Pakistan sets $1b target for export of auto parts over 5 years

At present, annual exports stand at only $70 million

KARACHI: The government of Pakistan, which is looking for various avenues to increase exports of the country, has set the export target of $1 billion for the manufacturers of auto parts over the next five years.

This was stated by the leadership of the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) in a statement on the occasion of the Pakistan Auto Parts Show.

A total of 244 exhibitors were participating in the auto show, including 106 international exhibitors, 89 domestic exhibitors, 18 support organisations and three universities, said Paapam Chairman Muhammad Ashraf Shaikh.

“The government has discussed export policy with auto parts manufacturers and has given them the task of increasing exports to $1 billion (over a period of five years) from just $70 million per annum,” said Paapam former chairman Shariq Suhail.

Earlier, only those auto parts manufacturers, who had contacts in the international market, considered exporting their products, whereas now, “the government has shifted its focus to the entire market. As a result, the whole market will become export-oriented”, he said. “Today, auto parts’ global trade is worth more than $800 billion, which in 2023 will cross $1 trillion. The task of $1 billion in exports from Pakistan is definitely difficult, but not impossible, as we have targeted only 0.1% of the global trade,” said the former chairman.

For achieving the $1-billion target, the government had removed roadblocks, including improvement in the regulatory duty structure and revival of the Engineering Development Board (EDB), which was a great step as the board would communicate with every relevant institution and stakeholder, he said.

The government has constituted a committee, which would meet every fortnight with auto parts manufacturers to gauge the progress, he said, adding that the government was going to make the EDB an autonomous body.

Moreover, the rupee depreciation against the dollar had made Pakistan’s labour more cheaper and competitive, due to which foreign companies would come to Pakistan, said Paapam Chairman Shaikh.

In recent years, many Chinese companies have invested in joint ventures for auto parts manufacturing in Pakistan. In future, the export of auto parts will not only increase, but they will also be a substitute for imports.

“In the auto show, procurement departments of Pakistan International Airlines, Pakistan Railways and Pakistan Army are invited to see the quality of locally manufactured parts,” said Mashood Ali Khan, head of the organising committee.

South Korea’s Kia is going to bring its vehicles to Pakistan market soon while Hyundai has got approval for its plant, thus new players are on the verge of entering the market. They are being given concessions under the Greenfield investment status for the import of completely knocked down (CKD) kits at a lower duty for five years.

However, after the stipulated period, they will have to come to domestic vendors, otherwise, they will not remain competitive and will not be able to compete with the existing players. “Consequently, local vendors will get business, which will subsequently help increase employment in the country,” said the Paapam president.

Published in The Express Tribune, April 9^th, 2019.

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