Spe­cial Eco­nomic Zones Bill 2011

Enterprise - - 19 -

Fol­low­ing the rapid eco­nomic growth ra­tio­nale of In­dia and China in terms of cre­at­ing spe­cial eco­nomic zones, the Spe­cial Eco­nomic Zones (SEZS) Bill 2011, passed by the Se­nate Stand­ing Com­mit­tee on Law, Jus­tice, Hu­man Rights and Par­lia­men­tary Af­fairs, lays down a pol­icy frame­work for en­cour­ag­ing the es­tab­lish­ment of SEZS to at­tract both do­mes­tic and for­eign in­vestors in Pak­istan. The new law will bring about con­sis­tency in gov­ern­ment poli­cies, al­low­ing in­vestors to work with­out any ap­pre­hen­sions of sud­den changes or with­drawal of in­cen­tives given to them in the SEZS.

Now SEZS can be set up by the fed­eral gov­ern­ment or any pro­vin­cial gov­ern­ment or by a pri­vate de­vel­oper. The fed­eral and pro­vin­cial gov­ern­ments can also set up SEZS in col­lab­o­ra­tion with pri­vate de­vel­op­ers. The ex­ist­ing in­dus­trial es­tates and zones in the coun­try can also qual­ify for SEZ sta­tus sub­ject to ful­fill­ment of cri­te­ria men­tioned in the law.

SEZS are ex­pected to re­duce the ris­ing cost of do­ing busi­ness in the coun­try and pro­vide one-win­dow fa­cil­ity to en­trepreneurs. The pur­pose is to im­prove ef­fi­ciency and com­pet­i­tive­ness of the in­dus­try in ques­tion by cre­at­ing in­dus­trial clus­ters of big projects where the gov­ern­ment is com­mit­ted to pro­vid­ing in­fra­struc­tures at the doorstep of the SEZS.

The law re­quires the for­ma­tion of a Board of Ap­provals (BOA) to be chaired by the prime min­is­ter and an Ap­provals Com­mit­tee to be headed by the BOI chair­man for final ap­proval of the de­vel­op­ment agree­ments for set­ting up SEZS. The prov­inces will be re­quired to set up SEZ au­thor­i­ties to ap­prove and se­lect zone de­vel­op­ers for con­sid­er­a­tion of the BOA. The BOI will be the sec­re­tariat for the BOA and will ex­tend full sup­port and fa­cil­i­ta­tion to pro­vin­cial SEZ au­thor­i­ties, in­clud­ing FATA SEZ Au­thor­ity.

The bill al­lows set­ting up of SEZS any­where in the coun­try over a min­i­mum area of 50 acres. There are sev­eral in­cen­tives for the de­vel­op­ers of SEZS and en­trepreneurs set­ting up in­dus­tries in the zones. De­vel­op­ers will get a one-time ex­emp­tion from cus­toms du­ties and taxes for all cap­i­tal goods im­ported into Pak­istan for the de­vel­op­ment and op­er­a­tion of SEZS. A 10-year tax ex­emp­tion for both SEZ de­vel­op­ers and en­trepreneurs will also be pro­vided un­der the law. Ar­eas to be Ad­dressed The fol­low­ing are the sec­tions that must be fully de­vel­oped for a com­plete set of SEZ Rules and Reg­u­la­tions.

1. Or­ga­ni­za­tion and rules of pro­ce­dure of Board of Ap­provals

The mem­ber­ship and key rules for meet­ings and quo­rum are pro­vided by the SEZ Act.

2. Or­ga­ni­za­tion and rules of pro­ce­dure for other SEZ bod­ies

The SEZ Act pro­vides for the cre­ation of ad­di­tional gov­ern­ing bod­ies of the Ap­provals Com­mit­tee and Pro­vin­cial SEZ Au­thor­i­ties. 3. Def­i­ni­tions of SEZS The “Def­i­ni­tions” sec­tion of the SEZ Act men­tion clas­si­fi­ca­tions of zones such as Ex­port Pro­cess­ing Zones, Free Trade Zones, Re­con­struc­tion Op­por­tu­nity Zones, and Re­gional De­vel­op­ment Zones and give them loose def­i­ni­tions. The only clas­si­fi­ca­tion that has any ex­ist­ing le­gal frame­work is the EPZ (EPZ Au­thor­ity Or­di­nance 1980). 4. Qual­i­fi­ca­tions for SEZ sta­tus For the ba­sic SEZ, the SEZ Act out­lines re­quire­ments that each must meet to qual­ify. These re­quire­ments in­clude min­i­mum land area, max­i­mum pro­por­tion of non-pro­cess­ing area, and land al­lo­ca­tion pol­icy. Ad­di­tional cri­te­ria that the Board should in­clude in the SEZ Rules and Reg­u­la­tions would be spe­cific in­fra­struc­ture stan­dards, mea­sure­ments for fea­si­bil­ity, and gov­er­nance stan­dards. 5. Ap­provals Process for SEZS The ap­provals process needs to be de­fined in the fol­low­ing ways: • Who may ap­ply • Pre­req­ui­sites for ap­ply­ing • Re­quired con­tents of zone ap­pli­ca­tions – these should mir­ror the zone cri­te­ria so that ap­pli­ca­tions clearly ad­dress the is­sues that they will be eval­u­ated un­der o Forms/ tem­plates for ap­pli­ca­tions

• Eval­u­a­tion cri­te­ria to be used by Au­thor­ity and Board – these should be as quan­ti­ta­tive as pos­si­ble, most likely with a scor­ing and weight­ing method­ol­ogy that is stan­dard­ized

• Process for re­ceiv­ing and dis­sem­i­nat­ing pro­pos­als in the Pro­vin­cial SEZ Au­thor­i­ties

• Process for the Pro­vin­cial SEZ Au­thor­i­ties to re­view the ap­pli­ca­tions o Tim­ing for re­view and decision Process for for­ward­ing decision to Board • Process for Board of Ap­provals to re­view ap­pli­ca­tions o Tim­ing for re­view and decision

Del­e­ga­tion of re­spon­si­bil­i­ties be­tween mem­bers • Public com­ment pe­riod (if re­quired) • Process for no­ti­fi­ca­tion of ap­proval • Process for giv­ing con­di­tional ap­provals and re­quests for mod­i­fi­ca­tions • Process for re­ject­ing ap­pli­ca­tions 6. De­vel­oper Agree­ments The SEZ Act spec­i­fies that each SEZ must have a De­vel­oper Agree­ment that would be signed be­tween the Board and the de­vel­oper

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