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Khyber Pakhtunkhwa

SETTING NEW HEIGHTS

History is evident that Khyber Pakhtunkhwa Province in the wake of its geographical proximity to Afghanistan always remained victim of terrorism, in all global events including Soviet Invasion in Afghanistan in 1979 or United States of America’s attack on Afghanistan responding 9/11 event. Impact of devastation finally travelled to Khyber Pakhtunkhwa.

From the last more than three decades, this region has witnessed escalation of instability, political violence and insurgency in Khyber Pakhtunkhwa just because of its capacity as an ally of NATO / ISAF forces. Khyber Pakhtunkhwa has paid extremely high cost on economy both in terms of investment inflows and market confidence.

Khyber Pakhtunkhwa has witnessed a regular feature of attacks by the militant’s including suicide bombing, rocket attacks, remote controlled bombs, abductions for ransoms and beheadings overall sight from 2003 onward. More than 52,000 human life losses in the war against terrorism have been reported since 2001. Majority of victims hails from Khyber Pakhtunkhwa. Beside human loss the economic losses sustained by Khyber Pakhtunkhwa have also paralyzed the economic strength of the Province. Abduction for ransom, load shedding and impact of insurgency has also resulted negative impact on Industrial sector of KPK.

Khyber Pakhtunkhwa remained in the clutches of external shocks including fall-out from over three decades of the Afghan conflict, spillover of the forces in tribal belt, devastation caused by the 2005 catastrophic earth quake, displacement of more than three million people followed by insurgency by the militants in Swat during 2009 and extensive damage inflicted by unprecedented floods of 2010 in major areas of Khyber Pakhtunkhwa. The above explained factors have left severe negative impact on the economic growth particularly priority sector of Industries which even remained ignored by the Commercial Banks of Pakistan in terms of loaning facility just because of unrest and insurgency. To rebuild Industrial sector in Khyber Pakhtunkhwa, the Provincial Government besides taking other steps had also approached the Federal Government for incentives on account of income tax, sales and custom duty to attract the local and foreign investment but unfortunately response was not much encouraging.

The present Provincial Government’s vision embodies prosperous Khyber Pakhtunkhwa through sustainable Industrial Development resulting in large employment opportunities and mobilization of local resources. To revamp, facilitate the Industrial sector and develop Special Economic Zones to benefit from the opportunities by the China Pakistan Economic Corridor (CPEC) the Government of Khyber Pakhtunkhwa has undertaken the mission of stabilizing the economy of Khyber Pakhtunkhwa and ameliorating its impaired conditions. Khyber Pakhtunkhwa is the 3rd largest Provincial Economy in Pakistan and it is crucial that we lead this region to stability and utilize all means to attract local and foreign investment.

To overcome all setbacks due to war on terrorism, absence of a healthy Industrial Investment and focused Industrial Policy & lack of guidance, the Government of Khyber Pakhtunkhwa has established Khyber Pakhtunkhwa Economic Zone Development & Management Company (KPEZDMC) to ensure the implementation of policies, development of new modern Industrial Estates, Special Economic Zones and to provide a frame work for one window facilitation center to resolve the problems and challenges currently faced by the Industrialists. Consequent upon establishment of KPEZDMC the Provincial Government has announced Industrial Policy; 2016. Main objectives of the policy are:

To rehabilitate the sick industrial units by taking necessary remedial measures.
To encourage setting up those industries which have comparative cost advantage and market, such industries based on local raw material, skilled labor, local and export markets.
To create more jobs by facilitating Small and Medium Enterprises (SMEs) to grow and flourish by providing Business Support Services (BSS) including necessary finances.
To create more Special Economic Zones (SEZs) to attract local and foreign investors to set up industries.
To improve infrastructure, facilitate in the existing industrial estates.
To make available cheaper energy through available resources.

Industrial Policy; 2016 has been framed to ensure sustainable development of industry in Khyber Pakhtunkhwa and reshaping economic growth based on natural resource endowment. The Provincial Government has devised its strategy to derive the economic growth and Industrial sector, is one of those sectors, which can be ranked high on the priority list of the Government Khyber Pakhtunkhwa. There is huge untapped potential in different sectors, if unlocked can result tremendous benefits. In fact, the Industrial Policy; 2016 containing incentives for the Industrialist is a game changer and likely to prove engine of growth in Khyber Pakhtunkhwa.

Incentives announced by the Provincial Government to build a prosperous Khyber Pakhtunkhwa through uplifting the affected Industrial sector are highlighted as under:

Government shall bear 5% mark up on financing for five years for new / expansion projects availed up to June 2018.
Government shall finance 25% of the cost of property (cost) acquired for setting up industrial unit up to December 2017 viz Early Bird Investment to expedite the industrialization process.
To address the issue of high transportation cost in setting up industrial units, Government of Khyber Pakhtunkhwa shall subsidize 25% of the transport cost from Karachi Port to industrial site against import of plant and machinery for setting up new units. This subsidy shall be available for all new capital goods/plant and machinery reached into SEZ for installation.
In order to attract innovative and newer technology and to promote labor intensive industry, Government of Khyber Pakhtunkhwa shall bear 25% of the electricity bill maximum up to 3 years from the start of commercial production for all the new units, which are unique in nature and first of its kind in Khyber Pakhtunkhwa.
Government of Khyber Pakhtunkhwa shall finance 25% of the equity investments for female entrepreneurs’ subject to maximum of PKR 3.0 million per investor. Government of Khyber Pakhtunkhwa shall create initial reserve of PKR 500 million for such financing, Government of Khyber Pakhtunkhwa shall help in micro-financing, conduction of training, business and technical education, providing access to market and supporting talent for enterprises with majority female ownership and female employees.

Besides all new Industrial Estates shall be declared as Special Economic Zone (SEZ’s) under SEZA act which shall entitle them to Tax, Custom, and Excise Invectives as follow:

Exemption from custom duties and taxes on import of capital goods / plant and machinery to Special Economic Zone for installation therein.
Exemption from all taxes on income for a period of 10 years from the date the enterprise starts commercial operations. KPEZDMC is on its way to develop world class Industrial Estates in Khyber Pakhtunkhwa summarized as under: