China’s CPEC investment in Pakistan reaches $62 billion

Islamabad: China’s investment in its ambitious economic corridor project in Pakistan has reached $62 billion, jumping more than 34% from its initial investment of $46 billion, a top Pakistani official said on Wednesday.

CPEC key Gwadar port

Sindh province governor Mohammad Zubair said China’s approved financing for several projects in Pakistan under the China-Pakistan Economic Corridor (CPEC) has reached $62 billion. He made the remarks at a conference on ‘Infrastructure demand and financing’ jointly organised by credit rating agencies Pacra (Pakistan) and Dagong (China) in Karachi.

“New investment has been approved for projects in various sectors including (establishment of) industrial zones,” said Zubair. He said that the government was also in talks with China to place the Karachi Circular Railway project under the CPEC.


China overtakes US as top direct foreign investor in Pakistan

China is overtaking the US as the largest direct foreign investor in Pakistan, with the South Asian nation increasingly favouring its neighbour’s “One Belt, One Road” trade route that is funnelling in billions of dollars and revamping decrepit infrastructure.

With relations frayed between the United States and Pakistan, China has been strengthening its ties to the nation of about 200 million people after it pledged two years ago to loan and finance about US$55 billion (S$77 billion) in a so-called China-Pakistan Economic Corridor (CPEC).

US direct investment in Pakistan stood at US$505 million – from July 2013 to January this year, compared with US$1.82 billion that came from neighbouring China, according to central bank data.

Hyundai plans to set up assembly plant in Pakistan


Nishat Mills Limited (NML), one of the largest integrated textiles mills in the country, on Friday announced that it has resolved to enter in to a Memorandum of Understanding (MoU) with Hyundai Motor Corporation (HMC), Korea and Sojitz Corporation, Japan to set up a green field plant to assemble Hyundai vehicles in Pakistan.

The joint venture will produce HMC passenger cars and 1-ton range commercial vehicles in PaHyundai Motors in Pakistankistan, according to a notice sent to the Pakistan Stock Exchange (PSX).

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However, the notice added, the project is subject to applicable statutory and regulatory approvals. NML share price closed at Rs169.52, up 2% on a day when the KSE-index declined by 110 points or 0.22% to close at 49,555.

After the announcement of the new auto policy in March 2016, a number of foreign automobile companies have announced to set up their plants in Pakistan.

Just two months ago, Lucky Cement, one of the largest cement makers in Pakistan, announced that it will set up a car plant in collaboration with Kia Motor Co with an investment of Rs12 billion.

Both leading Korean automobile companies, Hyundai and Kia, used to assemble cars in Pakistan but left the market mainly due to the liberal used car import policy in the Musharraf regime.

In November 2016, French carmaker Renault also agreed to invest in a new factory in Pakistan and the production phase is expected to start in 2018.

The re-entry of Korean brands is a big success of the PML-N government, which took over two years in announcing the new auto policy to give attractive incentives to new entrants and those who left Pakistan earlier. The government wants to encourage new players to invest in the local market, which is currently dominated by only three Japanese players.

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Analysts say the trust in foreign companies on Pakistan is growing while the lucrative automobile market is attracting them to the country.

Pakistan’s car penetration of 13 vehicles per 1,000 persons is significantly lower than the regional average of 162, which shows there is a strong potential for automobile growth due to growing disposable income and low interest rate in the country.

Published in The Express Tribune, February 4th, 2017.


KIA MOTORS to Setup Assembly plant in Pakistan

The board of directors at Lucky Cement has indicated that they plan to invest Rs 12 billion in an automobile company, Kia Motors Corporation, after investing in power sector.

Lucky Cement will help in setting up operations of Kia Motors in Pakistan through its investments. Once these investments are done, the company will be kickstarting its manufacture and/or assembly of car units locally. Kia was ranked as the most reliable car manufacturer in 2016 and is one of the top 20 most valuable car brands.KIA MOTORS

According to information disclosed to shareholders, the board of director of the leading cement producer decided to invest by way of equity in the proposed associated project.

