New car manufacturing plants face delay

Aspiring players complain EDB has delayed processing of their cases


Zafar Bhutta June 07, 2017
PHOTO: REUTERS

ISLAMABAD: The automobile assemblers, which have dominated Pakistan’s market for decades, have pressed the government not to give the go-ahead to new players who are planning to set up plants as a green field investment under the incentive-filled new auto policy.

This move on the part of existing auto assemblers is in line with the popular belief that they are trying to create hurdles in the way of aspiring new entrants into the market.

Last year, the government announced the new auto policy to break the monopoly of three players, which were using obsolete technology and setting higher prices for their vehicles.

Apart from these, they were also denounced for delaying the delivery of booked cars to get premium from the customers for early handover of vehicles.

Officials of the Ministry of Industries and Production held a meeting on Tuesday with the potential new entrants who were eager to invest in Pakistan’s auto sector and introduce new brands.

According to officials aware of the development, the new players revealed during the meeting that they had imported machinery for setting up car manufacturing plants, but the Engineering Development Board (EDB) was causing delay in processing their cases.

The officials said the local auto assemblers had argued before the EDB that they were already manufacturing the cars that the new market players planned to produce and it was a clash of interests, which would lead to further delay in setting up new plants.

The ministry, however, assured the new players that their issues would be addressed.

Representatives of Kia Motors, Foton JW Auto Park, Habib Aneeq Private Limited, Hyundai Motor, Khalid Mushtaq Motors, Gulya Motors, Pak China Motors, Eagle Automobiles, Lucky and United Auto Motors attended the meeting.

Among upcoming players, Volkswagen Commercial Vehicles is in final talks with Premier Systems Private Limited - the authorised importer of Audi vehicles in the country - to set up a manufacturing/assembly plant for its Amarok and T6 (transporter range) models. France’s Renault and South Korea’s Hyundai and Kia have also announced they will soon start assembling vehicles in Pakistan, in partnership with local companies.

According to a statement, Ministry of Industries and Production Secretary Khizar Hayat Gondal and Board of Investment (BoI) Secretary Azher Ali Choudhary co-chaired a meeting of prospective investors with the EDB chief executive officer under the Automotive Development Policy (ADP) 2016-21 at the Ministry of Industries on Tuesday.

At the outset, the industries secretary told meeting participants that investment under the ADP 2016-21 was very critical for growth in the auto sector and the overall national economy.

“Hence, due priority to this area will be accorded by all the relevant government agencies for speedy processing of investment proposals and other allied facilitation required in this regard,” he said.

He assured the prospective investors that no hindrance would be allowed to cause delay at any level and if they faced any difficulties or snag in smooth processing of their cases, the matter should be brought to the notice of industries secretary or BoI secretary.

He also announced that he would hold similar meetings every month to put the implementation of investment proposals on a fast track.

The secretary told the EDB to take necessary measures for processing all the cases expeditiously and strictly within the auto policy framework for determining the eligibility for incentives under green field investments.

Some of the investors were at advanced stages of executing their projects and their products were expected to come in the market by the end of 2017. It means that the new auto policy is really taking off.

The investors expressed their satisfaction over the assurances and voiced hope that new investments would spark healthy competition and help in the swift delivery of passenger and commercial vehicles.

It was agreed that next meeting with the upcoming players would be held in the second week of July.

Published in The Express Tribune, June 7th, 2017.

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COMMENTS (3)

Ehs | 4 years ago | Reply Special measures need to be taken to ensure new assemblers enter the market. There is a critical need for competition in the local market. Safety standards like airbags, etc. should be immediately enforced. Under any circumstances, government should not grant new assembler incentives to existing players as it will block competition in the market
AQ | 4 years ago | Reply Suzuki, Honda and Toyota should not have raise prices much and should have introduce better cars. They should not be allowed to stop other Manufacturers from entering the market. They are third class makers they should face some challenges otherwise they keep looting Pakistan. Look at Toyota corolla, no build quality (all manufacturers problem), no options and price as much as 2.3 million with third class drive and interior material. India is producing SUVs for 500K per unit. Pakistan's cheapest SUV Honda BRV is 2.5 million. Shameless Suzuki, Toyota, and Honda Manufacturers should shut their mouth and do their job.
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