"CSF to Carryout Policy Analysis on the Competitive Advantage of Motorcycle Industry in Pakistan"

Islamabad, August 23, 2006 The Competitiveness Support Fund (CSF), a joint venture of the Government of Pakistan, Ministry of Finance and the US Agency for International Development (USAID), plans to conduct a number of studies on the global competitiveness of selected economic sectors. The studies will examine where competitiveness already exists within targeted sectors and where it can be improved. CSF will use the studies to forward recommendations to the government on policy interventions it should take to make certain sectors more internationally competitive.

The first sector selected by CSF is the growing motorcycle industry in Pakistan. Other analysis will follow on the automotive and food processing sectors. Motorcycle Industry estimates show that last year a total of over 700,000 motor cycles were produced in the country. The industry has been experiencing a healthy growth rate of around 30% per year for the past 4-5 years. It is estimated that production will cross the million units mark by 2008. To identify the prospects and problems/obstacles of the motorcycle industry, a high-level delegation from CSF recently visited Karachi and met the key stakeholders. A follow-up visit is scheduled for the first week of September to Lahore for an interaction with the stakeholders there as well.

Presently there are 43 motorcycle assemblers in the country that have been licensed by the Engineering Development Board (EDB). Out of these, there are 3 Japanese assemblers (Honda, Yamaha and Suzuki), while the remaining 40 assemble Chinese motorcycles. These assemblers buy parts, sub-assemblies and assemblies from over 200 large, medium and small vendors located in Karachi and Lahore. It is estimated that the motorcycle industry employs more then 200,000 people directly and indirectly.

There are a number of government agencies that are involved in regulating, controlling and monitoring the motorcycle industry. These include the Engineering Development Board (EDB), the Pakistan Standards and Quality Control Authority (PSQCA), the Ministry of Industries & Production (MOIP) and the Central Board of Revenue (CBR).

The primary objective of this study is to carry out a policy analysis of the competitive advantage of the local motorcycle industry, along with identification of the problems being faced by the sector. It will use its findings to recommend solutions at the policy and programme level on how to strengthen the supply chains and improve the value chains of this industry. CSF is also facilitating the establishment of a Policy Expert Group (PEG), consisting of members from the value chain of the motorcycle industry in Pakistan.

The Competitiveness Support Fund is based on international best practices (i.e. India, Thailand, Turkey, Ireland and Finland). It has been tailored to the current Pakistani economic environment to strengthen and make the private sector more competitive and to improve the policy framework needed for innovation-based competitiveness. The Competitiveness Support Fund is chaired by Mr. Omar Ayub Khan, Minister of State for Finance, and has a professional management team headed by Mr. Arthur Bayhan as the CEO of the fund.

The CSF will support Pakistan’s goal of a more competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks and enhancing public-private partnerships within the country. The CSF will also provide technical assistance and co-financing for initiatives related to entrepreneurship, business incubators and private-sector led initiatives with research institutes and universities that contribute to creating a knowledge-driven economy. CSF activities will help all producers along the value chain that contribute to ultimate product quality. By obtaining better value and better prices for quality products, and by improving cooperation throughout the Pakistani economy, the CSF will contribute to poverty alleviation by providing more income for producers and better employment prospects for employees.

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