Overview: Pushing Ahead with Special Economic Zones Despite IMF Constraints
Pakistan is intensifying its push to develop Special Economic Zones (SEZs) across the country, aiming to attract foreign investment and boost industrial output even as the International Monetary Fund (IMF) restricts the creation of new zones under the Extended Fund Facility (EFF). The IMF’s latest arrangement, approved on September 25, 2024, allows exceptions only for zones tied to prior international obligations or those approved by the relevant SEZ authority. In this context, Pakistan’s Board of Investment (BoI) is moving to accelerate SEZ development, including a zone with Iran that had been under consideration prior to IMF restrictions.
The key objective is to finalize SEZ status for projects legally protected under the SEZ Act, 2012 and to press ahead with four zones linked to international commitments. This effort underscores the government’s focus on channeling investments into industrial clusters that can deliver jobs, exports, and technology transfer during a period of fiscal tightening and external financing constraints.
Four Internationally Tied SEZs Under the Spotlight
The government has identified four SEZs tied to international commitments that remain urgent for establishment:
– Mohmand SEZ
– Karachi Industrial Park
– Federal SEZ in Islamabad (approved under the Pak-China Joint Cooperation Committee of CPEC in 2016)
– Gabd-Rimdan Border SEZ (under a 2024 memorandum of understanding with Iran)
Letters of Intent are being issued to locate development partners and expedite submissions under applicable rules. These zones are seen as strategic assets for realizing cross-border trade and regional cooperation, particularly in the context of Pakistan’s broader economic and geopolitical considerations.
Gilgit-Baltistan: Export Processing Zone on the Horizon
In Gilgit-Baltistan, the Moqpandas Export Processing Zone (EPZ) was approved in principle in January 2025, with formalities still pending. A Letter of Intent from the BoI has enabled the GB government to begin negotiations with potential investors. The application has been resubmitted for final approval, and the Board of Approvals (BoA) is expected to grant SEZ status once the remaining procedures are completed. This development signals a wider geographic spread of SEZ activity, including regions that have historically faced infrastructure and investment challenges.
Private Sector SeZs: Punjab and Sindh Leading the Charge
Beyond the zones tied to international commitments, several private-sector SEZ applications in Punjab and Sindh are gaining momentum. Notable projects include:
– United Business Park in Lahore, a 258.7-acre site near Raiwind
– Capital SEZ in Chakwal
Per the latest policy adjustments by SEZA Punjab, the per-acre industrial plot costs for these projects have been revised to boost attractiveness for investors: Rs 99 million for the Lahore sites and Rs 40 million for Chakwal. The Green Industrial Park in Lahore, spanning 63 acres, saw its per-acre cost reduced to Rs 120 million from Rs 150 million, reflecting a deliberate pricing strategy to spur private capital and project rollouts.
Expansion in Sindh: Oborcon Industrial Zone and BoA Consideration
In Sindh, the Oborcon Industrial Zone in Thatta, a 300-acre project, has been resubmitted after addressing prior observations and is awaiting BoA consideration. This demonstrates a steady tempo of approvals and reassessment to align with the IMF-mandated framework while sustaining private-sector enthusiasm for SEZs.
Established SEZs: Maintaining Stability and New Financing Models
Existing SEZs, such as the Bin Qasim Industrial Park in Karachi, continue to operate under standard criteria with 60-year lease terms. The Pakistan Industrial Development Corporation (PIDC) has proposed a new annual preferential land lease model at $10,000 per acre per year for up to 50 years, a move designed to reduce upfront costs and make long-term investments more predictable for developers and tenants.
Coordinated Policy Efforts: A Unified Approach to SEZ Qualification
New qualification criteria have been jointly formulated by the BoI, the Special Investment Facilitation Council (SIFC), the Ministry of Industries and Production, SEZA Sindh, and PIDC. The harmonized framework aims to streamline approvals, align with IMF conditions, and accelerate the implementation of zones that align with Pakistan’s industrial strategy and export ambitions.
Why SEZs Matter Now
SeZs are central to Pakistan’s plan to attract foreign direct investment, accelerate job creation, and diversify exports. By prioritizing zones with international commitments and nurturing private-sector developments, the government seeks to maximize the limited policy space allowed under the IMF arrangement. The focus is on creating robust industrial ecosystems, improving logistics, and fostering technology transfer that can help Pakistan navigate current fiscal constraints while laying the groundwork for resilient long-term growth.
Outlook
With Letters of Intent and resubmitted applications moving through BoA and related authorities, Pakistan aims to translate policy intent into tangible investment, even as IMF restrictions shape the pace and scope of SEZ expansion. If successful, the country could see accelerated industrial activity, stronger regional linkages, and a more attractive investment climate for both domestic and international players.
