Can SEZ Industrial Parks Help Pakistan Become an Export Powerhouse?

by Riaz Haq

Feb 23, 2021

Asian Tigers built their strong economies by becoming export powerhouses. China has done so in more recent decades.  How can Pakistan do the same? An answer to this question came this week from Karen Chen of China's Challenge Apparel. Here's what she said as reported by Dawn News:

“Chinese want to shift their business to a place where they can set up their operations in 3-6 months. You know when you go overseas to invest even in Africa they have industrial parks ready. You just go there and enjoy the ‘plug-and-play’ facility. No firm wants to waste two years in acquiring land and another couple of years in securing utilities to start operations. By the time you get utilities the opportunity is gone and you are already out of business. This is the biggest problem in Pakistan.”

Pakistan Industrial Development Corporation Building in Karachi

Pakistan was the original "Asian Tiger" back in the 1960s when other developing Asian economies sought to emulate Pakistan. It became an export powerhouse in the 1960s when the country's manufactured exports exceeded those of Thailand, Malaysia and Indonesia combined.  The creation of major industrial estates in Karachi under President Ayub Khan's industrial policy incentivized industrial production and exports of value added manufactured products such as textiles. Now the country's industrial output lags its neighbors'. 
History of Pakistan's Manufactured Exports

With Chinese looking to relocate some of their industrial production to low-cost countries, Pakistan has a golden opportunity to grow its industrial output and exports again. Here's Karen Chen explaining why:
“Vietnam is too crowded already and moved into automobiles and electronics. There is no space for investment in Vietnam. Myanmar doesn’t have infrastructure. India is terrible. In Bangladesh you don’t have right conditions for setting up fabric units. So Pakistan is the ideal location for such garment manufacturing because of abundance of cheaper labour. The investment and tax policies for SEZs and new projects are also good. We’ve confidence to be at here.”
Seizing the opportunity to attract export-oriented investors will help Pakistan avoid recurring balance-of-payments crises that have forced the nation to seek IMF bailouts with all their tough conditions. Focusing on "Plug and Play" Special Economic Zones (SEZs) is going to be essential to achieve this objective.
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  • Riaz Haq

    CPEC special economic zones to generate huge job opportunities in Pakistan: official

    https://english.news.cn/20221215/e0172b03c8b5487d806730149fd7b5fb/c...

    Four special economic zones (SEZs) being set up under the framework of the China-Pakistan Economic Corridor (CPEC) are likely to generate about 575,000 direct and over 1 million indirect jobs in Pakistan, a senior official said on Thursday.

    The economic zones being established in the country's Khyber Pakhtunkhwa (KP), Punjab, Sindh and Balochistan provinces would bring about immense opportunities for Pakistani people in job and business sectors, Chairman of Special Economic Zones Authority S.M. Naveed said.

    "We have conducted a study to assess job opportunities in four out of nine SEZs, including KP's Rashakai, Sindh's Dhabeji, Punjab's Allama Iqbal and Balochistan's Bostan, to find out potential jobs and industries in the SEZs," the official said, adding that the SEZs offer employment in different fields for which the local youth would be trained before the initiation of the industrial phase.

    The trained and skilled labor and engineers would not only get good jobs in the economic zones but also enable Chinese and local companies to recruit skilled professionals from local areas, he added.

    The potential industries being set up in the CPEC special economic zones include food processing, cooking oil, ceramics, gems and jewelry, marble, minerals, agriculture machinery, iron and steel, motorbike assembling, electrical appliances and automobiles.

    Launched in 2013, CPEC is a corridor linking Pakistan's Gwadar Port with Kashgar in northwest China's Xinjiang Uygur Autonomous Region, which highlights energy, transport and industrial cooperation. ■

    Dec 15, 2022

  • Riaz Haq

    KP takes lead by completing first CPEC originated project

    https://dailytimes.com.pk/1114618/kp-takes-lead-by-completing-first...

