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FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Contents

Contents Acronyms ...... I Executive Summary ...... III Chapter 1 ...... 10 1.1 The present scenario...... 10

1.2 Background of Industrial Development in FATA ...... 11

1.3 Obstacles to industrial development ...... 12

Chapter 2 ...... 15 2.1 FATA- Administrative Structure ...... 15

2.2 Frontier Crime Regulation ...... 19

2.3 What are regulatory laws, need and History? ...... 21

2.4 Need for regulatory laws ...... 22

2.5 Role of regulatory laws in today’s economy...... 23

2.6 History of Pakistan regulatory laws...... 24

2.7 Why regulatory laws are not extended to FATA? ...... 26

2.8 Advantages of regulatory laws ...... 26

2.9 Demand for Regulatory Laws extension to FATA ...... 33

Chapter 3 ...... 35 Laws already extended to FATA ...... 35

Chapter 4 ...... 50 4.1 Laws proposed for extension ...... 50

4.2 Prioritized list of laws that need to be extended in Phase I...... 88

Chapter 5 ...... 90 Key findings of FGDs (Focused Group Discussions) ...... 90

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Contents

5.1 FGD Region – 1 (Bajour Agency, Mohmand Agency, Khyber Agency, FR Peshawar).. 90 5.2 FGD Region – 2 (Aurkzai Agency, Kurram Agency, FR Kohat ...... 92 5.3 FGD Region – 3 (North Waziristan Agency, FR Bannu, FR Lakki) ...... 93 5.4 FGD Region – 4 (South Waziristan Agency, FR Tank, FR D.I. Khan) ...... 95 Chapter 6 ...... 97 Key findings of Stakeholders Workshop ...... 97

6.1 Stakeholders Workshop Region – 1 (Bajour Agency, Mohmand Agency, Khyber Agency, FR Peshawar)...... 97 6.2 Stakeholders Workshop Region – 2 (Aurkzai Agency, Kurram Agency, FR Kohat ..... 99 6.3 Stakeholders Workshop – 3 (North Waziristan Agency, FR Bannu, FR Lakki) ...... 101 6.4 Stakeholders Workshop – 4 (South Waziristan Agency, FR Tank, FR D.I. Khan) ...... 104 Chapter 7 ...... 106 Prospects of development in commerce and industry ...... 106

Chapter 8 ...... 108 8.1 Creating an ambience for growth and regulatory mechanism...... 108

8.2 Special Development Fund ...... 112

8.3 Industrial Estates...... 113

8.4 Skill Development Centers (SDC)...... 114

8.5 Advancement of Loans...... 116

8.6 Incentives ...... 117

8.7 Industry and Trade Development Cells ...... 120

8.8 Interest on Loans ...... 121

8.9 Arms Manufacturing ...... 122

8.10 Mineral Development...... 123

8.11 Finances: ...... 125

8.12 Commerce ...... 125

8.12.1 Reintroduction of Red Pass ...... 126

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Contents

8.12.2 Border Management of Turkham ...... 128 8.13 Issues of Security ...... 130

8.14 Regional Focus ...... 131

Chapter 9 ...... 134 Key Recommendations and Way-forward...... 134

Chapter 10 ...... 136 Conclusion ...... 136

Regulatory Laws Extension Ordinance Format ...... 137 Annexure – 1 ...... Focused Group Discussion Report Region - 1 ......

Annexure - 2...... Focused Group Discussion Report Region – 2 ......

Annexure – 3 ...... Focused Group Discussion Report Region - 3 ......

Annexure – 4 ...... Focused Group Discussion Report Region - 4 ......

Annexure – 5 ...... Stakeholders consultative workshop Report Region – 1 ......

Annexure – 6 ...... Stakeholders consultative workshop Report Region - 2......

Annexure – 7 ...... Stakeholders consultative workshop Report Region - 3......

Annexure – 8 ...... Stakeholders consultative workshop Report Region - 4......

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Acronyms

Acronyms

ADP Annual Development Plan

APA Assistant Political Agent

CARs Commissionate for Afghan Refugees

CPC Citizens' Peace Committee (CPC)

DC Deputy Commissioner

DCO District Coordination Officer

EDF Export Development Fund

EIA Environmental Impact Assessment

FATA Federally Administered Tribal Aras

FC Frontier Corps

FCR Frontier Crimes Regulations

FDA FATA Development Authority

FGDs Focused Group Discussions

FR Frontier Region

GTI Government Technical Institute

ICDB Industrial and Commerce Development Board

IEE Initial environmental examination

ISI Inter Services Intelligence

IT Information Technology

KPK Khyber Pakhtunkhwa

L/Cs Letter of Credit

NEFPRA National Electric Power Regulatory Authority

I FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Acronyms

NWFP North West Frontier Province

PA Political Agent

PATA Provincially Administered Tribal Area

POI program of instruction

P&D Planning and Development

QATT Quadrilateral Agreement on Transit Transport

ROZs Reconstruction Opportunity Zones

SAFRON Ministry of States and Frontier Regions

SDC Skill Development Centers

SDF Special Development Fund

SME Small & Medium Enterprises

SRO self-regulatory organization

TTFA Transit Trade Framework Agreement

USAID United Stated Agency for International Development

WAPDA Water and Power Development Authority

II FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Executive Summary

Executive Summary

The current mayhem in the tribal area has caused incalculable damage to the area. It will take years before complete normalcy is restored.

The gigantic task of reconstruction has many facets. Foremost is the return of IDP’s.

Restoring the infrastructure is a monumental task. An important element in the rehabilitation programme is the revival of institutions and systems.

The healing of the wounds, compensating those who suffered collateral damage, will take years. A traumatized population, a brutalized society would have to be restored to its erstwhile vigor, dynamism and vitality. That is a stupendous undertaking.

This study however focuses on a relatively small, though significant aspect of reconstruction and development. Since industrial development has not taken place in FATA, that must be made a priority by the planners. For that to happen, both in the public and private sectors, there has to be a conducive environment. Such an environment can come about only if appropriate laws are extended to the area so that potential entrepreneurs would begin to invest in industries as soon as security situation improves. The study therefore focuses on the introduction of regulatory laws in FATA.

A number of regulatory laws have been recommended to be extended/applied to the area. For these laws which are extended but not enforced, the necessary legal infrastructure has to be created.

The extension of these laws would provide an impetus to the investors who would go about their work mindful of the fact that laws would give them protection.

III FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Executive Summary

Extension or enforcement of land acquisition Act would facilitate purchase of land; partnership Act would help create partnerships ; companies Act would help establishment of companies; banks would begin to lend; import and export would be made easier; labor laws would help secure relief of workers; Mining laws would help establish framework for undertaking large scale mining exploration and exploitation.

Besides, the report also highlights the crucial relevance of an ambitious mining exploration programme that would herald the advent of a new era of prosperity for the tribal area..A very elaborate and comprehensive package of incentives is an integral part of the new strategy that would help, together with the regulatory laws, to transform the socio-economic scene of

FATA.

All this may seem utopian in the current state of pervasive lack of security. But should the situation begin to normalize, as indeed it must, the framework of regulatory laws would help attract investors to the tribal area. For meaningful and quick uplift of the area it is imperative that the long neglected industrial sector receives urgent attention: the extension and enforcement of regulatory laws, recommended in this study would go a long way in realizing the latent potential of the area and its people.

IV FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 1

Chapter 1

1.1 The present scenario The picture in the tribal area could not be more painful and gloomy from one end to the other.

It is a scene of devastation. Years of bombing, shelling, explosions and gunfire exchanges, use of artillery, mortars have ruined villages, decimated markets, and destroyed government buildings. It’s a war zone. Most families have lost their loved ones. Hundreds of thousands have left the area. The physical damage is horrendous. Thousands have perished and perhaps tens of thousands having been maimed, disabled, crippled. Businesses have been badly affected. Trade have almost come to a standstill. The population has been torn between the armed gangs of resistance and the overwhelming might of the military. The civilian casualties have been staggering. The families of those who have suffered have lived through a nightmare. The economy has suffered irreparable losses. The little farming in the area has been damaged. The orchards have become stunted. Marketing of the fruit or vegetable has not been possible because of the road communication having been totally cutoff. That has broken the back of the orchards owners and farmers. Items of daily use have become expensive because of road closures. All border area tribes are dependant on supplies like flour, ghee, vegetables, petrol coming from Afghanistan. The high cost of these communities have made life difficult for the common man. There is therefore a dramatic rise in the level of poverty.

The telephone lines are disrupted. And for “security” reasons mobile networks don’t operate for months and years. That has compounded the predicament of the tribesmen. Emotional problems are taking a toll also. Children are the worst affected by the trauma that they have to undergo. Education has been a major casualty of this pervasive lawlessness and conflict. In a situation where battles are being fought, bombs are falling and people dying, it is unrealistic to expect that the teachers and the taught would focus on acquisition of knowledge. This loss would never be adequately compensated.

10 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 1

Rehabilitation remains a major challenge. Firstly for rehabilitation to be undertaken peace has to return to the area. Secondly there have to be systems and institutions in place so that orderly rehabilitation programme could be pursued. There have to be an oversight system and close monitoring. Further all these initiatives require a fair degree of decentralization. There have to be a fair degree of administrative and financial autonomy for rehabilitation work to proceed briskly and satisfactorily. These requirements need to be fulfilled before any meaningful rehabilitations work could proceed. A very disturbing aspect is the militarization of the area which has tended to marginalize the civilian institutions. Only civilian institutions can deliver water, education, health, delivery, electricity, roads etc. Unless therefore the civilian institutions are restored to their rightful status and position, the work of getting the

FATA back on track would remain incomplete and inconclusive. In any future scheme of things the civilian institutions have to take center stage. That alone would convey a strong signal to the people that things are now returning to normalcy.

1.2 Background of Industrial Development in FATA As a matter of fact in terms of medium and small enterprises one has to start from scratch.

The only real intervention in terms of putting up industrial units in public sector, was made in the seventies as part of a new initiative of the government, to uplift the tribal area. As a consequence of this initiative, a tribal development corporation was created with its

Headquarter at Peshawar. This corporation was to work under the ministry of stats and frontier reigns. The body was charged with formulating and executing schemes in such sectors on mineral development, irrigation, industry etc. A few industrial units were established, funded entirely by the federal government in sectors like mineral, edible oil, match, leather, furniture etc. These units were not helped, as envisaged in the concept document, with working capital as time passed. They had to resort to borrowing from the banks at high interest rates. Problems of locational disadvantages, marketing, transportation of raw materials, non availability of skilled labour further compounded the difficulties. A

11 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 1 constant and recurring irritant was frequent power break down and non availability of

Energy. All this resulted in the factories producing goods at a high rate of unit cost of production. The products become uncompetitive; the loses began to accumulate. The factories had to close down one by one.

Since then the situation has undergone a sea change. In the aftermath of 9/11 and in consequence of a policy that bracketed Pakistan irreversibly with the so called war on terror, the whole complexion has changed. Old values are disappearing; systems have eroded.

Civilian institutions have lost leverage and vitality. The whole basis for ensuring peace and tranquility in FATA has been shattered. A climate of fear, anger, acrimony, hostility has enveloped the area. The people, tired of militancy, endless operations, unquantifiable loss of life and destruction of property have been driven to state of utter despondency.

1.3 Obstacles to industrial development Perhaps one of the most remarkable failures of our system of administration has been our inability to make development compatible with our societal norms. In normal circumstances many of our traditions and customs would be deemed to be averse to any substantial progress.

These would be seen as impeding and obstructing change. Consequently we have become, in some cases, prisoner of ‘status quo’. A more healthier outlook would have dictated different approach. This approach advises us not to abandon but to convert these vary customs and traditions to one’s advantage. For instance there is an acute, genetically embedded rivalry amongst tribesmen of the same clan. This is often destructive because each one is puling in different directions. Such rivalry eats into the vitals of healthy society. But this could be converted into a rivalry for excelling each other in more positive and productive enterprises.

Further, education would make a difference because an enlightened person would refuse to be a bigoted introvert, focused on harming or obstructing his cousin’s ascendance to prosperity or prominence. Having said that it has to be nonetheless recognized that there are formidable

12 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 1 roadblocks to progress and developments in the tribal area. And these impinge on the march to progress and prosperity. The most fundamental of those obstacles in an inherent and deep- seated aversion to industries as opposed to trading, farming and cattle raising. Although there has been a shift in attitude in recent years, still a tribesman would always be fascinated by the prospect of quick gains thro’ trading rather then get bogged down in establishing plants that will lake a few years to deliver profit. Then there are, besides cultural, other problems. One obvious difficulty in the tribal area is its difficult and often inhospitable terrain. The harsh features of its topography, coupled with its location are barriers to any substantial investment.

Remoteness is a restraining factor hard to overcome by investors. The fact that there is no individual landholding is another obstacle. Because it is not easy to secure a quick bargain for purchase of land in the tribal area. There is very little agriculture because the area is mostly hilly and neither there is enough farmland nor any major sources of irrigation. This imposes certain constraints upon the policy makers like basing industries mostly on imported raw materials. Then there are tribal issues like claims and counterclaims to ownership or share in contracts or profits which at times assume ominous proportions. This certainly weighs down heavily with prospective entrepreneur.

A persistent and so far unmanageable problem is the absolute lack of basic infrastructure facilities. Energy are perennially in short supply, Electricity more often than not is available for not more then 2-3 hours a day. And that too with extremely low voltage. That is a major stumbling block in the way of any entrepreneur who would otherwise be persuaded to invest in the tribal area. A self produced electricity thro’ generator is very expensive and cannot sustain a manufacturing unit anywhere. The absence of good roads is another disincentive.

Reliable means of communication is imperative for any industrial unit to operate in an area.

And more importantly there is the problem of security. It goes without saying that with the present state of insecurity it would be futile to seek any major private investment in FATA.

13 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 1

When industries are closing down in KPK, it is inconceivable that anyone would be attracted to make any investment in the tribal area. Issues like the absence of a conducive environment are at the core of the whole reappraisal of policy in FATA. An investor would want facilities like loans, insurance, tax relief etc, before he would venture into the tribal area for setting up industry or starting business. The banks would demand collateral; loan recovery laws have to be extended before they could lend. They would also demand collateral in the shape of tangible assets for advancing loans. These and other impediments have to be removed before private sector could be persuaded to play its role in the development of industry and commerce in FATA.

14 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

Chapter 2

2.1 FATA- Administrative Structure

Pakistan’s tribal area comprises of the following seven tribal agencies and six frontier regions:

 Bajaur

 Mohmand

 Khyber

 Orakzai

 Kurram

 North Waziristan

 South Waziristan

 FR Peshawar

 FR Kohat

 FR Bannu

 FR Lakki

 FR Tank

 FR DI Khan

The total population of FATA was 3,176,331 people with an area of 27220 square kilometers

(Source: Population census organization statistics division government of Pakistan-Islamabad).

The British moved into the area in the later half of the 19th century. The Imperial British ingress into the area was, in large measure, motivated by an ambition to keep czarist Russia away from the crown Jewel of British Empire i.e. India.

15 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

Before the advent of the British, the area and its people had been living for generations in accordance with their own time honored customs and traditions.

But very soon the rulers felt that there ought to be a framework of laws for a more responsive administration to emerge. The consensus was that the existing systems be codified in order that there is no deviation from the manner in which people have lived for centuries. However since the British had their own strategic goals to pursue some form of criminal justice system that also reflected the sentiments of the tribesmen had to be evolved.

It was decided that the system would revolve around:

 The principle of territorial responsibility i.e. each clan assuming ownership of the

events, incidents occurring in their parts of area.

 The continuance of the “Jirga” system as a dispute resolution mechanism and

 Non-interference of the Govt. in the way of life of the people of these areas.

The introduction of frontier crimes Regulation was an institutionalised legal response to

the objective ground realities that prevailed not only in the tribal area but also in the rest

of the frontier province, now KPK.

An important aspect of the administrative system devised by the British was that the Govt. would not come into a direct confrontation with the people on issues that were contentious and divisive. An indirect system of administration was thus created for the tribal area.

The lynchpin of this arrangement was the creation of an effective and well resourced coordinator. Unlike his counterpart in the settled area, he was appropriately titled as political agent. The incumbents of this office were drawn from the Indian civil or sometime military service who would have acquired a certain degree of proficiency not only in Pashto but also

16 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2 in administrative affairs of the area. Only the most outstanding men of very high caliber and integrity were posted as political agents.

On reflection it must be noted that the office of the political agent was one of the most fascinating institutions created by the British. On the one hand he was a representative of the crown, charged with ensuring that the agency that he administered posed no serious security problem for the Govt. and on the other hand he was an ‘advocate’ of the tribes vis-à-vis the

Govt. In other words he had acquired, by a constant rapport with the tribes and adequately fed by his trusted informers, a reliable and authentic assessment of the situation in the agency which he dutifully transmitted to the Govt. in Lahore and Delhi with his own invaluable comments on the possible options to pursue in the given circumstances.

In performing the onerous responsibilities entrusted to him he was helped by a number of functionaries who would report to him.

The following chart would shed light on the hierarchy that was created for administration of the tribal area.

Political Agent – PA  Head of Administration and

 District Magistrate(under criminal procedure code)

Assistant Political Agent - APA  In charge of a Sub Division + Sub Div. Magistrate

Khasadar Force Commanded by an official like Subedar Major and supervised by any Asst. Pol Officer,

the force had the following duties:

a) To maintain security of roads, Govt. Installations.

17 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

b) To man barriers

c) To make arrests

d) To serve summons

e) To carry out small operations for arrest of offenders.

f) To impound vehicles, seal shops of the defaulting sub sections of a sub tribe when so

ordered.

The political agent used to be assisted by the scouts (Frontier Corps - FC). This paramilitary force commanded by Pak Army officers was mainly responsible for border and internal security.

In addition all other departments such as education, communication, health, power, factory buildings functioned under their respective supervisors. But they all looked up to the pol.

Agent for support in such matters as:

 Acquisition of land

 Recruitment of security personnel

 Resolution of tribal disputes

 Nominations of contractors etc

The Political Agent used to report to the Div. Commissioner, who in turn were being supervised by the chief secretary and Governor.

It was a well coordinated and appropriately structured system that had the intrinsic capacity to function as a well knit team to achieve the objectives of promoting public welfare, socio economic development and maintenance of peace in the area.

The system delivered under normal and at times very difficult circumstance. The major test of the system came when the ‘Mujahideen’ in the 80s used to traverse the tribal area on their way to Afghanistan for ‘Jihad’ against the Former Soviet Union. When a major conflict shook the very foundations of the country across the border, the tribal areas did not show any

18 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2 signs of unrest what to speak of Insurgency, because the administrative system had the strength to maintain peace and tranquility.

2.2 Frontier Crime Regulation As started earlier, Frontier Crimes Regulations (or FCR) was in vogue besides the tribal area, in much of the KP province before and after partition. When all the relevant laws were extended to the KPK, the FCR was repealed. But it continued with some amendments, in the tribal area.

The reason why the law has continued to operate in the tribal areas is its being consistent and compatible with the ethos of society and the psyche of the people.

It places heavy reliance on territorial responsibility. Territorial responsibility is the bedrock on which the way of life in the tribal area hinges.

The system aligned with aspirations of the tribes. Offenders are scared to commit an offence on the soil of a clan or sub tribe because: a) The perpetrators of the offence would soon be identified and b) The retribution would not be long in coming.

Secondly the system reaffirmed and reinvigorated the aged old institution of “Jirga” not only for dispute resolution but also for the trial of accused in criminal cases.

Although there has been some dilution of the quality of decisions handed down by Jirgas in recent years because of the factors of clout, influence and money, the system has, by and large, delivered. Further, the decisions or recommendations came cheaply for the parties and the mechanism did not take long to produce or deliver decisions.

19 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

This compared to the system in the settled area, offers many advantages. Its economy and expeditiousness are the hallmark which continue to reinforce the conviction in the tribal areas that the tribesmen are much better off with the system of admin in vogue than the one that has inflicted pain and agony on a helpless population in the settled area in the shape of long delays, ever escalating cost of lawyers and endemic corruption of police that extends also to subordinate judiciary.

FCR therefore has to be judged in the backdrop of the societal norms and customs, delivery of justice both in the tribal areas and in comparison, the settled area. No law could be appraised in isolation to the prevailing cultural and social dynamic of the society.

Having said that the law and the legal systems have to evolve over time. Such evolution should not be stifled. But as long as it is a historic evolution, brought about by the dynamic of society and historical, political, social developments, it is anchored in the norms and values of society. Any such evolution is indispensable and indeed useful in making the laws more responsive to the needs of people in a different milieu.

In the same spirit changes that are both deemed necessary and expedient because of multiple developments taking place in society and area, may be made and incorporated in the basic

FCR structure. However for such changes to find easy acceptance they must be such as to reflect the aspirations of the people.

Let us briefly shed light on some of the more relevant provisions of FCR.

The FCR deals with all aspects of criminal justice administration in the administrated area of any particular agency or Frontier Regions (FRs). The laws are administered by the political agent acting as a District Magistrate (under CPC). He institutes Jirga with consent of parties.

20 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

The jirga examines all the evidence within the framework of the issues framed and submits its recommendations to the assistant political agent. The later examines the records of the

Jirga, scrutinises its recommendations and gives an award or issues an order based on the recommendations of the Jirga.

Against the decision/order of the political agent an appeal would lie to the commissioner and revision proceedings can be initiated in the court of the Home and Tribal Affairs Secretary

(or Secretary FATA).

To the extent that an offence has been committed in FATA and the offenders belong to the tribal areas, the high court and the Supreme Court have no jurisdiction.

Kharsadar, Levis As referred to earlier, Khasadars is a tribal force. It is not technically a service under the

Govt. of Pakistan. That is the reason the political agent appoints a nominee of the concerned section of the tribe where a vacancy has arisen. He cannot unilaterally upset the sectional or tribal balance in the number of Khasadars that each tribe is supposed to offer to the Govt. for recruitment. Through usage and custom Khasadaris have become more or less hereditary.

But Khasadaris can be cancelled in special circumstances.

[The type of jobs and functions, performed by Khasadars has already been dealt with earlier]

2.3 What are regulatory laws, need and History?

Organized societies live by laws that are enacted by the chosen representations of the people.

A law is a generalized, codified formulation or a principle or concept that people have to observe.

Regulatory laws are not dissimilar to the other laws in a region, country or society. These are laws that regulate life, business, administration or governance.

21 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

Regulatory laws in the context of business would therefore be deemed to be laws that lay down frameworks within which an activity has to be carried out.

The main objective of the business regulatory laws is to provide legal, enforceable protection to all parties involved in a particular activity. The laws define the nature and extent of responsibility of the parties or individuals in an activity or transaction.

The rationale for such laws is simple: Without any legal safeguards people would not be induced to make investment. Secondly within a business or activity those involved in the business would remain vulnerable unless their rights and obligations have the protection of law.

The scope of business regulatory laws is wide ranging. They extend to all types of trading, manufacturing, marketing and encompasses the rights and obligation not only of traders, investor but also the workers, transporters, middlemen etc.

The existence of regulatory laws makes business transactions easier and induces entrepreneurs to invest capital. Since laws are enforced by the government, that gives businesses enormous satisfaction with regard to their rights and security.

2.4 Need for regulatory laws

In follows from the above that the need for regulatory laws is as old as the emergence of organized societies and expansion of business.

There was no need for such laws as long as there was barter trade. There was no need for such laws in the 16th or17th century when individuals would trade with individuals. There

22 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2 was no recourse to regulatory laws when there were no companies or very little manufacturing of goods. Then everyone took his own risk while selling or buying goods or marketing. A personal goodwill was all that was required in transactions between buyers and sellers.

When manufacturing of goods started and activities involved a group of individuals, the need for some legal mechanism to regulate business was felt. Fast on the heels of the industrial revolution came the establishment of companies .because large businesses could not be handled by individuals. And then owners wanted to pass their businesses assets to their heirs or next of Kin.

The creation of companies, partnerships, joint enterprises entailed the need for laws that would lay down an appropriate framework for all investors in the business. This could not be done without specific laws which would protect rights and place obligations on all individuals and groups involved in the business.

The result was the introduction of regulatory laws. Once begun there was no end to the number of laws pertaining to the many emerging business sectors. As business expanded, the number of laws relating to such activities also expanded. In our times there are a plethora of laws regulating the umpteen numbers of businesses.

2.5 Role of regulatory laws in today’s economy.

It is impossible to conceive of business being transacted these days without regulatory laws being in force.

23 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

In today’s world neither would any investor invest capital nor any trader would contemplate any trading activity without there being in place a set of laws that would provide adequate safeguards against any breach of trust, violation of agreement, unlawful strike, or pressure and blackmail as an instrument of intimidation.

Regulatory laws provide an ambience for smooth transactions and orderly and disciplined code of conduct on the part of all those from the owner/ proprietor to the skilled and unskilled workforce. Thus everyone is conscious of his rights as well as of his obligations and responsibilities. Farther everyone is also aware of the definitive implications that would follow should a breach of trust occur. Individually and collectively they perform as a team and the team spirit works as a motivating force ensuring smooth functioning of an enterprise.

2.6 History of Pakistan regulatory laws.

Pakistan has gone through several phases of introduction of regulatory laws, dealing with business, commerce and industry. The country inherited adequate legislative infrastructure at the time of partition. Codified laws, dealing with manifold sectors, were a fine British legacy to the subcontinent. The British laid stress on enacting laws and legal frameworks pertaining to commerce and industry. For an imperial power that was the most appropriate course to adopt because existence of laws facilitated government. control and supervision. Since they had to deal with countless number of tribes, races, ethnic and linguistic groups spread our vast swathes of geographical zones, they considered law making an essential instrument of not only regulating trade and industry but also of ensuring better monitoring and closer supervision.

Not surprisingly they enacted laws in such diverse sectors as mining and canals, drainage, highways, weights and measures, opium, hoarding, business transactions, mortgage,

24 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2 registration, post and telegraph, banking, insurance, labour, land acquisition, etc. As the need arose these laws were modified or their scope widened.

By and large the private sector was the engine or growth from 1947 to 1973.

In the seventies the government adopted a totally different policy and began nationalization of such sectors as banking, insurance, cement, automobiles, packages and a host of other industries. They went to the extent of flour and rice mills and cotton ginning factories which too were nationalized.

In order to deal with such a large number of nationalized industries the government had to introduce dozens of new acts. While in intent these were regulatory laws, the policy boomeranged. The economy began to show signs of strain and soon it was realized that most of these sectors had to be denationalized. This approach continued well into the 80s.

In the nineteen’s the process of privatization continued.

In the 21st century there is a continuing emphasis on facilitating the private sector in the realm of investment, improvement of quality, creation of jobs, innovation, speed, better monitoring and generation of exportable surpluses. Nationalization kills vitality and enterprise. It stifles growth. It follows thereafter that regulatory regimes have to operate within limitations. An unregulated economy spins out of control. An over regulated system places barriers on freedom of enterprise.

But a regulatory mechanism or regulatory laws are helpful in so far as these provide the much needed safeguards and protection to all stakeholders, as stated earlier. Rigorous enforcement of regulatory laws is a different area of inquiry. But as long as there are laws which deal with rights and obligations, the entrepreneurs would have no fear of investing in works or projects

25 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2 that are found to be economically feasible. Fortunately there are laws for each sector of the economy in this country. Not only are there laws pertaining to each area of commercial activity, there is a fairly large volume of case law accumulated over years comprising of court orders and judgments.

In Pakistan we therefore have laws covering all the relevant business sectors like contract, registration, land acquisition, mortgage, banking etc.

2.7 Why regulatory laws are not extended to FATA?

While same regulatory laws have been extended to tribal area, many have not been extended.

There are many reasons for this:

- Tribesmen have lived by their own customs and traditions and do not want these to be

infringed

- As a matter of policy and a solemn pledge the state of Pakistan would not intrude into

the way of life of tribesmen.

- Since FCR is the basic legal framework, no law would be enacted which is

inconsistent or violative of any of its (FCRs) specific provisions.

- The level of socioeconomic progress in the tribal area did not warrant the introduction

of many regulatory laws that were in vogue in the settled area

- There was a deep skepticism about the motives of the government in extending laws

- The machinery that was needed to implement the many regulatory laws in the tribal

area, did not exist.

2.8 Advantages of regulatory laws

26 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

The advantages have been mentioned in the preceding paragraphs. The chief advantage of such laws being in operation is the most conducive ambience, legal and administrative, that is created which acts as a catalyst for investment.

- Disadvantages of not having regulatory laws.

- These have also been alluded to in this paper. Some of the problems that arise as a

consequence of non extension of laws may be summarized as follows:

- Investors would not be induced to invest capital where there is no legal protection.

- Business would not be set up in an area where there is no option for a legal recourse

in case of any breach of trust etc.

- Land acquisition will be difficult.

- Obtaining loans would be extremely time consuming

- Recovery of loans would not be easy.

- Opening of L/Cs would not be possible

- Taxation systems would not be enforced

- Workers rights could not be ensured

- There would be no insurance against loss, theft, fire or any other emergency

- Quality control would not be effective etc.

These aspects were discussed with people from the tribal area, drawn from all agencies

and FRs in four different workshops organized by the FATA Development Authority in

collaboration with CAMP.

Here is a summary of the main conclusions of the deliberations of the workshops:

- There was no disagreement in principle on the need for extending regulatory laws to

the tribal area to facilitate business and provide legal safeguards to the entrepreneurs

with regard to their investment, loans, recovery of loans etc.

27 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

- There was need for more interaction with the tribes by government echelons at all

levels with regard to an authentic ascertainment of the people’s needs and how to

prioritize these

- There was need for an ambitious programme for extending energy and improving the

supply of electricity.

- Transport is the mainstay of the economy of the people of the tribal area.

- Government needs to pay attention to this sector by way of grant of loans to

transporters, issuing route permits, providing security against undue, unlawful

harassment by police etc.

- FATA Agency Councils should be established to help formulate development

programmes for each tribal area.

- All the local taxes levied by officers of the agency may be abolished.

- All relevant mineral laws may be extended to FATA in order that the work of mineral

exploration and exploitation goes ahead smoothly.

- Mortgage laws may be also be extended.

- FCR may be suitably amended in order to pave the way for extending the regulatory

laws.

- Banks to start providing loans to tribal investors, businesses, entrepreneurs.

- There should be in existence in the tribal area, some mine rescue teams which could

render help in the event of an emergency.

- Government should set up industrial zones or industrial estates in the tribal area which

would become pivotal centers for the evolution of industries in the area.

- The communication and road system must be improved.

- The reasons for lack of investment in FATA before or after 9/11 are:

a) No adequate infrastructure

b) Low quality man power

28 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

c) Low quality education

d) Lack of necessary skills

e) Lack of incentives

f) Lack of resources

g) Non existence of regulatory laws

- Banking laws must be extended to the tribal area.

- There should be a huge emphasis on education, training and infrastructure

(e.g. Roads, energy, water etc)

- Incentives to tribesman for import of machinery/ commodities as well as

facilities for export of minerals or manufactured goods.

- For quick development breakthroughs it is imperative that the security

environment improves significantly, insurgency/ militancy ends and the area

returns to a state of normalcy.

- The ‘Jirga’ system as a means of resolving disputes must not only be

maintained but given more impetus.

- There is need for a network of small industries in order that jobs are created

for the unemployed youth.

- Those industrial units which have closed operations must be made operational

by:

- Availability of credit

- Improvement of and installation of modern machinery

- Better management practices

- More responsiveness to the market conditions

- Tribesman should be given visas liberally as migrant workers to work in the

Middle Eastern countries.

29 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

- There should be at least one university which must be established within

FATA.

- The fruit and vegetable production in Kurram, South Waziristan must be

supported. Better roads, financial incentives, subsidized seeds and fertilizer

must be provide and so that these sectors which have been badly affected by

the ongoing insurgency, are resuscitated.

- There is a potential for making small dams, particularly in areas like FR Tank.

Wherever there is a favorable feasibility study, work must be undertaken on

these schemes which would, bring more area under cultivation as well as

produce more electricity.

- The uncertainty with regard to the security situation, the insurgency, the

militarization of the area is substantial disincentive for traders, investors.

- The target killings, abductions have created an atmosphere of fear, panic and

no amount of incentives would work as long as the area does not return to a

state of normalcy and the institutions and rule of law do not take hold.

- It was felt that the absence of statutory mechanisms has made the business

climate very uncertain.

- It was felt that for outsiders to do business in FATA, the land acquisition

process must be made simpler and more transparent.

- It was noted that laws relating to partnerships must be extended so that joint

ventures could be undertaken in the area.

In the light of the above discussion and conclusions there would appear to be a near consensus on the extension of regulatory laws to the tribal areas. Laws relating to the following areas of interest may therefore be extended to FATA in accordance with the procedure laid down in the constitution:

 Land Acquisition Act.

