By Arsalan Ali

ISLAMABAD, July 27: Pakistan has the potential to boost the export of motorcycles using the latest technology, which will help to lift foreign reserves.

Suleman Akram, Research Associate at Trade Development Authority of Pakistan (TDAP), told WealthPK that Pakistan has a manufacturing capacity of six million units per year, while local demand is only 2.4 million. He said Pakistan has the capacity to export more than 3 million motorcycles per year, which can generate $825 million annually.

Suleman said motorcycles are primarily exported to the United Arab Emirates, Somalia, Sudan, Nigeria, Kenya, Afghanistan, and Sri Lanka. He added that China, India, and Indonesia are the main competitors of Pakistan in Asia. Currently, Pakistani exports are far too low as compared to competitors because it lags behind in producing modern and fuel-efficient motorcycles.

Suleman said motorcycle manufacturers face numerous issues including scarcity of raw material such as steel and aluminium that are imported from China and Korea. He said the government has imposed additional 35% customs duty on motorcycle parts which has raised the cost of production of the final product. He said increasing prices led to a decrease in demand for motorcycles in domestic as well as international markets.

The official pointed out that Pakistan cannot compete with the market of India and Indonesia due to less fuel-efficient motorcycles. he said there is no innovation due to inadequate research and development in this sector. He added that Pakistan currently manufactures motorbikes having engine capacities of 150cc, 125cc, 100cc, and 70cc.

As many as 124 companies assemble motorcycles in Pakistan. Suleman said Atlas Honda bike holds a major share in the production of motorcycles (74%) followed by United Autos (14%), Road Prince (5%), and Yamaha (1.3%). He said sales tax increases the cost of doing business and makes expansion difficult for manufacturers. He added that additional taxes, and income tax are applied to the sale of products, while manufacturers already pay taxes on raw material.

Suleman mentioned that Pakistan motorcycle manufacturers face many hurdles in exports such as exchange rate volatility, capital available to the motorcycle industry, unfair tax system, and no investment in design. He said that in order to compete in the worldwide market, Pakistan should import the latest technology or produce it locally with the assistance of China. China is the largest producer and exporter of motorcycles in the Asia region.

He said that owing to the depreciation of Pakistani rupee, manufacturers are facing difficulty in the export of motorcycles, as the cost of importing engine components has increased.

According to the latest TDAP report, technology should be improved, and the government should raise the minimum fuel consumption requirements for various motorcycle capacities.

The report said technological research institutes should be established, and motorcycle research departments should be linked with various educational institutions. Research and development should be made mandatory based on a percentage of sales, says the report.

According to the report, low tariffs on motorcycle raw material and parts should be imposed to reduce the price of finished products. The report pointed out that the tax adjustment system needs to be improved to benefit local manufacturers.