ACT No. XX OF 2012
SPECIAL ECONOMIC ZONES ACT, 2012
An Act to provide for setting up and
operation of special economic zones in Pakistan
[Gazette of Pakistan, Extraordinary, Part-I, 13th September, 2012]
No.
F. 22(7)/20L2-Legis.—The
following Act of Majlis-e-Shoora (Parliament) received the assent of the
President on the 12th
August, 2012 and is hereby published for general information:
WHEREAS it is necessary and expedient to
promulgate a law for the creation, development and efficient operation of
special economic zones through provision of a legal and regulatory frame work
to encourage domestic and international investors for promotion and
establishment of industrial infrastructure and for other matters connected or
ancillary thereto;
It is hereby enacted as follows:-
1. Short title, extent and commencement.—(1) This Act may be called the Special
Economic Zones Act, 2012.
(2) It
extends to the whole of Pakistan.
(3) It
shall come into force on such date as the Federal Government may, by
notification in the official Gazette, appoint and different dates may be
appointed for coming into effect of different provisions of this Act and any
reference to commencement shall generally refer to the commencement of this Act
but commencement of any provision that comes into force subsequent to the
general commencement shall be treated from the date of coming into force of the
respective provision and not the general commencement.
2. Act to override other laws.—The provisions of this Act shall have force
notwithstanding anything to the contrary contained in any other law for the time
being in force.
3. Definitions.—In this Act, unless there is anything
repugnant in the subject or context,—
(a) "Approvals
Committee" means the committee constituted under Section 7;
(b) "arbitration"
shall include arbitration under the applicable laws of Pakistan as well as
arbitration under any applicable international regime, whether selected
contractually through an agreement in writing or available to a party or
parties as a result of an international agreement accorded or ratified;
(c) "BOA"
means the Board of Approvals constituted under Section 5;
(d) "BOI"
means the Board of Investment established under the Board of Investment Ordinance,
2001 (XV of 2001);
(e) "capital
equipment" means plant, machinery or equipment, accessories, and component
part of machinery and equipment identifiable for use in or with machinery
required for economic activities and machinery includes machinery and equipment
of any description, such as is used in industrial process, manufacture,
production or processing of other goods and rendering services, except the
goods that are consumed in the manufacturing, production of processing of goods
or provision of services;
(f) “developer"
means an enterprise which has entered into a development agreement with a SEZ
Authority;
(g) "development
agreement" means a duly approved agreement between SEZ authorities and
agreed to and endorsed by the BOA and a developer that authorises a developer
to develop, establish and operate a SEZ;
(h) "economic
zone" means a geographically defined and delimited area which has been
notified and approved for economic, industrial and commercial activities;
(i) "existing
zones" means the export processing zones, industrial zones and other
similar entities in existence at the time of the commencement of this Act and
includes but not limited to the following, namely:-
(i) "export processing zones" means
and economic zone which is established under the Export Processing Zones
Authority Ordinance, 1980 (IV of 1980);
(ii) "extra-territorial zone" means an
economic zone of a type that is to be deemed to be outside the customs territory of Pakistan;
(iii) "free trade zone" means an
economic zone that shall be deemed to be outside the customs territory of
Pakistan with respect to which the BOA shall approve special facilities for
trade, transshipment and re-export operations in accordance with applicable
legislation as for the time being in force in Pakistan;
(iv) "hybrid export processing zone"
means an economic zone that shall be deemed to be outside the customs territory
of Pakistan in which goods are manufactured and from which services are
provided, both for exportation to countries other than Pakistan as well for
export into Pakistan;
(v) "multilateral economic zone"
means an economic zone in which all zone enterprises are required to be
beneficially owned by national, residents or corporate entities of one or more
particular countries;
(vi) "reconstruction opportunity zone"
means an economic zone from which the exports of goods and services has been
recognized by any country or jurisdiction other than Pakistan as being eligible
for reduced tariff duties and other benefits;
(vii) "regional development zone" means
an economic zone wherein economic activates are promoted so as to develop
particular regions and industries; and
(viii) "sector development zone" means a
regional development zone in which permissible economic activity shall be limited
to one or more sectors as notified by the BOA;
(j) "misconduct"
means any conduct of a member or Chairperson of the Provincial SEZ Authority
that is prejudicial to the good order and management of the SEZ Authority or a
SEZ and includes but not limited to the following, namely :-
(i) a failure to disclose an interest of the
member or Chairperson in a transaction related to a SEZ or an interest of the
member's parent, spouse, brother, sister, child, or spouse of a parent,
brother, sister or child;
(ii) any act or omission which is ultra vires of
this Act;
(iii) any act or omission which lacks good faith;
or
(iv) any act or omission which is inconsistent
with the fiduciary duties of such member or Chairperson;
(k) "Provincial
investment promotion authority" means an investment promotion agency, by
whatever name called, formed by a Province to work as local authority to
promote domestic and foreign investment in that Province such as Sindh Board of
Investment established in Sindh and Punjab Board of Investment and Trade or any
other similar entity;
(l) "SEZ
Authorities" mean the Provincial SEZ Authorities established under Section
10;
(m) "SEZ
Committee" means the authority chartered by the BOA at each SEZ under Section
23;
(n) "special
economic zone" or "(SEZ)" means a geographically defined and
delimited area which has been notified and approved by the BOA. The SEZs shall
be deemed to be outside the customs territory
of Pakistan only for the
purposes of this Act;
(o) "zone
admission criteria" means the criteria under this Act and to be applied by
developers in deciding whether or not to admit an enterprise into a particular
SEZ including thereof zone approval criteria that means the criteria to be
applied by the SEZ Authority and the BOA in deciding whether to allow or not to
allow a particular area to be developed as a SEZ;
(p) "zone
application" means an application submitted in accordance with the
provisions of this Act by an SEZ Authority seeking the notification of an area
as a special economic zone;
(q) "zone
development plan" means a business plan for developing a SEZ;
(r) "zone
enterprise" means an enterprise admitted into a SEZ by a developer; and
(s) "zone
regulations" mean regulations made under this Act.
