Industrial zones’ publicity
Chief Minister Mahmood Khan directed the high-ups of Khyber Pukhtunkhwa Economic Zones Development and Management Company (KPZDMC) to accord upbeat publicity to Hattar, Draband Special Economic Zone and Mahamand Marble City. The creation of this company was the brain child of former PTI Chief Minister for which an efficient public sector organisation, Sarhad Development Authority (SDA) was wounded up to appease the vested interest merely on political consideration. It was a vibrant and fully functional public sector enmity which played a marvelous role in establishing a number Industrial Estates in the province since its creation in 1972. The successor organisation KPEZDMC is not that vibrant and functional which is evident from the lack of interest of entrepreneurs to avail the opportunities of investment assured to them in the industrial policy of May, 2016.
In the industrial policy, the provincial government announced a rebate of 25 percent in the payment of electricity bills but investors could not be lured towards investment. In the past GadoonAmazai Industrial Estate had attracted investors for which the federal government had announced the incentive package of 10 years tax holiday, exemption on import duty on new machinery and raw material and lower electricity tariff although the scrupulous investors from Punjab misused the import duty exemption and installed second hand machinery in a number of industrial units. A storm had been raised by Karachi based industrialists against the incentive package made available to entrepreneurs in GadoonAmazai Industrial Estate by describing it “Industrial Cobra” in advertisements which had been published in the leading English and Urdu daily newspapers. The incentives were secretly and discretely withdrawn by an additional secretary of finance ministry, IbrarNaqvi and the then PPP Chief Minister Aftab Ahmad Khan Sherpao did not know about it. He was informed about this torpedo action by a bureau chief of a national English daily newspaper. Rest of the destruction of this industrial estate was done by high electricity tariff and power outages of longer durations. Over the past few years, the provincial government has been making announcements for the provision of cheap electricity of 18 megawatt from Pehurhydel power station to the dying GadoonAmazai Industrial Estate but a transmission network is yet to be put in place.
Publicity tools will not achieve the desired objective of attracting investment in new industrial zones. It is the incentive package comprising import duty exemptions on machinery and raw material, tax holiday, provision of inexpensive energy inputs. Provision of this package is the prerogative of the federal government. It is pertinent to mention that the Malaysian Prime Minister Dr. Mahatir Muhammad, in his visit of Pakistan, gave a workable advice to our Prime Minister to announce a tax holiday of 20 years if he really wants a big boost to foreign and domestic investment. At the time of merger of former FATA, Khyber Pukhtunkhwa assembly had passed a resolution demanding 10 years tax exemption for the tribal districts and areas of former PATA. Transport and Labour Associations of these areas have reiterated the same demand in an appeal published in a leading Urdu daily newspaper yesterday. It is likely that the demand may be endorsed by investors who are keen to invest in the tribal districts. In response to proposals included in the federal budget for the next fiscal year, the industrialists have expressed frustration over the lack of incentives to large scale, small scale and medium scale industrial enterprises.
Location advantage in terms of proximity to rail network, sea port and access to marketing outlets within the country and neighbouring states is another contributory factor that gives impetus to industrialisation. The location disadvantage of Khyber Pukhtunkhwa and prolonged war in Afghanistan has made the private sector shy of investment. There are 400 plus sick industrial units in the province the revival of which is near to impossible. Fast track industriaisation in Khyber Pukhtunkhwa needs special incentive package for the economic zones which fall within the purview of federal government. The non-starter provincial industrial policy serves a lesson about the reluctance of entrepreneurs for new investment in the province.