PBF highlights critical issues facing automotive CKD sector

KARACHI: Pakistan Business Forum (PBF) highlighted the critical issues facing Pakistan's automotive CKD sector in its letter to the ministry of industries and production stating that the automobile sector employs over 3.5 million people and is vital for our industrial development.

With an installed capacity of 1.1 million units per annum, the sector struggles to produce and retail merely 100,000 units annually, representing less than 10% of its potential.

He said, “Unfortunately we don’t have any vision for putting the country's economy on a self-sustained path of growth. Most decisions for running the economy are based on appeasing the political constituencies that support the government at the political level”.

PBF President Khawaja Mehboob Ur Rehman said the influx of grey imports continues to undermine our local industry, siphoning off foreign exchange and impacting all segments of domestically assembled vehicles.

Equally concerning are the new Completely Built-Up (CBU) units, often imported with vague promises of future local assembly, such as the recent case of MG. These imports not only compete directly with local assemblers but also bypass commitments to investment, technology transfer, and local employment.

To safeguard our national interests, PBF urges that stringent measures be implemented without delay. Companies seeking to import CBU units must provide a detailed plan outlining their timeline for local assembly, with a strict limit of 200 vehicles per year. Furthermore, the importation of used vehicles should be strongly discouraged to protect the integrity of our local market.

The international precedence in protecting automotive industries during crises, as seen in the United States, the European Union and India and Indonesia underscores the need for decisive action. These measures are essential to bolster our foreign exchange reserves, support local industries, and stimulate economic growth.

Therefore, it is imperative that OEMs (Original Equipment Manufacturers) are mandated to engage in local assembly through tolling arrangements with existing local networks, utilizing idle capacity to foster sustainable growth and export potential.

Controlled imports of Electric Vehicles (EVs), up to 1,000 units, should only be permitted when accompanied by a comprehensive industrial and localization plan approved under relevant regulations.

PBF President further emphasizes the preservation of the Automotive Industry Development and Export Policy (AID&EP) 2021-2026 to maintain investor confidence and ensure long-term stability. In this regard immediate action is required to review and restrict large-scale imports and also restrict the existing automakers to adopt technology transfer, so that customers get the same safety measure and smooth driving experience, as they get in imported vehicles.

Copyright Business Recorder, 2024