Thursday, 21 November 2019

Inwards investment

International organisations and companies are willing to make a stake in Pakistan
International organisations and companies are willing to make a stake in Pakistan

There is a discernible rise in inwards investment. International organisations and companies are willing to make a stake in Pakistan. French car-maker Renault are the latest such to announce that they are to start assembling cars in Pakistan by 2018. This was announced by the Board of Investment (BOI) and at least in part is down to some determined lobbying in France by finance minister Ishaq Dar and the chairman of the BOI itself. Renault are to invest around $100 million in the expansion of capacity at the Ghandara plant and the knock-on effects are going to be significant.

The government has wanted to break the monopoly  some might say stranglehold  which Japanese brands have on the Pakistan car market. The model that Renault are to introduce is the Duster, a compact SUV that will be priced at around Rs2.5 million or cheaper than Japanese 1500cc vehicles, and a cheaper still 1200cc model will be introduced. Toyota, Suzuki and Honda all assemble vehicles locally but at prices that the Duster is going to undercut, as well as exceed the Japanese vehicles in terms of quality of build and specification.

It is a pleasant change to report that a government initiative, namely the offering of attractive incentives and concessions to foreign investors, has paid off. Government representatives promoting Pakistan abroad can rightly point to an improvement in the security environment in the last two or three years, a stock market that is one of the best performing in the region and a widening arterial infrastructure that is going to feed into easier and cheaper distribution of imported products. If Renault are confident to put significant amounts of money into Pakistan then that is going to ease the anxieties of other inwards investors – Paramount Fine Foods of Canada have also announced their entry into Pakistan in the last week albeit on a smaller scale but another confidence indicator – then a cautious optimism is justified. Persistence has paid off with Renault and we hope for similar results for the future.

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