The Multilateral Investment Guarantee Agency (MIGA), member of the World Bank Group, is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against political and non-commercial risks in developing countries.
MIGA has issued guarantees worth US$66 million in support of the design, construction and operation of the Hyundai-Nishat Motor vehicle assembly plant in M3 Industrial City, Faisalabad.
The guarantees cover investments and loans guarantees extended by the Sojitz Corporation of Japan, a trading company, to Hyundai Nishat Motors (Private) Limited, a joint venture with Nishat Group, one of the largest conglomerates in Pakistan. The guarantees are issued for up to 15 years against political risks of transfer restriction, acts of expropriation, war and civil disturbance.
Once operations begin in 2020, the plant expects to assemble a range of Hyundai-branded vehicles from passenger cars to light pickup trucks. The plant will have the potential to achieve an annual production capacity of 30,000 vehicles.
Hyundai Nishat Motors benefits from the Automotive Development Policy (ADP 2016-21) under the Greenfield investment status. The ADP offers incentives to new entrants in the automobile sector, including the ability to import machinery at concessionary duties. The company will also benefit from a ten-year corporate income tax exemption and import of 100 CBU units for test marketing at 50% of the prevailing duty under the ADP.
According to Hyundai-Nishat production plans, the company will reportedly start its assembly operations with H100 1-ton commercial pickup, followed by the Tucson SUV, Kona Crossover and the Elantra sedan.