Home appliances industry targets regional exports

Industry invested Rs30 billion to enhance capacity, has achieved over 50% localisation

LAHORE:

Pakistan Electronics Manufacturers Association (PEMA) President, Muhammad Farooq Naseem has said that the electronics’ industry is working internally to kick-start exporting of home appliances from Pakistan to some nearby countries.

“The home appliances industry of Pakistan has invested Rs30 billion in the last couple of years to enhance its capacity and has managed to achieve over 50% localisation. With these investments, we can now compete with China in those components which we now produce locally,” Naseem told The Express Tribune. While there were still some hurdles that needed to be overcome, the PEMA president felt confident that in a few years this milestone would be met.

“We are in an internal discussion to see if we can export some of our products initially to some regional countries like Afghanistan and others in Central Asia, East Africa and the Middle East,” he said.

Elaborating on the issues that the industry may have to face initially he said, “We will have to shift our industrial base to Karachi as transportation cost is a major issue. We can send our products to Dubai for export purposes in two days whereas it takes almost two weeks to export our products to China.”

Explaining that their business model targets populous countries he said, “Currently, the only countries we can viable export to are Afghanistan and Central Asian countries, however, these are not populous countries and the size of the population ultimately matters,” he further explained.

Reflecting on previous practices he said that the home appliances industry of Pakistan was operational primarily through imports or for assembling. Smuggling and under-invoicing in trading practices with Afghanistan have damaged the industry considerably, he said.

“Since 2018, however, some internal and external factors have helped create a level playing field for the formal sector,” he said. These include product prices in China, a huge upsurge in shipping costs, FATF laws curtailing grey channel payments, inclusion of home appliances in schedule III of sales tax and more recently, the government’s drive to bring market transactions into the tax ambit.

Pakistan’s home appliances industry comprises of refrigerators, air conditioners, televisions, washing machines, water dispensers, small kitchen appliances and home theatre devices. As per PEMA, the estimated size of the industry is Rs350 billion, valued at retail price on Dec 2021. The industry is also contributing around Rs150b in the form of taxes.

Talking about the ongoing crisis in Pakistan, the PEMA President said, “This crisis has also impacted the industry as people’s buying power has been reduced.”

“The recent floods have destroyed everything and, in the months to come, we expect the sale of home appliances to take a hit,” he said.

Published in The Express Tribune, September 2^nd, 2022.

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