The investment plan of Pak-Suzuki to invest $460 million in Pakistan is in doldrums owing to the non-serious attitude of the Ministry of Finance and Board of Investment (BoI), a top official of Pak Suzuki said here on Tuesday.
Despite the completion of all the paperwork submitted by Pak-Suzuki, the company is still waiting for a reply from the government and finance minister Ishaq Dar has asked the management of Pak-Suzuki to contact Dr Miftah Ismail, chairman of BoI.
Pak-Suzuki has submitted its plan to invest about $460 million in order to set up another car plant in Karachi and is continuously lobbying to avail tax breaks for next 2-3 years with the new entrants.
In this connection, the top management including Managing Director Hirofumi Nagao had met Ishaq Dar in December 2016 and the government had committed to providing a level playing field to all prospective investors.
“We are still looking towards the Board of Investment and the Ministry of Finance,” said an official of Pak-Suzuki. Whenever the government desires to give a concession of 2-3 years, Japanese will start work on their expansion plan.
He warned that Japanese calendar starts from March and if such attitude of the government continued, the company may delay its new investment plan for Pakistan or it may invest such a big amount in India again.”
If the government gives permission for the expansion of the plant, the project would be completed within two years, he added.
The official said that Engineering Development Board (EDB) and standing committee of Industries and Production and Federation of Pakistan Chamber of Commerce and industries (FPCCI) have already appreciated this new investment flow as it would generate 3000 direct employment and 315,000 indirect jobs.
According to EDB’s official, the cases of investments in the auto sector, including new entrants are stuck up in BoI as its chairman Dr Miftah Ismail is not taking an interest in the new investment in the plants of the automobile manufacturing sector.
Informed sources said the Japanese automobile company wants to avail tax incentives recently announced by the government for new automobile companies under the auto policy and in this connection, Pak-Suzuki had already launched its two models; Suzuki Vitara, and Suzuki Ciaz in Pakistan.
However, the import of vehicles would be difficult for the company after the announcement of 100 per cent cash margin condition announced by the State Bank of Pakistan. The company was selling Suzuki Vitara and Suzuki Ciaz by importing them. After expansion of its plant, Pak-Suzuki will build units of Suzuki Vitara and Ciaz here.
The official said Suzuki wanted to take benefit of the word ‘innovation’ in the new policy to qualify for the incentive scheme. The finance minister, who is also chairman of the Economic Coordination Committee (ECC) of the cabinet, has rejected the idea of letting the existing automobile players benefit from ‘incentives for new entrants’, unless the Engineering Development Board and related ministries, like commerce and industries, conclusively define existing players as under the innovation clause.
The analyst report of Topline brokerage house said, on a sequential basis, the net revenues of Pak-Suzuki increased by 11 per cent in the outgoing quarter, while gross margins improved by 3.7ppt QoQ to 10.7 per cent, which remained above expectation. Volumetric sales, on the other hand, registered a growth of 8 per cent QoQ to 27,254 units.
PSMC’s sales turnover contracted 15 per cent YoY, on account of completion of ‘Apna Rozgar’ Taxi Scheme.
The company sold a total of 27,254 units during Oct-Dec 2016 period, down by 26 per cent YoY. After normalising the effects of Taxi Scheme, sales volumes of the company posted a growth of 21 per cent YoY. To point out; the company managed to sell 109,758 units in 2016, down by 18 per cent YoY (Ex-Taxi +21pc YoY). In terms of growth, ‘Suzuki WagonR’ remained the most impressive variant with volumes reaching to 13,209 units in 2016, up by 75 per cent YoY.
