Sindh government seems unwilling to give proper attention to the industrial development, as it has not made any progress for establishment of Special Economic Zones, it is learnt. Economic zones would be set up in districts of Larkana, Shaheed Benazir Bhutto, Tharparkar, Hala, Thatta and Badin, with an aim to increase foreign investments, sources told Business Recorder on Wednesday.
They said that a fund of Rs 200 million had been allocated in the Annual Development Plan (ADP) 2008-09, out of which Rs 50 million was released in September 2008 for survey/feasibility of the areas identified, seminars and workshops. But due to negligence of provincial authorities, not a single penny had been spent so far on the feasibility study towards industrialisation, which could bring huge investments in Sindh.
"A Special Economic Zone (SEZ) is a geographical region that has economic laws, more liberal than a countrys typical economic laws. The SEZ covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones (UEZ) and others. Usually the goal of an SEZ is to increase foreign investment", they added.
According to estimate of the World Bank, as of 2007 there are more than 3,000 projects taking place in SEZs in 120 countries world wide, they said.
Sources said SEZs have been implemented, using a variety of institutional structures across the world, ranging from fully public (government operator, government developer, government regulator) to fully private (private operator, private developer, public regulator). In many cases, public sector operators and developers act as quasi-government agencies, and they have a pseudo-corporate institutional structure and have budgetary autonomy.
SEZs are often developed under a public-private partnership arrangement, in which public sector provides some level of support (provision of off-site infrastructure, equity investment, soft loans, bond issues, etc) to enable a private sector developer to obtain a reasonable rate of return on the project (typically 10-20 percent depending on risk levels), they opined.
They said the setting up of SEZs were aimed at promoting rapid industrialisation in the country to attract Foreign Direct Investment (FDI), especially by the Chinese companies in the areas of manufacturing, high technology, vendor industry and other export oriented industries.
The SEZs would also create incentives for exports through huge tax breaks and an international competitive business environment, besides duty and tax-free import of plant, machinery, equipment and accessories.
According to sources, the government would also provide income tax exemption for a period of five years from the start of commercial operations and l00 percent depreciation allowance. However, the federal government would ensure provision of gas, electricity and other utilities at these zones.
Moreover, they said that these SEZs would ensure access of foreign investors to 160 million Pakistani consumers, besides regional markets of Central Asian States, Afghanistan, Iran and India by road-link, sea and air.
To a question about the selection of the areas for SEZs, they said that rice production, guava, textile, sugar manufacturing and rice husking are major industries of Larkana. Shaheed Benazir Bhutto district has main crops of wheat, oil seeds, fodder, Mutter, gram, cotton, Bajra, Gawar and sugarcane.
Tharparkar district is blessed with coal mining, livestock, China clay, granite and handicrafts, while Hala is famous for exquisite pottery and tiles, lacquer work, Ajraks, Sindhi caps, Rilli, patch work embroidery etc. Thatta and Badin have livestock, dairy farming and processing, fish farming, shrimp farming, windmill and coal-based power generation, they pointed out.
When this reporter approached, Ali Ahmed Lund, Secretary Commerce and Industries, he refused to comment and advised that all relevant information could be obtained from Planning and Development Department.