Minister of State and Chairman Federal Board of Investment (BoI), Dr. Miftah Ismail has announced tax exemption for companies planning to invest in Special Economic Zones (SEZs). According to this decision – likely to have a mammoth impact upon the business industry, all local and international companies who invest finances in establishing industries in these zones, can avail this facility.
While addressing a gathering of business professionals at the office of Chamber of Commerce and industry, Dr. Miftah stated that the government is planning to provide some tax rebates to China, under the Pak-China Free Trade Agreement. Some of these measures are certain to boost exports to China which currently amount to a meager PKR 2 billion while imports stand at a staggering figure of PKR 18 billion.
Also Read: Business benefits as agreement against double taxation signed between Pakistan and Hong Kong
BoI is Restricting Double Taxation and Encouraging Ease of Doing Business
BoI is currently in talks with the Federal government that provinces should not charge double taxation from investors. This will discourage them from investing their money in establishing a business. Additionally, the government is expected to reduce the number of taxes in the upcoming budget. Investors who plan to establish textile units in Pakistan before June 2020 will also be given special tax incentives.
Giving an example of Bangladesh, the Chairman said that their government only takes 60 days to allow a new investor to set up a business including all the utility connections and relevant processes. The same process takes more than 180 days in Pakistan. Thus, it is highly significant for the government to reduce these hindrances in order to attract more local and foreign investors.
On the other hand, Cambodian economy has promised to facilitate the necessary procedures of doing business for Pakistani investors within 2 days.
Quick Read: Effects and influences of the withholding tax
He also shed some light on the China-Pakistan Economic Corridor stating that this project will change the fate of Pakistan’s economy in future. Out of the $52 billion investment, $34 billion have been allocated for just power plants. This reflects upon the special emphasis given to uplift this sector. Overall, 5 power plants will be established in Punjab alone.
Another speaker at the event, FPCCI Regional Chairman and Vice President – Manzoor ul Haq Malik, said that flexible trade policies should be adopted by the government to encourage exports. Adding further, he stated that advanced taxation on imported material should be eliminated and liquidity issues should be resolved.
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samir sardana
14/08/2020 at 10:53 am
Surely the good Pakistanis will save themselves from the disasters of the Indian SEZ policy
In the COVID and POST-COVID world,when the USA and the EU govtt and private entities,are looking to relocate their supply chains,to India and South East Asia, and insulating themselves from supply chain and logistics shocks,in each host nation – what value can the Indian SEZs provide ?
The Indian SEZ Policy is doomed ! dindooohindoo
• How can an investor invest in a SEZ in India,unless it is benchmarked with the world and with Indian SEZs, on operations, costs,efficiencies,tax.FDI/FX,Power Cost,Infra facilities,Port Faciliies,DTA Risk,Political Risk,Geo Political Risk (as in Chabhar) etc
• How can a SEZ be sure that, it is getting the maximum profits,lowest costs, nil fraud and providing the maximum efficiencies to its units – unless there is a comprehensive audit of all aspecrs of operations,as stated in the RTI Application requirement ?
• If a Pharma exporter in the PRC wishes to relocate to an Indian SEZ – he would want to know the best SEZ for the same and the reasons for the same.
o Besides benchmarking,if the SEZ or the GOI does not have this basic information – in terms of broad SEZ financials – why will the investors come to India to invest in SEZs
• If the SEZ has no records of the financial performance of the SEZ units – how will the SEZ and the developers etc., innovate to improve the performance,efficiency and profitability of the SEZs
• If the SEZ or the GOI has no data on Raids or Criminal Prosecutions of Units – how will an overseas investor be convinced, that he is entering into a safe regulatory environ.In addition,how will the public be satisfied,that sufficient supervision,regulation and control is being exercised,on the SEZ units,by the State ?
