“SEZ Faces Challenges Amidst Other Productive Sectors” | (एसईजेड, अन्य उत्पादक क्षेत्रों के सामने चुनौतियाँ – संपादकीय )

Main Points In Hindi (मुख्य बातें – हिंदी में)

1. आर्थिक क्षेत्र और निवेश की समस्याएं: संघीय मंत्री अलीम खान ने विशेष आर्थिक क्षेत्रों (एसईजेड) में और विशेष रूप से खैबर पख्तूनख्वा में औद्योगिक निवेश को बढ़ावा देने के लिए निर्देश जारी किए हैं, जिसमें राज्य बैंक ऑफ पाकिस्तान निवेशकों की समस्याओं के समाधान के लिए एक फोकल व्यक्ति नियुक्त करेगा।

2. निवेशकों की अपीलों का अवहेलना: बड़े औद्योगिक समूहों, जैसे कि ऑल पाकिस्तान टेक्सटाइल मिल्स एसोसिएशन, ने रियायती निजी क्षेत्र ऋण के लिए राजकोषीय और मौद्रिक प्रोत्साहन की मांग की है, लेकिन उनकी अपीलों का जवाब नहीं मिला है।

3. पीआईए की असफलता और जिम्मेदारी: पाकिस्तान इंटरनेशनल एयरलाइंस (पीआईए) की हालिया बोली में असफलता को लेकर मंत्री ने किसी भी जिम्मेदारी से इनकार किया, जिससे यह सिद्ध होता है कि निर्देश जारी करना एक बात है, लेकिन उनका सही तरीके से कार्यान्वयन करना दूसरी बात है।

4. सरकारी नीतियों का विडंबना: सदन के सदस्य सरकार की नीति की विडंबना को दर्शाते हैं, जो बताती है कि न तो मंत्री और न ही मंत्रालय के अधिकारी आईएमएफ के साथ स्वीकृत शर्तों को गंभीरता से लेते हैं, जबकि देश अभी भी आर्थिक डिफ़ॉल्ट के खतरे का सामना कर रहा है।

5. प्रोत्साहनों का प्रभाव और भविष्य की योजना: हालांकि सरकार ने आर्थिक विकास को प्रोत्साहित करने के लिए विभिन्न छूट और प्रोत्साहनों की पेशकश की है, इनका वास्तविक प्रभाव नकारात्मक रहा है, और सरकार ने भविष्य में एसईजेड के प्रोत्साहनों को समाप्त करने की योजना बनाई है।

Main Points In English(मुख्य बातें – अंग्रेज़ी में)

Here are the main points from the editorial regarding investment, privatization, and directives issued by Federal Minister Aleem Khan:

1. Federal Directives for Investment Issues: Federal Minister Aleem Khan has issued a series of directives aimed at addressing issues related to Special Economic Zones (SEZs) in Khyber Pakhtunkhwa. The State Bank of Pakistan will appoint a focal person to resolve investor concerns within three days.

2. Calls for Fiscal and Monetary Incentives: The directives reflect ongoing appeals from exporters, particularly the politically influential All Pakistan Textile Mills Association, for the restoration of fiscal and monetary incentives. However, these appeals have largely been ignored by the government.

3. Concerns Over Implementation: The failure of Pakistan International Airlines (PIA) to attract bids raises questions about the real power of officials in issuing directives versus their ability to ensure implementation. There have been no measures to identify and hold accountable those responsible for PIA’s failures.

4. Issues with Current Economic Policies: The editorial criticizes the lack of understanding from government officials regarding the IMF agreements that limit the provision of new or renewed financial incentives for SEZs, indicating that the reliance on subsidies and incentives has not led to competitive improvement in the trade sector.

5. Plans for Future of SEZ Incentives: As part of the ongoing IMF program, the government has pledged to phase out existing incentives for SEZs by 2035, avoiding new financial incentives to foster a more competitive business environment. The focus is on replacing existing benefits with cost-based incentives by June 2025.

