Brief Introduction on export-processing-zones or free-trade-zone operating in Pakistan

1. Insight: Pakistan Export Processing Zones | Sayyed Zakir Ali Rizwe
INSIGHT: Pakistan Export Processing Zones
Assignment – EPZ Facilities in Pakistan
SUBMITTED TO: FAIZ UL ISLAM
Sayyed Zakir Ali Rizwe
20151‐19131

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Introduction:
Free Trade Zones (FTZ) are not new to the board. Per history, first documented FTZ was established by Greeks
in 166 BCE followed by Romans who used the arrangements to not pay annual dividends to the emperor.
Shannon, Ireland (Shannon Free Zone) established in 1959 claims to be the first "modern" free trade zone. It
enabled the city airport adjust to aircraft technology allowing longer range aircraft to skip a required refueling
stops at Shannon. An attempt by Irish Government to maintain employment & generate revenue.
Other free zones of note are the Kandla Free Zone in India, which started about 1960, and the Kaohsiung Export
Processing Zone in Taiwan which started in 1967.
What is a Export Processing Zone?
‘Export Processing Zone’ (EPZ) a type of a ‘Free Trade Zone’ (FTZ) is a class of a ‘Special Economic Zone’. These
zones are usually setup in developing countries by the government to promote industrial and commercial
exports.
Free trade zones are generally organized around major seaports, international airports, and national frontiers
offering geographic advantage for trade.
Definition & Services ‐ EPZ or a FTZ:
EPZ is a duty‐free area, offering warehousing,
storage, and distribution facilities for trade,
transshipment, and re‐export operations.
It offers companies, investors, entrepreneurs, firms
free trade conditions and a liberal regulatory
environment. Its objectives are to attract foreign
investors, collaborators, and buyers who can
facilitate entry into the world market for some of the
economy's industrial goods, thus generating
employment and foreign exchange
Can also be defined as labor‐intensive manufacturing
centers that involve the import of raw materials or components and the export of factory products. Under
services, they deliver software, back‐office operations, research and financial services
Modern day Interpretation:
World Trade Organization (WTO) call to replace EPZ to SEZ or special economic zones.
Per WTO, EPZ is legacy and SEZ is the new age as it provides necessary environment to bench implementation
of liberal market economy principles and are viewed as instruments to enhance the acceptability and the
credibility of the transformation policies and to attract domestic and foreign investment
Incentives of an Export Processing Zone or an Economic Zone:
Corporations setting up in a zone are given regulatory and fiscal incentives (few stated below) to attract
investment, generate employment, reduce unemployment to stimulate national economy.
 Right to establish a business
 Right to import parts and equipment without duty
 Right to keep and use foreign exchange earnings
 Income or property tax breaks as an ‘incentive’
 Incentives relating methods of customs control and filing requirements
Free‐trade zones should be distinguished from free
trade areas.
A free trade zone is normally established in a single
country, although there are a few exceptions
where a free zone may cross a national border and
are set up between countries such as the Latin
America Free Trade Association (LAFTA) or North
American Free Trade Association (NAFTA).
In Free trade areas tariffs are only lowered
between member countries.

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Export Processing Zone – Pakistan:
Export Processing Zones Authority or EPZA is a GoP (Government of Pakistan)
venture conceived and designed to increase and improve exports.
Established in 1980, the EPZA is one of the fast‐growing projects undertaken by
the government and carries a great appeal for both local and overseas investors.
EPZA is pursuing an extensive program to create a network of export processing
zones in Pakistan.
Main objectives is to accelerate industrialization pace and enhance export
volume by creating an enabling environment for investors in the Zones which
would,
 Act as a corollary
 Create job opportunities
 Bring in new technology
 And attract foreign investment.
Stated below is a brief insight in to incentives offered & facilities extended by the nine (09) EPZ established in
Pakistan in Sind, Baluchistan, Punjab and Khyber‐Pakhtunkhwa.
It is important to note here that the position tabulated, although planned, but represent approximate coverage
at all EPZ. Actual services available can be lesser of more than stated below
The EPZ established in Pakistan are a result of joint venture arrangements with provincial governments, private
sector, foreign companies and public sector.
Incentives offered by EPZs Pakistan Facilities offered by EPZs Pakistan
 Developed land on competitive rates for 30
years
 Duty free import of machinery, equipment and
material; no import regulations applied
 Exchange control regulation not applied
 Repatriation of capital and profits
 No sales tax on input goods including electricity
and gas
 Presumptive tax @ 1%; only EPZA collect it at
the time of export and is the final tax liability
 Obsolete machinery & defective goods
(maximum 3% value) can be sold to domestic
market
 One widow operation
 Utilities (electricity, gas, water) available at all
locations
 Peaceful, secure and environmentally
protected (pollution free) work area
 Easy access to wet and dry ports
 GSP plus concessions by various countries
available to manufacturers in the zone
 Relief from double taxation

