Karachi Export Processing Zone Pakistan

Economic Review, July 1996 | Go to article overview

Karachi Export Processing Zone Pakistan


Pakistan Excellent Investment Environment

Pakistan, a land of many splendours and opportunities, has a population of more than 120 million industrious, enterprising and hospitable people. Flanked by Iran and landlocked Afghanistan in the west, Central Asian republics and china in the north and Gulf states just across the Arabian Sea in the south, Pakistan is strategically located for easy and convenient access to a vast market. The current government policy of deregulation, privatisation and liberalisation of economy has resulted in immense opportunities for foreign investors and has had a positive impact on the investment climate in the country.

Export Processing Zones Authority (EPZA)

Government of Pakistan attaches great importance to the role of foreign investment in accelerating the pace of industrial development in Pakistan. With this object in view, the government promulgated an Ordinance in 1980 establishing the Export Processing Zones Authority with the mandate to plan, develop and operate Export Processing Zones in Pakistan.

Karachi Export Processing Zone (KEPZ)

KEPZ is the first Zone established by EPZA. The Zone will cover an area of approx. 500 acres. The first phase consisting of 200 acres has been fully developed and many industries have already been set up. KEPZ is located adjacent to the Landhi Industrial Trading Estate Extension within a distance of 10 km from the modern Quaid-i-Azam International Airport and 30 km from the highly modernised and developed Karachi Sea Port. The Zone is linked to the National Highway network. It offers effective and convenient approach to the markets of the Gulf, the Middle East, Far East, Africa, Europe, America and yet to be explored Central Asian Republics by sea, air and land.

Eligible Investors

1. A foreigner/foreign company up to 100 per cent.

2. Non-resident Pakistani up to 100 per cent.

3. Resident Pakistanis can invest up to 100 per cent from their own foreign exchange resources. Even if they arrange 60 per cent foreign exchange from their own resources, foreign exchange cover to 40 per cent local currency would be provided by State Bank of Pakistan.

4. Any joint venture between the above in any proportion.

Mode of Investment

1. All investment in the Zone shall be made in convertible Foreign Currencies.

2. Investors have the option to establish public or private limited companies or sole proprietorships or partnership concerns.

Facilities and Incentives

1. One window service and simplified procedure. The investor has only to fill in a simple application form, and submit the same to EPZA along with non-refundable security fee of US$250/-. EPZA processes the application expenditously and the investor is kept informed about its progress. A special feature of the Zone is that Investors have to deal with only one agency, namely, EPZA, during pre-investment, construction and production stages of their industries.

2. All infrastructure facilities like water, electricity, gas, telex, telephone are provided in the Zone by EPZA.

3. Import permits and export authorisations are issued within 24 hours by KEPZ. There is no fee for an import permit. Export authorisation is issued on payment of a development surcharge of 1 per cent on the FOB value of exports.

4. Production-oriented Labour Laws framed by EPZA are applicable in the Zone. Formation of any labour union and strike in the KEPZ is prohibited. EPZA is vested with responsibility to administer labour matters for all enterprises in the Zone.

5. Inexpensive labour available in abundance.

Incentives offered by EPZA at a glance

1. Exemption from federal, provincial and local taxes; any foreign exchange control and insurance regulations as applicable in Pakistan.

2. Tax holiday up to the year 2000 AD, thereafter 25 per cent in perpetuity.

3. Income chargeable under the head "Capital gains" is exempted from tax.

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