By Staff Report
ISLAMABAD: The Advisor to Prime Minister on Commerce and Investment , Abdul Razak Dawood on Wednesday said the government was prioritizing development of Special Economic Zones (SEZs) for attracting Foreign Direct Investment (FDI) and transfer of technology into the country. “The SEZs are primarily focused on industrialization that result in export promotion, import substitution, transfer of technologies and employment generation, which are the primary targets of our government as well,†Abdul Razak Dawood stated here.
The advisor said the establishment of SEZs was critical to resolving Balance of Payment Issues as ‘†we tend to give priority to enterprises which are involved in export generation or import substitution†he said. Talking about the criteria, the advisor said that only those economic zones are given status of SEZ which are successful in export generation and import substitution while at zone enterprise level, the admission into an SEZ is based on the economic viability of the business proposal. Razak Dawood said this economic viability was gauged through the expected employment generation, domestic raw material consumption, imported raw material, and local and imported machinery at the time of consideration of the zone entry application.
He said as more and more zone enterprises are coming into production the monitoring of these commitments has become indispensable, informing that instead of leaving it up to the developers or SEZs for that matter, the SEZ Secretariat at BOI was working to not only consolidate the data for gauging the actual benefits at zone enterprise level.
He added that the BOI was also working towards amendments in the SEZ Act 2012 to streamlines these objectives and provide a conducive environment for the enterprises to meet these objectives.
Replying to question on changes expected in SEZ Act and rules, he said the SEZ Act in its current form could not effectively contribute towards industrialization of Pakistan in its true spirit due to some inherent shortcomings, like slow pace of development and lack of utilities in the SEZs, complicated approval process, cumbersome procedures for availing the incentives, lack of clear policy objectives, absence of one window operations and others. The advisor said the proposed amendments aim to cater for the government’s vision to promote the entire Service Sector such as knowledgeand Information Technology (IT) SEZs, tourism ,:including faith, health, cultural, and geographic etc, through Integrated Tourism Zones. He further said that considering that regulatory and bureaucratic hurdles pose the biggest challenge to Industrialization, One Stop Services Act is proposed to be promulgated to ensure the requisite Ease of Doing Business and to provide quality services to the investors with legal backing. Razak Dawood said that with digital world becoming a reality, the SEZs are to be transformed to meet the challenge and create space for IT SEZs. For this to materialize, the proposed amendments also include a special provision for IT SEZs that relaxes the minimum land requirement of 50 acres,he added.
He informed that an incentives package to attract meaningful export led, import substituting and labour intensive industrialization through local and foreign investors including the expected Chinese relocation of industries in the SEZs has been prepared by our team at Board of Investment, which has been submitted for the approval of the Economic Coordination Committee (ECClesiastic) of the Cabinet. He said this package not only includes extension of the already provided incentives but also some additional benefits for the developers and zone enterprises subject to the approval of the ECC.
While replying to a question on the role of SEZs in industrial development under China Pakistan Economic Corridor (CPEC), he said that CPEC , SEZs can be a true catalyst to industrialization in Pakistan. The advisor said that due to various shifts in global economy and the changes in international relations, many manufacturing businesses are relocating from China to other destinations.
An Industrial Development Cooperation Project (CPEC-ICDP) project is already working at full pace at the Board of Investment (BOI) with a mandate to fast track industrial cooperation between China and Pakistan, he said. He informed that China is developing first state of the art CPEC-SEZ (Rashakai Special Economic Zone) in Nowshehra, KPK and more international developers are being solicited through international bidding to develop SEZs in Pakistan;
He said Chinese companies (State Owned as well as Private) are showing keen interest to develop SEZs in Pakistan and hope that having Chinese units in CPEC, SEZs, Pakistan will become part of Global Value Chains (GVCs). Exports, import substitution, transfer of technologies, and employment generation are the expected outcomes from CPEC-SEZs,he said.
While in his message for foreign investors to lure investment in SEZs, he said Pakistan offers liberal investment regime to local as well as foreign investors. He said thar Investment Laws, Investment Policy, along with the SEZ Act, regulate foreign investments in Pakistan. Important considerations regarding Pakistan’s Investment Regime for the foreign investors are and emphasised to equal treatment for local and foreign Investors. Razak Dawood said said that all Sectors are Open for Investment , except arms, explosives, radioactive substances, securities, mint/currency and consumable alcohol). He further Up to 100% Foreign Ownership allowed and no minimum investment is required or restrictions on currency convertibility and repatriation of profits and capital.
The government offered the Investment Protection through laws of the Parliament on Online Visa Facility, International Arbitration is allowed and full ownership and lease of land is allowed, he said.
The advisor said that in Ease of Doing Business, Pakistan has improved from 136 to 108 number of EoDB rank which shows government’s commitment to improving business environment.
