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Old Sunday, April 23, 2006
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Post Investment Climate In Pakistan

Pakistan's Investment Policy has been formulated to create an investor-friendly environment
By AMANULLAH BASHAR
Apr 29 - May 05, 2002
Despite the enormous potential and attractive business opportunities exist in Pakistan, the potential investors did not come out with money at the desired level due to various reasons especially the unpredictable policies and attitude of the past governments in this country. As the trade rule says, "investment in any business, any area and any country calls for careful judgment".
Recently, the size of the Foreign Direct Investment (FDI) has however inched up slightly as compared to the previous couple of years as the expected size of the FDI at the end of the current financial year was estimated at around $500 million. This amount of FDI however does not reflect the actual depth the economy of this country has. In the year 1998-1999 the size of the FDI was estimated at $472 million, 1999-2000 $472 million, and 2000-2001 $322 million.
FACTS SHEET OF PAKISTAN
AREA 796,095 sq.km
Population 144 million
GDP $66 billion
Inflation 3 per cent
Foreign Exchange Reserves over $5.6 billion
Exports around $9 billion
Imports over $10 billion
Rural/ urban ratio 71 : 29
Registered Companies 40,000
Foreign Firms 657
Listed Companies on Stock Market 761
The overseas investors doing business in Pakistan view of business environment in Pakistan from various angles. Their major concern seems to be frequent change in policies, lack of follow up for effective implementation of the good decisions, unfriendly attitude of government officials, corruption, international political situation and above all the law and order situation.
The business community, local and foreign investors, is however pinning hopes for stability in the situation that seems in the offing due to repeated assurance held out by the present government for continuation of the policies, level playing field for local and foreign investors and strong signals for improvement at macro-economic level.
Energy sector in Pakistan has been the focal point of the investors since last many years and evens in the current scenario the major part of the foreign investment is coming in this sector.
Sources in business circles are attaching great importance to the current scenario of economic activity including Chinese investment in the deep-sea Gwadar port, power generating units at Lakhra and Thar coal fields, and political stability in neighbouring Afghanistan as these two factors have every potential to create infinite economic activity not only for Pakistan but in the entire region.
The Asian Development Bank (ADB) while commenting on the state of economy has observed that Pakistan's economy seems to have weathered the effects of the post-September developments and global recession well, and agriculture sector has also adjusted to continuing conditions of drought. Price stability observed during the current fiscal year is also likely to continue, and the current fiscal year is expected to end with an annual inflation of about 3 per cent which is substantially below from last year.
The downward trends in exports, particularly in terms of value, observed during the current fiscal of 2001-2002 are likely to continue in the final quarter as well. But the trend should be turning around soon, as increased access to the European Union markets results in higher exports, and the impact of growth in the economics of Pakistan's major trading partners feeds through. The imports may pick up in the remaining part of the current year due to higher petroleum prices, some increase in investment and higher consumer spending. As a result of increasing trend in international oil prices, the improvement seem in the first nine months of the year is unlikely to continue in coming months.
The trade deficit is expected to be around $1.3 billion for the year as a whole. The improvement in the current account balance in the first half of the current year was partly due to exceptional inflows like grant assistance from the USA. Therefore the further improvement in the overall balance of payment is not likely in the second half of the year but the year can end with a current account surplus of about $800 million.
The fiscal balance, which has worsened in the first half of the current financial year is likely to further deteriorate in the second of the year, as expenditure on mobilization of troops on the eastern border with India since December 2001 is reflected in the budget.
Tax collection may improve due to increase in imports and revival of economic activity, but that will only partially offset the impact of higher defense budget. The overall fiscal deficit to exceed 5.5 per cent of the GDP.
The output in the manufacturing sector has not been significantly affected by global recession, and the farming sector also adjusted to continuing conditions of drought, so, the overall economic growth for the year is likely to be 3.5 per cent.
The medium term prospects for Pakistan economy have improved recently and the investor confidence has been restored by number of post-September developments.
Increased access to European Union markets and rescheduling of debt are likely to have the greatest medium and long-term benefits for the economy.
Besides modernization of textile industry under way for the last couple of years has started showing results in the form of substantial increase in the industry's output and in the export volumes despite global recession.
If the government continues to pursue sound macro-economic policies and to implement the planned economic and governance reforms, it could fairly quickly achieve rapid and sustainable economic growth and poverty reduction. The growth target of 5.2 per cent set for the fiscal year now looks achievable, even a higher growth rate of 5.5 per cent seems possible.
On December 13, 2001, Pakistan signed the third debt restructuring agreement with the Paris Club, interest rates to be applied to restructured loans, are to be negotiated between the government of Pakistan and each creditor country. Interest rate on ODA loans will be a below market rate and not higher than the interest of the original credit. Non-ODA loans will be rescheduled at a market interest rate determined on the basis of risk free rates for the concerned currency, plus a management margin.
Depending on what the finally agreed rates are, Pakistan will get a saving of $2.7 billion to $3 billion in the three year PRFG period and $8.5 billion to $11.1 billion over the grace period. Expected reduction in the net present value ranges from 27 per cent to 43 per cent.
PRIVATIZATION
Government's policy of privatization of public sector entities again being taken as one of the most important factor which is to attract foreign investment at a massive scale in Pakistan.
Following are the upcoming transactions through privatization prior to June 2003:
Banking and Finance Sector: Government's shares in Muslim Commercial Bank, Habib Bank Ltd, United Bank, NIT/ ICP and 10 per cent more shares of the National Bank.
Oil and Gas: Pakistan Oilfields Ltd, Oil and Gas Development Corporation, Pakistan Petroleum Ltd, Attock Refinery Ltd, Pakistan State Oil, Sui Northern and Sui Southern gas companies, National Refinery and 18 oil and gas fields.
Insurance: State Life Insurance Corporation and other insurance companies.
Power: Karachi Electric Supply Corporation and other distribution and generation companies.
Pakistan Telecommunications and PIA etc. these are huge projects and have every reason to bring the investors at a massive scale in Pakistan.
TOURISM
Tourism is another area which has been suffering from negligence since long. In order to inject life in this sector, the government has declared it as an industry and as such hotels great promise for prospective investors to explore true potential from snowcapped mountains in the North with vast fertile plains of Punjab.
In Pakistan tourism has a huge growth potential with high returns and revenue for the investors. Hotels and other tourism projects hold great promise and rewards for the investors:
Following projects have also been placed on board for sale through privatization:
These are Motel at Astak in Skardu, Motel at Birmoglasht, Chitral, Motel at Chaman (Pak-Afghan Border in Balochistan, Motel at Chattar Plain Mansehra, Motel at Hawk's Bay Karachi, Motel at Katas Chakwal, Motel at Mankial Sawat, Motel at Moenjoadaro Sindh, Motel at Satpara Lake Skardu, Motel at Torkham Pak-Afghan Border, Daman-e-Koh Restaurant, and Jaltarang Restaurant Islamabad, Restaurant at Chakdara Malakand Division, Land at Bhambore Thatta Sindh, Land at Benjosa Azad Jammu and Kashmir, Land at Gadani Beach Sindh, Land at Garam Chashma Chitral, land at Hyderabad and Mansehra, Flatti's Hotel Lahore, Flashman's hotel Rawalpindi and Malam Jabba Resort.
POLICY
Pakistan's Investment Policy has been formulated to create an investor-friendly environment, with a focus on further opening up the economy and marketing the potential for direct foreign investment. The essence of the policy is to strengthen Pakistan's competitiveness by improving the policy regime, offering fiscal and tariff relief and providing comprehensive facilitation services.
Previously, only the manufacturing sector was open to foreign investment. Now, the policy regime is much more liberal with most other economic sectors open for foreign investment and with significant efforts at mobilizing domestic financial resources towards long term investment.
MANUFACTURING/ INDUSTRIAL SECTOR
Foreign investors are permitted to hold 100 per cent of the equity of industrial projects without any permission of Government.
No government sanction is required for setting up any industry, in terms of field of activity, location and size, except for the following:
--Arms and Ammunitions.
--High Explosives.
--Radioactive Substances.
--Security Printing, Currency and Mint.
No new unit for the manufacture of alcoholic beverages or liquors will be allowed.
There is no requirement for obtaining NOC from the provincial governments for locating the project anywhere in the country except in areas that are notified as negative areas.
Tourism has been given the status of Industry in accordance with the Ministry of Industries and Production. It has been placed under priority Industries in the policy.
HOUSING AND CONSTRUCTION
The Housing and Construction sector has also been declared as an Industry. It has also been placed under priority industries of the investment policy.
Local and foreign companies involved in real estate projects will not market these projects unless the title of the property is transferred in the name of a locally incorporated company and the "Commencement of Business" is issued by the Securities and Exchange Commission of Pakistan to the firm.
Under the policy, foreign investment on a repatriable basis is now allowed in the Service, Infrastructure, Social and Agriculture Sectors subject to the conditions indicated against each. They will have to simply register their company with Securities and Exchange Commission of Pakistan under the Companies Ordinance 1984 and to inform the State Bank of Pakistan provided the relevant conditions are fulfilled.
Foreign Direct Investment (FDI) in Services Sector is allowed in any activity subject to condition that services which require prior permission/ NOC or licence from the concerned agencies will continue to get the same treatment until and unless de-regulated by such agencies and will be subject to provisions of respective sectoral policies.
CONDITIONS
The amount of foreign equity investment in the company/project shall be at least $0.3 million.
Foreign investors are allowed to hold 100 per cent of the equity subject to the condition that the repatriation of profits will be restricted to a maximum of 60 per cent of total equity or profits and that a minimum of 40 per cent of the equity is held by Pakistani investors (including sale of shares in stock exchange) within five years.
INFRASTRUCTURE SECTOR
Infrastructure Projects, including the development of Industrial Zones.
CONDITIONS
The amount of foreign equity investment in the company shall be at least $0.3 million. 100 per cent foreign equity is allowed on a repatriable basis.
SOCIAL SECTOR
Education, Technical/ Vocational Training. Human Resource Development (HRD). Hospitals, Medical and Diagnostic Services.
CORPORATE AGRICULTURE FARMING
Land development/ reclamation of Barren Land, Desert and Hilly areas for agriculture Projects and Crop Farming, Reclamation of Water Front Areas/ Creeks, Crops, fruits, Vegetables, Flowers, Farming/ Integrated Agriculture (Cultivation and Processing of Crops), Modernization and Development of Irrigation Facilities and Water Management, Plantation/ Forestry, Horticulture, Dairy, Small Ruminants (Sheep and goats) and all other Livestock Farming and Breeding.
The corporate agriculture farming has been declared as an Industry with 100 per cent foreign equity allowed, no minimum foreign investment is required while remittance of capital, profits, dividends allowed.
INCENTIVES
To keep Pakistan competitive in international markets and support the viability of investments in the country, following incentives are available to both foreign and local investors:
Priority manufacturing/ Industrial activities have been designated as follows:
Category A: Value Added or Export Industries.
Category B:Hi-Tech Industries
Category C: Priority Industries
Category D: Agro-based Industries
TAX RELIEF
For new investments, a First Year Allowance (FYA) on investment in plant, machinery and equipment (PME) is available. The FYA can be set off against statutory income in the year of assessment. Any unutilized allowance can be carried forward to subsequent years until the whole amount is used up. The FYA is available at the following rates:
Categories A and B: at the rate of 90 per cent of the cost of Plant, Machinery and Equipment.
Categories C and D: at the rate of 75 per cent of the cost of Plant, Machinery and Equipment
Other Industries: at the rate of 50 per cent of the Cost of Plant, machinery and Equipment.
Infrastructure and Agriculture: at the rate of 75 per cent of the cost of Plant, Machinery and Equipment.
Service and Social: at the rate of 50 per cent of the cost of Plant, machinery and Equipment.
PROTECTION
The economic policies and the existing legal cover for foreign and Pakistani investment will be extended to new areas and sectors. The benefits and incentives for investment provided by the government shall continue in force and will not be reduced or altered to the disadvantage of investors. The Foreign Private Investment (Promotion and Protection) Act. 1976 and the Furtherance and Protection of Economic Reforms Act 1992.
Pakistan is holding a two-day International Forum focusing on government's development policy, priorities and investment opportunities at the World Bank's European office in Paris from April 29-30. Finance Minister Shaukat Aziz will chair the Forum.
During the investment forum the initiatives taken by the government would be highlighted regarding deregulation and privatization besides economic reform programme in Pakistan.
The Chairman of Board of Investment Pakistan will be presenting his paper on the subject. Statements by the World Bank Group on the Country assistance Strategy, development prospects, including investment climate issue will be made on the occasion. IFC will also make its presentation on overall business climate in Pakistan. Some leading multinational companies engaged in Pakistan will made presentation on Industrial and Banking sectors in Pakistan.
NON-RESIDENT PAKISTANIS
There are over 3.5 million Pakistani expatriates living and working in countries spread across the globe. Despite all sorts of odds they have to face, at the hands of the government officials supposed to be the public servants, whenever these Pakistanis visit the motherland, yet the love of the soil never dies. A quantum jump in the home remittances from less than one billion dollar last year to over 2 billion dollar this year indicates their strong passion and love for the country after the events of September 11. These Pakistanis can be a real source of attracting investment in Pakistan. Major reason for investing in Pakistan for any overseas Pakistani should that it is the market they known best. They are also equipped to manage the human resources available in this country because their social and cultural understanding of Pakistan. The only thing required is to check the corrupt and greedy officials operating with the tactics to extort money by hook or crook from the visiting Pakistanis on one pretext or the other. These non-resident Pakistanis deserve special treatment as an individual they are projecting the image of Pakistan and remitting their hard earned money to Pakistan.