30 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

 Banking laws.

 Financial Recovery ordinance.

 Mortgage Act.

 Insurance Act and related laws.

 Companies Act.

 Registration Act.

 Partnership Act.

 Laws relating to Quality Control.

 Customs Act.

 Central Excise Act.

 Import and Export Act or Acts.

 Mining Acts and all other laws relating to mineral exploration, extraction, Marketing.

 Canal and Drainage Act.

 Electricity Act.

 All Laws relating to water reservoirs, power house.

 Laws relating to weights and measures.

 Contract Act.

 Labour Laws and Laws dealing with protection and welfare of Labourers.

 Forest Act.

 Opium Act.

 Narcotics substances Act.

 Acts that deal with environment.

 The explosives Act.

 Coinage Act.

 Patents and Design Act.

31 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

 Petroleum Act.

 Tariff Act.

 Standard of weight Act.

 The public debt Act.

 The Foreign Exchange regulation.

 State Bank Act.

 Banking companies ordinance.

 West Pakistan Motor vehicle ordinance.

 Application of weights and measure Act.

 Trade organization ordinance.

 Anti Narcotics free Act.

 Extension of the Regulation transmission and distribution of electric power Act.

 Factories Act 1934.

 Trade Marks Act 1940.

 Payment of wages Act 1936.

 The Drugs Act 1940 and the Drug Rules 1945.

 The arbitration Act 1940.

 Industrial statistics Act 1942.

 Banking Tribunal Act.

 The foreign exchange regulation Act 1947.

 The regulation of mines and oilfields and mineral development Act 1948.

 NWFP protection of trees and Bushwood Act 1949.

 Pakistan Currency Act 1950.

 North West Frontier preemption Act 1950.

 The West Pakistan Agriculturists Loan Act 1958.

32 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

 The West Pakistan Foodstuffs (Control) Act 1958.

 The West Pakistan Industries Corporation Ordinance 1960.

 The Trade Organizations Ordinance 1961.

 The Banking Companies Act 1962.

 The West Pakistan Dues Recovery Ordinance 1962.

 The Tribal Areas Drugs Regulations Act 1964.

 The West Pakistan Motor Vehicles Ordinance, 1965.

This then would be a comprehensive coverage encompassing all aspects of business and commercial activity in the Tribal Areas.

Because extending such wide ranging laws in different sectors may trigger a backlash, only these laws which are considered as an essential pre-requisite for business and investment in

FATA may be extended in phase I.

2.9 Demand for Regulatory Laws extension to FATA

FATA Development Authority has conducted a research study in October 2010 titled

“Survey-Enumeration of industries, Service Sector Entities, Labor Force and Identifying

Constraints in FATA”. According to the data Businessmen perceived that a variety of factors will contribute to success. These include concessional loans, extension of industrial laws and regulations, availability of energy, tax/duties exemption on import of raw material, better law and order and availability of skilled workers. Specific incentives are needed with adequate credit facilities as per need of locals in various sectors. For details see the below table;

33 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 2

Source: “Survey-Enumeration of industries, Service Sector Entities, Labor Force and Identifying Constraints in FAT A” pp- 46 http://www.fatada.gov.pk/Docs/Industries/IndustriesSurveyReport.pdf

34 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Chapter 3

Laws already extended to FATA

Notification/ Extent of S.No. Title of Law Order/Reference Application Tribal Areas beyond Notification No. 8- Western and Northern 1 The Pakistan Penal Code, 1860 W, of Govt. of India, boundaries of NWFP now is dated 3.9.1939. Khyber Pakhtunkhwa The Tribal Areas 2 The Sea Customs Act, 1878 (Application of Acts) All Tribal Areas. Regulation 1965) 3 The Arms Act, 1878 do do 4 The Explosive Act, 1884 do do 5 The Telegraph Act, 1885 do do The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the (Regulation No. 1 of 1975). The Bankers Books Evidence Federally 6 SAFRON Notf. No. F, 1(3)- Act, 1891 (XVIII of 1891) Administered Tribal Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975. All Special Areas of W.P. Regulation No.1 of 7 The General Clauses Act, 1897. NWFP now is 1961. Khyber Pakhtunkhwa Tribal Areas beyond Notification No.8-w, dt. the Western and 3.9.1939 of the Govt. of The Code of Criminal Procedure, Northern boundaries 8 India. Noti: NO. 217-F 1898 of NWFP/Khyber dated 13-4-1931 by the Pakhtunkhwa/Khyber Govt: of India. Agency The Tribal Areas 9 The Post Office Act, 1898 (Application of Acts) All Tribal Areas. Regulation 1965) The Tolls (Army & Air The Centrally The Tolls (Army and Air Force) Force) Act (Application to 10 Administered Tribal Act, 1901 (II of 1901) the Centrally Administered Areas. Tribal Areas. The Punjab Minor Canals Act. 11 1905 (No.III of 1905) to the 1980 FATA Khyber Agency only)

35 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

The Tribal Areas 12 The Pakistan Coinage Act, 1906. (Application of Acts) All Tribal Areas. Regulation 1965) The Explosive Substances Act, 13 do do 1908. Tribal Areas beyond Notification No.8-w, dt. the Western and The Frontier Crimes Regulation 14 3.9.1939 of the Govt. of Northern boundaries 1910. India. of NWFP/Khyber Pakhtunkhwa 16 The Passport Act, 1920 do do 17 The Official Secrets Act, 1923. do do Notification No.19-F, dt. 1) Khyber Agency. 24.1.1938 N.W Agency with 18 The Land Customs Act, 1924. 2) North Waziristan effect from the 28th Aug: 1954, Gazette of Pakistan. Agency. Tribal Areas of Notification No.23-w, dt. The Soldiers (Litigation) Act, NWFP now is 19 5.11.1940 of the Govt: of 1925. Khyber India. Pakhtunkhwa. The Cooperative Societies Act, Tribal Areas of 20 W.P. Reg. 1 of 1970. 1925 (Sind Act VII of 1925). Peshawar, D.I, Khan. The Tribal Areas The Wireless Telegraphy Act, 21 (Application of Acts) All Tribal Areas. 1933. Regulation 1965) 22 The Petroleum Act, 1934. do do Khyber Agency, Gazette of India, 1939 Pt. I, P.50 North Khyber Agency and 23 The Tarrif Act, 1934. Waziristan Agency with North Waziristan effect from 28.8.1954, Agency. Gazette of Pakistan. The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the (Regulation No. 1 of 1975). The Insurance Act, 1938 (IV of Federally 24 SAFRON Notf. No. F, 1(3)- 1938). Administered Tribal Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975. Tribal Areas of Notification No. 102-G, dt. The standards of weights Act, NWFP now is 25 11.7.1942 of the 1939. Khyber Government of India. Pakhtunkhwa.

36 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Whole of Tribal The Registration of Foreigners Gazette of India, 1939 Pt. I, Areas of Peshawar 26 Act, 1939. P. 854. and D.I Khan Divisions. The Drugs Act, 1940 and the 27 W.P. Reg.No.I of 1964 do Drugs Rulers 1945.

Exercise by the Provincial Government of certain powers Notf.No.32-W, dt. 28.31.942 28 do under the war injuries Ordinance, of the Govt: of India. 1941 in the Tribal Areas.

The War Injuries Regulation Notf.No.12-W, dt. 7.2.1942 29 1942 and the war Injuries do of the Govt: of India. scheme, 1942. The Enemy Agents Ordinance, Notf.No.21-W, dt. 20.2.43 30 1943 and the rules made there do of the Govt: of India. under. Notification No. 53-W, FATA of NWFP now The Military Stores (Unlawful 31 dated 20.11.1943 Govt: of is Khyber Possession) Ordinance, 1943. India. Pakhtunkhwa SAFRON Ref. No. II of The war Injuries (Compensation 1987 dated 2.4.1987 under 32 do Insurance) Act (XXIII of 1943) article 247(5)-F.I(II)- F.III/85-Part. The Tribal Areas 33 The Public Debt Act, 1944. (Application of Acts) All Tribal Areas. Regulation 1965) Tribal Areas of Notf.No. 29-W, dt. The Rialway Stores (Unlawful NWFP now is 34 10.6.1944 of the Govt: of possession) Ordinance, 1944. Khyber India. Pakhtunkhwa. The Tribal Areas 35 The Foreigners Act, 1946 (Application of Acts) All Tribal Areas. Regulation 1965) The Prevention of Corruption Tribal Areas of 36 Reg. No.1 of 1960. Act 1947. Peshawar Division. Tribal Areas of The Sugar (Temporary Excise See Gazette of India 1947 NWFP now is 37 Duty Act, 1947. Pt.1p.860. Khyber Pakhtunkhwa.

37 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the The Foreign Exchange (Regulation No. 1 of 1975). Federally 38 Regulation Act, 1947(VII of SAFRON Notf. No. F, 1(3)- Administered Tribal 1947) Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975.

The Pakistan Special Police Tribal Areas of 39 Reg. No.1 of 1966. establishment Ordinance, 1948. Peshawar Division.

The Regulation of Mines and Oil Notf. No. Legis: 16(23)/56, 40 Fields and Mineral Dev: (Govt: dt. 22.3.1956 of Govt. of All Tribal Areas. control) Act, 1948. West Pakistan. All territories outside The Extra Provincial Jurisdiction the Province of 41 G.G.O No. 5 of 1949. Order, 1949. NWFP now is Khyber Pakhtunkhwa The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the (Regulation No. 1 of 1975). The National Bank of Pakistan Federally 42 SAFRON Notf. No. F, 1(3)- Ordinance. 1949 (XIX of 1949) Administered Tribal Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975. Federally The Import Export (Control) Act, 43 1979 Administered Tribal 1950. Areas. The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the The House Building Finance (Regulation No. 1 of 1975). Federally 44 Corporation Act, 1952 (XVIII of SAFRON Notf. No. F, 1(3)- Administered Tribal 1952). Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975. The Tribal Areas 45 The Pakistan Army Act, 1952. (Application of Acts) All Tribal Areas. Regulation 1965) The Pakistan (Control of Entry) 46 do do Act, 1952.

38 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the (Regulation No. 1 of 1975). The State bank of Pak: Act, 1956 Federally 47 SAFRON Notf. No. F, 1(3)- (XXXIII of 1956) Administered Tribal Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975. The West Pakistan General No. Leg. 14(43)/57, dated All Special Areas of 48 Clauses Act, 1956. 8/9/1958. West Pakistan. The West Pakistan Special Areas All Special Areas 49 (Application of Laws) Reg. 2 of 1956. (Tribal Areas of Regulation, 1956. West Pakistan. Tribal Areas of The Pakistan Criminal Law 50 Reg. 1 of 1966. Peshawar & D.I Amendment Act, 1958. Khan Division. Tribal Areas of The Agricultural Dev: Bank 51 Reg. No. II of 1967. Peshawar & D.I Ordinance, 1961. Khan Division. The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the (Regulation No. 1 of 1975). The Agricultural Dev: Bank Federally 52 SAFRON Notf. No. F, 1(3)- Ordinance, 1961. (IV of 1961) Administered Tribal Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975.

The Industrial Dev: Bank of 53 Pakistan Ordinance, 1961 (XXXI do do of 1961).

The West Pakistan Anti- Tribal Areas of the 54 corruption Establishment Ord: W.P. Regulation IV of 1962. D.I Khan & 1961). Peshawar Division.

The Federally Administered Tribal Areas (Application of laws) (Regulation 1975) The whole of the (Regulation No. 1 of 1975). The Banking companies Federally 55 SAFRON Notf. No. F, 1(3)- Ordinance, 1962 (LVII of 1962). Administered Tribal Sect. III/75, dated 2.7.1975, Areas. published in the Gazette of Pakistan, Extraordinary Part 1 dated 2.7.1975.

39 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Notification No. The West Pakistan Press and All Tribal Areas of 56 1/23/HDC/65 dated Publications Ordinance, 1963. West Pakistan. 20.9.1965.

No. D.2133-FI(SOI)/64, dt. All Tribal Areas in The President's Election Act, 22.11.1964 See Gazette of 57 NWFP now is 1964 and the Rules there under. Pakistan, 1964 Khyber Pakhtunkhwa Extraordinary P. 292.

The West Pakistan Motor Notf. No. 1/23/HDC/65, All Tribal Areas of 58 Vehicles Ordinance, 1965. dated 20.9.1965. West Pakistan.

The Carriage by Air (International Conventional) The Carriage by Air Act (Application to Tribal The Whole of Tribal 59 (International Convention) Act, Areas) Regulation 1972- Areas. 1966 (IX of 1966). (Regulation No. II of 1972). SAFRON Notf. No.F. I(4)- Sec. III/72, dt. 16.12.1972.

The administration of basic All Tribal Areas of 60 Democracies (Tribal Areas) W.P. Reg. 1 of 1967. West Pakistan. Regulation, 1967.

The Members of the Electoral College (Functions of Local Notification No. SRO-70 All Tribal Areas of 61 Govt: in Tribal Areas) (R)/67, dated 12.5.1967. West Pakistan. Regulation, 1967.

The Peshawar District and Tribal Gazette of Pakistan, 1. Peshawar 62 Areas (Settlement of Disputes) Extraordinary, dt. 7.10.1971. 2. Khyber Agency Regulation, 1971 (MLR No. 93) (issued by CMLA).

SAFRON Notification No. SRO. 55(I)71, dt. The Centrally The Defence of Pakistan 30.11.1971 published in the 63 Administered Tribal Ordinance, 1971 (XXX of 1971). Gazette of Pakistan Areas. Extraordinary dated 1st December, 1971. Law Division Notification The Centrally Administered No. F. 24(I)/72-published dt. Tribal Areas (Employees Status) 64 12.4.1972 published in the do Order, 1972 (P.O. No. 13 of Gazette of Pakistan 1972) Extraordinary dt. 12.4.1972. SAFRON Notf. No. SRO, The Delimitation of 1418(I). 74, dt. 14.11.1974 65 Constituencies Act, 1974 published in the Gazette of Do (XXXIV of 1974). Pakistan Extraordinary part II. Dt. 16.11.1974.

40 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Law Division Notification The preparation of Electoral No. F. 24(I)/72-Pub, dt. Federally Rolls (Federally Administered 10.4. 1975 published in the 66 Administered Tribal Tribal Areas) Order 1975 (P.O.I. Gazette of Pakistan Areas. of 1975). Extraordinary Part. I, dt. 10.4.1975. The Federally Administered Tribal Areas (Application of The whole of the The Senate (Election) Act: 1975 laws) (Regulation 1975) Federally 67 (No. LI of 1975). (Regulation No. 1 of 1975). Administered Tribal SAFRON Notf. No. F, 1(3)- Areas. Sect. III/75,

The Customs Act, 1969 (IV of 68 The Gazette Pakistan FATA 1969)

SAFRON Notf. No. SRO, The whole of the The Suppression of Terrorist 8098(I)/ 75, dt. 18.7.1975 Federally 69 Activities (Special Courts) Act, published in the Gazette of Administered Tribal 1975 (XV of 1975) Pakistan Extraordinary part Areas. II. Dt. 18.7.1975. SAFRON Notification No. SRO. 258(I)76, dt. The Criminal Law Amendment 20.03.1976 published in the 70 (Special Court) Ordinance, 1975 FATA Gazette of Pakistan (XXIX of 1975) Extraordinary Part-II 20.31976.

The Criminal Law Amendment 71 (Special Court) Act, 1976 (XI of do do 1976)

The Criminal Law Amendment (Special Court) Act, 76(XLI of 72 do do 76) to Tribal Areas of NWFP now is Khyber Pakhtunkhwa

Application of Criminal Law (Amendment) Act 76 (XLI of 76) 73 do do to Tribal Areas of NWFP now is Khyber Pakhtunkhwa Application of Weights and SAFRON Notification No. Measures Act 76 (NWFP ACT of I(10)-Sec. III/76, dt. 74 do 76) to FATA of NWFP now is 30.12.76 under Regulation Khyber Pakhtunkhwa NO. IV of 76. SAFRO Notif. No. 1(9)-Sec. Extension of Laws to FATA in II/76, dt. 17.12.76 to be 75 respect of Peoples Finance do published in the Corporation 1977. Extraordinary Gazette of

41 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Pakistan.

The Representation of the people SRO 362 (I)/79, dated 76 (Amendment) Ordinance, 1979 do 23.4.1979. (L of 1979).

The Offences against property SRO 362 (I)/79, dated 77 (Enforcement) of Hudood) FATA 23.4.1979. Ordinance, 1979 (VI of 1979).

The Offence of Zina SRO 362 (I)/79, 78 (Enforcement of Hadd) FATA dated 23.4.1979. Ordinance, 1979 (VII of 1879)

The Execution of the punishment Federally 79 of whipping Ordinance, 1979 (IX 1979 Administered Tribal of 1979) Areas.

The Code of Criminal Procedure 80 (Amendment) Ordinance, 1979 do do (X of 1979).

The Preparation of Electoral 81 Rolls (FATAs) (Amendment) do do Order, 1979 (II of 1979).

The War Injuries Ordinances Regulation No. II of 1987 82 FATA 1941 (XX of 1941) (14/70)

Census Amendment Ordinance F. 4 (10)FIV/90 dated 83 FATA 1990 (XII of 1990). 4.2.1991 (1/29-Laws)

Drugs Act 1976 and the Rules SAFRON No. SRO. 84 FATA made thereunder. 668(9)/9, dated 15.7.1991.

SAFRON No. SRO Pakistan Bait-ul-Mal Act, 1991 (I 85 608(I)/94 dated 13.6.1994 FATA of 1991). (1/43-Laws/92).

The Dangerous Act, 1930 (Act II 86 (26-808-II) FATA of 1930)

42 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

SAFRON Notification No. Prohibition (Enforcement of 87 SRO. 816(1)/94. dt. 25-00- FATA Hadd) Order, 1979 1994

Peoples Act, 1976 )LXXXV of SAFRON Notification No. 88 FATA 1976) F/(53)/P-1/76, dt.9/7/1994

Aircraft Removal of danger to SRO 13(12)(1)/92 dt. 89 FATA Safety) Ordinance, 1965 25/11/1998 President Order No. 3 of 90 Electoral Rolls (FATA 1975. FATA 1996. FATA of NWFP now The Representation of People No. F. 15(I)/96 SRO No. 91 is Khyber Act 1976. 45(I)/97 dated 12.1.1997 Pakhtunkhwa

92 Frontier Crime Regulation Regulation II of 1977 FATA

Senate (Election)(Third 93 Amendment) Ordinance 1996 SRO No. 130(I)/97 FATA (XC-II of 1996)

The Representation of the People SRO No. 129(I)/97, dated 94 (4th Amendment) Ordinance FATA 15.2.1997. 1996 (CS-II of 1996) Civil Aviation Ordinance 1960, Air Craft (Removal of Danger to 95 Safety ) Ordinance 1965 and the FATA Pakistan Civil Aviation Ordinance 1982.

Control of Narcotics substances SAFRON Notification No. 96 FATA Act 1997. SRO 12.. Dated 16/11/1998

97 Anti-Narcotics Force Act 1997 FATA

Frontier Crime Regulation 98 No. F. 9(2)F.IV/95 FATA (Amendment Regulation 1998.)

SRO No. 924 (I)/98, dated 99 Electoral Rolls (FATA 1974. FATA 20.8

Repeal of the Electoral Rolls Act, 100 1998 FATA 1975

43 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Electoral Rolls Act, 1974 (Constitutional Amendment) in 101 1998 FATA the Representation of People Act, 1976. Further to amend the Electoral Rolls (FATA ) Order 1975 (I to 102 14.12.1996 FATA 1975) President Order No. 3 of 1996 to FATA

Representation of people Act 1976 to FATA (Exemption of 103 12.1.1997 FATA I.D. Card for issuance of ballot papers in FATA)

Amendment in the FCR. 1901 104 (Regulation II of 1997) for 14.2.1997 FATA FATA.

i. Senate (Elections)(Third No. F. 15(8)F-I/96 amendment), Ordinance, 1996 No. 2(3)/97-Pub, (XVII of 1996) and dated.15.2.1977

ii. Represenation of the people Act (Fifth amendment), 105 FATA Ordinance, 1996 (CXIX II of do 1996) iii. Representation of the People Act (Sixth amendment), do Ordinance, 1996 (CXIX of 1965) to PATA of Balochistan.

Representation of the People Act F.(-F/IV/95(ii) SRO No. 129 106 (Fourth amendment), Ordinance, FATA (I)/97(II) dated. 15.2.1977 1996 (CXIX of 1965)

Employment of Children Act, FATA & PATA 107 1991 to FATA and PATA of 2.7.1997 NWFP NWFP

Extension of Civil Aviation Ordinance 1960 Aircraft (Removal of danger to Safety), 108 2.7.1997 FATA Ordinance 1965 and the Pakistan Civil Aviation Ordinance, 1982 to FATA's of NWFP. National Highway Authority FATA & PATA 109 1991 (Act No. XI of 1991 to 26.5.1998 NWFP FATA & PATA of NWFP.

44 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Extension of Control of Narcotics Substances Act 1997 FATA & PATA 110 16.11.1998 (XXV of 1997) to FATA and NWFP PATA of NWFP

Anti-Narcotics substances Force FATA & PATA 111 Act 1997 to FATA and PATA of 27.5.1998 NWFP NWFP.

Frontier Crimes (Amendment) Regulation No. 1 of 1998). FCR 1901 Regulation No. III of 1901) to provide for proper 112 FATA implementation (Enforcement of the prohibition (Enforcement of Hadd) Order, 1999 (P.O. No. 4 of 1979) in FATA.

Frontier Crimes (Amendment) 113 Regulation, 1901 (Regulation No. F.9(2)RIV/95 FATA No. I of 1998)

SAFRON Notification No. Frontier Crimes (Amendment) SRO. Dated 16/11/1998 HD 114 Regulation, 1901 (Regulation FATA No. 2/6-SOSII/Laws (HD) No. II of 1998) XII

Extension of Control of 115 27.5.1998 PATA Baluchistan Narcotics substance Act, 1997

Anti Narcotics Force Act, 1997 116 do PATA Baluchistan to the PATA of Baluchistan.

Extension of Electoral Rolls Act 117 and Rules framed the reunder to 20.8.1998 FATA FATA.

Repeal of the Electoral Rolls Act, 118 do FATA 1975 to the FATA of NWFP

Extension of Electoral Rolls Act 1974 and Rules framed the reunder to FATA (Amendment 119 17.1.2000 FATA consequential) in the Representation of People Act, 1976 to FATA.

45 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Amendment in FATA DC 120 19.8.2000 FATA DC Regulation, 1970.

FATA Pure food Regulation, 121 Pending FATA 1999/2000

122 Extension of Laws to Malakand. 21.1.2001 FATA

Foreigners (Amendment) 123 Ordinance 2000 to FATA & 6.2.2001 FATA & PATA PATA of NWFP.

Pakistan Travel Agencies Act, 124 27.7.2001 FATA 1976 to FATA(XXX of 1976).

a). The Crimanal law (Amendment) Act 1901-1989 (III of 1990) 125 FATA b). The Criminal Law (Amendment) Act 1991 (II of 1991).

Extension of Section 365-A (Act 126 8.8.2001 FATA of 1990 to FATA).

Extension of Evacuee Property 127 FATA Laws to PATA in NWFP

PATA (Application Election 128 9.8.2001 FATA Laws) Regulation, 2001.

Final list of Union Council in 129 3.10.2002 FATA FATA.

Extension of NWFP River 130 protection Ord. 2002 to the 7.8.2002 FATA Territory/Jurisdiction of FATA.

Surrender of illicitly Arms Act 131 19.2.2002 FATA 1991 Act No. XXI-2199).

46 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

Extension of labour 132 Laws(Amendment) Ord. 2000 to 19.3.2003 FATA FATA.

Extension of Juvenile Justice PATA & FATA 133 Systems Ord. 2000 to PATA & 23.11.2004 NWFP FATA. NWFP.

Extension of Zakat & Ushr 134 Ordinance 1980 (XVII of 1980 to 26.9.2006 FATA NWFP FATA, NWFP. Extension of the Regulation, Transmission & Distribution of 135 Electric Power (XL of 1997) 10.2.2007 FATA NWFP Power Act 1997 called NEFPRA Act 1997 to FATA. Amendment of Shari-Nizam-e- Adl Regulation, 1999 to PATA, 136 6.6.2007 FATA NWFP NWFP (change of designations i.e. DC to DCO. Extension of PEMRA Ordinance (Pakistan Electronic Media 137 9.8.2007 FATA Regulatory, Ordinance 2002) to PATA NWFP The Tribal Areas All Tribal Areas in 138 The Explosives Act, 1884. (Application of Acts) NWFP Regulation, 1965. The Revenue Recovery Act, All Tribal Areas in 139 W.P Reg. II of 1969. 1890 NWFP

All Tribal Areas in 140 The Pakistan Coinage Act, 1906. The Tribal Areas NWFP The Tribal Areas The Patents and Designs Act, All Tribal Areas in 141 (Application of Acts) 1911. NWFP Regulation, 1965. The Tribal Areas All Tribal Areas in 142 The Companies Act, 1913. (Application of Acts) NWFP Regulation, 1965. The Soldiers (Litigation) Act, Notf. No. 23-W of Govt: of All Tribal Areas in 143 1925. India, 5.11.1940. NWFP The Tribal Areas All Tribal Areas in 144 The Wireless Telegraphy (Application of Acts) NWFP Regulation, 1965.

47 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

The Standards of Weights Act, Notf.No. 182-G of Govt. of All Tribal Areas in 145 1939. India dated 11.7.1942 NWFP The Tribal Areas All Tribal Areas in 146 The Trade Marks Act, 1940. (Application of Acts) NWFP Regulation, 1965. The War Injuries Ordinance, All Tribal Areas in 147 W.P Reg. II of 1964. 1941. NWFP

The War Injuries Regulation, Notf.No. 12-W of Govt: of All Tribal Areas in 148 1942 and the War Injuries India, 7.2.1942. NWFP Scheme, 1942.

The Enemy Agents Ordinance, Notf.No. 21-W of Govt: of All Tribal Areas in 149 1943 and the rules made there India, 20.2.1942. NWFP under.

The Railway Stores (Unlawful Notf.No. 29-W of Govt: of All Tribal Areas in 150 Possession) Ordinance, 1944. India, 10.6.1944. NWFP

The Sugar (Temporary) Excise Gazette of India, 1947 Pt. I All Tribal Areas in 151 Duty Act, 1947. P.860 NWFP

The Tribal Areas The Pakistan Currency Act, All Tribal Areas in 152 (Application of Acts) 1950. NWFP Regulation, 1965.

The Elective Bodies All Tribal Areas in 153 Reg. I of 1966. (Disqualification) Order, 1959. NWFP

The Mineral (Acquisition & All Tribal Areas in 154 P.O.I. of 1961 Transfer) Order, 1961. NWFP

The West Pakistan Govt: Dues All Tribal Areas in 155 W.P. Reg II of 1968. Recovery Ordinance, 1962. NWFP

The Electoral College of Pakistan (Representation of Tribal All Tribal Areas in 156 P.O.I. of 1965 Areas)(Amendment) Order, NWFP 1965.

The Carriage by Air All Tribal Areas in 157 (International Convention) Act, Reg. II of 1972 NWFP 1966.

48 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 3

The Members of the Electoral College (Functions of Local Notf:No. SRO-70(R)/67, All Tribal Areas in 158 Govt. in Tribal Areas) dated 12.5.1967 NWFP Regulation, 1967. Noft. No. 127-SOTA- All Provincially The Delimitation of 159 II?HD/73-74/B, Administered Tribal Constituencies Act, 1974. dt.23.11.1974. Areas in NWFP. The Census Ordinance, 1979 All Tribal Areas in 160 (Application to Tribal Areas) Reg: I of 1981. NWFP Regulation, 1981.

The Trade Organization 161 Ordinance 1961 (Application to Reg. I of 1979 All Tribal Areas. Tribal Areas) Regulation, 1979.

Establishment of FATA Development Authority PATA & FATA 162 01/06/2007 (Regulation, 2006) to FATA NWFP NWFP. Extension of National Disaster 163 Management Ordinance (No. 03.03.2008 FATA NWFP LIII of 2007) to FATA.

The Central Excise and Salt Act, Notf. No. 137-F of Govt. of All Tribal Areas of 164 1944 India, Dt: 20-6-1945 NWFP

The National Assembly and Provincial Assembly of West All Tribal Areas of 165 P.O. No. 2 of 1965 Pakistan (Representation of NWFP Tribal Areas) Order 1965. Source: SAFRON – Ministry of States and Frontier Regions

49 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 4

Chapter 4

This chapter covers the core objective of the study. Due to peculiar nature of the assignment, diversified sources ware taped to identify a wide range of business and commercial laws of Pakistan right from its inception. Curious efforts were made to segregate those laws that has been repeal and those which are still in vogue. Due to cross cutting themes of laws a hefty effort and time was consumed to distinguish and identify these cross cutting issues. Keeping in view the ground realities in FATA and feedback obtained from Focused Group Discussions (FGDs) and Stakeholders Consultative Workshops, the following list of laws are proposed for extension in order of priority.

4.1 Laws proposed for extension Geographical S# Category Law Scope Rules Priority Coverage 1 Corporate/Compa Securities and This Act provides for the establishment of the Securities It extends to the 1. Securities and Exchange Commission of Pakistan High nies law of Exchange and Exchange Commission of Pakistan for the beneficial whole of (Appellate Bench Procedure) Rules 2003 Priority Pakistan. Commission of regulation of the capital markets, superintendence and Pakistan. 2. Securities and Exchange Commission of Pakistan Pakistan Act 1997 control of corporate entities. The commission shall have (Insurance) Rules 2002 the function of regulating the issue of securities, business 3. Securities and Exchange Rules 1971. in Stock Exchange and any other securities markets, 4. Brokers and Agents Registration Rules 2004. supervising and monitoring the activities of any central 5. Leasing Companies depository and Stock Exchange clearing house, 6. (Establishment and Regulation) Rule 2000. prohibiting fraudulent and unfair trade practices relating to 7. Securities and Exchange Commission of Pakistan securities markets and encouraging the organized (Conduct of Business) Regulation 2000 development of the capital market and the corporate sector 8. Securities and Exchange Policy Board (Conduct of in Pakistan etc. however Securities and Exchange Business) Regulations 2000. Commission of Pakistan (Amendment) Ordinance 2000 9. Stock Exchange Members (Inspection of Books and introduced certain amendments which mainly includes Record) Rules 2001 substitution of words like the board shall now be called commission and inserted S 43A which abolished the department of insurance.

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2 Corporate/Compa Companies This ordinance offers an in depth analysis into how the It extends to the 1. Companies (Employees Stock Option Scheme) High nies law of Ordinance 1984 companies in Pakistan are to be registered and managed. It whole of Pakistan Rules 2001. Priority Pakistan. entails the whole scheme of the establishment of a 2. Companies (Audit of Accounts) Rules 1998 company together with the rules and regulations, and as to 3. Companies (Audit of Cost Accounts) Rules 1998 what are the types of companies that are to be registered. 4. Companies (Buy-Back of Shares) Rules 1999 Formats of memorandum and articles of associations are 5. Companies (Court) Rules 1997 also provided. It also lays down the scope of duties of the 6. Companies (General Provisions and Forms) Rules directors of the companies, rights and duties of the 1985 shareholders, share capital how to be increased or 7. Companies (Invitation and Acceptance of Deposits) decreased. The process to be followed in case a company Rules 1987 wishes to transform into a public limited company from a 8. Companies (Issue of Capital) Rules 1996 private limited company and vice versa. The procedure to 9. Companies (Management by Administration) Rules be followed in case the company is unable to pay its debts 1993 or creditors together with, as to what courts are to function 10. Companies (Rehabilitation of Sick Industrial Units) as appellate tribunals in case of any right being claimed or Rules 1999 any person wishing to enforce any provision or section of 11. Companies Audit (Convention) Rules 1998 this Ordinance. To conclude this Ordinance lays in detail 12. Companies Profits (Workers Participation) Rules the minute basics to be followed by the companies in 1971 managing their day to day affairs. 13. Companies Share Capital (Variation in Rights and Privileges) Rule 2000 14. Companies Share Capital (Variation in Rights and Privileges) Rules 2000 15. Companys Employees Service Rules 16. Compendium of Pension Rules 1987 17. Investment Companies and Investment Advisers Rules 1971. 18. Public 19. Asset Management Companies Rules 1995. 20. Asset Management Companies Rules 1995. 21. Companies (Managing Agency and Election of Directors) Order 1972. 22. Companies (Asset Backed Secrutinization) Rules 1999 23.Venture Capital Companies and Fund Managers Rules 1995 24. Venture Capital Companies and Venture Capital Funds Rules 2001. 25.Central Depository Company (Establishment and Regulation) Rules 1996

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3 Corporate/Compa Modaraba An Ordinance to provide for matters relating to It extends to the 1. Modaraba Companies and Modaraba Rules 1981. High nies law of Companies and registration of modaraba companies and the floatation, whole of 2. Prudential Regulation for Modarbas Priority Pakistan. Modaraba management and regulation of modarabas. Under the Pakistan. (Floatation and Ordinance "modaraba" means a business in which a Control) Ordinance person participates with his money and another with his 1980 efforts or skill or both his efforts and skill and shall include Unit Trusts and Mutual Funds by whatever name called. Moreover under the Ordinance the Modaraba for any sort of business has to be under Injunctions of Islam, for this matter there is a religious board under the Ordinance. Furthermore the Ordinance puts down the functioning, qualification, disqualification and registration requirement for Modaraba. The ordinance in hand was Amended 2005 by the Modaraba Companies and Modaraba Floatation and Control) (Amendment) Ordinance 1985, Modaraba Companies and Modaraba (Floatation and Control) (Amendment) Act 1985, Modaraba Companies and Modaraba (Floatation and Control) (Second Amendment) Act 1985.

