Mobile, auto exports seen fetching billions of dollars

ISLAMABAD: The upcoming mobile phone manufacturing plants and expansion in the auto sector could fetch Pakistan billions of dollars in exports over the medium term.

It was stated by Chairman Board of Management of Engineering Development Board (EDB) and businessman Almas Hyder during a meeting with Prime Minister Imran Khan on Monday. The meeting was held to discuss ways to diversify exports.

“Engineering goods trade is the largest export sector in the world. It is 54 percent of the global trade which is equivalent to nearly $9 trillion,” Hyder said. “Pakistan is now in the phase of transforming. Engineering sector includes everything from steel bars to automobiles and from medical devices and surgical instruments to mobile phones.”

The PTI government, Hyder said, made some landmark policies like mobile phone manufacturing policy for Pakistan. “This policy has resulted in setting up 22 manufacturing plants in the last one year, including world class companies like Vivo, Oppo, etc. And now a plant is being set up for Samsung in Pakistan,” the EDB chief said.

This alone might result in several billion dollars of exports in the coming years, Hyder said. To give an idea, he said China was currently exporting over $126.7 billion mobile phones (50.9 percent of total cellphone exports), Vietnam over $35.3 billion (14.2 percent) and Pakistan was now on its way.

“We are now finalising the policy for the automotive industry, which will be called the Auto Industry Development and Export plan. This plan envisages export of at least 10 percent of the total import of this industry in the next five years, which should be a billion dollars at least.”

Consumer durables and energy equipment were two very large sectors of the World Trade and policies were being finalised for the export of these products, Hyder said. “Our exports last year were a total of $1.48 billion, which included medical devices surgical instruments cutlery fans, the auto parts home appliances and other engineering products, which is not much.”

The major changes were being made, he said. “We started with reduction in the prices of raw materials which has led to our industry becoming competitive.” He said the PTI government started looking at Africa policy last year. “When we went to Africa, we realised Pakistan does not have even a single trade agreement with any country in Africa,” he said adding, “Although we import tons of tea from Kenya and many other products from other African countries”.

He said India had signed over 32 trade agreements with African countries. “Africa is now becoming an economic union with over a trillion dollars of demand. Indian engineering products are spread all over including two and three wheelers, cars, buses and trucks, from Bajaj, Mahindra, Tata etc.”

The EDB head said these companies were getting special trade preference because of the trade agreements. “We need to urgently sign such trade agreements with Africa so that our goods get equal preference and we can get market share. We need to join the African Development Bank to enable our construction and EPC industry to compete and get orders from this great continent.”

He said the FTA signed with China was favorable to China. Recently over 300 items were added for export from Pakistan, including engineering products, he added. “We need to set up a Pakistan-China trade development institute, preferably with the help of our Chinese friends to train our companies for export to China.”

He said there was a huge potential there. Engineering industry was located mainly in the golden triangle of Punjab, Karachi and some of it in KP, he said adding that these were mainly small and medium enterprises. These industries purchased raw materials and components from the local markets and most of the time they did not get receipts because most of our trade was undocumented.

As such they cannot get duties and taxes refunds.

He told the Prime Minister that the government could not export taxes. “We have to provide them instruments and facilities to make them competitive. We can give them refunds through DLTL only. The other is the Export Passbook Scheme, which allows export first and then import of raw material duty free later on.”

Hyder said it was recorded in the passbook and that was the reason it was called the export passbook scheme. “We need to design and implement it with your (Prime Minister) blessing and backing.”

This year, he said the country would be closing around $1.8 billion of exports; however the future was bright. “If all our policies are put in place within this year, we should close exports of this sector around $4-$5 billion in the next five years.”

He further said they had also incorporated the EXIM bank. “We need government’s support to become operational. From where we, the President of EXIM Bank tells me, can commence operations by December 2021. This will help improve our export ecosystem,” he concluded.