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KEPZ — AN ASSET OR A BURDEN?

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Need to make KEPZ a model zone for other and future zones

By AMANULLAH BASHAR
Oct 18 - 24, 1999

Like other public sector organizations, ruined by excessive politicization by different governments, the Karachi Export Processing Zone (KEPZ) is also not an exception.

Over the years of rampant corruption by the favourites, friends and supporters, appointed on political considerations, instead of running the zone have thoroughly ruined the image not only of the zone but the country as a whole in the eyes of the foreign investors.

The incentives of duty free imports and exemptions from other taxes proved a windfall for the black sheep among the investors who obviously in connivance with the zone authorities made fortunes by selling duty free imported raw material or machinery in the tariff area. Informed sources in Zone said that the unscrupulous elements who are out to make money through illegal means use indecent tactics to keep the genuine investors off the zone. They might be worried of their guilt which may be exposed with the arrival of genuine investors.

Frequent cases of non-compliance to the rules, mal-practices at gross level by some of the corrupt investors, mal-administration and mismanagement on the part of the authorities altogether created such a hopeless situation that except three foreign investors rest of them left the zone. Currently some 80 factories almost all of them run by the locals are in operation, 82 have switched their units off, giving a deserted look to the zone.

Karachi Export Processing Zone was launched in 1980 and completed in June 1989 through ADP Grants at a total cost of Rs362.840 million. The project was planned over an area of 500 acres some 19 years ago. Initially, out of the total land, 200 acres were developed for industrialization where all necessary infrastructure facilities like electricity, gas, water, phones roads were provided at a huge cost. In this first phase of the zone 330 industrial plots and 70 plots for commercial sector which include warehousing and trading were allotted. Another 33 plots were provided for financial sector including banks and DFIs.

Gymkhana

The foundation stone of KEPZ Gymkhana building is the glaring example of how much interest is taken by the authorities in the development of the Zone.

The ground breaking ceremony of the zone gymkhana was performed on Oct. 10, 1993 by Abrar Hussain Naqvi, the then Chairman of Export Processing Zone Authority by laying the foundation stone. In order to promote sports culture and social activities in the zone the investors had also made open hearted contributions for early completion of the complex. However, the neglected gymkhana project is still at the level from where it was inaugurated at a colourful ceremony some 6 years ago.

EPZA

Inspired by rapidly flourishing zones in other countries of the region, the Export Processing Zones Authority was established vide Ordinance IV of 1980 with the mandate to plan, develop and operate Export Processing Zones in Pakistan.

Primarily, the objectives of the establishment of EPZ were to increase the foreign exchange earnings by export of value added goods, to provide a show window for display the ability and enterprise of country's work force to attract foreign investment, to boost industrialization and augment country's export by creating facilities for investors to enable them to set-up export oriented units which would as a result create job opportunities.

Future plan

In 1998, the EPZA chalked out a plan to set up another 12 export processing zones in different parts of the country. Out of them, Faisalabad zone and Risalpur zone have been developed and all infrastructure facilities have been made available at these two zones. Applications seeking allotments in these two zones have already been received by EPZA authorities. A decision regarding allotment of plots has yet to be taken.

The investors at Karachi zone, however, feel that the government has already spent a huge amount for the development of Karachi Export Processing Zone. This has not yet achieved the prime objective of the increasing country's exports which is reflected in the nominal amount of $77 million it earned last year. It would be advisable to go for more zones with simultaneous development of the Karachi Zone, which should be the model for future zones. Let it grow to the level where it could deliver the desired results.

The KEPZ sources feel that the attention should be focussed on speedy development of the zone to make it a model to pave the way for flow of foreign investment in the upcoming zones planned to be established in other parts of the country. However, the professional and selfless management is required to lead the zone affairs.