SEZ at Rashakai under CPEC hits Snags

ISLAMABAD: The maiden Special Economic Zone (SEZ) at Rashakai under China Pakistan Economic Corridor (CPEC) has hit snags as KP government proposed a fee of $700,000 per annum from day one from Chinese contracting firm CRBC that created a stumbling block in the way of the signing concession agreement.

Official documents and top officials told The News on Sunday that the KP government acquired 1000 acres of land for Rashakai Economic Zone for the first phase and process was underway to acquire 2000 acres more to expand it for next phases.

Sindh government adopted the path of open bidding for hiring a firm to develop its economic zone at Dhabeji but the KP government preferred to go for G2G (Govt to Govt) agreement in order to avoid open bidding under the requirement of PPRA rules with the argument to save the time.

The Khyber Pakhtunkhwa Economic Zone Development and Management Company has established Rashakai economic zone in district Mardan which is 57km away from Peshawar airport, 1584km away from seaport of Karachi, 10km away from railway station, 19km away from dry port, 4km away from motorway at Col Sher Khan interchange at Motorway, 13km away from highway and 13.6km away from city center.

The SEZ is equipped with electricity provision, boundary wall, water availability, and all other provincial utilities. It will be able to locate industries like fruits, food processing, textile stitching, kitting etc.

Although, Pakistan and China had signed Memorandum of Understanding (MoU) for industrial cooperation on eve of last JCC meeting held at Beijing a few weeks back, the critical part of establishing SEZ in a timely and smooth manner was facing problems on the ground.

The establishment of SEZ with successful model and relocation of industries from China will be the most critical part for Pakistan’s economy in the wake of dwindling exports and capability of the country to generate the required exportable surplus to come out from the existing economic morass.

The Board of Investment (BOI) had granted conditional approval to KP government for finalizing concession and development agreement with Chinese partner till December 31, 2018, but now the deadline expired without finalization of this agreement.

“The Joint Cooperation Committee (JCC) between Pakistan and China under CPEC has instructed both sides to finalise all procedures till first quarter of this calendar year because success of this SEZ will set the benchmark for remaining 8 SEZs in other parts of the country,” top official sources confirmed to The News here on Sunday.

In a meeting held at Planning Commission prior to JCC meeting, heated debate occurred among the participants of the Planning Commission, Board of Investment and KP government where the BOI and KP government unanimously argued that SEZ must be devised in such a way that protected the interest of the country for longer period because this SEZ would set the tone and criteria for remaining zones for remaining phases.

Pakistan’s experience for establishing SEZs in the past had met with failure by and large because these SEZs became a hot potato in terms of selling plots after provision of basic utilities.

Now the upcoming SEZs should be developed for the purpose of industrialization instead of selling plots of real estates.

One top official of Planning Commission said that Gwadar economic zone was developed with a ratio of 85:15 ratios between Chinese and local partner so any mechanism acceptable to both parties could be devised for moving ahead.

Pakistan and China have also decided for establishing IT based SEZ in the federal capital so on this both sides could move ahead at much-accelerated pace, added the official.

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