Complicated procedure hindering investment in SEZs: PIAF
The Pakistan Industrial and Traders Association Front (PIAF) has asked the government to make the regulations and procedures of Special Economic Zones (SEZs) easy and simple, removing all irrelevant and unnecessary clauses causing hurdles in the new investment, reported 24NewsHD TV channel.
PIAF chairman Mian Nauman Kabir and vice chairman Javed Siddiqi, in a joint statement issued here on Sunday, observed that policies and procedures in SEZs were very complicated and bureaucratic that an ordinary businessman was reluctant to shift his business unit there.
“To establish industrial units at SEZs the irrelevant documents are demanded by the authorities, which, actually, have no relevance, he said and added that such kind of approach should be changed, making it business-friendly rather,” Javed Siddiqi said and underscored the importance of expediting the establishment of special economic zones for creating investment and employment opportunities.
The CPEC has ushered in a new era of economic prosperity and is of utmost importance for Pakistan, as it will generate abundant employment and investment opportunities in Pakistan and beyond, he added. “The government needs to update 2016 amended SEZs policy to re-examine the policy and fiscal incentives also empowering the management and governing boards of the SEZs,” he added.
Mian Nauman Kabir said that the manufacturers are desperately waiting for the government to initiate measures, as they believe special economic zones can play a catalytic role in attracting investment, creating jobs, boosting exports and enhancing growth.
“The SEZ Act of 2012, amended in 2016, limits the scope and access of special zones to certain categories and is ambiguous on the mode of development in zone locations. The businessmen also find the current pace of progress on SEZs too slow and the direction far from clear,” he added.
PIAF vice chairman said that SEZs are set up around the globe as a strategy to industrialize, accelerate economic growth and fast track development but unfortunately, the attractiveness of the incentives in Pakistan has been exaggerated, in view of energy cost, lack of skilled labor and the inconsistency of the government policies.
Javed Siddiqi said that the successful SEZs in the world are operated locally by the independent administrations and boards, which organize affordable utilities and one-window operations. In Pakistan, Pakistan’s Board of Investment is supposed to work as a one-stop window for the new investors but it is not working properly in its true spirit.
The SEZ law does not offer any meaningful policy and fiscal concessions to investors. For example, the one-time exemption from custom duties and taxes on import of plant and machinery discourages future modernization and replacement expansions needed by companies. Besides, many of these exemptions are currently already available for many companies importing from China under the Pakistan-China Free Trade Agreement. Similarly, import of plant and equipment needs to be exempted from the payment of 17% sales tax as well as withholding tax to reduce the capital cost of establishing units, particularly for small and medium-sized companies.
“The investors should be welcomed in SEZs, fulfilling government commitment of ease of doing business there. Instead of imposing hosts of restrictions on the investors there should be very simple and one-point formula that the production should be started within 36 months so that the genuine manufacturers should come here instead of property developers or real estate investors,” he suggested and added that except this condition, all other rules and restrictions are unnecessary and irrelevant which should be removed, as they create hurdles and delays the new investment.