China – Pakistan to sign Rashakai SEZ development agreement under CPEC today

ISLAMABAD: Pakistan and China on Monday will sign the Development Agreement for the first China Pakistan Economic Corridor’s (CPEC) Rashakai Special Economic Zone (SEZ) Monday at the Prime Minister (OPM) House.

The event will be attended by federal ministers, officials from line ministries, the KP government and other stakeholders.

In a statement, State Minister and Board of Investment (BOI) Chairman Atif R. Bokhari said that the agreement would realise the vision of SEZs’ development, ultimately leading to a prosperous and industrial Pakistan.

He highlighted the progress on SEZs under CPEC, saying that sufficient headway has been made on this front and the zones are now gearing up for business. “Pakistan’s proximity with China will allow these SEZs to foster economic interdependence for mutual economic advantage,” he added.

The SEZ Act 2012, under Section-13, binds together the Federation (BOI), the province and SEZ developer through an agreement for the successful establishment and development of an SEZ, aptly termed ‘Development Agreement’.

This agreement provides the road map for the establishment of an SEZ while holding the federal and provincial governments as well as the developer jointly responsible for the development and successful operations of an SEZ.

The Rashakai SEZ is to be developed under Public-Private Partnership (PPP) model, by the Khyber Pakhtunkhwa Economic Zone Development and Management Company (KPEZDMC) in collaboration with China Road & Bridge Corporation, a state-owned Chinese enterprise.

An SPV company of these two firms named Rashakai Special Economic Zone Development and Operations Company (RSEZDOC) has been created for the implementation of this agreement, which is a first of its kind with our Chinese counterpart being one of the parties.

On August 6, 2019, a project of $128 Million, spanning over 1,000 acres of land was awarded SEZ status while its Concession Agreement was signed in April 2019.

The BOI promoted the establishment of this SEZ with the goals of capitalising on investment inflow under CPEC, inclusive economic development of KP Province, creation of job opportunities, industrial development, and export generation in Pakistan.

Rashakai SEZ holds a unique competitive advantage due to its proximity to the first juncture of the CPEC route, and significant resource and manufacturing base in the region. Due to such factors, it has the potential to become one of the primary investment destinations for foreign investors – particularly Chinese investors who are looking to find new and cheaper markets to relocate their industrial base.

Bokhari said that the BOI has successfully expedited the process of provision of promised utilities besides facilitating the allocation of fiscal incentives and concession to the SEZ’s co-developer.

“To enable successful operations of this SEZ, the federal government has committed Rs1.8 bn for provision of 210 MWs of electricity, and Rs1.2 bn for the provision of 30 million cubic feet per day (MMcfd) gas from the Federal PSDP. Provision of required utilities at the SEZ’s doorstep as per the required timelines will allow on-time construction and development,” he concluded.