ISLAMABAD, Oct 12: Pakistan and China have decided to sign a protocol for establishment of economic zones in the country to house industrial units to produce goods for duty-free export to China.

The protocol will amend the investment chapter of the free trade agreement between the two countries and will include special incentives for Chinese investors.

A senior official told Dawn on Sunday that the protocol would be signed in Beijing during the first official visit of President Asif Ali Zardari to China. Commerce Minister Ahmad Mukhtar will sign the agreement with his Chinese counterpart.

The delegation accompanying the president will include adviser on finance and minister for commerce who also heads the ministry of defence.

It is expected that the zones will attract $2 billion to $5 billion in the first phase from Chinese investors for setting up industries. Pakistan already has more than 82 such zones, particularly for export-oriented industries.

Commerce Secretary Syed Asif Shah told this reporter that the protocol would enable foreign direct investment (FDI) from China. The products manufactured in these zones will be exported to China duty free.

He said that 40 per cent investment will be from China and the rest from any other country. There would be no restriction on products to be manufactured in the zones for export to China at zero duty.

The ground work for the first zone is well under way with the land having been identified in Kala Shah Kako near Lahore.

Pakistan’s exports to China in particular and to other countries in general are likely to go up because of re-location of textile industries to these zones.

The annual bilateral trade has increased to the level of $6.8 billion. The free trade agreement will further boost the trade which may touch $15 billion mark by 2011.