When Gadoon Amazai Industrial Estate was established in a remote area, there was no raw material and market available for industries to be set up there. To compensate for high transportation cost on raw material and finished goods and to make , manufacturing viable, a fiscal incentive package was provided by the federal government.

The package announced in 1989 attracted huge investment and no less than 270 factories were set up. When the incentives were withdrawn in 1991, bulk of the small enterprises gradually went out of business.

Zahid Shinwari, the ex- president of the Gadoon Chamber of Commerce and Industry and current vice president of the KP Chamber of Commerce and Industry said the cost differential of about 25 per cent because of remote location was compensated by incentives. But when these incentives were withdrawn, industries went into losses and many closed down. At the peak of industrial production, around 80,000 were employed but their number is around 16,000 these days.

Rangeen Shah, former secretary of the Gadoon Chamber says the estate has ceased to attract fresh investment since the incentives were withdrawn in 1991. Out of 270 units in operation then, around 120 are now running round the clock or in one or two shifts. However, it were small industries that were closed and the bigger ones have even expanded.

He added that industries whose raw material is abundantly available in KP like processing of agriculture produce, packaging and paper board, furniture, cigarette etc., are nowhere in sight here.

The industrial package announced by PM Yousaf Gilani in 2009 somewhat shored up industrial production. Under the war on terror package, industries in KP were given varying rates of exemption from sales tax, income tax and excise duty for three years. “These expired in June 2012 and need to be extended for another two to three years,” says another factory owner.

GAIE was set up to provide jobs and livelihood to the locals to discourage them from poppy cultivation. However, no homework was done to impart skills to locals. A technical college promised for training of locals and developing manpower for the estate is yet to be built. Locals were employed as watchmen and for other menial jobs while technicians were brought from Punjab and Sindh.

Shinwari says this partly explains why poppy cultivation has started in some parts of Gadoon again. In April 2012, the government had to conduct an operation to destroy poppy crop grown over 34 kanals in some remote Gadoon villages.

The Rs10 billion GAIE project, spread over 1116 acres, situated about 100km to the east of Peshawar, was created after seven poppy growers were killed in anti-poppy operation in the area in 1987. The GAIE was initially planned to have 600 factories. The estate has spacious roads, drainage and water supply system, communication, power and gas facilities and standard schooling and medical facilities at Tarbela, lying close to it, and Peshawar.

In 2003 the estate was proposed to be converted to an Export Processing Zone by Syed Iftikhar Hussain Shah, the then provincial governor. But the plan seems to have been shelved.

According to a technocrat Mumtazuddin, the estate can be revived by improving security situation and announcing a comprehensive incentive package for investors. “First of all, the government should announce that whosoever intends to establish industries will not be asked about his source of income. Then the investor should get soft loans without collateral and with a long grace period for debt repayment. The incentives should also include subsidies on loans, power/gas tariff and industrial plots, reduced rates of sales/ income taxes, and rebate in custom/excise duties on import of raw material and machinery.”

“For a level playing field, the estate deserves a permanent reduction of 25 per cent in sales/income tax and power/gas tariff. This will not only revive the sick industries but also encourage fresh investment. This rebate will help clear stuck-up bank loans ,” says Shinwari.