Differences between govt, PPP remain over special economic zones amendments

ISLAMABAD (Hareem Jadoon) – Although the ordinance that caused differences between the government and the Pakistan Peoples Party (PPP) has been withdrawn, the key question still remains: was PPP’s objection related to the issuance of the ordinance without the president’s signature, or to certain measures introduced through amendments to the Special Economic Zones (SEZ) Act?

The government claims the purpose of the ordinance was to promote investment in the country and make the special economic zones framework more effective. However, PPP argues that under the amendments, a 10-year exemption on taxes and duties until 2035 would harm local industries and could also lead to an increase in smuggling.

PML-N sources say there was a plan to establish an economic zone on the vacant land of the Steel Mills, which may have raised some concerns. They add that consultations will be held with PPP and amendments will be reintroduced with consensus.

Among the main objectives of the withdrawn proposed ordinance were facilitating investment, reducing administrative hurdles, ensuring speedy resolution of disputes, and accelerating industrial and economic growth. It also included a 10-year income tax exemption for industries operating in special economic zones until June 30, 2025.

To ensure quick dispute resolution, the ordinance proposed the establishment of a Special Economic Zones Appellate Tribunal instead of referring matters to regular courts. Amendments to the SEZ Act 2012 were also suggested to clearly define and harmonize the powers of the federation and the provinces.

The ordinance proposed providing a formal legal basis for the establishment of a federal Special Economic Zones Authority, while expanding the definition of SEZ authority to include both federal and provincial bodies. It also clarified the procedure for applying to establish special economic zones.

Under the amendments, multiple developers were allowed in large SEZs, provided the zone covered at least 1,000 acres and each developer was allocated a minimum of 500 acres for development.

When the amending ordinance came to light, it emerged that it had been issued without the president’s signature, triggering a strong reaction from PPP. The party staged a walkout from the National Assembly and convened a parliamentary party meeting to decide its future course of action. However, later the same night, the government announced the withdrawal of the ordinance and sent a summary to the president.

On Wednesday, the president approved the summary for withdrawal, after which the Ministry of Law issued a formal notification.

PPP maintains that issuing an ordinance without the president’s signature was unconstitutional, and that the amendments themselves also raised serious concerns. Party sources said the ordinance granted industries in special economic zones a 10-year exemption on income tax and duties until 2035, which would negatively impact ordinary industries. They argued that local industries would be unable to compete with subsidized firms, and that increased supply from such subsidized industries in the open market could fuel smuggling.

On the other hand, PML-N sources say tax exemptions are a standard feature of special economic zones and see no justification for objections on this point.