Pak Suzuki is still struggling to get Greenfield status against estimated investment of $460 million, according to Business Recorder.
As per information, two senior diplomats of Japanese embassy in Islamabad have recently met with senior officials of Ministry of Industries and Production, seeking help to “achieve” this goal. However they were clearly told that Suzuki’s investment does not fall under Greenfield status under the prevalent auto policy. Reportedly, the quality of Suzuki’s cars also came under question during the meeting.
According to sources, all Pakistani senior officials and political leaders who visit Japan are being plausibly questioned as to why Suzuki is not being granted Greenfield status despite the fact that the company is willing to make a huge investment in Pakistan. Masafumi Harano MD &CEO of Suzuki said:
“We have completed all the preparatory work to start the construction of our new plant. Funds have been arranged by our principal Suzuki Motor Corporation, Japan for direct investment and are ready to transfer. Now we are eagerly awaiting the approval of Greenfield incentives and benefits for the period of three years by the Government of Pakistan.”
The CEO also assured that the company and its vendors will continue progressive localization, assuring that there will be no rollback of localization after allowing the Greenfield incentives and benefits to Pak Suzuki.
Suzuki also intends to invite Prime Minister Imran Khan and other top officials on the occasion of stone laying ceremony of the new plant. The ceremony will also be attended by the worldwide auto sector business community.
Suzuki began efforts to get Greenfield incentives ever since the new Auto Policy 2016-21 was announced during the previous PML-N government. The proposed investment of $460 million to construct another Suzuki plant in Pakistan was set conditional only if Suzuki was granted the Greenfield status.
On the other hand, newcomers including Chinese, Korean and French car makers have strongly opposed the move by Pak Suzuki seeking same benefits/incentives that are marked for new players under the Auto Policy 2016-2021 which does not allow the incentives under Greenfield investment status to existing assemblers.
The Greenfield policy was made to provide level-playing field to new comers and if Pak Suzuki or other existing assemblers receive these benefits, this would be completely unfair. It was decided that the auto policy, once implemented will not be changed for at least 5 years. However, the government will have to amend the Auto Policy 2016-2021 to provide benefits to existing assemblers. But if the government grants the Greenfield status to Pak Suzuki, or introduce any changes to the policy, it will be a huge credibility loss for the government policies. Furthermore it will create a negative impact on the new investment as there won’t be any attraction for newcomers to invest in the auto sector.
It is imperative to mention that the two other key players i.e. Indus Motors Company which manufacture Toyota cars and Honda Atlas have invested billions of rupees on expansion without seeking Greenfield incentives.