Pakistan and China have been enjoying cordial and friendly relations since 1950. From 1970s onwards, the relations between Pakistan and China strengthened more in all sectors. China has generously supported Pakistan in military, missile and nuclear program, and economic sector, even during the sanctions imposed by the US. This led to confidence building between Pakistani and Chinese policy makers and people. As a result of this long-standing friendship, we see a big achievement in the form of China-Pakistan Economic Corridor - CPEC.
CPEC is a 3,218 kilometer long route, to be built over next several years, consisting of highways, railways and pipelines. The actual estimated cost of the project is expected to be US $75 billion, out of which US $45 billion plus will ensure that the corridor becomes operational by 2020. The remaining investment will be spent on energy generation and infrastructure development.
Automobile industry is an integral part for the development of highways, roads and infrastructure. This project is strategically very important and beneficial for the economies of both countries. I am confident that Pakistan automobile industry would be one of the main beneficiary of CPEC. Once this, One Belt-One Route is developed and started its operation, Pakistan can import automotive parts and ckd kits from China on cheaper cost. Due to un-employment factor, Pakistan has low labor costs, so Chinese origin vehicles can be developed locally in little investment. These vehicles can capture the local market if these are sold in economic prices to Pakistani people.
The government of Pakistan is introducing extensive long-term tax concessions for Chinese companies operating at the port of Gwadar on the Arabian Sea, in a move aimed at bringing in more investment from china. The Chinese companies are exempt from customs duty for a period of 40 years for the importing of equipment, materials, plants, machinery, appliances and accessories used for development of the port and free zone. The duty exemption also extends to the import of bunkers and vehicles. Duty exemption for the import of Chinese vehicles, used for the development of Gawadar port, means a big influx of Chinese vehicles can be seen on Pakistani roads in near future. The major import would be in heavy duty and light duty trucks segment.
CPEC has definitely opened doors for Chinese companies to come here 'BIG'. Several news reports have appeared during last few months indicating that Chinese are willing to invest in Pakistani automobile sector JAC, a Chinese automobile colgromate has already been in talks with the government, while Zotye another Chinese automobile company is in process of making a deal with a big business group of Pakistan.
One of the automobile giant of China, The Foton Group, has showed keen interest in investing in manufacturing a range of automobiles in Pakistan. A delegation from Foton Group China held a meeting with the Finance Minister, recently and praised the pro-investment policies of the government of Pakistan. The Finance Minister welcomed the delegation and appreciated its plans for investment in Pakistan. He said that the government has earlier this year announced the new auto policy for the next five years and encouraged the Chinese company to make use of the opportunities for investment offered under this policy. There are quite a few companies which have shown interest so far.
Chief Minister of Punjab Shahbaz Sharif has offered free-of-cost land to Chinese investors if they invest in Punjab, Pakistan. The Chief Minister made the offer while addressing the Punjab-Qingdao Business Seminar, during his last visit to China.
A spokesman for Brilliance China Auto, German luxury carmaker BMW's Chinese mainland partner, said that Chinese automakers are planning to expand their business network in Pakistan. "We plan to build a new automobile assembly plants in a number of countries, such as Pakistan, "We are engaged in setting our sights in foreign markets. Building assembly plant in Pakistan will enable us to explore Pakistan markets faster than direct vehicle exports, we are looking at CPEC as a great opportunity".
The First Automobile Works... FAW has already working with a Pakistani partner and having an assembly plant in Karachi, they are increasing their market share gradually. Donfeng motors has also started assembly of their heavy duty trucks in Pakistan.
In light duty commercial truck and pickup segment many Chinese companies are establishing their assembly plant in Pakistan with Pakistani partners. The most prominent is Khalid Mushtaq Motors. They are building their automobile assembly plant in Nooriabad. They will introduce their revolutionary products very soon especially in light commercial pickup/truck segment. It will certainly change the horizon of Pakistan automobile industry.
(The writer is Chairman Pak-China Cultural & Businessmen Society)
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