Red tape drives away Chinese group from Apparel Park

Ruyi group loses interest over delay in finalising modalities of joint venture.

Anwer Sumra July 20, 2014

LAHORE: Shandong Ruyi Group of China is losing interest in the Quaid-e-Azam Apparel Park, a project of the Punjab government where the company was planning to invest heavily, over some bureaucratic hurdles.

“The company has not yet come up with proposals to demonstrate its interest in the project despite the fact that its Director Arie Qiu, daughter of the owner, held several meetings with the Punjab chief minister to discuss investment,” an official of the provincial Industries Department told The Express Tribune but requested anonymity.

The Ruyi Group, a joint venture between Chinese and foreign investors headed by Qiu Yafu, is a hi-tech enterprise, is listed among top 10 firms in the textile industry as well as among 100 major companies in Shandong.

The Punjab government is setting up the Apparel Park over an area of 1,562 acres of farmland near Sheikhupura motorway interchange. It acquired land at a cost of Rs3.3 billion, which constituted about 49% of total investment in the project.

The remaining 51% (estimated at around Rs4 billion) was promised by Shandong Ruyi Group for infrastructure development and providing all services to the factories under the public-private partnership model and later as a joint venture.

The Punjab government will own 49% of the project and the Chinese group will have 51% shareholding.

Earlier, Ruyi was planning to submit unsolicited bids accompanied by a feasibility study, environment impact assessment, draft of public-private partnership agreement, need of government support and modalities.

Later, the idea of joint venture was floated to cut the time period. In this arrangement, both the government agency and private investor make equity investments for project development and establish a new company or take joint ownership of an existing one through purchase of shares.

After the company is set up, board of directors will be appointed for supervision. The company will deal with the Apparel Park on the model of Punjab Industrial Estates Development and Management Company (PIEDMC) and will be registered under the Companies Act.

“Though the new company has been established, it has not become fully functional, denting confidence of the Ruyi Group,” the official said.

In a joint venture, the process is streamlined and the private company joins hands with others in order to start work without any delay.

Separately, Ruyi has tied up with a private sector concern, Masood Textile, in Faisalabad M3 Industrial Estate spread over 4,415 acres, which was inaugurated in the last week of May by the Punjab chief minister.

As Ruyi does not submit its proposals, the Punjab government has decided to execute the project with managerial support of PIEDMC. But experts question whether PIEDMC has the capacity to deal with such a big project.

“Ruyi and the new company have failed to agree on the modalities of the joint venture in the Apparel Park and this could be the cause of the former’s lack of interest,” another senior official of the Industries Department said.

At present, PIEDMC is handling four projects – Sundar Industrial Estate, near Lahore, Multan Industrial Estate, Bhalwal Industrial Estate and Rahimyar Khan Industrial Estate.

Talking to The Express Tribune, PIEDMC General Manager Naveed Mushtaq Gill said National Engineering Services of Pakistan (Nespak) had been hired as a consultant that would prepare a master plan and standard documents for the establishment of the park.

Following this, advertisements will be given in national newspapers to invite expressions of interest from financially sound investors.

The park will generate 250,000 jobs after becoming fully operational and will have about 600 industrial plots from half acre to 25 acres for an industrial unit. A 100-megawatt coal-fired power station will also be developed for electricity production.

“I have no knowledge that Ruyi has disassociated itself from the project. PIEDMC will manage the new park,” Gill said.

Published in The Express Tribune, July 21st, 2014.

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khurram kaleem | 9 years ago | Reply

Ruyi has bought 1036 acres of land at M3 faisalabad.they plan to install 600,000 spindle textiles spinning facility importing australian cotton.faisalabad is far better place for textiles it has been proven due to ample labour supply of cotton and proximity to motorway to gwadar .

Bilal | 9 years ago | Reply

Misleading headline.

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