Clouds gather over Al Futtaim-Renault’s $165m investment plan

Updated May 18, 2019

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A website earlier claimed that “Renault has revoked Al-Futtaim’s license to build its manufacturing plant in Pakistan”. — AFP/File
A website earlier claimed that “Renault has revoked Al-Futtaim’s license to build its manufacturing plant in Pakistan”. — AFP/File

KARACHI: Amid reports that Al Futtaim is considering pulling back from the Renault project, the government departments concerned say that “nothing concrete has so far come from the Gulf and French-based companies.”

A microblogging website had earlier claimed that “Renault has revoked Al-Futtaim’s license to build its manufacturing plant in Pakistan” following which Al Futtaim decided to hold its investment in the venture.

However, speaking to Dawn, Board of Investment (BoI) Chairman Haroon Sharif said that he has not received any confirmation regarding reports of pull back or delay about the project despite reaching out to the company.

Al-Ghazi Tractors Chief Executive Officer Shahid Hussain, who is dealing with the project, said that “he cannot confirm right now that the Al Futtaim-Renault project has come to an end.”

“We are still in the project and in the process of looking at it,” he said without elaborating any details.

Faisalabad Industrial Estate Development and Management Company Chief Operating Officer Aamer Saleemi confirmed that number of people working with Al Futtaim-Renault project have either quit their jobs or are currently searching for new jobs.

On the other hand, he said UAE’s Al Futtaim Group had purchased 67 acres of land at M-3 Industrial City in May last year to establish an assembly-cum-manufacturing plant to produce and assemble Renault vehicles and other automobiles in Pakistan.

The project was expected to cost $165 million and generate around 500 jobs. However, “the company has not started any construction work so far,” he added.

However, he said that he does not have any confirmation regarding the rumoured pull back or delay by Al Futtaim.

He said that investors are demanding extension till 2023 in Auto Policy which expires in 2021. In addition to that, the investors are also seeking an extension of 10-year tax holiday under Special Economic Zone incentives.

Earlier this week, Prime Minister Imran Khan was apprised on the issues faced by Al Futtaim-Renault project. Prime Minister asked concerned departments to remove any bottlenecks at the government’s end to save the huge investment in auto sector.

Moreover, an Engineering Development Board (EDB) official also confirmed to Dawn that the board had also not received any formal announcement from Al Futtaim or Renault regarding closure or delay of the project.

In 2018, Al-Futtaim announced that the design and pre-engineering work of the project was underway, and on-site activities would commence shortly in Faisalabad.

The company in that announcement also said the project would be completed in the fourth quarter of 2018 and begin production by 2020.

Sources said the country’s worsening economic indicators had the shaken investor confidence while massive rupee devaluation against the dollar from January 2018 to date had hit the economic viability of the project besides soaring project cost.

Surprisingly, French Senator Pascal Allizard, leading a three member French Parliamentary Group, last month said that Renault was keen to set up a manufacturing plant in Pakistan.

Published in Dawn, May 18th, 2019