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Investment opportunities are galore in the auto sector of Pakistan

Plenty of interest has been exhibited by the auto sectors of many countries in Pakistan over the period of particularly last two years, may be because of the Automotive Development Policy 2016–21. Pakistan with a population of over 208 million is the fifth most-populous country in the world. Pakistan currently has around 13 cars per thousand people which are expected to reach 20 cars per thousand by 2020.

The great development for the masses over the couple of years is that many countries particularly China, Turkey, Thailand have expressed their interest in investing in Pakistan’s auto sector which may be a great news for the masses since the prices would be competitive and luxury of choice may be availed by a common man in Pakistan, which otherwise has always been a dream.

Thailand’s automotive industry is the largest in Southeast Asia and the 12th largest in the world. The auto sector of Thailand produces around two million vehicles per annum and is ahead of many countries namely the United Kingdom, Belgium, Italy etc. Turkey is one of the leading global auto manufacturers and its auto sector plays an important role in the manufacturing sector. It produces more than a million vehicles every year. Turkey’s exports of vehicles runs in billions of dollars. China’s auto sector like steel and other sectors is the global leader in production since its annual production of automobiles is far more than that of the European Union, the United States and Japan altogether. China’s leading car manufacturers are SAIC Motor, Dongfeng, FAW and Chang’an. China’s car exports are in millions of units every year. Kia, Hyundai, Renault and Volkswagen are aiming to start production next year by investing millions of dollars which would help the sector grow manifold and there would be cars of various categories galore.

Yes, once these countries invest in Pakistan and the competition in the auto sector deepens, the masses would be the net beneficiaries. There is no doubt that the auto sector is poised to see a large influx of new investment under the Automotive Development Policy 2016–21 that has incentivized greenfield investment in the sector.

One can say that the decades old so-called monopoly in the auto sector by three companies is going to diminish benefiting the buyers who always lacked choice when venturing into the market for locally-assembled vehicles. Car sales were around 151,000 units in 2014-2015, 180,000 units in 2015-2016 and there was no big change during last fiscal year as such. The demand is there, however, the supply and pricing may be an issue for those who intend to buy a locally-assembled car.

Pakistan’s auto industry is the sixth largest manufacturing sub-sector and the passenger cars segment alone provides employment to around three million people directly and indirectly. It is great to now that after the entry of the South Korean auto makers in the predominantly Japanese dominated Pakistani auto market, manufacturers from lots of countries are eyeing to capture their share of pie with a win-win situation. Whenever, opinion is sought from the investors regarding investment in Pakistan, the investors are bullish and see Pakistan as a land of opportunities with some exceptions. Based on all this, the future of auto sector of Pakistan is very promising which would be very helpful for the revenue generation by the government which otherwise faces perennial problems of fiscal deficit.

The delegations of investors from various countries have been visiting the business chambers and talks are going on at the government to government level for investment in the auto sector which actually is going to be a reality sooner rather than later. One should not agree with the cynics who think it is too little too late. It is essential to look forward for the betterment. Business opportunities in Pakistan are galore. It is not only the cars but also heavy vehicles for which abundant investment would be pouring in. Heavy duty trucks and vehicles have large scope in Pakistan as road freight transportation contributes over 90 percent of the goods transported by land.

It is high time that the government capitalized on the situation. It is hoped that Free Trade Agreement (FTA) for market access to be signed with some countries should not be a kind of hurdle in terms of investment in the auto sector. The negotiation regarding FTA should not procrastinate the flow of investment in the auto sector. Way back in 2016, some Italian automotive companies had shown interest in exploring investment opportunities in Pakistan and the investors had a meeting with the then finance minister in this regard, however, nothing concrete has come up in this regard so far.

The times have changed and it is going to be an era of electric vehicles in the days to come. This may be considered by the relevant authorities since the buyers would be looking at this opportunity while making decision. Various countries such as the United States, our neighboring India etc. have already unveiled their plans for introducing EVs. Pakistan should not lag behind and should take the decision pragmatically.

In addition to cars and heavy vehicles, Pakistan’s motorcycle market has great potential of growth. Currently, there are more than 100 players in this market who are reaping the benefit of this potential. It is hoped that the foreign investors would take advantage of this still untapped segment of auto industry.

Pakistan is heaven on earth for the investors for various reasons. Board of Investment at federal level and the provincial boards of investment need to go one step further to bring investors to Pakistan for the economic prosperity of Pakistan.

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