4 Corporate/Compa Contract Act 1872 This Act deals extensively with the issues relating to the It extends to the High nies law of formation, execution and performance of contracts. It lays whole of Priority Pakistan. down as to what are the basic components for the Pakistan. formation of a contract, the rights and duties of the parties thereafter, implied and express conditions in a contract, different types of contract, the procedure to be followed in the case of relinquishment of a contract, the procedure to be followed in case of breach of contract and all other matters that may be necessary for the parties to look into while at the time of formation or execution of contracts. Moreover it also provides as to how applications are to be made and the interpretations to be derived by the courts while adjudication upon the rights of contracting parties.

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5 Corporate/Compa Partnership Act The purpose of this Act is to provide for laws which It extends to the North-West Frontier Province Partnership Rules 1932 High nies law of 1932 govern the regime of partnerships in Pakistan. This Act whole of Priority Pakistan. defines partnerships as the association of persons who Pakistan. have agreed to share the profits of a business. There can be individual partners or collective partners known as a “firm”. The partners are bound to carryon this business to the greatest common advantage and to be just and faithful to each others. Furthermore this Act also provides for registration and its procedure, duties of individual partners and their liabilities.

6 Laws of Courts Notaries Ordinance The reason for promulgating this ordinance was to It extends to the High and litigation 1961 regulate the profession of notaries in Pakistan. The whole of priority process. function of a notary is to verify, attest, certify or to Pakistan. authticate an instrument or any other document and to maintain a register of his authtication.

7 Laws of Courts Power of Attorney The purpose of this Act is to amend the law relating to It extends to the High and litigation Act 1892 powers of attorney. "Powers-of-Attorney" include any whole of Pakistan priority process. instrument empowering a specified person to act for and in the name of the person executing it. An instrument creating a power-of-attorney, its execution being verified by affidavit and declaration is important. This Act further Repealed the Act NO. XII of 1891.

8 Laws of Courts Stamp Act 1899 This Act provides for amending and consolidation of laws It extends to the High and litigation related to stamps. It provides that every instrument which whole of priority process. is executed between the parties it shall be chargeable with Pakistan. duty. This duty is generally mentioned on the stamp which needs to be paid. This Act covers every provision that relates to the instrument of stamp and provides penalties for non compliance.

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9 Corporate/Compa Sale of Goods Act This Act provides to define and amend the laws relating to It extends to the 1. Removal and receipt of Conditionally Exempt High nies law of 1930 sale of good in Pakistan. It further define sale, agreement whole of Goods Rules 1995 Priority Pakistan. and how contracts are made, what would amount to future Pakistan. goods, duties of a seller and those of the buyer and delivery etc. it also provides for damages and the remedy of specific performance for the breach of any provision of contract. Sale of Goods (Amendment) Act 1994 introduced certain amendments firstly by inserting S 16A which provides seller to inform buyer of any defect in goods sold and secondly slight amendments to S 37.

10 Insurance laws of National Insurance It provides for conversion of the National Insurance It extends to the 1. National Co-Insurance Scheme Regulation 1970. High Pakistan. Corporation (Re- Corporation into a public limited company for whole of Pakistan 2. National Company Insurance Funds Rules, 1973 Priority Organization) incorporation under the Companies Ordinance, 1984. Ordinance 2000 Furthermore it also provided that all forms of property, rights and liability owned by the corporations shall vest in the company. It also provides for the procedure as to its registration and that all employees who were the employee of corporation to become employees of the company.

11 Insurance laws of Insurance This Ordinance is to regulate the business of the insurance It extends to the 1. General Insurance Business (Nationalisation) Rules High Pakistan. Ordinance 2000 industry, to ensure the protection of the interests of whole of Pakistan 1973. Priority insurance policy holders and to promote sound 2. Insurance Claims Settlement Board Rules 1975 development of the insurance industry and for matters 3. Insurance Rules 2002 connected therewith. It lays down the procedure of registration of such companies, and the checks and balances of their affairs.

12 Labour/Service Factories Act 1934 This Act provides for the regulation of labour in factories. It extends to the N.-W.F.P. Factories Rules 1975 High laws It also deals with the appointment of inspectors, powers of whole of Priority inspectors, safety of buildings and machinery, prohibition Pakistan. of employment of children and women near cotton openers, intervals for rest, weekly hours, matters related to cleanliness and ventilation. Moreover it puts forth conditions related to the certificate of fitness, penalty for contraventions of act and rules, annual holidays, casual leaves, sick leaves, cognizance of offences and penalties .

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13 Land/Property Land Acquisition This Act is for the acquisition of land needed for public It extends to the Land Acquisition Rules High and Act 1894 purposes and for Companies and for determining the whole of priority Accommodation amount of compensation to be made on account of such Pakistan. laws of Pakistan acquisition. The amount of compensation how to be made, the factors to be determined in this regard and the powers of the land acquisition collector.

14 Land/Property Revenue Recovery This Act provides for laws for making better provision for It extends to the 1. Land Revenue Assessment Rules 1929. High and Act 1890 recovering public demands. Where a sum is recoverable as whole of 2. Land Revenue Rules 1922. priority Accommodation arrear of land and is payable to collector by a defaulter Pakistan. 3. West Pakistan Urban Immovable Property Tax laws of Pakistan residing in another district. The collector can send a Rules 1959 certificate to the other collector providing details of the 4. West Pakistan Land Revenue Rules 1968 defaulter to recover the arrears. If that person denies any part of the payment the remedy available to him is under civil courts.

15 Laws of Courts Registration Act It provides for matters related to registration of the It extends to the High and litigation 1908 register-able documents at the time of presentation, place whole of priority process. of registration and the effect of registration. It also Pakistan. provides the procedure for registration of wills, duties and powers of registration officers and the effect of refusal to register.

16 Laws of Courts Negotiable This Act brought amendment to S25 of Negotiable It extends to the High and litigation Instruments Instruments Act 1881 where it was added that public whole of priority process. (Amendment) Act holiday means holiday declared by the federal Pakistan. 1997 government.

17 Laws of Qanun-e-Shahadat It consolidated the law of Evidence so as to bring it in It extends to the Qanun-e-Shahadat Order 1984 High Evidence. order 1984 conformity with the injunctions of Islam laid down by the whole of Priority Holy Quran. It provides a whole code for evidence that Pakistan. must be followed in both civil and criminal trials. Furthermore it defines as to who can be called as a witness, admissibility of his testimony and whether is eligible to be called as a witness. It also deals with oral and written or documentary evidence and any thing which is relevant at the stage of trial.

55 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 4

18 Social Charitable And This Act provides for the creation and management of It extends to the High Welfare/Charities Religious Trusts charitable and religious Trusts, dealing with matters whole of priority and Trusts law of Act 1920 related to it, such as, the power to apply to the court in Pakistan. Pakistan. respect of trusts, powers of trustee to apply for directions and failure of trustees to comply with orders.

19 Social Charitable This Ordinance deals with the matters related to the It extends to the High Welfare/Charities Endowments Act management and creation of charitable endowments, it whole of priority and Trusts law of 1890 further covers appointment of the treasurer of Charitable Pakistan. Pakistan. endowments, scheme for administration of property vested in the treasurer and power to frame and make rules.

20 Social Co-Operative This Act provides for the creation and registration of Co- It applies to the 1. Co-Operative Societies (Reforms) Order 1972. High Welfare/Charities Societies Act 1925 operatives societies. It also deals with the conditions of province of east 2. Co-Operative Societies and Cooperative Banks priority and Trusts law of registration, amalgamation and transfer of societies, pakistan (Payment of Loans) Order 1972. Pakistan. restrictions on interest of member of society with limited 3. Co-Operative Model Town Society (1962) Limited liability and a share capital, provident fund, effect of Employees Service Rules 1969. cancellation of registration and offences as committed. 4. Co-Operative Societies (Bahawalpur, Khairpur, Quetta, Kalat) Rules 1963. 5. Co-operative Societies Rules. 6. Co-Operative Societies Rules 1912 7. Co-Operative Societies Rules 1925 8. Co-Operative Societies Rules 1927 9. Co-Operative Societies Rules 1929 21 Social Societies This Act makes provisions for improving the legal It extends to the High Welfare/Charities Registration Act conditions of societies established for promotion of whole of priority and Trusts law of 1860 literature, science, fine arts, diffusion of useful knowledge Pakistan. Pakistan. and charitable purposes. Further it provides that societies must be registered and the procedure to do that is also provided. Although Societies Registration (Amendment) Act 2006 has introduced amendment to S 21 whereby all deeni madarass shall now be registered for them to operate in Pakistan and it has also repealed Societies Registration (amendment) ordinance 2006.

22 Social Trusts Act 1882 This Act regulates laws which are applicable to trustees It extends to the High Welfare/Charities and private trusts. Further it defines as to who may create whole of priority and Trusts law of trust, the duties of a trustee and the beneficiaries, it also Pakistan. Pakistan. provides for the creation of lawful trust.

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23 Social Voluntary Social This ordinance provides for laws to registration and It extends to the Voluntary Social Welfare Agencies (Registration High Welfare/Charities Welfare Agencies control of voluntary social welfare agencies. This whole of 1. And Control) Rules 1962 priority and Trusts law of (Registration and ordinance has put a prohibition on all agencies which are Pakistan. Pakistan. Control) Ordinance not registered and provides procedure for imposition of 1961 penalties on the violators.

24 Banking Laws of Industrial This Ordinance is to provide for the re-organization and It extends to areas High Pakistan. Development Bank conversion of the Industrial Development Bank of covered by the priority of Pakistan Pakistan into a public limited company. Under the Parent Ordinance. (Reorganization and Ordinance the company is deemed to be a banking Conversion) company. This ordinance has powers to override other Ordinance 2007 laws.

25 Banking Laws of Micro-Finance An Ordinance to provide for the establishment of the, It extends to the High Pakistan. Bank Ordinance Micro-finance Bank for rendering micro finance services whole of priority 2000 to poor persons for purposes of alleviation of poverty. Pakistan. Under the Ordinance the MFB is not a banking company. Although doing many such things as a bank, the share capital is determined and controlled by the State Bank. This Ordinance also gives out the outlines for the functioning of the bank. This Ordinance is amended in the same year 2000 by the Micro-Finance Bank (Amendment) Ordinance 2000.

26 Banking Laws of Micro-Finance This Ordinance provides for the establishment of micro It extends to the High Pakistan. Institutions finance institutions. Thereby it lays down the whole of priority Ordinance 2001 requirements of such micro finance institutions Pakistan.

57 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 4

27 Trade & Anti Money This Act prescribes that any person, including an It extends to the High investment laws Laundering Act individual , a firm, an entity, an association or a body of whole of priority of Pakistan. 2010 (the Act) individuals, whether incorporated or not, a company and Pakistan. every other juridical person, shall be guilty of offence of money laundering, if the person: a.) Acquires, converts, possesses, uses or transfers property, knowing or having reason to believe that such property is proceeds of crime; b.) Conceals or disguises the true nature or origin, location, disposition movement or ownership of property knowing or having reason to believe that such property is proceeds of crime; c.) Holds or possesses on behalf of any other person any property knowing or having reason to believe that such property is proceeds of crime; or d.) Participates in, associates, conspires to commit, attempts to commit, aids, abets, facilitates or counsels the commission of the acts specified in clauses (a.), (b) and (c).

28 Trade & TRADE This ordinance provides for the establishment of Trade It extends to the 1. Pakistan-China Preferential Trade Agreement Rules High investment laws DEVELOPMENT Development Authority in Pakistan to provide for better whole of of Origin 2004. priority of Pakistan. AUTHORITY OF and healthy trade growth in the country. Further it Pakistan. 2. Trading Corporation of Pakistan Limited (Service) PAKISTAN provides for the structure for the management, powers and Rules 1975 ORDINANCE, functions of this Authority. 2007 29 Trade & TRADE The purpose of this ordinance is to provide ensure It extends to the High investment laws ORGANISATIONS appropriate representation of all genders and business whole of Pakistan priority of Pakistan. ORDINANCE 2007 sectors at all levels in trade organisations and that they and to trade play significant role in developing policy framework for organisations improving business environment and economic growth. It whose functions further provides regulations for licensing, renewal and are not confined revocation of these organisations. It also provides set of to provincial rules for any violation of any provision of this ordinance. level.

30 Trade & Export This Act establishes an export development fund, it It extends to the Export Credits Guarantee Scheme Rules 1962 High investment laws Development Fund provides for its administration, powers of the board, whole of 2.Export Guarantee Insurance Scheme Rules 1962 priority of Pakistan. Act 1999 secretariat and the executive authority of the board. Pakistan.

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31 Trade & Export Processing This Ordinance provides for the establishment of an It extends to the 1. Export Processing Zone (Control of Employment) High investment laws Zones Authority Export Processing Zones Authority for making all whole of Rules 1982. priority of Pakistan. Ordinance 1980 arrangements for the planning, development and Pakistan. 2. Export Processing Zones Authority (Service) Rules management of the Zones. Also lays down duties and 1980. scope of the board, preparation of schemes for 3. Export Processing Zones Authority Rules 1981 infrastructure, sanctioning of industries and power to make rules. 32 Arbitration & Arbitration This Ordinance hereby amends the Arbitration Act of It extends to the High Arbitral Awards (Amendment) 1940, amending the Section 26 dealing with the power of whole of Pakistan priority related laws of Ordinance 1981 the Courts to remit cases pending at the commencement of Pakistan. this Ordinance.

33 Arbitration & ARBITRATION This Ordinance was promulgated after Pakistan signed It extends to the High Arbitral Awards (INTERNATIONA and ratified the International Convention on the whole of Pakistan priority related laws of L INVESTMENT Settlement of Investment Disputes between States and Pakistan. DISPUTES) Nationals of other States. This Ordinance recognizes such ORDINANCE, foreign awards, on the condition requisite, that the person 2007 wishing for such enforcement may apply to the respective High Court, and upon such registration, it shall be binding on the Government and parties as it was a decision of that respective High Court.

34 Arbitration & Arbitration Act This Act, an extensive instrument, devised for the It extends to the 1. Arbitration of Labour Disputes Order 1972 (M.L.O. High Arbitral Awards 1940 codification and consolidation of the laws relating to whole of Pakistan 235) priority related laws of arbitration of Pakistan was promulgated in 1940. It 2. Arbitration of Labour Disputes Order 1972 (M.L.O. Pakistan. contains sections covering every angle and aspect of 52) arbitrations and matters ancillary thereto, from the inserting of arbitration clauses in the agreements to the appointment of arbitrators, their powers, their roles, the effect of an award made by the Arbitrator, disagreement of party (ies) to the award to the effect of non compliance, powers of the High Courts and other procedures to be followed; is an exhaustive Act, fully in conformity with the international standards of laws relating to Arbitration.

35 Trade & Board of Investment This Ordinance creates a Board of Investment (BOI) to It extends to the High investment laws Ordinance 2001 promote, encourage and facilitate local and foreign whole of Pakistan priority of Pakistan. investment, further its sections enshrine, the Functions of the BOI, the giving of grants and funds, delegation of powers and power to make rules.

59 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 4

36 Trade & Economic Reforms This Act seeks to create a liberal environment for It extends to the Economic Reforms (Acquisition and Compensation) High investment laws Act 1992 investment in Pakistan, for that provides protection to the whole of Rules 1973 priority of Pakistan. foreign currency accounts in Pakistan, protection of Pakistan. foreign and Pakistan investment and protection of the financial obligations.

saving 37 Intellectual INTELLECTUAL The Intellectual Property Organization of Pakistan It extends to the High Property laws of PROPERTY Ordinance, 2005 (XXI of 2005) is hereby repealed by this whole of Priority Pakistan. ORGANIZATION Ordinance of 2007. The ordinance establishes the Pakistan. OF PAKISTAN Intellectual Property Organization of Pakistan to provide ORDINANCE, for the protection of Intellectual Property Rights in 2007 Pakistan. The Ordinance moreover provides the policy, powers, delegating powers and actual functioning of the organization. Other then general exclusion it also curtails the prohibition of use of certain names marks seals.

38 Intellectual Patents Ordinance This ordinance amends and consolidates the law relating It extends to the 1. Patents and Designs Rules 1933 High Property laws of 2002 to protection of inventions. It establishes a Patent office whole of 2. Patents Rules 2003 Priority Pakistan. which works under the Federal government. It also Pakistan. provides as to who are eligible to register patents, its procedure and penalty for any violation. Patents (Amendment) Ordinance 2002 amended certain section of the previous act like defining inventions as any new and useful product or process, in any field of technology. It also omitted s 102 of the 2000 ordinance and added S 107 which bar any proceedings against an employee under this ordinance who has acted in good faith and S 108 if any difficulty arises as to any provision of this ordinance then the Federal government by publication in official gazette may take any step which is deem fit.

60 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 4

39 Intellectual Registered Designs This ordinance repeals and re-enact the law relating to the It extends to the High Property laws of Ordinance 2000 protection of industrial designs. A patent office was whole of Priority Pakistan. established to register new designs. It further provides for Pakistan. the procedure which needs to be adopted to register or cancel a design. Offences and penalties are also provides in this ordinance for non compliance. It has repealed Clause (5) of section 2 and sections 43, 44, 45, 46, 47, 48, 49, 50, 51, 51A, 51B, 52, 53 and 54 of the Patents and Designs Act, 1911.

40 Intellectual Trade Marks This ordinance amend and consolidate the law relating to It extends to the High Property laws of Ordinance 2001 trade marks and unfair competition and to provide for whole of Priority Pakistan. registration and better protection of trade marks, for the Pakistan. prevention of the use of fraudulent marks and registration of class of goods and services to which it applies.

41 Provision of Pharmacy Act 1967 This Act established Pharmacy Council to regulate the It extends to the High Health and practice of pharmacy. Furthermore it provides the rules as whole of priority medical facilities to who can qualify to be a pharmacist and register and Pakistan. laws. grant licenses to pharmacies. It also provides that no court can take cognizance until a compliant is launched by the drug inspector under drug act 1940.

42 Tax and Financial FEDERAL This Act establishes the Federal Board of Revenue, a It extends to High laws of Pakistan. BOARD OF board which deals with the levying of taxes, the preparing whole of priority REVENUE ACT, of annual reports related to the taxation. This board has Pakistan. 2007 been given the powers and functions of a regulatory body for the management and administration of tax system in Pakistan. Dealing with all the tax related issues for e.g. collection and recovery of taxes, the initiation of proceedings in case on non compliance. IT has been provided that the board will be run by a nominated board, headed by the Chairman.

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43 Tax and Financial Federal Excise Act This Act consolidates and amends the law relating to the It extends to Federal Excise Rules 2005 High laws of Pakistan. 2005 federal duties of excise on goods manufactured or whole of 2..Fixed Amount of Central Excise Duty (On priority produced in Pakistan, levying and collection of duty and Pakistan. Monofilaments for Ropes) Rules 1997 the powers and duties of the officers. 3.Fixed Amount of Central Excise Duty on Caterers Rules 1996 4. Fixed Amount of Central Excise Duty on Marriage Halls and Marriage Lawn Rules 1994 5. Fixed Amount of Central Excise Duty Rules 1999 6. Fixed Amount of Excise Duty (PVC W ires and Cables) Rules 1996 44 Tax and Financial Sales Tax Act 1990 This Act provides for laws to regulate the levying of tax It extends to the Fixed Amount of Sales Tax (Desert Coolers) Rules High laws of Pakistan. on sale, import, export, production and manufacturing or whole of 1993 priority consumption of goods. It creates a mandatory requirement Pakistan. 3. Fixed Amount of Sales Tax (Electric Fans) Rules of registration for manufacturers, retailers, wholesale 1993 dealer and importers. It also provides for the procedure of 4. Fixed Amount of Sales Tax (Electric Geysers and registration and how taxes shall be imposed. Water Coolers) Rules 1993 5. Fixed Amount of Sales Tax (fabrics) Rules 1992 6. Fixed Amount of Sales Tax (Fasteners i.e. Nuts, Bolts and Screws Etc) Rules 1994 7. Fixed Amount of Sales Tax (Iron and Steel Nails) Rules 1994 8. Fixed Amount of Sales Tax (Marble And Slabs) Rules 1991 9. Fixed Amount of Sales Tax (Pakistan Printing and Graphic Arts Industry) Rules 1993 10. Fixed Amount of Sales Tax (Paper Board) Rules 1991 11. Fixed Amount of Sales Tax (Plastic Bags) Rules 1991 12. Fixed Amount of Sales Tax (Plastic Dori and Nawar Fita) Rules 1993 13. Fixed Amount of Sales Tax (Plastic Goods) Rules 1993 14. Fixed Amount of Sales Tax (Processed Fabrics) Rules 1991 15. Fixed Amount of Sales Tax (Processed Fabrics) Rules 1995 16. Fixed Amount of Sales Tax (Processed Fabrics) Rules 1997. 21. Fixed Amount of Sales Tax (Agarbatties) Rules 1991

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22. Fixed Amount of Sales Tax (Aluminium Utensils) Rules 1993 23. Fixed Amount of Sales Tax (At Source) Rules 1992 24. Fixed Amount of Sales Tax (At Source) Rules 1994 25. Fixed Amount of Sales Tax (Brass Water Sanitary Fitting) Rules 1991 26. Fixed Amount of Sales Tax (Brick Kiln) Rules 1995 27. Fixed Amount of Sales Tax (Cement Blocks) Rules 1991 28. Fixed Amount of Sales Tax (Cermaic Sanita ry Wares) Rules 1993 17. 16.Fixed Amount of Sales Tax (Corrugated and Solid Board Cartons) Rules 1992. 18. Fixed Amount of Sales Tax (Melamine Crockery) Rules 1991. 19. Fixed Amount of Sales Tax (R.C.C Pipes) Rules 1993 20. Fixed Amount of Sales Tax (Re-rolled Mild Steel Products) Rules 1991 21. Fixed Amount of Sales Tax (Reprocessing of Cotton Waste) Rules 1994 22. Fixed Amount of Sales Tax (Sewing Thread) Rules 1993 23. Fixed Amount of Sales Tax (Sweetened Supari) Rules 1991 24. Fixed Amount of Sales Tax (Tin Containers) Rules 1993 25. Fixed Amount of Sales Tax (Washing Machine) Rules 1993 26. Fixed Amount of Sales Tax (W ire Netting) Rules 1993 27. Fixed Amount of Sales Tax Rules 1997 28. Fixed Amounts of Sales Tax (P.V.C Pipes) Rules 1993 29. Sales Tax General Order 30. Sales Tax Registration Rules,1996 31. Sales Tax Special Producer Rules 2007 32. Sales Tax (Transport Premit) Rules 1990

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33. Sales Tax Recovery Rules 1992 34. Sales Tax Refund Rules 2002 35. Sales Tax Rules 2006 36. Sales Tax Special Audit Rules I 1998 37. Sales Tax Special Audit Rules II 1998 38. Sales Tax Special Producer Rules 2007 39. 40. Simplified Sales Tax Rules 1999 41. Removal and Receipt of Taxation Goods without Payment of Sales Tax Rules 1992 42. Special Procedure for Collection and payment of Sales Tax (Electric Power) Rules 2000 43. Special Rules for Delivery of Certain Goods (Without Payment of Sales Tax) Rules 1998 44. Collection of Sales Tax on PaperBoard Rules 1995. 45. Apportionment of Input Tax Rules 1996 45 Trade & Export Control on This Act provides for certain safeguards and control on IT extends to the High investment laws Goods, the export of material and equipment related to nuclear whole of priority of Pakistan. Technologies, and biological weapons. Pakistan. Material and Equipment Related to Nuclear and Biological Weapons and their Delivery, Systems Act 2004 46 Trade & Imports and Exports This Act provides for restrictions for some time on It extends to the Deferment of Import Duties (Power, Gas and Energy High investment laws (Control) Act 1950 imports and exports, and for matters related to the whole of Pakistan Project) Rules 1994 priority of Pakistan. cognizance of offences. It also prohibits to sell or 1. Deferment of Import Duty (on Ships for Scrapping) purchase import license. Rules 1993 2. Deferment of Import Duty Rules 1991. 3. Determination of Imported Materials and Fixation of Rates for Repayment or Duty Drawback Rules 2001. 4. Export (Quality Control) 5. Order 1973 6. Export Credits Guarantee Scheme (Abolition) Order 2001 7. Export Policy and Procedure Order 2000 8. Export Oriented Units Rules 1998. 9. Imports and Exports (Control) (Amendment) Regulation 1983 10. Import Policy Order, 2005

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11. Import Trade and Procedures Order 2002-2003 12. Import-Export Procedure Order 1999 13. Import and Export Policy Order 1999-2000 14. Import Fee 15. Order 1993 16. Input Rules 1996 17. Inspection and Valuation of Imported Goods Rules 1990 18. Inspection, Valuation and Assessment of Imported Goods Rules 1994. 19. Negative List 20. of the Import, Trade and Procedure Order 2001- 2002. 21. Registration (Importers and Exporters) Order 1952. 22. Registration (Imports and Exports) Order 1993. 23. Removal of Zero Rated Goods (Under Bond) for Export Rules 1992. 24. Takeover of Imported Goods Rules 2003. 25. West Pakistan Excise and Taxation 26. Department Delegation of Powers Rules 1962 27. West Pakistan Excise and Taxation Department Subordinate Service Rules 1966 47 Trade & Competion Act This Ordinance is to provide for measures against undue It extends to the High investment laws 2010 corporation of economic power, growth of unreasonable whole of priority of Pakistan. monopoly power- and unreasonably restrictive trade Pakistan. practices.

48 Labour/Service Industrial Relations This Ordinance is to amend and consolidate the Law It extends to the .Industrial Disputes (Conciliation and Adjudication) High laws Ordinance 2002 relating to the formation of Trade Unions, the regulation whole of Order 1965 Priority of relations between employers and workmen and the Pakistan. 2. Industrial Disputes (Central) Rules 1960 avoidance and settlement of any differences or disputes 3. National Industrial Relations Commission arising between them. Under the Ordinance if the (Procedure and Functions) Regulations 1979. conciliation fails, the Conciliator shall try to persuade the 4. N.-W.F.P. Industrial Relations Rules 1974 parties to agree to refer the dispute to an arbitrator. This Ordinance also lays down the procedure and powers of Labour Courts.

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49 Corporate/Compa ALTERNATIVE This Ordinance provides for the creation of an It extends to the High nies law of ENERGY autonomous body called the Alternative Energy whole of Pakistan Priority Pakistan. DEVELOPMENT Development Board (AEDB). The functions of AEDB are BOARD outlined as implementation of various policies, ORDINANCE 2005 programmes and projects in the field of Alternative or Renewable Energy Technologies. It also outlines the functions and the terms of office of the board, together with the organization of the Board and the matters related to the delegation of powers to carry out the functions necessary. 50 Corporate/Compa Companies This Act deals with the matters related to the appointment It extends to the . Companies (Appointment of Trustee) Rules 1973 High nies law of (Appointment of of trustees in a company, powers of the trustee, liability of whole of Pakistan Priority Pakistan. Trustees) Act 1972 the Company, delegation of powers and removal of difficulties 51 Corporate/Compa Competition Through this Ordinance the competition commission of It extends to the Competition High nies law of Ordinance 2007 Pakistan was established, primarily to deal with the issues whole of Pakistan 1. Commission (Appeal) Rules 2007 Priority Pakistan. related to unfair trade practices, formation of cartels by 2. Competition Commission (Extension In Exemption) companies, detrimental pricing of products. It also gave Rules 2007 the commission vast powers to investigate into any such 3. Competition Commission Appeal Rules 2007 matter as provided above and take penal action. Note: this 4. Competition Commission Enquiry (Conduct of Ordinance has not been passed by the Parliament and as of Investigating Officers) Rules 2007 now the Competition Commission is redundant, it is 5. Competitive Examination Rules 1977 hoped that this Ordinance will be passed by the Parliament 6. Competitive Examination Rules 1996 in the near future 7. Competitive Examination Rules 2001 8. Competitive Examination Rules 2002. 52 Corporate/Compa Pakistan Standards This Enactment establishes Pakistan Standards and It extends to the High nies law of and Quality Control Quality Control Authority to provide standardization and whole of Priority Pakistan. Authority Act 1996 quality control services. The functions of this authority are Pakistan. to inspection and testing of products and services for their quality, specification and characteristics, during use and for import and export purposes and to stop manufacture, storage and sale of such products which do not conform to the Pakistan or any other country's standards recognized by the Authority. This Act also provides penalties against the violation of any provision of this act. Pakistan Standards and Quality Control Authority (Amendment) Act 1997 introduced amendment where the word industry was to be substituted by science and technology.

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53 Corporate/Compa Small and Medium This ordinance provides for the establishment of a Small It extends to the High nies law of Enterprises and Medium Enterprises Development Authority to whole of Priority Pakistan. Development provide requisite support services for encouraging and Pakistan. Authority facilitating the development and growth of s mall and Ordinance 2002 medium enterprises in Pakistan by way of policy making and through the provisions of resources and support services. This functions of the board may include ask for any information or call for the record of any matter relating to S.M.E.s, from any ministry, division, department, section, statutory body, corporation, agency of the Federal of Provincial Government concerning any policy, relating to S.M.E.s subject to the constitutional and legal requirements, for review and appropriate action as and if necessary and assist and facilitate banks and other institutions in developing appropriate programmes for the promotion and development of S.M.E.s etc.

54 Banking Laws of Banking Tribunals This Ordinance provides for the creation of banking It extends to the High Pakistan. Act1984 tribunals to deal with cases related to the default of loans whole of priority and other related issues. It provides for the procedure and Pakistan. the execution of decrees how to be carried out, and also the powers of the Banking Tribunal.

55 Tax and Financial Establishment of the This Ordinance creates a post of the Federal Tax It extends to the .Federal Tax Ombudsman's Investigation and Disposal High laws of Pakistan. Office of Federal Ombudsman to diagnose, investigate, redress and rectify whole of of Complaints Regulation, 2001 priority Tax Ombudsman any injustice done to a person through mal-administration Pakistan. Ordinance 2000 by functionaries administering tax laws, and for that matter it provides as to how the tax ombudsman is to be appointed, tenure, recommendations for implementation, powers to enter & and search and the delegation of powers.

56 Tax and Financial Income Tax This Ordinance is to provide for the levying of income-tax It extends to the Income Tax Rules, 2001 High laws of Pakistan. Ordinance 2001 and super-tax. It also provides for the appointment and whole of 3. Income Tax (Computation of Capital of Industrial priority jurisdiction of income-tax authorities, the computation of Pakistan. Undertakings) Rules 1948 the total income for tax purposes, payment of tax before 4. Income Tax (Declaration of Undisclosed Income) assessment, the procedure of assessment, tax liability in Rules 1976 special cases and the rules and procedures relating to the 5. Income Tax (Double Taxation Relief) (Ceylon) recovery of tax with penalties. Rules 1942 6. Income Tax Appellate Tribunal Rules 2005 7. Income Tax Recovery Rules 1969

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8. Income Tax Rules 2002 9. Income Tax Settlement Commission Procedure Rules 1994 10. Income-Tax (Computation of Export Profits and the Tax Attributable to Export Sales) Rules 1977. 11. Refund of Input Tax Rules 1991. 12. Levy and Collection of Extra Tax Rules 1999. 13. Turnover Tax Rules 1999 14. Special Procedure for payment of Sales Tax Rules 2000 15. Retail Tax Rules 1998 16. Collection of Tobacco Cess Rules 1968 17. Destruction of Taxable Goods Rules 1991 18. N.-W.F.P. Recovery of Taxes Rules 1980. 19. Tax (Amendment) Order 1984 20. Taxpayers (Authorized Representatives) Rules 2001 57 Tax and Financial Weights and This Act provides to establish standards of weights and It extends to the High laws of Pakistan. Measures measures based on the International system. It covers all whole of priority (International standard weight and measure instruments and makes it Pakistan. System) Act 1967 mandatory for them to be issued by government with it stamp. It also provides penal sanctions against forged stamps and contravention of this Act.