4. Establishment of special economic zones.—The Federal Government and Provincial
Governments may establish special economic zones by themselves or in
collaboration with private parties under various modes of collaboration
including public-private partnership or exclusively through the private parties
as provided under this Act.
5. Board of Approvals.—(1) There shall be a Board of Approvals, hereinafter
called BOA, consisting of—
(i) the
Prime Minister of Pakistan who shall be the Chairperson of the BOA;
(ii) the
Minister for Finance who shall be the Vice Chairperson of BOA;
(iii) the
Minister for Industries;
(iv) the
Minister for Production;
(v) the
Minister for Commerce;
(vi) the
Minister for States and Frontier Regions Division;
(vii) two
members of Majlis-e-Shoora (Parliament) to be nominated by the Prime Minister
(one from each House);
(viii) the
Chairman of the BOI;
(ix) the
Deputy Chairman Planning Commission;
(x) the
Chief Minister of each Province;
(xi) the
Chairman of the Federal Board of Revenue;
(xii) Governor,
State Bank of Pakistan;
(xiii) Secretary
BOI;
(xiv) executive
heads of the Provincial investment boards by whatever names known or if no such
board is established a nominee of the Government of such Province, having
adequate relevant professional experience, the tenure of such nominees shall be
three years;
(xv) the
President of the Federation of the Pakistan Chambers of Commerce and Industry;
(xvi) the
President of the Pakistan Business Council;
(xvii) the
President of the Overseas Chamber of Commerce and Industry; and
(xviii) a
professional having relevant adequate experience to be nominated by the Prime
Minister of Pakistan.
(2) The
meeting of the BOA shall be convened on the orders of the Chairman BOA or on
the recommendations of BOI or the Provincial SEZ Authority.
(3) The
BOA shall meet as frequently as required but not less than twice a year.
(4) Fifty
percent of the members shall constitute quorum of the BOA.
(5) Where
the Chairperson is not present, the Vice-chairperson shall chair the BOA's
meeting and if both are not available, a member designated by the Chairperson
shall preside.
(6) The
decisions of the BOA shall be taken by majority of the total membership present
and voting.
(7) The
BOA shall adopt its own rules of procedure.
(8) Secretary
BOI shall also act as Secretary of the BOA.
6. Functions and responsibilities of the
BOA.—The BOA may—
(a) approve
such regulations for the implementation of this Act as are applicable to all
SEZs or to a particular group of SEZ or a particular SEZ;
(b) approve
or reject zone applications;
(c) approve
or reject development agreements;
(d) examine
and decide upon policy issues submitted to it by SEZ Authorities or by
developers;
(e) co-opt
on the members of the Approvals Committee as necessary;
(f) notify
with approval of relevant authorities additional benefits under sub-section (2)
of Section 34;
(g) cancel
development agreement;
(h) review
and direct actions on annual reports submitted by SEZ Authorities;
(i) annually review the
implementation of this Act with a view to improving policies relating to SEZs;
and
(j) take any other steps it
deems appropriate in order to advance the objectives of this Act.
