ISLAMABAD, June 15: Daimler-Chrysler and Coastal Group has decided to invest $5.85 billion in Pakistan by starting production of Mercedes-Benz trucks, both commercial and military, buses and Mercedes cars of various types to create a vendor industry.

The group would set up their plant on 1,200 acres of land near Shaikhupura provided by the government. The investment would create 5,000 jobs directly and indirectly, said Umar Ahmed Ghumman, minister of state for Privatisation and Investment and chairman Board of Investment (BoI) at a news conference at the Parliament House here on Thursday.

Coastal Group would make all the financial investment in the project, while Daimler-Chrysler would provide technology transfer.

It is to mention here that on May 7, 1998 two of the world's leading car manufactures, the German Daimler-Benz AG and the USA-based Chrysler Corporation, announced the largest industrial merger in history. The new company, called Daimler-Chrysler, became the world's fifth largest car maker with combined revenues of around $130 billion, a combined operating profit of around $7 billion, and a combined workforce of more than 420,000 employees.

The minister said the group would export products to neighbouring countries as well as to the Gulf region, which would earn billions of dollars in foreign exchange for Pakistan. A training institute conforming to the international standards would also be established in Pakistan to update the technical knowledge in the country.

An industrial estate for vendor industry would also be set up to locally produce spare parts as per European standards for local and export purposes, Mr Ghumman said.

Black cabs: Responding to a question about the reported violation of rules in import of black cabs from the United Kingdom, Mr Ghumman said: "We are importing duty-free 300 black cabs for testing purposes. The government had to give this facility in order to invite $1 billion investment from Prime Transport Limited to assemble, manufacture and operate London taxis in Pakistan under joint venture partnership with LTI of UK and ST Electronics of Singapore."

The minister said 150 of the black cabs would be tested in Karachi, 100 in Lahore and 50 in Islamabad so that to keep in mind the local conditions while manufacturing the cabs locally. He said no rules of the Public Procurement Regulatory Authority (PPRA) had been violated as the matter did not involve any investment by the government and the investment did not create any scam.

"I have no personal connection with the person who has invested the money. He is a Pakistani and his name is Dawood Khan. He belongs to Karachi. He wanted to introduce a secure and safe taxi system in Pakistan after a 15-year-old girl from his family was raped and killed by a taxi driver," he said.

The minister said no one was ready to provide such an investment for the purpose-built black cabs, but still, “we invited the tenders through various newspapers to ensure transparency," he added.

The minister said that as per the agreement, the London taxis would charge Rs11 per km which was reasonable. To a question, he said the manufacturing plant of black cabs was being set up in Gharo, near Karachi on 300 acres. The plant had to be shifted to Pakistan because the manufacturing of a single black cab required 43,000 sterling pounds in the UK compared to the 22,000 sterling pounds in Pakistan.

He said the government wanted to change the culture of taxis in Pakistan by revolutionising, introducing and implementing the most economical, dependable, comfortable and safe satellite-controlled taxi service in the country.