China-Pakistan Economic Zone in the doldrums

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (July 22 2009): The government's dream project, the China-Pakistan Economic Zone (CPEZ), is in doldrums as the much talked about Haier Ruba has refused to buy thousands of acres of land from its own pocket, sources close to the Minister for Industries and Production told Business Recorder. The Haier Ruba Group is engaged in electrical home appliances.

It had expressed interest to establish Chinese Economic Zone. Ground breaking ceremony of the project was performed in December 2006 in the presence of Chinese President and Prime Minister of Pakistan. Land acquisition proceeding for 4218 acres has been initiated by the Punjab government. However, the project has been considerably delayed on the issue of sharing cost of land.

"Government is considering buying land from the Punjab government through National Industrial Parks (NIPs) as in case Haier Ruba backs out, other investor should be invited to acquire land," sources said. Giving the details, they said that a summary for the Economic Co-ordination Committee (ECC) of the Cabinet, proposing acquisition of about 3,000 acres of land in the name of Federal Government for development of Economic Zone for leasing out to Haier Ruba was submitted by the Ministry of Investment.

The summary was considered by ECC in its meeting on February 25, 2008 and a committee, under the chairmanship of Deputy Chairman, Planning Commission, was constituted to revise the proposal to straighten out ambiguities in the proposed modalities relating to land acquisition and financing. The committee considered the case in its meetings on April 18, 2008 and April 26, 2008, but further progress remained held up as Haier-Ruba kept on insisting that land should be provided free of cost, or at subsidised rates.

Sources said that the case was further considered at a meeting held in the President's Secretariat on February 14, 2009 where it was decided that NIPs, a wholly owned company of the Government of Pakistan, will purchase approximately 4200 acres of land and develop it for use by Haier Ruba as a Special Economic Zone (SEZ).

They said that the proposal was circulated among Planning and Development Division, FBR, Finance Division, Ministries of Textile Industry and Commerce who supported it with minor observations. Sources said that observations of the Ministries/Divisions will be kept in view while working out an agreement with Haier-Ruba and NIPs. In view of the existing scenario, following proposals are being submitted to the top policy markers for the implementation of the project:

a) Ministry of Industries/NIPs will request Government of Punjab for acquisition of required land, (approximately 3,000/4,000 acres).

b) Ministry of Finance will issue sovereign guarantee against which NIPs will generate money from the market for acquisition of land and the development of the zone. The interest accrued on the loan will be built into the cost of developed land.

c) NIPs will sell the developed land to Haier Ruba, or its customers, at a predetermined price.

d) Haier Ruba will market/sell and operate the zone independently with in the framework agreed with NIPs.

e) In case Haier Ruba backs out, NIPs will invite any other investor to acquire and use the land.

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