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Monday, May 23, 2022
EditorialExport achievement in auto industry

Export achievement in auto industry

Pakistan’s success to export its first locally assembled vehicle is a remarkable achievement. Reportedly, Master Changan Motors Limited (MCML) has become Pakistan’s first automaker to export a vehicle to a market in the Oceania region. The assembling of vehicles at the local level and their export to the international market will surely create a lot of job opportunities besides reducing the country’s import bill incurred on the purchasing of costly saloons brought from other countries. Indeed this is a great development. Pakistan needs more such ventures for assembling vehicles meeting international standards. That is one of the best ways to improve the dwindling economy as the country mostly relies on imported items in each sector. The next step in the right direction can be the expansion of such plants in major cities of the country to flourish the local auto industry and manufacturing of their spare parts at the local level. Already, Pakistan has become the only country outside China that can produce vehicles of international standards. The credit for the success goes to local investors and the government that finalized the Auto Industry Development and Export Policy for giving a quick boost to the auto industry. The key features of the policy were tax exemption for locally assembled cars of 800cc engine capacity, ending additional customs duty, excise and withholding tax on small cars as well as a considerable reduction in import duty on electric vehicles.

At a time when the country is passing through one of the worst economic crises, any venture to boost the local auto industry is a welcome piece of news. Stakeholders claim that the local auto industry can produce around eight million vehicles in different categories annually by 2026. Additionally, the demand for vehicles is at an all-time high, rendering the automotive industry one of the fastest-growing investment avenues in the country. The entry of new-energy vehicle manufacturers from Europe and China is increasing the prospect of a strong local auto industry in Pakistan. The automobile industry is a key sector in Pakistan’s industrialization and modernization efforts. So far, Pakistani manufacturing industries have failed to increase the level of export, which is considerably low compared to the import of different items. This difference is leading to a hefty payments bill through the national exchequer. Paying for imports can strain the resources in Pakistan where economic growth lags and foreign exchange earnings are limited. The government needs to introduce industrial friendly policies and provide a conducive environment for local and foreign investors to make investments in the auto industry. At the international level, the government needs to engage experts in branding its local vehicles to make them more acceptable. Surely these measures will help decrease the existing trade deficit.

 

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