Special Economic Zones of Pakistan
Table of Contents
Engrained with the dedication to enhancing industrial transformation policies and promoting industrial upgrading, Special Economic Zones (SEZs) are utilized by states for opening new avenues of domestic and foreign investment while generating employment and encouraging import substitution. What triggered an influx in the SEZs establishment in Pakistan was the China-Pakistan Economic Corridor (CPEC).
In 2012, the Special Economic Zones Act was promulgated by Pakistan followed by the formulation of SEZ Rules 2013. The mandate of the Act is “the creation, development and efficient operation of special economic zones through provision of a legal and regulatory framework to encourage domestic and international investors for promotion and establishment of industrial infrastructure and for other matters connected or ancillary thereto.”
SEZ is defined in Section 3(n) of the Act as “a geographically defined and delimited area which has been approved and notified by the BOA”
The Federal and Provincial Governments can set up SEZs by themselves or in collaboration with the private sector. Notably, there also exists a one-time exemption from custom duties and taxes pertaining to goods required for the development and maintenance of these SEZs.
Regulatory Authorities under the 2012 Enactment
The Act has highlighted various authorities that have been vested with the responsibility to overlook and regulate the SEZs. These are:
- The Board of Approval (BOA)
- The Board of Investment (BOI)
- Provincial Investment Promotional Authority (PIPA)
- SEZ Authorities and Committees for each SEZ
The Board of Approval
The BOA is the highest authority for the purposes of the establishment, operation, and monitoring of any SEZ pursuant to the Act.
Functions of BOA
As specified under Section 6 of the Act, the BOA can:
- Approve regulations applicable to all, some, or just a single SEZ, for the purposes of implementation of the Act.
- Decide on whether to reject or accept zone applications and development agreements.
- Examine the issues submitted by the SEZ Authorities and developers.
- Grant additional benefits, if justified, to any specific category of SEZs to promote high-tech industries.
- Examine the annual reports submitted by the SEZ Authorities and direct actions on them.
- To improve the existing policies, it is mandatory for the BOA to annually review the implementation of the Act.
The Board of Investment (BOI)
The BOI was established under the Board of Investment Ordinance 2001. It is also known as the focal point of contact for domestic and foreign investors, highlighting important information and assisting them to be in correspondence with Government entities. It additionally enhances Pakistan’s International competitiveness and involvement in both economic and social development.
Functions of the BOI
The responsibilities of the BOI in the context of SEZs have been encapsulated in Section 8 of the Act. As the Secretariat of the BOA and Approval Committee, the BOI is responsible for the following:
- Coordinating all SEZ-related activities which also include preparing documents that will be considered by the BOA.
- Make sure that all the decisions of the BOA are implemented.
- Processing zone applications, that are submitted by SEZ Authorities, for them to be considered by the BOA.
- Processing applications pertaining to additional incentives (additional benefits).
- Reviewing all development agreements proposed by the SEZ Authorities before sending them to the BOA where the final decision takes place.
- Promoting international and domestic SEZ investments.
- Facilitating coordination of developers and zone enterprises with Federal and Provincial government entities and other financial institutions.
- Supporting and facilitating SEZ Authorities, if requested.
Provincial Investment Promotional Authority
As per Section 3(k) of the Act, PIPA is an investment promotion agency developed by the provinces, which plays the role of a focal entity promoting domestic and foreign investment in that specific province.
Functions of PIPA
The functions of PIPA include:
- Assisting in the operation of Provincial SEZ Authorities or Committees.
- Promote domestic and foreign investment.
- Assisting the SEZ Authorities and developers in matters such as the acquisition of land.
- Ensuring good infrastructure development linkage between the authorities involved in an SEZ and also ones that are not involved as such.
- Effectively and systematically resolve any issues that arise during the operations of the plans for SEZs.
- Facilitating the compliance of the enterprises and developers with environmental regimes.
An SEZ Authority has been established for each province.
Functions of SEZ Authority
The functions of the SEZ Authority include:
- Establishing rules and procedures with the approval of BOA.
- Preparing zone applications.
- Selecting appropriate developers.
- Negotiating development agreements.
- Assisting in the acquisition of land and access to public utilities for the developers or enterprises after the application has been approved.
- SEZ Authorities in the Provinces or in any other area shall seek to enter into administrative arrangements with tax, customs, labor and other authorities under which SEZ authorities may exercise certain administrative functions on behalf of such authorities, which arrangements may include a secondment of officials with decision making power from such authorities to SEZ Authorities.
- Preparing zone regulations for specific SEZs by being mindful of the area.
- Being in correspondence with Federal and Provincial entities.
- Ensuring the development of infrastructure outside an SEZ’s boundaries.
- Serving as a liaison and between the Federal and relevant Provincial Authorities.
