LAHORE: Changes in current policy governing the motorcycle industry – following the Board of Investment’s initiatives to incentivise a Japanese motorcycle manufacturer’s re-entry in the Pakistani market at zero rates – have purportedly shaken the confidence of investors and local manufacturers.
Stakeholders say the sector had progressed tremendously due to consistent policymaking on part of the government, but the new policy has threatened their – protected – growth.
“The plan to allow a new investor to import all motorcycle parts at zero duty will be a negation of previous policies, and will encourage producers to bypass local vendors and manufacturers,” said a representative of an Original Equipment Manufacturer (OEM). “This policy u-turn is worrisome and against the interests of the country and future industrialisation,” he added.
Industry players say that the portrayal of the motorcycle manufacturer as a ‘new investor’ conveniently overlooks the fact that the same brand was produced and marketed for decades in Pakistan, and was only forced to wind up due to its failure to compete with other brands – especially those from China. Stakeholders are dismayed at the government’s insistence in granting special status to this OEM on its re-launch.
“Motorcycle production has increased from 100,000 units at the start of the century, to around 2 million this fiscal year,” an official from Atlas Honda told a group of journalists, here in Lahore. “No other industrial sector has shown such high and sustained growth during the past decade. In fact, Pakistan has emerged as a global leader in the production of 70cc motorcycles.” He claimed that Pakistan now exports 125cc bikes as well.
Stakeholders complain that government claims that new investment will introduce new technology to the country are mere eyewash, as existing players have introduced the latest Euro-2 engines in their products without any special incentives. Current players are even willing to import hybrid and EFI-based engines without special incentives, they say. This is because many engine parts complying with new emission standards are produced locally, they claim.
They say that local industry, based on projections of increase in demand, has already embarked on capacity enhancement plans. By the end of the current fiscal year, they say they will have invested around $100 million in the sector, out of which a sizeable amount has already been invested, while plans for the rest are being submitted.
Published in The Express Tribune, July 18th, 2012.