Silver lining of fully functional Gwadar Port.

• Author: Fazl-E-Haider, Syed

Byline: Syed Fazl-E-Haider

Pakistan is taking initiative to develop Gwadar Port in Balochistan as a duty-free port with free economic zone on the lines of UAE's Dubai. Present government led by Prime Minister Imran Khan plans to provide exemptions from income tax, sales tax and custom duties to the Gwadar Port for 20 years.

The Economic Coordination Committee (ECC) has approved a proposal for amendments to various laws that would provide exemptions from income tax, sales tax and custom duties to the Gwadar Port for 20 years- until 2039. The proposal in this regard was submitted by Ministry of Maritime Affairs and sought changes in the country's tax laws in line with the concession agreement between the Gwadar Port Authority and China Overseas Ports Holding Company Pakistan.

The ECC has asked the law ministry for a legal way out in order to provide a legal cover for the amendments. The initiative will benefit those who intend to set up industries in Gwadar. As a result of this initiative, business activities in Gwadar will get a boost from next year.

The tax incentives as announced by the government would mobilize the private sector for setting up the manufacturing and assembling units in the new port city of Gwadar. The country has already announced a 15-year tax holiday for the proposed Export Processing Zone (EPZ) that has been planned near the Gwadar port for local and foreign investors. Pakistan automobile market is dominated largely by Japanese and Korean manufactures like Suzuki, Honda, Toyota, Hino, Hyundai and Mazda. Many foreign manufacturers including Chinese are reportedly in negotiations with Pakistan to start assembly operations in the country.

These incentives will attract manufacturers to establish the manufacturing and assembling units in Gwadar. Serious efforts on the part of the government will start at least assembly operations in Gwadar. The assembling units in the country are already assembling most of the world leading brands and the government can facilitate the private sector to set up assembling units in Gwadar.

Prospects are bright for China for setting up automobile units in Gwadar. China's vehicle market is the world's third-largest behind the United States and Japan, but the after-market segment is in its relative infancy. In the United States and Europe, after-market sales account for roughly 70 percent of the auto industry. According to an estimate, after-market sales accounted for one-third of the total...