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M/s Kia Lucky Motors Pakistan is expected to commence production from August this year but is worried due to imposition of 10 percent Federal Excise Duty (FED) on above 1,700 cc vehicles, an official told Business Recorder.

The company''s representatives met with the Prime Minister''s Advisor on Commerce, Textile, Industries and Production and Investment Razzak Dawood and apprised him of their production plans and other issues.

Kia Lucky Motors Pakistan Ltd applied for Greenfield status on March 13, 2017 which was awarded on June 19, 2017. The planned investment in the project is $ 190 million.

The manufacturing facilities of the firm are complete and the firm will start manufacturing by August 2019 of the following models: Kia Sportage, 2000 cc petrol and Kia Picanto, 1200 cc petrol.

The booking of Kia Picanto will start in August, 2019 and delivery will start in October, 2019 whereas Kia Sportage will start booking in June, 2019 and will be delivered in August 2019.

In January this year, Meezan Bank, Pakistan''s leading Islamic bank and the Best Bank in Pakistan has recently signed a Memorandum of Understanding with KIA Lucky Motors Pakistan Ltd, a collaboration between KIA Motors Corporation, South Korea and the Yunus Brothers Group, Pakistan, formed to start vehicle assembly/manufacturing operations in Pakistan.

The sources said, M/s Kia Lucky Motors Pakistan and M/s Hyundai Nishat Motors were awarded Greenfield status under ADP 2016-21 and have submitted requests for withdrawal of Federal Excise Duty (FED) @ 10 per cent levied on locally assembled vehicles having cylinder of 1800 cc or above in view of their major variants of higher engine capacity.

Engineering Development Board (EDB)/Ministry of Industries and Production have supported their proposal and opposed the levy of FED @ 10 per cent levied on locally manufactured vehicles.

In the final version of Finance Bill (second amendment), FED has been imposed on locally manufactured vehicles of 1700 cc and above despite MoI&P''s recommendation to remove the FED.

According to Kia Lucky Motors, it is being rumoured that the Government of Pakistan (Ministry of Industries and Production) is actively considering award of Greenfield status and similar concessions to an existing OEM which has committed to bring in new investment.

The company argues that it was never the objective of the ADP to give concessions to existing OEMs under the Greenfield or Brownfield categories, adding that if such intent had been communicated earlier, global OEMs like Kia and others would not have decided to enter Pakistan.

"It was clearly stated during our initial meetings with BoI, MoI&P and EDB that the Greenfield/Brownfield incentives provided to new entrants under the policy will not be available to existing OEMs and this was the basis for the company deciding to make a large investment in Pakistan''s automotive sector," said CEO of the company.

Copyright Business Recorder, 2019

the author

I did graduation from the Government Murray College Sialkot and MSc in Psychology from the University of Punjab. I am in journalism since 1990. I worked in Daily Nawa-i-Waqt as sub editor and staff reporter in Daily Pakistan and Daily Din prior to joining Daily Business Recorder. I have been associated with this newspaper since 2000 as staff reporter. Energy Sector, Commerce / Trade and Industries are key areas of my interest. I have also the credit of exposing number of scams like Rental Power Plants (RPPs), LNG, sugar import, etc.