LAHORE - The auto industry in Pakistan certainly welcomes new investment in the all sectors but without endangering the existing industry and level playing field. The auto industry has enough competitors as compared to demand but still for sake of growth and to benefit the consumer the new players are good omen but on existing terms and conditions.
Abdul Waheed Khan, Director General Pakistan Automotive Manufacturers’ Association (PAMA), has appealed to the Federal Minister of Finance not to allow any new investment by putting at risk the investment already there in far greater size, as the local investors have already expanded their capacities to manufacture 2.5 million motorcycles.
“We are not opposing any new investment but we would certainly oppose it if it disrupts the equation by unfair grant of relief in duty and taxes to any new entrant”, he said, adding that the existing sector represents substantial investment by Pakistani, Chinese, Japanese and European stakeholders.
He suggested that the Board of Investment should encourage new investment that does not negate the fundamental concept of a level playing field.
He informed the minister that the localization level in locally produced motorcycles is over 90%, which has made it feasible to considerably reduce prices of motorcycles to a most competitive level when a large number of new players entered in the recent past.
An analysis shows that with the help of stable government policies market mechanism alone has enabled the sector to grow in an unprecedented manner, and the equilibrium in the growth of motorcycle sector has so far been kept by the policy whereby the existing players are surviving,’ he added.
The progressive thrust of growth in the motorcycle sector has so far been maintained by a policy which allows incentives for localizations but at the same time permits introduction of new technologies by allowing import of components against a different tariff.
The fine balance between new technologies and cost effective standard products that are favoured by the market has been maintained successfully allowing this segment to grow at an average rate of over 31 per cent over the last 10 years.