KARACHI: Three vehicle assemblers have presented their investment plans and projected multiplier impact on the economy in a meeting, chaired by Federal Minister for Water and Power Khawaja Asif.
Pak Suzuki Motor Co Ltd (PSMCL) had sent its investment plan of $660 million to government, requesting same benefits/incentives for two years from the start of mass production of new models instead of new entrants in Auto Policy 2016-21.
Faw Motors Pvt Ltd and Dewan Motor Co Ltd also highlightd their investment plans in the meeting.
According to Prime Minister’s Office Faw got new entrant status in 2012 for assembly of heavy vehicle trucks and light commercial vehicles under Automotive Industrial Development Plan (AIDP) 2007-2012. It was the only company obtaining Greenfield status under a technical licence agreement with China’s Faw Motors.
Its plant had been constructed in Karachi with 100% equity. As a new entrant, it was allowed three years for localisation of mandatory parts as per SRO 693. During this period, the company was allowed to import 100pc completely knocked down (CKD) kits at prevalent rate of duty.
However, Al-Haj could not achieve desired localisation level in time due to low market demand and consequent drop in sales. The company had been paying additional duties for CKD consignments on parts not localised.
Chinese maker is now in second phase of plant modernization. Projects completed or in progress include acquisition of additional land (25 acres), progressive manufacturing of V2 passenger car, completion of electro deposition painting facility, CKD assembly for heavy duty trucks, truck chassis assembly line and new level welding activities for minivan and mini pick up models.
The investment on these projects is Rs3.5 billion. To acquire these initiatives, Al Haj had signed an MoU with Faw Motors China, which had asked for new entrant status under new ADP 2016-2021 as Greenfield. The company opined that new policy deprives companies of any benefits and as such it would not be able to compete with new entrants.
Daehan Dewan has requested the government for granting Brownfield status to their unit under new ADP 2016-2021 for production of Daehan, Ssangyong and KIA range vehicles.
According to Board of Investment (BoI), the applicant company closed its operation in Oct 2010 owing to problems and requested Auto Industrial Development Committee (AIDC) in 2013 to renew its manufacturing license to consume leftover inventory/ CKD units. AIDC accepted the request and allowed the company to consume leftover inventory/ CKD kits from Sept 2013 to Feb 2014 which were imported in Aug 2010.
Daehan Dewan’s request and its business plan was earlier referred to EDB for determining its eligibility. Technical Team visited EDB’s manufacturing facility on Nov 10, 2016 and recommended the company be permitted to avail the facilities of SRO 656 for making of LCVs and SUVs.
Al-Haj and Daehan Dewan cases were referred to Ministry of Industries highlighting that though these are not exactly within strict ADP parameters 2016-21, both matters present opportunities for investment, competition and thus justify special treatment.
However, the ministry felt that the treatment can trigger similar requests from others and company specific modifications in the ADP 2016-21 at this stage.
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