Sino-Pak experts mull over setting up nine SEZs

ISLAMABAD: Under the China-Pakistan Economic Corridor (CPEC) which is a combination of transport and energy projects, experts from both the countries are working on the modalities for establishment of nine special economic zones (SEZs) alongside this mega project. 

Besides, the government has already notified seven other SEZs and work on their establishment by Chinese and Pakistani companies is underway.  Experts believe that this mega project is a rare opportunity to change the economic geographies, especially of Pakistan under which both the countries plan to establish around 46 SEZs alongside this corridor in years to come. 

To this effect, a Chinese National Development and Reform Commission (NDRC) experts group is on a five-day visit to Pakistan who had also visited two SEZs in KP [Rashakai] and Punjab [M-3 Industrial City Faisalabad]. 

On Thursday, a one-day session was held on prioritised SEZs under Pak-China Industrial Cooperation here in Islamabad and discussed various investment avenues. These nine proposed SEZs to be set up include one each in all four provinces, federally administered tribal areas (Fata), Gilgit-Baltistan and Azad Jammu and Kashmir and one in Islamabad. Another one will be set up by federal government on the land of steel mills in Karachi.

A senior official who attended the meeting told The News, “Chinese visiting delegation was quite satisfied with the work on the establishment of SEZs and are going to relocate their industries to Pakistan.” Now, we are going to have further deliberation on setting up of these proposed SEZs which offering plenty of incentives to investors, he said. 

The government has planned to establish 46 special economic zones (SEZs) alongside the CPEC in years to come and of which nine SEZs sites have been declared prioritised, said Chairman BOI, Dr. Miftah Ismail while addressing the concluding session of Pakistan-China Industrial Cooperation dialogues. Seven SEZs that have been notified/established
including three each in Punjab and Sindh and one in Khyber Pakhtunkhwa. These SEZs include three in Sindh i.e. Khairpur Special Economic Zone, Korangi Creek Industrial Park and Bin Qasim Industrial Park; in Punjab they are Quaid-i-Azam Apparel Park, Sheikhupura, M-3 Industrial City Faisalabad and Value Added City Faisalabad, and Hattar Economic Zones, Haripur, Khyber Pakhtunkhwa.

Miftah expressed the commitment of Pakistani government to nominate a working group to deliberate on how to build the zone. He expressed the views that either Chinese or Pakistani companies can build the zone or the same can be built jointly by both sides. 

Chairman BOI highlighted that products manufactured in these zones can not only be exported but can also be sold in the local Pakistani market, where they are not required to pay any customs duty. This makes the zone ideal for investors as Pakistan has a big market of 200 million plus people. The model can be primarily export oriented. But in case of China import substitution also has a lot of potential. The Government has already given its commitment to provide all utilities and security to the investors in these zones. 

He pointed out that each zone has its special features for investors in terms of its location, raw materials, skilled work force and linkages with other parts of the country and outside the country. China has rich experience in developing zones particularly from 1985 to 1995 and from 2009 till 2015 and Pakistan can learn much from Chinese experience. 

Earlier, Secretary BOI Azher Ali Choudhry expressed the hope that Chinese Experts Group must have a very successful site visit of Rashakai Special Economic Zone in KP and bilateral meetings with the authorities concerned in the province. He also requested Chinese side to share the composition and Terms of References (ToRs) of Chinese Experts Group to have the matchmaking with the proposed Expert Group from Pakistan side. 

He highlighted the main features of incentive package devised for the identified priority SEZs and invited Chinese side to convey their view point if any for further discussion. He emphasised that Chinese companies have huge opportunities to relocate their businesses to these priority SEZs. Pakistan side is also expecting feedback of Chinese Experts on this visit.

Mr. Li Yuan informed that they started with four (04) SEZs in China in the initial phase and then 14 Coastal Cities were developed and subsequently 14 Industrial Zones were developed by China. Industrial development takes a long time and planning to consider all relevant factors. Proposed Pakistani priority SEZs are needed to be reviewed by Expert Group from each side to decide exact number and types of zones to be developed in the first phase. 

Chinese side has already notified its Experts Group while Pakistan side needs to expedite composition of the Group. Li also emphasised on devising of long-term cooperation mechanism to select priority sectors and to synergise policies for SEZs.

During the session two presentations were made by the representative of Government of AJ&K and Gilgit Baltistan. The representatives of AJ&K highlighted the potential of AJ&K in terms of water and mineral resources. The incentives being provided by the Government of AJ&K to the foreign investors were also highlighted in the presentation. The potential of proposed Mirpur Zone in terms of its connectivity with Highway, Railway and Airport as well as the expected industries to be parked in this zone based on local endowment was also deliberated through the presentation. 

Representative of Gilgit-Baltistan underscored the strategic location, scenic beauty and hospitality of the people Gilgit-Baltistan. He highlighted the mineral potential and location advantages being gate way for Central, East and South Asia. He also apprised the house that this zone is situated exactly on the CPEC route which is ancient Silk Route. The zone has huge comparative advantage for manufacturing and processing of mineral fresh fruits and vegetables, wood, herbs and trout fish. Maqpoon Dass SEZ can also acts as logistic hub of the North.

During question and answer session the Chinese head of delegation informed that they will send a detailed visit report to CPEC Secretary with their recommendations and proposed way forward. He also apprised the participants that China has three foreign investment acts relating to Land Leasing, Tax exemptions and employment policy. China has three years exemption for investors in the zone and subsequent half tax exemption for three years. Many countries are trying to attract Chinese industries. Leasing period of 99 years is quite attractive. However, tax policy needs review. He proposed that these SEZs may follow either Chinese or Pakistani standard to attract investment.