Source of attraction for foreign investment

Apr 28 - May 04, 2003

Automobile sector, growing impressively, is becoming an attractive area for foreign investment in Pakistan. Impressed with market growth, a Malaysian auto company manufacturing POTON cars has expressed its willingness to establish their plant in Pakistan in collaboration with local participation.

The Malaysian company had shown its interest to join auto sector in Pakistan when Liaquat Ali Jatoi, Minister for Production and Industries visited that country recently.

POTON's economy passenger car is comparatively cheaper in price as compared to the cars, currently being produced in Pakistan. What will add a variety as well as choice for the people especially for the people belonging to middle income groups.

Accordingly, the government has directed the high commissioner in Malaysia to coordinate with the investors with a view to help them out in the plans for investment in Pakistan.

Currently, the entire auto sector including cars, trucks/buses, tractors, light commercial vehicles and even bikes, was booming with a jump in sales ranging from 30 to 58 per cent in different range of products.

The increase in demand especially of cars has proved a windfall for the dealers who are selling various models of economy class at premium. The delivery of the cars generally taking 3-4 months from the date of booking.

In view of tremendous increase in demand, the President of Karachi Chamber of Commerce and Industry (KCCI) has demanded of the government to lift ban on the import of used cars in Pakistan.

Factors instrumental in enhancing demands for automobiles of various categories is stated to be strong economic fundamentals, availability of lease facility and consumer financing by banks and leasing companies besides change in models.

According to reports, Japanese bike assemblers including Honda, Suzuki and Yamaha have managed to maintain their market share despite a tough competition with the cheaper Chinese bikes in Pakistan.

According to a survey, the market share of Japanese bikes has risen by 30 per cent to 112,848 units during the current financial year as compared to 86,544 units in the corresponding period of previous fiscal year.

The financing facility offered by the commercial banks under their consumer financing products has significantly pushed growth in sales of all models of the motorcycles in the country. However, Chinese bikes being cheaper as compared to Japanese models are gradually getting an edge in the market.

On the tractor side, sales also improved by 18 per cent to 17484 units from 14,793 units in previous financial year again due to enhanced credit facility extended to the farming sector. It is generally expected in the tractor manufacturing circles that the overall tractor industry is to take off mainly due to arrival of the commercial banks in this sectors. It may be recalled that the overall turnover of the tractor industry had reduced considerably due to limited allocation of funds for loaning facility for this segment of the auto industry.

On the light commercial vehicles front, the sales also registered a jump of 58 per cent during the current financial year. So far, the increase in sales is reported at 8,899 units from 5,636 units during the corresponding period of the previous financial year. Those light commercial vehicles which got a jump in sales include Dewan groups Shehzore, Indus groups' Hilux and Suzuki's Bolan.

Sales of trucks and buses including Hinopak, Ghandhara Nissan and Sindh Engineering Mazda also soared by 65 per cent to 2,353 units from 1427 units in the same period of previous year.


Automobile sector is said to be the mother industry and its growth as provided tremendous support for economic growth of the developed world in their days of struggle for economic growth.

With the presence of Japanese, Korean, Italian assemblers and now Malaysians are also expected to join the auto sector in Pakistan, it is the time that emphasis should be laid for speedy implementation of the deletion program in the auto sector.

Although the tractor and other commercial vehicles have attained appreciable growth in producing locally-made spares, yet implementation of deletion program in cars is slow depriving the country of actual benefits of growth in demand of automobiles.

Since the majority of the basic spare parts are still being imported from outside the country, the vendor industry in the auto sector has not been able to come out with a strong support to the engineering sector in Pakistan.

It is the high time that new licenses for manufacturing of automobile units should only be given to those companies which ensure transfer of technology within the shortest possible time so that the country could get the actual benefit of the growth of this sector which is certainly of vital importance for real economic growth in the country.