58 Trade & Foreign Exchange This Act provides regulations in accordance to certain It extends to the 1. Five Years Foreign Currency Bearer Certificates High investment laws Regulation Act payments, dealings in foreign exchange, securities and whole of Pakistan Rules 1992. priority of Pakistan. 1947 import, exports of currency, gold and silver. Furthermore 2. Foreign Exchange Bearer Certificate Rules 1992 the Act lay downs the power to enter and inspect, and 3. Foreign Exchange Rules 1952 under the act the Adjudicating Officer or Appellate Board is deemed as a judicial board or the proceedings are considered to have the same authority as of the Courts proceedings.

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59 Trade & Protection of This Act provides to introduce economic reforms and to It extends to the High investment laws Economic Reforms provide legal protection to them. The provisions of this whole of priority of Pakistan. Act 1992 Act shall have effect over anything contained in the Pakistan. Foreign Exchange Regulation Act, 1947, the Customs Act, 1969, the Income Tax Ordinance, 1979, or any other law for the time being in force. It also provides freedom to sell, hold or transfer foreign currency. Further it also lay down that all citizens living abroad who have foreign currency account enjoy immunity for tax department. Protection of Economic Reforms (Amendment) Ordinance 1999 amends S 4 and S 5 providing that this immunity shall not be available to people living in Pakistan.

60 Trade & Safeguard Measures It gives effect in Pakistan to the provisions of Article XIX It extends to the High investment laws Ordinance 2002 of the General Agreement on Tariffs and Trade, 1994, and whole of priority of Pakistan. to the Agreement on Safeguards to provide for the Pakistan. imposition of safeguard measures and to provide a framework for investigation and determination of serious injury or threat of serious injury caused by products imported into Pakistan. This law overrides the National Tariff Commission Act, 1990 and the Customs Act, 1969.

61 Arbitration & RECOGNITION This ordinance provides for recognition and enforcement It extends to the High Arbitral Awards AND of arbitration agreements and foreign arbitral awards. whole of priority related laws of ENFORCEMENT However the powers of the courts are not curtailed they Pakistan. Pakistan. (ARBITRATION can exercise them by following civil procedure code. AGREEMENTS Although a party to arbitration agreement against whom AND FOREIGN legal proceedings have been initiated if the issue is ARBITRAL covered by agreement can apply to the court for staying AWARDS) the proceedings. As Pakistanis a signatory to UN ORDINANCE, convention on recognition and enforcement of foreign 2007 arbitral awards 1958 and in case of any inconsistency in any law this convention will prevail.

62 Agricultural and Agricultural Census This Act has been enacted in pursuance of the United It extends to the High produce related Act 1958 Nations convention, requiring the member states to make whole of priority laws of Pakistan. an agricultural census. Pakistan.

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63 Anti PREVENTION OF The ordinance covers provision for illegal and criminal It extends to the High Corruption/Penal ELECTRONIC acts such as data access, data damage, system damage, whole of priority laws of Pakistan. CRIMES electronic fraud, electronic forgery, spamming, spoofing, Pakistan. ORDINANCE, cyber terroris m etc. This law applies to every person who 2008 commits an offence under the said Ordinance irrespective of his nationality or citizenship whatsoever or in any place outside or inside Pakistan, having dtrimental effect on the security if Pakistan or any electronic system or data capable of being connected, sent to, used by or with any electronic system in Pakistan. The Ordinance i.e. " Prevention of Electronic Crimes Ordinance, 2008" gives exclusive powers to the Federal Investigation Agency (FIA) to investigate and charge cases against such crimes. 64 Environmental Pakistan This Act provides for protection, conservation, It extends to the Pakistan Environmental Protection Agency (Review of High protection & Environmental rehabilitation, improvement of environment and to whole of IEE and EIA) Regulations 2000 priority forest laws of Protection Act 1997 eliminate pollution. This Act also established Pakistan Pakistan. Pakistan. Environment Council. The function of the council is to protect environment within the ambit of this Act. It also provides for sanctions for those who are found in contraventions of this Act. 65 Telecommunicati Pakistan This Act provides for re-organisation of tele- It extends to the High on laws of Telecommunication communication system in Pakistan by establishing the whole of Priority Pakistan. (Re-Organization) Pakistan Telecommunication Authority. The functions of Pakistan. Act 1996 this authority are to regulate the establishment, operation and maintenance of telecommunication systems and the provision of telecommunication services in Pakistan, promote and protect the interests of users of tele- communication and promote the availability of a wide range of high quality, efficient, cost effective and competitive telecommunication services throughout Pakistan etc. This Act also provides set of rules to regulate this Authority. Furthermore it has repealed The Pakistan Telecommunication Corporation Act, 1991 and Pakistan Telecommunication (Re-Organization) Ordinance, 1996. Pakistan Telecommunication (Re-Organization) (Amendment) Ordinance 2005 has brought some amendments which includes that the Federal government shall establish a Fund to be called the Universal Service Fund (USF), which will be used to provide telecom services to the places which are not served and for. research and development in telecom sector

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66 Oil & gas/Mining Natural Gas This ordinance provided for the establishment for Natural It extends to the 1. Natural Gas (Price for Supplies by Producers) Rules High related laws of Regulatory Gas Regulatory Authority. The purpose of this Authority whole of 1976. Priority Pakistan. Authority would be to provide for licences, its amendment, Pakistan. 2. National Gass Tariff Rules 2002 Ordinance 2000 modification or its cancellation. Determine the well-head gas prices for the producers in accordance with the relevant agreements or contract. Further to protect the interests of consumers in accordance with this ordinance.

67 Oil & gas/Mining Oil and Gas It provides for conversion of oil and gad development It extends to the High related laws of Development corporation into a company Ltd under companies’ whole of Priority Pakistan. Corporation (RE- ordinance 1984. All assets and liabilities will now be Pakistan. Organization) transferred to the company and it also provides for the Ordinance 2001 procedure of transfer of employees from corporation to company. This ordinance has repealed OGDC ordinance 1961. This corporation has been established for the promotion and regularisation of the Oil and gas sector of Pakistan.

68 Oil & gas/Mining Oil and Gas This ordinance establishes Oil and Gas regulatory It extends to the Liquified Petroleum Gas (Production and Distribution) High related laws of Regulatory Authority. This Authority will ensure to foster whole of Rule 1971 Priority Pakistan. Authority competition, increase private investment and ownership in Pakistan. Ordinance 2002 the midstream and downstream petroleum industry, protect public interest while respecting individual rights and provide effective and efficient regulations. This ordinance also provides penal sanctions against those who violate any provision of this ordinance. Furthermore it has repealed the Natural Gas Regulatory Authority Ordinance, 2000.

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69 Oil & gas/Mining Petroleum Products This ordinance provides for levy and collection of It extends to the High related laws of (Development development surcharge on petroleum products. Every whole of Priority Pakistan. Surcharge) company under the provisions of this ordinance shall pay Pakistan. ordinance 1961 to federal government development surcharge equal to the differential margin in respect of the quantities of the petroleum products sold by the company. Further the maximum price to sell will be fixed by the government. Petroleum Products (Development Surcharge) (Amendment) Ordinance 1984 introduced certain amendments like "depot" includes the premises set apart for manufacturing, refining or reclaiming lubricating oil from used lubricating oil in any manner and Lubricating oil including Base Oil and Lubricating Oil reclaimed from used Lubricating Oil .

70 Electricity/Hydel Electricity Act 1910 This Act amends the law relating to the supply and use of It extends to the Electricity Rules 1973 High laws of Pakistan. electrical energy. It offers provisions relating to the grant whole of priority and revocation of licences, purchase of undertaking, Pakistan. restrictions on licensee's controlling or interfering with use of energy, exemption of electric supply-lines or other apparatus from attachment in certain cases, penalties, central electricity board and the maters related to arbitration.

71 Electricity/Hydel Electricity Control This Ordinance provides for powers to control the It extends to the High laws of Pakistan. Ordinance 1965 production, distribution, use and consumption of electrical whole Of priority energy during an emergency throughout Pakistan, the Pakistan. penalties for contravention of anything contained in this ordinance are also provided.

72 Electronic and Electronic Media This Ordinance provides for the recognition and It extends to the High Print media laws Regulatory facilitation of documents, records, information, whole of priority of Pakistan Authority communications and transactions in electronic form, Pakistan. Ordinance 1997 accreditation of certification service providers, and for this establishes certification council.

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73 Consumer laws of Consumer This provides for the promotion and protection of the It extends to the High Pakistan, Protection interests of consumers, it also lays down the implied province of priority Ordinance 2004 guarantee as to repairs and spare parts, the requirement of Sindh. exhibition of prices, product safety, establishment and the powers of the consumer courts. Note: for the federal capital territory if Islamabad Consumer courts has been established by the Islamabad Consumer Protection Act 1995. the act serves the same purpose as this ordinance.

74 Miscellaneous Inspection Agencies This Ordinance provides for laws to control and regulate It extends to the High (Registration and the business in relation to pre-shipment, inspection of whole of priority Regulation) goods exported out of or imported into Pakistan. It also Pakistan. Ordinance 1981 lays down the procedure for the registration of the Inspection Agencies companies. (Registration and Regulation) (Amendment) Ordinance 1982 75 Banking Laws of Bank of Khyber Act This Act contains guidelines for the Bank of Khyber, to IT extends to 1. Bank of Khyber Employees Service Rules 1998 High Pakistan. 2004 conform and get in line with the provisions and practises areas of NWFP priority of Islamic Banking, with a vision to evolve into a full (Now Khyber- fledged Islamic Bank in the future. Pakhtonkhuwa) Only 76 Banking Laws of Micro-Finance An Ordinance to provide for the establishment of the, It extends to the High Pakistan. Bank Ordinance Micro-finance Bank for rendering micro finance services whole of priority 2000 to poor persons for purposes of alleviation of poverty. Pakistan. Under the Ordinance the MFB is not a banking company. Although doing many such things as a bank, the share capital is determined and controlled by the State Bank. This Ordinance also gives out the outlines for the functioning of the bank. This Ordinance is amended in the same year 2000 by the Micro-Finance Bank (Amendment) Ordinance 2000.

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77 Electricity/Hydel Pakistan Electric It provides for an establishment of Pakistan Electric It extends to the 1. National Electric Power Regulatory Authority High laws of Pakistan. Power Regulatory Power Regulatory Authority to improve the efficiency and whole of (NEPRA) Service Regulation 2004. priority Authority availability of electric power services which will include Pakistan. 2. National Electric Power Regulatory Authority Ordinance 1997 mobilizing generation, transmission and distribution Licensing (Distribution) Rules 1999 through private ownership. Its functions may include granting licences, approve tariff, rate charges by the generation, transmission and distribution companies etc.

78 Social Employees Social This Ordinance introduces a scheme of social insurance It extends to the High Welfare/Charities Insurance for providing benefits to certain employees or their whole of priority and Trusts law of Ordinance 1962 dependants in the event of sickness, maternity, Pakistan. Pakistan. employment injury or death, and for that matter creates a employees social insurance institution. It also provides for employees social insurance fund, injury benefit, disbablement pension, claims for benefits and the repayment of benefit illegally received.

79 Land/Property North-West Frontier This Act regulates taxation on immovable property. It has It extends to the High and Province Urban also amended the West Pakistan Urban Immovable whole of N.W.F.P priority Accommodation Immovable Property Tax Act, 1958 for the application in N.W.F.P except laws of Pakistan Property Tax mainly in section 4, for clause (c), where the property is a FATA/FANA (Amendment) Act residential building not exceeding five marlas and the 2005 owner resides in it himself, then it is exempted fro m property tax. Although he has to submit an affidavit that he doesn’t have any other property. If the owner fraudulently avails the concession under this clause, he shall be liable to pay a penalty amounting to five times of the tax so evaded in addition to the tax payable.

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80 Labour/Service Payment of Wages This Enactment provides for laws to regulate payment to It extends to the 1. Payment of Wages (Federal Railways) Rules 1938 High laws Act 1936 certain classes employed in industry. It makes it whole of 2. Payment of Wages Priority mandatory for employer to pay wage to employees for Pakistan. 3. (Procedure) Rules 1937 work done and provides for fixation of wages period. It also provides a mechanism for deductions which are allowed under this Act. The Government may appoint any commissioner or magistrate to take proceedings under this Act against the grievance of the worker. Furthermore it also provides penalties for those who violate the provision of this Act.

81 Corporate/Compa Small and Medium This ordinance provides for the establishment of a Small It extends to the High nies law of Enterprises and Medium Enterprises Development Authority to whole of Priority Pakistan. Development provide requisite support services for encouraging and Pakistan. Authority facilitating the development and growth of s mall and Ordinance 2002 medium enterprises in Pakistan by way of policy making and through the provisions of resources and support services. This functions of the board may include ask for any information or call for the record of any matter relating to S.M.E.s, from any ministry, division, department, section, statutory body, corporation, agency of the Federal of Provincial Government concerning any policy, relating to S.M.E.s subject to the constitutional and legal requirements, for review and appropriate action as and if necessary and assist and facilitate banks and other institutions in developing appropriate programmes for the promotion and development of S.M.E.s etc.

82 Tax and Financial Countervailing This Ordinance provides for the imposition of It extends to the High laws of Pakistan. Duties Ordinance countervailing duties. It gives effect to the general whole of priority 2001 agreement on trade and tariffs 1944. it also lays down the Pakistan. procedure for levying of the countervailing duty, definition of subsidies and duties and how the injury if any is to be determined. 83 Tax and Financial Exchange Risk This Ordinance provides for foreign exchange risk cover It extends to the High laws of Pakistan. Coverage to loans in foreign currency and for validity of certain whole of Pakistan priority Ordinance 1997 orders.

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84 Trade & Antiquities Act This act relates to the law relating to the preservation and It Extends to the Antiquities Act (Application to the Tribal Areas) High investment laws 1975 protection of antiquities. The Sections contained outline Whole of Regulation 1973 priority of Pakistan. elaborately the definition of an antiquity, the procedure to Pakistan be followed in case it has to be determined, whether an article is an antiquity or not, penalty in case of non compliance from the orders of the government issued as a consequence to this Act. It also provides that certain movable or immovable antiquities shall be acquired by the Government if it feels necessary.

85 Trade & Prevention of This Act provides laws to take effective steps to curb and It extends to the High investment laws Smuggling Act prevent smuggling. It further deals with the procedure as whole of priority of Pakistan. 1977 to how the culprits may be brought to justice and the trail Pakistan. to be conducted by a special judge etc. this Act has repealed Prevention of Smuggling ordinance 1977.

86 Agricultural and Pakistan This ordinance provides for establishment and re- It extends to the 1. Pakistan Agricultural Research Employees (Service) High produce related Agricultural organising the Pakistan Agricultural Research Council. whole of Regulations 1984 priority laws of Pakistan. Research Council The function of this council will be to undertake aid, Pakistan. 2. Pakistan Agricultural Storage and Services Ordinance 1981 promote and coordinate agricultural research, to establish Corporation Ltd. (Efficiency and Discipline) research establishments mainly to fill in the gaps in Regulations, 1977. existing programme of agricultural research, arrange the 3. West Pakistan Agricultural Service (Research Wing) training of high-level scientific man power in agricultural (classII) Rules 1963 sciences, to generate, acquire and disseminate information 4. West Pakistan Agriculture Department Delegation relating to agricultural and to establish a research library. of Powers Rules 1962. 5. West Pakistan Agriculture Service (Class I) Rules 1965

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87 Telecommunicati Telecommunication This ordinance provides for establishment of Pakistan It extends to the Pakistan Telecommunication Rules 2000 High on laws of s Ordinance 1995 Telecommunication Authority, Frequency Allocation whole of Priority Pakistan. Board and National Telecommunication Corporation, to Pakistan. regulate the telecommunication industry in Pakistan and to transfer the telecommunication services to private sector. The powers and functions of the Authority are to Grant and renew licences for telecommunication services in accordance with the policies and guidelines set out by the Federal Government, administer the radio frequency spectrum allocated to telecommunication services by the Board, specify standards for locally manufactured telecommunication equipments and determine compatibility and standards of imported telecommunication equipments and advise the Federal Government for adopting policies and guidelines for the regulation of telecommunication services. It also provides penalty for those companies who violates the terms and conditions of the licence. And repeals Telecommunications Ordinance, 1994.

88 Electricity/Hydel Pakistan Water and It provides for unified and coordinated development of It extends to the 1. Water and Power Development Authority (Power High laws of Pakistan. Power Development water and power resources in Pakistan. It establishes whole of Pakistan Wing) Commercial and Revenue Officers Rules 1982 priority Authority Act 1958 WAPDA. The powers and duties of this Authority is to except Karachi 2. Water and Power Development Authority prepare comprehensive plans for the development and and tribal areas. 3. Accounts Service Rules 1968 utilization of water and power resources, irrigation, water 4. Water and Power Development Authority Pension supply and drainage, generate, transmission and Rules 1977 distribution of power, to maintain powerhouses and grids. 5. West Pakistan W.A.P.D.A (Head Office) Ministerial Services Rule 1966 6. West Pakistan W.A.P.D.A (Pension) Rules 1977 7. West Pakistan W.A.P.D.A (Water Wing) Scientific Service (Officers) Rules 1970 8. West Pakistan W.A.P.D.A (Water Wing) Service of Engineers Rules 1968 9. West Pakistan W.A.P.D.A Accounts Service (Conditions of Service) Rules 1966 10. West Pakistan W.A.P.D.A Armed Forces 11. Officers Induction/Re-employment Rules 1980 12. West Pakistan W.A.P.D.A Employees (Allocation to Provinces) Order 1979 13. West Pakistan W.A.P.D.A Employees (Conduct)

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Rules 1978 14. West Pakistan W.A.P.D.A Employees (Efficiency and Discipline) Rules 1978 15. West Pakistan W.A.P.D.A Employees (Retirement) Rules 1979 16. West Pakistan W.A.P.D.A Employees Pension/Gratuity Rules 1977 17. West Pakistan W.A.P.D.A Revenue Officers Service Rules 1970 18. West Pakistan 19. W.A.P.D.A Service of Electrical Engineers Rules 1965 20. West Pakistan Water and Power Development Authority Accounts Service Rules 1966 21. West Pakistan Water and Power Development Authority Employees (Recruitment From Service) Rules 22. West Pakistan 23. Water and Power Development Authority Rules 1978 89 Highways & National Highway This Amendment was made to National Highway It extends to the 1. National Highways Safety Ordinance 2000 High Motor vehicle Authority Authority Act 1991 which established National Highway whole of (Adaptation and Enforcement) Order 2001 priority laws of Pakistan. (Amendment) Authority for planning, development, operation and Pakistan. Ordinance 2001 maintenance of National Highways and strategic roads. Amendments included establishment of National Highway Council, certain amendment were also done to the Board and powers of the chairmen were increased like the power to approve projects of emergent nature, maintenance, rehabilitation and construction affecting traffic movement and safety of structures up to fifty million rupees and to recommend for approval proposals, schemes and projects exceeding fifty million rupees to the Executive Board. The Chairman, on the recommendations of the Executive Board, shall have the power to divert funds from one approved project to another only within a financial year's allocation.

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90 Electronic and Pakistan Electronic This ordinance provides for establishment of an Authority It extends to the High Print media laws Media Regulatory for the development of broadcast media in order to whole of priority of Pakistan Authority improve the standards of information, educ. and Pakistan. Ordinance 2002 entertainment, Enlarge the choice available to the people of Pakistan, and Ensure accountability, transparency and good governance by optimizing the free flow of information. This Authority was given the powers to grant and revoke or suspend the licences of media channels and further it also provides the procedure and penalties for violation. 91 Tax and Financial Anti-dumping In order to give effect to the provisions of Article VI of It extends to the Anti-dumping Duties Rules 2001 High laws of Pakistan. Duties Ordinance the General Agreement on Tariffs and Trade, 1994. This Whole of Priority 2000 Ordinance provides a framework for investigation and Pakistan determination of dumping and injury in respect of goods imported into Pakistan. The sections also outline the determination of Normal value of prices based on the value in exporting country, determination of export price, comparison methods, individual dumping margin, determination of injury, imposition of anti dumping measures and mandatory imposition of duty. It also establishes an Appellate Tribunal in case of an appeal against a decision.

92 Social Employees Social This Ordinance introduces a scheme of social insurance It extends to the High Welfare/Charities Insurance for providing benefits to certain employees or their whole of priority and Trusts law of Ordinance 1962 dependants in the event of sickness, maternity, Pakistan. Pakistan. employment injury or death, and for that matter creates a employees social insurance institution. It also provides for employees social insurance fund, injury benefit, disbablement pension, claims for benefits and the repayment of benefit illegally received.

93 Oil & gas/Mining Mines Act 1923 This Act amends and consolidates the law relating to the It extends to 1. N.-W.F.P. (Minor Minerals) Mining Concession High related laws of regulation and inspections of mines. The power of the whole of Rules 1971. Priority Pakistan. inspector, the function of the mining board and duties owedPakistan. 2. .N-W.F.P. Mines Registration Rules 1994 by the manager, owner, moreover the health and safety 3. N.-W.F.P. Mining Concession Rules 1976 requirements are laid down in the Act.

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94 Tax and Financial Wealth Tax Act This Act provides to impose levy on wealth. It imposes It extends to the 30. Wealth-Tax Rules 1985 High laws of Pakistan. 1963 wealth tax on the wealth a person has per annum. It also whole of priority provides for people who will be included while ascertain Pakistan. an individuals wealth e.g. wife, children or any person associated with him. It further provides general penalty for contravention of this Act and penalty for concealments. Wealth Tax (Amendment) Ordinance, 2000 introduced certain amendments to this Act. 95 Agricultural and Agricultural This Ordinance provides for measures to regulate the It extends to the High produce related Pesticides import, manufacture, formulation, sale, distribution and whole of Pakistan priority laws of Pakistan. Ordinance 1971 use of pesticides and for matters ancillary thereto ; entailing creation of a pesticide laboratory, powers and procedures of inspectors and penalty in case of non compliance or adulteration of pesticide. 96 Agricultural and Seed Act. 1976 The quality control of seeds – which resultantly increases High produce related per acre yield to the benefit of the farmer Priority laws of Pakistan. 97 NWFP W ildlife High Protection, Priority Preservation, Conservation & Management Act. 1975 and the NWFP Forest Ordinance, 2002 98 Public Procurement The PPRA Ordinance 2002 was promulgated to provide The Public Procurement Rules, 2004 and High Regulatory for the establishment of Public Procurement Regulatory The Public Procurement Regulation, 2008 Priority Authority Authority for regulating public procurement of goods, were framed under this Ordinance. Ordinance, 2002 services and works in the public sector. (PPRA) 99 Development General Statistics This Act is to constitute certain authorities for the It extends to High Authorities Act 1975 collection and co-ordination of statistics to facilitate whole of priority related laws of economic and other planning. Pakistan. Pakistan 100 Development Industrial Statistics High Authorities Act. 1942 priority related laws of Pakistan

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101 Corporate/Compa Insolvency Act This Act consolidates and amends the law relating to It extends to the Medium nies law of 1920 insolvency, proceedings of insolvency, administration of whole of Pakistan priority Pakistan. property, realization of property, effect of insolvency on except for the antecedent transactions and the penalties and procedures. Karachi division.

102 Land/Property Transfer of Property This ordinance provided for the payment of taxes before It extends to the Medium and (Pakistan) recognition of transfer of property. It also provides for the whole of priority Accommodation Ordinance 1947 procedure as to registration of documents and to recover Pakistan. laws of Pakistan defaults payments. 103 Land/Property Succession Act This Act consolidated the laws relating to intestate and It extends to the Medium and 1925 testamentary succession in Pakistan. whole of priority Accommodation Pakistan. laws of Pakistan 104 Tax and Financial Central This Act makes provisions for the establishment and It extends to the Medium laws of Pakistan. Depositories Act operation of book-entry systems for the transfer of whole of priority 1997 securities by central depository companies, effect of book Pakistan. entry transfer on transferee, the condition of central depository to supply information and conversion of non equity securities into equity Securities. 105 Corporate/Compa Listed Companies This Act is expedient to provide for a fair and equal It extends to the Medium nies law of (Substantial treatment to all the investors as well as a transparent and whole of Pakistan priority Pakistan. Acquisition of efficient system for substantial acquisition of voting Voting Shares and shares and takeovers of listed companies. Takeovers) Ordinance 2002 106 Labour/Service Apprenticeship This Ordinance makes provisions for promotion, It extends to the 1. Apprenticeship Rules 1966 Medium laws Ordinance 1962 developing and regulating systematic apprenticeship Whole of 2. Apprenticeship Rules 1986 Priority programmes in the industries and for securing certain Pakistan minimum standards of skill. It outlines the obligations of the Employers, advice and guidance to employers, obligations of apprentices, and the offences, their penalties and procedures to be followed. 107 Social Co -Operative This Act provides for the formation, working and pro- It extends to the Medium Welfare/Charities Farming Act 1976 motion of co-operative farming and setting up of allied whole of priority and Trusts law of agro-based industries on the basis of self-help and mutual Pakistan. Pakistan. aid, it also lists down the conditions related to amendment of bye laws of the society, pooling of land, liability of members, liability in respect of encumbrances on land, effect of winding up and matters related to arbitration in case of any dispute.

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108 Labour/Service Minimum Wages This Ordinance is to provide for the regulation of It extends to the Medium laws Ordinance 1961 minimum rates of wages, moreover the recommendations whole of Priority for the rate of wage for unskilled and juvenile workers. Pakistan. Under the Ordinance the minimum wage board is established and also it prohibits paying under the minimum rate. The Ordinance further lays out the procedures to calculate periodically the minimum wages. 109 Corporate/Compa Pakistan Council of It establishes Council of Scientific and Industrial It extends to the Medium nies law of Scientific and Research. The functions of this council are to setup and whole of priority Pakistan. Industrial Research manage technological research institutes, to coordinate Pakistan. Act 1973 and review their work and to manage existing research units. 110 Corporate/Compa Pakistan Hotels and This Act provides for measures to control and regulate the It extends to the N.-W.F.P. Hotel Tax Rules 2003 Medium nies law of Restaurants Act standards of service and amenities for tourists in hotels whole of 2. Pakistan Hotels and Restaurants Rules 1977 priority Pakistan. 1976 and restaurants. It also deals with fix rate list to be display, Pakistan. registration and provides licences to restaurants and hotels. It also provides offences and penalties for non compliance 111 Corporate/Compa Travel Agencies This Act provides for the development, regulation and It extends to the Travel Agencies Rules 1977 Medium nies law of Act 1976 control of the profession of travel agencies in Pakistan. whole of priority Pakistan. The Federal government shall establish a Travel Agencies Pakistan. Regulatory Committee. This committee would then grant licences to the travel agencies to regulate them. It also provides penal sanctions against the contravention of this Act. 112 Corporate/Compa Pakistan This Act establishes Pakistan Engineering Council, which It extends to the 1. Pakistan Engineering Council Employees Medium nies law of Engineering has the functions to regulate the working of Engineers in whole of Recruitment Rules 1995. priority Pakistan. Council Act 1975 Pakistan by providing them with licences and to ensure Pakistan. 2. Pakistan Engineering Council Employees Service that they comply with the provision of this Act. Rules 1999 113 Banking Laws of Islamic This Ordinance implements the International agreement It extends to the Medium Pakistan. Development Bank for the establishment and operation of the Islamic whole of priority Ordinance 1978 Development Bank, also prescribing the status, Pakistan. immunities, exemptions, and privileges.

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114 Trade & Foreign Currency The Ordinance provides for the protection of foreign It extends to the Medium investment laws Accounts currency accounts. This ordinance has authority to whole of priority of Pakistan. (Protection) override other laws and has powers to make laws. The Pakistan. Ordinance 2001 provisions of this Ordinance shall have effect notwithstanding anything contained in the Foreign Exchange Regulation Act, 1947 (VII of 1947) the Customs Act, 1969 (IV of 1969), the Income Tax Ordinance, 1979 (XXXI of 1979) or any other law for the time being in force. 115 Trade & Inland Bonded This Act is to provide for the establishment of bonded Medium investment laws Warehouses Act warehouses at places other than customs-ports, and to priority of Pakistan. 1896 afford facilities for the bonding of salt in such warehouses. 116 Oil & gas/Mining Regulation of Mines This Act provides for provision connected to mines, It extends to the 1. Pakistan Mineral Development Corporation Rules Medium related laws of and Oil Fields and oilfields and mineral development. The Central whole of 2. Pakistan Mineral Development Corporation priority Pakistan. Mineral government was authorized to make rules for the Pakistan. Travelling Allowance Rules Development Authority to grant or renewal of an exploration licences 3. Pakistan Mining (Government shall be entitled to charge a fee for such purpose. The Rules 1960 Control) Act 1948 power to impose penalty in violation of this Act is also 4. Concession Rules 1949 provided which may extend to three years or a fine or 5. Pakistan Mining Concession both. The government can also declare any certain mineral to be exempted from the application of this Act.

117 Electricity/Hydel Regulation of This Act provides for Regulation of Generation, It extends to the Medium laws of Pakistan. Generation, Transmission and Distribution of Electric Power. The whole of priority Transmission and Authority under this Act has the exclusive responsibility Pakistan. Distribution of for regulating the provisions of electric power services, Electric Power Act grant licences for generation, transmission and distribution 1997 of electricity. Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Ordinance 1999 it has substituted a word by inserting “retire on attaining”.

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118 Highways & Provincial Motor This ordinance provides for consolidation of the law It extends to the Provincial Motor Vehicle Rules 1969 Medium Motor vehicle Vehicles ordinance relating to the Motor Vehicles in the Pakistan. It provides whole of priority laws of Pakistan. 1965 for provision as to the registration of vehicles, road Pakistan. clearance to be driven on road, the driver must have a licence to drive and all other related provides, along with penalty for violation of any provision of this ordinance. For the applicability of this ordinance in Punjab Provincial Motor Vehicles (Amendment) Act 2006 was introduced, it inserted S 99 A to provide for punishment of one wheeling of motorcycle whereby endangering human life shall be liable for imprisonment of six months or five thousand rupees fine or both.

119 Electronic and Electronic This Ordinance provides for the recognition and It extends to the Medium Print media laws Transactions facilitation of documents, records, information, whole of priority of Pakistan Ordinance 2002 communications and transactions in electronic form, Pakistan. accreditation of certification service providers, and for this establishes certification council. 120 Anti Establishment of the This Order provides for the appointment of a Wafaqi It extends to the Medium Corruption/Penal Office of Wafaqi mohtasib to deal with the readressal of grievances of the whole of priority laws of Pakistan. Mohtasib people, for that matter it contains sections related to tenure Pakistan. (Ombudsman) of the mohtasib, procedure for evidence, powers of the Order 1983 mohtasib and the power to punish for contempt

121 Labour/Service Coal Mines This Ordinance provides for the fixation of rates of wages Not specified. Medium laws (Fixation of Rates in respect of labour employed in coal mining industry, it Priority of Wages) also makes provision for the minimum wage of workers. Ordinance 1960 122 Banking Laws of Bankers Books This Act amends the law of evidence with respect to It extends to the Medium Pakistan. Evidences Act 1891 bankers. Primarily it deals with when and how the bankers whole of priority are required to give evidence before the courts and other Pakistan. related issues

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123 Land/Property Pakistan Council of The purpose of this ordinance is to establish a council of It extends to the Medium and Architects and architects and town planners and to regulate the profession whole of priority Accommodation Town Planners of architects and town planners. Further regulate the Pakistan. laws of Pakistan ordinance 1983 working grant licences and conduct inquires if they are found guilty of malpractice. Although S-3 is amended by Pakistan Council of Architects and Town Planners (Amendment) Act 1994 the word "for a period of ten years or till a separate Council of Town Planners is constituted, whichever is earlier" shall be substituted with "for a period of ten years or till a separate Council of Town Planners is constituted, whichever is earlier".

