LAHORE - Blaming the international changes which he described unkind, Prime Minister Shaukat Aziz said that oil and commodity prices have put Pakistani economy under inflationary pressures, “but this is a global change rather than a Pakistan specific one.”
Speaking on the 40th anniversary of Honda Atlas operations in Pakistan, marked by groundbreaking ceremony of 100 million dollars new Honda Motorcycle plant here Monday, the prime minister admitted that agriculture sector indicated a slower growth rate as compared to last year.
The Prime Minister acknowledged that 2.6 percent decline in agriculture sector from 4.1 as compared with the previous year saying, “but that it was due to pest attack on cotton crop.” Shaukat Aziz said that lower than expected wheat crops yield also contributed to slowing-down of agriculture sector growth.
However, Prime Minister said the present government had been taking several measures for the economic fundamentals of Pakistan, which he said had steadily been improving over the last couple of years in the wake of prudent economic policies adoption. He said present policies were acting as catalyst in bringing about economic stability and predictability.
With low interest rates and steady exchange rate, he said, economy had shown signs of growth and resilience in the face of ever increasing geo-political challenges, as both trade and investment figures reflected growth, he remarked.
He said government’s decision to focus public sector investment towards infrastructure development would give a positive boost to growth and investment, which, ultimately, he said would address the problems of unemployment and poverty.
As per PM, the present government is bringing down the cost of Pakistani products to compete globally. “Our goal is to adopt a new strategy to encourage rapid industrialisation for creating more job opportunities in the country,” he observed.
He said the engineering industry was in the forefront to make economy stronger, whereas 100 billion auto-industry, under the head of motorcycles, was taking the lead marking itself a hi-tech value-added sector, providing high skilled job opportunities to the people.
Prime Minister said that WTO framework allowed a country enough flexibility for its industry to grow and develop. “Irrespective of the WTO requirements, there is enough space to provide good working environment to automobile industry,” he assured the assemblers and vendors.
He said that excess capacity had largely been consumed in various sectors, adding that capacity enhancements were currently being carried out in several sectors including textiles, engineering, electronics, cement and packaging.
He said that the low interest rates had enabled the financial sector to become more dynamic. Rather than just lending to the government, the focus of innovation had been the private sector and the consumer, he added. This step unleashed unforeseen consumer purchasing power across the economy with over 50 per cent growth rate in consumer durables like TVs, refrigerators and motorcycles. Shaukat Aziz said that a tight fiscal stance helped stabilize the economy. “The budget deficit is at around 4 per cent and inflation has largely been kept in single digit range”, he added.
Talking about the performance of Pakistan’s economy in the year 2003-04, he said that a real GDP growth rate of 6.4% was achieved during this year.
He said that all the sectors contributed to the growth but automobile, electronics, textiles and cement sectors clearly stood out.
Shaukat Aziz said that large scale manufacturing had grown by 16 per cent - a trend that augers well for high growth during current fiscal year.
Shaukat Aziz said that the indigenous auto industry with 80% to 90% deletion level in tractors and 50% to 70% in cars, has performed well over the last few years under auspices of Engineering Development Board (EDB).
He said that it was government’s policy to localize as localization led to self-reliance. He urged the auto industry to export automobiles and improve competitiveness adding that wages in many competitor countries were on the rise, providing an ample opportunity to Pakistani auto industry to take advantage.
Prime Minister said that Pakistan could prove a regional manufacturing hub for South Asia, Middle East, Africa and Central Asia. He said that Pakistan must have more and more industries, enabling environment provided by the government to help increase motorcycle production from 100,000 in 2002 to the projected level of over 500,000 during the current fiscal year.
Highlighting some of the measures taken so far, he said that launching of industrial parks all over the country operated as public-private partnership was providing a hassle free investment environment. He said stable macro economic situation had also provided a high growth environment for investors.
Talking about the tariffs for raw material, he said that the tariffs had been reduced to ensure competitiveness of local manufactures, which would, he said, continue in future budgets. He said that continuity and consistency of economic policies would ensure a predictable environment for investors.
Prime minister said that the present government was promoting healthy labour-management relations to improve productivity and competitiveness. He said that his government was focusing on SME sector promotion through skill enhancement, easier availability of credit and technology transfer.
Speaking on the occasion, Vice President Honda Japan, M. Hamane commended government for providing healthy environment to auto industry adding that Honda Atlas would produce 300,000 motorcycles this year. He urged the government to take notice of the companies that were marketing foreign-made motorcycles in the name of locals.
Earlier, in his welcome address, President and Chief Executive Officer of Atlas Honda Limited, Saquib H.Shirazi said that they had successfully met the three challenges of volume, consumer benefit and investment before them. Talking about volume he said that Atlas Honda was going to produce 300,000 motorcycles this year out of half million of country production. Despite some undesirable practices adopted by some players in the sector, the consumers were made able to discerning between value added and one time-buy phenomena.
Talking about the passing on the volume benefit to the consumer, Saquib Shirazi said Atlas Honda had increased its localisation and volume continuously and could able it to achieve over 90 percent of the result. He said that Atlas Honda had reduced prices by 25 percent by reaching to the lower middle class users.
About investment he said that Honda had invested about 25 million dollars to expand the existing facilities and over 2,000 new jobs had been provided besides contributing around Rs. 9 billion to national exchequer.
Referring to the new Motorcycle Plant, Shirazi said that the plant would be set up at a cost of US $ 100 million.