The government is finalising new legislation which supports the growth of the motor vehicle industry through capacitating local vehicle assembly and component manufacturing.
BY TATIRA ZWINOIRA
A draft copy of the legislation titled The Motor Industry Development Policy Framework, which is being prepared for Cabinet approval, aims to boost local assembly of vehicles to 70% from the current levels of below 10%.
Industry and Commerce minister Mike Bimha told NewsDay on the sidelines of the launch of Grandtiger vehicles on Monday that the policy was targeted at local and foreign investors. The vehicles are being assembled in partnership with Chinese car manufacturer BAIC and Willowvale Motor Industries (WMI).
“Investors want to know what the policy framework is for them to have confidence to invest. Without any policy they will come and say ‘what policy?’ And when we say we do not have, they will say ‘bye bye’ and go to other countries,” Bimha said.
“It is more to encourage both local and foreign investors to go into the motor vehicle value chain. The policy does not just address the assemblers, it also addresses component manufacturers, those who can make components for cars. The moment you have policy framework then investors will see that there is some support and that it is sustainable for them to invest and make a return out of it.”
He said that the policy framework would soothe investors who wanted to partner local assemblers, which would result in them investing in capacitating that segment in the motor vehicle value chain.
Since 2012, the country’s biggest assembler WMI had ceased production, as the company could no longer sustain itself with the downturn of the economy.
As such, this gave rise to second-hand vehicles that started elbowing out local car assemblers and retailers.
Bimha said the policy was expected to facilitate the development of the automotive industry to become a significant contributor to the gross domestic product, exports and government revenue.
The government plans to capacitate car assembly to 70%, with a goal of exporting cars in the region and earn the much-needed foreign currency.
The implementation of the policy will first focus on semi-knocked-down (set of car parts that have been partly put together) car kits to increase production.
Once car production go up, the Motor Industry Development Policy Framework is expected to attract investors to partner car component manufacturers to support car assemblers in assembling fully-knocked-down car kits from their component level.
Analysts say such a move is welcome and long overdue, as the sector has suffered stiff competition from second-hand vehicles.