Foton JW Auto Park and Master Motors have engaged in an argument over granting of Greenfield status to Foton. Master Motors complained that it is unfair to give greenfield status to Foton JW as it will give them a 30% competitive edge over the already established automobile company.
Foton JW, on the other hand, emphasized that their Greenfield status is in line with the Automotive Development Policy (ADP) 2016-21. A representative of Foton told that the company has assured the government that they will introduce new products in the Pakistani market, and that is why they were conferred the Greenfield status as per existing rules.
The companies have approached the Ministry of Industries and Production to resolve their conflict.
In order to understand what the conflict between the two automakers is about, let’s take at what Greenfield status is.
According to ADP, Greenfield status is given to companies that are installing new and independent automotive assembly and manufacturing facilities by an investor for the production of vehicles. These vehicle models, it should be mentioned, are those which aren’t already being assembled/manufactured in Pakistan.
The policy further elaborates on this by mentioning that:
A new manufacturer under Automotive Development Policy (2016-21), establishing a maiden assembly facility will invariably need separate treatment and greater incentives in the early years to enable it to introduce its brand, develop a market niche and share, create a distribution and after-sales service networks, and develop a part manufacturer base.
In short, the Greenfield status was introduced in the auto policy to attract new market players by giving them incentives.
Given all this, why is Master Motor not convinced about awarding Greenfield status to Foton? The company states that Foton JW has previously sold their products in Pakistan under the brand name Forland.
A representative from Master Motors told:
Forget about what happens to us or our business; is the decision not in contravention of the auto policy? The net impact of such a move will not be positive for the economy. We see no logic in promoting new investment that kills an operational project.
Foton JW Auto Park responded to the reservations of Master Motos saying;
Nothing could be further from the truth. We secured the status after a long-drawn process of scrutiny by the relevant departments. Everything has been done in a perfectly transparent manner. Why would government officials stick their neck out if we were simply rebadging?
Foton’s COO Hamid Rasul says that Master Motors is simply not happy about the fact that his company got the license from Beiqi Foton Motor to assemble vehicles in Pakistan. He said:
The fact is that the company that is raising objections was not authorised to manufacture the said brand in Pakistan. My company has provided a signed letter from the parent company, Beiqi Foton Motor, attested by the Pakistan Embassy in China and the Chinese consulate in Pakistan with our application to the ministry.
Mr. Rasul elaborates on this and explains what he believes to be the reason behind Master Motors’ frustration:
As far as we know, there is a lawsuit from Forland against the said company for illegally assembling vehicles in Pakistan.
He further added that Foton has already acquired 40 acres of land in Lahore, as well as the necessary equipment. The company will start its operations in a matter of weeks, Rasul told.
Will the ADP be fully Implemented?
Engineering Development Board’s (EDB) CEO Mirza Nasim Baid denied all rumors that the government is hesitant over the implementation of ADP 2016-21. He said;
The policy is paying rich dividends, so why would we vacillate? Millions of dollars have already been invested since the launch of the policy.
Talking about the improvements in current policy as compared to the 2008-13 policy, Baig added;
We are both sincere and serious. The last policy (2008-13) fell flat on its objectives. But the current one is succeeding as it is aimed at addressing imperfections in the auto market by paving the way for new entrants in the sector which is expected to expand further with higher economic growth as CPEC gains materialise.
The policy does have certain flaws. However, EDB and the Ministry of Industries are already working on improving it. EDB’s Mirza Nasim had this to say about it:
Yes, we are fallible. However, processes are in place in the EDB and the Ministry of Industries to make amends. For example, we reversed the decision to permit aspiring auto investors to import 100 vehicles duty-free for a test run, as the facility could be abused.
Talking about the conflict between aforementioned companies, EDB CEO said;
I am aware of several cases of ongoing confrontation. The case in question is with the ministry that is engaging all stakeholders, and I am confident that it will be decided on merit. We can’t afford any controversy at this juncture.