plz pray,
Sardarzada
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Old Thursday, April 27, 2006
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Post Investment Policies

The flow of foreign capital in the form of direct investment plays a major role in linking international economics and building an integrated international production system creating core of the global economy. A notable feature of Foreign Direct Investment (FDI) since 1990 is that it has become the largest and fastest growing single component of external finance for development countries. This represents a dramatic shift in the capital flow from developed to developing countries which was previously dominated by official assistance. During 1996, out of the total FDI of $ 310 billion at global level, the share of the developing countries has been $ 109.5 billion.

Till recently , only Manufacturing Sector has been completely opened for foreign investment - which contributes only 18% to Gross Domestic Product (GDP). While there are other major sectors which are equally productive to contribute to GDP i.e., Service Sector and Agriculture Sector, these Sectors have remained almost closed for foreign private investment. Currently the service and agriculture sectors are contributing 53% and 24% to GDP respectively. Since 1997,these sectors are also open to foreign investors.
Approaching the year 2000, Pakistan expects investment of US$ 2 billion per year, and it is hoped a large chunk will be invested in expanding the industrial base, infrastructure, software, electronics, engineering, petro-chemicals, value added textiles, agro-food and the tourism and construction industries. These areas will increase export earnings potential and stimulate economic growth. In return, Pakistan offers to remain committed to liberalization and privatization resulting in free market environment for investors and ultimately acting as a springboard to the un-explored markets in Central Asia and the Gulf States.


plz pray,
Sardarzada
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Post Pakistan

1. THE LAND AND THE GOVERNMENT
Pakistan, a land of many splendors and opportunities, the repository of a unique blend of history and culture from the East and the West, the cradle of one of the oldest civilizations which developed around the Indus valley. It is the ninth most populous country of the world with 135 million tough, conscientious, hard working people, wishing and striving hard to enter into the 21st century as equal partners in the community of developed nations. It is located between 23 and 37 degrees latitude north and 61 and 76 degrees longitude East. Flanked by Iran and land-locked Afghanistan in the west and the Central Asian Republics and China in the north, Pakistan can rightly boast of having a significant location advantage with a vast, only partially tapped, market of 250 million people. The affluent Gulf states are just across the Arabian Sea to the South and provide an additional opportunity of a high consumption market.
The geographical location, with one of the highest peaks of the world in the North and vast plains in the South, offers and unusual diversity of temperatures ranging from sub-zero levels on the mountains in winter to scorching heat in the plains in summer, providing friendly habitats to exquisite ranges of flora and fauna and a large variety of agricultural crops used for both food and raw material for industries.
Pakistan, spread over a land mass of 796,095 square kilometers has vast, relatively cheap land for setting-up industries. The average office occupation cost in the prime business districts of the big cities is less than US$ 10 per sq. fit. per year, much lower than other countries of the region.

2. THE PEOPLE AND THEIR SKILLS
Used to living in an environment where it takes a considerable effort to provide for one’s family’s livelihood. Pakistan’s labour force has a reputation for being one of the most hard-working in the world. Pakistan labour is also one of the most inexpensive and offers very high return on investment. A large percentage of the labour force is skilled, both at home through a network of training institutes, employment in the Middle East and studying in the developed countries. The 36 million strong labour force includes a large, highly trained and experienced corps of professional managers, engineers, computer scientists, bankers and financiers, that is vital for the industrial and corporate environment.
Pakistan ranks amongst the top seven fastest growing economies of Asia. Except for the period of the fifties and the seventies, annual Gross Domestic Product (GDP) has been growing at a rate exceeding six per cent per year. Although, agriculture is still the mainstay of the economy, its share in the GDP has declined over time to 24% but still employs 48% of the manpower. The growth of the manufacturing sector has averaged more than 8% over the last 40 years.
In manufacturing, cotton yarn and textiles is the leading sector, followed by the food processing industries, largely based on indigenous raw materials. The growing emphasis on the development of engineering, electrical, and non electrical machinery, automobiles and chemical industries and the rapid flow of an ever increasingly larger proportion of investment into these sectors has diversified the industrial output.
An outward looking industrial strategy with sufficient safeguards against deleterious imports, provides very profitable investment opportunities to both local and foreign investors. Private investors are encouraged in all types of manufacturing activities especially: hydel energy, transport and communications, cement and social services. An open economy and liberal environment have given a definite impetus to private sector investment.
Pakistan has a large market with a population of 135 million. The markets of land-locked countries of Afghanistan and those of the Central Asian republics can be effectively and conveniently catered for from Pakistan. The fact that Pakistan is a member of both the Economic Co-operation Organization (ECO) and the South Asian Association for Regional Co-operation (SAARC) further expands the potential of the target market for enterprises based in Pakistan enabling the installation of efficient sized plants for almost any industrial activity.
Pakistan has a highly developed financial sector consisting of four public twelve private and twenty one foreign commercial banks, development financial institutions, investment banks, leasing companies, mutual funds and "Modarba" fund companies. The commercial banks have assets of over one trillion rupees of which about 80% are held by domestic banks and the rest by the foreign banks. Besides providing working capital and long-term financing to the investors, these banks offer a range of vital facilities, such as remittances of profits / dividends and foreign currency accounts. The specialized development institutions provide credit for investment in various sectors. Karachi, Lahore and Islamabad have developed stock exchanges with an aggregate capitalization of US$ 20 billion.
"Pakistan has adopted a liberalizing, market-oriented course and
declared the private sector the engine of economic growth."
* Report from the US Department of Commerce, 1994
"Pakistan has opened its arms to overseas investment with some of the most liberal economic policies yet seen in Asia. It has been rewarded with an inflow of foreign capital which is the envy of some of its neighbors."
3. BOARD OF INVESTMENT
The Board of Investment is the focal point of contact between potential investors and all Government agencies involved in the investment process and it responsible for providing advice to the government formulating investment policies, investor for expeditious completion of the project.
The Board of Investment works under the Ministry of Industries and is playing a pivotal role in the formulation of investment policies and investor facilitation in coordination with the concerned government agencies.
The Board provides all the necessary information to potential investors, both domestic and foreign. It assists investors in expeditious processing and implementation of their investment proposals and in coordinating with other government departments. The Board also extends advisory facility on issues relating to direct investment in business and industry anywhere in the country. The Board is responsible for a number of significant investment schemes which it designs to facilitate direct investment in priority areas.

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Sardarzada
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Post Guidelines On Foreign Investment

1. Existing Facilities.
Key features of existing policies, incentives and facilities.

2. Investment Policy of 1997.
a) Policies:
1. Services/Infrastructure Sectors
2. Social Sectors
3. Agriculture Sectors
b) Incentives:
1. Fiscal (Tax Relief).
2. Re-investment allowance.
3. Industrial Building Depreciation Allowance.

3. Protection to Domestic Manufacturing.

4. Protection to Foreign Investment.

5. Holding Companies.

6. Others
GUIDELINES ON FOREIGN INVESTMENT
1. EXISTING FACILITIES
KEY FEATURES OF EXISTING POLICIES, INCENTIVES AND FACILITIES
Prior to the announcement of Investment Policy, 1997 following facilities were available to the foreign investors:-

A) POLICIES
1. Foreign investors are allowed participation in industrial projects on 100 percent equity basis, without any permission of the Government.
2. No government sanction is required for setting up an industry in any field, place and size, except for the following four industries:-

• Arms and ammunitions.
• High explosives.
• Radio-active substances.
• Security printing, currency and mint (establishment of new units for the manufacture of alcohol, except industrial alcohol, is banned).
3. There is no requirement for obtaining No Objection Certificate (NOC) from the provincial government for locating the project any where in the country except the areas which are notified as negative areas.
4. Foreign companies are allowed to undertake export and import trade (for selling to whole sellers/distributors.)
5. Hotels & Tourism have been declared as an Industry/Industrial undertaking. Therefore, this sector is already open to foreign investment and is entitled to incentives and concessions as admissible under the Tourism Policy.
B) INCENTIVES

