Chinese bus manufacturers are planning to set an auto assembly plant near Lahore to capitalise on the incentives offered to the new investors under the Pakistan Auto Policy 2016-21, official documents revealed.
King Long United Automotive Industry in joint venture with Shine Autos plans the assembly plant to produce commercial vehicles, both buses and trucks at the plant.
“Initially, the JV plans to produce three types of commercial vehicles, including commercial vehicle with capacity of 15 passengers, buses with capacity of 58 passengers, and mini truck of different capacities,” the document noted.
An official said for this purpose, the joint venture requires 100 acres of land near Lahore and contacting the concerned authorities in Pakistan to help them in this regard. “The project would attract an investment of approximately $200 million,” the official estimated.
It may be recalled that Master Motor Corporation, part of the Master group, is collaborating with China-based Changan to manufacture crossover SUVs as well as light commercial vehicles in Pakistan, establishing a plant in Karachi with an aim to export units to other countries as well.
Pakistan has huge potential in terms of the Motorisation Index since it ranked 160th in the world with only 18 vehicles per 1,000 inhabitants.
Auto Policy 2016-21 aims to facilitate higher volume, more investment, enhanced completion and better quality with latest technology. It aims to create a balance between industrial growth and tariffs to ensure sustainability of all stakeholders, and providing policy consistency and predictability for investors and mid-term review to cater for emerging developments.
Under the policy, the government has allowed one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility. It has also permitted import of 100 vehicles of the same variants in the form of completely built units (CBUs) at 50 percent of the prevailing duty for test marketing after the groundbreaking of the project.
A major incentive for the new investors is the reduced customs duty on non-localised parts for five years. Similarly, localised parts can be imported by the new entrants at 25 percent duty compared to the current 50 percent for five years.
Pakistan’s total truck production was 2,049 units in July-September period, with sales clocking in at 1,738 units, down 22 percent from 2,230 units the same quarter last year.
Similarly, 281 buses were produced in the country, of which 267 units were sold, up 23. 6 percent from 216 units sold in July-September 2017. Overall, Pakistan’s auto sales declined four percent year on year in the first quarter of fiscal year 2019.