Pakistan Haier-Ruba Economic Zone

(| Updated : 2018-05-17

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Introduction to the investment climate:

(1) Political environment

China and Pakistan have enjoyed more than 50 years' good diplomatic relations, maintaining the ties of brotherhood. The all-weather friendship and all-round cooperation between the two sides have made them a model of friendly exchanges among developing and neighboring countries. 

(2) Economic environment

In recent years, the Pakistani government has made the recovery and development of the economy the focus of its work. Through the implementation of the economic reform plan, the Palestinian economy has grown at an average rate of more than seven percent for five consecutive years, making it one of the fastest-growing economies in Asia. 

(3) Strategic location

Bordered by India to the east, Iran to the west, and the Arabian Sea to the south, Pakistan’s unique geographical location enables it to easily reach out to the surrounding markets of South Asia, West Asia and the Gulf. It serves as a pivotal gateway for China’s enterprises to implement the “going global” strategy and to access the markets of Central Asia, Southern Asia and the Middle East. 

(4) Resource advantages

Pakistan boasts the name of Central Asia's granary and oriental "fruit basket". It is abundant in labor resources and mineral deposits that are rarely developed, and has high proficiency in English. 

(5) Market potential

With a population of 170 million, Pakistan is a market of enormous potential set for rapid growth. As the economy grows, and people’s income and consumption capability continue to rise, the domestic consumer market will expand. 

(6) Development potential

Pakistan has a relatively weak industrial base featuring a small scale and incomplete sectors. Economic development requires huge investments in infrastructure, so there is much room for investment in various areas. 

(7) Policy in Pakistan

The Pakistani government is actively pursuing a highly liberal investment policy that opens all economic sectors directly to foreign investors. Foreign companies enjoy the same treatment as local enterprises. They are allowed to hold 100 percent of equity without the need of government approval, and enjoy tax and tariff preferences. All project-related remittances such as capital, income, profits, and dividends are also allowed. 

Preferential policies in the Economic Zone:

(1) Tax relief

1. Exemption from taxes on imported equipment for the Economic Zone projects. 

2. Exemption from export tariffs on goods and import tariffs on raw materials that are scarce in Pakistan, or local materials of a quality that fails to meet the production requirements of the enterprise. 

3. Income tax will be 100 percent exempted within five years since the date the Economic Zone has gained profits with the previous accumulated losses deducted. The preferential tax rate will be halved to 17.5 percent within five years after the 6th year of operation in the Zone. 

4. The initial depreciation rate will be increased to 100 percent. 

5. Income tax will be exempted for enterprises that reinvest their profits. 

6. Enterprises in the Economic Zone enjoy Pakistan's existing export incentive policies. 

7. Exemption from withholding taxes levied by the withholding agent for all business transactions including land transactions. 

8. Simplification of procedures for obtaining income tax exemption certificates. 

9. There are bonded zones and bonded warehouses in the Zone assuring fast customs clearance of products. 

10. Two percent of the VAT, four percent of the stamp duty, and five percent of the withholding taxes on rental income arising from land deals will be exempted within five years from the operation date of the Economic Zone. 

11. Labor tax, consumption tax and other taxes will be exempted from the year the operation in the Zone begins. 

(2) Investment facilitation

1. The Investment Department will provide one-stop service in the Economic Zone. 

2. Simplifying the policy application and approval procedures for Haier Group's projects in Pakistan. The Pakistani government bodies will establish a special agency to facilitate the construction of the Economic Zone. 

3. Establishing a land port in the economic zone to facilitate import and export. 

4. The Investment Department provides investors with free services and guidance. 

(3) Energy environment

1. The Pakistani government provides electricity, natural gas and other energy sources to the Economic Zone. 

2. The provincial governments build highways directly connecting the Economic Zone. 

3. Forming a staff training center in the Economic Zone. 

4. Surrounding highways, including M2, Link Road and GT Highway, will all be provided with direct exports to the Economic Zone. The development and construction of the road park must be fully independent to ensure multi-purpose development without prejudice to relevant laws and policies of Pakistan. 

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