1.Foreign exchange controls have been relaxed. Foreign investors have been
allowed participation in local projects on 100
per cent equity basis. There is no compulsion for a limited company to offer
shares to the public even if its paid-up
capatical exceeds Rs. 100 million, provided that foreign equity in the project
is more than 51 pre cent.
2.Ceiling on payment of royalties and technical fee have been abolished.
3.Work permit restrictions on expatriate managers have been withdrawn and remittance
restrictions have been eased.
No prior approval for investment in any sector is required, except for the following:
1.Arms and ammunitions.
2.High explosives.
3.Radio-active substances.
4.Security printing, currency and mint. Establishment of new units for the manufacture
of alcohol, except industrial alcohol,
is banned.
There is no requirement for obtaining No Objection Certificate from the provincial
government for locating the project
anywhere in the country except in certain areas which are notified as negative
areas. In notified negative areas, the establishment
of industries is not considered desireable for particular reasons, such as environmental
degradation, over-congestion, etc.
However, if any, investor, intends to set up an industry in the negative areas
too, he may apply to the concerned provincial
government for permission.
Foreign Companies can also engage in export/import activities, provided that such companies are registered in Pakistan.
With a view to providing additional fiscal and institutional incentives to
those investors who intend to establish export-oriented
industries, an Export Processing Zone (EPZ), with fully developed infrastructure
including a 2000 lines digital International
subscribers dialing exchange, has been set up in Karachi, the largest industrial
and port city of Pakistan.
The following incentives would be available to the industrial units set-up in the EPZ:
1.Complete exemption from all federal, provincial and municipal taxes; any
foreign exchange control and insurance
regulations as applicable in Pakistan;
2.tax holiday up to year 2000 A.D., thereafter 25 per cent in perpetuity;
3.income accuring outside Pakistan is exempted from tax;
4.the losses, if any, on an undertaking set up in the Zone may be carried forward
indefinitely;
5.import of equipment machinery and materials (including components, spare parts
and packing material) for enterprises
set up in the Zone is exempted from all federal and provincial taxes and duties
including customs, excise, sales tax and
municipal taxes;
6."One Window" service and simplified procedures -- import permits
and export authorizations are also issued by the
Export Processing Zone Authority (EPZA) itself;
7.usual import/export restrictions enforced in Pakistan are not applicable to
the zone;
8.export of goods from the Zone are exempted from all duties;
9.all goods and material entering into the Zone from the tariff areas are considered
to be exports from Pakistan, hence they
are entitled to all facilities and concessions allowed on exports to other countries;
10.off-shore banking and insurance facilities are available in the Zone;
11.full repatriation of capital, profits and dividends is allowed to the foreign
investors and non-resident Pakistanis;
12.resident Pakistanis are allowed to invest up to 100 pre cent in joint ventures
in the Zone;
13.exemption from the labor laws applicable in the country;
14.there is no minimum investment required;
15.free employment of expatriates with exemption of salary income tax for 5
years from the date of arrival in Pakistan;
16.international distribution centers are allowed to be established;
17.constructed warehouse buildings are available on temporary rental basis;
18.free choice of the forwarding and clearing agents;
19.free choice of the shipping companies;
20.free choice of contractors for construction of factory building and import
of construction material; and
21.duty free import of up to three vehicles is allowed proportionate to the
capatial investment.
With a view to accelerating the pace of industrial investment, increasing the
quantum of exports, ensuring transfer of technology
and creating additional employment opportunites in the country, it has been
decided to establish 12 Special Industrial Zones,
three each in the provinces of Punjab, (Dera Ghazi Khan, Rahim Yar Khan and
Leiah) and Sindh (Larkana, Nawabshah and
Keti Bandar), two each in the provinces of N.W.F.P. (Dera Ismail Khan and Risalpur)
and Balochistan, (Windher and Quetta)
and one each in Azad Jammu and Kashmir and Northern Areas. These Zones will
be fully equipped with the requisite
infrastructure. A package of incentives, concessions and facilities has been
provided to these zones, which will be available to
such companies which are incorporated in Pakistan under the Companies Ordinance,
1984.
