Pakistan looks at inflow of $2b as four auto companies get permission

Official says nine companies have expressed interest in setting up assembly/manufacturing plants in the country

ISLAMABAD: Pakistan is hoping that $2 billion will make its way into the country as it seeks investment in its auto sector with the arrival of four new companies.

Under the auto policy, four companies have been granted permission to set up their assembly/manufacturing plants in Pakistan. It had been reported in June that three companies were granted permission by the government, a move that would result in a total investment of $372 million.

However, a government official with knowledge on the matter said that authorities are expecting a total of $2 billion to make its way into the country as the number of companies interested in setting up their plants goes up.



“One plant needs an investment of around $500 million,” the official told The Express Tribune. “Hence, we hope and believe that these four auto manufacturing plants will invest $2 billion in the automobile industry.”

He added that within a week, two more firms be allowed to set up plants which is expected to attract around $1 billion as investment.

Meanwhile, he said that a total of nine companies had applied to set up new manufacturing plants and four had been granted permission already, whereas two had completed documents and would be given the go-ahead in a week.

It was earlier reported that United Motors Private Limited, Kia-Lucky Motors Pakistan Limited and Nishat Group, which is collaborating with Hyundai, have been granted permission. Moreover, the official said that Regal Automobile Industries Limited Karachi has also been given permission.



The remaining five entrants who have applied include Habib Rafiq Private Limited, Khalid Mushtaq Motors, Pak-China Motors, Foton JW Auto Park, and Cavalier Automotive Corporation.

According to a statement, a follow-up of the meeting held on June 6, was arranged on Wednesday in the Conference Room of the Board of Investment. The meeting was co- chaired by the Secretaries, Industries and Production and Board of Investment.

Officials of Board of Investment, Ministry of Industries and Production and Engineering Development Board also attended the meeting. Four awardees of ‘Greenfield’ status were also present and appreciated efforts in finalising investment proposals.

Under the new automobile policy, approved in March 2016, the government has allowed one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility. It has also permitted import of 100 vehicles of the same variant in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after ground-breaking of the project.

A major incentive for the new investors is the reduced 10% customs duty on non-localised parts for five years against the prevailing 32.5%.

Similarly, localised parts can be imported by new entrants at 25% duty compared to the current 50% for five years. A-category investors will be entitled to import of 100% parts at 10% customs duty for a period of three years in respect of passenger cars below the 800cc category.

They will also be entitled to import 100% parts at prevailing custom duties applicable to non-localised parts for a period of three years in respect of buses, trucks, tractors and prime movers.

Published in The Express Tribune, July 13^th, 2017.

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