Cabinet body seeks relaxation in export policy

ISLAMABAD:

As an uncertain policy for Gwadar Free Zone has marred the investment environment, the Cabinet Committee on Chinese Investment Projects (CCOCIP) is seeking exemption from the import and export policy order to facilitate investors in making shipments to overseas markets.

Sources told The Express Tribune that an investor set up a fertiliser plant in Gwadar Free Zone but he was unable to export its product due to a ban in place. The cabinet body, which took up the matter in a recent meeting, was informed about the investor who established a potassium sulphate fertiliser plant in Gwadar Free Zone but could not export its final product due to the restriction on fertiliser exports under the Export Policy Order 2022.

To enhance attractiveness of the free zone as an export-oriented industrial area, the cabinet committee suggested that there should be exemption from certain provisions of the Import/Export Policy Order.

It was highlighted that rules for the free zone should align with those of the regional free zones such as in the United Arab Emirates (UAE), Iran and Oman.

During discussions, the cabinet committee inquired about the definition of free zone and its differences from the Export Promotion Zone and Export Processing Zone. However, no clear definition or associated concessions were available.

It was emphasised that the Ministry of Maritime Affairs must come up with a clear definition and associated concessions for the free zone in the next cabinet committee meeting, after consultation with the Commerce Division, Federal Board of Revenue (FBR) and other relevant agencies.

CCOCIP was briefed that in September 2023 the Ministry of Commerce introduced a policy requiring special permission, including a bank guarantee, for importing bulk cargo, such as that of di-ammonium phosphate (DAP) fertiliser, for Afghan transit trade at Gwadar Port.

The policy negatively impacted transit trade at the port. Consequently, China Overseas Port Holdings Company (COPHC) requested the Ministry of Commerce to replace the requirement of bank guarantee with an insurance guarantee to facilitate smooth trade operations.

The cabinet body observed that the issue was also linked with the definition of Gwadar Free Zone and associated concessions, which must be clarified before making any decision.

The forum directed the Commerce Division to submit a summary to the CCOCIP, after consultation with the Finance Division, State Bank of Pakistan (SBP), Ministry of Maritime Affairs and FBR.

The cabinet body was briefed that Rashakai SEZ, a prioritised special zone under the China-Pakistan Economic Corridor (CPEC), applied for the grant of electricity distribution and supply licences from the National Electric Power Regulatory Authority (Nepra) in November 2022. However, the decision had been pending with the authority as it awaited confirmation from the Power Division of the source of power supply, either from the Central Power Purchasing Agency-Guarantee (CPPA-G) or Peshawar Electric Supply Company (Pesco).

During a meeting chaired by the minister for planning, development and special initiatives on August 21, 2024, it had been decided that the Power Division would finalise the policy decision within five days for a permanent solution to the electricity provision request.

Additionally, the Power Division was tasked with holding a meeting with the developer of Rashakai SEZ – China Road and Bridge Corporation (CRBC) – and Pesco to immediately energise the internal network of Rashakai zone as an interim measure.

The forum was informed that, during a CPEC progress review meeting held on September 11, 2024, the planning minister expressed serious displeasure over delay in implementing the previous decision.

The Power Division was directed to finalise the policy decision within three days and instruct Pesco to immediately energise the internal network of Rashakai SEZ for supplying electricity to the industrial units.