ISLAMABAD, Jan 10: Germany and UAE will invest $3 billion in hydel power generation and production of Mercedes Benz cars and trucks in Pakistan.

A six-member delegation of M/s Daimler Chrysler of Germany and Coastal Group of UAE told the Minister of State for Privatization and Investment Umar Ahmed Ghumman they planned to invest about $3 billion in the country.

Out of the total amount, about $2 billion would be invested in hydel power generation, while the rest would be invested in automobile sector to set up production plant for Mercedes Benz cars and trucks, the group observed.

During the first phase, the group would produce trucks for defence forces and set up a production line for two new commercial models of Mercedes Benz cars in addition to constructing the tallest high-rise 'international commercial city' to provide offices/show rooms to the multinational companies (MNCs).

In the second phase, they will start manufacturing commercial trucks. Mr Ghumman had held a series of formal and informal discussions with the top management of the group in order to persuade them to invest in Pakistan, which, according to the minister, was now becoming more open to the foreign capital due to domestic economic reforms by the government.

Assuring full cooperation on behalf of the government of Pakistan and Board of Investment (BoI), the minister pointed out that out of the more than 600 foreign companies in Pakistan, 300 were MNCs.

The return on equity which ranged between 30 per cent and 40 per cent proved that Pakistan was a place where business environment was conducive for foreign investment, he said.

No foreign company, which had invested in Pakistan, had wound up its business due to losses, the minister claimed. Pakistan, he said, was a gateway to the Central Asian Republics and offered tremendous opportunities to the investors to further expand their business.

With the gradual improvement in law and order situation in Afghanistan, the minister said, lucrative opportunities of export would be available to foreign investors to reach the European markets.

Pakistan's investment policy, Mr Ghumman maintained, was liberal as compared to any other country of the region. President Pervez Musharraf and Prime Minister Shaukat Aziz, he claimed, were dedicated to ensure the continuity of policies, good governance, liberalization and facilitation to foreign investors. The business group also included Chairman Coastal Group, UAE, Yusaf Najibi, Senior Vice President (SVP) and Daimler Chrysler, Dr Thomas Hegel.