PUNJAB’s ambitious $1bn Lahore Knowledge Park, the first of its kind in the country, is expected to lead the way to transforming the province into a knowledge-based economy by creating ‘state-of-art infrastructure for cluster interaction of universities, businesses and researchers to drive innovation and entrepreneurship’.
Punjab’s three-year Economic Growth Strategy (2015/2018) also targets the transformation of the province into knowledge economy.
The government may consider creating another park in Faisalabad and/or in Rawalpindi.
“The park will be mini smart and green city that will create over 40,000 jobs and more than 11,200 PhDs by 2040.”
The government is also considering proposals to change the company into an authority and declare the Lahore Knowledge Park a tax-free zone
“It will become a business and innovation hotbed in Pakistan for the five key economic growth hubs — life sciences and biotechnology, design and creative industry, information technology and computer science, science, and engineering — that are heavily reliant on knowledge workers,” Lahore Knowledge Park Company Chief Executive Officer (CEO) Shahid Zaman said in an interview with Dawn.
Additionally, the park also provides space for legal, financial and other business services.
The work on the park spread over an area of 852 acres is expected to be launched by September this year. The land has been provided by the provincial government free of cost.
An area of 50 acres has been allocated within the park for an independent provincial project of the state-of-the-art Punjab Kidney and Liver Institute.
The Punjab government will contribute 20pc of the total cost or Rs21bn over the life cycle of the park in the shape of a grant and has already set aside Rs2bn for the project in its budget for the next fiscal year. The rest of the money will come in the shape of private investment.
Zaman said the company will target both domestic and foreign direct investment into the park, adding some Chinese and East Asian investors had already shown keen interest in investing in the park. “Several Chinese investors even wanted to take over the project but we declined because we want to develop it according to our own plans,” he said.
The management of the LKP Company — formed in the public-private partnership mode — expects to complete infrastructure development and construction of two public universities in the next 18 months.
“The park will provide a complete lifestyle. The key components of the park — universities and schools, science and innovation hubs, retail, entertainment, central business district, residential district, and green areas — will be developed in a holistic and phased approach with a large involvement of the private investors,” the CEO said.
“The universities and knowledge-based establishments will be located on the periphery of the park and adjacent to one another to facilitate easy access, information sharing and collaboration. The business district is going to be centrally located to house businesses, retail, entertainment, professional services and commercial facilities.”
Zaman said there are around 500 functional knowledge parks — and as many under-developed — around the world, and many of them exist as extensions of the universities, offering academia, researchers and businesses a combined space to cohabit. “The Lahore Knowledge Park will house around 13,200 people and is projected to be used by 53,000 souls every day.”
According to the Frost and Sullivan, the consultant firm that has developed the concept paper for the park, the project will annually generate Rs173bn in the shape of labour income and Rs35bn in tax revenues. The total revenues, or wealth, that the project is expected to create in 25 years is estimated to be a whopping Rs5.9tn in (the form of business) revenues, Rs253bn in labour income and Rs178bn in corporate income tax.
The financial plan projects that the project will run a deficit for 12 years. Annual deficits will, however, disappear after year 20 when the park will stop constructing buildings. The company will have an accumulated deficit of Rs5.70bn in year 2017, which is projected to disappear in year 24 and to become a consistent surplus.
From Year 1 to Year 25, the LKPC will have generated cumulative revenues of Rs39.2bn and the tax authorities will have received a total of Rs462bn in taxes.
“The plan is to make the project self-sustainable,” the CEO said. He added that the land will be leased out to private investors for a specific period.
The government is also considering proposals to change the company into an authority and declare the park a tax-free zone. “The decision will be made on the recommendation of the consultant,” he said, adding, “We’ll begin reaching out to the private investors shortly after the launch of the project.”
Published in Dawn, Business & Finance weekly, June 27th, 2016