Kia was rated as the most reliable car manufacturer in 2016

The project is to be set up and established in Pakistan, which shall undertake the manufacturing, assembling, marketing, distribution, import and export of all types of Kia motor vehicles.

The cement producer will make an investment of Rs. 12 billion through 1.2 billion shares worth Rs 10 per share each in the automobile company.

In Pakistan, Kia Motors Corporation provided its franchise to Dewan Farooque Motors to manufacture or assembly its different models at its plants based in Karachi.

Three months back, Dewan Farooque Motors issued a statement to resume its production by October this year. The company was negotiating with KIA Motors for resuming local production of KIA range of vehicles in Pakistan.

According to plans, Dewan Farooque planned to launch passenger cars, light commercial vehicles and SUVs in collaboration with KIA Motors Korea in the years to come.

The investment of Lucky Cement in Dewan Farooque Motors or an assembly unit for Kia brands will help boost local automobile industry in Pakistan. It will also expedite the transfer of technology in Pakistan from a new country, South Korea and improve competition in the automobile industry, resulting hi-tech and affordable cars are likely to be available in future.

Earlier in 2016, Lucky Cement announced to invest Rs 200 million to establish a third plant in northern part of the country, cashing in on fast paced economic activity that will be part and parcel of China Pakistan Economic Corridor (CPEC).

The company is working to diversify its business through setting up 660 MW coal-based power plants ‘Lucky Electric Power Company Limited’ (LEPCL) in Karachi as it is the hub of industrial activities.


German truck maker MAN SE to set up assembly plant in Pakistan


German truck maker MAN SE is at an advanced stage of setting up a plant in Pakistan, industry officials say.

Forecasting greater demand of heavy vehicles under the China-Pakistan Economic Corridor (CPEC), vehicle manufacturers are flocking to Pakistan to explore opportunities of investment with MAN SE being the latest addition to the growing list.Man trucks in Pakistan

MAN SE, which has been watching the Pakistan market for over five years, is expected to officially announce its decision within a couple of months.

It is pertinent to mention that 75% of MAN SE’s ownership rests with the Volkswagen Truck and Bus GmbH, a wholly-owned subsidiary of Volkswagen AG.

Industry officials say this is a big development for Pakistan because the company is also expected to export trucks from the country.

The National Logistic Cell (NLC) is expected to give significant orders to MAN SE because Pakistan’s leading logistic company is looking to replace its old fleet, an auto industry official informed.Wolkswagen

Officials from the German company are also coming to Pakistan to participate in the Pakistan Auto Show (PAPS) 2017, being held from March 3 at the Expo Centre, Karachi.

CPEC is expected to generate huge demand for trucks in Pakistan and industry officials say Pakistani companies like NLC would prefer to use German trucks due to quality concerns. Local industry officials say German trucks are better placed to commute on extraordinary high altitude of Karakoram Highway (KKH) – one of the highest paved roads in the world that connects Pakistan and China.

In February 2012, German Embassy’s Commercial Section Head Samy Saddi, while talking to media, said that German auto giant MAN was looking at Pakistan as a potential market.

The 250 year-old company operates through fully owned subsidiaries or joint ventures with local companies in India, Poland, Turkey, China, the US, the UAE South Africa, Uzbekistan, Portugal etc.

After years of stagnant economic activity and poor automobile sales, Pakistan is witnessing huge demand in heavy vehicles due to CPEC, macroeconomic stability and relative improvement in the country’s security situation.

Earlier, it was reported that Volkswagen Commercial Vehicles is in final talks with Premier Systems Private Limited – the authorised importer of Audi vehicles in the country – to set up a manufacturing/assembly plant for its Amarok and T6 (transporter range) models.

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In the past year, a number of international auto makers have expressed interest to set up manufacturing plants in Pakistan.

France’s Renault and South Korea’s Hyundai and Kia have announced they will soon start assemblies in Pakistan, in partnership with local companies.

This will mark a return for Kia and Hyundai, which left in the previous decade when their local partner suffered financial problems.