Pak govt allocates Rs 160-mn for RoZs

Islamabad: The federal government has decided to develop much needed infrastructure for establishment of Reconstruction Opportunity Zones (ROZs) in NWFP with an allocation of Rs 160 million from Public Sector Development Programme (PSDP) 2008-09.

Additional allocation has been made for infrastructure development in industrial estates of NWFP with an allocation of Rs 160 million, a government official said.

US legislation on establishment of ROZs in Pakistan and Afghanistan’s border areas is under consideration before the US congress for formal approval.

Some nine locations have been identified for the proposed ROZs in the province. These include Peshawar Industrial Estate, Mallagari Industrial Estate (proposed), Mardan Industrial Estate, Gadoon Aamazai Industrial Estate, Nowshera Industrial Estate, Risalpur Economic Zones, Yaka Industrial Estate (proposed), Shakas Industrial Estate (proposed) and Kohat Industrial Estate, the official added.

US proposal seeks to include and qualify areas adjacent to Federally Administered Tribal Areas (FATA) into proposed ROZs package for duty free treatment of goods produced in these ROZs at the time of their imports in US.

According to a research by Pakistani authorities, $1 billion market access to Pakistan would enable the country to generate 200,000 job opportunities and would benefit indirectly 1.2 million family members of the workers in FATA area.

These proposals were the result of a study commissioned by Ministry of Commerce which indicated that poverty and regional disparity in depressed areas spawns extremism. Unemployment in these areas was a major factor breeding extremism and educated unemployed in age between 20 to 25 years are more prone to extremism.

Based on Pakistan’s competitiveness and existing export profile to United States, Pakistan has the potential to export top 41 hot selling textiles and clothing items and 30 non-textile items through utilising these facilities. Pakistan is of the view that despite high US import tariffs, Pakistan has substantial exports in these products, and therefore these must not be excluded from duty free market access.

Pakistan would extend existing incentives, regulatory structure available for Export Processing Zones to ROZs which include full ownership rights, full repatriation of capital and profits, no minimum or maximum limit would be fixed for investment in ROZs, duty free import of machinery. “There would be no sales tax on electricity and gas consumed in the said units and Foreign Exchange Control Regulation of Pakistan would not be applicable to investment made in ROZs,” said the official.

A team of management and technology consultants hired by US government visited Pakistan to identify possible locations and products to be included in ROZs package. The US fact finding mission, after visiting different locations has recommended potential locations which could be considered for ROZs to meet the following criteria: existing and future planned infrastructure, having access to transportation, power, water and land title, having availability of raw materials, components and security.

The fact finding mission has also recommended that if the locations within the territories are not commercially feasible, locations near the territories should be considered. The fact finding mission was comfortable with the idea of locating ROZs outside the tribal areas in the first phase as proposed by Pakistan. The mission also held that scope of products for duty free status depend on existing business and production capacity, including, but not limited to, those products where either or both countries are currently competitive and represent export potential to the US market and ROZs would not be product specific, the official maintained.

According to the official, rules of origin would be framed in a manner to facilitate trade; afghan content in value addition in ROZs may be different for different produ