These points highlight the challenges Pakistan faces regarding investments, the role of government directives, and the implications of international financial commitments.

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Complete News In Hindi(पूरी खबर – हिंदी में)

Complete News In English(पूरी खबर – अंग्रेज़ी में)

Editorial: Investments, Privatization, and Communications

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Federal Minister for Investment and Privatization, Aleem Khan, has issued a series of directives aimed at resolving various issues related to Special Economic Zones (SEZs), particularly in Khyber Pakhtunkhwa, including the provision of electricity connections from the national grid. Within three days, the State Bank of Pakistan will appoint a focal person to address the concerns and complications faced by investors.

These directives reflect ongoing pleas from exporters, especially those represented by the politically influential All Pakistan Textile Mills Association, as well as other major manufacturing sectors, for the reinstatement of fiscal and monetary incentives. Their appeals have largely gone unanswered until now.

There are two key observations to note:

1. The recent failure in bidding for Pakistan International Airlines (PIA), for which the minister seemingly denied all responsibility, underscores the reality that while those holding portfolios can issue directives, ensuring their implementation is another matter entirely.
2. Additionally, this situation contradicts the government’s earlier claims, made in documents uploaded in October 2024 concerning the ongoing International Monetary Fund (IMF) loan program, that "the government has made significant progress towards privatizing PIA, which is in its final stages." Moreover, as is often the case, there have been no directives to identify or hold accountable those responsible for PIA’s failure, which could serve as a deterrent to future mistakes.

The pivotal question remains: Are Aleem Khan’s directives or the industry’s demands actionable? The irony behind these directives and requests is that neither the minister nor the ministry officials, nor the private industrial sector, seem to have taken the time to review the documents detailing the conditions agreed upon with the IMF by Federal Finance Minister Muhammad Aurangzeb and SBP Governor Jameel Ahmed. Members of the cabinet have repeatedly acknowledged the importance of averting the threat of default.

The relevant documents clearly state that "subsidies have taken the form of low-cost financing and other concessions, which, despite varying across industries, have made the financing and taxation framework more favorable compared to peer economies and less optimized sectors."

The tax system has been extensively utilized to provide non-transparent support through exemptions for privileged sectors like real estate, agriculture, manufacturing, and energy, along with the proliferation of Special Economic Zones.

Government intervention in pricing, particularly for agricultural goods, fuel products, electricity, and gas (biannually), has skewed the playing field in favor of selected groups or sectors due to high tariffs and non-tariff protections.

Despite all this support, the business sector has failed to become an engine of growth, as the incentives have ultimately weakened competition and confined resources to long-standing inefficient industries (including "baby" industries).

Additionally, the Letter of Intent (LOI) issued by Pakistani officials, which approved the current Extended Fund Facility program, includes the following pledge: "Officials will refrain from providing new or existing SEZs with new financial incentives, and existing incentives will not be renewed, as SEZs are merely a temporary solution to existing business environment obstacles. They will also avoid creating new SEZs or export processing zones (including provincial governments). Furthermore, by the end of June 2025 (structural benchmark), officials will prepare a plan to completely phase out all existing SEZ incentives by 2035 based on evaluations conducted under pre-existing contractual obligations."

During the transition period between 2024 and 2035, officials will attempt to replace existing benefits-based incentives (like tax breaks) with cost-based incentives (like immediate expenses on tangible assets), subject to compliance with existing legal obligations.

In cases where contractual provisions allow for the prompt termination or renegotiation of existing SEZ incentives, officials will gradually phase out such incentives according to these legal allowances. Accordingly, no new fiscal or other incentives should be provided to any firm, sector, or investment in relation to SEZs.

The government has only opposed calls to reconsider the operation of the Special Investment Facilitation Council but has insisted on maintaining provisions to ensure equal opportunities concerning the investment environment and to avoid declining governance standards.

Copyright Business Recorder, 2024

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