Pakistan’s first liberal auto policy was introduced in the 1980s which saw Japanese auto firms entering Pakistan’s market, and since then Japan has held a sway over the local auto market. The intent of inviting the private sector was to make the existing auto sector efficient, competitive, and more choice for the customers along with the aim to indiginise the auto sector through technology transfer. It was also hoped that opening the auto sector would help to develop the local auto industry and its related complimentary industries, would create more jobs and generate more revenue.
The auto industry got a boost when banks started auto financing, and our roads were suddenly not enough for the new cars that came on the roads. Since then traffic jams have become a norm in every other city despite the widening of the roads, creation of over and underpasses by felling of trees and clearing of green belts.
While the auto sector prospered per number of units sold annually, no serious key performance indicators (KPIs) were used to measure the actual performance of the auto sector against the intended benefits purported at the time of the liberalisation of the auto industry: localisation of core technologies through technology transfer, quality of autos produced, safety and performance features incorporated in the products offered, value for money for customers, and foreign exchange earned through auto exports.
Resultantly, facing a liquidity crunch, whenever restrictions were imposed on imports in recent years, the supply chain of the local auto industry would get seriously disturbed and many times they had to close their production lines for want of critical parts which are regularly being imported for the last many decades. Thus, the dire economic conditions brought to the fore the fact that minimum indigenisation was carried out and all major components and critical technologies were imported, which not only caused a big drain on the foreign exchange reserves but also robbed the local economy of revenue and deprived people of jobs.
Furthermore, all this time, the autos produced are not good enough to be exported to any international market. Resultantly, the local consumer is paying astronomical amounts for autos which are not even quality-wise internationally competitive. Thu is the panache among the elite and ruling class to import vehicles as they would not bet their lives on the local, low-quality autos.
Our premier policy formulation and implementation institutions such Engineering Development Board (EDB) under the Ministry of Industries and Production are responsible for formulating and implementing engineering-related policies. Such institutions must not only propose but implement and see through the policy implementation- against established KPIs, in various sectors so that the promised dividends are reaped by the economy and the people.
Presently, EDB is again rushing into electric vehicles (EVs), without first assessing to what happened to its previous auto policies in terms of implementation and outcomes. It seems, there is a lack of a feedback loop to check on ground performance against defined KPIs so that the policies be continuously tweaked accordingly. EVs are the state of art technologies, especially the batteries. It is being proposed that the country has local raw materials needed for the manufacture of EV batteries, implying that we will be manufacturing EVs including their critical technologies in Pakistan. On the contrary, we have not been able to indigenise conventional autos’ critical technologies in the last three to four decades. Therefore, it seems, again a fresh vicious cycle of importing EVs and assembling them in Pakistan will start, thus generating jobs abroad and proving a costly drain on our foreign exchange reserves.
Ahsan Munir
The writer is a freelance columnist