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Pakistan manufacturing Updates

ghazi52

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Foreign investors from China, Russia and Korea are taking interest in the revival of Pakistan Steel Mills (PSM), which has been closed since 2015.

The government had already announced to run PSM through Public-Private Partnership to revive the Mill. A high-level meeting was informed yesterday that meetings are being held with potential investors regarding the revival of Pakistan Steel Mills (PSM).

These investors/parties are from China, Russia and Korea and the meetings are being held almost on a daily basis.


Federal Minister for Privatisation, Mohammed Mian Soomro chaired a meeting regarding transaction updates, legal matters and e-office in the Ministry.
 

ghazi52

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In another major development for Pakistan's manufacturing sector, South Korean electronics giant Samsung is in the process of establishing a television line-up plant in Karachi, announced Advisor to Prime Minister on Trade and Investment Abdul Razak Dawood on Tuesday.

“I have been informed that Samsung Electronics is in the process of establishing their TV line-up plant in collaboration with the R&R Industries at Karachi,” said Dawood in a tweet.

The advisor added that the said plant would become functional in the fourth quarter of 2021 and is expected to produce 50,000 units annually.

“This is a vindication of MOC’s "Make-in-Pakistan" policy for industrialization via rationalization of input costs and other incentives,” added Dawood.

As per the financial results for the second quarter ended June 30, 2021, Samsung Electronics posted consolidated revenue of Korean Won (KRW) 63.67 trillion, a 20% increase from the previous year and a record for the second quarter. Operating profit increased 34% from the previous quarter to KRW 12.57 trillion as market conditions improved in the memory market.

The development also comes as a major boost to Pakistan that has been promoting local assembly/manufacturing in a bid to reduce reliance on imports.

Back in July, Lucky Motor Corporation (LMC), a subsidiary of Lucky Cement Limited, announced in a notice to the Pakistan Stock Exchange that it has entered into an agreement with Samsung Gulf Electronics Co., FZE (Samsung) for the production of Samsung-branded mobile devices in Pakistan.

The notice added the production facility for producing Samsung mobile devices will be located at LMC’s existing plant facility producing vehicles at Bin Qasim Industrial Park, Special Economic Zone, Port Qasim, Karachi.

The production facility is expected to be completed by end of December 2021.

Last month, the Pakistan Communication Authority (PTA) issued the Mobile Device Manufacturing (MDM) authorisation to LMC to manufacture Samsung-branded phones in the country.

The authority said this is a landmark achievement and “will further revolutionise the vibrant mobile manufacturing ecosystem in the country by ensuring the presence of major local and foreign players in the market".
 

Ali_Baba

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While these are all assembly deals - what they do is reduce the cost of imports and you are not paying for the value add of a manufactured product versus manufactured parts needing assembly and the advantage of doing it inside Pakistan means the product is cheaper for local consumers to buy.

This should be openly recommended and not something people should turn their noses up at if it doesnot involve manufacturing of key components(that can come later).
 

_NOBODY_

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While these are all assembly deals - what they do is reduce the cost of imports and you are not paying for the value add of a manufactured product versus manufactured parts needing assembly and the advantage of doing it inside Pakistan means the product is cheaper for local consumers to buy.

This should be openly recommended and not something people should turn their noses up at if it doesnot involve manufacturing of key components(that can come later).
You don't immediately go from nothing to full fledge manufacturing so be patient.
 
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ghazi52

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ISLAMABAD: The federal government is likely to frame a petrochemical policy aimed at attracting an investment of $3 billion in this sector on the same lines as in India and other countries.

The Overseas Investors Chamber of Commerce and Industry (OICCI) has written a letter to Prime Minister's Advisor on Commerce and Investment, Abdul Razak Dawood, in which foreign companies have proposed incentives to support the petrochemical industry locally.

A delegation of OICCI has also held a meeting in Islamabad to seek support from the authorities for the petrochemical policy.

There is a need for development of comprehensive petrochemical policy for Pakistan in the following four dimensions:

(i) cost competitiveness (duty free imports of equipment, extended tax exemptions for up to 20 years, low cost financing like TERF, low BTU gas at wellhead prices etc);

(ii) market volume/access to demand (11 per cent duty on mainstream final petrochemical products currently not produced in Pakistan and maintain duties at January 2021 levels for midstream final petrochemical products currently produced in Pakistan, protection for local industry in FTAs, etc.); and

(iii) ease of doing business (simplification and streamlining of processes in the form of one window operations).

