The current economic uncertainty and other negative macroeconomic indicators have reportedly started negatively affecting international investors. Well-informed sources in Engineering Development Board (EDB) told Business Recorder that one of the leading new entrants in auto sector, a UAE-based group M/s Al-Futtaim which wanted to invest $ 226 million, has shown a reluctance to invest in the Pakistani market due to uncertainty, rise in dollar against rupee and Board of Investment's (BoI) investment incentives for five years instead of 10 years due to delayed operations.
M/s Al-Futtaim Automotive Pakistan (Pvt) Ltd was granted Greenfield investment status under ADP 2016-21 on October 25, 2018 for the production of passenger cars, Light Commercial Vehicles (LCVs) and Sports Utility Vehicles (SUV).
Al-Futtaim Automotive Pakistan was allotted a plot for setting up at Bin Qasim Investment Plant (BQIP). However, the company decided to shift to Faisalabad Industrial Estate Development and Management Co. (FIEDMC) due to non-settlement of some issues with National Industrial Park (NIP).
The progress on construction of plant in Faisalabad is very slow and the company has not entered into contract agreement with Ministry of Industries and Production.
The auto sector firm purchased 66.25 acres of land at M 3 industrial city, in May, 2018 to establish an assembly-cum-manufacturing plant for French Renault cars and other automobile companies.
Al-Futtaim is facing following issues: (i) As the ADP is going to expire by 2021, the company wants an extension till 2023 with legal cover to the new investors in auto sector; and (ii) extension of 10 year tax holiday under Special Economic Zone (SEZ) incentives, expected to be reduced to five years in June 2020.
According to the notification, the company would enter into agreement with the Ministry of Industries and Production, government of Pakistan, to ensure compliance with conditions of the ADP 2016-21, SRO 656(1)/2006 (updated vide SRO 483(1)/2016 dated 29th June, 2016 and various timelines for completion of the project for availing incentives under the ADP 2016-21; and (iii) EDB shall issue manufacturing certificate and list of importable components after it verifies that the manufacturing/assembly facilities established by the company are adequate to produce roadworthy vehicles.
The sources said five other top companies targeting to establish their units in NIP, Karachi are complaining about non provision of basic amenities like, water, gas and electricity.
These investors raised their issues with the Prime Minister's Advisor on Commerce, Textile, Industries and Production, Abdul Razak Dawood but they remain unresolved.
Comments
Comments are closed.