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February 5, 2019

Govt mulls legal amendments to attract SEZs investment

Business

February 5, 2019

ISLAMABAD: The Economic Coordination Committee of the cabinet (ECC) on Monday decided to propose amendments into the special economic zones (SEZs) law to attract investments, while directing the Board of Investment (BOI) to expedite process to approve SEZ applications.

The ECC took the decision during a meeting presided over by Finance Minister Asad Umar. It was decided that BOI would reduce the timeframe for approval of SEZ applications from 90 days to 45 days. Further, it will propose certain changes in SEZ Act to make it more investors-friendly. It was also decided that SEZs of Islamabad and Bostan would be included in the list of priority SEZs under China-Pakistan Economic Corridor (CPEC).

ECC also asked BOI to revisit the requirements for setting up of tourism, IT and health-related entities within SEZs. ECC directed petroleum and power divisions to devise a roadmap within 30 days for provision of electricity/gas to all industrial estates.

Currently, seven SEZ applications are in the pipeline, including Oil Village SEZ (1,000 acres), North Star Textiles Private Limited (200 acres), Rahim Yar Khan Industrial Estate (456 acres), Bhalwal Industrial Estate (227.5 acres), Vehari Industrial Estate (277 acres) and Rachna Industrial Park (178 acres).

They have aggregate estimated electricity requirements of 400 megawatts and gas demand of 100 million metric cubic feet/day. The government has already approved seven SEZs with total electricity and gas demands of 972 megawatts and 248.5 million metric cubic feet per day.

Alone SEZs under CPEC projects require 740 megawatts of electricity and 170 million metric cubic feet/day of gas, according to a BOI’s estimate. There are at least three SEZs under CPEC, namely Rashakal; Allama Iqbal Industrial Estate, Faisalabad; and Dhabejji, Thatta.

BoI urged the government to overcome key issues on governance of SEZs in Pakistan. BOI, in a document, said there is no regulatory and enforcement body. No law binds relocation of local industry inside SEZs. There are non-functional layers of institutions and there is an issue of role duplication.

Industrial units in SEZ can avail corporate income tax holiday of five years and duty-free and tax free imports of capital goods. They can be provided plots on installments, freight subsidy by the federal government and rental sheds for industrial use.

BoI has a mandate to coordinate all activities pertaining to SEZs, scrutinise the application, review development agreements, and support and facilitate SEZ authorities under SEZ Act 2012.

ECC, in consideration of a proposal submitted by the ministry of industries and production, also approved provision of funds to the tune of Rs833 million to Pakistan Machine Tool Factory for payment of employees’ salaries and retirement benefits.

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