Greenfield tyre project: IFC, local banks providing up to $50.2m in financing: Schehzad

ISLAMABAD: Advisor to the Finance Minister Khurram Schehzad has stated that the Greenfield tyre manufacturing facility project holds significant export potential, in addition to catering to a large domestic market.

The project aims to save and generate foreign exchange reserves for the country. He added that investor confidence has increased and the investment environment is improving steadily.

According to a statement issued by the International Finance Corporation (IFC); the IFC and a consortium of local banks, including HBL, Meezan Bank, Bank Alfalah and Habib Metropolitan Bank, are providing up to $50.2 million-equivalent in financing to support Armstrong ZE (Pvt) Ltd in developing a Greenfield tyre manufacturing facility in Gharo Town, Sindh to boost local tyre production.

The project will introduce a locally manufactured international brand to Pakistan, which will improve consumer access to quality, affordable tyres, while strengthening local supply chains, creating jobs and boosting private sector-led growth.

The financing comprises a $25 million loan from IFC alongside an up to $25.2 million equivalent investment in Pakistani rupees from local banks. The project is expected to create over 1,800 direct and indirect jobs and help increase the competitiveness of the sector through technology and know-how transfers.

The number of registered vehicles in Pakistan has grown steadily over the last decade, reaching approximately 30 million vehicles in 2023, including 23 million two-wheelers. However, local tyre manufacturing remains constrained due to a lack of technical expertise and technology and a substantial informal market, making the country heavily dependent on imports. Reducing these imports will also help improve Pakistan’s foreign currency reserves.

“Armstrong ZE is deeply honoured to have earned the trust and support of IFC and our partner banks; HBL, Meezan Bank, Bank Alfalah and Habib Metropolitan Bank. Their investment in this transformative project is not just a financial endorsement but also a strong vote of confidence in our vision, capabilities, and potential to shape the future of tyre manufacturing,” said Azim Yusufzai, chairman of Armstrong ZE.

“Together, we aim to foster innovation, create employment opportunities, and contribute to sustainable development in our communities and beyond. This collaboration marks a monumental step forward in advancing our mission to deliver world-class, sustainable, and innovative tyre solutions to the Pakistani market.”

IFC will also be supporting Armstrong through its Responsible Investing Support in Emerging Economies (RISE) advisory program, which will strengthen Armstrong’s climate risk management, resource efficiency, and environmental and social processes.

“IFC is committed to improving Pakistan’s value-added manufacturing capacity by partnering with strong companies that can scale up production,” said Khawaja Aftab Ahmed, IFC’s regional director for the Middle East, Pakistan, and Afghanistan. “This investment exemplifies this commitment and will help improve consumer access to tyres while spurring the economy through job creation, increased productivity, and reduced reliance on imports.”

The project will utilise the company’s long-standing experience in the tyre industry, through its UAE-based company, Zafco Group Holding, which operates as a global importer and exporter of tyres, batteries, and lubricants, with a presence in over 85 countries, as well as Zafar Enterprises, a leading tyre distributor in Pakistan.

The project will create over 1,800 jobs and bolster local manufacturing and supply chain. This will contribute to reducing reliance on imports and strengthening Pakistan’s foreign currency reserves.

Copyright Business Recorder, 2024