Newly approved Special Economic Zone (SEZ) Bill 2012 provides guarantee to foreign and local investors that incentives once granted would not be withdrawn due to conflict of interest. The law will ensure consistency and transparency in economic policies beyond political divide and restore investor confidence.
While addressing a press conference on Saturday, Board of Investment (BOI) Chairman Saleem Mandviwalla said investment could be able to get protection under SEZ Bill and no incentives to be withdrawn in the future by any government. He was accompanied by BOI Secretary Anjum Bashir.
He made it clear that the bill gave 10 years holidays from start of the production. However, these incentives would be given only on capital investment and there would be no relaxation on duties on import of raw material.
There will be three types of zones to be allowed for establishment; public, public-private partnership and private. The location of zones will be selected by investors, but final approval will be granted by Board of Approval (BOA) headed by Prime Minister. The BOI Committee of Approval will initiate the process on the proposals.
To a question, Saleem replied that BOI would design a guideline for special zone developers. The developer must come up with its own model in line with these guidelines. The land could be acquired in partnership with provincial governments or developers by themselves, he added.
Responding to another question, he said that investors should work out where they wanted to establish the SEZs. These might be developed in the surroundings of motorways, highways and rural areas where land availability was more as compared to urban areas, he added.
Highlighting the response on offer, he said Chinese, Turkish and Japanese Government had assured Pakistan for investment in these SEZs if proper laws and structure of SEZs would be laid down for the protection of foreign investment. He said that in the past, "we did not have laws or structure for SEZs, so Chinese government will wait till the framework for SEZs will be approved. Similarly, Japanese Chamber of Commerce which has shown keen interest in developing Economic Zone in Karachi also stressed for a framework for SEZ". He explained that the potential investors who wished to enjoy benefits of incentives must apply to BOI with their project proposals. They had option to establish zone or execute independent projects, he said.
He further clarified that SEZs could not be linked with ROZs. The nature of incentives given in ROZs by US government was different from the incentives to be given under SEZs. ROZs were linked Pakistani products access in the US Market, he explained.
In the past, BOI had to seek approval from Economic Co-ordination Committee or Federal Cabinet in each and every case but now there was no need to take the matter to these forums after passage of the bill. "We offer companies to come and make investment in SEZs under laid down incentives", he said.
Responding to a question, he said security was the biggest hurdle in attracting foreign investors. Foreign investor even did not want to visit Pakistan to discuss the matter related to their investment. "Therefore, we have to announce incentives for these investors to enhance foreign investment inflows", he said.
BOI Chairman said the acquisition of land would be made for business purposes. In case, it would not be utilised for business, the contract could be recalled. Pak Army could also be welcomed to take part in establishment of SEZs, he said. He said in absence of incentives for new entrants in auto sector, fresh investment was not coming to the sector. "We need a policy for auto sector", he stressed.
Quoting example of Yamaha Motorcycle, he said the company could not bring investment in motorcycle as there was no policy for new entrants. Similarly, other car manufacturers like Ford Motors, GM Motors and Korean Companies showed their interest in investment in auto sector but no policy was formulated so far.
He said how long they would keep patronising local auto industry. "We have to give incentives to new investors in this sector", he stressed.
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