7. Approvals Committee.—(1) There shall be an Approvals Committee that
shall be chaired by the Chairman of the BOI and shall consist of the following,
namely:-
(i) executive heads of the
Provincial investment boards or companies or agencies, and where these do not
exist a representative equivalent to a Provincial Secretary designated by the
concerned Province;
(ii) representatives of the
Ministries of Finance, Commerce, Industries, Production and States and Frontier
Regions Division not below the level of an Additional Secretary to the
Government;
(iii) private sector
representatives representing different sectors and regions to be notified and
two co-opted members by special invitation with a three-year term extendable at
the discretion of the BOA; and
(iv) with approval of BOA,
co-opted members from concerned Federal and Provincial Governments for specific
cases.
(2) The
Approvals Committee shall exercise all such powers and responsibilities as are
delegated to it by the BOA, subject to such conditions as it may deem fit.
(3) The
BOA may delegate all or any of its remaining powers and responsibilities to the
Approvals Committee.
(4) A
decision taken by the Approvals Committee shall be submitted to BOA at its
meetings or by circulation for approval.
(5) The
BOA may, at any time, exercise any responsibility or any power which it has
delegated to the Approvals Committee.
8. Functions of BOI.—(1) The BOI as the Secretariat of BOA and
Approvals Committee shall—
(a) be responsible for the
co-ordination of all activities pertaining to SEZs, developers and zone
enterprises, including the preparation of all documentation for consideration
by the BOA and for ensuring the implementation of all decisions of the BOA;
(b) process all zone
applications submitted by SEZ Authorities for consideration of BOA;
(c) process all applications
for additional incentives in accordance with sub section (2) of Section 34;
(d) review all development
agreements proposed by SEZ Authorities;
(e) be responsible for the
international and domestic promotion of investments into SEZs; and
(f) facilitate the
interaction of developers and zone enterprises with all other Federal, Provincial
and other Governmental authorities as well us with international financial and
developmental institutions.
(2) BOI
shall act as SEZ Authority for the Islamabad
Capital Territory
as provided in Section 12.
(3) BOI
shall support and facilitate the SEZ Authorities, if requested.
9. Responsibilities of Provincial investment
promotion authorities.—(1) A
Provincial investment promotion authority shall be responsible within its
Province of jurisdiction for the following, namely:-
(a) to assist in the operation
of the Provincial SEZ Authorities;
(b) to be the focal entity
responsible for the investment promotion;
(c) may assist the SEZ
Authorities and the developers in acquisition and other land related matters
including but not limited to necessary easement issues;
(d) to
ensure infrastructure development linkages between authorities within the SEZ;
and outside the SEZ;
(e) to
facilitate the developers and zone enterprises in dealing with all Provincial Governmental
authorities for smooth and systematic resolution of issues as and when they
arise; and
(f) to
facilitate the developers and enterprises in complying with environmental
regimes and social development.
10.
SEZ Authority.—(1) There shall be established for each
Province, an authority to be known as the SEZ Authority of that Province.
(2) Every
SEZ Authority shall be a body corporate by the name aforesaid, having perpetual
succession and a common seal, with a power, subject to the provisions of this
Act and any regulations, to acquire, hold and dispose of property, both movable
and immovable, and to contract and shall, by the said name, be entitled to sue
and to be sued.
(3) Each
SEZ Authority shall consist of—
(a) a
Chairperson, who shall be the Chief Minister of the concerned Province or a
person appointed by the Chief Minister;
(b) a
Vice-Chairperson, who may be the Minister or the Advisor in charge of the
investment department and where no such department exists, any member of the
Provincial cabinet nominated by the Chief Minister of the concerned Province;
(c) a
Chief Executive Officer who may be appointed by the Chief Minister of the
Province concerned and may be the Secretary of the SEZ Authority;
(d) Secretary
of the Provincial investment department and where no such department exists,
the executive head of the Provincial investment promotion authority by whatever
name it exists;
(e) Secretaries
of the Provincial industries, finance, commerce, investment, works and
services, livestock, agriculture and planning and development departments;
(f) two
members to be appointed by the Chief Minister of the Province concerned and two
other members to be appointed by the BOA; and
(g) a
member to be appointed by the concerned Chamber of Commerce and Industry where
the SEZ is proposed. If there is no Chamber of Commerce then a member of the
Chamber of Commerce of that respective area to be appointed.
(4) Each
SEZ Authority may acquire land in its respective Province in accordance with
the Land Acquisition Act, 1894 (I of 1894).
(5) Each
SEZ Authority shall, subject to the approval of BOA, establish its rules and
procedures.
(6) Where
the Chairperson is not present, the Vice Chairperson shall chair the SEZ
Authority's meeting.
11.
