An intended investment of $1 billion by two new auto industry players is at risk as their Greenfield status have been confronted in the Sindh High Court.
Two existing auto companies – Tayba Motors and Master Motors – have filed cases in opposition to the Engineering Development Board (EDB) for processing applications of two new players involved in setting up manufacturing plants in Pakistan under the new auto policy.
The government has prized Greenfield investment status to Regal Motors for setting up its plant in Pakistan while the case of Foton JW Auto Park is in progression. Tayba Motors has challenged the Greenfield status of Regal Motors in the court, declaring it was by now manufacturing variants of trucks and mini-passenger buses in Pakistan.
It pointed out that Regal Motors’ manufacturing certificate had expired in 2016, but the EDB did not renew it. It appealed the court to direct the EDB to renew the certificate.
Master Motors, conversely, has challenged the process started by the EDB to grant Greenfield status to Foton JW Auto Park under the new policy, which makes available smart tax and duty concessions for new industry players.
It argued that Foton JW was already manufacturing trucks and it could not be treated for Greenfield investment under the new policy.
It additionally said there was no joint venture with the Chinese company according to records of the Securities and Exchange Commission of Pakistan. The government has approved Greenfield status to Regal Automobile Industries Limited, United Motors Private Limited, Kia-Lucky Motors Pakistan Limited and Nishat Group, which is working together with Hyundai.
Sources said work on projects being developed by Regal Automobile and Foton JW had come to an end following the court cases. but, work on the residual three new entrants is succeeding.
Other new players who have applied for setting up plants in Pakistan include Habib Rafiq Private Limited, Khalid Mushtaq Motors, Pak-China Motors and Cavalier Automotive Corporation. Their documents are now going through the verification process.
According to officials, one plant needs an investment of at least $500 million and the postponement of work by two new players means $1 billion of investment is at stake in the wake of the court cases.
Auto industry insist on govt to think again on EDB’s closure
The government, which had up to now approved Greenfield status to four new investors, was on tenterhooks that they would pour at least $2 billion into the automobile industry, the officials said. In Pakistan, three Japanese auto companies, working in partnership with local firms, have benefited from monopoly over the years. Though, lately calls are rising that they are using outdated technology and getting premium from consumers for swift delivery of vehicles.
After sharing discussions for a long time, the government is setting up new companies to break the domination of existing auto manufacturers and assemblers.
