China has suggested Pakistan to give extra incentives to Chinese companies to set up industries in the Special Economic Zones (SEZs).
This proposal was moved by the head of a delegation from China, Li Yuan at the concluding session of Pakistan-China Industrial Cooperation Dialogue.
Sharing Chinese experience, Li Yuan said the country has three foreign investment Acts relating to land leasing, tax exemptions and employment policy. China has three years’ exemption for investors in the zone and subsequent half tax exemption for three years. Many countries are trying to attract Chinese industries, he added.
He suggested that the leasing period of 99 years is quite attractive; however, the tax policy needs a review. He proposed that these SEZs may follow either Chinese or Pakistani standard to attract investment.
China and Pakistan have also reached an agreement that a team of experts would be constituted to determine the number of SEZs in the first phase.
Chinese delegate Li Yuan had informed during the meeting that proposed Pakistani priority SEZs are needed to be reviewed by expert group from each side to decide exact number and types of zones to be developed in the first phase. He added that “the Chinese side has already notified its experts group while Pakistan side needs to expedite composition of the expert group.”
He further emphasised to devise a long-term cooperation mechanism to select priority sectors and to synergise policies for SEZs.
Board of Investment Chairman Dr Miftah Ismail, while addressing the concluding session stated that Pakistan is planning to establish 46 SEZs along side the CPEC route in the long run. Nine zones have already been declared as prioritised during the 6th JCC meeting held in December, 2016.
The chairman BoI highlighted that products manufactured in these zones can not only be exported but can also be sold in the local Pakistani market, where they are not required to pay any customs duty. The model can be primarily export-oriented. But in case of China, import substitution also has a lot of potential. The government has already given its commitment to provide all utilities and security to the investors in these zones.
He also pointed out that each zone has its special features for investors in terms of its location, raw material, skilled workforce and linkages with other parts of the country and outside the country.
Secretary Board of Investment, Azher Ali Chaudhry in his opening remarks expressed the hope that Chinese experts group must had a very successful site visit of Rashakai Special Economic Zone and bilateral meetings with the authorities concerned in Khyber Pakhtunkhwa. He also requested the Chinese side to share the composition and terms of reference of Chinese experts group to have the matchmaking with the proposed expert group from Pakistani side. He emphasised that Chinese companies have huge opportunities to relocate their businesses to these priority SEZs. Pakistani side is also expecting a feedback of Chinese experts on this visit, he added.
During the session, two presentations were made by the representatives of government of Azad Jammu and Kashmir (AJ&K) and Gilgit-Baltistan (GB). The representatives of AJ&K highlighted the potential of AJ&K in terms of water and mineral resources. Representatives of Gilgit-Baltistan underscored the strategic location, scenic beauty and hospitality of the people of GB. He highlighted the mineral potential and location advantages are a gateway for Central, East and South Asia. He also appraised that this zone is situated exactly on the CPEC route, which is ancient Silk Route.
During question & answer session, the Chinese head of delegation said that they will send a detailed visit report to the secretary CPEC with their recommendations and a proposed way forward in this regard.
