ISLAMABAD: The Board of Approvals (BoAs) of Board of Investment (BoI) has disallowed unilateral price increase in Special Economic Zones (SEZs) which have not been supported by any business survey, well informed sources told Business Recorder.
In this regard a meeting presided over by Minister for Investment, Ch. Salik Hussain was apprised that certain zone developers, without seeking approval of the Board of Approvals (BoAs), increased the price of plots in SEZs, or are seeking to increase price while deviating from the approved pricing strategy as stated in their respective applications.
The meeting was also informed that certain developers have also submitted proposals for sharp upward revision in prices of industrial plots of public sector SEZs. These proposals have not been endorsed by the concerned SEZ Authority Boards. Moreover, Ministry of Foreign Affairs, Embassy of Pakistan in China, Chinese and local business community have also raised strong reservation on sharp increase in prices. These proposals were put up before the BoA for necessary direction as certain developers, in anticipation of price increase have halted further allotments.
The sources said SEZ Secretariat proposed that any revision in price may not be allowed retrospectively and the earlier zone enterprise applications that have been received so far be allotted plots at the same rates based on which they had submitted their applications.
It was also apprised that owing to changes in cost estimates and related revisions in the PC-1 of Hub SEZ the developer has sought revision in land pricing strategy from Rs 10 million per acre to Rs 15 million per acre. The revision has been endorsed by SEZ Authority Balochistan in its 10th meeting held on July 25, 2022, which was also placed before the BoA for approval.
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On a reservation by the Government of Sindh that BoA should not be regulating land pricing and developers be allowed to administer it, the Secretary BoI said that land pricing strategies are submitted by the developers and SEZs to the BoA as part of zone application.
He further contended that if the proposed plan is to allot land at a certain rate or a plan and the same is approved by the BoA, then it is the prerogative of the BoA to ensure that the terms of SEZ approval are being followed including the land pricing strategy.
Secretary BoI highlighted that the principled stance of BoI is that the land pricing of SEZs is a provincial subject and provinces should take decisions based on their commercial interests. However, while setting the land prices, they should also factor in the PSDP funding provided for the development of SEZs, as well as, the tax revenue that are being foregone by the Federal Government to promote industrialization in the region through SEZs. Therefore, it is expected that the commercial interest is curtailed in favour of industrialization and larger economic interests while formulating the pricing policy and setting a reduced price.
The Chair also endorsed the proposal saying that the developers and provincial governments must also ensure that infrastructure and amenities committed in master plan are provided. He further said that the mere fact that apart from Balochistan, SEZ Authority Board has endorsed the sharp increase in prices which is evident that the provinces are also aiming to promote investment.
He maintained that the requirement was of ‘first come first served’ and to display prices in case zone enterprise entry application is to protect the interest of the investors and provide them with assurance that their application will achieve finality in a transparent and judicious manner provided it meets the requirements of the law.
The BoA took exception to the unilateral price increase and disallowed price revisions which have not been supported by any business survey and endorsed by the respective provincial SEZA.
Copyright Business Recorder, 2022