Major existing tariff and fiscal incentives for manufacturing sector are as follows:-
a) TARIFF
- Maximum Tariff Rate : 45%
- Number of Slabs : 5
with Rates of : 10%,15%,25%,35% & 45%
- Imported Plant & Machinery
(Not Manufactured locally) : 10%
- Machinery (not manufactured locally) Zero rate upto 200% of the
imported by engineering units for export value during the
export related production: preceding financial year.
- Import of certain machines and tools Duty free
for gems & jewelry manufacturers
exporters
- Machinery (not manufactured locally) Zero Rated
imported by Export Oriented Units.
- Raw Materials Used in Producing Zero Rated
for Export
- Cascaded Tariff with following Target Rates:
? Primary Raw Materials : 10% - 15%
? Secondary Raw Materials : 15% - 25%
? Intermediate Goods : 35%
? Finished Goods : 45%
- Assembly Kits : Duty Free (Corresponding to the
number of their exported units).
- Import of raw materials and : Duty Free (against Bank
components for manufacture Guarantee)
engineering goods meant for exports
b) GENERAL SALES TAX (GST)
- GST On Imported and Domestically: "NIL"
Manufactured Plant & Machinery
- Standard GST Rate : 12.5%
c) FISCAL
I) Corporate Tax Rates (Assessment Year 1998-99)

- Public Companies 30%
- Other Companies 35%
- Banking companies 55% (50% for Assessment
Year 1999-2000)
II) Personal Income Tax Rates
(Applicable to Assessment Year 1998-99)
0 - 100,000 5%
100,000-200,000 10%
200,000-300,000 15%
ABOVE 300,000 20%
Tax on Perquisites & Allowances
Value of Perquisites (Rupees)
0 - 100,000 3%
100,000-200,000 5%
200,000-300,000 10%
ABOVE 300,000 15%
III) Tax Holiday
- 5 years Tax Holiday for following industries set up by 30-6-2000:
- Solar Energy Technology related industries.
- Fruit Processing.
- Soft & Stuffed Toys.
- No Tax on income of software exports.
IV) Accelerated Depreciation Allowance (ADA & DA)
- Initial Accelerated Depreciation allowance @ 25% on plant and equipment.
- Depreciation Allowance (DA) @ 10% on Reducing Balance.
- Extra depreciation 50% of normal allowed for double shift & 100% trip shift.
DA @ 10% is available on industrial buildings.
- DA @ 10% (Additional) on factory or workshop building.
- DA @ 5% is available on office building of factories.
- Initial DA 25% to Labour Residential Building (Constructed upto 30-6-000).
V) Fiscal Incentives for Capital Market
- Capital gains tax Exempted upto June 2001
- Tax on Bonus Shares Exempted
- Turnover tax on trading Exempted
Stock/Shares
- Tax on Foreign Investment in
Government and Corporate
fixed Income Securities Exempted
- Income Tax on non-resident
individuals, firms and Exempted
companies, investing in
stocks
- Tax on Mutual Funds and Exempted
Distribution as Dividend
C) FACILITATION
Exchange Control
Full repatriation of capital gains, dividend, profits is allowed.

There are no restrictions for contracting foreign private loans (which do not involve any guarantee by the Government of Pakistan). Also, there is no restriction on source of foreign currency loan. Long term loans can be arranged from a bank, financial institution, parent companies of multinationals or under suppliers credit.
Transfer of Technology
There are no ceilings on payment of royalties and technical service fee

Withholding tax rates on royalties and technical service fees paid to non-residents are 30% and 15% respectively. However, Royalty under some of treaties is taxable at reduced rates.
Incorporation of Companies
Section 4(a) of the Monopolies and Restrictive trade Practices Ordinance, appears to be the main concern for the foreign investors and is seen as discouraging or restricting capital formation. For facility of ready reference the said section is reproduced below:
Circumstances constituting undue concentration of economic power. "Undue concentration of economic power shall be deemed to have been brought about, maintained or continued if:
(a) there is established, run or continued an undertaking the total value of whose assets is not less that Rs. 300 million or such other amount as the Authority may be rule prescribe and which is:
(I) not owned by a public company, or

(II) is owned by a public company in which any individual holds or controls shares carrying not less than 50% or such other percentage as the Authority may be rule prescribe, of the voting power in the undertaking."
CAPITAL MARKET
Capital market has been given following incentives:
Capital gain tax exemption upto June 30, 1998 has been extended for another three years i.e., upto 30.06.2001.

Tax on bonus shares has been completely abolished.

Tax exemption to non-resident Pakistanis and foreign investors in fixed income securities.

Minimum turnover tax on the income of companies engaged in share trading has been exempted.
All those mutual funds which would declare 90% dividend for shareholders will be exempted from income tax.
iv. UNILATERAL RELIEF
A person resident in Pakistan is entitled to a relief in tax on any income earned abroad, if such income has already been subjected to tax outside Pakistan. Proportionate relief is allowed on such income at an average rate of tax in Pakistan or abroad, whichever is lower.
v. AGREEMENTS FOR AVOIDANCE OF DOUBLE TAXATION
The Government of Pakistan has so far signed agreements to avoid double taxation with 37 countries including almost all the developed countries of the world. These agreements lay down the ceilings on tax rates applicable to different types of income arising in Pakistan. They also lay down some basic principles of taxation which cannot be modified unilaterally. The list of countries with which Pakistan has concluded tax treaties is given below:

plz pray,
Sardarzada
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God is dead! God remains dead! And we have killed him! How shall we console ourselves, the most murderous of all murderers? The holiest and the mightiest that the world has hitherto possessed, has bled to death under our knife....
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Post List Of The Countries

Austria Belgium Bangladesh
Canada China Denmark
Egypt France Finland
Germany Greece India
Indonesia Iran Ireland
Italy Japan South Korea
Lebanon Libya Malta
Mauritius Saudi Arabia Singapore
Poland Romania Sri Lanka
Switzerland Sweden Thailand
Turkmenistan Tunisia Turkey
Kazakistan U.K. U.S.A.
U.A.E.


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Sardarzada
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Post Investment Policy Of 1997

The Investment Policy-1997 has been formulated to provide an integrated strategy for creating an investor friendly environment with the focus on further opening up of the economy and marketing the potentials of all economics sectors for direct foreign investment. The essence of the policy is to keep Pakistan attractive in International Investment Market by improving the Policy Regime, offering fiscal and tariff relief and through providing additional procedural & Social facilitation.
a) Policies
Previously only manufacturing sector was open to foreign investment. Now, it has been decided to liberalize the Policy Regime, open up other economic sectors for FDI and mobilize the domestic financial resources towards long-term investment. Foreign investment on repatriable basis is now allowed in Agriculture, Service/ Infrastructure and Social Sectors.
I) Services/Infrastructure Sectors
Foreign repartiable investment in above sectors will be subject to the following conditions:-
? Foreign companies which have fulfilled the conditions of registration under the Companies Ordinance 1984 and the requirements of registration with BOI.
The amount of foreign equity investment to be at the level of at least US$ 1 million.
? A minimum 40% of the equity will be held by Pakistani Company/investors in the company / project.

? The import tariff on Plant, Machinery & Equipment (not manufactured locally) will be leviable at standard rate of 10% and no sales tax shall be leviable.
Following activities in these sector will be available for foreign investment:
? Wholesale, Distribution and Retail Trade; Transportation, Storage and Communications/Infrastructure Projects including development of Industrial Zones; Telecommunication (List of deregulated services in Telecommunication Sector is at Annex-III; Real Estate Development (Development of Commercial Buildings, Apartment Buildings, Housing Projects, Super Markets/Shopping Malls, Urban Development, Development of New Communities); Technical Testing Facilities; Audio-visual-Services; Sporting and other recreation Services; Rental / leasing Services relating to Transport Equipment and Machinery, Equipment and Tools for Land Development & Agriculture purpose; Environmental Services.

