September 08, 2008
Pakistan plans to boost auto parts exports
Khaleej Times reported that Pakistan’s caretaker government has planned to boost the export of auto parts industry and a detailed study will be conducted to identify issues in the auto parts industry and as soon as the study was completed.
The study also sought to address issues concerning quality development, standards, domestic and international market potential, the employment potential, and a mechanism for successfully tapping the full potential of the country's auto parts industry.
The auto parts industry is USD 125 billion market dominated largely by the industrialized countries. The share of Pakistan in the total exports is only USD 25 million and auto parts consumption in local production is only 12% of total sales. The auto parts vendors are also showing steady growth and becoming one of the most dynamic sectors in Pakistan's manufacturing. The industry has generated 110,000 jobs and exported USD 25.03 million thus saving foreign exchange of PKR 23 billion.
As the production of automotive is increasing in Pakistan, the auto parts vendor industry is also expanding. The components produced in Pakistan range between 55% and 70% of total completely Knocked down kit. The policy of localization, helping this sector to also generate more jobs is needed to be effectively pursued.
Pakistan government was informed by its planners that the automotive industry has potential for growth and employment because of its greater backward and forward linkages. The global exports of auto sector are over USD 600 billion while Pakistan's share is approximately USD 50 million. The domestic market is expanding with rising income levels and auto financing facility extended by banks. Since 2000-01, there has been a rising trend in the capacity utilization and the industry at present is operating at full capacity. The sector employs about 300,000 workers and that is expected to rise sharply due to a positive outlook of the industry.
Similarly, the motorcycle industry is growing steadily. It has greater linkages with the vendor industry that shows its potential for growth. This sector contributes USD 200 million in GDP and provides employment to more than 100,000 workers.
