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Investors to get hefty incentives for industries in Special Economic Zones

ISLAMABAD: Pakistani and Chinese investors, preparing to set up industry in Special Economic Zones (SEZs) will get significant incentives including exemption from duties and taxes, concessional loans, land on instalments and the facility of one window operation to help them in dealing with federal and provincial departments.

According to an official document of China Pakistan Economic Corridor (CPEC) Secretariat, the Pakistani government has provided a policy package to attract potential investors including Chinese enterprises.

The incentive package includes one-time exemption from all customs duties and taxes on plant and machinery imported into Pakistan for installation in Special Economic Zones.

The investors will get an exemption from all taxes on income accruable in relation to the development and operation of the SEZs for a period of five years and an exemption from all taxes on income for enterprises commencing commercial production by June 30, 2020, in the SEZs for the next ten years.

Pakistan and Chinese governments in their 7th Joint Cooperation Committee (JCC) meeting held in November last year decided to establish nine special economic zones in different regions.

The list of priority Special Economic Zones (SEZs) include: SEZ in Rashakai, Khyber Pakhtunkhwa, SEZ Dhabeji Sindh, Bostan Industrial Zone in Balochistan, Allama Iqbal Industrial City (M3), Faisalabad in Punjab, SEZ Maqpoondas in Gilgit Baltistan, ICT Model SEZ in Islamabad, Port Qasim SEZ on Pakistan Steel land in Sindh, Mohmand Marble City in FATA and SEZ in Mirpur in Azad Jammu and Kashmir.

Pakistan will provide gas, electricity, water and other supporting facilities and working shelters in the industrial parks, set up under China Pakistan Economic Corridor (CPEC) project.

The package includes the provision of plots on instalments (50 per cent down payment and remaining 50 per cent in four biannual instalments).

The investors will also get the markup support at the rate of 50 per cent of the markup to a maximum of 5 per cent on the loans taken in Pakistani currency for financing the project. The support is to be provided by the respective governments for the zones in their jurisdiction. Freight subsidy of 50 per cent will be provided on the inland transportation of plant and machinery for installation in any of the priority SEZ.

Special Economic Zones Authority (SEZA) will put in place a one window operation and the respective provincial governments will delegate authority for implementing labour, environment and other laws and for the collection of local and provincial taxes or will depute representatives of the departments in SEZA office. The federal government departments including utility companies, Federal Board of Revenue and Securities and Exchange Commission will depute representatives to perform similar functions in the zone.

The developer shall also be allowed to purchase gas, electricity, and other utilities from utility providers in bulk and supply the same to the enterprises at rates that are duly notified by SEZA in consultation with the stakeholders.

The developer would also be allowed to rent out sheds for industrial use. To encourage upscaling of the industry so that it can become part of global supply chain, certain guidelines have been prepared by the government, to give a thrust to the industrialization process.


Chinese delegation to visit Pakistan next month

A high level Chinese delegation will visit Pakistan next month in a bid to expedite the China Pakistan Economic Corridor (CPEC) projects agreed by the both sides during 7th Joint Coordination Committee (JCC) held here in November 2017.
“The delegation will interact with high level government officials, and local trade bodies besides while it will also visit all the provinces to ensure speeding up work on all nine Special Economic Zones (SEZs) to be established under the umbrella of CPEC,” Project Director CPEC, Hassan Daud Butt told APP here.
He said progress on all projects under China Pakistan Economic Corridor (CPEC) including up-gradation of Main Line-1 (ML) railway track is going smoothly and without any delay.
He said progress of all the projects that were agreed by the both China and Pakistan during 7th Joint Coordination Committee (JCC) on CPEC held here on November 21, 2017 was on track as both sides were committed to complete the projects as early as possible.
Responding to a question regarding possible delay in the $8.2 billion ML-1 project, the project director said earlier due to huge implications in the project, the revised PC-1 of first phase got delayed, however he said ministry of railways had assured to submit the PC-1 of phase-1 by February 20, therefore groundbreaking of the project was likely to be launched in few months as per announcement made by Minister for Planning Ahsan Iqbal last month.
He said the ministry of planning had also sought time from cabinet committee on CPEC to discuss details of the project in next meeting and discussion would help further boosting the progress of project.
Giving details about preliminary design review of the project, Butt said work scope of phase-1 sub projects had already been completed.Similarly, he said work of standards and specifications, BOQs, and cost estimates both local and foreign had also been finalized.
He said now approval of PC-1 and award of Engineering, Procurement and Construction (EPC) would be given on fast track to ensure ground breaking of the project as early as possible.—APP