? Unless title of property is transferred in the name of foreign company, it will not develop real estate projects.

?Inter-Provincial Regulatory Authority will be established at Federal level to regulate and monitor the land and real estatedevelopment by foreign companies.

Condition of induction of Pakistani equity as 40% of the total equity will not be applicable in case of Infrastructure Projects including development of Industrial Zones.
II) Social Sector:
Foreign companies which have fulfilled the conditions of registration under the Companies Ordinance 1984 and the requirements of registration with BOI.

Foreign investment is allowed in Education, Technical/Vocational Training, Human Resources Development (HRD) as well as Hospitals & Medical/Diagnostic Services, on repatriable basis; provided the quantum of foreign equity investment is to the level of at least US$ 1 million.

The import tariff on plant, Machinery & Equipment (not manufactured locally) will be leviable at standard rate of 10% and no sales tax shall be leviable.
III) Agriculture Sector:

• Foreign companies which have fulfilled the conditions of registration under the Companies Ordinance 1984 and the requirements of registration with BOI.

• The amount of foreign equity investment to be at the level of at least US$ 1 million.

• A minimum 40% of the equity will be held by Pakistani Company/individuals in the company/project.

• The import tariff on agriculture machinery (not manufactured locally) will be zero rated. The list of specific machinery and equipment will be notified later.

• In line with the reforms announced in Agriculture Package, there will be no upper ceiling of land for registered agricultural companies which are involved in production, processing and marketing of agricultural products on commercial lines. However, the income of these companies would be taxable.
• Following activities will be available for foreign investment in Agriculture sector:-
• Land Development/Reclamation of barren, desert and hilly land for Agriculture purpose and Crops Farming; Reclamation of Water Front Areas/Creeks, Crops, fruits, vegetables, flowers Farming/Integrated Agriculture (Cultivation and Processing of Crops); Modernization & Development of Irrigation Facilities/Water Management; Plantation/Forestry and Horticulture.

• The proposals related to foreign investment in Agriculture Sector will be processed by the BOI in consultation with the respective Provincial Government and will be approved by the competent Decision Making Forum.

• The land for agriculture purpose can be obtained on lease basis for long periods, i.e. initially upto 30 years, extendible for a further period of 20 years.

• Foreign company, allowed for investment in agriculture sector/reclamation and cultivation of land will not be allowed to transfer such land to any other foreign company unless specifically permitted by the Federal and the concerned Provincial Government.

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Post Incentives

To keep Pakistan competitive in international market and make the investments viable, it is decided:-
Manufacturing sector be prioritized in four categories:

(A) Value Added or Export Industries
(B) Hi-Tech
(C) Priority Industries
(D) Agro-based Industries
The units which export 80% or more of their production in any one year or have minimum value-addition of 40% of production value (which may be specified from time to time), will be treated as Value-Added or Export Industry respectively. The indicative list for such industries is shown in Category (A). Any industry other than indicated in the list for Category (A) shall also be entitled for the same incentives provided it fulfills the criteria laid down for this category.
Comprehensive lists for these categories have been formulated. While identifying the industries, parameters have been the level of technology involved, export potential, domestic market requirements, value addition, processing of local raw materials and forward/backward linkages to other economic sectors. The lists are placed at Annex-IV, V,VI & VII. However, these lists can be reviewed by the Cabinet Committee on Investment (CCOI) as and when deemed necessary. List of service deregulated in the Telecommunication Sector is at Annexure-III.
Zero rated tariff will be applicable on import of plant, machinery & equipment (which is not manufactured locally) for the industries falling under (A) & (B) categories, i.e. Value Added, Export and Hi-tech Industries. The facility will be available only to plant, machinery & equipment used for manufacturing in that industry - while the import of raw materials, sub-components and components, etc., will be governed by the present cascaded tariff regime and subject to the provisions of Deletion Policy.
The imported plant, machinery & equipment (which is not manufactured locally) for the industries falling under Categories (C) & (D), will have the facility of deferment of import duties as half of the payable duties shall be paid at the time of import and half shall be deferred and the deferred amount will be paid in lump sum after a period of three years.
(I) FISCAL (Tax Relief)
Fist Year Allowance (FYA)
For new investments, First Year Allowance (FYA) on capital expenditure/ investment, will be granted. The capital expenditure/investment will include the cost of plant, machinery & equipment. However, FYA will be allowed in case tax exemption/holiday is not available. FYA can be utilized to set-off against the of statutory income in the year of assessment. Any un-utilized allowance can be carried forward to subsequent years until the whole amount is used up.
FYA will be available at following rates:-
Category (A): @ 90% of the Capital expenditure investment.
Category (B): @ 90% of the Capital expenditure investment.
Category (C): @ 75% of the Capital expenditure investment.
Category (D): @ 75% of the Capital expenditure investment.
Other Industries:
Presently Accelerated Depreciation Allowance (ADA) is available @ 25% in first year and 10% normal DA, i.e., initial DA of 35% in first year. However, Extra Shift Allowance for 3 shifts @ 10% is also available. It is decided that for other industries (not falling under above categories) DA in first year be enhanced to 50% from the present level of 35 - 45%.
(II) Re-investment Allowance (RA)
To encourage the investors to re-invest their earnings by expanding the existing manufacturing facilities and improving the technology or diversifying the product line, Re-investment Allowance (RA) @ 50% of capital expenditure/investment will be allowed in case of Balancing, Modernization & Replacement (BMR), and expansion.
(III) Industrial Building Depreciation Allowance
To encourage the establishment of Small and Medium Industries, the companies who would construct Industrial sheds/structures and sell/lease to SMIs will be granted an enhanced DA @ 30% (in first year) of the cost which has been incurred on the development of these sheds/structures.
3. Protection to Domestic Manufacturing
The Concept to keep the domestic manufacturing competitive will continue to be followed in adjusting tariff structure. The duty on finished products will attract higher rate than the imported raw materials/inputs. Therefore, incidence of duties and taxes on locally produced goods would be less than the incidence of duties and taxes on finished imported goods. A reasonable tariff protection will be available to domestic manufacturing depending upon value addition.
4. Protection of Foreign Investment
The economic policies, and the existing legal cover for foreign and Pakistani investment will be extended to new areas/sectors. The benefits and incentives for investment, provided by the Government shall continue in force and will not be reduced or altered to the disadvantage of investors. According Foreign Private Investment (Promotion and Protection) Act, 1976 and the Protection of Economic Reforms Act, 1992 shall be amended.
5. Holding Companies
To facilitate the formation of holding companies, it is decided that:-
? Preparation of consolidated financial statement be made mandatory for listed companies initially.

? Section 208 of the Company’s ordinance 1984 will be amended whereby exemptions presently available to wholly owned subsidiaries be extended to subsidiaries, whether or not whollyowned. As section 208 relates to investment both in respect of equities and loans, the suggested amendment will be restricted to equity investments only.

? The holding company should be listed, while the subsidiary companies should be delisted, and shareholders be given shares of the holding company.

? Following amendments in tax laws will be made to facilitate the functioning of holding companies:-
a) Provision to offset tax losses incurred by other subsidiaries.
b) Tax exemption on subsidiaries’ dividends to avoid double taxation.
c) Adjustment of taxes paid by subsidiaries against tax liability of the holding company.
6. OTHERS
? The source of investment made under this Policy Package will not be questioned by the Tax Authorities.

? There will be no ceiling of total value of assets of a Company for retaining 100% ownership by investors.

