The ground breaking ceremony of Proton’s assembly plant in Pakistan took place on the 22nd of March, in presence of the founding father of Proton & the Malaysian Prime Minister Dr Mahatir Mohammad and his Pakistani counterpart Imran Khan.
The event holds a significant importance since it isn’t just a beginning of a new automobile assembly plant, but brings the two nations closer in terms of trade and bilateral relations. During the three-day visit by Malaysian Prime Minister, Pakistani and Malaysian firms signed 6 Memorandums of Understanding (MoUs) for joint venture in IT, Telecommunication and off course, vehicle manufacturing.
Another noteworthy aspect is the fact that Pakistan will be the location of the first-ever overseas CKD plant for Proton vehicles, and will reportedly become Proton’s gateway to penetrate other countries.
Proton Chairman Syed Faisal Albar said the company’s export strategy was to look at countries that had multi-trade agreements with other nearby countries. Syed Faisal Albar while speaking to Malaysian media said:
“Hopefully, they (Pakistan) can become gateways for us. Therefore, we don’t need to go everywhere. We just focus on key markets that have trade agreements with surrounding countries. That will become our door (for new markets).”
The Proton assembly plant in Karachi, will be operated by its Pakistani partner Al-Haj Automotive who will make an initial investment of US$30 million to build the plant on a Greenfield site near Karachi.
According to Proton Chairman Syed Faisal Albar, Karachi had been chosen as the site of the plant because it was the center of the automotive industry in Pakistan and Proton’s partner Al-Haj was based there. Syed Faisal said Proton had actually repositioned its export strategy, where it would like to go into a market which was meaningful and be there for the long term. He said:
“Rather than just sending cars CBU (completely built-up cars) to the dealers to sell, the new strategy includes assembling cars in that local market. With that you assure the local government or you get it to be more motivated to be with you in the longer term because we create jobs.
This is like the partnership (in Pakistan), where within three years we will be creating 2,000 direct jobs. We estimate to the downstream level, which is the whole entire ecosystem of the automotive sector that we want to create, we will be creating another 20,000 ancillary jobs.”
Syed Faisal said Proton chose Pakistan to establish its first overseas assembly plant because of the high market potential.
“There are 17 cars for every 1,000 people – that’s quite low. We want to go to the market for the longer term. Besides that, there’re not many foreign brands that exist in Pakistan currently. Therefore, we believe there’s a first mover advantage if we go in early enough before everybody crowds in. Then we can gain long-term benefits.”
Syed Faisal said currently Proton was targeting a production capacity of 25,000 units a year starting June 2020 from the new plant, with 1.3 liter Saga sedan as the first production model. He explained:
“We need to position according to the tax structure incentives in each country. We are now focusing on Saga simply because Saga is below 1500cc, while the tax structure of 1600cc and above is different. We are studying (to introduce) other models also. We are also studying the consumer behavior in Pakistan. Some products may work in Malaysia and other countries but don’t work in this country.”