PESHAWAR: The Khyber Pakhtunkhwa government has planned to establish at least 10 economic zones across the province in the next decade under the Industrial Policy, 2020.

The provincial cabinet had approved the policy last month.

According to the policy, a copy of which is available with Dawn, the proposed zones include Rashkai Special Economic Zone and Nowshera Economic Zone Extension and will be set up in Jalozai, Nowshera, Chitral, Mohmand, Ghazi, Darband, Swat, Buner and Shakas areas. Also, the establishment of two special economic zones under the public-private partnership in the next five years has been planned.

The document shows that the policy will promote construction, automobile, pharmaceutical, electronics, apparel, transshipment, IT and food and labour intensive industries in the province.

It also includes a snapshot of the province’s existing small and medium enterprise and cottage industry and proposes the establishment of 19 small industrial estates across the province in the next decade.

Government also intends to set up two SEZs under public-private partnership

The policy proposes that the province’s human resources be equipped with modern and technical skills, including artificial intelligence, and those required for fourth industrial revolution.

It also calls for leveraging the province’s natural resources like hydel, mines and minerals, oil and gas, food and beverage processing, and cottage industry to make the local industrial sector competitive.

The fiscal incentive package proposed for investors to set up industrial units in the province provides for the exemption from provincial electricity duty for new and expansion projects, initial installation and balancing, modernisation and replacement facility for one-time duty, tax-free import of capital goods both plant and machinery, exemption of tax on transfer of sick unit property and repatriation of profit for foreign investors subject to the existing laws and commitments.

Similarly, the financial incentive package provides for 25pc concessions on land lease charges till breakeven or for a period of three years, whichever is earlier. In case of government land, the acquisition of land will take place over five years with 25 per cent down payment instead of upfront payment.

The policy notes that industrial cooperation under the CPEC provides KP with opportunities to jumpstart industrialisation.

“The Chinese labour is graduating from low-paying to high-paying jobs, while with the introduction of improved labour laws, the labour costs are rising sharply,” it said, adding that the average labour cost of an operational hour in the coastal and inland regions of China is thrice the one in Vietnam and Pakistan.

The policy says through the industrial policy, the province can leverage its natural endowments and low-cost human resource to attract Chinese industries.

According to it, there are 1,096 industrial units in various industrial units of the province and 986 of them are operational and 306 closed. These units have employed 56,439 male workers and 7,442 female ones.

The document notes that the policy is meant to help investors launch joint ventures with local ones, put money to utilise indigenous natural resources, bring in new technology, invest in labour intensive and export-oriented industries, and add value to the local products.

It adds that the policy stresses on the importance of developing the critical infrastructure facilities through the public-private partnership to help the government optimally utilise its resources while extending full facilitation to the prospective investors.

The policy also proposes incentives in the merged tribal districts, especially in those with raw material and human resources and says they will be provided with 15pc quota in credit incentives for SMEs. Also, the State Bank of Pakistan will be asked to direct both public and private sector commercial banks to extend Shariah compliant commercial lending to these districts.

According to the policy, land in the specific merged areas earmarked for industrial zones will be provided at 15 per cent discounted price, while electricity will be supplied through independent feeders. Also, an easy access to local markets will be ensured in respect of the goods processed and manufactured in the merged tribal districts.

The policy also reveals that the exemption of KP sales tax on services will continue in tribal districts until June 30, 2023.

Published in Dawn, January 17th, 2021