? Petroleum, Mineral Development, Tourism, Private Power & Transmission, Insurance and Health Policies will become part of the Package on finalization by the concerned Ministries and approval of the competent Authority/Forum


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Post Industrial Zones

1. INDUSTRIAL ZONES.
a) Institutional Framework.
b) Objectives of National Industrial Zones Scheme.
c) Location parameters.
d) Criteria:
I) Specified Industries.
II) Competitive Industries.

2. FREE INDUSTRIAL/EXPORT PROCESSING/TRADE ZONES:
a) Criteria.
b) Existing Incentives/concessions.
c) Additional Facilities.

3. CRITERIA FOR EXPORT ORIENTED UNITS:
a) Framework of Operation.

4. PRIVATE INVESTMENT IN DEVELOPMENT OF NATIONAL INDUSTRIAL ZONES:
a) Financing.
b) Bond Facility.
c) Utilities and Other Facilities.
d) Labour Laws.
e) Terms of Lease and Maintenance Charges.
f) Infrastructure and Utility Services.
g) Public Facilities.
h) General Provisions.


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Default Industrial Zones

1. INDUSTRIAL ZONES
The present Government assigns high priority for revitalization of the economy and create more conducive and liberal environment for foreign and local investment in the country. The announcement of economic reform package and budgetary measure for rationalization of taxes and tariff are manifestation of Government support to provide concessions and facilities for activating private sector as engine of economic growth in the country.
Translating these objectives into practical realities, calls for adoption of pragmatic policy package for development of industrial zones that could effectively energize the process of efficient industrialization and development with adequate attraction for local and foreign investment.
a. Institutional Framework
A scheme of National Industrial Zones (NIZs)" engulfing industrial estates, free industrial zone and Free trade zone and Export Oriented Units and Estates for Small and Medium Industries within the areas of its boundary will be launched at a few selected prime sites. Export-oriented units will however be allowed to be set up all over the country.
The basic criteria of selection of the site will be availability of "access-net" infrastructure and utilities to the door steps of the zone involving minimal expenditure of the Government and participation of foreign and local investors in development of infrastructure within the zone, its marketing, management and establishment of industries.
Free Industrial Zone will be multi-product zone where a variety of export products can be manufactured, traded, exported or re-exported. The zone will offer incentives package on the pattern of EPZ, allowing trading activity/acting as a hub of warehousing of imported produce and their re-export in freely convertible foreign exchange.
Free Trade Zone will serve as an effective instrument to boost up Export trading. The zone set up as an enclave separated from Domestic Tariff Area by physical barriers are intended to provide an internationally competitive duty-free environment for trading of exportable production at low costs. Trading activities, namely, imports for re-export in freely convertible foreign exchange for activities such as repacking and labelling will be permitted. Import for reconditioning, repair and re-engineering will also be permissible for export in freely convertible foreign exchange. Private bonded warehouses will be permitted to be set up in the Zone to meet the requirements of industrial units in the Free Industrial Zones or other EOUs in the country. The Free Trade Zone will be allowed similar concessions and facilities as are admissible to the free industrial zones and Export Oriented Units for value addition and export.
An Export Oriented Unit (EOU) is an industrial unit which exports its entire production excluding permitted level of Domestic Tariff Area (DTA) sales and reject.
Infrastructure within the Zone will be developed by the Private Sector Investors. Development, management and marketing of Industrial Estate/Free Industrial Zone and Free Trade Zone will be offered to local Scheme. Provision of infrastructure and utility facilities upto the Zones will be the responsibility either of relevant agencies of the Government or the Developer/Investor. As added incentive to Developer/Investor, area surrounding the zone may be offered to them for development of township including commercial and residential facilities.
Country specific zones will be allowed to be established by Developer/Investor to attract setting up of industrial units preferably export oriented industries. The developer of zone and the project investors may be allowed "bond facilities" for their community and cultural activities within the area of the zone. They may also be allowed to develop residential facilities for the personnel working in the zone.
A single National Industrial Zone Authority (NIZA) will be set-up with statutory powers to carry out the responsibility of management of the National Industrial Zone. However, the existing Export Processing Zone Authority Ordinance 1980 may continue to apply to the Free Industrial Zone (Export Processing Zone) and Free Trade Zones. The National Industrial Zone Authority (NIZA) will be established through an enactment to provide a legal frame work for management and providing necessary facilities and services to the Zones.
The development, marketing and maintenance of the Estate infrastructure facilities within the Zone will be responsibility of the Developer/Managing Company. Provision of utilities will be the responsibility of the developer of the estate/zone or the concerned departments depending on the agreement to be reached with the developer. The NIZA will deal with the regulation of public services, revenue collection and management of the affairs of the Zone for implementation of the NIZs Act and other enactment’s, and issuing of permission for projects under "One Window Facility".
The National Industrial Zone Authority (NIZA) will extend one window facility to give permission incorporating all required clearance of various departments and arrange utility facility and other related services for the investors to undertake industrial project within the zone.
The policy matters and issues will be by the Board of Investment. The implementation of the Policy of the National Industrial Zones (NIZs) will rest in the National Industrial Zone Authority (NIZA). Management Committee for the zone will run the administrative and management affairs of the Zone which will have representation of the developers, and the sponsors/investors of the projects in the Zones. The functionaries of various departments of the government working in the zone shall be under the administrative control of the Management Committee of the zone.
b. Objectives of National Industrial Zone Scheme.
Main objectives of the composite scheme of National Industrial Zone are as under:-
1. Efficient industrialization and development with export-led strategy in a contiguous, congenial investor-friendly-environment.

2. Promoting local and foreign investment through time-framed provision, access-net of utilities, infrastructure facilities and one-window-services to investors in establishment of their projects.

3. Attract foreign investment, transfer of technology and for development of value added industries.

4. Development of the "National Industrial Zones" at prime locations having marketing linkage, available land and infrastructure.

5. Help achieve concentrated growth of industries with provision and operation of services and promoting beneficial inter-firm linkage with world market.

6. To create growth pole at suitable geographical points which may combine the need of local area development and efficiency in industrialization and act as generator of economic growth.

7. To provide strategic production basis with globally competitive edge and encourage production of value added exportable surplus through the schemes of Free Industrial Zone, Free Trade Zones and Export-Oriented Units.

8. Consistency and long-term continuity in the policy with integrity and transparency in the implementation of the scheme.
c. Location parameters
The basic criteria for selection of National Industrial Zones (NIZs) would be availability of land of preferably 1000 acres, for each Estate/Zone preferably government land with "access-net" of infrastructure/utilities or its reach in vicinity thus involving minimal financial outlays from government resources for provision of these facilities. Zones at such prime strategic sites will be located where the consumer market, skilled manpower and socio-economic infrastructure are available in the vicinity, to develop to comprehensive industrial paradigm with short gestation period at lowest possible cost.
d. Criteria
All industries can be set up in the National Industrial Zones, except the following:-
(I) Specified Industries

(a) Arms and Ammunition.
(b) Security Printing, Currency and Mint.
(c) Explosives.
(d) Radioactive substances.
(e) Alcohol, except industrial alcohol.
(II) Competitive Industries (Free Industrial Zone/Free Trade Zone)
(a) Cotton Ginning.
(b) Sugar manufacturing (white).
(c) Flour Milling.
(d) Steel Re-rolling and furnaces.
(e) Tobacco Industry.
(f) Ghee or Vegetable Oil Industry.
(g) Plastic bags including Polypropylene & Polyethylene.
(h) Beverage excluding fruit juices.
(i) Automobile Assembly.
(j) Industries giving rise to pollution of water, land and atmosphere environment.
(k) Carpets.
2. FREE INDUSTRIAL/EXPORT PROCESSING/TRADE ZONES
Free Industrial Zone and Free Trade Zones will serve as an effective instrument to boost exports of manufactured products. The zones setup as enclaves separated from the Domestic Tariff Areas by physical barriers, are intended to provide and internationally competitive duty-free environment for export production and trade at low costs. This enable the products to be competitive both quality wise and price wise in the international market.
a. CRITERIA
Criteria for projects in these zones are:
1. The unit should be 100% export-oriented;
2. Minimum value addition according to prescribed formula;
3. Improvement in industrial technology;
4. Export marketing capability;
5. Employment of skilled manpower; and
6. Process of manufacture should meet applicable environmental standards and regulations.
b. Existing Incentives/Concessions.
1. Tax holiday upto the year 2000 A.D., and there-after 25% in perpetuity.

