A joint-venture agreement has been signed between M/s Doublestar, MSD Tyre & Daewoo Pakistan Express Bus Service Limited in Islamabad.
Prime Minister Imran khan said that after achieving economic stability, also reflected by improvement in current account deficit, appreciation of rupees as well as positive a market sentiments, the government was now focusing on job creation and exports augmentation by encouraging foreign investment.
He expressed his view while addressing a Sino-Pak tyre manufacturing joint ventures tripartite signing ceremony between M/s Doublestar, MSD tyre and Daewoo Pakistan express bus service limited here at PM office.
The company will aim to produce five to six million pieces every year, 2-3m of which will be for trucks and buses and 3-4m for passenger cars. “We will start with the trucks and buses segment,” Peng says, “because nobody is producing these in Pakistan and there is growing demand.” With Daewoo as the local partner, there should be no difficulty finding the first customer.
Dr Xu Peng, Managing Director of InvestTarget said “We have looked at the numbers carefully, and have local partners who know the market well. The cost of doing business may not be lower than China, but the location advantage of being in Pakistan will help reduce transportation cost.”
Further he added “Daewoo is a very influential brand and working with them will be a good signal to the market that we are bringing a reputable brand. Last year, Doublestar (a partner in the consortium) acquired Kumho, the Korean company. We are confident we will be able to develop the local market, curbing smuggling will be important and the government has to give us the protection we need.”
“I have worked with Haier” he says, “and they have been quite successful here.”
The project is still deciding between Gwadar and Karachi for the site. “Gwadar is a free economic zone and a seaport, so that gives it a bit of an advantage” Peng says. “But Karachi is also a seaport with a mature infrastructure, though there is no free economic zone here. Travel distance to the markets to Lahore, Rawalpindi, and Faisalabad and so on is much easier from Karachi.”
“Whatever we decide, it will be close to the sea so we can open up export markets.”
He wants to hit breakeven within 3 years, given the import protections and that there is no TBR (Truck Bus Radial) tyre producers in the country, “depending on how we finance the project”. At the moment there are two big financiers, himself and another from Hong Kong.
They hope for groundbreaking by mid-2020. “Right now we are finalizing hiring, training timelines. We aim to hit one million TBR in the first year for production and distribution.”
Khan congratulated his economy team for putting the country’s economy which was main aim of that political party.
Further prime minister added “ with recent report World Bank report listing Pakistan at number 6th and 28 points improvement in terms of Ease of Doing Business (EODB),the heads international Monetary fund (IMF), World Bank (WB) and the Asian acknowledge stabilization of economy in the country.
He said that now governments focus was on creation of jobs opportunity for youth and encouraging investments so as to achieve an enhanced and more than projected economic growth rate.
This agreement will allow to jointly manufacture tyres in Pakistan, resulting in a major yearly saving in import bills as well as boosting foreign exchange reserves along with the export of tyres.
This agreement holds a significant value for the automotive companies in Pakistan. Since they rely on imported tyres for their cars, with this Sino-Pakistan Tyre Manufacturing Joint Venture, we can expect this trend to change. People can expect to buy cheaper and reliable tyres now at a minimal cost
More importantly, several agreements have been signed with China under the China-Pakistan Economic Corridor (CPEC). As a result, our nation benefits from the increment in job opportunities for the youth.
The government is said to be making a great effort to improve the manufacturing sector of Pakistan, so if the foreign investments keep taking place like this, we can hope for a brighter tomorrow.