by Yasir Habib Khan

 

 

Sanctioning of long-awaited tax concessions for the Gwadar free trade zone and Gwadar port are instrumental in fostering a culture of industrialization and boosting ease of doing business. These tax exemptions will get legal cover through presentation of a historic bill in front of the top legislative authority in the country soon. Approval will help induce a new degree of confidence among potential investors.

 

These views were expressed while giving exclusive interviews to Gwadar Pro by Gwadar Port Authority (DPA) Chairman Naseer Khan Kashani, China Overseas Port Holding Company (COPHC) Chairman Zhang Baozhong and CPEC Project Director Hassad Daud Butt.

 

Gwadar Port Authority (GPA) Chairman Naseer Khan Kashani hailed the decision taken by meeting of Economic Coordination Committee (ECC) of the Cabinet presided over by the Adviser to the Prime Minister on Finance and Revenue, Dr Abdul Hafeez Shaikh.

 

On a query he said that tax exemptions will prove to be a catalyst allowing influx of investment to pour into the Gwadar port and free zone areas. “As every cloud has a silver lining, so to me this momentous decision is a silver lining and I expect that it will encourage diverse industries to get established here,” he added.

 

“Free zone is open for all. It welcomes all kind of exportable commodity industries. All investors in free zone will enjoy exemption from sales tax, customs duties and federal excise duties for 23 years,” he mentioned.

 

While responding to another query, he said “However, if you take it out of the free zone and bring it to the open market, it will not have all such exemptions. This is just to produce goods in free zone area and export to foreign destinations.”

 

The Free zone development plan integrates the free zone and port to strengthen the linkage of industries between China and Pakistan. The free zone is positioned as the economic development engine of Gwadar, and the international trade logistics center under CPEC.

 

The Free Zone is located at a critical location and gateway of the China-Pakistan Economic Corridor and provides enormous opportunities and a window into  landlocked Central Asian Republics. The goal of the Gwadar Free Zone is to bolster global market presence by attracting new businesses and foreign investments in general trade, services, manufacturing, logistics, trans-shipment and bunkering business. Its main development orientation is to play a pivotal role by setting up industries, and to provide cargo capacity for the port. The construction of the initial area includes a few projects: infrastructure, business center, trade exhibition hall, cold storage, warehouse, and fishery processing center, etc.

 

Zhang Baozhong, Chairman of China Overseas Port Holding Company (COPHC), Pakistan, said that the long awaited Statuary Regulatory Order (SRO) which was supposed to offer incentives to Pakistani and foreign investors in the Gwadar Free Zone will restore confidence into them. It is a very positive indication of the seriousness of the current government to improve the economic development of Pakistan. It will attract more investment to Pakistan by early issuing of this SRO in such a difficult and sensitive time.

 

“All the tax exemptions are those that have already been specified in the concession agreement. They do not entail new additional incentives at all,” he clarified. “We are all set to organize various seminars after official publication of the SRO to create better awareness,” he added.

 

CPEC project director and CEO KP Board of Investment & Trade Hassan Daud Butt revealed how the package of tax exemptions will be constitutionalized. He said that the Gwadar free zone had its own distinctive status and could never be compared with other prioritized SEZs being executed through SEZ Act 2012. “Given Gwadar free zone exclusivity, the package of tax exemptions does not come under the purview of SEZ Act 2012. Therefore, in order to award legal status to them, instead of Presidential order, a constitutional bill will be presented in the parliament that will seal the approval of these special tax concessions in the free zone,” he added.

 

The business promotion of Gwadar Free Zone has been started and the first edition of the investment guide has already been officially issued. The Free Zone Phase II, III, IV will develop into manufacturing zone, focusing mainly on agricultural processing, seafood processing, marble processing, halal food processing, and refrigerated storage/cold chain. There are container yards for warehousing of international purchasing, transit/distribution, packing/labeling, stuffing & de-stuffing, trans-shipment, light end-assembly/re-assembly, and supporting services for value added exports. To provide one window solution, financial services assistance for the investors is now fully functional.

 

Gwadar free zone is located in the northern part of Gwadar, about 7 km from the existing port, and is divided into four phases. The free zone includes the northern area (898 hectares) and the initial area (25 hectares), totaling 923 hectares.

 

The Gwadar Free Zone enjoys significant geographical superiority due to its proximity to this vital node of international trade. The Zone is an integral part of the port and is designed to ensure the optimum utilization of port infrastructure. The Zone sits next to the Gwadar Port which is going to become a future hub of transit and trans-shipment.

 

Preferred businesses will include agricultural product processing, seafood processing, marble processing, manufacturing(Light Industry), Halal food processing, refrigerated storage/cold chain, rest & recreation, financial services, technical and vocational training, container yards, warehousing, international purchasing, transit / distribution, packaging / labeling, stuffing & de-Stuffing, trans-shipment, light end-assembly/re-assembly, value added exports, business supporting services, Onsite Customs, Information Center, retail outlets, hotels, restaurants, entertainment amenities, medical facilities and other related businesses.