124 Factories/Industri Boilers and Pressure This Ordinance provides for regulations pertaining to the It extends to the N.-W.F.P. Fee of Renewal of Certificate (Boilers) Low priority al law of Pakistan Vessels Ordinance use construction, installation and repair of boilers and whole of Rules 1999 2002 pressure vessels; prescribe uniform rules and regulations Pakistan. for boilers and pressure vessels, penalties for tempering wills registration number, alterations and renewal to boilers and duty or owners at examination, etc. 125 Labour/Service Employees Social This Ordinance introduces a scheme of social insurance It extends to the Low priority laws Insurance for providing benefits to certain employees or their whole of Ordinance 1962 dependants in the event of sickness, maternity, Pakistan. employment injury or death, and for that matter creates a employees social insurance institution. It also provides for employees social insurance fund, injury benefit, disablement pension, claims for benefits and the repayment of benefit illegally received. 126 Banking Laws of Banking Tribunals This Act provides for the validation of Orders passed by It extends to the low priority Pakistan. (Validation of the banking tribunals, and gives retrospective effect to whole of Pakistan Orders) Act 1994 them. 127 Agricultural and Agricultural Census This Act amends the Agricultural Censes Act 1958, It extends to the Low priority produce related (Amendment) thereby amending the provisions of the parent act in Whole of laws of Pakistan. Ordinance 1984 relation to the assessment of loss or damage to be carried Pakistan out in the manner provided.

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128 Labour/Service Federal employees This Act seeks to establish a benevolent fund and a It extends to the Low priority laws Benevolent fund scheme for group insurance of workers. It lays down as to whole of Pakistan and Group who is entitled to receive from the benevolent fund as a Insurance Act 1969. result of physical or mental incapacitation. Federal employees Benevolent fund and Group Insurance (Amendment) Act 2005

129 Agricultural and On-Farm Water This ordinance provides for the set of laws that governs It extends to the Low priority produce related Management and the regime of water users on farm and their associations. province of laws of Pakistan. Water Users Although certain amendments followed in S-2 of this Punjab. Associations ordinance by On-Farm Water Management and Water Ordinance 1981 Users Associations (amendment )Ordinance 1981 whereby Field Officer' means and includes the District Officer On Farm Water Management or any other officer empowered as such by Government. 130 Land/Property Requisitioned Land It provides for continuance of emergency powers in It extends to the Low priority and (Continuance of relation to requisitioned land, delegation of functions, whole of Accommodation Powers) Ordinance continuance of requisition and compensation. Pakistan. laws of Pakistan 1977 131 Corporate/Compa Cigarettes (Printing this Ordinance was brought as an amendment, and the Cigarette (Printing of Warning) Rules 2003 Low priority nies law of of Warning) parent Ordinance has been discussed at below Pakistan. (Amendment) Ordinance 2002 132 Corporate/Compa Cigarettes (Printing This Ordinance provides for printing of a health warning It extends to the Low priority nies law of of Warning) on packets of cigarettes, prohibition to sell to underage, whole of Pakistan. Ordinance 1979 offences by companies and cognizance of offences. Pakistan.

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133 Labour/Service Employees Old Age This Act provides for the old-age benefits for the persons It extends to the 1. Employees Old Age Benefits (Contributions) Rules Low priority laws Benefits Act 1976 employed in industrial, commercial and other whole of 1976 organisations. For that matter it creates a employees old Pakistan. 2. Employees Old Age Benefits (Registration of age benefit institution, and details the appointment of the Employers and Insured Persons) Rules 1976 board of trustees and the functions of the institution, the 3. Employees Old-Age Benefits (Audit and Accounts) keeping of records and returns by the employers, benefit Rules 1977 claims and payments, appeal to the board and offences in 4. Employees Old-Age Benefits (Board of Trustees) case of non compliance of this act. The latest amendment Rules 1977 was brought by Employees Old Age Benefits (Second 5. Employees Old-Age Benefits (Investments) Rules Amendment) Ordinance 2002 1979 6. Employees Provident Fund (Investment in Listed Securities) Rules 1996

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4.2 Prioritized list of laws that need to be extended in Phase I.

 Land Acquisition Act 1894.

 Banking Laws, Banking Tribunal Act.

 Financial Recovery Ordinance.

 Insurance Act.

 Companies Acts/Laws.

 Registration Acts/Laws.

 Partnership Acts/Laws.

 Import and Export Act.

 Customs Acts/Laws.

 Mining Acts/Laws.

 Contract Act.

 Labour Laws.

 Mortgage Act.

 The Drugs Act.

This would provide a conducive environment for investors and traders to begin to plan to set up businesses and manufacturing facilities in the Tribal Areas.

But these laws have to be made applicable to the tribal areas within the framework of the provision of Frontier Crimes Regulation, (FCR).

Article 3 of the FCR lays down that other Laws that are extended from time to time will have to be consistent with the provisions of the FCR. Whenever therefore there is any ambiguity about any specific clause or article of any law in its application to FATA, the provision and spirit of FCR would prevail. And wherever any law that is extended to FATA requires the

88 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 4 creation of a forum or a tribunal which is not practicable because of the provisions of FCR, a way out within the ambit of the FCR would have to be worked out. The overriding basic law would remain the FCR unless the government makes an amendment to FCR itself.

In order to move forward on the extension of these laws a cell may be established in FATA secretariat that will be entrusted with the task of drafting of laws to be extended to FATA.

It must be noted however that while some of these laws may already have been extended, these have not been made applicable. Because either there is no administrative machinery to enforce these or matters relevant to these laws are best resolved by the traditional methods of

“Jirga” etc. While for the local tribesmen this may not be an irritant, these who come to invest in FATA from the settled areas would certainly need a protection of laws that are easily enforced. Hence the need for practical steps to apply the laws.

Secondly it may also be noted that laws would only apply to the protected areas or

Administered areas. These would not apply to the tribal territory (TT). But since the government keeps on extending its writ by establishing posts, forts, picquets in the tribal territory, more and more tribal territory is becoming protected or administered. While the tribal territory (TT) in shrinking, the protected or administered area goes on expanding. In other words the laws once extended would be made applicable to more and more area within the tribal region.

The legal cell to be set up in FATA secretariat under the supervision of Administration and coordination wing will not only finalize draft laws for extension but also propose steps for applicability and implementation so that the spirit of this exercise namely, promotion of trade and Industry, is accomplished.

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Chapter 5

Key findings of FGDs (Focused Group Discussions)

5.1 FGD Region – 1 (Bajour Agency, Mohmand Agency, Khyber Agency, FR Peshawar)

Extension of Laws to FATA

The participants expressed their views firmly and opined that since the laws are not extended to FATA, the people have suffered in almost all the areas, from justice system to employment and so on and so forth. The most common complaint has been the lack o f provision of agriculture loans. They considered the government’s attitude as negative towards the people of FATA. In response to the issue Mr. Mahmood explained that there is a false perception about FATA people for not being willing to accept the extension laws prevailing in rest of the

Pakistan. He stressed that banks give loans to those who provide them with a reasonably documented security. He further said that banks give loans to other businessmen outside

FATA because in the rest of the country Financial Recovery Ordinance is in place, which provides great safety to the banks to recover their money. In response to the clarification by

FDA representative the participants stressed on the need for extension of laws in FATA and asked the CAMP management to advocate for their rights.

Role of FDA in Support of Industrialists in FATA

The state of affairs seems dismal when the people of an area are not aware of the support they may get from the government, same was the case with most of the participants as they did not know the role FDA played in the development of FATA, they asked the Mr. Mahmood who explained that there is a need of collective effort.

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Government role is to provide an enabling environment, mainly to facilitate and to take appropriate measures for the development of the business and for the establishment of your

Industries. FDA is specially focusing on SMEs in FATA because it is a universal truth that in every economy 80% role is of small businessmen. Promotion of Small & Medium size

Enterprises will no doubt become a cause for generating a lot of opportunities of employment for FATA people.

FATA DA has already launched pilot projects with quick impact results. The strategy at the moment is that in current situation whatever is possible is being done in the best of organizations capacity. He added that initiatives of constructing a Marble City in Mohmand

Agency, grid station and an Industrial estate in Shahkass (Khyber Agency) and there are similar plans for Dara Adam Khail (FR Kohat).

A businessman from Bajaur agency asked for the establishment of Technical College at

Agency Level. The Government has already established the same with the name of

Government Technical Institute (GTI) in every Agency and FRs, it is a sad fact that people are unaware about their own area and have not tried to find out the existing facilities there.

Establishment of Industrial Estate

The Government is planning to construct an Industrial estate where it would be feasible. All the relevant buildings from electricity department to Banks etc will be in close vicinity. A proper communication plan including roads etc has been designed for the industrial state. The investors all over Pakistan will be able to invest in the industry if provided all the facilities as planned.

The participants were told about Reconstruction Opportunity Zones (ROZs) that will be established in FATA. The plan was announced by Bush administration, according to which

91 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 5 any product made in ROZs will be exempted from custom duty in USA. This will benefit the local industrialist as there will be a bigger margin in profit.

5.2 FGD Region – 2 (Aurkzai Agency, Kurram Agency, FR Kohat

Lack of support for External Investors by the Locals

Mr. Mahmood pointed out the issue of lack of support of local business men for external investors, some of the participants assured that they would welcome such support but the rest had reservations about the idea and considered it a threat to their business; they opined that due to external investment their own businesses will not flourish as they were not compatible with investors outside FATA.

Skill Training For youth

The participants stressed on the need of skill training for youth in response to which Mr.

Khalid Mahmood informed that FATA DA has already launched such an initiative. It sends

FATA youth to the settled areas for getting skills training in various institutions for three months and six months courses relating to mobile repairing and refrigeration.

Land Purchase in FATA

Mr. Zafar Gul, owner of ammunition factory, from FR Kohat criticized the role of Political

Administration for financial embezzlement in the allocated funds for the payment of immovable property bought from the people of FATA for establishing Industrial estates in

FATA. He believed that the price for the land is 1/3rd as compared to the real price. With reference to that Mr. Jamal Nabi, Aurakzai Agency, asked for the reason for low price purchase on land by the government. Mr. Khalid Mahmood explained that if government buys the land on high price it would automatically raise the price of the property in the

Industrial Estate for the investors and may be it becomes beyond their capacity to buy it.

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5.3 FGD Region – 3 (North Waziristan Agency, FR Bannu, FR Lakki)

Environment of Mistrust and Ambiguity

Participants in general were uncertain about the situation of industrial development in FATA.

Most of them were not sure if they would ever be able to have sustainable industrial development under current circumstance of law and order, security situation, communication system, infrastructure and lack of resources. Relief was the only thing, businessmen of FATA is looking for, support by the government in improving the economic crunch through a holistic approach, in which they can have maximum benefit. The uncertainty is such that many businessmen whose business has affected are in a state of wait and see. The general perception was that the government is not serious and sincere in provision of enabling environment to the industrialist and businessmen of FATA, for the it was a facade or farce effort on behalf of the government and may take another 10 years in implementing the requisite. They asked for speedy change rather than red taped decision that would reach

FATA when it would be too late.

Security Situation, Power Breakdowns are a Hurdle in the development of SME

This particular group belonged to that part of FATA which has seen worst security situation.

Uncertainty and insecurity has been prevailing everywhere for the last few years and one cannot find a person who is not scared of everyday bomb blasts, suicide attacks, rocket barrages and kidnapping for ransom. The target killing, abduction, and militancy has made it hard for the local people to survive let alone to develop their means of income or have industrial revolution for that matter.

Power is also a need for large number of commercial and industrial operations. There is some encouraging coverage but low voltage and prolonged breakdowns are a serious concern, cited as one of the reasons why industrial and commercial development has remained sluggish. The

93 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 5 business only worked for 03 hours a day due to lack of electricity, in what is left in the industries.

Extended laws in FATA it was perceived from the discussion that FATA cannot continue to remain closed off from the majority of Pakistan. Integration in legal terms is the only solution for the future. Already, communications networks and the electronic media has reached to the remotest parts of

FATA. The situation is fluid, dynamic and vibrant; people want to work and want to be like rest of the Pakistan.

The participants clearly opted change, they felt the urgent need to target development investment and strategies planning that include vigorous legal regulatory framework which can o secure the rights of individuals or communities to access and use resources. The absence of statutory mechanisms is felt in the commercial and industrial sectors, which are not subject to direct taxes or regulation, which has made the business climate uncertain, and prevented small entrepreneurs from expanding their operations and deters potential investors.

Under the circumstances, it is also difficult to employ and retain skilled workers.

They understood that, an agreement must be signed between the prospective business owner and the local tribe. Similarly, outsiders cannot own land in the region and any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established.

All contracts and agreements are enforced under the Frontier Crimes Regulation by a Jirga, and not through the judicial channels available elsewhere in Pakistan. This system serves as a disincentive for investment in general, and particularly for corporations and large firms. For the government, meanwhile, valuable revenue is lost through trade conducted without the payment of taxes. The fact that mainstream statutory provisions do not apply to FATA creates a climate of fear and a perception of lawlessness in the minds of outsiders.

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The participants feared that extension of laws will include the other unfavorable laws which will affect their traditional structure etc. the happily opted for the favorable laws needed for industrial development , banking laws , legal cover to partnerships and those particular laws that gives that gives security to the business like insurance , registration act, collateral law, etc. They unanimously ruled out the extensions of laws other then the laws that favor the business, trade and commerce and passed a resolution for the later.

5.4 FGD Region – 4 (South Waziristan Agency, FR Tank, FR D.I. Khan)

The participants included a diverse group ranging from the Gem stone industry to dry fruit and fresh fruit sellers, from transporters to owners of nation telecommunication franchise.

The participants participated in the discussion with enthusiasm and at the end gave their recommendations for the government for perusal.

Lack of Interest in the Legal Framework Reforms

It was perceived from the discussion that the representatives of the Zone IV were not forthcoming about the legal reforms or the industrial regulation. They believed that the policy frameworks take longer than required and may need another 50 years to come into practice.

According to them today as FATA is festered by military operations and economic downturns, it needs immediate support in improving service delivery. It is a matter of great concern that the people of FATA have little hope from the government in their socio economic development. They felt that the government has to be more focused on improving the lives of the people with concrete efforts.

According to them certain laws do exist in their cultural context, and there is no need to bring mo re laws for the industrial development. Although, they welcomed the government’s plan in

95 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 5 regulating the industry, trade and commerce by extending cooperation but were more interested in outright grant from FDA, they clearly indicated that regulation would be welcomed but only the favorable laws, as far as the Banking Laws and loans are concerned, not many people would like to have bank loans to set up their business as the local religious school of thought will be against it.

Conducive Environment

The other foremost need for the FATA is the return of peace; people are eager for stability, peace and tranquility, without which there is no chance of any industrial or business revolution to occur.

At the moment FR Tank, FR DIKhan and South Waziristan do not have a conducive environment for the external investors, neither the local business community wants the external investors to invest in business there. Furthermore, the internal investors are also reluctant in putting capital in the industry or in any business for that matter.

Infrastructural Development

Zone IV representatives were more keen for the development of infrastructure, roads, communication means etc. They reiterated that the top priority of the government should be the development of the area and any other reform should come after that.

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Chapter 6 Key findings of Stakeholders Workshop

6.1 Stakeholders Workshop Region – 1 (Bajour Agency, Mohmand Agency, Khyber Agency, FR Peshawar)

 FATA Development Council should be established which represent the views of the

People of FATA and representation should be given to FATA’s people in this council.

 Personal interaction from FATA secretariat or FDA authorities with the people of

FATA is necessary for mutual understanding / needs rather than telephonic

conversation and inauguration ceremonies. “If the US president can come to the war

zone ‘Afghanistan’ for his troops encouragement than why FDA authorities are

denying to came FATA, which is really amazing and shaming.”

 There is extreme scarcity of Energy in FATA and the people of FATA are sinking in

dark there industries and machineries are always waiting for electricity so, the energy

needs are growing day by day in FATA and for this problems, urgent consideration is

needed in order to provide them Jobs which depends on this small industries.

 80% of business in FATA is running through transport and no special attention is

given till by the authorities or FDA so, this asset should be consider and protection

should be provide to the owners of this business.

 FATA Agency Council at each Agency basis should be established which is

authorized to present draft of suggestions to FATA secretariat.

 There are three kinds of taxes in settled area which are colleted by the government

and FATA are subject to 11 taxes which is a huge burden on FATA’s people and

already on the poor economy and infrastructure of these areas.

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 Mineral law should be extended to FATA because there are huge reservoirs of

minerals in FATA. The taxes on minerals are collected by Political Agent and he put

this money into his own pocket so, a regulatory law is needed for that in order to

transfer this money into national treasury rather than PA’s or Governor pocket.

 Regulatory laws must be extended to FATA but FCR is a big hurdle in the implication

of such laws so, FCR should be amend and than regulatory laws.

 FATA Council should be authorized to implement this laws, cross border trade should

be regularized, tax should be imposed and such taxes should be go to the government

treasury instead of Political Agent.

 Mortgage laws should be extended to FATA in order to develop economic

opportunity zones for the people of FATA.

 The incident of 9/11 suffers each and every thing specifically the people of FATA and

their business because every internal or external upheaval inside Afghanistan has

direct spill over effect not only on Federally Administered Tribal Areas but on the

whole Pashtuns belt of Khyber Pukhtoonkhwa so, Economic Advisory Forum should

be established for them to encourage their skills regarding business and ensure their

security and safety.

 There are a lot of mineral reservoirs in FATA but till these reservoirs have not been

explored so, technical staff must be provided in order to explore these reservoirs for

the benefit of the country and people of FATA.

 If we are saying about FCR that it is a good law than why it is a hindrance in the way

of other laws i.e. the extension of regulatory laws and feasibility regimes. FCR must

98 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 6

be abolished and we need the laws which are in the cities of Pakistan and we have the

right for these laws because we are also the citizens of Pakistan and discrimination

should be abolished amongst us.

 We need loan on no interest basis from banks in order to establish our industries. The

electricity shortage must be solved for our industries. If government provides Energy

to our Mineral industries without load shedding “we promise that we can give 7

billion to government instead of Carry Lugar Aid”.

 FCR is a big hurdle in the development of FATA. Pakistani Laws must be extended to

Tribal Areas. FATA Secretariat should be reform because it is a big group of thieves.

Local Self Government should be established and political parties act should be

extended to FATA.

 Peace is needed in FATA, when peace is restored than infrastructure must be

flourished / renew and build.

 The right should be given to the people of FATA in each and every sector because

they know themselves better than the other.

 Every laws regarding FATA is controversial so, it must be cleared and representation

should be given to the people of FATA in the laws making body which is concerned

to the people of FATA. Incentives from Income Tax and Customs must be given to

people of FATA.

6.2 Stakeholders Workshop Region – 2 (Aurkzai Agency, Kurram Agency, FR Kohat

 People of FATA should be aware regarding business and skills so, there is a need of

(1) Knowledge (2) Approach (3) and then regulatory regimes.

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 There should be mine rescue system in FATA to protect the reservoirs of coal and

natural resources from burning etc, a well and quick rescue system should be

flourished.

 Government should build small Industrial zones in each Agency of FATA and for that

purpose the authorities must buy the specific territory in these areas of FATA. After

development of these Industrial zones, the government must privatize the Industries

while selling these to the local people. In this regard one of the participants from FR,

Kohat ‘Mr. Fahim Alam’ agreed, according to him I am willing to give my own land

to FDA for Industry.

 The roads must be constructed in FATA to approach to the Natural Resources and

exploration of these resources, Infrastructure is very necessary for business and

regulatory regimes.

 The interaction of the FATA Secretariat officials is very necessary with the ordinary

people of FATA because “every thing is sweetened by risk” and they are not ready to

take the risk while making personal visit to these areas.

 The exposure and awareness programmes must be arranged for the people of FATA

and their vision must be cleared about their own development.

 Rescue centre must be built in Dara Adam Khel to rescue the workers of coals and

give them a proper first medical aid.

 Feasibility study is very necessary in FATA and after that study the practical steps

must be taken because there are an urgent need of practical steps rather than the

theoretical studies.

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 Energy, Law & Order, Education, Roads and Reconstruction is very necessary and it

should be on top priority.

 If we are talking about Law & Order situation that there is no Law & Order, before

9/11 there was complete peace in FATA then why business in FATA was in a

deplorable condition. The answer to this is that there was no infrastructure, there were

no roads, no education, no media, and the people were unskilled and there were no

business opportunities for the people of FATA. The same situation is still present

there right now so, why there is the urgent needs of Roads, Infrastructure, media etc.

 Regulatory Laws for business development is the need of the time in these areas but

these laws should be in the spheres of the local customs, traditions and Riwaj in order

to make these laws durable.

 Local Government Laws must be extended to FATA.

 There is a need to bring limitations in the powers of Political Agent, e.g. The Judicial

Powers from Political Agent must be separated and he should be only the executive

body in order to make the ground feasible for the business and regulatory regimes and

Laws.

6.3 Stakeholders Workshop – 3 (North Waziristan Agency, FR Bannu, FR Lakki)

 Property revenue mechanism established in Kurram Agency while not in other

Agencies of FATA.

 Bank Act extension to FATA is very necessary in order to give loans for business to

the people of FATA and to those who want to establish business / industries in FATA.

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 The land of FATA is self – sufficient in natural resources therefore there is a need to

explore these natural resources and to establish industries.

 If you curse someone it means you have concern with him / her.

 For development, the main actors are awareness, education and participation of local

community.

 Ad-hoc Policy mechanism should be avoided and pre-draft of recommendations need

to be discussed with local community.

 Education and infrastructure are the main phases of development and these should be

flourished.

 The people of North Waziristan is still not found in any type of narco-business so, it

means that these people are very much tilt towards fair and looking for legal business

/ industries.

 Skill development programme is very necessary in every field; the youth bulge must

be trained.

 Incentives must be given to the people of FATA to have the rights of import and

export and for that purpose the regulatory laws must be extended.

 According to one participant, the FCR is a failed law the police extension is also not

applicable in FATA than how these regulatory regimes / laws should be extended to

FATA in order to recover the loans?

 Answer to the above by the participant, that recovery process is very easy in FATA

because of its balanced Justice system like through Jirga and local Lashkar.

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 FATA is very backward and it is passes through very dark shades currently there is a

need of some basic initiatives on emergency basis e.g. (1) Education sector must be

developed there is need to build one modern school in each Tehsil and at least one

university for each Agency. (2) Security situation must be restored because without

stable security situation business can’t be developed and flourished. (3) The

requirements of globalization must be must be given to the people of FATA e.g. to

launch the networking of electronic media. (4) The informal laws like the previous

Jirga system must be re-encouraged. (5) Political parties act must be extended to

FATA. (5) Small industries must be built in FATA and for that we need proper

electricity.

 The vacancies in FATA secretariat or in FATA Development Authority which are

serving by other people should be handed over to the original people of FATA.

 Small industrial state must be built on each Tehsil to provide the job opportunities and

to engage the people of FATA in their own development. Buying of territory in

FATA for industry is very easy rather than the settled areas.

 Because of security situation all the Banks returned back so, peace is necessary for

that regulatory regimes.

 Those industries which have been sallied to other areas must be returned back to

FATA in order to provide employment opportunities to the people of FATA.

 To amend the FCR is very necessary because it is a big hurdle in the way of

Commerce and Industries.

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 Practical steps must be taken rather than theoretical debate. If true practical steps have

been taken than there is no need of our skill development because we are skilled, we

are developed and we are better businessmen.

6.4 Stakeholders Workshop – 4 (South Waziristan Agency, FR Tank, FR D.I. Khan)

 Any law or regulatory regimes must be according to the nature, customs and traditions

of the people of that area.

 Awareness must be given to the people of that area and their skills must be developed

regarding business and the resources must be given to the people for business

establishment.

 Visa facilities must be given to the people of FATA for abroad and they should be

trained regarding import and export.

 If any person having vague idea of specific business he / she must be cleared about

their feasibility and that should not be confined to one sector instead multi – sectors.

 Establishing factories by outsiders (from Punjab) but they need security, Law & Order

stability in FATA so, Law & Order must be stored and then Regulatory Regimes.

 There is no assurance of investment protection in FATA through law so, FCR must be

amended in order to extend regulatory laws for business.

 The regulatory laws must be made for these people according to the nature of terrain

of these area and people.

 There is a need to realize that for business in FATA – special laws should be made

instead of general laws of business in settled areas, e.g. special provisions in FCR is

needed. Mortgage of property for bank loans through surety of P.A & A.P.A due to

lack of revenue record.

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 Due to security education opportunities are limited, education sector must be

improved and at least one university in FATA and one college for each tehsil in each

Agency of FATA is needed.

 For business flourishing in FATA free loans with out interest must be given through

Banks. Development of communication, infrastructure e.g. roads and cold storage

establishment for vegetables and fruits storage system must be established.

 There is a need of trust building between government institutions and common tribals,

property mortgage for bank loans via P.A & A.P.A, need of reform in FCR like the

Article 40 must be abolished.

 There are 32 markets of vegetable and fruits in South Waziristan Agency, proper

communication like roads and infrastructure for these markets are needed because

about 200 trucks are daily dispatched for outside from South Waziristan Agency.

These markets are the centre of business activities for Pakistan, Afghanistan and Iran.

 One of the participants from FR, D.I. Khan again stressed on infrastructure,

communication, electricity and education.

 Small industrial states must be built in some areas of FR, D.I. Khan which is very

near to the settled areas and to the main Highway of Karachi.

 There is a need of small industries and Dams in FR, Tank so, the authorities must be

noted these needs under their kind considerations.

 There is a need to constitute a survey team and provide facilitations in business visits

across the countries must be given to Tribals.

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Chapter 7 Prospects of development in commerce and industry Given the present database with regard to the quantum and quality of minerals known to be existing in FATA, the limited availability of trained and skilled manpower, the many locational disadvantages, the uncertain and unstable electric supplies, and the virtual siege of the area, the prospects for any robust growth of industry and commerce are not very promising. That is a realistic assessment. However an area as politically important in the current geopolitical situation as FATA, the government has to take radical measures to improve the condition of the masses in terms of education, health delivery, employment and income generation etc. For such improvement to be long-lasting, it has to be based on solid foundation. And hence the need for bringing about a fundamental change in the economic outlook of the area. Such a change could not occur in the limited farming sector. Nor can it happen by opening more schools or developing the meager service sector. It can only happen if the economy is transformed through a string of industries enjoying extensive government concessions for if to be competitive. Industries can generate employment thus increasing people’s incomes. This would be a harbinger for more social changes to occur. With growing prosperity there would be more emphasis on education, family planning, better health care.

Industries alone can usher in a culture where unemployment would be reduced and the value of skills more generally accepted in the tribes as a major factor that ensures a life of honor and dignity. With more people learning diverse skills in FATA, human capacity will increase.

Capacity building will occur and that is the foundation for sustained economic development.

Capacity building is in accord and is compatible with the tribal ethos of living a life of dignity and not being a dependent on someone else’s charity. It will help change the tribal culture which, at times would be seen to be inconsistent with the virtue of learning a new skill or trade. People having a propensity to migrate for economic compulsions would become

106 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 7 bound to their work and territory in their own homes. Such educated skilled manpower would change the tribal area from within rather than a change being imposed from without which will be short-lived and transitory. And change that comes in the natural course is more easily accepted and is more permanent. As industries grow and the people realize the value of education a new culture that does not emphasis’ petty rivalries as a virtue, would come into existence. It will help generate a work driven society.

Commerce is equally important. With more trading, cultural linkages will develop. Outlooks would begin to change. More importantly it would bring communities on either side of the border together if trade takes place across the border. When the present situation is behind us and peace finally returns to Afghanistan and FATA, traders from FATA would rediscover the old routes of Central Asia. Trading with Afghanistan and Central Asia will bring immediate economic dividends and also bring fresh ideas and a new vibrant trading culture that would transcend borders. For that to happen a new approach based on open borders would have to be adopted. Barriers would have to be dismantled. Tariff barriers as well as non tariff barriers will have to be removed or reduced drastically. The European example will have to be followed. That will require a whole new thinking on the subject. The prospects of expansion of industry and commerce therefore are bright if certain conditions are met, and peace finally returns to the area. The scope is enormous and the advantages and benefits fa r too many to be recounted. It is important thereafter to have a blue print ready so that the government can embark upon a new policy that can put the tribal area on path to rapid and sustained progress.

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Chapter 8

8.1 Creating an ambience for growth and regulatory mechanism For any sustained progress in the context of the evolution and growth of industry and commerce it is essential that a climate of trust underpinned by security and a legal system that can be enforced is created. It will not be necessary or perhaps desirable that the system that is in vogue in the settled area is replicated. That would neither be possible nor, given the situation on the ground, practicable. As a matter of fact the best course would be to work through the systems and indeed utilize these to the advantage of the entrepreneurs. Many laws have been extended to the tribal area without creating parallel systems or procedures for their execution. If the promulgation and extension of each law in FATA is accompanied by the introduction of voluminous procedures, a plethora that will be unwieldy and difficult to enforce would be created. It is essential therefore that whereas all relevant laws that are absolutely imperative and needed in the context or promoting industry and commerce in

FATA, be extended but care and prudence be exercised not to create far too many procedural mechanisms for the implementation of the laws to be extended.

The simple, easy to understand system that conforms to societal norms in the tribal area works best for its people. Indeed it would be a disservice to the people of the tribal area, if in the name of establishing new legal system for promoting commerce and industry, a vicious system of red tap is inadvertently created that would fatally impinge on the way of life of its inhabitants.

The objective should be clear: establish a framework that would not only facilitate but encourage and promote commerce and industry in the tribal area. This would have to take into account all such factors as security, recovery of loans, purchase of land, import of machinery, employment of labour, taxation, marketing, insurance, trade across the border etc.

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But the overriding priority would have to be not to cause an upheaval or generate tensions that lead to destabilization of the area. As long as FCR is practiced as a legal framework, it must be made use of in promoting the cause of commerce and industry. Any tampering with the law, without consulting the principal stake holders i.e. people of the tribal area would boomerang and be counterproductive. Tribal area needs a new beginning. But this heralding of the advent of a new era should encapsulate in terms of a conceptual framework, all the elements of sound administrative systems that have proven to be worthy of being continued.

Peripheral changes where necessary, may be brought about to keep the area and its people abreast of modern times and material progress, This should be done without compromising on the core values of its rich and time honored treasure trove of tradition and culture.

It will require a herculean effort to change all this: To instill hope, to motivate, to educate, to train and to institutionalize. Indeed it will require bold, imaginative decisions and sound teamwork. At the core of this new initiative would be a regulatory frame work that is indispensible for achieving a breakthrough in development of industry and commerce. There is need for an overarching body that would oversee the work of promoting industry and commerce. This body should have adequate credibility, muscle and power to give effect to a new policy. An industry and commerce development board (ICDB) would be created. It will be headed by the Governor, KPK Province. It will have the fowling members:

 Add Chief Secretary FATA

 Chief Executive, FATA Development Authority (Member/ Secretary)

 General Manager P&D FATA Development Authority

 Secretary Finance Government of Pakistan

 Secretary Commerce, Government of Pakistan

 Secretary SAFRON Government of Pakistan

 Secretary Interior, Government of Pakistan

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 Tow Tribal MNAs and two Senators to be nominated by the Governor

 President, Tribal Chamber of Commerce

 President Khyber Pakhtunkhwa Chamber of Commerce & Industries

The board will be created by an Act to be promulgated by the president under Article 247 of the constitution. The functions of the board would be as under:

 To create an enabling environment for growth of industry and commerce.

 To take such administrative measures as may be necessary to assist the private factor

in its investment in FATA.

 To remove all obstacles, bottlenecks that impede the private sector investment in

industry and commerce

 To undertake all works that are needed for establishment, operation and maintenance

of industrial estates in FATA.

 To review from time to time the legal impediments to investment in FATA in industry

and commerce.

 To facilitate the extension of laws that are considered to be essential for creating an

appropriate and conducive environment for establishment and operation of industry

and commerce.

 To ensure there are no lacunae or bottlenecks as far as banking operations are

concerned.

 To encourage as a matter of policy, tribal entrepreneurs to invest in the tribal area.

 To help establish skill development centers in FATA as part of capacity building

efforts.

 To take measures in order to promote commercial activities with a focus on cross

border trading to open more border crossing points for movement of people and

goods.

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 To adopt such steps as are necessary for providing protect in to industries,

management and employees.

 To promote mining and mineral development programme.

 To administer a fund called Special Development Fund (SDF) that will be created to

promote industrial development in FATA.

The board will be created by an act under article 247 of the constitution, by the president. T he secretariat of the board will be located in the FATA Development Authority with its chairman acting as the secretary of the board. The board will meet once every three months. The secretariat will frame the agenda. The board will be a legal entity, having been created by an Act of the president. It may also be registered under the companies ordinance 1984. The Governor as the administrator of the board and in his capacity as the overall administrator of tribal area, would take all necessary steps to give effect to the decisions of the board.

