Policy Brief 05/09/2024
This study critically examines the development of Special Economic Zones (SEZs) in Pakistan, with a focus on those established under the China-Pakistan Economic Corridor (CPEC). It identifies key challenges including attracting Foreign Direct Investment (FDI), promoting export diversification, and enhancing employment opportunities. SEZs are pivotal in building the industrial capacity necessary for Pakistan’s sustained economic growth, particularly through regional tax incentives and robust infrastructure. However, despite the establishment of 35 SEZs and 9 planned CPEC-SEZs under CPEC Phase II, progress is hindered by security threats, business environments, and other systemic issues.1
To address these challenges, the government should consider reducing the cost of doing business by lowering documentation fees, offering electricity at subsidized rates, and reducing land acquisition cost. Furthermore, enhancing job creation through CPEC-SEZs requires implementing policies that boost employment opportunities and aligning vocational training institutions with industry needs. These measures could significantly improve the success rate of CPEC-SEZs, enhance the performance of existing SEZs, and generate positive externalities for the broader economy.
