South Korea’s Motrex has decided to halt its plans to establish a vehicle assembly plant in Nepal. The company had signed a preliminary investment agreement (PIA) with the Investment Board Nepal (IBN) on December 11, 2019, proposing an investment of USD 105.4 million (Rs 8.03 billion). Nearly five years later, the automaker has opted to abandon the project, citing unresolved issues regarding tax incentives.

Under the original agreement, Motrex aimed to manufacture fuel-based vehicles initially and transition to assembling electric vehicles (EVs) by 2030. The plant was proposed to be set up at the Motipur Industrial Area in Rupandehi, Lumbini Province, and was expected to produce 5,820 units in the first year, with a gradual increase to 50,000 units annually. The project was envisioned to boost local demand and reduce Nepal's trade imbalance.

However, Motrex requested a 70% exemption on customs duties and an 80% reduction in excise duties, which the government could not agree upon. These unresolved negotiations, coupled with shifting market conditions, led to the company's decision to exit.

Motrex's plans faced additional challenges after Laxmi Intercontinental, the official distributor of Hyundai in Nepal, began assembling Hyundai vehicles at its plant in Nawalparasi in April. With a local competitor already operational, the relevance of Motrex's project diminished.

IBN CEO Sushil Gyawali confirmed the withdrawal, stating that Motrex representatives had verbally communicated their decision. “They have informed us that they no longer plan to establish a plant in Nepal and will soon submit a formal letter,” said Gyawali.

The cancellation of the project marks a setback for Nepal’s automotive sector, which had hoped to attract foreign investment and technological expertise. Motrex’s withdrawal highlights the challenges of balancing investor demands with national policy priorities.