AUTOMOTIVE INDUSTRY IN PAKISTAN: Messages from MAKHDUM KHUSRO BAKHTYAR Federal Minister for Industries and Production, Islamic Republic of Pakistan
TEXT: It gives me immense pleasure to announce that the present government is all set to put forward a progressive automotive policy to make Pakistan a hub for competitive manufacturing of auto parts and vehicles for local market & exports in next five years. The policy will give new identity to the auto sector in line with the vision of Prime Minister Imran Khan to grow local industry and generate employment opportunities in Pakistan. Our purposed Auto Industry Development and Export Policy (AIDEP) 2021-26 has two-pronged guiding principles: indigenization & establishment of export-oriented industry, which will provide a window of opportunity to promote downstream industry in the country and save foreign exchange. The auto sector as a key industrial sector and its' wide contribution in LSM growth, makes it potential sector to generate employment. It is noteworthy to mention that the overall car sales have witnessed an increase of 104 percent in July 2021, inter alia, 56.7pc sale recovery in FY21 by car assemblers because of cheaper auto financing by the banks due to low interest rates. This is manifestation of growth- oriented economic policies of incumbent government.
Furthermore, we have launched (Meri Gari Scheme) to make small cars financially affordable for the middle class. This measure will revamp urban demand and steer the production of vehicles in country.
In conjunction with these initiatives, the government's focus is now on improving car quality, such as the introduction of modern safety features, which would eventually make the automobile sector export-oriented. We will put auto makers under obligation to ensure and improve road safety, international safety measures such as brakes, steering, tyres, lightening, safety belts, airbags and collision will be met.
The government undertook an effective step for consumer welfare pertaining to "on money" problem through compulsory payment of KIBOR+3% mark up by manufacturers on delivery beyond 60 days, as well as, maximum upfront payment on booking not to exceed 20 percent of the invoice value at the time of booking. Real-time track-able online booking and manufacturing status safety measures in cars.
The introduction of the EV policy in the country is an important step for Pakistan's future when it comes to a pollution-free environment, especially its contribution towards climate change mitigation through reduced CO2 emissions and improving 'Air Quality Index' in urban centers. It will also minimize the import bill of fossil fuels. The approved EV package will be integrated in new auto policy. Also, it will enable us to capture a share in the emerging EV market.
Under framework of new auto policy, the government has set an ambitious target to enhance manufacturing capacity of Cars/LCVs/SUVs per annum along with adoption of UNECE's WP 29 Regulations. This Policy will also encourage export of 2-3 wheelers, tractors, parts and components and integration into global supply chain. We are also looking forward to connect auto industry of Pakistan to global supply chain through a strategy for OEMs to export parts and vehicles through global distribution channels.
I am confident that many automobile players would be unveiling their investment plans to increase production capacity in view of new auto policy. I am also assured that all stakeholders including customers, industry, assemblers and part makers shall reap the benefits of new policy equally.
I would also like to take this opportunity to express my appreciation to Business Recorder, in partnership with Pakistan Automotive Manufactures Association (PAMA), for providing positive exposure to GoP's initiatives for revamping automotive industry. Thanks for supporting us with projection of our measures for local development of auto industry in Pakistan.
Copyright Business Recorder, 2021