Automobile Assemblers Shifting Foreign Direct Investment From Sindh to Punjab

Automobile manufacturers bringing in foreign direct investment (FDI) at the Bin Qasim Industrial Park (BQIP) and Korangi Creek Industrial Park (KCIP) in partnership with local companies, allege that bureaucratic hurdles at the National Investment Park (NIP) are delaying the implementation of their projects, thereby resulting in mountings costs, time overruns and risk additions.

Hyundai had originally planned to set up a plant at BQIP. However, NIP’s bureaucratic issues forced the Korean auto giant to shift investment to the Faisalabad Special Economic Zone (FIEDMC) in Punjab.

Al-Futtaim Motors was also allotted land at BQIP to set up Renault car assembly plant after Groupe Renault and Al-Futtaim signed definitive agreements in November 2017 to assemble vehicles at a new plant in Karachi. However, repeated delays by the Board of Directors of NIP forced the company to change the plant’s location to Faisalabad.

Other companies that are currently investing at BQIP include Kia-Lucky Motors, Tecno Auto Glass, Hitech Auto Parts, Horizon Steel and Ahmed Glass.

The total investment being made by these companies is in excess of US$200 million (Rs 20 billion) within June 2019.

Delays and non-availability of infrastructure facilities at BQIP and other issues forced the two units (Hyundai and Al-Futtaim) to move up country. Investors slam NIP for not providing promised facilities.

Shareholders of these companies had agreed on purchasing BQIP land at almost double the land price at Port Qasim Eastern Zone on the basis of NIP’s commitment of setting up a world class industrial park with allied facilities and infrastructure at door step.

The investors were given assurance that electricity connections would be provided to their units by January 2018. Contrary to these commitments, the projects are facing serious issues in terms of availability of utilities and infrastructure.

As per the special economic zone (SEZ) requirements, the zone operator is obligated to provide utilities at doorstep to the SEZ enterprises.

As of now, the NIP does not have any surplus electricity available and there seems to be no follow-ups on its arrangement despite repeated reminders by the allotees.

In its response, the NIP said the decision on utilities and power policy is awaited from its Board of Directors.

The investors have made several attempts to contact Chairman NIP Muhammad Afzal. However all efforts have failed.

Investors at KCIP are also facing similar problems and have appraised the Ministry of Commerce in this regard.

KCIP was launched in March 2010 by the NIP. It has more than 250 acres of area with capacity of 100 industrial plots. So far only seven units are under construction.

Sources said there currently there were no representatives of Karachi on the NIP Board composition.

(Originally reported in Dawn)

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