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SEZs: All investors to be treated equally

Pakistan and China have agreed to treat all investors equally that will show willingness to invest in the nine Special Economic Zones (SEZs), said Chinese Charge d’ Affaires Lijian Zhao. He added that the SEZs would help the small and medium businesses of Pakistan and said that it would help these enterprises through joint ventures with Chinese and foreign companies. BOI secretary emphasized that the major gain from CPEC was industrial cooperation which would ensure sustainability of CPEC.

ISLAMABAD: Pakistan and China on Tuesday agreed to treat equally all investors that will pour capital into the planned nine Special Economic Zones (SEZs) – an understanding that will address concerns of local businesses about preferential treatment of the Chinese.

“It has been agreed that everyone will be treated equally,” said Chinese Charge d’Affaires Lijian Zhao after first meeting of the Expert Group on Industry.

Lijian said SEZs would address some realistic concerns of Pakistan’s small and medium businesses, adding the possibility of helping Pakistan either through joint ventures or assistance from the Chinese government was also discussed.

He pointed out that Beijing had given preference to foreign investors over local investors, which helped attract foreign investment.

In the meeting, China urged Pakistan to fast track work on the nine prioritised SEZs as slow progress may delay realisation of full benefits from second phase of the China-Pakistan Economic Corridor (CPEC).

Chinese experts reviewed implementation process of the SEZs that were at the centre of a long-term CPEC framework and were considered critical for Pakistan’s industrialisation. These zones will be set up in four provinces, the federal capital and special regions of the country.

Authorities found that no major infrastructure had so far been developed at the SEZ sites. Provinces were asked to complete feasibility studies by the middle of next month so that a plan could be placed before seventh meeting of the CPEC Joint Cooperation Committee (JCC), said an official who attended the meeting.

However, it seems that the provinces may not be able to complete work on time as the JCC is scheduled to meet in the third week of November.

“Pakistan and China have agreed to fast track industrial cooperation under CPEC to take maximum benefit and ensure a win-win situation for both,” said the Board of Investment (BoI) that hosted the meeting.

Pakistan’s side was led by BoI Secretary Azher Ali Choudhry and the Chinese delegation was headed by China International Engineering Consulting Corporation Director Du Zhenli.

Choudhry emphasised that the major gain from CPEC was industrial cooperation which would ensure sustainability of the multibillion-dollar project. Chinese experience in establishing industrial parks would be instrumental for economic and social development in Pakistan, he said.

Both sides held comprehensive discussions on the relocation of Chinese industry, an incentive package for relocation, opportunities available with export promotion zones, identification of industries to be set up in SEZs, terms of engagement for establishing the SEZs and human resources development through technical education.

The Chinese side, while expressing its satisfaction over the incentive package announced by Pakistan, revealed that a number of Chinese developers and enterprises were willing to invest in the SEZs.

Both sides agreed that SEZs were open for all foreign and local investors. Chinese developers and enterprises could enter into joint ventures with local developers and investors to ensure successful cooperation.

Bureaucratic hurdles

However, due to bureaucratic inefficiencies, Pakistan has not been able to complete work on SEZ sites on a fast track. BoI has not yet received any application from provinces and special areas for the approval of SEZs that the sixth JCC meeting approved in December last year.

Pakistan requested the Chinese side to review the possibility of developing the zones in order to make them stakeholders in the process. It also asked them to help in establishing a vocational training centre to produce skilled human resources.

Pakistan has offered over half a dozen more incentives to the investors that will invest in CPEC zones. It proposes to pick up 50% of the mark-up cost of loans that the investors will take.

According to some estimates, about 85 million jobs will be relocated from China following the relocation of industries to countries falling on the route of One-Belt, One-Road initiative.

The SEZ package also offers investors income tax holidays and relief from customs duty on the import of equipment and machinery. Developers will be allowed purchase of gas, electricity and other utilities in bulk and supply of these to enterprises at rates approved by the SEZ authority. The developers will be able to give sheds on rent for industrial use.

However, the federal and provincial governments have not yet finalised arrangements for electricity and gas supply, according to officials. Provinces have asked the centre to bear the cost of laying power and gas transmission lines.

 

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