President of the Mardan Chamber of Commerce and Industry (MCCI), Naseem-ur-Rehman, wants the government to give exceptional incentives to the industrial sector in NWFP. A newspaper report quotes him as saying that the government should exempt the province's industries from sales and income tax for a ten-year period.
A few days earlier, ie, on January 15, a delegation of the Sarhad Chamber of Commerce and Industry, led by its chief Sharafat Ali Mubarak, called on President Zardari with the request that NWFP be declared a war-affected zone and granted a stimulus package. The delegation members also demanded relief in the provision of gas and electricity. The law and order situation in the province being as bad as it is, its business community has a strong case to get special incentives.
As it is, extremist violence emanating from Fata, even from some of NWFP's settled districts, has dampened investor confidence in all parts of the country. The Frontier province, of course, has been hit the hardest. Joblessness and the resultant poverty are exacerbating the problem. There is a growing realisation that eradication of extremism and poverty is inter-linked.
Success in employment generating economic activity can help bring about good results in curbing militancy as well. Which is why the US is in the process of helping create Reconstruction Opportunities Zones (ROZs) in the militancy infested Fata and parts of the Frontier province.
Industries set up under the programme are to have duty-free export facilitation in the US markets to ensure that the economic activity generated in the ROZs becomes profitable and leads to the achievement of its objective. In the same spirit, the request from NWFP's business community for incentives merits earnest attention.
Nonetheless, it seems to have rather excessive expectations. Reports speak of a desire to have something on the order of the Gadoon Amazai industrial zone, set up over two decades ago under the watch of the then NWFP governor Fazl-e-Haq. Exempted from all taxes, at one point the zone boasted some 580 industries of various descriptions. But the experience did not turn out to be very fruitful.
It created vast disparities in product prices, rendering business people in other parts of the country unable to compete in the market. Some even shifted their industries to Gadoon Amazai to take advantage of the special concessions on offer, while others became deeply resentful. Gadoon Amazai, therefore, is not a good example to emulate. There is need for a carefully crafted incentives plan, such as the ones enjoyed by industries in the existing export processing zones.