2. "Capital gains" are exempted from taxation.

3. Total exemption from all federal, provincial and municipal taxes, no foreign exchange control, and no insurance regulations which are normally applicable in Pakistan.

4. One window service and simplified procedures for such items as, import permit and export authorizations, are also issued by EPZA itself.

5. Usual import/export restrictions enforced in Pakistan are not applicable to the Zone.

6. All goods and material entering into the Zone from Pakistan (where tariffs and taxes are to be paid) are regarded as exports from Pakistan, and, hence, Pakistanis are entitled to all the facilities and concessions allowed on exports to other countries.

7. Duty free import up to three vehicles, proportionate to the capital investment, is allowed.

8. Free employment of expatriates, with exemption of the salary income tax for five years, from the date of arrival in Pakistan.

9. Income accruing outside Pakistan exempt from taxation.

10. Losses, if any, on an undertaking setup in the Zone may be carried forward for tax assessment purposes.

11. Import of equipment, machinery and material (including components, spare-parts and packing material) for enterprises set up in the Zone, is exempted from all federal and provincial taxes and duties, including customs, excise, sales tax and municipal taxes.

12. Any income chargeable under the head "capital gain" is not taxable.

13. Full repatriation of capital, profits and dividends is allowed to the foreign investors and non-resident Pakistanis.

14. Off-shore banking and insurance facilities.

15. International distribution centers are allowed to be established.

16. Exemption from labour laws upto year 2000.
c. Additional facilities:
1. Local DFIs/Banks are allowed for project financing in Zone.

2. Sale upto 20% of exports are allowed to Domestic Tariff Area subject to payment of duties and taxes.

3. Export of waste and defective items allowed to tariff area as also to bonded manufacturing units.

4. Exporters of a zone will be treated at par with tariff area counterparts for freight subsidy on certain item.

5. Sub-contracting by zone units in tariff area is permitted. It should also be allowed the other way round to utilize idle capacity.

6. Inter-unit transfer of finished goods among exporting units may be allowed.

7. "Deemed export" benefits be allowed to supplies from DTA.
3. CRITERIA FOR EXPORT ORIENTED UNITS (EOU):
The criteria for establishment of Export-Oriented Units will be as under:-
1. The EOU shall undertake the entire production of goods for export, except sales permitted in the domestic tariff area (DTA) - (20%).

2. The unit shall achieve the minimum value addition (MVA) value addition as to be prescribed by the National Industrial Zone Authority.

3. The unit shall execute a bond/legal undertaking in prescribed form with the National Industrial Zone Authority or the agency designated by Authority.

4. The National unit shall have marketing/buy-back arrangement and track record of the promoters.

5. Raising of funds through external commercial borrowing shall be preferred where outflow capital goods tie-etc., involved.

a. Framework of operation
The above criteria for approval of a scheme would be subject to the basic condition that the unit shall undertake to manufacture the goods in bonded warehouse under Custom control and to export its entire production for a period of 10 years ordinarily and 5 years in the case of products having high degree of technological change. The Customs Authorities are to provide bond facilities to such units wherever located which is got to be revalidated on yearly basis depending on export performance of the unit and the place is declared as ware housing station. The fiscal concessions and facilities of Export Processing and Free Trade Zone will be admissible to Export Oriented Units (EOU).
4. PRIVATE INVESTMENT IN DEVELOPMENT OF NATIONAL INDUSTRIAL ZONES - INVESTOR, DEVELOPER AND PROMOTOR SCHEME (IDP).
In order to attract domestic and foreign investors for the development of National Industrial Zones (NIZs), concept of IDP - Investor, Developer and Promoter will be adopted. Under this scheme, private developer/investor would be offered the tracts of land earmarked for development of attractive National Industrial Zones.
a. FINANCING:
Financing of the projects of the National Industrial Zones, in addition to the following shall be covered through normal rules applicable to the type of industry being set up under the project:-
1. Foreign investors shall bring their own foreign exchange for financing their projects.

2. Local DFIs, Commercial Banks etc. may, however, consider for financing local currency cost of the projects, subject to their normal terms and conditions and laid down procedure. Government of Pakistan, however, will not guarantee payment of foreign loans.

3. The units can procure capital goods from local/domestic leasing companies which on behalf of the units can import the goods (not manufactured in Pakistan), with permissible concessions.
b. BOND FACILITY:
Special bonding facility for duty free raw materials will be provided by the customs on the pattern of Export Processing Unit (EPU) scheme for Exports.
c. UTILITIES & OTHER FACILITIES:
Provision of utilities will be the responsibility of the developer of the estate/zone or the concerned departments of the government depending on the agreement to be reached with the developer.
Banks and Finance Institutions may set up their authorized offices in all NIZs.
d. LABOUR LAWS:
Same labour laws will apply in the National Industrial Zones as are applicable in the existing Export Processing Zone.
The application of following laws will be vested in the National Industrial Zone Authority (NIZA):

• The Provincial Employee’s Social Security, Ordinance 1965 (W.P. Ordinance No. X of 1965). (not to be exempted from payment or contributions).

• The Employee’s Old Age Benefits Act, 1976 (XIV of 1976) (not to be exempted from payment of contributions).

• The units NIZs will pay 12% of wages of employees towards old age benefits and Social Security to the Project Director of the NIZs who will act as One Window Operation and will deposit it with relevant agencies.

• Municipal Corporation Act.
• Following rules shall be applicable:
• No employee shall refuse to work or go slow or go on strike; or

• No employee shall commence, continue, instigate incite or compel other to take part in or support "go slow" or strike.

• The service of an employee shall be governed by the terms and conditions as laid down in his letter of appointment, issued by the employer.

• The services of an employee may be terminated by an employer in accordance with the terms and conditions contained in his letter of appointment.

