KARACHI: Industrialists in Karachi’s two especial economic zones (SEZs) are forced to live a miserable life as they are not provided with infrastructure and utilities as promised.
Bin Qasim Industrial Park (BQIP) and Korangi Creek Industrial Park are the two flagship special economic zones being developed by the federal government in Karachi.
Korangi Creek Industrial Park (KCIP) industrialist Mashood Khan said with the new budget out, dynamics and environment of business was changing. “It’s getting more difficult to survive, especially SEZ investors, who are in darkness,” he said.
Industrialists said the land was sold to these investors by National Industrial Park, a subsidiary of the Ministry of Industries and Production, at twice the prevailing market rates with the obligation under the SEZ Act of 2012 to provide a world-class infrastructure and all utilities at the doorstep of the industries.
“Despite a passage of more than two years investors in BQIP have yet to be provided with the promised infrastructure and required gas connections,” said Mashood Khan in a written statement to Digital News. “KCIP investors are facing a different struggle whereby they are not able to get electricity due to disputes between NIP and the Independent Power Producer inside KCIP.”
He said the SEZ initiative was the best policy the government announced for the industries of Pakistan. “It was a breath of fresh air for high profile businessmen as industrialization was stagnate for some time,” he said.
The concept was to make special economic zones that would take the initiative to pave the way for a brighter and stronger economy. “China is the best example where SEZ have transformed a country to an industrial and financial power house,” Khan said.
Mashood said the Government of Pakistan should have tried to build and provide complete infrastructure in one of the seven SEZs specially Karachi to prove the real model and appearance of SEZs which can attract local and foreign investment.
To make matters worse for these SEZs, he said, they have continued to burden industrialists with various forms of income taxes they were meant to be exempt from.
The government has increased minimum turnover tax to 1.5 percent in the proposals for Federal Budget 2019-20 and failed to address the anomaly in the income tax ordinance to clarify exemptions for SEZ enterprises despite being exempt from all taxes on income under Section 37 of the SEZ Act, 2012, Mashood said.
The Federal Board of Revenue (FBR) was given proposals by various SEZ enterprises and industry associations to resolve this anomaly in the current budget, which further shattered the investor’s confidence in the economic policies of the current PIT government.
Representatives of BQIP and KCIP regretted making investment in an SEZ as they were losing billions because the government was not living up to its legal obligations. “The government talks about ‘Ease of Doing Business’ but in reality it has no idea of the problems being faced by existing investors,” he said.
Industrialists urged the federal government to intervene and resolve existing investors’ issues otherwise, they warned, it would discourage other local and foreign investors to invest in SEZ’s in Pakistan as this goes against the PTI’s mandate of encouraging economic growth through investment.