FIEDMC: Flag carrier of public-private partnership in Pakistan

The successful ground-breaking of the Allama Iqbal Industrial City (AIIC), Pakistan’s first CPEC linked Special Economic Zone (SEZ), in the first week of January 2010, brought to the forefront the role of the semi-autonomous, public-listed company, Faisalabad Industrial & Estate Development Management Company (FIEDMC) that has emerged as the role model of Public-Private Partnership (PPP) in Pakistan.

FIEDMC

The successful ground-breaking of the Allama Iqbal Industrial City (AIIC), Pakistan’s first CPEC linked Special Economic Zone (SEZ), in the first week of January 2010, brought to the forefront the role of the semi-autonomous, public listed company, Faisalabad Industrial & Estate Development Management Company (FIEDMC) that has emerged as the role model of Public-Private Partnership (PPP) in Pakistan.

AIIC is the first of the nine CPEC linked SEZs that has effectively left the stage of design, discussion, and approvals and has materialized on the ground with its structure – complete with access roads and commitments of investments from national and international stakeholders.

Industrial City has been planned over an area of more than 3000 acres, is strategically located on Motorway M-4, near Sahianwala Interchange, Faisalabad.

Timely ground-breaking of AIIC, in the first week of January 2010, has seen lots of institutional pedal work that includes the acquisition of land from private parties, (through a complex process under Sec-4) due diligence in obtaining titles and clearing legal issues, signing contracts with interested parties, contractors and supporting departments.

Boundary walls, main boulevard, and entrance gate are under construction and would be completed within six months. Internal roads are being developed. Punjab government has almost developed the outer access roads.

What is emerging is a state-of-the-art mega project of industrial renewal, in Pakistan, under public-private partnership, and this suddenly makes FIEDMC and its evolution worthy of public interest.

2004: JKT introduces a new idea

FIEDMC came into existence to benefit from Public-Private Partnership (PPP) in 2004 when the idea of Special Economic Zones was first conceived by Jahangir Khan Tareen when he was an “Advisor for Special Initiatives” with the then CM Punjab Pervaiz Elahi.

Tareen being a successful businessman himself, understood the importance of incentives and facilitation through policy measures and infrastructure in one place; he argued for corporate entities invested and facilitated by the government, with government presence on the board but run by executives from the private sector. His first brainwave was PIEDMC (Punjab Industrial & Estate Development Company).

FIEDMC
Jahangir Khan Tareen: who introduced Public-Private Partnership in 2004.

PIEDMC’s idea resonated across Punjab’s business world; Tareen was soon approached by a delegation of Faisalabad business community led by Mian Muhammad Lateef, founder of the prestigious Chenab Group.

Mian, a major textile exporter from the area, persuaded Tareen that Faisalabad is big enough, dynamic enough as an industrial hub to have its separate entity.

This is how FIEDMC was born, established by Govt. of Punjab and formally registered u/s 42 of company’s ordinance 1984 with aim to promote economic development of Faisalabad through the establishment of specialized industrial estates.

This public listed company is managed by a 21-member Board of Directors, of which 16 are from the private sector and five from the public sector. Mian Lateef was its first Chairman in 2004.

Given PM Khan’s deep interest in the subject, this ground-breaking of Allama Iqbal Industrial City will increase pressure on the management of the other zones. Especially important in this respect will be the Rashakai Economic Zone (M-1, Nowshera, KP) and China Special Economic Zone Dhabeji, Karachi, Sindh

FIEDMC has grown into a big business idea since then. It first launched a small industrial estate, on 225 acres of land, in the form of “Value Added City (VATC)” in 2007, then undertook the gigantic project of Faisalabad Industrial City (M3 Industrial City) spread on more than 4300 acres of land.

Today it has more than 7200 acres of land under industrial development. Allama Iqbal Industrial City will be its third project with more than 3200 acres of land being developed – and the first industrial estate being officially linked with CPEC.

FIEDMC aims to create over 600,000 jobs in those SEZs and estimates that another one million jobs will be indirectly created across the country. Over 557 industries have signed MOUs or set up in the three SEZs with a total investment of around Rs. 900 billion.

Govt support is crucial

FIEDMC’s Chairman, Mian Kashif Ashfaq, is very appreciative of the help his organization has continuously received from both the Federal Govt and Punjab government. Mian Kashif is also thankful to the PM for his directions that expedited the structural and logistic support from federal government departments.