Requirements for all zone applications.—(1) Every zone application submitted for
approval to the BOA shall identify the type of SEZ proposed and include—
(a) a
basic business concept or model for the proposed SEZ to be submitted;
(b) parameters
for zone admission criteria; and
(c) a
preliminary zone development plan which shall—
(i) define the geographic boundaries of the
proposed SEZ;
(ii) set out the basic infrastructure
development requirements, both inside and outside the proposed SEZ, necessary
for the proper functioning of the proposed SEZ;
(iii) set
out the land requirements of the proposed SEZ;
(iv) set
out the manner in which land required shall be procured, including specifically
whether land will need to be acquired under the Land Acquisition Act, 1894 (I
of 1894); and
(v) set
out what criteria shall be applicable to the admission of zone enterprises into
that SEZ.
(2) The
zone application shall be submitted along with a proposed development agreement
under Section 14 and the criteria on which a developer shall be selected for
that SEZ.
12. Approval of zone applications.—(1) All zone applications shall be submitted
to the BOA by the SEZ Authority of the Province in which the proposed SEZ shall
be located.
(2) The
BOA shall review every zone application submitted to it by the SEZ Authority to
ensure that the proposal is in conformity with the provisions of this Act, any
applicable regulations made under this Act and other applicable provisions of
law.
13. Approval of development agreements.—(1) If a zone application is approved by the
BOA, the concerned SEZ Authority shall select a developer in accordance with
any applicable zone regulations except as provided in Section 4. Such zone
regulations shall require that envisaged development agreements be notified for
competitive bidding.
(2) After
negotiating a development agreement, the concerned SEZ Authority shall submit a
final agreement for approval to the BOA.
(3) There
shall be a provisional approval by the concerned SEZ Authority subject to
fulfillment of all such conditions necessary for final approval according to laid
down criteria.
(4) The
BOA may condition its approval of a development agreement on the fulfillment of
such conditions as it deems fit and according to the laid down criteria.
(5) After
final approval, the development agreement shall be signed jointly by the
Secretary of the BOA on behalf of the Federation of Pakistan and by the chief
executive officer of the concerned SEZ Authority on behalf of the respective Provincial
Government.
(6) If
the BOA does not approve a development agreement submitted to it, the concerned
SEZ Authority, that submitted the development agreement, may resubmit the
development agreement after either renegotiating the terms of the proposed
development agreement with the developer concerned or after reaching agreement
with a different developer selected in accordance with the applicable zone
regulations.
(7) In
case of any grievances, a developer may approach BOA directly or through the
SEZ Authority and BOA shall have the authority to consider, modify or set aside
any decision.
14. Simultaneous approval of zone application
and development agreement.—The
SEZ Authority may simultaneously submit both a zone application and a
development agreement lo the BOA for provisional approval, provided that—
(a) the
developer in question either owns all immovable property in the proposed SEZ or
holds leasehold rights; and
(b) no
additional incentives shall be granted by the SEZ Authority under sub-section
(2) of Section 34.
15. Approval of existing zones.—(1) Any existing zone may apply to the SEZ Authority
in which it is located for submission of a zone application on its behalf.
(2) Subject
to applicable zone regulations, the SEZ Authority may choose to submit a zone
application with respect to an existing zone.
(3) The
BOA may approve a zone application with respect to an existing zone on such
terms and conditions as it deems appropriate, provided that all zone enterprises
in existing zones before the commencement of this Act exercises the option of
availing the benefits already enjoying or the benefits to be offered by this Act.
(4) The
existing zones shall not avail the two benefits simultaneously.
(5) Notwithstanding
anything contained in sub-section (3) only the new entrants and new industries
that have never availed any such benefits in the past are eligible for the
benefits of SEZ under this Act.
16.
Zone approval criteria.—(1) The BOA shall issue general and
particular zone approval criteria for SBZ compatible with Pakistan's
obligations under its multilateral and bilateral trade agreements which shall
cover--
(i) customs
procedures for imports into a SEZ and exports out of it; and
(ii) Pakistani
certificates of origin for exports issued by the respective Chamber of
Commerce.
(2) unless
otherwise decided by the BOA, the following provisions shall form part of the
zone approval criteria, namely:-
(a) a
SEZ shall have a minimum size of at least fifty acres;
(b) not
more than thirty percent of the entire area of a SEZ shall be used for
amenities (including commercial areas), infrastructure and residential or
labour colonies;
(c) public-owned
land, if used for SEZs shall be leased for a period of at least fifty years
extendable for further period as laid down by the competent forum;
(d) Developers
must undertake to comply with all environmental, labour and other applicable
legislation in force in Pakistan;
(e) zone
enterprises must begin construction of facilities within six months and assume
regular business operations within twenty-four months of their approval as zone
enterprises and after receipt of all required licences and permits;
(f) within
six months the developer is bound to take all necessary approvals to start
construction activities failing which that title will be withdrawn and
agreement will be terminated and land will be returned;
(g) title
to land may be registered in the name of zone enterprises only after they have
performed business operations in the SEZ concerned for at least six months;
(h) there
shall be no real estate activities in the zone as this would result in withdrawl
of the title of land and termination of the agreement; and
(i) articles
of association of the zone developer shall be approved by the Provincial SEZ
Authority in accordance with the regulatory framework prescribed by the BOA.