K-P hastens deal to develop Rashakai Special Economic Zone


The Khyber-Pakhtunkhwa (K-P) government has hastily engaged China Road and Bridge Corporation (CRBC) for the development of its once-favoured Rashakai Special Economic Zone (SEZ) despite the fact that the same company till recently was pushing the case for construction of Hattar as a prioritised zone.

The provincial government signed two pacts – a memorandum of understanding and an engagement agreement – with CRBC in a span of 24 hours, raising transparency concerns in the deal.

CPEC Cultural Caravan warmly welcomed in China

The provincial government entered into an engagement agreement with the CRBC despite not conducting any feasibility study on the Rashakai SEZ of the China-Pakistan Economic Corridor (CPEC), according to officials in the provincial government.

The China Road and Bridge Corporation  CRBC is a subsidiary of China Communications Construction Company (CCCC) that faces transparency issues. In July 2016, Transparency International named CCCC among firms that face “huge corruption scandals” and cause “immense damage to local economies”.

In 2011, the World Bank had also debarred CCCC and all its subsidiaries for fraudulent practices until January 12, 2017. But the CCCC is engaged in some of the critical road projects of CPEC.

K-P Chief Minister Parvez Khattak has given the China Road and Bridge Corporation CRBC preference over another Chinese company – China National Electric Engineering Company Limited (CNEEC). In January 2017, the K-P government and the CNEEC had signed the MoU for development of the Rashakai zone in presence of PTI Chief Imran Khan.

The provincial government did not sign the engagement agreement with the CNEEC despite it completing the feasibility study of Rashakai project, said officials in the CNEEC company.

The CRBC had pushed the case of Hattar for prioritised economic zone over the Rashakai during a meeting of the 7th Joint Cooperation Committee of CPEC, held in Islamabad three months ago.

In the meeting, both the federal and the K-P governments wanted to construct Rashakai-Mardan as the prioritised SEZ. However, China wanted to promote the Hattar site, which is near Havelian dry port and falls on the fast developing eastern corridor.

The prioritised SEZs have been planned to promote bilateral industrial cooperation under CPEC and will be at the centre of long-term economic relations. The industries being set up in the prioritised SEZs will be entitled to special tax treatments.

But quite surprisingly, on January 19, the Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC) signed MoU with the CRBC for the construction and development of Rashakai SEZ. The very next day – January 20 – the provincial authority and the CRBC signed Engagement Agreement for development of Rashakai SEZ.

The engagement agreement was signed by KPEZDMC Chief Executive Officer Adil Salahuddin andChina Road and Bridge Corporation  CRBC, Pakistan General Manager Li Zhihuai. The K-P chief minister witnessed the signing ceremony.

KPEZDMC’s response was awaited till the filing of the story.

The government did not sign the engagement agreement with CNEEC, as the company had quoted a very high cost for development, said a senior official of the planning department of the K-P government while defending the deal with CRBC. He claimed that CRBC was way ahead of the CNEEC and the decision to engage it was taken at the highest level.

But the claim about low cost of development by CRBC is surprising, as the CRBC has neither yet conducted a feasibility study of the Rashakai zone nor prepared its Master Plan.

In a letter dated January 18, 2018, which was also the last day of its one-year MoU, the CNEEC managing director informed KPEZDMC about completion of the fifth version of the feasibility study. The letter showed per acre land price at Rs6.8 million or $16 per square meter.