The requested support is broadly in line with incentives provided to petrochemicals in other countries such as India, South Korea, Egypt, Brazil, etc. According to the OICCI's member companies' estimate, by providing comprehensive policy support, Pakistan can attract investment up to $ 3 billion in the short term, which will improve investment to GDP ratio by 100 bps.

In the medium term, these investments will enable the country to achieve import substitution up to $ 800 million per annum, generate employment of 50,000 people and generate additional tax collection amounting to Rs 50 billion per annum.

In the long run, the success of these investments will lay the foundation for large-scale petrochemical investments which will have significant positive impact for the country.

Official sources told Business Recorder that petrochemical industry is categorised in the following segments:

(i) upstream products such as Ethane, Propane, Ethylene, Propylene, Styrene, Xylene, etc, which are basic feedstock of engineering plastics are not being manufactured locally due to unavailability of Naphtha cracker in Pakistan and local demand is being met through imports;

(ii) Midstream products not manufactured locally:
(a) Polyethylene (PE), Acrylonitrile Butadiene Styrene (ABS), etc. Polypropylene (PP) is presently not being manufactured locally but two projects are in pipeline:

(b) manufactured locally, Polyvinylchloride (PVC), Polystyrene (PS), Polyethylene Terephthalate (PET), Phthyalic Anhydride (PA), Purified Terephthalic Acid (PTA), Linear Alkyl Benzene Sulfonic Acid (LABSA), Sodium Laurel Ether Sulfate (SLES) and Methanol, etc.

The processes of this are injection molding, extrusion etc. Iii Downstream products:

Major applications are in construction sector (pipes, doors, windows, etc); auto parts; home appliances; electrical & electronics items; household items; furniture; apparel; packaging; scientific and medical equipment; paint & varnishes and artificial leather etc.

Copyright Business Recorder, 2021
 

ghazi52

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The Large-Scale Manufacturing (LSM) growth is back to the merry ways – registering 12.7 percent year-on-year growth for August. The cumulative Jul-Aug growth clocked in at 7.26 percent, but one has to be mindful that this comes off a low-ish base, as the second Covid wave had hit the country around the same period last year, leading to some disruption.

The August index is clearly the highest ever, keeping in line with a trend that started in September 2020. That said, the August value is not a runaway winner – as it is only better by a few decimals from the highest August index achieved in 2017. Last year August LSM index was at a multiyear low primarily due to Covid – and the 12.7 percent year-on-year must be viewed in that light.




In terms of sectoral contribution, automobile continues to lead the way with more than two-third of the cumulative growth, with less than 5 percent weight in LSM composition. The August growth is by and large built on low base as automobile production that had completely halted last year had only started to recover around August 2020. The August 2021 car production numbers are still some way off the peaks witnessed in FY18.

September car production numbers are encouraging – at multi-month high – registering highest production since January 2019. The Q1FY22 production will be nearly double than same period last year, but not all of it makes it way to the LSM numbers for various reasons. Whether or not the automobile demand takes a serious hit, like the one witnessed for much of 2019, as inflation concerns rise and chances of rate hikes increase with every passing day, will be known in due course. But for another two to three months, automobile will continue to lead LSM growth contribution, until the high base kicks in.





The two key construction industries – steel and cement remain on the upward trend, and that comes off a firm base, unlike some other sectors. As people finding it difficult to make ends meet, it will be an intriguing watch if low-cost housing continues with same fervor it started. Should there be a change of heart in Islamabad as regards PSDP spending, the demand could take a hit in the quarters that follow.

The three big sectors in terms of weight food, textile and petroleum have yielded low single-digit growth numbers, and not essentially from a high base. A significant number of industries are still producing way off the peaks seen in FY18. The same also gets cross verified by the use of HSD, which by and large indicates transportation of goods – as the volume remains lower than the high seen during FY16-FY18. There appear no signs yet of the industrial activity reaching the optimal. Not at least the large-scale.
 

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