(3) In
case the SEZ Authority is satisfied with the justification put forward for
delay in performance of a responsibility by an enterprise in a SEZ, it may give
reasonable relaxation in time frame for performance of the particular
responsibility.
17.
Functions and powers of SEZ Authorities.—The SEZ Authority shall be responsible to,—
(a) prepare
zone applications in accordance with this Act and applicable zone regulations;
(b) select
developers in accordance with the provisions of this Act and the applicable zone
regulations;
(c) negotiate
development agreements in accordance with the provisions of this Act and
applicable zone regulations;
(d) assist
developers upon award of a development in acquiring land and accessing public
utilities in accordance with the zone development plan;
(e) prepare
zone regulations for particular SEZ;
(f) co-ordinate
with Federal and Provincial authorities and ensure the building of
infrastructure outside the boundaries of SEZ;
(g) serve
as liaisons and facilitating agencies in accordance with the provisions of Section
29;
(h) facilitate
the availability of public utilities to zone enterprises in accordance with the
zone development plan;
(i) liaise
with all relevant Federal and Provincial authorities to ensure the security of
SBZs;
(j) monitor
the proper implementation of streamlined administrative procedures in SEZs
under Section 28;
(k) monitor
the compliance of developers with zone regulations as well as the compliance of
developers with their obligations under development agreements and suspend
development agreements, in case of violation of terms of development agreement
by the developer, pending final decision by BOA.
(l) monitor
the compliance of zone enterprises with their obligations under zone
regulations;
(m) review
of the activities of the developers and zone enterprises regularly but not less
than once a year; and
(n) report
bi-annually to the BOA with respect to SEZs in the Provinces concerned.
18. Suspension and removal of members of SEZ
Authorities.—(1) The Chief
Minister may order removal of either the Chairperson, if so appointed by him,
or any member of the Provincial SEZ Authority.
(2) If
either the Chairperson or any member of a Provincial SEZ Authority is removed,
their replacement shall be appointed by the Chief Minister.
19. Eligibility as developer.—Unless otherwise decided by the BOA with
respect to a particular SEZ or type of SEZ, any entity shall be eligible as a developer
which is incorporated under the laws of Pakistan.
20. Responsibilities of developers.—(1) With the exception of existing zones
which have been approved as SEZs, all SEZs shall be developed and operated by
developers within a specified time period as mentioned in the development agreement.
(2) All
developers shall—
(i) implement their zone
development plans in accordance with the terms of their development agreement;
(ii) approve zone enterprises
and allot land to such enterprises in accordance with the applicable zone
admission criteria, zone regulations and the terms of the development
agreement; and
(iii) monitor and ensure the
compliance of zone enterprises with all applicable zone regulations.
(3) Subject
to default on the foregoing unless otherwise, the agreement shall stand
terminated.
21.
Development agreements.—(1) Each development agreement shall
include--
(a) all undertakings of the
developer regarding the development and operation of the SEZ concerned, with
the zone development plan or business concept of proposed SEZ model as an
integral part of the development agreements; and
(b) all authorities conferred
on the developer with respect to the SEZ concerned, including specifically any
provisions pertaining to the developer's authority to—
(i) admit enterprises into
the SEZ in accordance with the zone admission criteria and allot land to them
in accordance with agreed eligibility criteria and procedures;
(ii) act as a liaison and
facilitating agency between the relevant SEZ authority and zone enterprise;
(iii) all financial obligations
of the developer, including any obligation to make payment for the allocation of
land and provision of services by public authorities; and
(iv) clear
provisions regarding the responsibility of maintenance of infrastructure and
utility services.
(2) A
development agreement shall also include—
(i) rights,
protections and entitlements of the developer with respect to the SEZ
concerned, established or allowed under this Act or any other applicable law:
(ii) rights,
protections and entitlements of zone enterprises in the SEZ concerned established
or allowed under this Act or any other applicable law, together with a
prescribed procedure for the invocation of such rights, protections and
entitlements by the developers;
(iii) provision
for the settlement of disputes, including disputes on behalf of zone
enterprises through arbitrations; and
(iv) rights
or titles and other legal authority of the Provincial SEZ Authorities superior
to it in terms of the provisions of this Act.
22.
Sanctions against developers.—(1) The SEZ Authority may, if it is satisfied
after notice and a hearing that a developer is not acting in accordance with
the terms of its development agreement or is acting in violation of applicable
zone regulations or applicable legislation and has failed to rectify such
violation despite notice to this effect, suspend the development agreement of
that developer and move for cancellation of such agreement to the BOA or impose
such other penalty as may be provided under the applicable zone regulations or
the development agreement.
