New auto players show discontent over government’s willingness to give incentive to Suzuki

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In a meeting held this week in Ministry of Industries and Production, the representatives of new automakers have forwarded their concerns over government’s willingness to give Greenfield status incentive to Pak Suzuki, reports a local media.

They argued that giving such types of incentives to Pak Suzuki will spoil their investment plans in the country and demanded that no incentive should be given to Suzuki or any existing local manufacturers. Note that, the coming new auto players will be investing as much as $3 billion in the local auto industry to manufacture vehicles and to create jobs as well.

As of now, many foreign automakers have come to Pakistan such as Kia, Hyundai, Renault and also Chinese automakers. Moreover, Volkswagen will also be coming to the country as it has already signed an agreement in this regard.

Pak Suzuki is trying to get tax exemption under ADP 2016-21’s Greenfield investment category. The current government is reportedly giving into the pressure coming from the Japanese Government to give incentives to the automaker. Moreover, as reported by a local media outlet, Adviser to Prime Minister on Commerce, Industries and Investment Abdul Razzaq Dawood is playing a vital role to convince the PM to give Greenfield incentives to Pak Suzuki; however, he was also of the view that giving incentive to Pak Suzuki will disturb the new entrants.

Pak Suzuki has announced to install a new plant with an investment of $460 million to meet the growing demand for new cars in the country, which is why the company reportedly approached the government. However, according to the current ADP 2016-2021, no existing auto company will be granted a Greenfield status, and the incentives remain exclusively for the new entrants in the industry.

Read Also: MoI&P ensures continuing the current ADP 2016-2021

This is not the first time the company has approached Pakistani government to give them relief, the previous government was also approached, but at that time the authority rejected company’s plea to grant them incentives as it would hinder the foreign investment. 

What are Greenfield incentives:

Greenfield Investment is defined as the installation of new and independent automotive assembly and manufacturing facilities by an investor for the production of vehicles of a make not already being assembled/manufactured in Pakistan.

  1. Duty-free import of plant and machinery for setting up the assembly and manufacturing facility on a one-time basis;
  2. Import of 100 vehicles of the same variant in CBU form; at 5% of the prevailing duty for test marketing after groundbreaking of the project;
  3. Concessional rate of customs duty @ 10% on non- localized parts and @ 25% on localized parts for five years for the manufacturing of Cars and LCVs;
  4. Import of all parts (both localized and non-localised) at prevailing customs duty applicable to non-localised parts for manufacturing of trucks, buses and prime movers for three years, and
  5. The existing policy for Motorcycle industry as approved by the government and notified by FBR vide SRO 939(I)/2013 and SRO 940(I)/2013 shall continue.

Should the existing manufacturers be given Greenfield status for a new plant? Let us know in the comments section below.

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