The Senate Standing Committee on Law, Justice, Human Rights and Parliamentary Affairs on Tuesday passed the Special Economic Zones (SEZs) Bill 2011 with amendments, while Awami National Party (ANP) Senator Ilyas Ahmad Bilor and Pakistan Muslim League-Nawaz (PML-N) Senator Zafar Ali Shah presented their dissenting notes.
The bill lays down a policy framework for encouraging the establishment of SEZs to attract both domestic and foreign investors. The committee, which met here with Senator Muhammad Kazim Khan in the chair, was of the view that setting up SEZs through an act of parliament would be an achievement by the government. The new law will bring about consistency in the government policies, allowing the investors to work without any apprehensions of sudden changes or withdrawal of incentives given to them in the SEZs, the committee members said.
The Board of Investment (BOI) has been working on the draft of the SEZ bill in close coordination with the provincial governments, including Gilgil Baltistan, Federally Administered Tribal Areas (FATA) and other stakeholders for over a year. The Council of Common Interests (CCI) in its meeting on the August 27, 2011, approved the draft bill with consensus and support of the provincial governments for legislation. As per the bill, the SEZs can be set up by the federal government or any provincial government or by a private developer. The federal and provincial governments can also set up SEZs in collaboration with private developers. The existing industrial estates and zones in the country can also qualify for the SEZ status subject to the fulfilment of criteria mentioned in the law.
The SEZs are expected to reduce the rising cost of doing business in the country and provide one-window facility to the entrepreneurs. The purpose is to improve efficiency and competitiveness of the industry by creating industrial clusters of big projects where the government is committed to provide infrastructures at the doorstep of the SEZs.
The law requires the formation of a Board of Approvals (BOA) to be chaired by the prime minister and an Approvals Committee to be headed by the BOI chairman for final approval of the development agreements for setting up SEZs. The provinces will be required to set up SEZ authorities to approve and select zone developers for consideration of the BOA. The BOI will be the secretariat for the BOA and will extend full support and facilitation to provincial SEZ authorities, including FATA SEZ authority.
The bill allows setting up SEZs anywhere in the country over a minimum area of 50 acres. There are several incentives for the developers of SEZs and entrepreneurs setting up industries in the zones. The developers will get a one-time exemption from customs duties and taxes for all capital goods imported into Pakistan for the development and operation of SEZs. A 10-year tax exemption for both SEZ developers and entrepreneurs will also be provided under the law.
The committee was informed that the interests of both local as well as foreign investors will be protected. The rationale behind the SEZs in Pakistan was to create efficient and competitive industrial cluster and reduce the cost of doing business, besides attracting foreign direct investment. China and India have adopted the same policy and the main factor behind China’s rapid growth was the creation of special economic zones. In China, the tax rate is 25 percent but in SEZs, it 15 percent.
Meanwhile, the Senate body formed a sub-committee to discuss and incorporate the proposed amendment in the National Commission for Human Rights Bill 2011, already passed by the National Assembly. Senator SM Zafar will chair the sub committee while JI Senator Professor Khurshid, PML-N Senator Zafar Ali Shah and Leader of the House in Senate Nayyar Hussain Bukhari will be the members of the committee. The sub-committee will meet on February 17 to discuss the proposed amendments in the bill and finalise the recommendation. It was already decided that the amendments would be finalised so as to lay the bill on the first day of the next Senate proceedings.
