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Suzuki seeks tax benefit and Greenfield status to invest $450mn in Pakistan

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suzuki

KARACHI: Pakistan Suzuki Motors has sought tax benefits and Greenfield status from Pakistan to expand its investment in Pakistan, the industry source said.

The company has submitted its plan to invest $450 million in Pakistan for setting up a new assembly plant under the new Automotive Development Policy 2016-2021. It also demanded from the Pakistani government to revise the auto policy 2016-21.

As per ADP 2016-2021 policy, Suzuki’s investment of $450 million would fall in the Brownfield category, however, it wants to avail tax benefits under the aegis of Greenfield project, said officials in the Ministry of Industry and Production (MoIP).

The previous PML-N administration had stood resolute two years before and rejected to extend these tax benefits to existing Japanese assemblers, which maintain a market stranglehold and dominance in Pakistan.

Ministry of Industries Secretary Azhar Chaudhary said any revisions in the ADP 2016-2021 will be undertaken with all stakeholders including the new entrants and won’t be a party specific decision, the official said.

The entrance of Volkswagen which earlier this month signed an agreement with Premier Motors Limited to make light commercial vehicles in Karachi alongside Renault which is partnering with Al-Futtaim to manufacture vehicles and launch them by end of 2019.

Besides, Hyundai-Nishat Motor Private Limited is also entering the fray and Kia Motors too.

The aim of the ADP 2016-2021 policy was to break the stranglehold and market dominance of the three Japanese manufacturers who have held sway in the country’s automobile sector for over three decades and provide better quality cars at lower prices to consumers.

Board of Investment (BoI) Chairman Haroon Sharif answering a query regarding Pak Suzuki Motors demand said, “Investors should take the country risks and it should provide a level playing field for all players.”

The major enticing thing for Pak Suzuki Motors is the decreased customs duty of 10% being offered to new investors on non-localized parts for five years, which is one-third of rates available to existing automobile manufacturers.

Likewise, new entrants are permitted to import localized parts at 25% duty for a duration of five years, which is almost half the rate being paid by existing players.

Also, new entrants are provided with a one-off duty-free import of plant and machinery for the establishment of an assembly and manufacturing facility to new entrants.

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