Pakistan’s Minister for Privatisation and Investment, Abdul Aleem Khan, announced plans to designate Karachi Industrial Park (KIP) as a model special economic zone (SEZ). This initiative is part of a larger strategy under the China-Pakistan Economic Corridor (CPEC) framework, aiming to make Pakistan’s SEZs more attractive to international investors. Under this program, KIP will be handed over to Chinese management on a trial basis, marking a first for SEZs in the country.
The decision to partner with China on KIP aligns with Prime Minister Shehbaz Sharif’s agenda of upgrading Pakistan’s SEZ infrastructure and business policies to international standards. In a recent meeting, Aleem Khan emphasized the importance of tailored incentives and streamlined operations to maximize the zones’ economic potential. This move highlights Pakistan’s commitment to overhauling its industrial landscape to foster sustainable growth and global investment appeal.
Reviving Pakistan Steel Mills: KIP’s Strategic Location
Spanning 1,500 acres on the land of the now-defunct Pakistan Steel Mills (PSM), Karachi Industrial Park is envisioned as a central hub for industrial development. The site, with an additional 19,000 acres of available land, holds potential for large-scale industrial projects. The Sindh government has already received 700 acres for the construction of a new state-of-the-art steel mill at the PSM location, which could contribute to job creation and economic regeneration in the area.
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Officials are considering dismantling the remaining PSM structures to pave the way for fresh infrastructure tailored to SEZ needs. KIP’s planned transformation into a model SEZ reflects a strategic approach to repurposing PSM’s vast land resources to attract foreign investments, particularly from China, and stimulate industrial activity across Pakistan.
Challenges and Solutions for SEZs
At the focal group meeting on SEZs, chaired by Aleem Khan, officials assessed the development status of various SEZs nationwide, addressing ongoing challenges. Infrastructure issues, limited policy support, and insufficient incentives were highlighted as major barriers impeding the success of these zones. Khan stressed the necessity of “special incentives” and called for swift reforms to make SEZs more functional and appealing.
Currently, Pakistan has 21 notified SEZs, designed to drive investment across different regions. Key SEZs include Bin Qasim Industrial Park, Korangi Creek Industrial Park, and Khairpur SEZ in Sindh; Hattar SEZ in Haripur; Rashakai SEZ in Nowshera, and notable hubs in Punjab such as M3 Industrial City and Quaid-e-Azam Business Park. Each SEZ provides unique opportunities for local and foreign investors, although further enhancements are needed to unlock their full potential.
Moving Towards Industrial Competitiveness
Aleem Khan highlighted the urgency of transforming Pakistan’s SEZs to align with global best practices. Special privileges, he noted, are vital for attracting international players and encouraging domestic industries to invest. By transitioning KIP’s management to China, the government hopes to set a benchmark for modernizing other SEZs across Pakistan.
This approach aims not only to address historical neglect of industrial zones but also to move away from “traditional practices” that have hindered growth. The focal group will reconvene to finalize recommendations and ensure KIP’s swift development as a model SEZ, with the broader goal of revitalizing Pakistan’s industrial infrastructure and enhancing its economic appeal on the global stage.
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KIP’s transition to Chinese management is expected to improve Pakistan’s SEZ operations and attract diverse investments. With dedicated reforms, expanded facilities, and modern infrastructure, the government hopes to position these zones as high-value investment destinations. The SEZ model, once fully optimized, could stimulate job creation, drive local industry, and ultimately contribute to Pakistan’s economic growth.