CPEC DG yet to start working
A dormant CPEC Directorate General is not the only hurdle in making SEZs operational. Pakistani authorities also could not address other issues, including the lack of consistency in taxation policies. photo: file
Pakistan, which was eyeing $10 billion Chinese investment and 420,000 new jobs in just four Special Economic Zones (SEZs), could not make the Directorate General of China-Pakistan Economic Corridor (CPEC) operational for swift handling of cargoes as 400 positions could not be filled in the body.
Despite creating a legal provision to set up the directorate four years ago, the last government of prime minister Imran Khan could not provide the required human resources to make the department operational due to internal rifts and usual bureaucratic inefficiencies.
Official record showed that the last government did not create 404 human resources positions, including the head of the new department, in the past four years. The file work to create these positions began in 2020 when the Federal Board of Revenue (FBR) requested the Establishment Division to sanction 719 posts.
However, the Establishment Division, after delaying the process for almost a year, sanctioned 404 positions in October last year, according to the documents. But these positions could not be created as the file remains stuck at the desk of FBR chairman, according to sources.
The FBR chairman never forwarded the file to the Ministry of Finance for further processing, said the sources. The delay in making the directorate operational, which had been planned as a ‘uniform enforcement’ arm of Pakistan Customs, highlights the indifference of bureaucracy that has contributed to keeping the country underdeveloped.
FBR spokesman’s version was awaited till the filing of the story. Former PM Imran Khan had directed to make the one-window service portal for the CPEC SEZs operational aimed at ensuring unhindered operation of these zones including the industries being set up there.
The PML-N government had created the enabling legal provisions for setting up a fully dedicated Directorate General of CPEC through the Finance Act 2018. The various areas in which the directorate general was supposed to play a role included the resolution of issues of industries working in SEZs, business process re-engineering, and development of an end-to-end automated clearance system for CPEC cargoes that integrates all stakeholders, such as government departments, traders, clearing agents, transporters, central and commercial banks, according to the FBR’s office memorandum.
The Directorate General of CPEC would develop and implement a holistic trade, transit and multi-model monitoring system that will track cargo under CPEC, thus greatly expediting the Customs process, monitoring cross-border movement of CPEC cargo and curbing illegal trading practices, it added.
The Directorate General was also required to develop an electronic data interchange to facilitate the timely and accurate exchange of information to properly monitor the progress of various projects. The Directorate General was supposed to be a uniform enforcement arm of Pakistan Customs. In September last year, the FBR noted that full operationalisation of all nine CPEC SEZs first required operationalisation of the CPEC Directorate.Under CPEC, Pakistan had requested China to set up at least nine SEZs, which would usher in second phase of industrialisation in Pakistan. However, both sides had agreed to first make four zones operational.
The CPEC Authority has estimated investment in the four zones – Rashakai in Khyber-Pakhtunkhwa, Allama Iqbal Zone in Punjab, Dhabeji in Sindh and Bostan in Balochistan – at $10.3 billion. This investment will create at least 420,000 jobs, according to government estimates.
A dormant CPEC Directorate General is not the only hurdle in making these zones operational. Pakistani authorities also could not address other issues, including the lack of consistency in taxation policies. A senior FBR official said that in the absence of the Directorate General of CPEC, the Customs Department could not efficiently handle the CPEC cargo.
The establishment of SEZs has already been delayed by almost four years against the original schedule.
The Rashakai zone will be developed in three phases by 2025. Electricity and gas services are being provided.
Bostan zone’s first phase of 200 acres is being developed and so far 19 industrial plots have been allotted. But gas and electricity projects are still in the implementation phase. The development work on the Allama Iqbal zone started in January 2020 but progress has remained slow. The zone is expected to be completed by 2024.
Short-term electricity and gas connections have been provided by Fesco and SNGPL but internal gas and electricity networks are yet to be developed by the zone authority.
Similarly, the Dhabeji zone is also falling behind schedule. Its concession agreement was signed in February 2022 and the zone will not be ready before 2027.
Published in The Express Tribune, April 26th, 2022.
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