The Export Processing Zones Authority of Pakistan (EPZA) has contributed significantly in the government’s drive to attract foreign direct investment by offering a state-of-the-art package of incentives and facilities. During the last three years, the success of export processing zones (EPZs) in Pakistan has generated new faith in business circles, demonstrated by the inflow of the large number of investment proposals being received by EPZA.
One great milestone achieved by EPZA was the conversion of Saindak Project into an EPZ in the mountainous province of Balochistan which is being operated by Metallurgical Construction Company of China. Saindak EPZ allowed Pakistan’s entry into the world market of metal exports. The gold and copper project located at Saindak in the Chagai district of Balochistan started operation in August 2003 and has already produced over $45m of exports in the past year. The Saindak Project has the capacity to produce around 20,000 tonnes of blister copper a year and about five tonnes of gold and silver from indigenous ores generating foreign exchange revenues of over $45m annually. The entire product (blister copper) shall be exported outside Pakistan.
EPZA is focusing on the take-off of yet another metal project of Reko Diq EPZ, again in Chagai District, to be operated by the Australian Company, Tethyan Copper Company, with an investment of over $170m and export potential of over 40,000 tonnes of copper a year. The infrastructure development work is in progress and should hopefully be completed by 2006.
The introduction of Textile City projects – which follow the EPZ model – is a significant breakthrough, with the creation of a joint stock company, Pakistan Textile City. This venture, with a starting capital structure of Rs1bn ($16.8m), has the consent of the government of Pakistan, which would put in 50% share and the rest would be offered to outside investors. The shareholders of the joint stock company include EPZA, Pakistan Industrial Development Corporation, Port Qasim Authority, Sindh Government, Saudi Pak Industrial & Agricultural Investment Company, Pakistan Industrial Credit & Investment Company, Pak Libya Holding Company, National Bank of Pakistan and Pak Oman Investment Company. The Textile EPZ will compete in international markets in the post-IMF quota environment and focus particularly on dyeing, processing and finishing. Similarly, there are plans to set up Marble City, under the EPZ model, at Gaddani, Balochistan to harness the tremendous potential of marble and granite in the area.
Steel plant progress
There is further heartening news as Saudi Company Al-Tuwairqi Group has shown active interest in locating a steel billet plant in the vicinity of Pakistan Steel Mills, under the EPZ concept. The project involves investment of over $100m. It is expected to be completed within two years with export potential of billets to be raised to over $1bn. The project would provide around 1000 job opportunities. The ground breaking ceremony of this project is likely to be held in April 2005.
EPZA Chairman Lt Col Syed Akbar Husain points out that EPZA projects of Saindak, Reko Diq, Duddar and Al Tuwairqi Steel Complex express the confidence of foreign entrepreneurs in the EPZ concept. Investors are attracted by the hassle-free and healthy environment. The established zones at Karachi, Risalpur and Sialkot are peaceful, secure and environmentally-protected, pollution-free work areas without bureaucratic red tape. EPZA is also trying its utmost to satisfy the investors by providing the best possible utility services.
A review of the latest performance of the zones would further augment the progress made so far. EPZs are showing healthy signs of industrial activity, with a 57% increase in export figures over past year. The entire area of KEPZ has been allotted to investors, as have all the plots of the KEPZ Phase II which is still currently being developed.
The success story has not only attracted the new investors – closed units are also being revived. The new industries being set up in EPZs in Pakistan have adapted to the EPZ environment to combat tough market competition. It is due to competitiveness that textiles and garments, light industries, food and beverages have prevailed over the past years. Risalpur EPZ, the second project of the Authority, is a joint venture between EPZA and Sarhad Development Authority of the Frontier Province. The zone, located on 92 acres, provides excellent opportunities for exports to Afghanistan, Iran, central Asian republics and China. The Risalpur zone has already started exporting consumable items to Afghanistan.
Col Syed extended an invitation to overseas Pakistani businessmen to take advantage of the good infrastructure coupled with EPZ incentives and the facilities available at Sialkot EPZ, developed on 238 acres. The Sialkot zone is a joint venture between EPZA, Punjab Small Industries Corporation and the Sialkot Chamber of Commerce and Industry. When fully commissioned, Sialkot EPZ will help Sialkot export over $1bn of goods with present exports being around $750m. Sialkot is known for quality exports in sports goods, surgical items and allied industries.
Col Syed emphasises that the EPZ objectives are to grow the country’s exports; to promote industrialisation by facilitating export-
orientated units – which in turn would create jobs; attract new technology and know-how; and attract foreign direct investment. EPZA provides investors with a one-stop service, says Col Syed. “We pride ourselves in extending world class facilities and speedy hassle-free procedures. EPZA strives to offer its customers maximum facilities with minimum formalities under one roof.”
Skilled and semi-skilled labour is available in abundance. Pakistani labour costs are the lowest in the region. The average wage of unskilled workers is about $75-$100 a month, whereas skilled workers earn about $100-$200. Managerial workers wages range from $200-$500 a month.