SEZs sit idle as business leaders demand overhaul

The export-oriented economic zones of Pakistan, long touted as engines of industrial growth, remain largely underutilised and business leaders now say the government's window to fix that is closing fast.

With regional competitors pulling ahead in attracting export-driven investment, the Pakistan Industrial and Traders Association Front (PIAF) has issued a call for sweeping reforms at the Special Economic Zones (SEZs) and the Export Processing Zones (EPZs), warning that without a stable and predictable policy framework, Pakistan risks losing billions of dollars in potential foreign and domestic investment.

The demand comes at a time when the government continues negotiations with international financial institutions over its tax regime, including incentive structures that industry groups argue are essential to keep export-linked sectors competitive.

PIAF Chairman Syed Mahmood Ghaznavi said the zones had underperformed for years despite their potential and piecemeal fixes would no longer be sufficient. "These zones were designed to be the backbone of our industrial and export growth, but bureaucratic delays, energy shortages and inconsistent policies have kept them from realising that potential," Ghaznavi said. "What we need now is a long-term, unwavering commitment from the state, not another temporary incentive package that gets rolled back in two years."

Industry leaders argue that tax incentives, while important, should not be treated as blanket exemptions. Instead, they want relief tied directly to measurable outcomes such as fresh investment inflows, export volumes, job creation and local value addition, a shift they say would make the incentive regime both fiscally sustainable and more attractive to reform-minded lenders such as the International Monetary Fund.

Pakistan's exports have hovered around $30 billion annually in recent years, trailing far behind regional peers despite a comparable industrial base. India's SEZs alone account for exports worth well over $185 billion this fiscal year, while Bangladesh's export processing zones have helped its garment sector become a global powerhouse, contributing more than 80% of the country's total export earnings.

PIAF leaders point to that gap as evidence of what effective zone management, reliable utilities and streamlined customs procedures can achieve when paired with consistent government backing.

Business owners operating within Pakistan's zones have long complained of a different reality on the ground and that is overlapping approvals, unreliable power and gas supply, and customs processes that can take weeks rather than days. The PIAF leadership argues that a genuine one-window operation, where investors can secure permits, utility connections and regulatory clearances through a single authority, would remove one of the biggest deterrents to setting up new industrial units.

An exporter with operations inside one of Punjab's industrial zones, speaking on condition of anonymity, described the frustration many businesses face. "We were promised uninterrupted power and fast-track customs clearance when we set up our business here," the exporter said. "Instead, we spend more time chasing paperwork than actually producing. If the government wants investment, it needs to make the system work, not just announce new tax breaks every budget cycle."

Different businessmen and groups are now pressing the government to treat SEZ and EPZ reforms as a long-term national priority rather than a bargaining chip in periodic fiscal negotiations. They argue that predictability, not generosity, is what ultimately drives investment decisions and that investors, both local and foreign, need assurance that today's incentive framework will hold five or ten years from now.