The government would constitute a Task Force to implement tax incentives package and determine zone development standards for the Special Industrial and Economic Zones, including China-Pakistan Industrial and Economic Zones (CPEZ).
Sources told Business Recorder on Saturday that the Task Force would co-ordinate implementation of the policy action plan for the development of SEZ. The Task Force would be chaired by the finance ministry and its members include officials from FBR, commerce ministry; industries ministry; Board of Investment (BoI) and chief secretaries of all the four provinces.
The Task Force will be assisted by the Competitiveness Support Fund (CSF). The functions of the Task Force will include to determine the zone development standards like minimum land area, minimum investment requirement, minimum infrastructure requirement and minimum time limit between land acquisition and commencement of operation to check land boarding and speculation. It would also help in setting up environment standards and giving the recourse for non-compliance as well as timeframes for execution.
The zone development standards also included industrial mix in clustering, investment attraction plan (especially for private developers) and execution plan with timeframe on industry case-to-case basis.
The agency responsible for administration of SEZs policies and development of implementation regulations will be a special directorate affiliated with Board of Investment (BoI).
The role of BoI will be to facilitate the investors and SEZs developers with the help of relevant independent service organisations working as one coherent team. The SEZs Act will be formulated once the Task Force takes shape.
Sources said the Competitiveness Support Fund has been tasked by the finance ministry to carry out a policy study on benchmarking. A policy action plan needs to be prepared as recommended by the CSF with the objective to promote industrialisation, generate employment, reduce poverty, and increase country''s competitiveness. There is, however, need to define an SEZ.
According to the CSF, an SEZ is an enclave for enterprises operating in a well-defined geographic location where certain economic activities, which are sector specific, are promoted by a set of policy measures generally not applicable to the rest of the country.
Sources said that Pakistan''s current SEZs incentives are not internationally competitive. A comparative listing of other regional countries. An analysis of policies prevalent in China, India, Thailand, Malaysia and Vietnam shows that on the average there is 3 to 15 years tax holidays commencing at operation, including exemption of customs duty on equipment and raw material. The infrastructure, including utilities are provided by the respective governments up to the entry point of the zones.
A special package has already been approved by the Economic Co-ordination Committee (ECC) of the Cabinet to provide incentives for having Chinese investment and these are also applicable to all other SEZs as per FBR notification. In order to improve Pakistan''s competitive edge, it is proposed that incentives being given to different types of SEZs should be streamlined.
Under the tax exemption package, the plant, machinery, equipment, and accessories, including capital goods, if not manufactured locally, shall be exempt from customs duty and sales tax if imported for the development of SEZs, including China-Pakistan Industrial and Economic Zones (CPEZ) and for establishing projects in the Zones.
The corporate income tax holiday would be available for a period of five years for projects in the Zone from the date of starting commercial operations shall be available. This shall also be available for developers of the zone. Moreover, existing initial depreciation allowance of 50 percent shall be considered being enhanced to 100 percent.
Comments
Comments are closed.