The prospective investors who wish to enter into the international markets
will find these zones extremely helpful for the
production of hi-tech export-oriented products with blend of imported components,
Pakistani raw materials, technical expertise
and Pakistanis cheap and disciplined labor.
The industries set up in the SIZs will be entitled to a very attractive and liberal package of incentives, suc as:
1.Income Tax Holiday for a period of ten years from the date of commencement
of commercial production, provided the
plant commences commercial operations up to 30th June, 1999.
2.The capital structure of projects in SIZs will be entitled to the debt equity
ratio of 70:30.
3.The projects which commences commercial operations up to June 30th, 1999,
shall enjoy 25% exemption from custom
duty on the import of such raw materials which are not produced locally, provided
the project cost is more than US $ 10
million and employs minimum of 100 persons in the factory.
4.The projects which commences commercial operations up to June 30th, 1999,
shall enjoy 25% exemption from the
Central Excise duty on production, for a period of 8 years, provided the project
cost is more than US $ 10 million and
employs minimum of 100 persons in the factory.
5.The incidence of duties and taxes leviable on production in SIZs would be
less than the incidence of duties and taxes, if
the same product is imported.
6.Capital Gains would be exempted from taxation for a period of 5 years from
the date of commercial production.
7.Any octroi or export tax leviable by the local government on the import and
export of goods to and/or from SIZs may be
exempted for a period of 10 years.
8.Parts and components, up to 5% of initial C & F value of imported plant
and machinery shall be exempted from Import
Duties and Sales Tax, if imported together with the plant.
1.Necessary utilities and credit will be arranged for the projects under one
window operation.
2.Banks and Development Financial Institutions(DFIs) will set up there authorised
offices in all SIZs. The Banks and DFIs
will simplify their procedure for sanction of loans to SIZ industries for quick
decisions.
3.There will be a Project Director for each SIZ, who will be responsible for
one window operation.
Special bonding facility for duty free raw material will be provided on the
pattern of Export Processing Unit (EPU) scheme for
exports.
All industries can be set up in the Special Industrial Zones, except the following:-
1.Arms and ammunitions
2.High explosives
3.Radio-active substances
4.Security printing, currency and mint
5.Alcohol, except industrial alcohol
6.Cotton Ginning
7.Spinning, except as part of integrated textile unit
8.Sugar manufacturing (white)
9.Flour Milling
10.Steel Re-rolling and furnace
11.Tobacco Industry
12.Ghee or Vegetable Oil Industry
13.Plastic bags including Polyproplene and Polyethylene
14.Beverages excluding fruit juices
15.Polyester industry
16.Automobile Assembly
17.Cement
The public facilities such as banking services, fire station, police station,
health center, customs office, post office, school, park,
mosque, will be provided by the concerned agencies at their own cost.
1.The terms and conditions of lease will not be changed during the lease period.
2.Companies having units in the Special Industrial Zones will be eligible for
listing in the local stock exchanges, subject to
fulfillment of their listing requirements.
3.The units of Special Industrial Zones will be treated at par with other units
of the country for allocation or purchase of
textile quota according to laid down procedure.
4.The facility of re-investment of the earnings in Pakistan to the extent of
foreign equity as "foreign investment" will be
available.
5.The units of Special Industrial Zones will have access to the local raw material
under the prevalent market conditions.
6.Each unit will be allowed to import one car, one van and one bus for 100 workers
each, duty free.
7.The installation and operation of anti-pollution facilities/measures pertaining
to the respective units will be the
responsibility of the unit concerned.
8.Expatriate employee of all investors will be allowed to import foodstuff and
other consumable intems up to US $ 6,000
per person per annum duty free, and up to US $ 2,000 with duty.
9.The provincial governments will ensure the safety of all workers including
foreign workers.