INTRODUCTION
EPZA was established through an Ordinance IV of 1980 with the mandate to plan, develop and operate Export Processing Zones in Pakistan. EPZA is an autonomous body working under the Ministry of Industries. It has a nine member Board of Directors. EPZA is mandated for setting up EPZ’s in Pakistan. EPZA as a system has worked very well in Pakistan especially in Karachi. As an already established, known and tried system for attracting investments and generating exports from Pakistan; it can provide almost risk free economic uplift.
Organizational Concept
As an organizational concept, EPZA facilitates, promotes, & provides business support to those who wish to setup their units in EPZ’s. Primarily it is a service-oriented organization for promotion of export. EPZA itself does not involve in physical business.
Objectives: Main objective of EPZA as an export promotion, service-oriented organization is to improve industrialization through commercial & marketing activities. Provide country-specific investment linkages on reciprocal basis. Reduce/simplify paperwork/procedures and transfer of technology through foreign investment. Following when added to our objectives, further clarifies EPZA’s profile as an organization:
· Attract foreign capital
· Setup export-oriented industries
· Assist in acquiring sophisticated technology
· Transfer of technology to Pakistan
· Generate employment & skill development
· Boost exports and foreign exchange earning
· Increase import of raw material from Pakistan
Incentives/subsidies
The incentives offered by EPZA are summarized below:
· Developed land on highly competitive rates for 30 years lease
· Well-defined security parameters enclosed in boundary wall
· Duty-free import of machinery, equipment and materials
· Freedom from National Import Regulations
· Exemption from Exchange Control Regulations
· Repartition of capital and profits allowed
· No Sales Tax on input goods including electricity/gas bills.
· Duty-free vehicles allowed under certain conditions
· Domestic market available to the extent of 20%. Exception may be available
· Only EPZA is authorized to collect Presumptive tax @ 1% of FOB value at the time of export of goods which would be final tax liability.
· Obsolete/old machinery can be sold in domestic market of Pakistan after payment of applicable duties and taxes
· Defective goods /waste can be sold in domestic market of Pakistan after payment of applicable duties, maximum up to 3% of total value.
· EPZ units are allowed to supply goods to custom manufacturing bonds.
· 30% export allowed to tariff area from Risalpur Export Processing Zone.
Facilities to Exporters
· One Window operation with simplified procedures
· All facilities like electricity, gas and water are made available
· Medical facilities for the factory employees are available
· Peaceful and environmentally protected and pollution-free work area
· Round-the-clock security is available
· Inter-unit transfer of finished goods among exporting units allowed
· Easy access to sea and airports
· Abundance of skilled and educated workforce
· Sub-contracting without limit on variety and quantity is allowed outside the zone as well as within the zone.
EPZ’s in Pakistan
Over a period of time EPZ’s in Pakistan have been established in different places/cities of Pakistan focused basically to develop the natural resources of these areas, provide job opportunities to the locals and to pursue active CSR requirements. Zones which are operational include (l) Karachi (2) Risalpur (3) Saindak (4) Sialkot (5) Duddar (6) Tuwairqi Steel Zones which are notified i.e. (i) Gujranwala (ii) Gwadar (iii) Reko Diq (iv) Khalifa Coastal
LEVIES & CHARGES
Karachi ZoneLicense basis Security DepositAnnual Ground RentIndustrial plots@ US$ 10 per sq. meter@ US$ 2.5 per sq. meterTrading/warehouse@ US$ 30 per sq. meter@ US$ 3.5 per sq. meterRisalpur ZoneIndustrial Plots@ US$ 6.5 per sq. meter@ US$ 0.50 per sq. meterWarehouse/Trading@ US$ 16 per sq. meter@ US$ 1.5 per sq. meterSialkot ZoneOwnership basis@ US$ 5.21 per sq. meterNo AGRGujranwala ZoneOwnership@ US$ 12.71 per sq. meterNO AGRImport & Export Analysis
YearImportExportBalance of Trade1983-84 to 192-93193.516206.2997%1993-94 to 2002-03560.142792.20741%2003-04 to 2011-121291.1852001.65555%
Average growth recorded in EPZA during last five years was 11% Growth rate in export if compared with the incentives is less. In order to balance the genuine absence of the above incentives, Government / Management of EPZA decided to offer following concepts to EPZA investors: EPZA is assisting its investors/exporters in managing supply chain issues along with strong and focused communication/awareness thrust. Marketing and Investment Division of EPZA, with the help of the stakeholders is creating and pursuing promotional/facilitation objectives within and outside the Zone. Work is in progress for creating transparent, simplified rules and regulations to cover all regulatory functions as a true one Window operation.
EPZA’s Units Operation
The total 194 units are in operation in KEPZ, 05 units in Sialkot EPZ 5 and 02 units in Risalpur EPZ. Total 201 units are in operation where as 19 units are closed due to various reasons including litigations.
Export of trade goods from the EPZ is also restricted to only 11 items. Facility of 100% exports from EPZ to Pakistan (tariff area) has now been restricted to 20% since 2004 resultantly MNC’s withdrew their investment from Zone. Tax is payable @ 1.25% under DTRE Scheme anywhere in Pakistan, while EPZs investors pay @ 1.5% on FOB value of exports.
Total Investments in EPZ:US$ 885.442 million
KEPZUS$ 277.274 millionSEPZUS$ 166.052 millionREPZUS$ 49.484 millionTSMLUS$ 320.000 millionDuddar EPZUS$ 72.630 million.
