Support export-oriented foreign companies.

King said he understands the constraints the government faces in allowing dollars to flow out, but restricting raw material imports is not the solution. “International trade must continue. Business must continue,” Dawn quoted King as saying.

According to the International Trade Center, Pakistan’s imports from South Korea will reach $1.5 billion in 2021, up 41.8 percent from 2020. (Arnie)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)