The growth in Pakistan’s automobile sector is evident in the number of vehicles produced and sold during the month July, August, and September 2017, as compared to the figures from the same time last year. To tap the ever-growing automobile industry, China has expressed its interest to make joint investments in the auto parts and accessories sector of Pakistan.
An eight-member Chinese delegation from the Sichuan province Hebei Chamber of Commerce arrived in Pakistan to discuss investment opportunities in the automobile industry, vertical building infrastructure, and town planning. The Chinese delegation, led by Mr. Gaoqiang, was invited by the President of Pak-China Joint Chamber of Commerce and Industry (PCJCCI) SM Naveed, and also included Mr. Cao Wei, Mr. Xu Yingliang, and Mr. Yang Yongang.
Total vehicles sold in the last three months are 50,640 as compared to 41,405 during the same period last year. This increase in sales and production of vehicles indicates that there may be more need for the auto parts and accessories in the coming times as well. Thus China is looking to setup auto parts, accessories, and electronic parts factory in a joint venture in Pakistan.
Gaoqiang said that China has manufacturing facilities that can be shifted to Pakistan in order to start local manufacturing of auto parts and accessories. However, the process of setting up a plant in Pakistan will take minimum 2-3 years. He further said that the arrival of China will increase competitiveness in the local industry and will also improve the quality of auto parts and accessories.
Pakistan has been helping out new investors in the automobile sector. According to the Automotive Policy 2016-2021, investors who fall under the “A” category will be able to import plant and machinery without paying any duty on one-time basis. Similarly, custom duty will be reduced for localized parts to 25% and non-localized parts to 10%, for a period of 5 years of manufacturing.
Pakistan’s auto industry is now contributing about 4% of the total GDP and employs a workforce of 1.8 million people. The arrival of Chinese companies in Pakistan would mean that local auto parts manufacturers will have to increase the quality of their parts or else they will start losing their market share. The quality of parts in Pakistan is low and a lot of counterfeit products are also being readily sold in the market.
In July, it was reported that $2 billion investment will flow in as four companies will set up their manufacturing plants in the country. Similarly Chinese investors last month met with the business community of Khyber Pakhtunkhwa and expressed their desire to invest in the provincial transport and automobile sector.