KARACHI: Due to import restrictions and a delay in the release of containers stranded at the port, South Korean businesses are on the verge of shutting down operations in Pakistan.
Senior executives from the state-backed trade organization and the local chamber of Korean investors claimed in a recent interview that the failure to open letters of credit (LCs) for the import of raw materials is costing Korean businesses “millions of dollars” in lost sales.
Official restrictions on the majority of imports have been put in place as a result of the economy’s dollar shortfall. The central bank’s reserves have decreased to $3.19 billion as a result of the $7 billion loan arrangement with the International Monetary Fund (IMF) remaining in limbo; this amount is insufficient to meet the country’s import bill for even 20 days.
“I have a battle with the bank every day. even for a meager $20,000 (outward) remittance. Import advance payments are not being cleared. The downstream business is also facing worsening conditions, according to Ji Han Chung, the head of the Karachi-based Chamber of Korean Investors.
At least 25 significant Korean businesses are active in Pakistan. Some of the most significant Korean investors that have established businesses recently include Kia, Hyundai, Lotte, and Samsung. Power generating and the export of seafood are other business ventures of Korean firms. With a $3 million FDI, another firm, Kumyang, established its local manufacturing facility in 2021 and has since been exporting chemicals to the Middle East and Europe.