Speech by Cabinet Secretary, Betty Maina, EGH During The Launch of Toyota Hiace Assembly Line At The Associated Vehicle Manufacturers

Last Updated 6 months ago by Kenya Engineer

Ladies and Gentlemen, I am delighted to join you today for this celebration of the Hiace launch today and I believe we are all very happy to be here.

The motor vehicle industry has been in existence since the mid 1970’s, the Government of Kenya invited investors to partner through joint ventures in setting up Motor Vehicle Assembly plants with capacity to satisfy regional demand and contribute to economic growth through wealth creation, employment and technology transfer.

Today the Automotive industry in Kenya has the capacity to produce over 34,000 vehicles per annum, which is enough to satisfy the local vehicle demand. However, the assembly plants are currently producing a paltry 10,000 units, which is just less than 30% of the production capacity.

Despite these the industry has been able to provide 10,000 direct and indirect jobs to Kenyans. The industry also contributes about 30 billion per annum to the government in form of taxes.

As you are aware, the Government has come up with 4 priority sectors that we believe will adequately respond to the challenges facing our country, these are the Big Four economic agenda; food security, affordable housing, affordable healthcare and manufacturing.

I am made to understand that Toyota Kenya started its operations in 1964, when Toyota Tsusho Corporation opened a representative’s office and appointed Westlands Motors as its distributor.

In the years that followed, Toyota Kenya has grown from strength to strength and supporting the 4 pillars with the introduction of KD Hilux in 2019 and now today’s inauguration of this assembly line for Toyota Hiace is one of the many accomplishments Toyota has achieved this far. Allow me therefore to congratulate Toyota Kenya on attaining this milestone and for leading the automotive industry in driving the industrialization agenda and investing in Kenya for the growth and prosperity of our nation.

In view of the Government’s commitment to revitalizing the automotive industry, the Cabinet approved the National Automotive Policy which is expected to provide a long-term road map for the growth and development of the sector

The policy addresses matters including laying the legal, regulatory and institutional framework; desired to knock down levels for vehicles and motorcycle assembly; local content development and fiscal incentives amongst others, while launching Kenya into the global automotive value chain.

In the meantime, the Government supporting to the industry include gazettement and implementation of Tax Procedures (Unassembled Vehicles and Trailers) Regulation, 2019 and (Unassembled motorcycles) Regulations 2020; arrange of fiscal measures in order to promote localization; preferential procurement of locally assembled vehicles and motorcycles to enhance market size for local assemblers and parts manufacturers, amongst others.

We have come up with several policy measures to ensure that the motor industry in Kenya operates in a favourable environment with enough elbow room to grow and expand. The government decided to buy locally assembled vehicles in order to promote home-grown manufacturing.

The President confirmed his Administration will set aside an initial investment of Ksh. 600 million for the purchase of locally manufactured vehicles to encourage and sustain the operations of local motor vehicle manufacturers, and generate more jobs. The Government continues to promote market access through preferential procurement of locally assembled vehicles.

In July 2020, the Ministry issued the “Preferential Procurement Master Roll No. 1 of 2020” comprising 334 products locally made and Preferential Procurement Master Roll No.2 in August 2021 comprising 334 products locally made. The Master Roll has automotive accessories included in the list of products. The procurement Master list was developed together with the private sector with a view of giving local manufacturers priority by Government Agencies during procurement. The business community is encouraged to take advantage of this opportunity to meet Government requirements.

The Government is also promoting “Buy Kenya Build Kenya” and also has developed the Local Content Policy which initially hopes to ensure MDAs considers purchasing from local firms but also encourages private sector to follow suit.

The Finance Act November 2019 reduced Import Declaration Fee (IDF) for raw materials from 2% to 1.5%. This applies to CKD as raw material and other raw materials used by the Automotive Industry.

Furthermore, Legal Notice 170 of 2020 on KS 1515: 2019 which is a Kenyan Mandatory standard on Road Vehicles Inspection of Road Vehicles Code of Practice is expected to boost demand from local assemblers, with the prospects of increased output from local vehicle assemblers.

The Government has been aiming at securing Kenyan products into regional and international markets. As you are aware Kenya was the first country in the Eastern region to ratify the ACFTA trade deal. As a country, we stand to gain from the implementation of the continental free-trade zone which offers opportunities for African countries to boost intra-African trade.

Moreover, on 9th March 2020, H.E. President Uhuru Kenyatta directed that the Ministry of Industry, Trade and Enterprise Development, the National Treasury work together with the Kenya Vehicle Manufacturers Association (KVMA), Association of Parts Manufacturers (APMA) and other players in the Industry with a view of charting a framework for a competitive automotive industry and which outcomes Mobius can take advantage of such an initiative as it is envisaged to create numerous incentives for the motor industry.

Besides, the Government is always willing to discuss and prioritize necessary support and incentives to enhance local industry competitiveness. But the industry is expected to reciprocate by investing in full automotive manufacturing; form joint ventures, train, and capacity build local SMEs to promote local content.

Moreover, such policies are proof of the government’s commitment to revive manufacturing in Kenya and to move it away from an ever-increasing reliance on imports of manufactured goods. Kenya has seen a significant investment commitment from companies in the motor industry with Toyota Kenya leading the way.

We therefore welcome Toyota Kenya’s decision to set up this assembly line, which comes two years after the introduction of the Hilux assembly line. We extend our full support to Toyota Kenya and automobile manufacturers in the country as we work towards driving Kenya into a fully industrialized economy.

With these few remarks, I declare the assembly line for Toyota Hiace officially opened