Following the announcements made by Kia and Renault to invest in Pakistan’s auto sector, Pak Suzuki announced it plans to set up a second assembly “Greenfield project”. However, the company’s plan currently hinges on the government’s decision to proceed with reducing import duties.
The move indicates that the company is trying pressure the government and win concessions within the revised auto sector policy. The company is also lobbying regulatory bodies to apply tax breaks across the board, which are currently available to new entrants.
Hirofumi Nagao, Managing director Pak-Suzuki met with Finance Minister Ishaq Dar on Thursday to discuss the future investment plans of the company. The new project is expected to be completed within two years, with production likely kick-starting production by the end of 2018. It is also reported that the Finance Minister asked the company’s MD to submit a complete proposal in order for the government to view their request, further stating that the government is committed to offer same level of playing field to all the prospective investors.
If government accepts the company’s request, it will have to amend the auto sector policy which was approved by Economic Coordination Committee (ECC) earlier this year. Also, many analysts believe that any changes made in the auto policy might discourage new automakers to enter the industry because of the sudden changes in policies under pressure from incumbent stakeholders.
Mr. Dar said that Japan External Trade Organization (JETRO) ranked Pakistan as its second choice when making investment in foreign companies. He added that the improvement in the Pakistan’s macroeconomic stability, security situation, and overall economy have provided a conducive environment for foreign direct investment (FDI). He said many new entrants have shown interest to invest in country’s automobile sector as well.