Jan 14 - 20, 2008

The strategically located Balochistan province can emerge as a strategic manufacturing and assembling hub for the country's automobile industry. The province however lacks the essential infrastructure and skilled workforce for the development of automobile sector. The government should create such conditions in the province that could attract over two dozens Pakistani manufacturers and assemblers, who have technical collaborations with Japanese and Korean manufacturers.

Pakistan automobile industry has set the target of manufacturing half a million cars and one million motorcycles by 2010. The industry is currently enhancing its production capacity due to the rising demand. Pakistan automobile market has witnessed a rapid growth and hefty expansion over the last five years. Development of automobile sector in Balochistan would not only help achieve the automobile vision 2010 of 500,000 units, but it would also help diversify the provincial economy. It would also create more employment opportunities to the people of the province.

The Engineering Development Board (EDB) should also help the provincial government and private sector to develop auto sector in Balochistan. The EDB was established in 1995 for the uplift and up-gradation of automotive parts and components industry under public-private partnership. The former government of Prime Minister Shaukat Aziz had decided to turn the EDB into the Engineering Development Authority (EDA). Moreover, technical assistance may also be sought from Technology Up-gradation and Skill Development Authority, which was also established under the public-private partnership. The authority has already taken a number of steps for improvement in production and design capabilities of the automobile industry in the country. It can also help in the establishing the technology up-gradation centers in different districts of the province.

Gwadar, a strategically located coastal town in southwestern Balochistan offers greater scope for the development of automobile, which is an export driven-industry providing lucrative investment opportunities for foreign investors. Pakistan automobile market is dominated largely by Japanese and Korean manufactures like Suzuki, Honda, Toyota, Hino, Hyundai and Mazda. Many foreign manufacturers including Chinese are reportedly in negotiations with Pakistan to start assembly operations in the country. These manufacturers may be lured to establish manufacturing and assembling units in the new port city of Gwadar.

The development of Gwadar as free port on lines of Dubai certainly promises massive investment, greater generation of employment opportunities and more development projects in different sectors of provincial economy. The port city would not only provide large-scale employment but also promote other income generating activities for local people. Federal government has already decided to establish an export processing zone (EPZ) on a 1,000-acre plot of land in Gwadar for providing better import and export facilities. The EPZ has also been planned for assembling plants and other industries which are to be set up by the prospective manufacturers for marketing in the region of Gulf and Central Asian republics. The government has already planned to provide transit shipment facility at the Gwadar port enabling businessmen to keep their cargo there for onward shipment to the central Asia states, Western China and Gulf states. The development of auto industry in Gwadar would not only translate into provision of jobs to the local people but also boost industrialization in Balochistan.

Balochistan is rich in natural resources. The free zones, which would be set up in the port city of Gwadar, would contribute to the harnessing of the province's potential in natural resources and development of heavy and large-scale industries, petrochemicals and manufacturing. The government can mobilize the private sector for setting up the manufacturing and assembling units in the new port city of Gwadar. It has already announced a 15-year tax holiday for the proposed EPZ that has been planned near the Gwadar port for local and foreign investors

The whole of Balochistan particularly its border districts with Afghanistan have been selected for setting up the Reconstruction Opportunity Zones (ROZs) and the goods produced in RoZs are to be exported to the US at zero tariff. The country hopes to get at least Rs10 billion for this project from the US, which had agreed to accept duty free imports of items manufactured in backward areas to be designated as ROZs. With the establishment of ROZs, the province can emerge as a strategic manufacturing base in the region. Pakistan has already identified various sectors like agriculture, social welfare and manufacturing with a budget of Rs6.5 billion. The assembling units in Pakistan are already assembling most of the world leading brands and the government can facilitate the private sector to set up assembling units at ROZs in the province.

The government should take advantage of the geo-strategic location of the province and make serious efforts to start at least assembly operations in the province. Unfortunately, the car-snatchers have taken advantage of Balochistan's geo-strategic position turning the province into a haven for hijacked vehicles. A number of vehicles stolen in Karachi and other major cities of Pakistan were several times recovered by the police in Balochistan. The vehicle-snatching has been a lucrative business in Karachi, as criminals with the collaboration of security officials smuggle the vehicles to Afghanistan via Hub-Balochistan route and get a good amount for it. The inter-provincial gangs have been involved in snatching, theft and transporting of vehicles to Balochistan. The presence of a junkyard for the stolen vehicles in Chaman, a city near Pak-Afghan border, facilitated the purchase and replacement of the engines of new cars at throwaway prices and many people have benefited from this option.

The private sector should come forward and make investments for the development of automobile industry in Balochistan. The provincial government should provide them land and other facilities and also offer incentive packages to attract the local and foreign investors. The federal government may also provide technical and financial assistance to the province for developing essential infrastructure in this regard. The technical institutes need to be set up in different districts of Balochistan to provide skilled workforce to the industry at local level. Human and infrastructure development must go together in the province.