He explains while talking to GVS, that “the speed at which gas, electricity and other facilities have been provided to this large industrial estate would not have been possible without continuous support and interest of the federal government from the very top.”

Highlighting the FIEDMC development projects and potential, Mian Kashif explained that another Rs. 357 billion foreign and local investment is expected to flow into various projects, which indicates that investors have complete confidence in the present regime.

Around 15-20 Chinese companies are already invested in the Faisalabad Industrial City (M3), and four Chinese companies have already expressed interest in Allama Iqbal Industrial City being launched. A total of 12 national and international companies have completed 100% signing of MOUs with the new Industrial City (AIIC).

M3 Industrial City (Faisalabad Industrial City) is currently Pakistan’s largest industrial estate located on motorway M-4 at Sahianwala Interchange; it is around 32KM away from Faisalabad airport. M3 city has specific areas available for foreign investors and offers plots up to 50 acres

FIEDMC managed SEZ currently has the largest number of Chinese private sector companies in one place in Pakistan. It has an estimated $1.3bn in potential investment from China-related companies so far.

Links with CPEC-II & China’s Industrial Relocation Policy

The first phase of CPEC (2014 – 2017) was focused on energy projects, and the second phase was to move ahead with industrial development and production with a view towards exports, job creation, and skill development.

Read more: China’s Policy of Industrial Relocation

An idea of “Industrial Relocation” from China’s maturing areas and sectors were in the background. Nine Special Economic Zones (SEZs) were thus conceived as part of the second phase of CPEC from 2016 onwards. These are as under:

  • Rashakai Economic Zone, M-1, Nowshera, KP
  • China Special Economic Zone Dhabeji, Karachi, Sindh
  • Bostan Industrial Zone
  • Allama Iqbal Industrial City (M3), Faisalabad, Punjab
  • ICT Model Industrial Zone, Islamabad
  • Industrial Park, Pakistan Steel Mills Land at Port Qasim near Karachi
  • Special Economic Zone at Mirpur, AJK
  • Mohmand Marble City
  • Moqpondass SEZ Gilgit-Baltistan

So far, the Allama Iqbal Industrial City, being developed by FIEDMC, has become the first such zone to reach the stage of ground-breaking.

This is a significant breakthrough on the part of FIEDMC because Chinese diplomats, government officials, and corporate executives were quietly complaining to the government in Islamabad that Pakistani institutions and businesses are not geared to benefit from large initiatives. A core is an idea of “industrial relocation” from China to key centers in Pakistan.

Given PM Khan’s deep interest in the subject, this ground-breaking of Allama Iqbal Industrial City will increase pressure on the management of the other zones. Especially important in this respect will be the Rashakai Economic Zone (M-1, Nowshera, KP) and China Special Economic Zone Dhabeji, Karachi, Sindh.

FIEDMC benefits from being based in Punjab, which has a GDP that is greater than many countries; it has around 60 percent of the country’s population and largest manufacturing base in the country.

The region also has the highest teledensity in the country at 75 percent, probably the best and most extensive road infrastructure, as well as the highest number of airports in the country.

Read more: PM Imran Khan unleashes a dream: First CPEC SEZ Takes Off!

Faisalabad itself is one of Pakistan’s largest industrial cities, and its third-largest revenue-generating city has, for long to be known as the Manchester of Asia, will soon be known as the Shenzen of this region.

Value Addition City & M3 City

Value Addition City (VAC) was FIEDMC’s first industrial estate completed in 2007 on 225 acres, near Faisalabad. It is located at 1.5 km off from Khurrianwala; located on the Faisalabad – Sheikhupura road and 35 KM from Faisalabad airport. VAC is focused on creating opportunities for the country’s SME sector; small in size; it has small industrial plots up to two acres in size.

M3 Industrial City (Faisalabad Industrial City) is currently Pakistan’s largest industrial estate located on motorway M-4 at Sahianwala Interchange; it is around 32KM away from Faisalabad airport. M3 city has specific areas available for foreign investors and offers plots up to 50 acres.

