Business Daily - Reports that another Chinese vehicle manufacturer, Chery Automobile, plans to open an assembly plant in Kenya are quite positive.
The announcement comes in the wake of another Chinese firm, Beiqi Foton Motors, announcing tht it is also rolling out plans to assemble its vehicles in the country in a bid to tap demand in the East African market.
The move is good news for the country as it means more jobs will be created as the economy battles the effects of a global economic recession, drought and a weak shilling
Recently, Toyota Corporation announced that it plans to acquire a 50 per cent stake in a local truck and bus assembly firm to assemble Hino trucks and buses locally. The company will invest Sh3.1 billion to upgrade and expand the assembly plant.
On its part, Foton Motors has said that it will open an assembly plant in Nairobi next year to build light commercial vehicles while India’s vehicle manufacturer, Tata, will also unveil an assembly plant in the country.
Asian vehicle manufacturers are taking advantage of the regional common market as duties for locally assembled units are zero as opposed to 25 per cent for fully built units.
The rise in freight costs and the high duties for imported vehicles has seen companies opt for local assembly in a bid to lower production costs.
The companies are also targeting the eastern Africa market, which has a population of about 130 million.
By assembling the vehicles locally, residents will be able to buy the units cheaply.
Only 51 per cent of new vehicles are assembled in Kenya and manufacturers hope to raise this figure to between 80 and 90 per cent.
We believe that the entry of the Asian firms is good as it will also spur competition in the motoring sector and offer consumers a variety of products.
The government should not rest, but should take advantage of this wave of investments from the East to shore up the local economy.
By providing these foreign investors with a conducive business environment, the government will be ensuring that it helps propel the creation of much needed jobs.
