The anticipated recreational vehicles (RV) industry could propel the tourism sector to contribute up to 7 per cent to Pakistan’s GDP — currently at 3.5pc — and a subsequent increase in the amount of annual tax collected by the Federal Board of Revenue (FBR).
Pakistan’s rich spectrum of natural setting is awaiting progressive investors to plunge into the multibillion-dollar RV industry. With bounteous opportunities for the manufacturers of recreational vehicles — motorhomes, campervans, and travel trailers — Pakistan’s tourism industry would experience economic uptrends in addition to boosting automotive engineering in the country. The government of Pakistan could take authoritative measures to persuade domestic and foreign investors to both set up local RV manufacturing units and import these purpose-built vehicles.
The aggregate demand for recreational vehicles is chiefly regulated by two factors: a passion for tourism and affordability. Let me speak of the buying power of the natives of Pakistan: according to the All Pakistan Motor Dealers Association, the country’s average monthly import of new and used vehicles is a bit more than 2,500 units that surpass the UK’s average monthly motorhome sales of 1050 units by one and half times. An average campervan costs $20,000. Pakistanis have bought more than 1,900 units of KIA Sportage cars in January 2021. The average price of this vehicle is nearly double that of a motorhome. It reveals a large number of Pakistanis are capacitated to buy an RV, thus, opening new avenues for RV makers and importers. This purchasing parity, if clubbed with Pakistanis’ unconditional love for travelling, camping and caravanning, could instigate bigger mercantile ventures.
Pakistan’s rich spectrum of natural beauty is awaiting progressive investors to plunge into the multibillion-dollar recreational vehicle industry
Garnished with four distinct climatic zones, Pakistan preserves scenic beauty to attract native and foreign vacationers. From the mountains of Himalayas to the plains of Indus, and from the divinely blissful Northern areas to the green waters of Gwadar, the whole landform seem to bloom with a multitude of textures. The country’s tourism industry has recently gotten momentum. Hundreds of thousands of people have got the financial net worth to buy luxury travel cars, travel trailers, campervans and other recreational vehicles.
The insurance sector is another area that would flourish exponentially under the auspices of RV culture. Apart from comprehensive insurance cover, the concepts of liability coverage, collision coverage and vacation coverage could facilitate both the RV owners and the insurers. Insurance protection, on the other hand, would render confidence to the RV lovers to drive safely.
Welcoming investments in RVs could further give the local banks another product. Banks in Pakistan have a huge capacity to finance RVs and earn handsome chunks of profit from the lessees. The State Bank of Pakistan (SBP) could formulate product features, tenure of financing, annual mark-up rates, and the eligibility criteria to apply for RV financing. Like passenger vehicles, an RV is also a non-fund based facility and hence comes under the category of secured loan for banks and leasing companies.
The hospitality industry is directly associated with recreational vehicles. Just like hospitality investors build and maintain serviced accommodations at tourist spots, they have adequate liquidity to construct RV parking pitches and essentials. It could increase employment opportunities in the hospitality sector by 5pc.
In the same pattern, mechanics and dealers of RV parts would see new horizons for high returns on investment. RV rental business could be a new segment, especially for small and medium enterprises. The people who do not afford to buy their own motorhome could acquire it through rent to cruise through the country and explore new trends in caravanning and peripatetic ventures.
With the help of the National Coordination Committee on tourism, the Tourism Development Corporation of Pakistan (TDCP) aims to elevate travel and tourism’s contribution to GDP by more than $6 billion by 2025. In 2017, prior to the pandemic, the domestic tourism industry earned more than $7bn. The present government’s special interest in developing the industry is appreciable. The high targets set to earn from tourism could be achieved by working on the potential gap available for the business of RVs.
A few laws are required that relate to the ownership, usage, maintenance and parking of recreational vehicles. The TDCP, the SBP, the FBR, and the Ministry of Transport, with the coordination of pertinent private associations, could initiate the process of essential lawmaking and the manual of holding a recreational vehicle in Pakistan.
While applying environmental valuation methods, the economists would find the RV industry as feasible for the country as the ordinary passenger vehicles. Honda, KIA and Suzuki are already in the business of manufacturing, exporting and assembling recreational vehicles of different types and capacity. The government could ask these big three automotive leaders to manufacture and assemble RVs which are compatible with Pakistan’s climate and users’ preferences.
Published in Dawn, The Business and Finance Weekly, May 3rd, 2021