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Importance of special economic zones in Pakistan

Special Economic Zones (SEZs) has been the growth engine of many developing states around the world for the last few eras. The SEZ scheme was launched to offer a special area to expertise in foreign trade by offering an attractive fiscal package both in central and state government level with little regulations. Now everyone seems to be an admirer of SEZs that offer a combination of tax-and-tariff incentives, streamlined customs procedures and less regulation. Presently, three out of every four states have at least one. The world now counts about 4,300 SEZs, and more are being added all the time. Myanmar and Qatar have presently unveiled new ones; India calls their SEZs ambitions revolutionary; Japan announced special strategic zones as part of his reform agenda.

Since its beginning, Pakistan has been focusing on its industrial development. In order to do so, during 1952, Pakistan Industrial Development Corporation (PIDC) was organized to encourage industrial growth that work fruitfully till 1970. After conversion of resources to agriculture sector from industry, the industrial growth rate fall at 2 percent in 1970s from around 11.9 percent during 1960s. After this failure, the focus shifted to the clustering of industries. In Pakistan, many terminologies have been utilized to identify the clustering of industrial production. For instance industrial estates, industrial clusters and special economic zones (SEZs) are the most used concepts in this regard.

First, an industrial estate is an area consisting of many factories and business in single locality but it is comparatively small region than SEZs with limited liberal economic strategies. The industrial failure during 1970s led the government to establish industrial estates. Many sick industrial units forced the government to organize greater than 100 industrial estates around the various places in the country. But if we analyze the present situation, the industrial sector is shifting from Pakistan to another country. Poor governance; rent seeking behavior of industrialist, political and economic agents are the major reasons of this shifting.

SEZ is a specific region of the land used to promote industrial growth in a country by offering more lenient economic and tax strategies as compare to general economic strategies in a country.

The Government of Pakistan has enhanced five industrial estates like Multan Industrial Estate Phase-II, Bhawal Industrial Estate and Mainwali, Rahim Yar Industrial Estate, Dera Ghazi Khan and Rawalpindi Industrial Estate, as SEZs under China-Pakistan Economic Corridor (CPEC) projects with prediction of 150,000 jobs creation. Under the CPEC, economic experts predict that almost 8-10 SEZs would be organized in Pakistan.

It is also revealed that special incentives would also be given to investors to make the zones attractive. Presently the Board of Investment (BoI) Pakistan has devised a comprehensive plan for development and management of an industrial park under the CPEC incentives for domestic and international investors in the SEZs. Approximately 41 sites had been selected after consultations with the provincial, Azad Jammu and Kashmir and Gilgit-Baltistan governments and the Federally Administered Tribal Areas (FATA) secretariat.


In Pakistan, the entire manufacturing sector continued to sustain its growth momentum with more vigor during the current fiscal year. During FY2017, it registered an impressive growth of 5.3 percent as compared to 3.7 percent of previous year which assisted overall industrial sector to enhance by 5.0 percent as compared to 5.8 percent last year.

During July-March FY2017, the Large Scale Manufacturing (LSM) recorded an impressive growth of 5.1 percent as against to 4.6 percent in the corresponding period last year. The Year on Year (YoY), LSM registered significant growth of 10.5 percent in March 2017 as against to 7.6 percent of March 2016.

The industry specific statistics show that Iron & Steel products registered highest growth of 16.58 percent, electronics 15.24 percent, automobiles 11.31 percent, food, beverages & tobacco 9.65 percent, pharmaceuticals 8.74 percent, non metallic mineral products 7.11 percent, paper & board 5.08 percent, engineering products 2.37 percent, fertilizers 1.32 percent, textile 0.78 percent and rubber products 0.04 percent.

The other sectors that showed fall included wood product -95.04 percent, leather products -17.97 percent, chemicals -2.20 percent and coke & petroleum products -0.32.

In March 2017, highest increased was registered in automobiles 20.97 percent, food, beverages & tobacco 20.80 percent, iron & steel products 19.52 percent, fertilizer 10.00 percent, pharmaceuticals 7.79 percent, non metallic mineral product 7.12 percent, wood products 4.14 percent, chemicals 3.23 percent, textile 2.25 percent, rubber products 1.65 percent and paper & board 0.12 percent.

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