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Karachi Export Processing Zone:
EPZA first project was Karachi Export Processing Zone
(KEPZ).
The first zone developed by EPZA for its important
geographical importance as It is center to international
routes, both sea and air. It is ideally located to reach the
markets of Middle East, Far East, Africa, Europe,
America and Central Asia.
Facility is planned over approximately 500 acres (zone
area: 305 acres) and located 10km from Port Qasim &
30km from Karachi Port.
House industries producing high value garments, gems, software/technology &
jewelry
Of key importance for:
 availability of support services & low cost high quality technical & professional manpower
 offices of all leading financial institutions, shipping companies & airlines
 moderate temperature/climate,
 developed & advanced low cost residential/commercial areas with high rise buildings ideal for
expatriates.
KEPZ Phase I (Area 211 acres) is fully allotted to invested and operational. Here garments is the dominant
sector followed by electronics, chemicals etc.
KEPZ Phase II (Area 94 acres) has completed infrastructural development. 12 acres allocated for Hi‐tech, Gem
& Jewelry, Technology based industries. New investors are more interested in hi‐tech industry, software
houses and IT based solutions.
Sialkot Export Processing Zone:
Sialkot is home to world largest producers of hand‐
sewed footballs, produce surgical instruments,
hospital equipment beside parting major
contribution for leather, tanneries garments,
musical instrument, cutlery, arms, wooden and steel
furniture, rubber and sportwear industries.
Sialkot Export Processing Zone or SEPZ is in Punjab.
It is a joint venture between Punjab Small Industries
Corporation (PSIC) and Export Processing Zones
Authority.
It comprises of 238 acres and is located at Sambrial,
about 20 kilometers from the on Sialkot‐Wazirabad highway.
Presently most (almost 95%) is booked as there taking in view the rich works
& craft heritage coupled with abundantly available skilled manpower.

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Risalpur Export Processing Zone:
Located in Frontier (now Khyber Pakhtunkhwa)
Province.
EPZ Risalpur comprise of 92 acres and has direct
access to central Asian markets. The zone is
located at about 50 kilometers from Peshawar
near Mardan interchange (Islamabad ‐
Peshawar motorway).
Hold immense potential for trading and
warehousing business, mineral, fruits &
vegetable processing, marble & granite, food &
sweets, carpet and furniture industry due to availability of raw material
and cheap skilled labor.
Site is of potential advantage for multinational companies who can
capitalize the advantage by using it to jump board good export to Central Asian Republics, Iran, and
Afghanistan.
Saindak Export Processing Zone:
Located in District Chaghai, Baluchistan. Spread
across 1284 acres.
Government of Baluchistan on behalf of Saindak
Metal Corporation under lease contract to a
foreign Chinese company M/s MCC Resource
Development Company Ltd. Operations started
in the year 2003.
Main product is extraction of blister, copper and
gold.
Gujranwala Export Processing Zone:
Located in Punjab on main Gujranwala‐Lahore,
grand‐trunk (G.T) road.
It is a joint venture between Punjab Small
Industries Corporation (PSIC) and is ready for
operational activities.
High potential for light engineering, ceramics
and cutlery.

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Duddar Export Processing Zone:
Located in District Lasbella, Baluchistan and spread
across 1500 acres.
Government of Baluchistan and (under lease)
contract to a Chinese company M/s MCC Resource
Development Company Ltd. Assumed operational
activities.
Main product is extraction of zinc and lead.
Tawariqi Steel Mills Export Processing Zone:
GoP granted status of EPZ to the STML (Tuwariqi)
project, along with the option to export 100
percent of its production to Pakistan, which
ensures a readily available market for TSML
products, apart from ATH plants and neighboring
Gulf countries.
Al Tuwairqi mine and explore avenues for iron‐
ore from Pakistan..
STML spreads over 220 acres and has a strategic
location at Arabian Sea within Muhammad Bin Qasim Port Zone, with the
port facilities at one corner of the site and sea water intake channel of
Pakistan Steel, bordering the other side.