The CNEEC has also submitted feasibility study of the Rashakai project in the 7th JCC meeting. The CNEEC is a state-owned company and is 100% subsidiary of China National Machinery Industry Corporation (Sinomach Group).  The company has undertaken 733 projects with total contract amount of $73.6 billion in 48 countries along the Belt and Road project. For Rashakai SEZ, the CNEEC engaged IPPR that also designed 22,600 acres of China-Belarus Industrial Park. The provincial government official said that under the engagement agreement the CRBC will conduct the feasibility study. He said that the MoU had been signed to merge both the Rashakai and Hattar zones as one project.

China-Pakistan health corridor along CPEC proposed

However, the provincial government cannot take this decision, as these powers rest with the federal government and National Development and Reforms Commission (NDRC) of China.

The provincial government official said that a case for the merger has been submitted to the Board of Investment and NDRC. On January 3 of this year, the provincial government had also signed an engagement agreement with CRBC for development of the Hattar zone. Now a single company has been given the gigantic task of completing two competing SEZs. 


Provinces working as a team for CPEC: Ahsan Iqbal

ISLAMABAD: Minister for Interior and Planning, Development and Reform Ahsan Iqbal has said that the broad consensus amongst the provinces has provided an opportunity to expedite China-Pakistan Economic Corridor (CPEC) projects and ensure their successful completion.

“All the provinces are fully onboard and eager to pluck the fruits of CPEC” said the minister, while responding to the CPEC Special Committee reports in the Senate.

He said that the provincial leaders are fully contributing in the decision making process since the launch of this initiative, irrespective of their political affiliation. “Chief Ministers and their teams have ensured their full participation in the Joint Working Groups and Joint Cooperation Committee of CPEC which is a manifestation of the government’s will to guarantee transparency, inclusiveness, national cohesion and sense of equality”.

He further said that CPEC, a project of inclusive development in Pakistan, undoubtedly, offers huge dividends for the provinces and regions of Pakistan, opening new avenues of opportunities for the people of the country, particularly, underdeveloped regions. The transport infrastructure projects of CPEC will give a boost to economic activities in far-flung areas of Khyber Pakhtunkhwa (KPK), Balochistan and Sindh and thus would help in the emergence of new urban and economic centres, he added.

“Economic activities at the smaller level are starting to crop up in the form of huts, hotels and new markets on the roadside to cater the needs of traffic on completed links of the western route from Quetta to Gwadar. This is a glimpse of a bright future when the region would be a “centre of focus” of local and foreign investors to benefit from the economic potential of these areas” the minister highlighted.

He underlined that the western route project, approved by the All Parties Conference held on May 28 2015, is under execution as decided by the national leadership.

Ahsan Iqbal said that a number of provincial infrastructure projects, Mirpur Mansehra Road, Nokundi Mashkhel Panjgur Road and Gilgit Chitral Chakdara, as well as the development of Keti Bandar Port, have been included in CPEC which would further enhance connectivity. He further said that under CPEC, circular railway projects are being implemented in all the four capitals.

Ahsan Iqbal said that CPEC’s Special Economic Zones (SEZ) in the provinces will attract investment in different sectors thus would boost the overall economic status of the provinces.

SEZs would help in the creation of thousands of jobs for the local youth. Government is planning two to three road shows in China to attract investors to ensure early population of these SEZs. This cooperation would be completed from 2020 to 2025 and it is open for all investors, he told the Senate.

The minister highlighted that the 820km long fibre optic that passes through Gilgit-Baltistan (GB) and KPK to connect Rawalpindi and Khunjerab is planned to be completed this year. “The project will not only turn the trade corridor into a digital corridor but will also bring a boom to Information and Technology (IT) related industry in this region along the route”.

Ahsan Iqbal further told that under CPEC, the government was able to attract $5 billion to explore coal resources of Thar for the first time in the history of Pakistan. “China has proved as a trustworthy friend of Pakistan by investing and completing mega energy projects in the country that helped in overcoming energy crisis. All the power plants meet international environmental standards”, he highlighted.

Source: Pakistan Today, 26th January 2018.