ISLAMABAD: The government on Wednesday asked four investors, which was given approval to invest around $3 billion in setting up auto assembling plants in the country, to furnish all the necessary documents in order to finalise the agreements by next week.
In June, ministry of industries and production allowed United Motors Private Limited, Kia-Lucky Motors Pakistan Limited, Regal Automobiles Industries Ltd, and Nishat Group to set up units for assembly and manufacturing of vehicles under the Greenfield investment category.
A senior official at BoI told The News that the four companies would likely to bring in investment of around three billion dollars, “which will help in breaking the existing cartel of three Japanese car assemblers and bringing down prices and create job opportunities.”
A statement said Khizar Hayat Gondal, secretary ministry of industries and production and Azhar Ali Chaudhry, secretary Board of Investment held a meeting on Wednesday with the four awardees of Greenfield status under the Auto Development Policy (ADP) 2016-21 as a follow-up of the meeting held on June 6.
The investors were urged to meet the necessary codal requirements under the policy as early as possible. They were asked to prepare their agreements to be effected pursuant to the award of ‘Greenfield status’ without any loss of time.
All concerned assured that these agreements would be finalised over the next week. Most of them expressed the resolve to present all necessary documentation by the 20th of this month, according to the statement.
Secretary ministry said companies awarded with Greenfield investment would be required to separately enter into agreements with the ministry of industries and production to ensure compliance with ADP 2016-21, relevant statutory regulatory orders and various timelines for completion of the projects for availing incentives under this policy.
The meeting asked the Engineering Development Board (EDB) to examine and put up these cases for approval as and when complete documentation is received.
Next monthly meeting with investors will be convened in the ministry of industries and production in the 2nd week of August 2017.
EDB will issue manufacturing certificate and list of importable components to new investors after verifying that their manufacturing facilities are adequate to produce roadworthy vehicles. The investors appreciated efforts of the ministry and the board for being pro-active in finalising investment proposals in record time.
Applicants for award of Greenfield status also participated during the meeting and showed their level of preparedness. The applicants are Habib Rafiq (Pvt.) Ltd., Khalid Mushtaq Motors (Pvt) Ltd., Pak-China Motors (Pvt) Limited, Foton JW Auto Park (Pvt) Ltd, Cavalier Automotive Corporation (Pvt) Ltd.
Sources said two more companies would be awarded the Greenfield status in a week time. Existing three Japanese’ car assemblers, namely Toyota, Honda and Suzuki rule the country’s 0.3 million car market and term low volume as major obstacle in indigenisation of production of critical parts and efforts to give price relief to consumers.
More than 185,000 passenger cars and light commercial vehicles were sold during the last fiscal year as compared to 181,000 in the previous fiscal year. Critics, however, said buyers despite paying full amount and premiums have to wait for three to six months of new cars.
“This phenomenon forced the government to encourage new entrants in the automobile sector as to create competition in favour of the consumers,” said an analyst. “There has been an influx of imported used cars in the recent past due to the lack of competition.”
Analysts said once new companies enter into market, it will create a healthy competition and definitely bring down prices, improve quality and innovation and increase the size of car market to more than half a million units.
Pakistan’s auto market is currently booming and a number of foreign and local investors expressed their interest in establishing new plants. “We foresee robust growth in volumes for the auto industry in coming months on the back of low cost of auto financing, agriculture friendly budget, growing construction activities, and heightened trade volumes on account of CPEC (China-Pakistan Economic Corridor),” said Hamdan Altaf, analyst at Taurus Securities Limited, a subsidiary of National Bank of Pakistan.
