On June 28, 2018, MIGA agreed to issue guarantees of up to $66 million covering Sojitz Corporation of Japan's equity investments in Hyundai Nishat Motor Private Limited project in the Islamic Republic of Pakistan, and its loan guarantees to commercial lenders to the project. The guarantees are issued for up to 15 years against the risks of currency inconvertibility and transfer restriction, expropriation and war and civil disturbance.
The project involves the design, construction, and operation of a greenfield motor vehicle assembly plant with a maximum annual production capacity of 30,000 units, located within the M3 industrial City in Faisalabad of Punjab province. The project will establish flagship dealerships, bring new technologies to improve production efficiencies, as well as increase competition within the domestic automobile sector.
Information on this project is being disclosed under the early disclosure procedures outlined in MIGA’s Access to Information Policy.
The project is expected to support over 500 sustainable jobs once the assembly plant is fully operational, in addition to short term jobs created during the construction phase. The project will raise domestic production standards by bringing in international expertise, yet also support local businesses by utilizing and further developing existing network of suppliers for localized automotive components. Significant contribution to government revenues can be expected in the form of payments for sales taxes and import duties.
MIGA’s proposed support for the investment is aligned with the World Bank Group’s Country Partnership Strategy to support private sector development, as well as MIGA’s mid-term strategy FY18-20 to support investments to countries eligible for financing from the International Development Association (IDA). Pakistan is an IDA-blend country as it is also creditworthy for borrowing from the International Bank for Reconstruction and Development (IBRD).