Motorcycle manufacturers seeks govt support to achieve 100% localisation

[Lahore_Real_Estate]

* Government withdraws R&D facility, $50 per unit in 2010-11

* Consequently exports nose-dive 135 percent

Staff Report

KARACHI: The domestic motorcycle manufactures are seeking the government’s assistance in order to produce the two-wheelers with complete locally-made parts so that the industry can hit the milestone of achieving 100 percent localisation.

Industry sources said that they are very optimistic about the government’s support in terms of continuation of industry-friendly policy, maintaining level-playing field and encouragement of local players to enhance their production through Research and Development (R&D) funds.

They said that the local motorcycle manufacturers have successfully achieved more than 90 percent localisation of parts so far but they do not want to relax here as they have eyed on the target of 100 percent deletion level.

This milestone will fulfil the dream of the local manufacturers to make cheaper motorcycles available for the consumers besides saving billions of rupees foreign exchange of the country, which is spent on importing the locally unavailable parts, they added. They revealed that the local players are trying tooth and nail to manufacture carburettors and hi-tech parts demanding high precision and modern technology. They need government’s support in all means to achieve the local production of these parts meeting the international standards.

The sources said that the demand of local industry to resume R&D fund is no way unjustified as the industry is progressing by leaps and bounds and any hurdle in its way must be removed. The government withdrew the R&D facility, $50 per unit in 2010-11, after which the exports nose-dived by 135 percent to $1.34 million from $3.5 million in 2009-10.

However, they mentioned, the bike manufacturers showed great resilience and started regaining lost grounds in international markets as during the months, April to July 2011, the industry exported in excess of 2,500 units per month. This is against an average export of around 1,200 units per month last year.

They said that if R&D fund is resumed, there is no other opinion that Pakistan will easily be able to double its motorcycle exports this year. They said that this massive recovery by local industry is testament to the resilience of this sector. The progress this sector has made over the last ten years or so is a proof that Pakistani entrepreneurs can compete with the best in the world if consistent policies are in place.

The sources revealed that in order to effectively cope with domestic market of over 1.5 million units and after successful launch of their products in global markets, the local motorcycle producers are now planning further investment of over $150 million in their existing units.

They said that almost a dozen motorbike producers having production of 50,000 units or above are now planning to expand their capacities to cope up with the market demands.

A large producer of two wheelers in the country requested the government to continue supporting the local industry with current policies as with its huge forward and backward linkages, the motorcycle industry moves the wheel of the economy. The large vendor base that has been developed now integrates many industries and different part of the economy to create a thrust for growth. It has taken 50 years for the industry to reach a point where it is looking beyond its borders for expanding markets. In addition to now well-established markets of Afghanistan and Bangladesh. Pakistani made motorcycles are now reaching new horizons exploring markets of neighbouring Iran and beyond the shores to the African continent. The Middle Eastern region has also had some exploratory exports.