    Khyber Pakhtunkhwa Economic Zones Development and Management Company (KP-EZDMC), a public sector company of the KP government, has taken the lead by completing the first phase of the China-Pakistan Economic Corridor (CPEC) flag-bearer Rashakai Special Economic Zone (SEZ), at District Nowshera.


    Talking to APP here Sunday, the Chief Executive Officer (CEO) Javed Iqbal Khattak said that the completion of the first phase of the Rashakai SEZ comprising three phases and covering an area of 247 acres, was due in December 2023, but due to better teamwork and coordination with China Road and Bridge Company (CRBC,) it had been completed six months prior of its specified time period. The Rashakai SEZ is the first completed project initiated under CPEC in Pakistan. This marvelous performance shown by a public sector company of Khyber Pakhtunkhwa has given an edge to the province over other provinces of the country.

    So far, an investment to the tone of Rs.85 billion has already been made in the zone and besides, Chinese several domestic big industrial groups are also investing in it, he said. The investors are going to set up units for manufacturing Active Pharmaceutical Ingredients (APIs) a raw material for the pharmaceutical industrial units while another investor has also shown interest in establishing a vaccine manufacturing unit in the zone while Pakistan Oxygen, a largest oxygen manufacturing unit has already invested in the Zone.

    The current innovative management of company has initiated construction work on 9 new economic zones including two special economic zones of Hattar and Rashakai. 90 percent infrastructure development work at Hattar Special Economic Zone has been completed and now colonization is also in progress in the facility. During the current management, the total assets of the company by the end of the year 2022 have increased to Rs.15.8 billion as compared to Rs.13 billion in 2021.

    Jul 16, 2023

  • Riaz Haq

    Artistic Milliners to invest over $18mn in Port Qasim 400-acre Garments City - Business & Finance - Business Recorder

    • Project first phase would cover 250 acres, with 35% allocated for internal roads, utilities and green areas

    Pakistan will establish a 400-acre Garments City at Port Qasim in Karachi to expand textile exports and create jobs, Federal Minister for Maritime Affairs Junaid Anwar Chaudhry said on Monday.

    Under the plan, a Pakistani textile and denim manufacturing company, Artistic Milliners, would establish a manufacturing unit with an investment of more than $18 million, incorporating vertical integration and green technologies, read a statement.

    Chairing a meeting on a proposed garment city project, the minister said the export-oriented manufacturing cluster would focus on high-value apparel production and attract private investment.

    According to the project plan, the first phase would cover 250 acres, with 35% allocated for internal roads, utilities and green areas. The project is envisaged as a public-private partnership.

    The proposed commercial structure comprises 32 industrial plots of five acres each, although the plot size could be reduced to two or three acres to accommodate more investors and manufacturing units.

    The Port Qasim Authority (PQA) would provide infrastructure and utilities. Each industrial unit would have access to up to 400,000 gallons of water per day, two megawatts of on-grid electricity, and 23,100 pounds of industrial gas per day at 8 pounds per square inch (PSI), enough to support the requirements for 10 tonnes of steam.

    Pakistan to establish 150-acre auto processing zone at Port Qasim

    For the overall project, planned utility capacity includes 13 million gallons of water a day, 64MW of on-grid electricity and 750,000 pounds of industrial gas a day.

    Chaudhry said private-sector participation would be a key component of the project.

    The project would also have a one-window mechanism for exporters, including streamlined export processing, specialised customs desks and dedicated transport corridors.

    Projections presented at the meeting put first-phase employment at 138,125 jobs and annual exports at $2.2 billion. The project also aims to raise the average export value of garments to around $8 per piece.

    The minister said the initiative was part of efforts to expand Pakistan’s industrial base and export capacity, with port infrastructure, utilities, customs facilities and private investment integrated into the proposed apparel zone.

    Pakistan’s textile and garment sector is the country’s largest export earner but has faced challenges from high energy costs, outdated technology and competition from regional rivals. The government has been seeking to develop industrial zones and special economic areas to attract investment and move up the value chain.

    Days ago, Chaudhry announced plans to establish an automotive processing zone on 150 acres at Port Qasim, Karachi, with the facility to be expanded in phases according to market demand.

    yesterday