Three Big Automobile Companies Approved to Setup Assembly Plants in Pakistan
The government decided to take a huge step towards reshuffling the automobile industry which had been dominated by the Japanese companies for decades, permitting three new, but non-European, brands to get started with their vehicle assembly plants in Pakistan.
The brands in collaboration with local partnerships will invest $372 million to put together the assembly/manufacturing plants.
The Ministry of Industries Secretary Khizar Hayat Gondal confirmed that the Ministry of Industry and Production granted permissions to United Motors Private Limited, Kia-Lucky Motors Pakistan Limited, and Nishat Group to construct units for assembly and manufacturing of automobiles according to the Greenfield investment category,
He said that these companies would bring in foreign investment worth $372 million. He added that Kia-lucky will provide a maximum investment of $190 million, pursued by $164 million by Nishat Group and $18.1 million by United Motors.
Read more: New Car Assembly Plants Delayed
It is said that around nine auto companies had sought after permissions to set up manufacturing/assembly plants but only the mentioned three were able to get the approval in the first phase. The secretary stated that the documents of other applicants are also being inspected.
The verdict comes days after the Prime Minister’s Office determined to eliminate the Engineering Development Board (EDB) on allegations of corruption and creating obstacles in the way of setting up new automobile manufacturing/assembly plants in Pakistan.
The three new players are anticipated to shake up the Japanese-ruled car market and slacken off the grip of Toyota, Honda, and Suzuki.
Nishat Mills Limited would be assembling vehicles with Hyundai Company. The two companies in collaboration will set up a Greenfield scheme for assembly and sales of HMC passenger and 1-ton variety commercial vehicles in Pakistan.
According to the new automobile policy, the government has permitted one-off duty-free import of plant and equipment for setting up an assembly and manufacturing plant. It has also allowed import of 100 vehicles of the same models in the form of “completely built units” (CBUs) at 50% of the existing duty for test marketing purposes after the pioneering of the project.
A major incentive for the new players is the abridged 10% customs duty on non-localized parts for five years against the current 32.5%.
Correspondingly, localized parts can be imported by new participants at 25% duty compared to the prevailing 50% for five years. A-category investors will be worthy of import of 100% parts at 10% customs duty for an era of three years regarding passenger cars below the 800cc category.
They will also be worthy of import of 100% parts at current customs duties pertinent to non-localized parts for an era of three years with regard to buses, trucks, tractors and prime movers.