Daimler-Chrysler abandons Mercedes plant project

Daimler-Chrysler and its UAE-based Coastal Group has walked out of Pakistan with their $1.1 billion Mercedes Benz manufacturing plant project as the government's last ditch efforts to save the investment plan have failed.

Daimler-Chrysler, a group of two auto sector global giants and manufacturers of Mercedez Benz, had formed a joint venture with Coastal Group of UAE to set-up a Mercedez Benz manufacturing plant in Pakistan. The joint venture was to make initial investment of $1.1 billion for the project.

Obvious loss of winding up of the project is that Pakistan missed a big investor with $1.1 billion sure investment, but the real loss is non-realisation of an opportunity to establish industrial zone for Mercedez Benz from where Pakistan could secure at least $5 billion exports annually.

The government was fully aware of the importance of the project and for the same it opened up the diplomatic channel to bring the joint venture back to Pakistan with its project. It made direct and in direct contacts to the joint venture during the last few weeks, but could not convince its management to rethink of its decision of winding up the project from Pakistan.

In today's open-sky investment world. a group like Mercedez Benz manufacturer can play very significant role in making other groups/ investors feel that the destination it selected for investment was better than the others. This type of project could bring many other companies to invest in Pakistan. Some one year back, the joint venture entered in Pakistan with a big bang and, as was expected it got very encouraging response from the authorities.

Things were moving smooth and in the right direction. The joint venture was making all possible efforts to make sure that its project comes on ground as early as possible and then not only caters to Pakistan's market demand but also export its products from here to the regional countries.

It overcame many obstacles and managed to secure a piece of land stretching over 1200 acres near Shaikhupura in Punjab for the project as well. It was a good development and no one could believe that such a big project will hit snags and one day can finish altogether specially when president general, Pervez Musharraf and, prime minister, Shaukat Aziz, were directly involved and interested to make sure that the joint venture does not face any problem in completing the project.

It happened and subsequent developments forced the joint venture to wind-up its project which, of course, was still on the papers and go back to Germany.

The officials blame media for unceremonial exit of the joint venture from Pakistan and claim that some elements with vested interested played in their own way to create problems for the joint venture. They also claim that the elements damaged the credibility of the joint venture through a malicious campaign in print media.