The Industry and Commerce Development Board (ICDB) will be an apex body mandated under the law, to oversee the development of industry and commerce in FATA. It will consider and approve schemes for development of industry and commerce both in public and private sector. But it will focus closely on creating a favourable climate for private sector investment in FATA. It will have the authority and responsibility to take all steps, administrative, legal and financial to encourage private sector investment in the tribal area, with that end in view it will also approve infrastructure and other works that are considered to be essential for promoting industrial development in FATA.

It will operate its own budget and would be dependent on the government grant for all its activities and functions. International Donors may contribute to the grant to be earmarked for the board. The board will administer a fund called Special Development Fund.

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8.2 Special Development Fund Government and major donors would contribute to the creation of a special development fund of Rs. 5b. The fund will have two components. Half of the amount i.e. Rs. 2.5b will be allocated to the development and maintenance of infrastructure. This will include:

 Establishment of industrial Estates in FATA.

 Development of infrastructure

 Provision of steady, uninterrupted supply of electricity and water supply to private

sectors industries.

 Establishment of skill development centers.

 Development of communications.

 Provision for subsidies on industrial plots.

 Any other activity that the board may approve for funding.

The board or the FATA development authority may require and obtain the services of an expert for such assistance, as appraisal of project, project preparation etc.

The fund will be managed and operated by the FATA Development Authority. A special finance wing will be created in the authority for management of the funds. The amount will be kept in one or more banks. The interest accruing will be used in connections with the management of the wing i.e. as administrative cost of the wing.

The finance wing will maintain a complete account of the disbursement made out of the fund.

Micro financing will be a key component of the new initiative considering that a large number of industrial and service activities are either small or medium.

Another important activity which the ICDB will supervise will be establishment of industrial estates.

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8.3 Industrial Estates The industrial estates will be established in FATA. In the first phase three industrial estates will be established in Mohmand, Khyber and Kurram Agencies. Subsequently these could be extended to other areas. The industrial Estates will have the following facilities:

 Roads

 Water supply

 Residential complexes

 Mosque

 Energy

 School

 Hospitals

 Sports

 Community halls

 Security

The industrial estates will be created, as stated above, out of the SDF (Special Development

Fund) by the FATA Development Authority. The normal rules governing execution of works out of ADP will apply.

The FTA Development Authority may engage a suitable firm for preparing detailed designs of industrial estates after arranging to purchase land from the tribes through the Political

Agent. The normal government rules would apply for hiring of private companies, award of contracts etc. The government accounting rules would also apply as far as utilization of this fund is concerned. A private company would be hired for management and maintenance of the industrial estates, on a permanent basis.

This would:

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a) Relieve the pressure on the government bureaucracy

b) Result in more efficient management and maintenance of the industrial estates

c) Help improve the quality of health care and education delivered by the hospital and

schools inside the estates.

d) Ensure better security

e) Also ensure that the vital supplies like water, energy are available round the clock

f) Result in more tribal youth getting trained in management practices

The private company will be engaged on such terms and conditions as may be mutually worked out between the authority and the company.

The ICDB will also help to establish Skill Development Center in FATA.

8.4 Skill Development Centers (SDC) The establishment of skill development centers is a major initiative of this programme. Under this concepts, skill development centers will be established in Bajour, Aurakzai and North

Waziristan in the first phase.

The following skills could be part of the training programme:

 Electrician

 Air-conditioning

 Refrigerator

 Information Technology (I.T)

 Mobile Telephones

 Computer literacy

 Auto repair etc.

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Tribal trainees will be inducted in batches. The course duration will be six months. During the duration of the course the trainees will be given a stipend of Rs 1000.0 besides free food, lodging and other expenses.

Highly qualified staff will be appointed to provide training. Visits will be organized for the trainees. Most modern methods and equipment will be used in the training courses. Each skill development center will be headed by a principal who will be assisted by instructors, technicians, mechanics etc. There would be an emphasis on learning the modern skill like computer programming. Both software and hardware will from part of training courses.

These skill will be closely linked to market requirements.

This skill development centers may be affiliated to recognized institutions so that the diplomas offered are acknowledged both within the country and abroad. A private company will be hired to operate and maintain the skill development centers on such terms as may be mutually agreed between the authority and the company. This would help relieve pressure on the authority so that the day to day affairs don’t get the government body distracted from other important functions. It would be also help in the operation and maintenance because:

a) There would be user supervision

b) Better discipline

c) Better accountability

d) More reliable system of procurement of stores, and purchase generally

e) Good quality training

f) Better supervision

The FATA Development Authority will be left only to guide and supervise the centers.

Another major activity that ICDB will supervise is advancement of loans to entrepreneurs.

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8.5 Advancement of Loans As stated earlier one half of the SDF will be earmarked for infrastructure etc. The other half i.e. Rs 2.5b will be allocated for advancing loans to investors, on concessional rate, who would wish to invest in the tribal area.

The following conditions will have to be fulfilled by the party/parties before they qualify for receipt of loans/credit.

 Party must enjoy sound reputation.

 It should have adequate demonstrated expertise in the sector it is investing in.

 It should have a record of having returned previous loans.

 No defaulter company would be eligible for such concessional loan.

 A feasibility study prepared by experts would have to be presented to FATA

development authority. The FATA development authority will examine scrutinize the

study and either accept if, suggest modifications or decline to approve it.

 The loan from this fund will carry interest rate of 3 %. This amount will cover the

administrative cost of the loan disbursement

 The loan amount would be released in installments and would depend on the pace of

the work progress achieved.

 A notification would be issued so that the collateral of the investor (s) in the settled

area would be accepted for loan advancement under this programme.

Whenever a default occurs, the political agent concerned would be advised by the board to initiate proceedings against the party. However as per provisions of the agreement the FATA development authority would be at liberty to initiate legal proceedings against the party in the settled are also.

In order to operate and manage the fund of Rs. 2.5b earmarked for advancement of loans to investors, the FATA development authority would hire a firm of management consultants.

116 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8

The management consultant firm would:

 Help in the evaluation of feasibility studies for industries.

 Draw up loan agreements with investors.

 Develop procedures for release of installments.

 Monitor progress on the ground and relate it to the release of fund.

 Develop procedures for timely recovery of loans.

 Develop such linkages with the banks so that all advances made, recoveries effected,

are constantly updated.

 Develop software programmes for quick examination of the funds advanced,

recoveries made, progress on the ground etc in respect of all companies/industries.

 Make suitable recommendations to the authority from time to time on the utilization

of the loan fund.

 Present quarterly review/statement to the authority on the overall picture of utilization

 Perform such other functions as may be assigned to it by the authority.

 The debt equity ratio as a criterion for advancement of loans would be determined, on

a case to case basis, by the FATA development authority in consultation with the

management consultants.

8.6 Incentives In order that the current stalemate is broken and a decisive and vigorous new initiative is launched in the sphere of industry and commerce in FATA, the government will have to provide major concessions and substantial incentives to the entrepreneurs. Half barked policies or nominal incentive packages would not work.

Since under the current circumstances, entrepreneurs have been closing down their businesses and factories in KPK, it will be naive to expect that in the foreseeable future any party or group would risk his capital and resources by investing in the tribal area. Perhaps from the

117 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 security angle there never was a more unfavorable environment for investment in FATA. And this situation may persist.

It would therefore require a phenomenal effort to induce prospective companies or resourceful individuals to invest in the tribal area.

Although the incentives which would be listed here may seem ambitions but these have to be related to the objective realities. These alone would tempt and attract the entrepreneurs.

Some of the incentives to be offered would be:

 A complete tax holiday for 15 years. The period to be counted from the date the unit

goes in to production.

 Only half the assessed amount of tax to be recovered from the industries after 15

years.

 Excise duty will be charged at 50% of the amount assessed.

 Energy would be charged at half the commercial rates; or a 50% rebate on energy

chargers would be given.

 A rebate of 50% on customs duty will be given on all machinery and equipment

imported either by the private sector companies operating in FATA or FATA

development authority.

 Industrial Plots will be offered in the industrial estates on concessional rates,

preferably on installments to parties which have been accepted for installation of

plants. Plots will be allotted by FATA development authority taking in to account the

requirements of the industry and its size etc.

 50% rebate on freight charges will be offered to all industries operating in FATA.

118 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8

 EDF (Export Development Fund), A percentage of this fund, 15%, would be allocated

for promotion of industry and commerce in FATA. Detailed modalities would be

prepared by the FATA Development Authority.

 50% rebate on import bill for machinery to be used in the industrial units in FATA

will be offered to the investors.

 Reconstruction Opportunity Zones (ROZs)

ROZs will be planned, financed and executed under a different programme. The major incentive offered would be easy access of the products in the US markets. The FATA

Development Authority and the board will ensure that there is proper coordination so that optimal benefits are achieved and one programme does not operate to the detriment of the other. As a matter of fact a policy will have to be worked out so that the ROZs and the initiative that is being envisaged in this document are mutually complimentary. That would be done on the basis of careful selection of sectors, type of goods produced, the targeted clients etc. The ROZs may be temporary phenomenon, closely linked with the ‘was on terror’ launched by the US but the indigenous initiative is homegrown and responds to a situation of poverty, illiteracy and backwardness. The homegrown initiative, as it may be termed, would therefore be expected to be a permanent feature of socio-economic development of FATA.

The FATA Development Authority will take such measures as are necessary to ensure that the incentives offered and the concessions made to investors are not abused in any manner directly or indirectly. Periodic review would be undertaken to ensure that the facilities offered are being utilized by genuine entrepreneurs in pursuit of the objective of promoting industry and commerce in FATA. The management consulting firm hired by the Authority will help formulate such criteria so that the concessions are not misused by the parties seeking to establish industry in FATA. The SDF will be replenished by the government, assisted by the international donors, from time to time. The fund will remain operational for a period of 20

119 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 years. At the end of this period the objectives of the initiative will integrate into the core functions of the planning and development wing of FATA.

The package of incentives however will remain in force indefinitely.

8.7 Industry and Trade Development Cells In order to decentralize decision making and to involve the local administration in this noble objective another body will be created at the agency level. This will be called industry and trade development cell, which will function under the FATA Secretariat.

The following such cells would be established:

 Industry and trade development cell Bajour

 Industry and trade development cell Mohmand

 Industry and trade development cell Khyber plus FR Peshawar

 Industry and trade development cell Aurakzai plus Dara Adamkheil

 Industry and trade development cell Kurram

 Industry and trade development cell North Waziristan plus FR Banuu, FR Lakki

 Industry and trade development cell South Waziristan plus FR Bhittani, FR Sherani

The composition of the cell would be as under:

 Commissioner of the concerned division, where the agency is located: Chairman

 Political Agent concerned------Member

 Representative of IGFC------Member

 MNA/Senators of Agency or FR------Member

 Representative of FATA Development Authority------Member/Secretary

 Representative of Tribal Chamber of Commerce------Member

 Representative of Sarhad Chamber of Commerce------Member

 Secretary P&D FATA------Member

120 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8

 Collector Customs Peshawar------Member

 Representative of WAPDA------Member

 Representative of GAS------Member

The cell would be created by an executive order and would be registered as a corporate body under the companies Ordinance of 1984. The following would be the main functions of the cell:

 To help the board and the FATA Development Authority to implement the

programme of promoting industry and commerce in FATA.

 To discuss from time to time the pace of progress in an agency with regard to industry

and commerce and remove any obstacles or sort out any problems arising in the

course of establishing plants and factories.

 To supervise the purchase of land for roads, industrial estates etc.

 To liaise effectively with departments like WAPDA, GAS, CUSTOMS on resolving

any problems/difficulties.

 To coordinate and ensure measures for providing security to the industrial

installations, employees etc.

The cells would meet in the office of the commissioner once every three months.

8.8 Interest on Loans The 3% interest charged on advancement of loans would become part of the fund for hiring management consultants to oversee the works assigned to them as described in the preceding pages. Some of the sectors that would perhaps need more focus and attention would be:

 Pharmaceuticals

 Mineral

 Cement

 Soapstone

121 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8

 Footwear

 Furniture

 Agricultural machinery

 Sports goods

 Textiles

The sectors have been identified with an eye on Afghanistan and Central Asia markets.

8.9 Arms Manufacturing Small and medium size arms manufacturing exists in FATA. The Darra Adamkheil manufacturing workshops employ thousands of workers, some skilled, some unskilled.

Because the business does not operate under any legal cover, it has not developed and the workforce not given the protection of law. In the tribal area the arms act is not extended. The products in Darra therefore get dispatched to the settled area clandestinely. There is need to bring this activity within the ambit of some documentation and control. Firstly a thorough survey may be carried out to determine the number, size of the workshops and factories in

Darra, MirAli and Kurram. Secondly all the units may be registered along with the names of proprietors etc. with the concerned Political Agent/DCO, under intimation to the

Commissioner and Tribal Affairs Department. Henceforth no further unit will be setup without license from the Political Agent/DCO. All licensed workshops/factories would be given loans to modernize their units. They will be prohibited from producing contraband items. The emphasis would be to produce items under valid permit with more sophistication and precision. All such units would then, under an agreement, sell their products to authorized arms dealers under the auspices of the team specially constituted for the purpose.

The team would comprise:

- Nominee of Political Agent/DCO.

- An arms expert firm frontier cops.

122 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8

- A representative of FATA Development Authority.

- A representative of the arms dealers.

The local factories owners would thus continue to run their business under some regulatory regime which will ensure that better quality arms are manufactured; workers rights are guaranteed; easy marketing facilities are provided and a complete record of all types of arms and ammunition manufactured is maintained. Most importantly the new policy would be a tremendous step in reducing and eventually eliminating arms smuggling which has become a national nightmare.

The license of any manufacturer who violates the agreement or is involved in smuggling of arms may be cancelled. Upon cancellation of a license the concerned dealer/owner would be debarred form operating any business of arms manufacturing or arms sales.

8.10 Mineral Development A key component of development in the tribal area is mining sector which needs immediate attention. This is an area that has also remained, by and large, unexplored and unexploited. In partnership with the private sector, mining exploration work may be undertaken. The tribal area may be divided into four parts, depending upon the topography and existence of mines.

These may prioritized in terms of those which need immediate attention and those which would be put off until, a later time. The FATA Development Authority should engage private companies to carry out a systematic survey, including satellite imagery, to ascertain the type of minerals in FATA. A project may be prepared out of the special development fund to appoint reputed mining companies, geologist to determine the nature, extent, quality of the ores found in the tribal area. In the 2nd phase, some ores may be selected for commercial exploitation. A private firm may be engaged for extracting the ores on terms and conditions to be mutually agreed upon. In the third phase the minerals may be processed for refinement or use in industry. In the fourth phase those minerals which have markets abroad may be

123 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 exported. In all these activities the locals may be thoroughly involved and the tribes on whose soil the mineral is produced, adequately compensated. In order to make assessment of the quantity and quality of the ores, a modern, well equipped laboratory ma y be setup in Khyber

Agency. It should be well staffed. Technicians may be given training locally and abroad.

Another such laboratory may then be set up in Kurram. Small on the site labs could be set up near the mines during the mineral extraction.

FATA Development Authority should create a separate wing or strengthen the existing wing to handle mining activities in FATA. There should be no tariff on import of machinery for use in the labs to be established in FATA. The tribes have to be completely on board, for such an activity to continue over a period of time. Because mining operations would cover a wide swath of area it is imperative that the tribes be taken into confidence, the local tribesman employed and the benefits shared with them as is the custom in FATA. The objective would be:

 To ascertain the quantum and quality of the mines.

 To utilize these minerals either in factories or market these for sale/export through

private companies.

This would help generate employment on the one hand and add to the incomes of the tribes as well as the government by way of export etc. The USAID would contribute significantly in the mining activities by providing expertise, technology, resources, helping with equipment, satellite imagery, scanning and reconnaissance etc. The FATA Development Authority can set the ball rolling by importing modern machinery which would be maintained by the mineral wing in the authority. The machinery will be rented To private companies that are engaged in mine exploration or exploitation in FATA. The cells headed by the commissioner for each tribal area will be totally involved in the mining operation and activities and would consider and resolve all such problems encountered by the private companies/parties like land

124 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 acquisition, royalty, license for transportation of explosives, sale, marketing of minerals etc. however it may be noted that the cells would function in close cooperation with the FATA development authority and under general guidance.

8.11 Finances: The industry and commerce development board would allocate sufficient resources out of the

SDF to cater for expenses on:

 Import of machinery

 Hiring of consultants

 Engaging private company for undertaking mining operations

 Establishment of laboratories

 Such other activities that may be helpful in promotion of mineral extraction,

refinement, marketing etc.

8.12 Commerce With the focus on cross border trading, there could be a enormous potential for this activity in

FATA. People have lived off trading for centuries in this inhospitable and rugged terrain of the borderland between Afghanistan and Pakistan. If a conducive environment is created, border trade can flourish and expand, revolutionizing the local economy. It has to do with a number of initiatives. The most crucial is the change in attitude and perception. We have to develop a new approach, abandon old clichés, dogmas, think innovatively in order to develop new approaches that are in accord with the dictates of the 21st century. Suspicious have to give way to trust and conservatism to hope if one have to go beyond the long held notions of

“security” and “strategic” goals etc. The world is changing, barriers are being dismantled; restrictions are being removed, trade and visa regimes are being liberalized and in many cases visas are being abolished. We cannot remain prisoners of the past and naïve ‘security’ perceptions should not hold us captives for eternity. There is need to open up the borders for free, uninterrupted movement of people and goods across many different border checkpoints.

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Afghanistan is a big market for may Pakistan commodities and products like wheat, rice, gur, cement, furniture, juices, biscuits, footwear, clothing, stationery, fertilizer, steel etc. In order to compete with regional countries the cross border trading has to be facilitated in a substantial way.

New border checkpoints for cross border trade and movement of people have to be established. In the first phase the following new custom checkpoints may be opened:

Nawapass ------Bajour

Khapakh kando ------Mohmand

Kharlachi, Teri Mangal, Lakka Tiga ------Kurram

Ghulam Khan, Saidgi ------North Waziristan

Angoor Adda ------South Waziristan

Customs and immigration officials may be appointed alongwith ‘khasadars’. A representative of the Political Agent i.e, an APA or Tehsildar may for the time being, supervise the border handling of traffic both men and goods. In order to make this exercise worthwhile the road communication at these points must be improved on both sides of the border. Further the following regulatory mechanism may be put in place for facilitation of commerce and trade:

8.12.1 Reintroduction of Red Pass Old system of travel to Afghanistan on the basis of red pass for transporters, traders may be restored with some modifications. The red pass will be issued by the commissioner of the concerned division. It will have one year validity. It will be issued in lien of passport and will be accepted in specified provinces, regions of Afghanistan. It will bear a photograph of the person along with other identity details. A similar arrangement would be worked out for

Afghan traders and transporters. The commissioner’s office will have to verify with the help of the special branch of police, if necessary, the antecedents of the drivers etc. before issuing red pass. The drivers must be employees of a registered transport company which operates on

126 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 both sides of the border carrying commodities etc. As a matter of fact the facility of red pass may also be extended to all Pakistan immigrant workers now in Afghanistan who do not carry any passports. A somewhat different procedure would have to be adopted for the immigrant workers.

Transporters would be asked to establish companies that are accountable for any abuse of facility extended to them under this procedure. No individual transporter will be issuing red pass and traders will have to prove their identity, nature and scale of business etc. before qualifying for issue of pass for vehicle or drivers. Transporters managed by companies, on both sides, will be allowed to carry goods up to specified destinations. The system of red pass for traders, transporter, drivers, vehicles will apply to all border designated exit points including Turkham and Chman. If in future permission is given for Indian goods to be taken to Afghanistan via Pakistan the trading across Turkham in particular would increase tremendously. While introducing the system of red pass, a mechanism will be established that would document every vehicle including the details of drivers that cross the border on either side. The whole border transactions will thus be carefully monitored and such changes as may be necessary would be introduced without compromising on the free market concept and practice. It goes without saying that institutional safeguards would be put in place to ensure that there is no trafficking of weapons, narcotics etc. The office of the respective commissioner would maintain a complete record of all the red passes issued along with detail of transporters, traders, drivers, vehicles. The commissioner will have the authority to cancel any red pass that is proved to have been misused. The cells chaired by the commissioner will exercise overall supervision over the whole process of border trade in respect of each tribal area.

All local taxes levied by the local administration on the transportation of goods will be abolished. The local admin of any tribal agency will not have the authority to impose or levy

127 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 any tax or duty on the goods imported or exported through that agency or during transportation of such goods through the tribal area or when entering the settled area. An ideal arrangement would be to advise the Afghan authorities to constitute trade and commerce facilitation cells on their sides of the border. The two bodies operating on both sides can initiate a system where their representatives can meet once a month to monitor the progress and remove bottlenecks that may be hampering or impeding movement of goods or vehicles. Such a measure would also help in bringing communities together and fostering greater understanding amongst the people on both sides of the border. Both Afghanistan and

Pakistan would review the tariff barriers, reducing these substantially; non tariff barriers will be removed.

8.12.2 Border Management of Turkham Turkham is an international border crossing point rather than a tribal check post. It nevertheless deserves attention because it is the busiest crossing point on the border. The scene at Turkham, on any given day, is ugly, disorganized and disgusting. Long line of trucks laden with goods, some with perishable items, waiting for days for clearance to cross the border. Traffic jams of the worst type are encountered every day. Drivers jostling with each other for space and attention; money changing hands in secret bargains; each representative of a department (mostly federal) asserting their authority and power; women, children being made to endure the cold and heat plus humiliation; acrimonious exchange of hot wards and occasional baton charge to control “unruly” crowd. The scene could not be more chaotic and disorderly. A sad reflection on our ability and competence to handle our borders!

One reason is of course that no sound border management practice has either been designed or followed. Secondly there are large numbers of agencies at work on the border. That leads to conflict of interest; overlap of functions, mutual rivalries, tensions. With complete lack of any horizontal contacts, there is mayhem at the border. Further while everyone would like to

128 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 claim ‘success’ when there is an opportunity, everyone passes the buck on to other when there is a setback. There is no coordinator to whom all the agencies report or accountable to.

There is an imperative need for putting in place a border management policy that would center around a coordinator who would be the overall incharge of the border. Currently there are agencies like IB, Customs, FIA, MI, ISI, FIU, Frontier Cops, Khasadar and others. All these at times operate to the detriment of the public. They add to the pain and suffering of the people on both sides, mostly Afghans. The multiplicity of agencies is a major irritant. Under a new policy only the following departments may be allowed to function of Turkhan:

 Customs

 ISI

 Khasadars

The immigration work would be handled by the Political Agents staff. The frontier cops would remain deployed and be used when necessary but would not handle the border crossings. Assistant Political Agent, Landikotal would be the overall incharge of the border crossing etc. Others would only be functioning under his supervision. He will be the captain of the team. This would help bring some semblance of order and discipline. Turkham is a gateway to Pakistan for men and goods. There should be some concern over how an international border is managed. Even other countries of the region have some systems.

Afghanistan’s border with Uzbekistan, Turkmenistan and Iran, for instance are more competently managed and there is a remarkable amount of order and a very clear, simple system of clearance of goods across the borders. The border trade would be facilitated by improving the condition of the roads both up to and beyond the border. This must be undertaken and well reputed companies involved in building roads, bridges of top quality in a short span of time. Chain as well same good Pakistani companies can be given contracts for speedy completion of such infrastructure work. All these roads should have gas stations, rest

129 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 rooms, water supply, power at designated points. Complete security has to be ensured by police check post as well as mobile squads.

The Pakistan Afghanistan transit trade agreement will be allowed to be implemented in letter and spirit. Pakistan will ensure that transit goods meant for Afghanistan are cleared expeditiously both at Karachi and Turkham/Chaman.

8.13 Issues of Security The issue most critical to investment in FATA is prevalence of peace and an end to the ongoing insurgency. Let this be made abundantly clear: no matter what liberal and generous incentives are offered and infrastructure provided, no one would be willing to invest in FATA as long as there is violence and as long as there is a conflict. The presence or armed gangs would continue to be a major hurdle in the way of entrepreneurs. Not only that, the presence of the military would also be a big disincentive. Because by a common perception it will be assumed that the situation, in the presence of military, has not returned to normalcy.

Militarization of the area is a disincentive to investment. Because it derails the systems and sidelines the civilian institutions. As long as civilian institutions are not strong and effective and not able to provide relief to the tribesmen, investors would also stay away from the tribal area. For investment to happen in FATA therefore there has to be a revival of institutions. All such institutions like Political Agent, departments of communication, education, health, irrigation, forestry etc. have got to be restored with full authority and full responsibility. More importantly the conflict has to end. Industrialization can nor occur in a state of violence and militancy. One has to be realistic and down to earth in analyzing the situation. Consider how many industrial units in KPK have shut down and have wound up their operations. How many investors have transferred their capital to other provinces or abroad. More are planning to follow. In such a depressing situation it would be naïve to expect that entrepreneurs would be attracted by any tax holiday or other incentives. Security is of paramount importance. All endeavors must therefore focus on this most basic objective. Once peace returns to the tribal

130 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 area and institutions are restored the role of maliks is guaranteed, a conducive environment from the point of view of security would have seen created. Last but not least is the crucial role or the Political Agent. The Political Agent is a fascinating institution. On the one hand he is a representative of the government; on the other he is an advocate of the tribes vis-à-vis the government. He enjoys a unique position and carries on his shoulders an awesome responsibility. The political agent however can discharge his functions only as long as he is trusted and supported by the Government and have the tribes on board with him. He therefore has to be an officer of acumen, integrity and one who can win the trust of the tribes.

Regrettably there has been a painful decline in both the quality of leadership that he provides and the level of integrity that is expected of him. As a consequence, the tribesmen have lost confidence in the government, machinery and the government itself. Never before has the gap between the tribes and the government been wider. Never before have the tribes been so hostile to the government. A political agent who is either lacking in competence or in his ability to communicate with tribes or in integrity can cause huge damage to the institutions, to the tribes and to the government. The government, if it has any genuine desire to lift up the tribal area, have to find officers of the requisite caliber and experience to run the tribal agencies. Officers who can work as real captains of the team. Officers who can inspire confidence amongst colleagues and can win the love, respect of the tribes. Such officers work as catalysts for a healthy change.

8.14 Regional Focus Pakistan has had perennial problems on it eastern border. It is unfortunate that full trading contacts have not been developed with a huge market of 1.1b people. It has to look westward.

If peace were ever to return to Afghanistan and the tribal area, there would be tremendous opportunities for trading. Afghanistan provides a springboard for Central Asia as far as import from and export to that region are concerned. Likewise Pakistan provides easy access to the sea to Afghanistan and some Central Asia countries. The emerging market trends have

131 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8 got therefore to be studied and monitored closely. The industrial base to be developed in

FATA must have a focus on the present and future needs of Central Asia. Pakistan, using the land route, can import a host of items and communities form Central Asia. Expansion of trade through Afghanistan is therefore a win for all parties in the region. There are a number of free economic zones (FEZ) in Central Asia which give incentives to local as well as foreign investors. In setting up industries in FATA these items which can find markets in Central

Asia should be given priority. Quadrilateral Agreement on Transit Transport (QATT) was signed among the government of China, Kyrgyzstan, Kazakhstan and Pakistan in 1995. The agreement was signed to facilitate transit trade between the four countries. But procedures have not been developed to implement the agreement. That needs to be urgently addressed.

Tajikistan traders want to enter into business and would like to benefit from the provision of

QATT. Tajikistan therefore should be made a full member of the treaty. Afghanistan lacks key business support services such as commercial insurance, freight forwarding etc. Modern international logistics, for non bulk cargo, is now largely based on containers and inter model transport. Afghanistan is presently excluded from these systems as the international shipping lines do not allow their containers into the country. The containers are unloaded either at the port or near the border. Frequent removal damages the cargo. Because of non existence of insurance cover, cargo in Afghanistan is transported either at owners risk or carries liability at higher freight rates.

Khyber Pukhtunkhwa province has natural resources like salt, sulfur, plaster, soapstone, lime, gypsum, minerals etc. Industries based on some of these raw materials can be set up in FATA with a focus on export to Afghanistan. Khyber Pukhtunkhwa has a well developed pharmaceutical industry. Pharmaceutical factories can be set up in FATA mainly for export of medicines to Afghanistan and Central Asia.

132 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 8

Pakistan is a major import partner of Afghanistan in ceramic, stone and glassware industry.

Industrial units of these goods could be set up in FATA to facilitate exports and find further avenues beyond Afghanistan procedures must be developed in order that the agreement

(QATT) becomes operational. Pakistan is a signatory to Transit Trade Framework Agreement

(TTFA). Other signatory countries include Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan,

Turkmenistan and Uzbekistan. This agreement addresses the issue of visas for drivers in connection with transit trade thro’ countries that are partners in this agreement. Government must take up issue of visas will CARs in the light of TTFA.

Railway

Pakistan should develop a plan leading to integration of Pakistan railway network with CARs in order to increase its share of trade with these countries. The issue of different railway track ganges being in use in CARs and Pakistan needs to be resolved. One option is to construct a track with a gange of 1520mm from KPK to nearest station of trains Asian Railway network i.e. Kashghar to china. Another option is construction of a railway line with track gange of

1520mm through Afghanistan connecting KPK on with trains Asian railway network.

Pakistan must develop customs and other related procedures based on best practices. Pakistan should raise the issue of customs reforms with Afghanistan and CARs and help promote the universal customs transit system in the region.

CARs should be kept informed about the full scale commencement of operations at Gawadar

Port, Traders, government departments and importers, exporters in CARs should be kept posted about the facilities being offered at Gawadar. A special website may be established for

Gawadar Port facilities.

CARs offer large number of concessions in the manufacturing sector. These could be availed by prospective investors from KPK. Areas of priority are textile, pharmaceuticals, cement,

Mineral.

133 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 9

Chapter 9

Key Recommendations and Way-forward 1. The following basic requirements listed in order of priority, must be met to create

a suitable climate for private sector participation in the industrial development of

FATA: Laws proposed under chapter – 8 may be extended to FATA.

2. Improved security and an end to violence and conflict.

3. Availability of credit.

4. Provision of Energy.

5. Generous incentives.

6. A FATA industrial and commerce development board (ICDB) will be created by

an Act to carry forward the policy of rapid industrial development in FATA.

7. Operating under the Act, industry and trade development cells would be created

for each Agency/FR.

8. A fund of Rs. 5b will be created for development of industry and commerce in

FATA.

9. Private companies will manage the establishment, operation and maintenance of

industrial estates on FATA.

10. Private Management Consultant companies will be engaged to review the

feasibility studies of industrial units to be set up in FATA.

11. Private companies will be engaged to establish, operate and maintain skill

development centers in the tribal area.

12. Work for major mining projects will also be outsourced. Incentives will be offered

to investors.

13. Cross border trade will be expanded keeping in view the requirements in

Afghanistan and central area.

134 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 9

14. More custom check posts will be established along the border.

15. Emphasis will be laid on improving the condition of the roads on both sides of the

border.

16. System of red pass that was in vogue some years ago will be reintroduced to

facilitate the crossing of trucks, driver and traders.

17. Laws such as banking insurance, custom, land acquisition Act, excise, laws

relating to recovery of loans, Registration Act, companies Act partnership

Act/Ord. may be extended. However powers and functions of Banking Tribunal

shall vest in the political agent.

135 FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA Chapter - 10

Chapter 10

Conclusion Tribal area, once a bastion of peace, has turned into a volcano. The conflagration has consumed lives, destroyed infrastructure, damaged population, decimated villages and profoundly negatively impacted the way of life of a people who were used to living in honor and dignity. Besides, hundreds of thousands have left their homes, some never to return. The reversal of this unending agony is not possible. A retrieval is unlikely. However it would be a fo lly not to take whatever steps a nation can, to return the area to some semblance of normalcy. We owe it to these brave people who helped to liberate a portion of Kashmir where the Pakistan flag in hoisted today. Revolutionary and bold initiatives are needed if we are to overcome the embedded hostility that these people show to the Pakistan state. Tribal area is an integral part of Pakistan. It should not be consigned to the dustbin of history; nor should it be left to the elements. Let us regain the initiative. In doing this we must be guided by the tribes themselves. Militancy has arisen because the tribes felt that the government is pursuing a policy which does not reflect their aspirations. The government would have to reach out to the tribes. Militarization has to end. Civilian institutions which alone deliver roads, education, healthcare, power, etc. have to restored and strengthened. The institution of the political agent has to be revitalized. Officers of exceptional competence and integrity have to be appointed as political officers. A new boost, impetus has to be given to the hither to overlooked sectors of industry and commerce. And the regulatory laws, identified in this paper, must be extended to create an environment for progress in business, commerce and industries.

Tribal area would then be on its way to recovery, on its way to stability and prosperity.