• If the SEZ of the GOI, is not aware of the profits and financials of the developers of the SEZs,and if the developers are making losses – it would mean that the State has no clue of the nature,extent and reasons of the said losses.
o In such an event – HOW WILL THE GOI ATTRACT FOREIGN DEVELOPERS AND FOREIGN INVESTORS, IN SEZs AND SEZ UNITS ?
o IF A DEVELOPER IS MAKING LOSSES OR NOT MAKING A FAIR PROFIT – WHAT SERVICE WILL BE PROVIDED TO THE SEZ UNITS – and will an entity invest in any UNIT, in such a SEZ ?
• Why are there non-Operational SEZ units in a SEZ ? Why does the SEZ not have this data ?
o How can the SEZ or the State be sure that, it has the right policies and rules and incentives, unless it had the said data, and the reasons for the said units.
o A Non-Operational unit is a failure of GOI Policy,loss of national resources,loss of bank funds,defaults in EU and violation of indemnities and guarantees by the SEZ units
• Why does the SEZ or the GOI,not have the data w.r.t SEZ units in terms of service supporters,such as Hotels,Banks and other facilities in a SEZ ?
o Why will any overseas investor,invest in such facilities – unless he has that data ?
o If the GOI does not have the said data – how can the GOI be sure,that their policies and incentives are working,as also, to innovate to improve the peformance of these service supporters ?
• How will India attract investments and COVID SUPPLY CHAIN RELOCATIONS INTO ASIA AND INDIA – if the PRC/Nippon/ Korea/Malaysia/GCC or other EU nations,invest in SEZs as developers in LDCs – which also provide Duty Free Access into USA/EU, from those LDC-SEZs,which will be staffed and operated across the SEZ value chain by Chinese//Nipponese/Koreans/ Malaysians ?
o Take the example of CPEC by PRC in Pakistan,an LDC,as an example.
o Why will any supply chain relocate to India, in an export led venture, if such BASIC DATA IS NOT IN THE PUBLIC DOMAIN.
o NO ONE HAS THE TIME OR MONEY TO WASTE ON CONSULTANTS , OR VISITS TO HOST NATIONS, TO ACCESS THE ABOVESAID INFORMATION.
o There is not a single link on the SEZ portal,as to why an investment in a SECTOR ,IN A UNIT IN THEIR SEZ , FOR EXPORT TO A PARTICULAR GEOOGRAPHY , IS THE BEST ,IF INVESTED AND EXPORTED, VIA THE SEZ – ALONGWITH SUCCESS STORIES.
o WHO WILL RISK AN INVESTMENT,IN SUCH A PROJECT OR A NATION
• IF MAHARASHTRA HAS 10 MILLION CASES,OF COVID BY FEBRUARY 2021 – WHAT IS THE PLAN OF THE GOI FOR THE LOGISTICS RISK FOR SUPPLIES FROM DTA TO THE SEEPZ (IGNORING SUPPLIES FROM SEEPZ TO THE DTA) ?
• ASSUMING A COAL POWER PLANT FEEDING THE SEEPZ – IF IMPORTED COAL IS STOPPED POST COVID FROM LOAD PORTS – WHAT IS THE ALTERNATIVE TO SUPPLY POWER TO THE PORT AND THE SEZs.
o If such Risk assessment is STILL not on the SEZ portals – why will any one invest in any Indian SEZ ?
• IF THE SEZ DOES NOT HAVE THE ABOVESAID INFORMATION,DOES NO ANALYSIS TO IMPROVE THE EFFICIENCY AND PERFORMANCE OF THE SEZ UNITS,DEVELOPERS,SERVICE SUPPORTERS,INFRA FACILITATORS ETC., AND IS ALSO, NOT INVESTED, IN THE VALUE CHAIN – THEN WHAT IS THE STAKE OF THE GOI OR SEZ , IN THE SAID FACILITY,AND WHY WILL ANY FOREIGN ENTITY, INVEST IN SUCH A SEZ ,AND WHY WILL ANY SUPPLY CHAIN, RELOCATE TO SUCH AN SEZ ?