(2) Upon
receipt of an application from the Provincial SEZ Authority seeking
cancellation of a development agreement, the BOA shall give notice to the developer
concerned, asking it to show-cause why its development agreement should not be
cancelled or why such lesser penalty as may be provided under applicable zone
regulations should not be imposed.
(3) Pending
the final decision of the BOA on a proposal for cancellation of a particular
development agreement, the SEZ Authority may appoint an interim administrator
or take such interim measures as it is necessary to do so—
(a) in
the public interest; or
(b) to
prevent any of the affairs of any SEZ being conducted in a manner detrimental
to the interests of stakeholders, zone enterprises or other persons whose
interest are likely to be affected or in a manner prejudicial to the interests
of the SEZ.
(4) Pending
the final decision of the BOA, on a proposal for cancellation of a particular
development agreement, the SEZ Authority may, if it is satisfied that it is
necessary to secure the proper management of any zone, issue directions to developers
generally or to any developer in particular to carry out such changes as are
necessary to rectify the situation and the developers shall be bound to comply with
such directions.
(5) Following
a hearing in person, in which the developer may be represented by counsel, the
BOA may impose such penalty as is provided by the applicable zone regulations
or the development agreement, which may include cancellation of a development
agreement or cancellation of any benefits allowed to a developer, provided that
any cancellation of benefits to a developer shall be without prejudice to the
rights and privileges of zone enterprises.
(6) The
BOA may only cancel a development agreement if it finds that—
(i) the
developer has violated its development agreement; and
(ii) that
the developer has failed to rectify such violation despite notice.
(7) In
addition to the rights of a developer to seek relief through arbitration, a
developer aggrieved by any decision of the BOA, BOI or by the imposition of
sanction by the SEZ Authority or by the suspension or cancellation of its
development agreement may appeal before the High Court of the relevant
Province.
23. SEZ committees.—(1) The BOA shall charter an SEZ Committee for
each SEZ as per the applicable zone regulations.
(2) The
membership of a SEZ committee shall consist of representatives from the
developer, BOI, Provincial investment promotion agency, SEZ Authority and
concerned district Government. The developer shall appoint the chairperson of the
committee.
(3) Each
SEZ committee shall have responsibilities to administer and enforce SEZ
benefits and rules as well as provide facilitation between the SEZ, its enterprises
and the Government with responsibilities including to--
(a) examine
and approve SEZ entry applications in accordance with zone admissions criteria;
(b) provide
for certification of zone enterprises;
(c) conduct
oversight of enterprises;
(d) enforce
the building code of the SEZ;
(e) coordinate
between the developer and Government entities and utility providers during
construction;
(f) assist
Zone enterprises in obtaining approvals and registrations;
(g) serve
as the point of contact between the zone enterprise and utility providers; and
(h) facilitate
between enterprises and Government regulators and tax authorities.
(4) SEZ
Committees shall execute their responsibilities according to their standard
operating procedure in accordance with zone regulations.
24. Admission of zone enterprises.—(1) Enterprise
shall be admitted into a SEZ by the developer in accordance with applicable
zone admission criteria, the zone regulations and the terms of the development
agreement.
(2) Any enterprise which is refused admission into
a SEZ by a developer may appeal to the SEZ Authority of the relevant Province,
which shall have the power to direct the relevant developer lo allow admission
to the enterprise in question in accordance with the applicable zone
regulations and development agreement.
25. Sanctions against zone enterprises.—(1) The BOA shall issue zone regulations
which provide for sanctions against zone enterprises and the manner in which
such sanctions may be imposed.
(2) The
BOA may, with respect to particular SEZs, delegate its authority under
sub-section (1) to SEZ Authorities.
(3) The
SEZ Authority may if it is satisfied that it is necessary to do so to secure
the proper management of any zone enterprise, issue directions to zone enterprises
generally or to any zone enterprise in particular to carry out such changes as
are necessary to rectify the situation and the zone enterprise shall be bound
to comply with such directions.
(4) The
SEZ Authority may only expel a zone enterprise from a SEZ if it finds that—
(i) the
zone enterprise is in violation of its obligations; and
(ii) the
zone enterprise has failed to rectify such violation despite notice.
(5) The
SEZ Authority may appoint an interim administrator or take such interim
measures for a period of not more than one month if it is satisfied that it is necessary
to do so--
(i) in
the public interest; or
(ii) to
prevent any of the affairs of any SEZ being conducted in a manner, detrimental
to the interests of stakeholders, developers, zone enterprises or persons whose
interests are likely to be affected or in a manner prejudicial to the interests
of the SEZ.
