MOTORCYCLE MAKER'S $150 MILLION PLANNED INVESTMENT IN DOLDRUMS
August 28, 2013 MUSHTAQ GHUMMAN
M/s Yamaha Motorcycle Company's planned $150 million investment in Pakistan is in doldrums as the Japanese embassy has rejected recent decision of the Economic Coordination Committee (ECC) of the Cabinet on "New Entrant Policy." Akira Kono, Japanese Charge d' Affaires, in a letter to the Finance Minister, has expressed disappointment over the decision of the ECC. The copies of that letter have also been sent to different Ministries including the Ministry of Foreign Affairs.
"The decision made by the Economic Coordination Committee (ECC) on August 22, 2013 on New Entrant Policy in motorcycle industry seemingly has put Yamaha Motor Co Ltd in a difficult position where they may have to abandon their planned investment in this country," he added. The top Japanese diplomat quoted the ECC press release as saying that the decision of August 22, 2013 appears to have added the following elements to the New Entrant Policy: (i) the minimum investment entitled for this policy would be 100 million dollars up to the commercial operation date; and (ii) new technology will be defined by the Engineering Development Board (EDB) and recommended by a Committee comprising Chairman, BOI, Secretary Commerce, and Secretary Industries and have to be approved by the ECC.
Japanese embassy maintains that the decision on minimum investment level makes it impossible for Yamaha Motor Co Ltd to enter the Pakistani market. In the investment plan Yamaha developed in close consultation with the Board of Investment, a $150 million investment in phases over several years was discussed and that too only if the market conditions allowed. In the view of Yamaha Motor Co Ltd, investment of 100 million dollars before they start commercial operation in 2016 is beyond its scope and capacity. Yamaha Motor Co Ltd also fears that the decision on the definition and approval of new technology may add further cumbersome procedures. The committee on the New Entrant Policy has already approved Yamaha Motor Co Ltd as a new entrant in June 2013.
"Yamaha has concerns if the ECC's decision means that Yamaha Motor Co Ltd has to go through additional procedures every time it introduces "new technology" which will cause difficulties in pursuing its investment plan," Kono maintained. The embassy further argues that the investment decision by Yamaha Motor Co Ltd was based on the tariff reduction and the new entrants' policy decided by the ECC in October, 2012. The SRO to implement this decision was issued in January 2013 (SRO 09(I)/2013). Should the new requirements, added later, inhibit the company from pursuing its investment plan, such inconsistency of policy would send an extremely negative signal to other potential Japanese investors in general.
"Judging from the conversation, I had with your good self on the evening of August 22, this does not seem to be your intention. I understand that you kindly intended to take actions to enable Yamaha Motor Co Ltd to begin their investment. However, it would seem that the ECC's decision of August 22 has an effect to the contrary," Kono continued.
Finance Minister Ishaq Dar has been requested to look into the matter and take appropriate measures so that Yamaha Motor Co Ltd could start their investment in accordance with the SRO issued in January (SRO 09(I)/2013. The then Finance Minister, Salim Mandviwala, had made considerable effort to get clearance for Yamaha Company but could not succeed. He also faced allegations of bribery for proactively pursing the case of M/s Yamaha. He denied all charges, saying it was his responsibility to ensure incentives promised in the agreement.
http://www.brecorder.com/top-stories/0/1225707/
August 28, 2013 MUSHTAQ GHUMMAN
M/s Yamaha Motorcycle Company's planned $150 million investment in Pakistan is in doldrums as the Japanese embassy has rejected recent decision of the Economic Coordination Committee (ECC) of the Cabinet on "New Entrant Policy." Akira Kono, Japanese Charge d' Affaires, in a letter to the Finance Minister, has expressed disappointment over the decision of the ECC. The copies of that letter have also been sent to different Ministries including the Ministry of Foreign Affairs.
"The decision made by the Economic Coordination Committee (ECC) on August 22, 2013 on New Entrant Policy in motorcycle industry seemingly has put Yamaha Motor Co Ltd in a difficult position where they may have to abandon their planned investment in this country," he added. The top Japanese diplomat quoted the ECC press release as saying that the decision of August 22, 2013 appears to have added the following elements to the New Entrant Policy: (i) the minimum investment entitled for this policy would be 100 million dollars up to the commercial operation date; and (ii) new technology will be defined by the Engineering Development Board (EDB) and recommended by a Committee comprising Chairman, BOI, Secretary Commerce, and Secretary Industries and have to be approved by the ECC.
Japanese embassy maintains that the decision on minimum investment level makes it impossible for Yamaha Motor Co Ltd to enter the Pakistani market. In the investment plan Yamaha developed in close consultation with the Board of Investment, a $150 million investment in phases over several years was discussed and that too only if the market conditions allowed. In the view of Yamaha Motor Co Ltd, investment of 100 million dollars before they start commercial operation in 2016 is beyond its scope and capacity. Yamaha Motor Co Ltd also fears that the decision on the definition and approval of new technology may add further cumbersome procedures. The committee on the New Entrant Policy has already approved Yamaha Motor Co Ltd as a new entrant in June 2013.
"Yamaha has concerns if the ECC's decision means that Yamaha Motor Co Ltd has to go through additional procedures every time it introduces "new technology" which will cause difficulties in pursuing its investment plan," Kono maintained. The embassy further argues that the investment decision by Yamaha Motor Co Ltd was based on the tariff reduction and the new entrants' policy decided by the ECC in October, 2012. The SRO to implement this decision was issued in January 2013 (SRO 09(I)/2013). Should the new requirements, added later, inhibit the company from pursuing its investment plan, such inconsistency of policy would send an extremely negative signal to other potential Japanese investors in general.
"Judging from the conversation, I had with your good self on the evening of August 22, this does not seem to be your intention. I understand that you kindly intended to take actions to enable Yamaha Motor Co Ltd to begin their investment. However, it would seem that the ECC's decision of August 22 has an effect to the contrary," Kono continued.
Finance Minister Ishaq Dar has been requested to look into the matter and take appropriate measures so that Yamaha Motor Co Ltd could start their investment in accordance with the SRO issued in January (SRO 09(I)/2013. The then Finance Minister, Salim Mandviwala, had made considerable effort to get clearance for Yamaha Company but could not succeed. He also faced allegations of bribery for proactively pursing the case of M/s Yamaha. He denied all charges, saying it was his responsibility to ensure incentives promised in the agreement.
http://www.brecorder.com/top-stories/0/1225707/
