ISLAMABAD, Dec. 02 (INP-WealthPK)–Pakistan has announced a number of unprecedented incentives to attract foreign investment to the Gwadar Free Trade Zone, WealthPK reports.
The incentives include the provision of full ownership to foreign investors in certain sectors of the zone, tax holidays for businesses related to the zone for 23 years, the availability of land and plots on a 99-year lease and the exemption of investors from sales tax.
Policymakers and economic experts believe that such unprecedented incentives will attract local as well as foreign investors in a large number.
“Pakistan has introduced liberal policies for investment in all sectors of the economy. The country has a unique geo-strategic position, high-skilled workforce and significant growth potential,” an official of the Board of Investment (BoI) told WealthPK.
He said that the government has launched several schemes to set up special economic zones, special technology zones, export processing zones, and the Gwadar Free Zone to attract investors. He said that the schemes would provide better chances of investment to the business community.
Foreign investors are offered full ownership in the Gwadar Free Zone. The Investment Policy of Pakistan, 2013, allows ownership rights to foreign investors except in certain sectors including airline, banking, agriculture and media.
The free trade zone also offers a 23-year income tax holiday to operators, contractors, subcontractors, lenders and investors. No sales tax is applicable on supplies of materials, equipment, plant and machinery for the zone. The vehicles for specific companies related to the zone have also been exempted from the tax.
Subject to certain conditions, custom duty has been waived on the import of some items meant for the construction, development and operations of the free trade zone.
Investors are also provided with plots at the Gwadar Free Zone on lease for a period of 99 years.
Ijaz Ali, a research associate at the Centre for Business and Economic Research, told WealthPK that Pakistan needs to evaluate high-quality investments that provide access to the market besides the promotion of technology and enhancing capabilities for the economic transformation of the targeted sectors.
He said that the government needs to remove generic and longstanding weaknesses in the investment climate that affects foreign and domestic investors alike. “Investment in the special economic zones, even if they function well, should not be the end goal of the policy, rather it should be considered a component of a broader industrial policy,” he added.
He told WealthPK that the government should reform its tax policies to encourage foreign direct investment as countries with complex and difficult tax policies face difficulties in meeting their economic objectives.
