Commerce Minister Abdul Razzak Dawood, while announcing the Trade Policy for 2002-03 spelled out the factual position of the Karachi Export Processing Zone (KEPZ). He said, “EPZ are important export promotional tools. Unfortunately our these zones are not up to par and compares most unfavourably with similar zones in the region. We intend to set things right.”
This declaration was in fact, a whiff of fresh breeze. In this context, I take the liberty to also refer to a recent statement of a spokesman of the ministry of industries and production who said:
“The need for improvement in EPZA’KEPZ has been underlined. It is expected that the requisite improvements will gradually take place in EPZA/KEPZ”. This is yet another acceptance of a disappointing state of affairs at KEPZ in many areas. This is very unfortunate that generally we take things easy and take the required decisions very late. We love to live in dreams. In today’s competitive world one cannot afford to deny or even ignore the realities on ground. We need to move faster on taking decisions.
An EPZ is established with the following objectives:
* to attract foreign investment; transfer of hi-tech; to create job opportunities and to increase exports of manufactured goods.
Unfortunately, the KEPZ has failed to achieve any of these objectives. It facilitated flight of capital. The current situation can be determined by the number of plots still available in the KEPZ, besides several abandoned factory buildings waiting for change of hands, if at all possible.
The Export Processing Zones Authority (EPZA) was established in early 80’s. Since then it could not prove itself a good administrator nor could it make KEPZ a ‘model’. A few more Export Zones are reportedly in the pipeline. Under the circumstances, how can one expect better results from other EPZs in the country with the ‘same set of managers’? Some fear that it could be a greater disaster unless 1) parameters are observed and reviewed periodically (2) EPZ sites are selected by consensus, (3) transfers of employees are made on regular basis (4) induction of private sector through Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and (5) by taking the corrupt to the task. Only these measures can satisfy and attract investors— both local and global.
Unless we have the ability and courage to arrest the irritants and obstacles present at the EPZ we have no right to play with public money or loans which ever the case may be.
Time and again, the attention of the authorities concerned has been drawn to the KEPZ and problems being faced by its investors although almost all the investors are local and no foreign investor is present at KEPZ today, still one has to be caring to investors. Certain grave irregularities have been pointed out from time to time but it appears that no one has enough time to spare for the KEPZ issue.
The question, as to why the KEPZ could not be a success even after a lengthy exercise of 22 years still remains unanswered officially. Although, the unofficial answer is no secret. On the contrary, it has become the talk of the town during all these years. The Ministry concerned has been reluctant, till late, to accept publicly that KEPZ is a failure in its totality. People term it as the story of “The Emperor in the Wardrobe”.
Many regimes came in the past 22 years— both civil and military but no one attended the issue of the EPZ so vigorously and seriously as Mr Abdul Razzak Dawood the Commerce Minister did. Mr Dawood seems to be convinced that the relevant Ministry had been over pampering its loving baby—-EPZA. And, therefore kept its lapses and irregularities a secret for quite a long time. The bureaucracy thought that they would be successful in keeping the project away from the eyes of the critics. One must praise the commerce minister to have enough courage to publicly accepting the weaknesses and drawbacks of this ill-reputed project in so many words. It is hoped that now at-least some visible improvements will follow unlike in the past when the ministers were briefed as “All OK”.
With regular intervals, we hear disgusting reports of malpractices from the KEPZ. After all news does travel place to place, despite of imposing strict censorship. The facts and figures cannot be kept secluded for long. Poor governance, bleak export figures, corruption and favouritism will not take us anywhere. If we want to compete specially in the current global perspective, we will have to change our attitude. The present approach of the people at the helm of affairs is incidentally not conducive to encouraging the economic growth and improvements in the area of export zones.
Furthermore, the state of affairs prevailing at the KEPZ is mainly because of the ‘syndicate’ of a few which tries to create hurdles to honest investor coming into the Zone. Corrupt officials are no better than termites. They are stationed at the same place i.e. KEPZ for several years and are the source of strength for the syndicate. Here a question arises that why can’t we get rid of these ‘termites’. It is an open secret that these termites are eating the foundations of the KEPZ from day one of their joining this institution. It would, however, be appropriate to mention that the majority of the employees as well as investors is fair and devoted. We can encourage these honest people to help improve the present scenario for the betterment of the Zone which in turn will bring progress and prosperity to themselves and to the country at large.
No body had ever asked the managers of the EPZA in the past to justify the huge duty-free imports and incentives against exports. It is pity that the KEPZ is exporting goods worth $70 million. If we compare these statistics with the EPZ of Bangladesh (BD). We will find that BD is doing some $1.2 billion. The climax of the story is that BD has to import raw materials including cotton, yarn, fabric and accessories from world sources and from Pakistan as well whereas we have for our garment export, ample quantity of yarn, fabric and accessories etc., at our disposal.
Notwithstanding, another announcement was made by the federal minister in connection with constituting of a steering committee on the EPZA. It may be recalled that during a meeting of the visiting delegation with the ministry of industries and production at Islamabad, the delegation was assured of the formation of a joint committee consisting of members from the ministry and members of a relevant committee of the FPCCI. Let us see the formation of the committee and the role assigned to private sector in this regard.
For the last few years, there has been a strong demand to do away with the EPZA and to hand over the institution to the private sector. This should, however, be done without further loss of time. An ideal situation, at least in my humble view would be coordination between the FPCCI and the Board of Investment (BoI) to establish and operate export zones in Pakistan. It would be in the fitness of things to add here that BoI is doing a praiseworthy job of finding potential investors for the country when it is needed most.