Concluded

136 FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA RLEO Format

Regulatory Laws Extension Ordinance Format

REGULATION ……..OF 2011 (Draft)

FEDERALLY ADMINISTERED TRIBAL AREAS (APPLICATION OF LAWS) REGULATION, 2011

A Regulation to apply certain laws to the Federally Administered Tribal Areas

[Gazette of Pakistan, Extraordinary, Part I, ______2011]

F.No._____/2011-Pub. (date)-----The following Regulation made by the President is hereby published for general information:---

Whereas it is expedient to apply certain laws to the Federally Administered Tribal areas;

Now, therefore, in exercise of powers conferred by clause (5) of Article 247 of the Constitution of the Islamic republic of Pakistan, 1973, the President is pleased to make the following Regulation:----

1. Short title, extent and commencement.---- (1) This Regulation may be called the Federally Administered Tribal Areas (Application of Laws) regulation, 2011.

(2) It extends to the whole of the Federally Administered Tribal Areas.

(3) It shall come into force at once.

2. Application of laws to the tribal Areas.-----The laws specified in the Schedule below shall, subject to the modification, if any, specified therein, together with any rules, notifications, and orders made or issued under those laws, as in force in Pakistan, shall apply to the Federally Administered Tribal Areas, hereinafter referred to as the said Areas.

3. Certain laws to cease to operate.-----

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FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA RLEO Format

(1) If, immediately before the commencement of this Regulation, there was in force in the said Areas any law, instrument, custom or usage having the force of the law corresponding to the provisions of the laws applied to those Areas by this Regulation, such law, instrument, custom or usage shall, upon such commencement, cease to have effect in the said Areas.

(2) Nothing in subsection (1) shall affect ------

(a) the previous operation of such law, instrument, custom or usage;

Or

(b) any obligation, liability, penalty, forfeiture or punishment incurred in respect of any offence punishable under such law, instrument, custom or usage; or

(c) any investigation, legal proceeding or remedy in respect of any such obligation, liability, penalty, forfeiture or punishment;

and any such investigation, proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if subsection (1) had not come into force.

SCHEDULE

(See section 2)

S. No. LAWS

1.

2.

3.

4.

5.

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FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Annexure – 1

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Focused Group Discussion Report Region - 1 07 JUNE 2010

REGION – 1 I. Bajour Agency II. Mohmand Agency III. Khyber agency IV. FR Peshawar

Community Appraisal & Motivation Programme (CAMP) House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Contents

Introduction ...... ii

Detail of the Program ...... iii

Extension of Laws in FATA ...... iii

Role of FDA in support of Industrialists in FATA ...... iii

Establishment of Industrial Estate ...... iv

Recommendations ...... iv

List of Participants ...... v

Agenda ...... vi

Pictorial Glimpse of the event...... vii

i FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Introduction

The dated governance system of FATA is one of the major contributing factors, which has impeded the economic development of its people. The region has a peculiar system of administration, where the people are governed through their local chieftains called Maliks, through financial strings controlled by Federal Government and exercised by its official known as the ‘Political Agent. In 1901, the entire north-western frontier region of British India was placed under the rule of the Governor-General of India, who governed it through the Chief Commissioner of the Punjab Province.

In Pakistan, all business, trade and commercial activities in a given economy are undertaken, operated, protected and regulated under a framework of laws, Rules & Regulation, which have not been extended to FATA. Currently FATA does not even have primary laws relating to starting businesses, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest o f Pakistan due to its non-extension, thus creating a complete legal void. The absence of legal cover not only makes investment highly risky but also serves as a disincentive in general and particularly for large firms1. Frontier Crimes Regulation 1901 is the only instrument for more than a century, as a special law prescribing trial procedures for offensive and civil disputes in the tribal areas.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labor into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.

Community Appraisal and Motivation Programme has designed a research study for situatio n analysis of industrial activity, review, and report on the existing legal setup/arrangements in FATA. The FGD is a part of series of activities undertaken to explore the ground realities and suggest suitable mechanisms to improve the state of dying industry of FATA.

A Focus Group Discussion was held at SS Club Peshawar on 7th of June 2010. Mr. Khalid Mahmood, Manager Industries, FATA Development Authority and Mr. Riaz ul Haq, Manager Research and M&E, jointly moderated the program.

Detail of the Program

1 FDA Guidelines and TOR for “FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA”

ii FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

The program started with an introduction by Mr. Riaz ul Haq who opened the forum with brief objectives of the FGD, guidelines and rules that were to be followed during the discussion.

Extension of Laws in FATA

The participants expressed their views firmly and opined that since the laws are not extended to FATA, the people have suffered in almost all the areas, from justice system to employment and so on and so forth. The most common complaint has been the lack o f provision of agriculture loans. They considered the government’s attitude as negative towards the people of FATA. In response to the issue Mr. Mahmood explained that there is a false perception about FATA people for not being willing to accept the extension laws prevailing in rest of the Pakistan. He stressed that banks give loans to those who provide them with a reasonably documented security. He further said that banks give loans to other businessmen outside FATA because in the rest of the country Financial Recovery Ordinance is in place, which provides great safety to the banks to recover their money. In response to the clarification by FDA representative the participants stressed on the need for extension of laws in FATA and asked the CAMP management to advocate for their rights.

Role of FDA in Support of Industrialists in FATA

The state of affairs seems dismal when the people of an area are not aware of the support they may get from the government, same was the case with most of the participants as they did not know the role FDA played in the development of FATA, they asked the Mr. Mahmood who explained that there is a need of collective effort.

Government role is to provide an enabling environment, mainly to facilitate and to take appropriate measures for the development of the business and for the establishment of your Industries. FDA is specially focusing on SMEs in FATA because it is a universal truth that in every economy 80% role is of small businessmen. Promotion of Small & Medium size Enterprises will no doubt become a cause for generating a lot of opportunities of employment for FATA people.

Mr. Khalid expressed that FATA DA has already launched pilot projects with quick impact results. The strategy at the moment is that in current situation whatever is possible is being done in the best of organizations capacity. He added that initiatives of constructing a Marble City in Mohmand Agency, grid station and an Industrial estate in Shahkass (Khyber Agency) and there are similar plans for Dara Adam Khail (FR Kohat).

A businessman from Bajaur agency asked Mr. Mahmood for the establishment of Technical College at Agency Level. Mr. Khalid told the participants that Government has already established the same with the name of Government Technical Institute (GTI) in every Agency and FRs, it is a sad fact that people are unaware about their own area and have not tried to find out the existing facilities there.

Establishment of Industrial Estate

iii FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Mr. Khalid stated that Government is planning to construct an Industrial estate where it would be feasible. All the relevant buildings from electricity department to Banks etc will be in close vicinity. A proper communication plan including roads etc has been designed for the industrial state. The investors all over Pakistan will be able to invest in the industry if provided all the facilities as planned.

Mr. Khalid told the participants about Reconstruction Opportunity Zones (ROZs) that will be established in FATA. The plan was announced by Bush administration, according to which any product made in ROZs will be exempted from custom duty in USA. This will benefit the local industrialist as there will be a bigger margin in profit.

Recommendations

 Mr. Abdul Azam Shinwari, a Journalist from Khyber Agency stressed on the restoration of peace for development plans to work out for the business people.

 Mr. Habibul Hassan from Bajaur Agency, recommended awareness should be raised in our regions the old mind set of decadence should replace with new positive approach, if we ask for the rights we should be ready for doing our duty. He blamed the people of FATA for not paying taxes and electricity bills.

 Improvement in communication, electric supply, extended laws and peace is the only source through which FATA can be developed.

iv FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

List of Participants Profession/Kind of S. # Name of Participant Agency/FR Business 1 Khalid Habib Bajour Agency Marble Factory 2 Aurangzeb Khan Bajour Agency Social Worker 3 Ijram Ullah Bajour Agency Businessman 4 Habib Ul Hassan Bajour Agency Printing Press 5 Nizam Ud Din Bajour Agency Whole Salar 6 Noushad Ali Khyber Agency Social Worker 7 Shah Mehmood Khyber Agency Political Worker 8 Rahim Gul Khyber Agency Salt Factory 9 Abdul Wadood Khyber Agency Marble Factory 10 Irshad Khan Khyber Agency Marble Factory 11 Ijaz Muhammad Khyber Agency Marble Factory 12 Widayat Ullah Khyber Agency Banker 13 Amir Khan Khyber Agency Social Worker 14 Imran Khan Khyber Agency Social Worker 15 Abdul Azam Shinwari Khyber Agency Journalist 16 Khadi Shah FR Peshawar Social Worker 17 Akbar Hussain FR Peshawar Contractor 18 Shaukat Khan FR Peshawar Amunation Factory 19 Sheermat Shah FR Peshawar Social Worker 20 Haji Sultan Hussain FR Peshawar Bricks Factory 21 Abid Hussain Mohmand Agency Marble Factory 22 Janat Khan Mohmand Agency Marble Factory 23 Naveed Ullah Mohmand Agency Marble Factory 24 Niaz Wali Khan Mohmand Agency Marble Factory 25 Ismail Khan Mohmand Agency Marble Factory

v FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

“FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA”

Focused Group Discussion Agenda 07 June 2010

S. # Agenda Item Time

01 Arrival and Registration 9:00 - 9:30

02 Recitation from the Holy Quran 9:30

03 Welcoming the participants 9:35

04 FGD objectives 9:40

Open Discussion:

05 The state of Trade, Commerce and Industry in FATA 9:50

06 Tea break 11: 30 Open Discussion:

Perception on Extension of Regulatory Laws to FATA- 07 Opportunities and challenges. 12:00

08 Lunch & prayer break – end of programme 1:30

Sponsored by: FATA Development Authority

vi FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Pictorial Glimpse of the event

vii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Annexure - 2

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Focused Group Discussion Report Region – 2 09 JUNE 2010

REGION – 2

I. Kurram Agency II. Aurakzai Agency III. FR Kohat

Community Appraisal & Motivation Programme (CAMP) House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Contents

Introduction ...... ii

Detail of the Program ...... iii

Extension of Laws in FATA ...... iii

Role of FDA in support of Industrialists in FATA ...... iii

Establishment of Industrial Estate ...... iv

Skill Training For youth...... iv

Recommendations ...... iv

List of Participants ...... v

Agenda ...... vii

Pictorial Glimpse of the event...... viii

i

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Introduction

The dated governance system of FATA is one of the major contributing factors, which has impeded the economic development of its people. The region has a peculiar system of administration, where the people are governed through their local chieftains called Maliks, through financial strings controlled by Federal Government and exercised by its official known as the ‘Political Agent. In 1901, the entire north-western frontier region of British India was placed under the rule of the Governor-General of India, who governed it through the Chief Commissioner of the Punjab Province.

In Pakistan, all business, trade and commercial activities in a given economy are undertaken, operated, protected and regulated under a framework of laws, Rules & Regulation, which have not been extended to FATA. Currently FATA does not even have primary laws relating to starting businesses, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest o f Pakistan due to its non-extension, thus creating a complete legal void. The absence of legal cover not only makes investment highly risky but also serves as a disincentive in general and particularly for large firms2. Frontier Crimes Regulation 1901 is the only instrument for more than a century, as a special law prescribing trial procedures for offensive and civil disputes in the tribal areas.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labor into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.

Community Appraisal and Motivation Programme has designed a research study for situatio n analysis of industrial activity, review, and report on the existing legal setup/arrangements in FATA. The FGD is a part of series of activities undertaken to explore the ground realities and suggest suitable mechanism to improve the state of dying industry of FATA.

A Focus Group Discussion that was held at SS Club Peshawar on 9th of June 2010. Mr. Khalid Mahmood, Manager Industries, FATA Development Authority and Mr. Riaz ul Haq, Manager Research and M&E, jointly moderated the program.

2 FDA Guidelines and TOR for “FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA”

ii

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Details of the Program

The program started with Mr. Riaz ul Haq who opened the forum with brief objectives of the FGD, guidelines and rules that were to be followed during the discussion. Mr. Khalid Mahmood briefed the participants on the working of FDA.

Mr. Khalid Mahmood told the participants that the government is playing the role of a facilitator. It would provide an enabling environment, infrastructure in the shape of roads and Industrial estates etc. FATA DA carried out an economic survey through CAMP to know about the challenges and problems in business, trade and commerce and now arranged such Focus Group Discussions with an aim to share these problems with the participants and look for solutions. The solution lies with the local people, only they are aware of their limitations, customs and the challenges. The report based on the study will help government in designing mechanism in the subject area.

Extension of Laws to FATA

The most common complaint has been the lack of provision of loans or any such support. They considered the government’s attitude as negative towards the people of FATA. In response to the issue Mr. Mahmood explained that there is a false perception about F ATA people for not being willing to accept the extension laws prevailing in the rest of the Pakistan. He stressed that banks give loans to those who provide them with a reasonably documented security. He further said that banks give loans to other businessmen outside FATA because in the rest the country Financial Recovery Ordinance is in place, which provides a great safety to the banks to recover their money. In response to the clarification by FDA representative the participants stressed on the need of extension of laws in FATA and asked the CAMP management of advocate for their rights.

Lack of support for External Investors by the Locals

Mr. Mahmood pointed out the issue of lack of support of local business men for external investors, some of the participants assured that they would welcome such support but the rest had reservations about the idea and considered it a threat to their business; they opined that due to external investment their own businesses will not flourish as they were not compatible with investors outside FATA.

Role of FDA in Support of Industrialists in FATA

The state of affairs seems dismal when the people of an area are not aware of the support they may get from the government, same was the case with most of the participants as they did not know the role FDA played in the development of FATA, they asked the Mr. Mahmood who explained that there is a need of collective effort.

Government role is to provide an enabling environment, mainly to facilitate and to take appropriate measures for the development of the business and for the establishment of your Industries. FDA is specially focusing on SMEs in FATA because it is a universal truth that in every economy 80% role is of small businessmen. Promotion of Small & Medium size

iii

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Enterprises will no doubt become a cause for generating a lot of opportunities of employment for FATAs people.

Establishment of Industrial Estate

Mr. Khalid stated that Government is planning to construct an Industrial estate where it would be feasible. All the relevant buildings from electricity department to Banks etc will be in close vicinity. A proper communication plan including roads etc has been designed for the industrial state. The investors all over Pakistan will be able to invest in the industry if provided all the facilities as planned.

Mr. Khalid told the participants about Reconstruction Opportunity Zones (ROZs) that will be established in FATA. The plan was announced by George Bush administration, according to which any product made in ROZs will be exempted from custom duty in USA. This will benefit the local industrialist as there will be a bigger margin in profit.

Skill Training For youth

The participants stressed on the need of skill training for youth in response to which Mr. Khalid Mahmood informed that FATA DA has already launched such an initiative. It sends FATA youth to the settled areas for getting skills training in various institutions for three months and six months courses relating to mobile repairing and refrigeration.

Land Purchase in FATA

Mr. Zafar Gul, owner of ammunition factory, from FR Kohat criticized the role of Political Administration for financial embezzlement in the allocated funds for the payment of immovable property bought from the people of FATA for establishing Industrial estates in FATA. He believed that the price for the land is 1/3rd as compared to the real price. With reference to that Mr. Jamal Nabi, Aurakzai Agency, asked for the reason for low price purchase on land by the government. Mr. Khalid Mahmood explained that if government buys the land on high price it would automatically raise the price of the property in the Industrial Estate for the investors and may be it becomes beyond their capacity to buy it.

Recommendations

 Extension of Industrial Laws to FATA.  Hydroelectric power stations should be built in FATA so that electricity issues are resolved.  Improvement in infrastructural facilities and communication should be given a top priority.  Labor hospital is to be built in the agency so that the labors of the area can be benefited.  Improvement in law and order situation should be the top priority of the government.

iv

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

List of Participants Profession/Kind of S. # Name of Participant Agency/FR Business 1 Haji Ghulam Muhamamd Kurram Agency Rtd. Engineer 2 Iqbal Hussain Kurram Agency Ex. Govt Swrvent 3 Fida Hussain Kurram Agency Tiles Business 4 Mujtaba Hussain Kurram Agency Coal Mines 5 Mazhar Hussain Kurram Agency Property Dealer 6 Hamid Ullah Kurram Agency Industrialist 7 Malk Abbas Kurram Agency Tribal Elder 8 Munir Hussain Kurram Agency Social Worker 9 Subhan Ali Kurram Agency Small Industry 10 Mujtaba Hassan Kurram Agency Constructor 11 Muhammad Shafiq Kurram Agency Journalist 11 Syed Badshah Hussain Aurakzai Agency Coal Mines 12 Najaf Ali Aurakzai Agency Coal Mines 13 Syed Wasi Syed Aurakzai Agency Coal Mines 14 Nafi Ullah Khan Aurakzai Agency Coal Mines 15 Najmul Hassan Aurakzai Agency Coal Mines 16 Syed Ibne Ali Aurakzai Agency Coal Mines 17 Syed Raza Hussain Aurakzai Agency Coal Mines 18 Syes Muhamamd Sajdain Aurakzai Agency Business man 19 Shabi Ul Hassain Aurakzai Agency Social Activist 20 Jamal Nabi Aurakzai Agency Coal Mines 21 Mehboob Ali Aurakzai Agency Coal Mines 22 Doctor Shah FR Kohat Shai Cola Factory 23 Muqeem Shah FR Kohat Arms/Ammunation Factory 24 Behram Shah FR Kohat Arms/Ammunation Factory 25 Zahid Rehman FR Kohat Genral Store 26 Waseem Haidar FR Kohat Arms/Ammunation Factory 27 Zafeer Gul FR Kohat Arms/Ammunation Factory

v

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

28 Jalil Khan FR Kohat Arms/Ammunation Factory 29 Khana Din FR Kohat Arms/Ammunation Factory 30 Arif Saeed FR Kohat Arms Dealer 31 Fayyaz Khan FR Kohat Arms Dealer 32 Asif Afridi FR Kohat Arms/Ammunation Factory 33 Naeem Alam FR Kohat Arms/Ammunation Factory

vi

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

“FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA”

Focused Group Discussion Agenda 09 June 2010

S. # Agenda Item Time

01 Arrival and Registration 9:00 - 9:30

02 Recitation from the Holy Quran 9:30

03 Welcoming the participants 9:35

04 FGD objectives 9:40

Open Discussion:

05 The state of Trade, Commerce and Industry in FATA 9:50

06 Tea break 11: 30 Open Discussion:

Perception on Extension of Regulatory Laws to FATA- 07 Opportunities and challenges. 12:00

08 Lunch & prayer break – end of programme 1:30

Sponsored by: FATA Development Authority

vii

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Pictorial Glimpse of the event

viii

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Annexure – 3

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Focused Group Discussion Report Region - 3 30 JUNE 2010

REGION – 3

I. NORTH WAZIRISTAN II. FR BUNNU III. FR LAKKI

Community Appraisal & Motivation Programme (CAMP)

House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Contents

Executive Summary ...... ii

Objectives of the FGD ...... iii

Detail of the Event ...... iii

Key Findings ...... iii

Environment of Mistrust and Ambiguity ...... iii

Security Situation, Power Breakdowns are a Hurdle in the development of SME ...... iv

Extended laws in FATA...... iv

Recommendations ...... v

List of Participants ...... vi

Agenda ...... viii

Pictorial Glimpse of the event...... ix

i

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Executive Summary

The dated governance system of FATA is one of the major contributing factors, which has impeded the economic development of its people. The region has a peculiar system of administration, where the people are governed through their local chieftains called Maliks, through financial strings controlled by Federal Government and exercised by its official known as the ‘Political Agent. In 1901, the entire north-western frontier region of British India was placed under the rule of the Governor-General of India, who governed it through the Chief Commissioner of the Punjab Province.

The statutory regime regulating industrial activity elsewhere in Pakistan does not apply to the tribal areas (Ali, 2003). Industry is not subject to direct taxes or regulation. In this sense, at least, FATA’s industrial sector is the ultimate free-market environment. In the absence of adequate legal cover, investment is a risky business. Acquiring land is also an issue since, under the tribal system, outsiders cannot own land in the region. Any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established. Where lease agreements are in place, enforcement is only possible through a jirga. In general, all contracts and agreements are enforced under the Frontier Crimes Regulation by a jirga, and not through the judicial channels available elsewhere in Pakistan. The syste m does not provide a distinct codified framework under which business and contractual disputes can be resolved. Although a number of scheduled Pakistani banks operate in FATA (GoNWFP, 2005a), current State Bank of Pakistan restrictions prohibit these institutions from extending loans to people in the tribal areas. These factors serve as a disincentive for investment in general, and particularly for corporations and large firms. Under the circumstances, it is also difficult to employ and retain suitable workers.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labour into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.For the government, valuable tax revenue is lost. Meanwhile, the lack of reliable statistical data concerning commercial activity makes it difficult to carry out meaningful plannin

The 3rd FGD was conducted with 29 representatives of business community of Zone 03 consisted of North Waziristan , FR Lakki and FR Bannu on 30th June 2010. Mr. Khalid Mahmood, Manager Industries, FATA Development Authority and Mr. Riaz ul Haq, Manager Research and M&E, jointly moderated the program. Mr. Naveed Shinwari, assisted Mr. Mehmood in Q&A session.

ii

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports

Objectives of the FGD

 to gather the perception of key informants regarding extension of laws and regulations to FATA.

Detail of the Event

The program started by Mr. Riaz ul Haq who introduced the forum with brief objectives of the FGD, guidelines and rules that were to be followed during the discussion. Mr. Khalid Mahmood took this as an opportunity and briefed the participants on the working of FDA.

FATA DA made an economic survey through CAMP to know about the challenges and problems in business, trade and commerce and now arranged such Focus Group Discussions with an aim to share these problems participants and look for a solution. The solution lies with the local people, only they are aware of their limitations, customs and the challenges. The report based on the study will help government in designing mechanism in the subject area.

Mr. Khalid stated that Government is planning to construct an Industrial estate where it would be feasible. All the relevant buildings from electricity department to Banks etc will be in close vicinity. A proper communication plan including roads etc has been designed for the industrial state. The investors all over Pakistan will be able to invest in the industry if provided all the facilities as planned.

Mr. Khalid also told the participants about Reconstruction Opportunity Zones (ROZe) that will be established in FATA. The plan was announced by George Bush administration, according to which any product made in ROZe will be exempted from custom duty in USA. This will benefit the local industrialist as there will be a bigger margin in profit. Government role is to provide an enabling environment, mainly to facilitate and to take appropriate measures for the development of the business and for the establishment of your Industries. FDA is specially focusing on SMEs in FATA because it is a universal truth that in every economy 80% role is of small businessmen. Promotion of Small & Medium size Enterprises will no doubt become a cause for generating a lot of opportunities of employment for FATAs people.

Key Findings

The participants included a diverse group ranging from a shopkeeper to food processing industrialist. The discussion remained focused and the participants gave their views openly, without any restraint.

Environment of Mistrust and Ambiguity

Participants in general were uncertain about the situation of industrial development in FATA. Most of them were not sure if they would ever be able to have sustainable industrial development under current circumstance of law and order, security situation, communication

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FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports system, infrastructure and lack of resources. Relief was the only thing, businessmen of FATA is looking for, support by the government in improving the economic crunch through a holistic approach, in which they can have maximum benefit. The uncertainty is such that many businessmen whose business has affected are in a state of wait and see. The general perception was that the government is not serious and sincere in provision of enabling environment to the industrialist and businessmen of FATA, for the it was a facade or farce effort on behalf of the government and may take another 10 years in implementing the requisite. They asked for speedy change rather than red taped decision that would reach FATA when it would be too late.

Security Situation, Power Breakdowns are a Hurdle in the development of SME

This particular group belonged to that part of FATA which has seen worst security situation. Uncertainty and insecurity has been prevailing everywhere for the last few years and one cannot find a person who is not scared of everyday bomb blasts, suicide attacks, rocket barrages and kidnapping for ransom. The target killing, abduction, and militancy has made it hard for the local people to survive let alone to develop their means of income or have industrial revolution for that matter.

Power is also a need for large number of commercial and industrial operations. There is some encouraging coverage but low voltage and prolonged breakdowns are a serious concern, cited as one of the reasons why industrial and commercial development has remained sluggish. The business only worked for 03 hours a day due to lack of electricity, in what is left in the industries.

Extended laws in FATA

It was perceived from the discussion that FATA cannot continue to remain closed off from the majority of Pakistan. Integration in legal terms is the only solution for the future. Already, communications networks and the electronic media has reached to the remotest parts of FATA. The situation is fluid, dynamic and vibrant; people want to work and want to be like rest of the Pakistan.

The participants clearly opted change, they felt the urgent need to target development investment and strategies planning that include vigorous legal regulatory framework which can o secure the rights of individuals or communities to access and use resources. The absence of statutory mechanisms is felt in the commercial and industrial sectors, which are not subject to direct taxes or regulation, which has made the business climate uncertain, and prevented small entrepreneurs from expanding their operations and deters potential investors. Under the circumstances, it is also difficult to employ and retain skilled workers.

They understood that, an agreement must be signed between the prospective business owner and the local tribe. Similarly, outsiders cannot own land in the region and any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established. All contracts and agreements are enforced under the Frontier Crimes Regulation by a Jirga, and not through the judicial channels available elsewhere in Pakistan. This system serves as a disincentive for investment in general, and particularly for corporations and large firms. For

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FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA FGDs Reports the government, meanwhile, valuable revenue is lost through trade conducted without the payment of taxes. The fact that mainstream statutory provisions do not apply to FATA creates a climate of fear and a perception of lawlessness in the minds of outsiders.

The participants feared that extension of laws will include the other unfavorable laws which will affect their traditional structure etc. the happily opted for the favorable laws needed for industrial development , banking laws , legal cover to partnerships and those particular laws that gives that gives security to the business like insurance , registration act, collateral law, etc. They unanimously ruled out the extensions of laws other then the laws that favor the business, trade and commerce and passed a resolution for the later.

Recommendations

 It was recommended that government should strive for conducive security measures for the people of FATA.

 Small level revolving funds to be established FATADA for the SMEs.

 Regulatory framework should be placed for the industrialists in FATA.

 Chamber of Commerce to be established at agency and Tehsil levels.

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List of Participants Profession/Kind of S. # Name of Participant Agency/FR Business

1 Amin Ullah North Waziristan Agency Whole Sale Dealer

2 Imtiaz Khan North Waziristan Agency Crockry & Steel Merchant

3 M. Qadir Dawar North Waziristan Agency Travel Agency

4 Mohib Ullah North Waziristan Agency Mobile Shope Keeper

Medicine Distributer & 5 Syed Mohshin Ali Shah North Waziristan Agency Promoter

6 Ihsan Dawar North Waziristan Agency Journalist

7 Umar Daraz North Waziristan Agency Radio Journalist

8 Hazrat Ullah North Waziristan Agency General Store

9 Tariq Aziz North Waziristan Agency Wheat Dealer

10 Saraj Ullah North Waziristan Agency Tea Dealer

11 Sami Ullah Dawar North Waziristan Agency Radio, TV Journalist

12 Muhammad Ayub Khan North Waziristan Agency Enginner

Tribal Elder & Ex. Chief 13 Eng. Muhammad Zaman North Waziristan Agency Engineer WAPDA

14 Haji Laiq Shah North Waziristan Agency Malik & Businessman

15 Malik Khan Azhar North Waziristan Agency Business Man

16 Sajid Khan North Waziristan Agency Car Dealer

17 Inayat Ullah FR Bunnu Medicine Business

18 Abdus Salam FR Bunnu Cement Dealer

19 Ijaz Muhammad FR Bunnu Fertilizer Dealer

20 Ihsan Ullah Khan FR Bunnu Food Green Dealer

Owner 9-Star Pipe 21 Muhammad Ishaq Khan FR Bunnu Factory

22 Dost Muhammad FR Bunnu Madina Dall Factory

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23 Asif Iqbal FR Bunnu Madina Dall Factory

24 Inam Ullah FR Bunnu Medical Student/Business

25 Dilawar Khan FR Bunnu Medical Student/Business

26 Khalil-Ur-Rehman FR Lakki Agriculture Products

27 Barkat Ullah FR Lakki Sales Officer - State Life

28 Niamat Ullah Khan FR Lakki Private School Principle

29 Shadi Khan FR Lakki Bee Keeping

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“FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA” Focused Group Discussion Agenda

30 June 2010

S. # Agenda Item Time

01 Arrival and Registration 9:00 - 9:30

02 Recitation from the Holy Quran 9:30

03 Welcoming the participants 9:35

04 FGD objectives 9:40

Open Discussion:

05 The state of Trade, Commerce and Industry in FATA 9:50

06 Tea break 11: 30

Open Discussion:

Perception on Extension of Regulatory Laws to FATA- 07 Opportunities and challenges. 12:00

08 Lunch & prayer break – end of programme 1:30

Sponsored by: FATA Development Authority

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Pictorial Glimpse of the event

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Annexure – 4

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Focused Group Discussion Report Region - 4 02 JULY 2010

ZONE – 4

IV. SOUTH WAZIRISTAN V. FR DI KHAN VI. FR TANK

Community Appraisal & Motivation Programme (CAMP) House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Contents

Executive Summary ...... iii

Objectives of the FGD ...... iv

Detail of the Event ...... iv

Key Findings ...... iv

Lack of Interest in the Legal Framework Reforms ...... iv

Conducive Environment ...... v

Infrastructural Development ...... v

Recommendations ...... v

List of Participants ...... vi

Agenda ...... viii

Pictorial Glimpse of the event...... ix

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Executive Summary

The dated governance system of FATA is one of the major contributing factors, which has impeded the economic development of its people. The region has a peculiar system of administration, where the people are governed through their local chieftains called Maliks, through financial strings controlled by Federal Government and exercised by its official known as the ‘Political Agent. In 1901, the entire north-western frontier region of British India was placed under the rule of the Governor-General of India, who governed it through the Chief Commissioner of the Punjab Province.

The statutory regime regulating industrial activity elsewhere in Pakistan does not apply to the tribal areas (Ali, 2003). Industry is not subject to direct taxes or regulation. In this sense, at least, FATA’s industrial sector is the ultimate free-market environment. In the absence of adequate legal cover, investment is a risky business. Acquiring land is also an issue since, under the tribal system, outsiders cannot own land in the region. Any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established. Where lease agreements are in place, enforcement is only possible through a jirga. In general, all contracts and agreements are enforced under the Frontier Crimes Regulation by a jirga, and not through the judicial channels available elsewhere in Pakistan. The system does not provide a distinct codified framework under which business and contractual disputes can be resolved. Although a number of scheduled Pakistani banks operate in FATA (GoNWFP, 2005a), current State Bank of Pakistan restrictions prohibit these institutions from extending loans to people in the tribal areas. These factors serve as a disincentive for investment in general, and particularly for corporations and large firms. Under the circumstances, it is also difficult to employ and retain suitable workers.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labour into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.For the government, valuable tax revenue is lost. Meanwhile, the lack of reliable statistical data concerning commercial activity makes it difficult to carry out meaningful plannin

The 4th FGD was conducted with 29 representatives of business community of Zone 04 consisting of South Waziristan, FR DI Khan and FR Tank on 2nd of July 2010. Mr. Khalid Mahmood, Manager Industries, FATA Development Authority and Mr. Riaz ul Haq, Manager Research and M&E, jointly moderated the program. Mr. Naveed Shinwari, assisted Mr. Mahmood in Q&A session.

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Objectives of the FGD

 To gather the perception of key informants regarding extension of laws and regulations to FATA.

Details of the Event

The program started with an introduction by Mr. Riaz ul Haq who introduced the forum with brief objectives of the FGD, guidelines and rules that were to be followed during the discussion. Mr. Khalid Mahmood took this as an opportunity and briefed the participants on the working of FDA.

The participants appreciated the consultation process adopted by FATA DA and CAMP in developing consensus on the Regulatory Regime in industries, trade and business. As a tribal tradition the participants from South Waziristan, presented the “Patkay” the head dress as show of gratitude to Mr. Khalid Mahmood.

Mr. Khalid stated that the Government is planning to construct an Industrial estate where it would be feasible. All the relevant buildings from electricity department to Banks etc will be in close vicinity. A proper communication plan including roads etc has been designed for the industrial state. The investors all over Pakistan will be able to invest in the industry if provided all the facilities, as planned.

Government role is to provide an enabling environment, mainly to facilitate and to take appropriate measures for the development of the business and for the establishment of your Industries. FDA is specially focusing on SMEs in FATA because it is a universal truth that in every economy 80% role is of small businessmen. Promotion of Small & Medium size enterprises will no doubt become a cause for generating a lot of opportunities of employment for FATAs people.

Key Findings

The participants included a diverse group ranging from the Gem stone industry to dry fruit and fresh fruit sellers, from transporters to owners of nation telecommunication franchise. The participants participated in the discussion with enthusiasm and at the end gave their recommendations for the government for perusal.

