Home Global Village Car industries get ‘Special Economic Zone’ status in CPEC

Car industries get ‘Special Economic Zone’ status in CPEC

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The Sindh government has approved Special Economic Zone (SEZ) status for nine new business enterprises, including three automotive industries, which will be set up in Sindh’s Korangi, Bin Qasim and Khairpur SEZs after being held off by the Chief Minister of Sindh for six months.

The total investment in these businesses is expected to be more than Rs. 30 billion, said Sindh Board of Investment (SBI) Chairperson Ms. Naheed Memon, who is also the vice chair of the Special Economic Zone Authority in Sindh.

Now these units will have to get further approvals from the Board of Investment and Federal Board of Revenue to get tax exemptions and other incentives that come with the SEZ status. Ms. Memon hoped these approvals would be done in a couple of months.

He was clear that the steps taken by the government are not beneficial for the consumer. Also when the government introduced SRO 1067(1)/2017, as a reaction, local automakers increased their vehicle prices, under the pretext of the rupee-dollar balance.

SBI in collaboration with the World Bank Group has also decided to automate business registration through a portal that would link all provincial and central databases and authorities for starting a business. It will integrate all departmental procedures online enabling entrepreneurs to require provincial registrations from a single platform in real time. This facility would be launched in pilot form in key government departments as well as in the office of Karachi Chamber of Commerce and Industry.

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The relevant provincial agencies are reforming regulations related to construction permits. These reforms include de-notification of environmental approval for low-impact projects, simplification of procedures and reduction in timeline for water connection at Karachi Water and Sewerage Board as well as reduction in legal formalities at Sindh Building Control Authority for obtaining a building permit.

Ms. Memon pointed towards reforms already implemented such as Land Administration and Revenue Management Information System at the Board of Revenue.

The government must take a firm stand to resolve the issue. He said that along with people losing their jobs, the Pakistan national treasury would face a loss of almost PKR 80 billion, which it gains via duties and taxes.

The automation of property registration has begun as all current registrations are scanned, indexed and made available online for title search through digital scanning unit. The time for execution and registration of the deed is now less than 100 days compared to over 200 days previously, she said.

One of these SEZ companies is Mehran Comm­ercial Enterprises, which plans to introduce new technology for supply of auto parts to assemblers such as KIA, Hyundai and Renault. The plant is being set up in KICP with an investment of Rs. 200 million.

Tecno Auto Glass is a joint venture between a Japanese car assembler and an independent auto parts manufacturer in Pakistan. Tecno Pack and Pak Suzuki Motor Company will be shareholders in the company according to a 60-40 ownership structure. The company will manufacture automobile windscreens, rear glass, and side glass for Suzuki automobiles being produced in the country. The company is investing Rs. 2.5 billion.

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Kia Lucky Motors Pakistan Ltd has signed a general agreement with KIA Motors Corporation as their foreign technical collaborator for establishing a two phased project, comprising of an auto assembly plant with a capacity of 30,000 units per year initially and then eventually expanding the capacity to 50,000 units per year. The total project investment is Rs. 15 billion.

The import of used and new cars in Pakistan and it will cost almost 0.7 million locals their jobs. Furthermore, he said that they are thankful that the government allowed them to clear their vehicles from Karachi port but this is not a permanent solution.

When SRO 1067(1)/2017 was issued last year, the automobile industry of Pakistan raised several reservations. Local importers were critical towards the government and wanted it to take back the policy altogether. The government’s stance was to decrease the existing trade deficit, which is why the import of used cars was restricted.

Both the government and local importers have had various sessions to address these conflicts. Chairman of APDMA HM Shahzad said that the amendment in the car import policy will limit the import of used and new cars in Pakistan and it will cost almost 0.7 million locals their jobs.

Furthermore, he said that they are thankful that the government allowed them to clear their vehicles from Karachi port but this is not a permanent solution. The government must take a firm stand to resolve the issue. He said that along with people losing their jobs, the Pakistan national treasury would face a loss of almost PKR 80 billion, which it gains via duties and taxes.

Read more: CPEC: A Chinese Vision Since 2005

He was clear that the steps taken by the government are not beneficial for the consumer. Also when the government introduced SRO 1067(1)/2017, as a reaction, local automakers increased their vehicle prices, under the pretext of the rupee-dollar balance.


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