Auto parts SMEs complain of no access to bank credit

Posted on 5 months ago

KARACHI (INP): Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Chairman, Munir K. Bana has appealed to the government to declare Auto Industry as a "Key Industry", as it provides livelihood to over 5% of the country's population, saves valuable foreign exchange and contributes almost 3% of GDP.
He clarified that the Auto Industry is comprised of Assemblers of various vehicles (i.e. cars, motorcycles, tractors, buses & trucks), as well as the Auto Parts Manufacturers (APMs), who produce the
entire spectrum of engineering technologies necessary for assembling an automobile.
He said that a majority of the Auto Parts Manufacturers are SMEs, and this category unfortunately has no access to traditional bank credit.
He stated that Governments in the West offer bailout packages for the auto industry in times of crisis, but unfortunately our government does not have the resources to support auto industries in Pakistan, even though these industries generate employment, save foreign exchange through import substitution and, being fully documented, honestly pay their fair share of taxes.
As the Auto Industry is considered the mother of all industries, governments around the world bend backwards to ensure that the Auto Industry survive all major setbacks, whether these are local or international slowdowns, or whether there are natural catastrophies or manipulated meltdowns. In Pakistan, this is the only industry which has continued to invest in new technologies and raise production capacities, in spite of adverse policies like import of used vehicles, non-implementation of past Auto Industry Development Plan, lack of export incentives, non-availability of credit, absence of utility services etc.
Mr Munir Bana reiterated that, by declaring Auto as a Key Industry, the government can create the right environment for encouraging new entrants to set up assembly plants in the country, thereby fostering healthy competition, further localization and industrial growth.
This is a better option as compared to the current trend of supporting import of used vehicles at the cost of local employment, foreign exchange losses and revenue generation.

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