Work in progress on 4 SEZs under CPEC, expecting huge employment
By Fatima Javed
Work has recently accelerated on 4 Special Economic Zones (SEZs) under the second phase of China Pakistan Economic Corridor (CPEC). In the first phase of industrial development, work on 4 economic zones has been started. Overall 9 SEZs would be developed across Pakistan including 4 provinces, Islamabad, Azad Kashmir and Gilgit Baltistan. It will bring 600,000 direct and 2 million indirect employment.
Phase II of CPEC has already begun in which construction acquires special importance. The benefits under the SEZ law include a one-time exemption from custom duties and taxes for all capital goods imported into Pakistan for the development, operations and maintenance of an SEZ (both for the developer as well as for the zone enterprise) and exemption from all taxes on income for a period of ten years.
Recently the Approval Committee of the Board of Investment (BOI) also approved ‘Special Economic Zone’ status for the Allama Iqbal Industrial City (AIIC), Faisalabad, and referred the applications of JW SEZ and Dhabeji SEZ for consideration of the Board of Approvals, chaired by the prime minister. BOI Chairman Arif R Bokhari said that significant progress has been achieved on SEZs development and colonization during the last few months.
In the 21st Century, industrial development and employment opportunities can be generated through the establishment of SEZs. A special economic zone is an area in which the business and trade laws are different from the rest of the country. The benefits a company gains by registering in a special economic zone means that it can produce trade goods at a lower price, aiming to be globally competitive.
In all over the world, there are a total of 4500 SEZs and the first up to date SEZ was built in Ireland. To know the importance of SEZs for industrialization, we can take an example from our neighbouring countries India and China. In India 230 SEZs are working while more than 300 were approved. These SEZs improve 30 per cent of Indian exports and provide 2 million direct employment.
Similarly, in China, the establishment of SEZs took place during the 1980’s, when investors from the other countries initiated building factories hence created more employment. China’s 60 per cent exports are due to these SEZs In which around 30 million people are employed.
In the past, if somebody wanted to build an industry in Pakistan they would have to go to at least 30 departments for approvals. But due to these industrial zones, one window facility provides convenience to the investors. SEZs will give an opportunity to create industries, help in technology transfer, increases foreign direct investment, limits tax deduction and bribery. This will help to reduce the cost price, exports will increase and the economy will eventually improve.
Around 125 Chinese companies are expected to invest in these zones. For local youngsters establishment of a technical training, university is also underway. Moreover, these SEZs will have five-star hotels, swimming pools, gyms and other similar recreational facilities.
Pakistan’s biggest economic zone will be established in Faisalabad industrial city which was inaugurated by PM Imran Khan last year. Since then a lot of work has been going on in this area. Faisalabad economic zone is situated on M3 M4 motorway that’s why it has a lot of importance. It has an area of 3217 acres.
Many industries will be established here. For example, textile, car industry, chemical food processing and pharmaceutical industries. Electricity supply has already been provided while for gas supply 20km pipeline has been placed which is expected to finish in this year.
Pakistan’s second important economic zone will be established in Thatta Sindh, named Dhabeje special economic zone. Right now 1530 acres land is listed for this special economic zone. It is very near to Pakistan’s largest city Karachi which makes its location ideal for the establishment of industries.
Dhabeje economic zone will provide around 100,000 direct and 400000 indirect employment. The gas pipeline has been under process for this zone. Chief Minister Sindh is adding 3000 more acres of land in this zone because of its high importance. After this, it will be Pakistan’s biggest industrial zone.
The third important and biggest economic zone is in Khyber Pakhtunkhwa's city Nowshera named as Rashakai special economic zone which will be built on 1000 acre of land. The development work has already started in this zone. The zone will have food processing, pharmaceutical, engineering and mineral industry. 150,000 direct employment and 400,000 indirect employment is expected in this area. 29km long gas pipeline has been approved for this zone.
The fourth special economic zone is in the province of Baluchistan known as Bostan special economic zone. This zone is also developed on 1000 acres of land. Industries like Fruit Processing, Agriculture machinery, Pharmaceutical, Motor Bikes Assembly, Chromite, Cooking Oil, Ceramic industries, Ice and Cold storage, Electric Appliance and Halal Food Industry will be established here and 55000 to 100000 jobs are expected to benefit the locals.
SEZs are the key to materializing the dream of industrialization. We witnessed the inauguration of SEZs and acceleration of work on different SEZs. As the business community makes investment decisions on the basis of policies and incentives. Therefore there is a need to do a lot more for operationalizing the SEZs, especially in terms of policymaking and incentive packages.