- Facilitating the availability of public utilities as per the requirements of the development plan.
- Monitoring the effective implementation of the SEZs administrative procedure.
- Overlooking the compliance of enterprises or developers with their obligations that were encapsulated in the development agreements.
- In case of any violation of the terms specified in the development agreement by the developer or enterprise, suspending the development and leaving the final decision in the hands of the BOA.
- Reviewing the activities of these developers regularly (minimum once a year).
- Reporting the progress of the SEZ in the relevant province to the BOA biannually.
An SEZ Committee is to be chartered by the BOA.
Functions of SEZ Committees
- Administering and enforcing SEZ benefits and rules.
- Examining and approving SEZ entry applications as per the criteria.
- Providing for certification of zone enterprises.
- Conducting oversight of enterprises.
- Enforcing building codes for SEZs.
- During the process of construction, assisting enterprises in relevant registrations and approvals.
- Acting as a point of correspondence between zone enterprises and utility providers.
- Facilitating tax authorities, government regulators, and enterprises.
The Special Economic Zones of Pakistan
Currently there are four under construction Special Economic Zone projects that are taking place in Pakistan. These include:
- Rashakai Special Economic Zone
- Dhabeji Special Economic Zone
- Allama Iqbal Industrial City
- Bostan Special Economic Zone
However, there are other SEZs in the pipeline too. They can be categorised as:
Proposed SEZs under CPEC (9 in total)
Approved / Notified SEZs (24 in total)
In order to fast-track the development of these SEZs, the Federal Government has ensured the provision of utilities to the designated zero point of these SEZs and as such allocated Rs4 billion in the Federal PSDP FY2021.
Rashakai Special Economic Zone
This SEZ is considered to be a key milestone as it was the first project of implementation for industrial corporations under CPEC. Being located on Motorway (M1) near the CPEC route, it increases the viability of investment feasibility of various industrial sectors including:
- Processing and Manufacturing
- Home Appliances
- Home Building Materials
- Automobile and parts
- Agriculture and Horticulture
- Wholesale Market/ Specialty mills
|Total Area (Acres)||1000|
|Industrial Area (Acres)||702|
|Area Remaining (Acres)||778|
|Per Acre Price (Industrial)||150,000 USD|
|Developer Name||Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC)|
|Contact||+92 335 5739362|
For the purposes of developing, marketing, managing and operating this flagship project, the Government of Khyber Pakhtunkhwa has developed an SPV (Special Purpose Vehicle) company called the Rashakai Special Economic Zone Development and Operation Company (RSEZDOC) between the China Road and Bridge Corporation (CRBC) and the Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC). The CRBC also has the responsibility to market the zone to both local and foreign investors.
Dhabeji Special Economic Zone
This SEZ has an advantageous location allowing easy access to Port Qasim which in return reduces transportation costs and time. An 8 km road is being constructed that would connect Port Qasim to Dhabeji zone.
The industrial sectors that would benefit include:
- Light Engineering
- Automotive and Auto parts
- Chemical & Pharmaceuticals
- Consumer Electronics Engineering
- Textile & Garments
- Building Material
To effectively facilitate, encourage, promote and enhance the industrial base of Sindh, the Government has established the Sindh Economic Zones Management Company (SEZMC). In the context of SEZs, this entity identifies the services required and supports the SEZ. In addition, to promote the level of productivity it also provides linkage mechanisms.
Allama Iqbal Industrial City
This SEZ is located in Faisalabad, Punjab, and is adjacent to M3 Industrial City. The developing body of this SEZ is the Faisalabad Industrial Estate & Management Company (FIEDMC). The potential that this SEZ holds is also evident by the rate of business interest that is already being shown by both foreign and domestic enterprises. This, in turn, could trigger Foreign Direct Investment (FDI) and generate employment which would ultimately assist in the maintenance of economic viability of the state.
Important Sectors for Investment include:
- Electrical & Electronic
- Chemical & Paints
- Food Processing
Bostan Special Economic Zone
Located in District Pishin bordered by Quetta, Qila Saifullah, Ziarat and Qila Abdullah, the different means of connectivity would make it a feasible business activity zone. Its developing entity is the Investment department of the Government of Balochistan.
The industrial sectors that are proposed to be established at Bostan Special Economic Zone include:
- Fruit Processing
- Agriculture machinery
- Motor Bikes Assembly
- Ceramic industries
- Ice and Cold storage
- Electric Appliance
- Halal Food Industry
|Total Area (Acres)||200|
|Industrial Area (Acres)||140|
|Area Remaining (Acres)||140|
|Per Acre Price (Industrial)||2.5 Mn PKR|
|Developer Name||Industries Department, Government of Balochistan|
|Contact||(+92-81) 9201 881|