Over the past few days, news regarding Al Futtaim-Renault pulling out of Pakistan was circulating in media. The joint venture had a number of issues that needed to be addressed. In order to sort out their concerns, a meeting between the Adviser to Prime Minister on Commerce and Industry Abdul Razzak Dawood and Al Futtaim-Renault was arranged in which Mr. Dawood assured the company of the government’s full cooperation.
Al Futtaim-Renault is looking into the extension of Automotive Development Policy (ADP) 2016-2021 to 2023. As the name of the policy suggests, the benefits and provisions of the auto policy are due to expire in 2021. Moreover, the company is also seeking an extension in the tax breaks associated with the Special Economic Zone (SEZ). The total foreign direct investment by Al Futtaim-Renault will amount to $165 million.
Previously, the company wanted to establish a plant in Karachi; however, with the delay in procedural work, it moved to M-3 SEZ in Faisalabad. The meeting was arranged by the Faisalabad Industrial Estate Development and Management Company (FIEDMC). The FIEDMC wants to protect the $165 million investment in the region which will generate approximately 500 jobs.
Renault is a French auto manufacturer which joined hands with UAE’s Al Futtaim group to manufacture vehicles in Pakistan. For this, the joint venture also bought land in the M-3 Special Economic Zone (SEZ) in Faisalabad. Previously, the joint venture aimed at local production to commence from 2020; however, seeing the current conditions, it is not possible for Al Futtaim-Renault to begin production any time soon. Therefore, the company wants to get an extension in the auto policy and 10-year tax incentives under the Special Economic Zone (SEZ).
Stay tuned for more updates on this matter as the government is still pondering on the issue and will possibly inform Al Futtaim-Renault regarding any policy changes for the future.