Documents available with Business Recorder note other major conditions for establishing SEZ's are: (i) 10-year income tax holiday both for zone developers and zone enterprisers and one time exemption on import of capital goods for establishment of zones and projects in the zones; (ii) maximum land that each SEZ can allocate for commercial use and other non-productive activities such as setting up retail shops, recreational areas, hospitals etc would be limited to 10 per cent of total land area; (iii) investors must begin construction within six months and production within 24 months of project approval, the land title will not be transferred to the investors until after it has been in production for six months; (iv) the government is committed to providing infrastructure and utilities up to the gate level of the SEZ; (v) Board of Investment (BOI) would provide one window facility within the zone for facilitation of the investors; (vi) Zone developers, once approved for SEZ status, shall have authority to develop their master plans, allot land and approve individual investors in compliance with the rules; (vii) the incentives protected by law cannot be withdrawn; and (viii) the policy allows existing Zones/Industrial Estates to apply for the status of SEZ.
Documents further reveal that the government would either establish SEZs on its own or in collaboration with private parties under various modes of collaboration including public-private partnership or accord recognition to the privately established economic activity zones as SEZ to be governed under the Act. The Provincial Investment Promotion Authority would be responsible for SEZs within its jurisdiction for supervision and operation of the SEZ Authorities and be the focal entity responsible for investment promotion.
The documents envisages the qualifications and approval criteria for SEZs as follows: (i) to generate economic activity in terms of exports, employment and other performance indicators at least equal to or more than the total overall capital cost incurred over a period of 15 years; (ii) provide import substitution and generate direct and indirect exports, (iii) not to target any industry material/input which is being protected by other countries in the larger national interest; (iv) respective federal and provincial governments have committed corresponding resource on the time line to materialize the SEZ under consideration; (v) zone Application shall be in conformity with the provisions of the Act, any applicable regulations issued under the Act and other applicable provisions of law; (vi) 70 per cent of the SEZ land area will be used for purpose of operations of zone enterprises; (vii) developer will be obliged to undertake to comply with all the environmental, labour and other applicable legislation in force in Pakistan; (viii) developer will be obliged to take all necessary approvals to start construction activities within six months of signing of development agreement; (ix) developer to be engaged for the particular SEZ shall be a body incorporated under the laws of Pakistan; (x) Articles of Association of the developer shall be approved by the Provincial/ Capital SEZ Authority; and (xi) developer shall ensure that the zone enterprises start construction of facilities within six months and assumes regular production within twenty four months after receipt of all required licenses and permits; (xii) developer will be obliged to undertake that the title of land may only be registered in the name of zone enterprises after they have performed business operations in the SEZ concerned for at least six months; and (xiii) there shall be no real estate activities in the zone.
The documents that would be required with zone application a preliminary zone development plan which shall: (a) define the geographic boundaries of the proposed SEZ, (b) set out the basic infrastructure development requirements, both inside and outside the proposed SEZ necessary for the proper functioning of the proposed SEZ, (c) set out the land requirements of the proposed SEZ, (d) set out the details of the current ownership of the proposed land, (e) a detailed analysis of prices as per sale deeds executed & registered within last five years as per official record, (f) set out the manner in which land required shall be procured, including specifically whether land will need to be acquired under the Land Acquisition Act 1984, (g) set out a geotechnical study and topographical survey of the proposed land, (h) SEZ plan encompassing Development Plan, Marketing Plan, Financing Plan and Management Plan, (i) cost of preparing the land based on technical estimates including but not limited to geotechnical and topographical survey etc, and (j) set out what criteria shall be applicable to the admission of zone enterprises into that SEZ.
Other documents that would be required with zone application a preliminary zone development plan are: (i) a basic business concept or model for the proposed SEZ; (ii) master plan; (iii) execution plan developed in Primavera; (v) industrial mix and authorized commercial activities; (vi) parameters for zone admission criteria; (vii) in case of zone application is being forwarded on the behest of non-recourse developer who already owns the land, proof of title/ownership land; (viii) infrastructure commitments for road, electricity, gas, water, sewerage/drainage, waste water treatment, communication, security, firefighting, hospital and school as provided in Rule 14 of Special Economic Zones Rules, 2013; (ix) criteria and plan for selection of developer, (x) Draft Development Agreement and (xi) Feasibility Study containing the following minimum components (a) a market assessment of demands of targeted industries, (b) assessment of the market price for industrial land and analysis for land pricing strategy, (c) assessment of the suitability of the local area to support the targeted industries and the required infrastructure and amenities, (d) financial model of the costs and revenue streams of the SEZ, along with sensitivity analysis and (e) economic impact analysis including estimates for job creation, export generation, and other benefits.
According to the sources, at present feasibility studies on SEZ's are ongoing and once completed would be discussed with China.
Copyright Business Recorder, 2017