Several international companies have located themselves in M3 City. The biggest so far is the Hayat Kimya from Turkey, which has invested $150 m in Pakistan, and more is expected. It is the world’s 5th largest branded baby diapers manufacturer, the largest paper tissue manufacturer of the Middle East, Eastern Europe, and Africa.

Hyundai-Nishat from Korea is also based in M3 and announced recently that it is operationally ready to produce up to 15,000 vehicles annually, from its plant. FIEDMC, on its resources, has started to construct a dual carriageway from Sahianwala to Chiniot Road to provide accessible transportation facilities up to the SEZ.

Read more: Pakistan’s Economic Policy for the 2020s

This road project began in December 2019 will be completed by June 2020 and is expected to cost around Rs.340m. The company is also setting up two grid stations having a capacity of 40-megawatt each, which will go some way towards fulfilling the estimated 375 MW required for the SEZ.

Allama Iqbal City (AIIC-I & II)

Allama Iqbal Industrial City had been planned over an area of more than 3200 acres, is strategically located on Motorway M-4 near Sahianwala Interchange, near Faisalabad, opposite the M3 city. As a prioritized CPEC linked SEZ, the project was expedited by all stakeholders.

The government of Punjab provided Rs. 4 billion for the purchase of land, while FIEDMC raised the remaining investment of Rs. 2 billion and 300 million. The federal government has allocated Rs 1.40 billion for the provision of utility service in its 2019-20 budget, while the Punjab government allocated Rs 1.50 billion for the development projects.

Given the popularity of Allama Iqbal Industrial City (AIIC), FIEDMC management decided to launch the project of Allama Iqbal Industrial City Phase II in Toba Tek Singh, which is only 25 to 30 minutes’ drive from the initial AIIC.

2500 acres have been acquired for the second phase, while another 2500 acres will be acquired for future expansion. Resources have started to construct a dual carriageway from Sahianwala to Chiniot Road to provide accessible transportation facilities up to the SEZ.

This road project began in December 2019 will be completed by June 2020 and is expected to cost around Rs.340m. The company is also setting up two grid stations having a capacity of 40-megawatt each, which will go some way towards fulfilling the estimated 375 MW required for the SEZ.

Vision Ahead: Exports, Import Substitution & local supplies

In the Allama Industrial city development, there is a particular focus on setting up companies that will export through a focus on “Made in Pakistan” Brand Establishment or will create products that will allow Import Substitution for existing products.

According to FIEDMC Chairman Mian Kashif Ashfaq, their first preference is to encourage exports-oriented industry to set up in their SEZ; second preference is for import substitution, and the local industry is being placed in the third category of choice.

Read more: FATF: Keeping Pakistan on the Edge!

FIEDMC aims ultimately to develop a state of the art Export Processing Zone (EPZ) on the model of Jabel Ali Free Zone (Jafza) Dubai to meet the needs of the export industry. In this regard, an agreement between FIEDMC and Export Processing Zone Authority is underway.

According to Mian Kashif, Chairman FIEDMC, around 25 to 30 more Chinese companies will ink agreements with FIEDMC to invest in Allama Iqbal Industrial City in the coming months. It is expected that the number of Chinese companies that will invest in this integrated economic zone (M3 & AIIC) will cross 150 by the end of the next year.

FIEDMC

With this goal in mind, FIEDMC has set up a special office in Shanghai where a team consisting of marketing consultants and staff having skills in Chinese language and culture will facilitate Chinese investors.

This FIEDMC team will not only provide the necessary information to those investors who are interested in investing in Allama Iqbal Industrial City but will also facilitate the issuance of visas.

Jabel Ali Free Zone (JAFZA): An inspiration

Jafza, Dubai, is the world’s largest free zone; it is spread over 57 square kilometers on both sides of Sheikh Zayed Road, Dubai, and is accessible via road, and the Danube and UAE Exchange stations of the Dubai Metro Red Line.

More than 7,000 global companies are based in Jafza. This includes approximately 100 of the Fortune Global 500 companies. Jafza accounts for almost 32 percent of total FDI (Foreign Direct Investment) flow into Dubai.

This state of art free zone contributes 21 percent of Dubai’s GDP on a yearly basis and it sustains the employment of more than 144,000 people in the United Arab Emirates. In 2015, Jafza generated trade worth $87.6 billion. FIEDMC’s scope may be limited, but its inspiration for an integrated economic zone (SEZ) is coming from Jafza.

