Kathmandu, December 13: If everything goes as planned, a South Korean company, Motrex Co Ltd, will set up an automobile assembly and manufacturing plant in Nepal.
The company has recently signed an initial agreement with the Investment Board of Nepal (IBN) for investing around Rs 11.95 billion (US $ 105 million) in this regard. The respective boards of two organization will soon approve this deal.
Under this project, Mortex Co Ltd is looking to set up the assembly plant in Motipur Industrial Park, Rupandehi to assemble Hyundai and Kia four-wheelers. It has set a target to assemble 1,000 four-wheelers of such brands in the first year of operation.
The Korean company is required to prepare the environmental impact assessment (EIA) report within seven months after signing the final agreement to establish the plant. After this, it is expected to set up the plant within three years and start assembling vehicles in Nepal.
The company had forwarded its proposal to establish the vehicle assembling factory in Nepal to the Investment Board on February 8, 2019. A meeting of the board headed by its chairman and Prime Minister KP Sharma Oli had approved it on March 15, 2019
While submitting its proposal, the company had put forth some “contentious” terms and conditions before investing in Nepal, but they were later rejected by the INB. Such demands include infant industry protection for seven years, entry restriction of the competitors investing below Rs 10 billion and exemption from paying customs duty and income tax.
Auto dealers in Nepal had also vehemently opposed them saying the fulfillment of these could deter other private players from investing in the automobile industry.
It is reported that the South Korean company agreed to drop its conditions after the IBN assured that its business interests would be protected in the Nepali market.
The IBN is said to be positive towards other demands being currently raised by company like 10% to 15% waiver on the import and excise duties of equipment, machinery or any other parts required for the assembling of four-wheelers in Nepal.
