By Muhammad Luqman
Pakistan’s automobile industry , presently dominated by Japanese companies is all set to welcome new entrants as the Ministry of Industries and Production has granted category A Greenfield Investment status to four investor groups who plan to set up auto-manufacturing plants in this South Asian country.
Government has signed the investment agreements with Hyundai Nishat Motor, a South Korean-Pakistan joint venture based in Lahore; Kia-Lucky Motors Pakistan, another South Korea-Pakistan JV based in Karachi; Lahore-based United Motors; and Regal Automobiles of Karachi.
According to Ministry of Industries officials, the investors will have to sign an agreement with the ministry to ensure their projects comply with the Pakistan government’s Automotive Development Policy which grants various tariff-related incentives to the companies, abiding by environmental, quality and safety standards.
These all the four companies are expected to make a total investment of around US $ 500 million (Rs 50 billion) , generating thousands of jobs in the major urban centres like Karachi and Lahore.
According to business plans submitted to Pakistan’s Engineering Development Board, Kia-Lucky Motors Pakistan will invest $190 million; Hyundai-Nashat will invest $164 million; and United Motors will invest $18.1 million while Regal group is also expected to make investment of more than US $ 100 million.
The Kia project will benefit from the participation of Lucky Motors’ owner, Pakistan-based conglomerate Yunus Brothers Group, which has major industrial infrastructure in the country, also owning Lucky Cement and chemical group ICI Pakistan.
Lucky Motors and Kia have not announced what models they intend to produce in Pakistan. However, Kia previously produced the Kia Classic natural-gas vehicle and Kia Spectra in Pakistan from 1999 to 2005 under a joint venture with Pakistan-based Dewan Motors. Output was on a small scale, however. According to Pakistan Automotive Manufacturers Assn. (PAMA) data, the local build of the Kia Classic in the 2002-2003 financial year was 459 units, which plunged to 188 in 2003-2004; while 465 units were produced in 2004-2005.
Kia Spectra output in Pakistan started wiith 890 units in 1999-2000, followed by 1,784 units, 2,091 units, 384 units, 73 units and only one unit in the subsequent five years of production.
The Hyundai Nishat Motor project will involve the assembly and sale of Hyundai passenger and 1-ton commercial vehicles in Pakistan, according to the Engineering Development Board.
In Pakistan, more than 30 auto companies are manufacturing cars, motorcycles, rickshaws, tractors and other vehicles. Almost all the car manufacturing companies are licensees of Japanese principal firms while the rickshaw manufacturing is mostly based on Chinese technology.