Read more: PTI launches Pakistan’s largest ever skill development program

With this vision and inspiration, FIEDMC intends to create a fully integrated economic zone (connecting its industrial cities) complete with:

  • Integrated Textile Park,
  • Weaving City
  • Furniture City
  • Mini-Airport
  • Expo Centre,
  • Export Processing Zone,
  • Estate for SME units,
  • Mall for branded outlets,
  • Common warehouses for industrial units,
  • Custom Service & Support Centre,
  • Business Centre
  • Technical University,
  • Model Police Stations,
  • Shuttle Trains,
  • Food Courts & Super Market
  • Residential & Recreational Facilities
  • Low Cost Housing Units

GVS Report has presented this as “Master Plan of Special Economic Zone planned by FIEDMC” as a schematic drawing.

In addition, FIEDMC plans to build a new dual carriageway road and a new interchange (Jhumrah Interchange) to connect M3 motorway with the SEZ further facilitating traffic entry and exit from the Zone. As referred to above, the idea is to create a fully integrated economic zone, a state of the art business space to attract investors from all across the world.

Facilities of mini-airport, Expo Centre, Mall for branded outlets, Business Centre, Food Courts, and Super Markets all have been designed to provide inter-connected facilities to the businesses for speedy results on their investments. Shuttle trains, collaborating with Pakistan Railways, are to facilitate the workers that will be coming from surrounding areas in a radius of around 30 km or so.

Of particular interest are the concepts of Furniture City and Weaving City; both are part of the “Industrial Relocation Strategy” of Punjab government that aims to encourage old spinning mills and furniture making units to move out of the inner cities and set up in the special economic zones.

FIEDMC will allocate 200 acres of land to both cities; it intends to provide technical training and support to enhance exports of textile products and furniture. FIEDMC will also ensure the safety of the environment, and in this regard, the World Bank has approved the loan worth Rs 4 billion on soft terms and conditions.

Read more: Implementation of Axle Load Limit Regime: When and How?

FIEDMC and representatives of power looms’ association have negotiated at the initial stage; FIEDMC will also provide a guideline for up-gradation of technology and recommended standard of machinery being used in the power loom sector Integrated Textile Park, complete with Research & Development (R&D) centers, will provide training and knowledge to workers and managers as per the requirements of GSP Plus.

Perhaps the most important aspect is the Technical University and Training Centres. FIEDMC is in touch with both Fauji Foundation of Pakistan and a Chinese University for the development of a Technical University. But it is also in contact with TEVTA (Technical Education Vocational Training Authority Punjab) for training centers to create a skilled workforce.

Training and Development of Labour

International companies are being encouraged to transfer technology as well as skill development for local employees. According to FIEDMC estimates, more than 400,000 trained employees are required for different areas in the three economic zones in the coming four years.

In view of this, FIEDMC is providing 26 acres of land in M3 Industrial city to Fauji Foundation, GIZ, and Punjab Vocational Training Council to set up training centers based on industry requirements. Trainees will be given advance job contracts upon the successful completion of their courses.

FIEDMC will also establish a technical university in its special economic zone, an accord has been signed with Fauji Foundation and a Chinese institution, Tianjin University. Four different courses will initially start soon, also including the Chinese language.

Read more: Why Insurance Industry has not prospered in Pakistan: CEO UBL Insurers

FIEDMC will provide 22-acre land to the Fauji Foundation for the establishment of the university in the opposite of the main gate of M-3, and the building of this university will be completed within one and a half years. Tianjin University will provide technical assistance for setting up of different departments besides tailoring courses.

FIEDMC has decided to give jobs to local inhabitants on a priority basis, and 25 percent quota has been assigned for their jobs. According to the FIEDMC estimate, about 70,000 people would be able to get jobs by the end of this year, while 20,000 local people who have the skill of spoken Chinese language would be absorbed during the first year.

Najma Minhas is Managing Editor, Global Village Space. She has worked with National Economic Research Associates (NERA) in New York, Lehman Brothers in London and Standard Chartered Bank in Pakistan. Before launching GVS, she worked as a consultant with World Bank, USAID and FES and is a regular participant of Salzburg Forum. Najma studied economics at the London School of Economics and International Relations at Columbia University, NewYork. she tweets at @MinhasNajma

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