Trade Development Authority of Pakistan (TDAP) has started deviating from its mandate by adopting makeshift policies and refusing patronage to nascent export industries. Auto parts manufacturers are one example, who have to run from pillar to post to convince the country’s ‘export promoter’ that without physical presence in the international markets Pakistan’s auto parts exports could not jump up.
Pakistan’s share in global auto parts and accessories trade is merely around 0.001 per cent – hovering around $25 million exports – but industry experts indicate that local manufacturers have vast capacity and potential to multiply the numbers. Currently, some 2,000 auto parts and accessories manufacturing facilities are operating in the country, of which around 40 per cent are well equipped and documented manufacturers, while the rest are unorganised or aftermarket suppliers.
Though it is an emerging export earner in the country, but it has shown promising growth by competing with regional players in China and India. In addition, this industry has already invested some Rs70 billion and has provided direct employment to over 180,000 people.
Despite the fact that the domestic industry is suffering long hours of power outages, poor law and order situation and high cost of capital, but people who have invested in manufacturing still believe that Pakistan has vast potential to diversify its export base, provided they get level playing field and market access.
Auto industry experts underscore that despite all odd, Pakistan has the most favourable circumstances for increasing auto parts exports, as Chinese products are getting expensive owing to high electricity tariffs and rapid urbanisation. Similar is the situation in Turkey, which caters to most of the European markets. Pakistan could easily tap this opportunity, if market access related issues are resolved and the government ensures support to local manufacturers in marketing and warehousing. It is the right time to increase trade and partnership with Turkey and China, as Pakistan could get benefit from their technological advancement and expertise.
Currently, auto parts manufacturers are facing multiple problems on the domestic front, which is hampering growth of this developing industry. Physical presence in the international markets and trade fairs is a big challenge for domestic manufacturers, but neither government nor the TDAP is willing to help the industry.
Manufacturers underscore that Automechanika and Automotive Aftermarket Products Expo (AAPEX) are two top auto manufacturers’ exhibitions, where industry leaders come from all parts of world for business development, but Pakistan’s presence in such events is negligible, because the trade promoter in Pakistan, TDAP, is reluctant to recognise the export potential of domestic manufacturing. In addition, the country does not have a long-term or permanent policy for trade and exports development.
Citing a recent example, industry leaders point out that Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has to do untiring efforts to convince the TDAP that auto parts manufacturers’ continuous participation in the trade fair and exhibitions is required for boosting auto parts and accessories exports from Pakistan. However, after a long wait trade development has provisionally allowed support to auto parts and accessories manufacturers by removing third time participation condition for one year. Now, Pakistani auto parts manufacturers can participate in Automechanika 2012, without paying an extra participation fee.
Auto parts manufacturers urge the TDAP and the government to immediately initiate industry profiling process, and declare a long-term policy for auto parts manufacturing in the country, instead of curtailing their participation in international exhibitions. They demand the government to encourage research and development in Pakistan and set up warehousing facilities in different parts of the world, as foreign buyers are reluctant to do business with Pakistan owing to non-availability of uninterrupted electricity supply for industry and poor law and order situation. Industry leaders also ask the TDAP CEO Tariq Iqbal Puri to take on board different stakeholders and formulate a comprehensive policy for auto parts manufacturers.
