LAHORE - Haier-Ruba, a Joint Venture in Pakistan, has announced initiating manufacturing of laptops and smart phones in Lahore this year- a good news for the nation which spends over Rs63 billion annually on the import of cellphone.
What can be described as Pakistan’s first assembly plant, will not only lessen the burden of cellphone import but will also lower government expanses on laptop schemes in the future.
The PML-N government, in the federal budget 2013-14 had allocated about Rs4 billion for distribution of around 100,000 laptops among students. If the government, instead of purchasing the whole lot of laptops from foreign companies, strike some deals with local manufacturers after the start of manufacturing, the government expanses will not only be reduced but the foreign exchange worth Rs4 billion will also be saved, besides generating employment at local level and etc.
It is to be noted that Pakistan spent Rs 62.96 billion on the import of mobile phone handsets during FY14 while it is expected to swell up more in current fiscal due to arrival of next generation technologies. Precious foreign exchange was continuously being spent on import of luxurious items for last many years, which broadens trade deficit of Pakistan. To save valuable foreign reserves, the government should encourage local mobile phone manufacturing by announcing incentives for manufacturers in its policies, observed Haier-Ruba President and CEO Faisal Shah Afredi. .
“Our group will no more rely on just importing mobile phones from China but our company’s focus is the transfer of technology in the country so that we could manufacture our own product here. We have already started an assembly line for the laptops in Pakistan,” said Afredi.
He said that under Haier-Ruba Economic Zones (HREZ), we have undertaken 11 projects, having annual turnover of more than $800 million with planning of another investment of $1.5 billion in the next five years in phases for future ventures. At present, the total size of Chinese investment in the country is estimated to be around $2.5 billion.
“Our other expansion plans include raising the production of tractors from 3,000 units to 40,000 units. And we will start assembling low-cost Chinese cars and buses in the near future.” He added that Chinese companies are interested in setting up their factories in Pakistan to reach other markets in South Asia, Middle East and Africa. Haier wants to use Pakistan as its business base for the South Asian and African markets.
He said the company is looking to buy more land, increase investments and target a wider market, as the group needs more land around the motorway and is willing to buy 3,000-5,000 acres of land at market price. The HREZ is a part of the CPEC and Afredi expressed hope that this will prove to be a gateway for other Chinese industrialists to venture into Pakistan. Afredi said that Haier-Ruba also plans to establish regional zones in Pakistan.
Haier Pakistan is currently producing refrigerators, deep freezers, washing machines, home air conditioners, commercial air conditioners, television sets, microwave ovens and other small appliances in a special economic zone (SEZ) on the outskirts of Lahore.
“Pakistan is one of eight countries around the world where the Chinese government plans to help its investors set up and operate SEZs, to use the country as a major base for manufacturing and exporting goods to the rest of the world. These zones have to be privately owned and operated,” said Afridi.
Haier has 8 industrial complexes and in these Special Economic Zones, Haier does localization to suit the needs of the consumers. There are many more such Special Economic Zones envisaged as part of the China-Pakistan Economic Corridor. It will be essentially an industrial corridor spanning almost the entire length of the country from the Arabia sea coast to the Karakorams where it enters China via the Karakoram Highway.
Replying to a question, Mr. Afredi said that under the agreement signed by Chinese and Pakistani leaders at a Beijing summit recently, $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid. An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.
According to him, starting in 2015, the Chinese companies will invest an average of over $7 billion a year until 2021, a figure exceeding the previous record of $5.5 billion foreign direct investment in 2007 in Pakistan. Beyond the initial phase, there are plans to establish special economic zones in the Corridor where Chinese companies will locate factories. Extensive manufacturing collaboration between the two neighbors will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes.
The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.