Auto Policy 2016-21 Unable to Bring Any Change in Auto Industry As Yet

[Sucha Kuggu]

Sabar kar jao. Sab ayengay. It's the Govt. that's dragging its feet.

There are reports that concerned department are causing delay in investment by Hyundai, Renault and other western investors to benefit Japaneses from current sale boom in cars.

 

[LeGenD]

I will acknowledge the credibility of this auto policy on the day when Suzuki Mehran will be phased out and vastly superior alternatives will be available for sale in the same price range. What is the point of auto policy if masses cannot enjoy its fruits?

Government should also invite American auto companies such as Tesla, Dodge, Ford and GM to establish their presence in Pakistan. It would be good to see high quality 'electric cars' in Pakistani markets in particular.

 

[Mumm-Ra]

Back on topic on this thread, why is the government not approving new entrants that would make its new auto policy a better success?

Maybe the delay is because of the type of proposals that they are receiving. From what I gather in this article, only Chinese companies seem keen on investing here. The rest of the automakers have yet to even show their intent on coming here. perhaps, some tweaking of this policy is allowed to get their attention. and maybe the government is reluctant in allowing only Chinese companies to gain a foot hold without any serious competition.

 

[CSPK]

mark my words. even Chinese companies will dump their obsolete stuff here if there are loopholes in the policy

 

[VCheng]

Maybe the delay is because of the type of proposals that they are receiving. From what I gather in this article, only Chinese companies seem keen on investing here. The rest of the automakers have yet to even show their intent on coming here. perhaps, some tweaking of this policy is allowed to get their attention. and maybe the government is reluctant in allowing only Chinese companies to gain a foot hold without any serious competition.

Chinese or Western, the basic problem remains the atrocious taxation structure, given the domestic market.

 

[v9s]

The useless promises and announcements need to kept alive for another year I guess, till the elections.

Aur Babloo:

ISLAMABAD:

The government took a huge stride towards shaking up the Japanese-dominated automobile industry, granting permission to three new, but non-European, companies to set up their car assembly plants in Pakistan.
The companies in collaboration with local partners will invest $372 million to set up the assembly/manufacturing plants.

The Ministry of Industry and Production allowed United Motors Private Limited, Kia-Lucky Motors Pakistan Limited and Nishat Group to set up units for assembly and manufacturing of vehicles under the Greenfield investment category, Ministry of Industries Secretary Khizar Hayat Gondal confirmed to The Express Tribune.

He said that these companies would bring in foreign investment worth $372 million. The maximum investment of $190 million will be made by Kia-Lucky, followed by $164 million by Nishat Group and $18.1 million by United Motors, he added.

As many as nine companies had sought permission to set up manufacturing plants but only three could got the approval in the first phase. The secretary said that the documents of other applicants are being scrutinised.

The decision comes days after the Prime Minister’s Office decided to abolish the Engineering Development Board (EDB) on allegations of corruption and creating hurdles in the way of setting up new car manufacturing plants in Pakistan.

New car manufacturing plants face delay

“The government of Pakistan is pleased to award the Category-A Greenfield Investment Status to United Motors (Pvt) Limited for assembly/manufacture of vehicles covered in the exclusive contract agreement,” according to a notification issued by the Ministry of Industry. Similar notifications have also been issued to two other companies.

These firms had submitted detailed business plans and relevant documents to the EDB for assessment. United Motors would set up a plant with Chinese collaboration. The Nishat Group will be in partnership with South Korea-based Hyundai Company and Lucky Cement would also collaborate with another South Korean firm, Kia Motors.

In the hope of attracting a European carmaker, the government in March last year had approved a new automobile policy, offering tax incentives to new entrants to help them establish manufacturing units and compete effectively with the three well-entrenched assemblers.

The Board of Investment had claimed that European car manufacturer Renault was keen to set up a car plant in Pakistan and the government was holding negotiations with them. However, sources said that neither Renault nor Volkswagen submitted applications for setting up plants in Pakistan.

Gondal hoped that once the automobile policy takes roots, the European brands would also come forward. Another meeting of the Auto Industry Development Committee is expected to take place after Eid to review more applications.

800cc or 1,000cc – Nishat to decide which car to produce first

However, in violation of the automobile policy, the federal government did not cut custom duties on import of completely built units (CBUs) by 10% from July 1, 2017. Such reversals discourage foreign investors who seek consistency in policies in return of long-term commitments.

A senior official of Lucky Cement confirmed to The Express Tribune that the company has been given permission to set up a plant in Pakistan. Lucky Cement would have 60% share in the joint venture and will invest $150 million, he added. The new venture will also market and sell, besides import and export of all types of Kia vehicles, parts and accessories.

All three companies would separately enter into agreements with Ministry of Industries and Production to ensure compliance conditions of the Automotive Development Policy 2016-21. The EDB will issue manufacturing certificate and list of importable components to new investors after verifying that the manufacturing facilities established by the firm are adequate to produce roadworthy vehicles.

The three new players are expected to shake up the Japanese-dominated car market and loosen the grip of Toyota, Honda and Suzuki.

Automobile industry: Pakistan woos Renault-Nissan in investment push

Nishat Mills Limited would assemble vehicles with Hyundai Company. The two companies together will set up a Greenfield project for assembly and sales of HMC passenger and 1-ton range commercial vehicles in Pakistan.

Under the new automobile policy, 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 variants in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after the 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 of 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.

https://tribune.com.pk/story/1441350/three-companies-get-approval-set-car-assembly-plants-pakistan/

 

[VCheng]

Kia/Hyundai is the same company, so why would they partner with two different entities? Which Chinese company? I bet this is the best part of the whole scheme: "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 variants in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing". "Test marketing". Right.

 

[v9s]

Kia/Hyundai is the same company, so why would they partner with two different entities?

Just like Daihatsu and Toyota are the same company, but IMC has agreements with both separately.

Which Chinese company? I bet this is the best part of the whole scheme: "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 variants in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing". "Test marketing". Right.

That is a part of AIDP 2016 and has been public knowledge for over a year now.

 

[VCheng]

Just like Daihatsu and Toyota are the same company, but IMC has agreements with both separately.



That is a part of AIDP 2016 and has been public knowledge for over a year now.

Well, then it just might be true and the new auto policy might be a success. Awesome!