KARACHI: Despite uncertain political and economic conditions, foreign auto players are striving to roll out locally assembled vehicles well within the deadlines in the next two years.

Sazgar Engineering Works Ltd (SEWL) informed the Pakistan Stock Exchange in a regulatory filing that the company had completed the trial and would roll out the first locally assembled “Haval” vehicle, a leading Chinese SUV, this month.

The annual production capacity of the plant is 24,000 vehicles, or 80 units per day, on a single shift, SEWL said.

Meanwhile, the Auto Industry Development and Export Committee (AIDEC) in its second meeting held in Islamabad on Aug 16 discussed at length the status of two projects namely — Premier Motors Ltd (PML) and MG JW Auto Park (Pvt) Ltd which are launching German and Chinese vehicles respectively.

MG JW Auto Park (Pvt) Ltd was granted greenfield status by the Ministry of Industries and Production under Automotive Development Policy (ADP) 2016-2021 on Jan 1, 2019 and as per agreement with the ministry, the manufacturing facility is to be completed by April 15, 2023 i.e. two years period from the date of signing of the agreement.

On July 21, MG asked the government to issue a manufacturing certificate and upload a completely knocked down (CKD) kits quota (lists of importable components before the completion of manufacturing facilities).

An MG representative said foreign investors required the manufacturing certificate for their confidence to order CKD kits for future consumption.

However, some old auto players in Pakistan, who were present in the meeting, had emphasised that the Engineering Development Board (EDB) could not issue manufacturing certificates to an incomplete manufacturing facility.

The AIDEC meeting recommended that issuance of a manufacturing certificate to MG might be carried out after the completion of manufacturing facilities as per plan.

It recommended that a letter of assurance might be issued to the company to boost investors’ confidence. MG Auto Park was also advised to submit part catalogues and a list of importable components to the EDB for necessary verification and schedule the imports according to the completion of the manufacturing facility.

The meeting was informed that significant investment in the paint shop of MG had been carried out and installation of equipment had started. The date of installation/completion of the plant conveyed by MG in the meeting was Nov 30, 2022, but work could be expedited, it was informed.

The PML had signed an agreement with German carmaker Volkswagen to produce its vehicles in Pakistan. However, PML’s CKD manufacturing was delayed primarily due to Covid-19 and associated lockdowns in various countries. PML had already informed this problem to Board of Investment (BoI) regarding delays in the project due to force majeure.

The EDB official informed the meeting that previously, two vehicles were approved for local assembly but later PML had submitted a fresh plan backed by an agreement with Volkswagen before June 30, 2021 regarding the replacement of previously approved variants with SUVs from Skoda and VW through BoI.

The official said the request of PML is to allow an extension in their contract until March 2024 i.e. completion date of the plant.

PML representative told the meeting that two models are being requested as old models had been discontinued.

The company had completed 90pc of civil works, while the EDB team had witnessed the construction of the site and facilities. He committed that facilities would be completed by March 2024. As per a media statement issued in October 2021, Premier’s plant is situation in Hub, Balochistan with a capacity of 30,000 units per month. The construction of plant began in July 2021.

The EDB official informed the meeting that German Embassy and Prime Minister’s Office had also requested consideration of the request by Premier Motor and to support local manufacturing and foreign investments in Pakistan.

The AIDEC finally endorsed the request of PML for an extension in the deadline to complete their manufacturing facilities by March 2024 and the replacement of previously approved variants with SUVs as approved by the principal.

In a market previously dominated by three big Japanese assemblers for decades, the ADP 2016-2021 has paved the way for Korean and Chinese assemblers that attracted an investment of around $1 billion besides creating new jobs.

Published in Dawn, August 24th, 2022

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