FIVE years after the establishment of an independent company under the umbrella of the ministry of industries, production and special initiatives, it launched its first industrial park. Titled the Korangi Creek Industrial Park (KCIP), the facility in Karachi is to house 230 enterprises.

The park, spread over an area of about 250 acres, is expected to contribute an estimated Rs46 billion to the GDP once it attains full-scale functionality, said Zubair Habib, head of the National Industrial Parks Development and Management Company (NIP) whose baby the KCIP happens to be. “Besides, it is expected to yield Rs8 billion to provincial and federal exchequer in the form of taxes and create at least 50,000 direct and indirect employment opportunities,” he added.

The KCIP potential sounds impressive, but optimum functionality is something the nation will have to wait for because it is not going to happen soon. As explained by Danish Ansari, the KCIP's head of marketing, the formal launching indicates that the 230 plots of land on the premises are now ready for sale. “The expression of intent shown by entrepreneurs - both the locals and the foreigners - immediately after the launch makes us believe that by the time we reach the April 30 deadline for the submission of applications, we will have our hands full,” he said.

Most of the plots are of one acre in size while the rest measure half that much. With a fixed price of Rs5,062 per square yard, the larger ones will cost Rs24.5 million, while the smaller ones will go for Rs12.25 million. At current market price, a one-acre plot in Korangi industrial area costs about Rs55 million.

The scrutiny of applications will take about a month after which official letters will be issued to the parties concerned, asking them to submit a feasibility report of their respective projects within 30 days. Once these reports have been processed, the KCIP hopes to be in a position to issue allotment letters by around August.

Over the following three months, entrepreneurs will have to come up with building plans which will need to be approved by the Korangi Creek Cantonment Board under whose administrative jurisdiction the park falls. With construction expected to get under way by the end of the year and with a strict two-year deadline for the purpose, it will be towards the end of 2012 that the park will start moving towards getting functional. “The second quarter of 2013 is what we are targeting for productivity within the industrial park,” said Mr Ansari.

The management is focusing on two vital areas. Its basic focus right now is on keeping the speculative buyer at bay so that price escalation in terms of land may not work against genuine industrial investors.

“It is a fact that exorbitant land rates is one of the main hurdles in the promotion of small- and medium-sized industries and the spiraling prices is due to the speculators whose only aim is to reap a windfall. It is common knowledge that most industrial plots only change hands without serving the productive purpose. As such, there is a need to curb this menace and the NIP has ensured that the park will not play host to the speculator, said Mr Habib.

Elaborating, he said that the terms and conditions of sale would bind the buyer to build the industry as per the pre-agreed timeline, failing which his plot would be cancelled and sold to the next prospective buyer in the queue. Besides, the land lease will be transferred in the name of the owner only after the two-year construction deadline has been met by the individual concerned. “With investment already having been made till that point, there will be little commercial sense to sell off the premises,” he hoped.

The other point of major concern for the KCIP management is the security issue which may play a make-or-break role in the prevailing scenario, especially in case of the foreigners.

According to Mr Habib, “foreign investors still consider Karachi to be a suitable place in the region for setting up industries, but their only concern is security”. Besides, the riots that took place in December 2007 when a number of factories were set on fire, has also caused anxiety among entrepreneurs who are now wary of investing in industrial estates and zones which are easily accessible to rioters. “Now they want to establish industries in a zone located within concrete four walls where they may feel fully secured and safe,” he added, stressing that with controlled and electronically-secured entry and exit points, the KCIP will be “as safe as anything”.

The park will have a host of industrial clusters which will take forward the strategy adopted in recent times by the Small and Medium Enterprises Development Authority (SMEDA). Clusters are geographic concentrations of interconnected companies and institutions in a particular field of business, with each cluster varying in terms of key features such as geographic locations, products, functions, and patterns of inter-firm linkages. They differ from each other because of differences in circumstances, demand conditions, supporting industries and competitive conditions that help them evolve. .

SMEDA's Cluster Development Programme (CDP) has so far been confined to cities in the province of Punjab; the main ones being in Sialkot for sports and surgical goods, in Lahore for auto-parts and PVC pipes and plastic products, and in Rawalpindi/ Islamabad for the marble and granite sector.

As has been planned, KCIP will have clusters related to, among others, light engineering, pharmaceuticals, printing and packaging, food processing and garments. For all practical purposes, the KCIP will be a cluster of clusters.