Top court earlier endorsed Reko Diq deal; ECC okayed opening of an escrow account to make project operational
ISLAMABAD: The Senate Monday passed theForeign Investment (Promotion and Protection) Bill, 2022 aimed at promoting and protectingforeign investment favouring the Reko Diq project.
The bill's approval — opposed by four government senators includingPakistan Peoples Party's Senator Raza Rabbani and National Party’s Tahir Bizenjo — happened in the middle of protests by PTI against the arrest of their senator Azam Swati and the non-release of his production order.
The septuagenarian is currently in the custody of the Sindh police for controversial tweets against the military. The Imran Khan-led party’s senators stood on their seats and later surrounded Chairman Senate Muhammad Sadiq Sanjrani’s dice.
While chaos in the upper house ensued with Speaker Sanjrani trying to make PTI senators take their seats, Law Minister Azam Nazeer Tarar presented the draft of the bill in the supplementary agenda, which was passed after normal proceedings were brought to a halt.
A day earlier, the Economic Coordination Committee (ECC) of the Cabinet approved the opening of an escrow account for depositing $900 million for making the project operational. The ECC's move came after receiving the endorsement of the multibillion-dollar project deal by the Supreme Court of Pakistan on December 9, 2022.
The apex court declared the agreement signed with the Canadian company Barrick Gold Corporation for the development of the Reko Diq mine in Balochistan "legal".
The bill is aimed at promoting large-scale foreign investment in the country’s national interest and sustainable development. The bill will promote foreign investment and provide relief in taxes, transfers and withdrawals.
According to the bill, the federal government will notify additional investments, sectors, industries, and projects as eligible investments. The eligible investment will not be less than $500,000 million. Under the bill, protection will be given to investments done on the basis of international agreements.
Eligible investors would be provided secrecy in the bank transaction. The account will also be protected from inquiries and actions taken by any tax authority. They will be exempt from wealth tax, income tax and zakat. The federal government will not be able to amend the first, second and third schedules of the bill.
Under the first schedule, the Reqo Diq project has been included in the eligible investment. As per the second schedule, income tax will be at 0% for 15 years from the beginning of the project, after which it will be increased to 1%. Even after the completion of the project’s 15 years, no more than 20% withholding tax will be applied.
The agreement related to income tax will be made for 30 years. As per the third schedule, investors related to the Reko Diq project will be allowed to open and operate national and international currency accounts both in and outside Pakistan. Neither the state bank nor any financial institution will restrict the withdrawal and deposit of money from the bank.
The Senate’s session was adjourned till 3am on Thursday.