The Automotive sector seeks State Bank assistance

Pakistan Association of Automotive parts and Accessories Manufacturers (PAAPAM) has asked the central bank to help the Automotive sector survive the pandemic crisis through various facilitations, including short- and long-term financing, a statement

In a letter written to State Bank Governor Reza Baqir, association Chairman Mohammad Akram said that the current loans should be converted to eight years long-term financing with zero markup for the next 12 months.

He complained the banks are generally discouraging SMEs from benefitting from salary loan by demanding collateral.

The SMEs should be given the salary amount as the case and funding may be arranged by the government through EOBI, WWF and Social Security Funds that these enterprises have been depositing since years.

Akram demanded waiver of 100 percent cash margin on opening letter of credit. Import without LC be enhanced to $25,000, he said and also demanded 15 percent export rebate on auto exports as provided by many economies.

The automotive sector in Pakistan is the one of the fastest-growing industries of the country, accounting for 4% of Pakistan’s GDP and employing a workforce of over 1.8 million people.

Currently, there are 3,200 automotive manufacturing plants in the country, with an investment of ₨92 billion (US$650 million) producing 1.8 million motorcycles and 200,000 vehicles annually.

Its contribution to the national exchequer is nearly ₨50 billion (US$350 million). The sector, as a whole, provides employment to 3.5 million people and plays a pivotal role in promoting the growth of the vendor industry.

Pakistan’s auto market is considered among the smallest, but fastest-growing in Asia. Over 180,000 cars were sold in the fiscal year 2014–15, rising to 206,777 units fiscal year 2015–16.

At present, the auto market is dominated by Honda, Toyota and Suzuki. However, on 19 March 2016, Pakistan passed the “Auto Policy 2016-21”, which offers tax incentives to new automakers to establish manufacturing plants in the country. 

In response, Renault, Nissan, Proton Holdings, Kia, SsangYong, Volkswagen,FAW and Hyundai have expressed interest in entering the Pakistani market. NLC signed an agreement with Mercedes Benz for the manufacturing of Mercedes Actros trucks in Pakistan.

Pakistan has not enforced any automotive safety standards or model upgrade policies. A few old models of vehicles including the Bolan and Ravi continue to be sold by Suzuki

 
 
 
 
 
 
 
The Automotive sector seeks State Bank assistance.

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