No progress on setting up of plants: MoI&P to scrap Greenfield status of three auto cos

ISLAMABAD: The Ministry of Industries and Production (MoI&P) is to scrap Greenfield status of three auto companies for not showing any progress on establishment of plants, well-informed sources told Business Recorder.

This decision has been taken by the Auto Industry Development Committee (AIDC) which met on August 13, 2020 with Chief Executive Officer (EDB) in the chair.

"Adequate time has been given to the new entrants M/s Pak CAMC, Pak China Motors and AI-Futtaim under ADP 2016-21 but they neither signed an agreement with MoI&P nor showed any progress," the sources added.

Secretary AIDC stated that under ADP 2016-21, 19 new investors have been granted Greenfield status. In addition, under Brownfield category two closed down units have been revived. Total investment attracted so far under the ADP 2016-21 is approximately $ 1 billion.

He revealed that United Motors (Pvt) Ltd, Regal Automobile Industries Ltd, Foton JW Auto Park (Pvt) Ltd, Master Motors Ltd, M/s KIA Lucky Motor, M/s Hyundai Nishat Motors with committed investment of $ 476 million have started manufacturing. He further added that Sazgar Engineering Works Ltd, Lahore with investment of $23 million is expected to start production shortly. He added that MoI&P has desired to deliberate the cases of cancellation of Greenfield status of M/s Pak CAMC and Pak China Motors in the AIDC. CEO, EDB said more than four years have passed and GoP has given adequate time to the two companies. CEO, Dartways said that there should be a minimum time, which he proposed to be 6 months to sign agreement after grant of status and if that time period is not met than status can be withdrawn. Secretary AIDC said that as per agreement the firm has two years to install production facilities and start production within two years after import of CBUs for test marketing. He revealed that no agreement has been signed by these firms. The EDB has sent notices and reminders and then recommended MoI&P to cancel two firms. CEO, Dartways was of the view that approving authority which is MoI&P in this case should send show cause notice to avoid any litigation issues. CEO, Honda Atlas Pvt Ltd said that, if there is no termination clause then EDB/MoI&P may wait till June 30, 2021 and the firms which have not signed agreement until that time will automatically stand cancelled.

Secretary AIDC said that EDB recommended case wise analyses. He said that EDB focus was to bring investment adding that Ms/Topsum Motor was granted approval and after lapse of two years the firm submitted business plan through Board of Investment with new principals including Zotye. The firm submitted revised Business Plan and New Investment Committee of EDB has recommended to visit the company premises to ascertain groundbreaking of the project/investment in land and building prior to recommending the case to MoI&P for approval. Senior Manager, Indus Motor Company recommended cancellation of non-complying firms after March 2021.

Secretary AIDC said that AI-Futtaim was a renowned group considering launching Renault in Pakistan; however, reportedly the firm has shown no progress. It would be better if non complying firms are eliminated and correct investment figures be reported. CEO, EDB said that EDB/MoI&P will finalize the modalities however EDB/MoI&P seeks an in principle decision from AIDC.

CEO, Dartways said that General Clauses Act allows amendment/withdrawn/conditionality to the approving authority. He reiterated that reminder and cancellation should be done by MoI&P. He added that ADP 2016-21 is approved by MoI&P and any amendment can only be made by ECC. He said Public Notice may be given before cancellation. Muhammad Faisal, COO, KIA Lucky Motors Pvt Ltd said that if no agreement. is signed then there is no value of Greenfield Status as the Greenfield status is subject to conditions mentioned in the notification.

CEO Atlas Honda requested a clarification regarding benefits to variants beyond 2021. It

was stated by EDB that benefits under the policy are to be extended for a period of five years however the cutoff date under the Policy is June 30, 2026; i.e. if a variant is launched in June 2021, then it will avail benefits till June 2025 however if a variant is launched in June 2022, then the cutoff date of June 2026 will apply. After detailed discussion, the AIDC decided that adequate time has been given. New entrants M/s Pak CAMC, Pak China Motors and AI-Futtaim under ADP 2016-21 have not signed agreement with MoI&P and neither showed any progress, hence they may be recommended to MoI&P for cancellation. In case of M/s Topsun Motors, EDB may visit to ascertain progress and status, which may be reported back to AIDC.

Copyright Business Recorder, 2020