• All other matters/issues relating to control of employment will be governed by the orders of managing authorities of the National Industrial Zones.
e. TERMS OF LEASE AND MAINTENANCE CHARGES:
Period of lease of land in National Industrial Estates/Zones would be 50 years, extendible further on mutually agreed terms. The rates of lease premium, annual rent and maintenance charges and their periodical increases will be mutually agreed between lessee and the Authority handling the management of the respective National Industrial Estates / Zones. Annual increase in the rent and maintenance charges will be linked with the cost of development and inflation. However, lease will be deemed as canceled, if, the project is not operative within two years from the date of allotment. Similarly, the title of lease/Virgin land is not transferable, this however, is not withstanding the change of title due to inheritance and mortgages, merger national and international.
f. INFRASTRUCTURE AND UTILITY SERVICES:
The Government or the developer of the NIZ will be responsible for provision of infrastructure facilities such as electricity, telecommunication services, gas, water, sewerage, roads link upto the door step of Industrial Zones. The coast thereof will be treated as development cost and would be recovered as part of the price (down payment) of the industrial plots in the industrial area.
g. PUBLIC FACILITIES:
The public facilities such as fire station, police station, health center, customs office, post office, school, park and social facilities will be provided by the developer of the NIZ at their own cost. However, such facilities will be staffed by the personnel of the concerned agencies of the government.
h. GENERAL PROVISION:

• Companies having units in the National Industrial Estates will be eligible for listing in the local as well as international stock exchanges, subject to fulfillment of their listing requirement.

• The units of National Industrial Estates will be treated at par with other units of the country for allocation or purchase of textile quota according to laid down procedure.

• The facility of re-investment of local earnings in Pakistan to the extent of foreign equity as "foreign investment" will be available.

• The units in National Industrial Estates will have free access to local raw material under the prevalent market conditions.

• Each unit will be allowed to import one car, one van and one bus for 100 workers each, duty free, provided the foreign equipment participation exceeds US$ 10.00 million.

• Expatriate employees of all investors will be allowed to import foodstuff and other consumable items equivalent to US$ 5,000 per person per year in Pakistan, against their own foreign-exchange.

• The installation and operation of anti-pollution facilities/measures pertaining to the respective units will be responsibility of the units sponsors concerned.

• Plant, equipment machinery and process installed in Unit shall be in conformity to local and international environment laws/regulations.



plz pray,
Sardarzada
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Post Immigration Procedure

1. Existing Visa Policy:

2. Further Concessions in the new Policy.
a) Work Permit.
b) Opening of Project/Branch/Liaison Office.
c) Issuance of Work Visa.

3. Grant of Pakistan’s Citizenship to Foreign National.

IMMIGRATION PROCEDURE

1. EXISTING VISA POLICY:
To facilitate travel and the stay in Pakistan of foreign businessmen and investors, the visa policy has been considerably relaxed.
Salient features of the existing policy are as under:
Businessmen an investors, from the 43 countries listed below, with substantial investment in Pakistan would be granted multiple entry visas valid for three years:
Australia Austria Belgium
Bahrain Brunei Canada
China Czech Republic Denmark France Finland Germany
Greece Hong Kong Hungry
India Iceland Indonesia
Iran Ireland Italy
Japan Kenya Kuwait
Luxembourg Malaysia Netherlands
New Zealand Norway Oman
Poland Portugal Qatar
Saudi Arabia Singapore South Korea
Spain Sweden Switzerland
Thailand Turkey U.A.E.
U.K. U.S.A.

businessmen from the listed countries who want to establish business offices in Pakistan would be issued multiple entry visa for one year on recommendations of their embassies/missions in Pakistan;

businessmen/investors from any of the listed countries where there is no Pakistani Embassy will also be allowed thirty days landing permit on arrival at the airport in Pakistan;

multiple entry resident visas for a period of three years will be issued to foreigners (except citizens of countries which are not recognized by Pakistan) who bring in an amount of US$ 200,000/- (Two Hundred Thousand);

Pakistani industrialists/businessmen interested to invite foreign entrepreneurs from countries, other than listed, for promotion of trade and industrial cooperation would be allowed to sponsor, on their guarantee, the grant of visa for one month through Chambers of Commerce and Industry at lahore, Karachi, Peshawar, Quetta, Islamabad and the Federation of Pakistan Chambers of Commerce and Industry; and

there is no restriction/requirement for work permit for foreign managerial and technical personnel for gainful employment/occupation in private firms/companies in Pakistan. The other categories of personnel will required work permission/visa which will be issued on the basis of No Objection Certificate/Work Permit by the Board of Investment, Karachi Office (former Investment Promotion Bureau).

2. FURTHER CONCESSIONS IN THE NEW POLICY
a. Work Permit
At present, the expatriate technical and managerial personnel working in manufacturing/industrial sector are exempt from obtaining work permits. The same facility will be extended to expatriates working with Infrastructure Projects.

In other cases, where the matter is referred by the Board of Investment to the concerned Government agencies, they will make sure that their clearance or otherwise is sent to BOI within a maximum period of 4 weeks.

Work permits will be issued for a period of 3 to 5 years - or validity of the Passports.
b. Opening of Project/Branch/Liaison Office
In case of requests for opening branch, liaison or representative office by a foreign company, time limit of clearance/comments by concerned agencies/Ministries will be 4 weeks.

In case of the establishment of Project Office by foreign Companies, present procedure will continue.

The existing procedure of getting prior permission/registration with State Bank in respect of opening the branches of foreign banks will be continued.

The permission for opening of branch/liaison office will be granted by BOI for a period of 3 to 5 years. Further extension will be granted by BOI after reviewing/examine the performance of foreign company during previous permitted period. The request for renewal/extension will however, not be referred to other Ministries/Agencies.
c. Issuance of Work Visas
Work Visa will be issued within a maximum time of one (1) month after the receipt of request alongwith the required documentation.

Multiple entry visa for 3 years will be issued to foreign investors and expatriate employees subject to submission of complete documentation by their employer company and they hold work permit/passports valid for 3 years. In case multiple entry visa is granted, the number of entries will not be restricted to any specified limit.

Ministry of Interior will issue instructions, to the concerned Pakistani Mission abroad for grant of work visa till the vanity of work permit or passport which ever is earlier, within a week after the receipt of request provided BOI issues work permits on the basis of NOC of Ministry of interior. In emergent cases, Ministry of Interior will issue work visas up to 3 months to a foreigner on the recommendation of BOI or on the request of the employer (as the case may be) without any clearance. However, further extension will be allowed after completing necessary formalities, i.e. production of work permit (in case it is required and obtaining security clearance.

Business Visa will be issued on the same day basis.

In case of the projects in power, petroleum exploration, communication etc., concerned Agency or the management of such projects will identify the requirement of expatriate personnel. Accordingly, Ministry of Interior would issue visas subject to condition that particulars alongwith supporting documents of the expatriate personnel are furnished to the Ministry.

For the purpose of changing the category of visa of foreign national employees/investors, from business visa to work visa, the condition to go out of Pakistan to any third country and get it converted from Pakistani Mission in that country, will be withdrawnl. In future, Ministry of Interior will process such requests on getting verification from BOI. The Ministry may levy a reasonable fee for conversion of visa category.
3. Grant of Pakistan’s Citizenship to Foreign Nationals (Investors)
By allowing the Pakistani Citizenship to foreign investors, potential foreign businessmen could provide an additional source of foreign investment for Pakistan. Any person of a country recognized by Pakistan, may get Pakistani Citizenship by investing a minimum of US$ 0.75 million in tangible assets and $ 0.25 million (or equivalent in major foreign currency) in cash, both on non-repatriable basis and subject to fulfillment of the conditions of Pakistan Citizenship Law. It is clarified that transfer on non-repatriable means that the amount will be brought to Pakistan through normal banking channels, converted into rupee and never remitted back through the free market

plz pray,
Sardarzada
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God is dead! God remains dead! And we have killed him! How shall we console ourselves, the most murderous of all murderers? The holiest and the mightiest that the world has hitherto possessed, has bled to death under our knife....
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