(6) The
action taken by the SEZ Authority in accordance with sub-section (5) shall be
referred to BOA within seven days for ratification by BOA, The BOA shall decide
the matter and issue the guidelines and instructions about operations of zone
enterprise within fifteen days.
26. Land regime.—(1) The Provincial Government of each
Province or any concerned authority shall nominate, for each SEZ, a
sub-registrar who shall be the exclusive authority with which all documents
relating to that SEZ shall be liable to be registered under this Act, zone
regulations and any other applicable law.
(2) Notwithstanding
any other law in force, a developer may not sell, sub-lease or otherwise
transfer any rights with respect to any immovable property within a SEZ except
through a duly registered instrument.
27. Public utilities and transportation links.—(1) Unless provided otherwise in a particular
development agreement, it shall be the responsibility of—
(i) the
Federal and Provincial Governments to ensure the provision of gas, electricity
and other utilities at the designated zero point of each SEZ;
(ii) the
Federal and Provincial Governments to ensure adequate road access to the SEZ;
and
(iii) each
developer to ensure, within a particular SEZ, the supply of gas and electricity
to all zone enterprises as well as the availability of all other public
utilities required for such areas as envisaged in the development agreement.
(2) Unless
provided otherwise in a particular development agreement and notwithstanding
anything to the contrary contained in the Regulation of Generation.
Transmission and Distribution of Electric Power Act, 1997 (XL of 1997), each
developer shall have the right to set up a captive electric power generation plant
or install a hydel power generator of sufficient size to cater to the expected demand
for electricity within a particular SEZ and to sell and distribute only the excess
electricity so generated within and outside that particular SEZ in accordance with
the applicable regulations.
28. Applicable operating administrative
procedures.—(1) The BOA, the
BOI and the SEZ Authorities shall promote the adoption of simplified administrative
procedures for SEZs and zone enterprises with the relevant Federal and
Provincial authorities and agencies. Such procedures shall in particular
facilitate the—
(i) issuance
of licences, permits and other approvals to zone enterprises required for their
business activities;
(ii) satisfaction
of customs and other export or import requirements by zone enterprises;
(iii) fulfillment
of tax obligations by zone enterprises; and
(iv) authorization
of electronic communications and Modes of e-governance.
(2) Procedures
under sub-section (1) shall endeavour to—
(i) substitute
notifications and registrations for licence, permit and other approval
requirements; and
(ii) authorize
approvals on a no objection basis within a specified period.
29.
Assistance by the BOI and SEZ
Authorities.—(1) The BOI
shall act as a liaison and facilitating agency between,—
(i) all
Federal Ministries, authorities and agencies; and
(ii) SEZ
Authorities, developers and zone enterprises.
(2) The
BOI shall act as a one stop shop in its responsibilities under sub-section (1).
(3) The
SEZ Authorities shall act as a liaison and facilitating agency between—
(i) all
departments, authorities and agencies of the relevant Province, including all
local Government and municipal authorities and agencies; and
(ii) developers
and zone enterprises.
(4) To
the extent practicable, SEZ Authorities in the Provinces or in any other area
shall seek to enter into administrative arrangements with tax, customs, labour
and other authorities under which SEZ authorities may exercise certain administrative
functions on behalf of such authorities, which arrangements may include a
secondment of officials with decision-making power from such authorities to SEZ
Authorities.
(5) All
Federal and Provincial Ministries and departments, authorities and other
agencies shall fully co-operate with the BOI and SEZ Authorities in facilitating
the activities of developers and zone enterprises and carry out the requisite
functions within the time frame stipulated under the regulatory framework
prescribed by BOA for the implementation of this Act.
30. Labour laws.—All labour and employment laws of Pakistan shall
be applicable to SEZ in the same manner as they are applicable to all
territories within Pakistan.
31. Employment of key persons.—Notwithstanding anything contained in any
other law, the BOA may issue special rules for the employment by zone enterprises
of key managerial and technical persons who are not citizens of Pakistan, relating
to the terms and conditions of their contracts as well as with respect to the issuance
of visas, temporary residence permits and temporary work permits for such key
persons and their dependents provided further that such rules shall only be issued
after consultation with—
(i) the
Ministry of Interior;
(ii) the
Ministry of Foreign Affairs; and
(iii) such
other Ministry or Department as the BOA may direct.
32. Security.—(1) Each Province or any concerned authority
shall be responsible for providing security for the protection of SEZs.
(2) Pending
the creation of a special police force, each Province or any concerned
authority shall designate special police units responsible for the protection of
SEZs within that area.
33. Extra territoriality of SEZs.—(1) Subject to the concurrence of the Federal
Board of Revenue, every extra-territorial zone shall from the dale of its approval
by the BOA onwards, be deemed to be a "customs-port" under Section 9 of
the Customs Act. 1969 (IV of 1969), upon notification by the Federal Board of Revenue.
(2) Any
transport of goods and provision of services from the customs territory of Pakistan
into an extra-territorial zone shall be considered as an export from-Pakistan.
Goods so transported and services so provided shall be eligible for all refunds
and other advantages offered under applicable law for exports into a foreign
country.
(3) Any
transport of goods from an extra-territorial zone into the customs territory of Pakistan shall be considered as an
export into Pakistan
of the goods brought into the extra-territorial zone under sub-section (2) and
used for producing the goods transported into the customs territory of Pakistan.
(4) Notwithstanding
any other provision of this Act, zone enterprises in extra-territorial zones
shall be eligible for—
(i) Pakistani certificates of
origin; and
(ii) any advantages under
trade or similar agreements of Pakistan
on the same conditions and to the same extent as enterprises within the customs
territory of Pakistan.
(5) The
BOA, in agreement with the Federal Board of Revenue, shall adopt simplified
procedures for the implementation of this section.
34. Incentives for SEZs.—(1) On execution of development agreements,
the developer of the particular SEZ as well as all zone enterprises in that SEZ
shall be entitled to benefits set out in Sections 36 and 37 respectively.
(2) With
the objective of promoting hi-tech industries or particular regions, the BOA
may grant additional benefits to a particular category of SEZs, zone
enterprise, regions or sectors provided that—
(i) such additional benefits
may only be granted if the BOA finds them to be justified on the basis of an
economic impact assessment;
(ii) such additional benefits,
if granted conditionally, may be liable to be forfeited with retroactive effect
if it is finally determined that a developer or zone enterprise has failed to
comply with the conditions prescribed for the additional benefits in question;
and
(iii) the BOA shall make the
economic impact assessment of a SEZ within five years from the date the
agreement is signed and within the first year of the operation of an
enterprise.
(3) Any
additional benefits granted by the BOA—
(i) shall be deemed to be
included in the relevant development agreement; and
(ii) shall become effective on
such conditions as the BOA may stipulate.
(4) Nothing
in this Act shall be construed to limit the authority of any Federal,
Provincial or Local Government authority to grant such additional benefits to
developers and zone enterprises as are within the scope of their respective
statutory powers.
35. Protection of benefits.—(1) All incentives under this Act shall be
additional to all incentives, benefits and protections which may be applicable
to developers and zone enterprises under generally applicable legislation and
international agreements of Pakistan.
(2) These benefits shall not be withdrawn
prematurely and any change therein shall be to the advantage of the developer
of the SEZ or the enterprise.
36. Benefits for
developers.—Unless
otherwise provided in a development agreement, developers shall be entitled to
the following benefits, namely:-
(a) one time exemption from all customs duties and taxes for all
capital goods imported into Pakistan for the development, operation and Maintenance
of a SEZ, entity, subject to verification and approval from the Board of
Investment; and
(b) Exemption from all taxes on income accruable in relation to the development
and operation of the SEZ for a period of ten years, starting from the date of
signing of the development agreement.
37. Benefits for
zone enterprises.—All zone enterprises shall be entitled to the following benefits, namely:-
(a) exemption from custom duties and taxes on imports of capital
goods into the SEZ for installation therein; and
(b) exemption from all taxes on income for a period of ten years
starting from the date the developer certifies that the zone enterprise has commenced
commercial operations with the relevant SEZ.
38. Jurisdiction of Court.—Without prejudice to the provisions of
Section 39,—
(a) the High Court of the
Province in which a SEZ is located shall have exclusive original civil
jurisdiction with respect to all disputes between the developer of that SEZ and
any Governmental authority or agency, to the extent that such dispute arises
out of, or relates to, a development agreement; and
(b) the district Court of the
district within whose boundaries a SEZ is located shall have exclusive original
civil jurisdiction with respect to—
(i) all disputes between the developer of that
SEZ and a zone enterprise located within that SEZ; and
(ii) all disputes between two or more zone
enterprises located within that same SEZ.
39. Alternative dispute resolution procedures.—(1) Development agreements may provide for
the resolution of disputes through arbitration between developers and any
Federal, Provincial or Local Governmental authority or agency arising out of,
or relating to, such development agreement.
(2) Development
agreements may authorize developers to pursue and defend the rights of zone
enterprises within a particular special economic zone through arbitration.
(3) Zone
regulations may provide for the resolution of disputes between zone enterprises
in the same SEZ or between zone enterprises and developers through arbitration
and mediation in accordance with procedures approved by the BOA for this
purpose.
40. Rules and regulations for implementation of
this Act.—The BOI, in
consultation with SEZ Authorities and with approval of the BOA, may make rules
and regulations as deemed necessary for implementation and to carry out
purposes of this Act.
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