Lack of Interest in the Legal Framework Reforms

It was perceived from the discussion that the representatives of the Zone IV were not forthcoming about the legal reforms or the industrial regulation. They believed that the policy frameworks take longer than required and may need another 50 years to come into practice.

According to them today as FATA is festered by military operations and economic downturns, it needs immediate support in improving service delivery. It is a matter of great concern that the people of FATA have little hope from the government in their socio

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FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports economic development. They felt that the government has to be more focused on improving the lives of the people with concrete efforts.

According to them certain laws do exist in their cultural context, and there is no need to bring more laws for the industrial development. Although, they welcomed the government’s plan in regulating the industry, trade and commerce by extending cooperation but were more interested in outright grant from FDA, they clearly indicated that regulation would be welcomed but only the favorable laws, as far as the Banking Laws and loans are concerned, not many people would like to have bank loans to set up their business as the local religious school of thought will be against it.

Conducive Environment

The other foremost need for the FATA is the return of peace; people are eager for stability, peace and tranquility, without which there is no chance of any industrial or business revolution to occur.

At the moment FR Tank, FR D.I. Khan and South Waziristan do not have a conducive environment for the external investors, neither the local business community wants the external investors to invest in business there. Furthermore, the internal investors are also reluctant in putting capital in the industry or in any business for that matter.

Infrastructural Development

Zone IV representatives were more keen for the development of infrastructure, roads, communication means etc. They reiterated that the top priority of the government should be the development of the area and any other reform should come after that.

Recommendations

 It was recommended that government should strive for security measures for the people of FATA.

 Regulatory framework should be placed for the industrialists in FATA.

 The government should give grants in aid rather than loans.

 The stock exchange should be introduced to the people.

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List of Participants S. # Name of Participant Agency/FR Profession/Kind of Business

1 Shahzada South Waziristan Agency Businessman

2 Inayat Ullah South Waziristan Agency Social Worker

3 Mazhar Ud Din South Waziristan Agency Businessman

4 Alam Gul South Waziristan Agency Printing Press

5 Hayat Ullah South Waziristan Agency Whole Seller

6 Akhtar Jan South Waziristan Agency Social Worker

7 Dr. Shah Zaman South Waziristan Agency Political Worker

8 Zalib Khan South Waziristan Agency Salt Factory

9 Khurshid Wazir South Waziristan Agency General Merchant

10 Islam Mir FR DI Khan Whole Seller

11 Salih Muhammad FR DI Khan Contractor

12 Yousaf Khan FR DI Khan General Merchant

13 Abdul Haleem Sherani FR DI Khan Social Worker

14 Salam Shah FR DI Khan Social Worker

15 Bakhtiar Shah FR DI Khan Journalist

16 Illaj Mir FR DI Khan General Merchant

17 Niamat Ullah FR DI Khan Contractor

18 Naseer Khan FR DI Khan General Merchant

19 Muasa Khan FR DI Khan Social Worker

20 Ghafoor Shah FR DI Khan Bricks Factory

21 Haji Azam Jan FR DI Khan General Merchant

22 Nabi Gul FR DI Khan Marble Factory

23 Hazrat Shah FR Tank General Merchant

24 Sanat Ullah FR Tank Whole Seller

25 Ahamd Munir FR Tank General Merchant

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FEASIBILITY STUDY OF REGULATORY REGIME FO R INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

26 Malik Jan Khan FR Tank General Merchant

27 Muhammad Tariq FR Tank Social Worker

28 Abdus Salam FR Tank Contractor

29 Dil Bar Khan FR Tank Bricks Factory

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“FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA”

Focused Group Discussion

Agenda

02 July 2010

S. # Agenda Item Time

01 Arrival and Registration 9:00 - 9:30

02 Recitation from the Holy Quran 9:30

03 Welcoming the participants 9:35

04 FGD objectives 9:40

Open Discussion:

05 The state of Trade, Commerce and Industry in FATA 9:50

06 Tea break 11: 30

Open Discussion:

Perception on Extension of Regulatory Laws to FATA- 07 Opportunities and challenges. 12:00

08 Lunch & prayer break – end of programme 1:30

Sponsored by: FATA Development Authority

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Pictorial Glimpse of the event

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Annexure – 5

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Stakeholders consultative workshop Report Region – 1 01 FEBRUARY 2011

REGION – 1

VII. BAJOUR AGENCY VIII. MOHMAND AGENCY IX. KHYBER AGENCY X. FR PESHAWAR

Community Appraisal & Motivation Programme (CAMP) House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Contents

Introduction ...... ii

Objective of the Workshop ...... iii

Main Points Discussed in the Workshop: ...... iii

Recommendations by the Participants: ...... iv

Conclusion: ...... vi

Agenda of the Workshop ...... vii

Invitation to the Participants ...... viii

List of Participants ...... ix

Pictorial Glimpse of the event...... xi

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FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Introduction

The Federally Administered Tribal Area (FATA) is strategically located between the Pakistan-Afghanistan border and the settled areas of KPK (Khyber Pakhtunkhwa). FATA, both historically and traditionally had a unique administrative and political status from the British times since 1849. However, in 1893, a demarcation was raised with Afghanistan called Durand Line. They controlled the area through a combination of effective Political Agents and tribal elders, while leaving the people with their traditions and internal independence. Pakistan inherited this system and more or less continues with it even today. Since the independence of Pakistan, FATA has not been accorded the same priority in terms of the development process being undertaken in other parts of the country.

The statutory regime regulating industrial activity elsewhere in Pakistan does not apply to the tribal areas (Ali, 2003). Industry is not subject to direct taxes or regulation. In this sense, at least, FATA’s industrial sector is the ultimate free-market environment. In the absence of adequate legal cover, investment is a risky business. Acquiring land is also an issue since, under the tribal system, outsiders cannot own land in the region. Any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established. Where lease agreements are in place, enforcement is only possible through a jirga. In general, all contracts and agreements are enforced under the Frontier Crimes Regulation by a jirga, and not through the judicial channels available elsewhere in Pakistan. The system does not provide a distinct codified framework under which business and contractual disputes can be resolved. Although a number of scheduled Pakistani banks operate in FATA (GoNWFP, 2005a), current State Bank of Pakistan restrictions prohibit these institutions from extending loans to people in the tribal areas. These factors serve as a disincentive for investment in general, and particularly for corporations and large firms. Under the circumstances, it is also difficult to employ a nd retain suitable workers.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labour into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.For the government, valuable tax revenue is lost. Meanwhile, the lack of reliable statistical data concerning commercial activity makes it difficult to carry out meaningful plannin

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Objective of the Workshop

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest of Pakistan due to its non extension, thus creating a legal void. The absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA.

Main Points Discussed in the Workshop:

There are various laws in the settled area of Pakistan regarding Business due to which the people are promoting their own businesses, homes buying cars etc and make their lives standard but unfortunately there is no existence of such laws in FATA for business promotion. e.g. Bank has two functions (1), To take money from people on interest basis and (2) to gave the same money by the Bank to people in settled areas on interest basis, this is only in settled areas or in the cities not in the FATA. The Bank only take money from the people of FATA and the same Bank does not gave this money to the people of FATA on loan because there are no laws regarding that. Following points were discussed in the detail;

 Regulatory Regimes registration with Government authorities.

 Establishing Industries, roads, agreements with Land Lords, Elders etc.

 By doing registration of Business with Government authorities provide protection to business class, these whole mechanism is called Regulatory Regimes.

 It’s an established and universal fact that business flourish through the Government support by providing Laws, subsidies but this is only available for the registered businesses and for the people of cities not for FATA.

 Example & Explanation of Bank Loan Process, i.e. Mortgaging / pledging property etc with Bank recovery guarantees and protect loans-Insurance.

 Whether private or public limited company-registered with concerned Government department-ensures Bank loans.

 To acquire legal status-registration is must.

 Example of social order controlled by Government because Government can’t run Business and the business must be controlled by the Private Peoples / authorities and groups while providing them the safe and secure ground by the governments.

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 Due to Law & Order situation the business remains limited in the Tribal Areas (FATA), however settled area laws cant be extended to FATA in its current spirit right now unless modified according to the ground realities so, registration procedure is must for business promotion in FATA.

 Secondly the large population of Tribals is IDP’s, unless they repatriate how business could be flourished?

 Loans are issued by mortgaging property however, absence of revenue record mechanism in Tribal Areas (except Kurram) are hindering loans assurance in Tribal Areas.

 Regulatory System: Those laws should be extended in modified form according to the availability of natural resources than such industries will be flourished and Natural Resources would be explored.

Recommendations by the Participants:

 FATA Development Council should be established which represent the views of the People of FATA and representation should be given to FATA’s people in this council.

 Personal interaction from FATA secretariat or FDA authorities with the people of FATA is necessary for mutual understanding / needs rather than telephonic conversation and inauguration ceremonies. “If the US president can come to the war zone ‘Afghanistan’ for his troops encouragement than why FDA authorities are denying to came FATA, which is really amazing and shaming.”

 There is extreme scarcity of Energy in FATA and the people of FATA are sinking in dark there industries and machineries are always waiting for electricity so, the energy needs are growing day by day in FATA and for this problems, urgent consideration is needed in order to provide them Jobs which depends on this small industries.

 80% of business in FATA is running through transport and no special attention is given till by the authorities or FDA so, this asset should be consider and protection should be provide to the owners of this business.

 FATA Agency Council at each Agency basis should be established which is authorized to present draft of suggestions to FATA secretariat.

 There are three kinds of taxes in settled area which are colleted by the government and FATA are subject to 11 taxes which is a huge burden on FATA’s people and already on the poor economy and infrastructure of these areas.

 Mineral law should be extended to FATA because there are huge reservoirs of minerals in FATA. The taxes on minerals are collected by Political Agent and he

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put this money into his own pocket so, a regulatory law is needed for that in order to transfer this money into national treasury rather than PA’s or Governor pocket.

 Regulatory laws must be extended to FATA but FCR is a big hurdle in the implication of such laws so, FCR should be amend and than regulatory laws.

 FATA Council should be authorized to implement this laws, cross border trade should be regularized, tax should be imposed and such taxes should be go to the government treasury instead of Political Agent.

 Mortgage laws should be extended to FATA in order to develop economic opportunity zones for the people of FATA.

 The incident of 9/11 suffers each and every thing specifically the people of FATA and their business because every internal or external upheaval inside Afghanistan has direct spillover effect not only on Federally Administered Tribal Areas but on the whole Pashtuns belt of Khyber Pakhtunkhwa so, Economic Advisory Forum should be established for them to encourage their skills regarding business and ensure their security and safety.

 There are a lot of mineral reservoirs in FATA but till these reservoirs have not been explored so, technical staff must be provided in order to explore these reservoirs for the benefit of the country and people of FATA.

 If we are saying about FCR that it is a good law than why it is a hindrance in the way of other laws i.e. the extension of regulatory laws and feasibility regimes. FCR must be abolished and we need the laws which are in the cities of Pakistan and we have the right for these laws because we are also the citizens of Pakistan and discrimination should be abolished amongst us.

 We need loan on no interest basis from banks in order to establish our industries. The electricity shortage must be solved for our industries. If government provides energy to our Mineral industries without load shedding “we promise that we can give 7 billion to government instead of Carry Lugar Aid”.

 FCR is a big hurdle in the development of FATA. Pakistani Laws must be extended to Tribal Areas. FATA Secretariat should be reform because it is a big group of thieves. Local Self Government should be established and political parties act should be extended to FATA.

 Peace is needed in FATA, when peace is restored than infrastructure must be flourished / renew and build.

 The right should be given to the people of FATA in each and every sector because they know themselves better than the other.

 Every laws regarding FATA is controversial so, it must be cleared and representation should be given to the people of FATA in the laws making body

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which is concerned to the people of FATA. Incentives from Income Tax and Customs must be given to people of FATA.

Conclusion:

FCR is a draconian law due to which the people of FATA are suffering and FCR always creating hurdles for the extension of other laws which are benefited for the people of FATA i.e. extension of business laws so, FCR should be abolished and FATA Advisory Council must be established and this council must be authorized to present a draft for new law for FATA or amend the FCR. The laws must be extended to FATA for cross border trade because of geographical proximities with the neighboring countries like Afghanistan and Iran and for the Economic enhancement of the people of FATA and ultimately for the whole country.

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Consultative Workshop – Agenda

Mr. Rustam Shah Mohmand Rtd. Chief Secretary will moderate the event

01 February 2011 - Pearl Continental Hotel, Peshawar

S. # Agenda Item Time

01 Arrival and Registration 10:00

02 Recitation from the Holy Quran 10:20

03 Welcoming the participants 10:25

Consultative Dialogue objectives

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest of 04 Pakistan due to its non extension, thus creating a legal void. The 10:30 absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA.

05. Key Findings of the survey of Industries, Service Sector and Labor 10:40 force in FATA 06. 11:00 Tea break

Open Discussion:

Perception on Extension of Regulatory Framework to FATA

Reasons for non existence/extension of Regulatory Framework in FATA 07. 11:15

Losses/disadvantages of non existence/extension of Regulatory Framework in FATA

Advantages/benefits of extension of Regulatory Framework in FATA

Laws that should be extended to FATA for business development

08 Lunch & prayer break – end of programme 1:30

Sponsored by: FATA Development Authority

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Invitation to the Participants

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List of Participants

S.# Participant Name Occupation Agency / FR

Secretary .General FATA 1 Taj Mahal Afridi Lawyer Forum Khyber Agency

2 Ibrahim Shinwari Journalist Khyber Agency

3 Haji Bazar Gul Afridi Khyber Union Khyber Agency

4 Said Ayaz Khyber Trader Union Khyber Agency

5 Javed Ahmad Business, Social Work Khyber Agency

6 Azar Khan Businessman Khyber Agency

7 M. Zaheer-ud-Din Babar A.P.A, FR, Peshawar FR, Peshawar

Malik Ikram Ullah Jan Association of Pakhtun 8 Koki Khail Schools Khyber Agency

9 Abdul Jalil Businessman Mohmand Agency

10 H. Zar Mohammad Factory Khyber Agency

11 Hamza Afridi Marbles Khyber Agency

12 Amjad Ali Businessman Mohmand Agency

13 M. Abdul Razaq Afridi Malik Khyber Agency

14 Bahadar Nawaz Malik Bajaur Agency

15 Mohammad Iqbal Malik Bajaur Agency

16 M. Zahir Shah Safi Lawyer Mohmand Agency

17 Haji Abdullah Jan Social Worker Khyber Agency

18 Said Nazir Social Worker Khyber Agency

19 Ghani Rehman Social Worker Khyber Agency

20 Luqman Afridi Social Worker FR, Peshawar

21 Amir Khan Businessman Khyber Agency

22 Khan Badshah Social Worker Bajaur Agency

ix

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

23 Khair Mohammad Khan Businessman Bajaur Agency

24 Ramzan Afridi Businessman Khyber Agency

25 Said Rehman Businessman Khyber Agency

26 Shah Mahmood Businessman Khyber Agency

27 Shafi Ullah Businessman Bajaur Agency

28 Mian Habib-ul-Haq Businessman Bajaur Agency

29 Sahibzada Bahaudin Journalist Bajaur Agency

30 Akbar Hussain Afridi Contractor FR, Peshawar

31 Usman Ghani Senior Vice President TCCI Mohmand Agency

32 Nawaz Khan Contractor Khyber Agency

33 Sheikh Jehan Zada Bee-Keeper Bajaur Agency

34 Sultan Hussain Bricks Factory FR, Peshawar

35 Asghar Ali Bricks Factory FR, Peshawar

36 Mohammad Rehman Businessman Bajaur Agency

37 Wakil Businessman Bajaur Agency

Malik Mohammad Iqrar 38 Khan Industrialist Mohmand Agency

39 Sahib Shah Businessman Mohmand Agency

40 Janjrez Khan Industrialist Mohmand Agency

41 Shams Momand Journalist Mohmand Agency

42 Mukkaram Khan Atif Journalist Mohmand Agency

43 Sher Ali Khan Industrialist Mohmand Agency

44 Media Person SAMAA News Peshawar

45 Media Person SAMAA News Peshawar

x

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Pictorial Glimpse of the event

xi

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Annexure – 6

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Stakeholders consultative workshop Report Region - 2 03 FEBRUARY 2011

REGION – 2

XI. ORAKZAI AGENCY XII. KURRAM AGENCY XIII. FR KOHAT

Community Appraisal & Motivation Programme (CAMP) House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Table of Contents

Introduction ...... i

Objective of the Workshop ...... ii

Main Points Discussed in the Workshop: ...... ii

Recommendations by the Participants: ...... iii

Conclusion: ...... iv

Agenda of the Workshop ...... v

Invitation to the Participants ...... vi

List of Participants ...... vii

Pictorial Glimpse of the event...... ix

.

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Introduction

The Federally Administered Tribal Area (FATA) is strategically located between the Pakistan-Afghanistan border and the settled areas of KPK (Khyber Pakhtunkhwa). FATA, both historically and traditionally had a unique administrative and political status from the British times since 1849. However, in 1893, a demarcation was raised with Afghanistan called Durand Line. They controlled the area through a combination of effective Political Agents and tribal elders, while leaving the people with their traditions and internal independence. Pakistan inherited this system and more or less continues with it even today. Since the independence of Pakistan, FATA has not been accorded the same priority in terms of the development process being undertaken in other parts of the country.

The statutory regime regulating industrial activity elsewhere in Pakistan does not apply to the tribal areas (Ali, 2003). Industry is not subject to direct taxes or regulation. In this sense, at least, FATA’s industrial sector is the ultimate free-market environment. In the absence of adequate legal cover, investment is a risky business. Acquiring land is also an issue since, under the tribal system, outsiders cannot own land in the region. Any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established. Where lease agreements are in place, enforcement is only possible through a jirga. In general, all contracts and agreements are enforced under the Frontier Crimes Regulation by a jirga, and not through the judicial channels available elsewhere in Pakistan. The system does not provide a distinct codified framework under which business and contractual disputes can be resolved. Although a number of scheduled Pakistani banks operate in FATA (GoNWFP, 2005a), current State Bank of Pakistan restrictions prohibit these institutions from extending loans to people in the tribal areas. These factors serve as a disincentive for investment in general, and particularly for corporations and large firms. Under the circumstances, it is also difficult to employ and retain suitable workers.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labour into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.For the government, valuable tax revenue is lost. Meanwhile, the lack of reliable statistical data concerning commercial activity makes it difficult to carry out meaningful plannin

i FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Objective of the Workshop

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest of Pakistan due to its non extension, thus creating a legal void. The absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA.

Main Points Discussed in the Workshop:

There are various laws in the settled area of Pakistan regarding business due to which the people are promoting their own businesses, homes buying cars etc and make their lives standard but unfortunately there is no existence of such laws in FATA for business promotion. e.g. Bank has two functions (1), To take money from people on interest basis and (2) to give the same money by the Bank to people in settled areas on interest basis, this is only in settled areas or in the cities not in the FATA. The Bank only take money from the people of FATA and the same Bank does not give this money to the people of FATA on loan because there are no laws regarding it.

 Regulatory Regimes registration with Government authorities.

 Establishing Industries, roads, agreements with Land Lords, Elders etc.

 By doing registration of Business with Government authorities provide protection to business class, these whole mechanism is called Regulatory Regimes.

 Its an established and universal fact that business flourish through the Government support by providing Laws, subsidies but this is only available for the registered businesses and for the people of cities not for FATA.

 Example & Explanation of Bank Loan Process, i.e. Mortgaging / pledging property etc with Bank recovery guarantees and protect loans-Insurance.

 Whether private or public limited company-registered with concerned Government department-ensures Bank loans.

 To acquire legal status-registration is must.

 Example of social order controlled by Government because Government cannot run Business and the business must be controlled by the Private Peoples / authorities and groups while providing them the safe and secure ground by the governments.

ii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

 Due to Law & Order situation the business remains limited in the Tribal Areas (FATA), however settled area laws can not be extended to FATA in its current spirit right now unless modify according to the ground realities. Therefore, registration procedure is must for business promotion in FATA.  Secondly the large population of tribal areas are IDP’s, unless they repatriate, how business could be flourished?

 Loans are issued by mortgaging property however, absence of revenue record mechanism in Tribal Areas (except Kurram) are hindering loans assurance in Tribal Areas.  Regulatory System: Those laws should be extended in modified form according to the availability of natural resources then such industries will be flourished and Natural Resources would be explored.

Recommendations by the Participants:

 People of FATA should be aware regarding business and skills so, there is a need of (1) Knowledge (2) Approach (3) and then regulatory regimes.

 There should be mine rescue system in FATA to protect the reservoirs of coal and natural resources from burning etc, a well and quick rescue system should be flourished.

 Government should build small Industrial zones in each Agency of FATA and for that purpose the authorities must buy the specific territory in these areas of FATA. After development of these Industrial zones, the government must privatize the Industries while selling these to the local people. In this regard one of the participants from FR, Kohat ‘Mr. Fahim Alam’ agreed, according to him I am willing to give my own land to FDA for Industry.

 The roads must be constructed in FATA to approach to the Natural Resources and exploration of these resources, Infrastructure is very necessary for business and regulatory regimes.

 The interaction of the FATA Secretariat officials is very necessary with the ordinary people of FATA because “every thing is sweetened by risk” and they are not ready to take the risk while making personal visit to these areas.

 The exposure and awareness programmes must be arranged for the people of FATA and their vision must be cleared about their own development.

 Rescue centre must be built in Dara Adam Khel to rescue the workers of coals and give them a proper first medical aid.

 Feasibility study is very necessary in FATA and after that study the practical steps must be taken because there are an urgent need of practical steps rather than the theoretical studies.

iii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

 Energy, Law & Order, Education, Roads and Reconstruction is very necessary and it should be on top priority.

 If we are talking about Law & Order situation that there is no Law & Order, before 9/11 there was complete peace in FATA then why business in FATA was in a deplorable condition. The answer to this is that there was no infrastructure, there were no roads, no education, no media, and the people were unskilled and there were no business opportunities for the people of FATA. The same situation is still present there right now so, why there is the urgent needs of Roads, Infrastructure, media etc.

 Regulatory Laws for business development is the need of the time in these areas but these laws should be in the spheres of the local customs, traditions and Riwaj in order to make these laws durable.

 Local Government Laws must be extended to FATA.

 There is a need to bring limitations in the powers of Political Agent, e.g. The Judicial Powers from Political Agent must be separated and he should be only the executive body in order to make the ground feasible for the business and regulatory regimes and Laws.

Conclusion:

The people of FATA need their basic needs at urgent basis for their business and economic enhancement, e.g. the construction of roads, to solve the electricity problems and through the dark shades from their faces and from their industries, skill development programmes must be launched for the people of FATA, media is the need of modern time for all aspects and the very important is that every law for the people of FATA must be made according to their Customs, Traditions and Riwajs. Because the people of FATA are very conservative in their thinking and they are tightly tied in the clutches of their Riwajs.

iv FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Consultative Workshop – Agenda

Mr. Rustam Shah Mohmand Rtd. Chief Secretary will moderate the event

03 February 2011 - Hotel Grand, University Road Peshawar

S. # Agenda Item Time

01 10:00 Arrival and Registration 02 10:30 Recitation from the Holy Quran 03 10:35 Welcoming the participants

Consultative Dialogue objectives

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, 04 employing workers and a host of related laws already in vogue in rest of 10:40 Pakistan due to its non extension, thus creating a legal void. The absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA. 05. 11:00 Tea break Open Discussion:

Perception on Extension of Regulatory Framework to FATA

Reasons for non existence/extension of Regulatory Framework in FATA

06. Losses/disadvantages of non existence/extension of Regulatory Framework in 11:15 FATA

Advantages/benefits of extension of Regulatory Framework in FATA

Laws that should be extended to FATA for business development

07 1:30 Lunch & prayer break – end of programme

Sponsored by: FATA Development Authority

v FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Invitation to the Participants

vi FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

List of Participants

S# NAME OCCUPATON AGENCY

1 Nazir Gul Medicine Orakzai Agency

2 Ameen ullah Khan Timber Orakzai Agency

3 Syed Mohd Muslim Shopkeeper Orakzai Agency

4 S.Wasi Syed Coal Minning Orakzai Agency

5 Najaf Ali Coal Minning Orakzai Agency

6 Najmul Hussain Coal Minning Orakzai Agency

7 S Ibne Ali Coal Minning Orakzai Agency

8 S Alim Jan Coal Minning Orakzai Agency

9 S. Sajid Hassan Coal Minning Orakzai Agency

10 Syed Abdul Hassan Farmer Orakzai Agency

11 S.Salam Businessman Orakzai Agency

12 Shuaib Nabi Trading Orakzai Agency

13 Syed Akbar Jan RID Banker Kurram Agency

14 Ahmad Bangash Journalism Kurram Agency

15 Abdullah Businessman Kurram Agency

16 Hidayat Hussain Engineer Kurram Agency

17 Sajid Iqbal Businessman Kurram Agency

18 Ghulam Muhammad RT. Engineer Kurram Agency

19 Fida Hussain Businessman Kurram Agency

20 Munir Bangash Civil Society Member Kurram Agency

21 Behram Shah Arms Dealer FR Kohat

22 M. Asif Afridi Job/ Wilkan Organization FR Kohat

23 Abid Shah Arms Factory FR Kohat

24 Qalandar Shah Pc Star Ammunition Factory FR Kohat

vii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

25 Doctor Shah Shahi Soda Water Factory FR Kohat

26 Naeem Alam Coal Minning FR Kohat

27 Faheem Ali Health Services Provider FR Kohat

28 Sakel Khan Arms FR Kohat

29 Arif Saeed Arms FR Kohat

30 M.Imran Coal Minning FR Kohat

31 Riazullah Arms FR Kohat

32 Wajid Khan Coal Minning FR Kohat

33 Javed Iqbal Businessman FR Kohat

viii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Pictorial Glimpse of the event

ix FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Annexure – 7

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Stakeholders consultative workshop Report Region - 3 04 FEBRUARY 2011

REGION – 3

XIV. NORTH WAZIRISTAN AGENCY XV. FR BANNU XVI. FR LAKKI

Community Appraisal & Motivation Programme (CAMP) House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Table of Contents

Introduction ...... i

Objective of the Workshop ...... ii

Main Points Discussed in the Workshop: ...... ii

Recommendations by the Participants: ...... ii

Conclusion: ...... iv

Agenda of the Workshop ...... v

Invitation to the Participants ...... vi

List of Participants ...... vii

Pictorial Glimpse of the event...... ix

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Introduction

The Federally Administered Tribal Area (FATA) is strategically located between the Pakistan-Afghanistan border and the settled areas of KPK (Khyber Pakhtunkhwa). FATA, both historically and traditionally had a unique administrative and political status from the British times since 1849. However, in 1893, a demarcation was raised with Afghanistan called Durand Line. They controlled the area through a combination of effective Political Agents and tribal elders, while leaving the people with their traditions and internal independence. Pakistan inherited this system and more or less continues with it even today. Since the independence of Pakistan, FATA has not been accorded the same priority in terms of the development process being undertaken in other parts of the country.

The statutory regime regulating industrial activity elsewhere in Pakistan does not apply to the tribal areas (Ali, 2003). Industry is not subject to direct taxes or regulation. In this sense, at least, FATA’s industrial sector is the ultimate free-market environment. In the absence of adequate legal cover, investment is a risky business. Acquiring land is also an issue since, under the tribal system, outsiders cannot own land in the region. Any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established. Where lease agreements are in place, enforcement is only possible through a jirga. In general, all contracts and agreements are enforced under the Frontier Crimes Regulation by a jirga, and not through the judicial channels available elsewhere in Pakistan. The system does not provide a distinct codified framework under which business and contractual disputes can be resolved. Although a number of scheduled Pakistani banks operate in FATA (GoNWFP, 2005a), current State Bank of Pakistan restrictions prohibit these institutions from extending loans to people in the tribal areas. These factors serve as a disincentive for investment in general, and particularly for corporations and large firms. Under the circumstances, it is also difficult to employ and retain suitable workers.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labour into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.For the government, valuable tax revenue is lost. Meanwhile, the lack of reliable statistical data concerning commercial activity makes it difficult to carry out meaningful plannin

i FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Objective of the Workshop

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest of Pakistan due to its non extension, thus creating a legal void. The absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA.

Main Points Discussed in the Workshop:

80 % businesses in FATA are small business while there are 20 % small industries, how to develop business and industries in FATA?

 Law and Order situation is worse in FATA, there is no stability but if we are talking about Law and Order, then before 9/11 FATA’s security was very stable then why there was no stable business / industries etc.

 There are two method of business development, (1) Socialization of business like the economy of USSR or the nationalization process in Pakistan in Bhutto’s regime which has been failed because government cannot run business and the business should be run and monitored by the private organizations / people. Nationalization of industries / business is a failed method.

 (2) The method of privatization is a very comprehensive and developed approach in the prevailing developed economies of the world. Government role is to provide infrastructure, communication facilities including roads, electricity etc.

 These firmly developed & implemented mechanisms motivate private investors to established and run businesses and industries.

 Businesses are carried out by two parties so, if any dispute arises between the parties then presence of a mechanism i.e. regulatory authority protects the rights of both parties.

Recommendations by the Participants:

 Property revenue mechanism established in Kurram Agency while not in other Agencies of FATA.

 Bank Act extension to FATA is very necessary in order to give loans for business to the people of FATA and to those who want to establish business / industries in FATA.

ii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

 The land of FATA is self – sufficient in natural resources therefore there is a need to explore these natural resources and to establish industries.

 If you curse someone it means you have concern with him / her.

 For development, the main actors are awareness, education and participation of local community.

 Ad-hoc Policy mechanism should be avoided and pre-draft of recommendations need to be discussed with local community.

 Education and infrastructure are the main phases of development and these should be flourished.

 The people of North Waziristan is till not found in any type of narco-business so, it means that these people are very much tilt towards fair and looking for legal business / industries.

 Skill development programme is very necessary in every field, the youth bulge must be trained.

 Incentives must be given to the people of FATA to have the rights of import and export and for that purpose the regulatory laws must be extended.

 According to one participant, the FCR is a failed law the police extension is also not applicable in FATA than how these regulatory regimes / laws should be extended to FATA in order to recover the loans?

 Answer to the above by the participant, that recovery process is very easy in FATA because of its balanced Justice system like through Jirga and local Lashkar.

 FATA is very backward and it is passes through very dark shades currently there is a need of some basic initiatives on emergency basis e.g. (1) Education sector must be developed there is need to build one modern school in each Tehsil and at least one university for each Agency. (2) Security situation must be restored because with out stable security situation business cant be developed and flourished. (3) The requirements of globalization must be must be given to the people of FATA e.g. to launch the networking of electronic media. (4) The informal laws like the previous Jirga system must be re- encouraged. (5) Political parties act must be extended to FATA. (5) Small industries must be build in FATA and for that we need proper electricity.

 The vacancies in FATA secretariat or in FATA Development Authority which are serving by other people should be handed over to the original people of FATA.

 Small industrial state must be built on each tehsil to provide the job opportunities and to engage the people of FATA in their own development.

iii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Buying of territory in FATA for industry is very easy rather than the settled areas.

 Because of security situation all the Banks returned back so, peace is necessary for that regulatory regimes.

 Those industries which have been sallied to other areas must be returned back to FATA in order to provide employment opportunities to the people of FATA.

 To amend the FCR is very necessary because it is a big hurdle in the way of Commerce and Industries.

 Practical steps must be taken rather than theoretical debate. If true practical steps have been taken than there is no need of our skill development because we are skilled, we are developed and we are better businessmen.

Conclusion:

The people of FATA are looking for practical steps for their development rather than the theoretical debates. They are of the view that we need a real and practical Economic Opportunities Zones rather than Utopian visions. Bank act extension is the need of the time to provide loans on low interest rates to the people for their business and industrial developments. The FCR should be amended to make ground feasible for regulatory regimes for Commerce, Trade & Industries.

iv FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Consultative Workshop – Agenda

Mr. Rustam Shah Mohmand Rtd. Chief Secretary will moderate the event

04 February 2011 - Hotel Grand, University Road Peshawar

S. # Agenda Item Time

01 Arrival and Registration 10:00 02 Recitation from the Holy Quran 10:30 03 Welcoming the participants 10:35

Consultative Dialogue objectives

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest of Pakistan due to its non extension, thus creating a legal void. The 04 10:40 absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA.

05. Tea break 11:00

Open Discussion:

Perception on Extension of Regulatory Framework to FATA

Reasons for non existence/extension of Regulatory Framework in FATA 06. 11:15 Losses/disadvantages of non existence/extension of Regulatory Framework in FATA

Advantages/benefits of extension of Regulatory Framework in FATA

Laws that should be extended to FATA for business development

07 Lunch & prayer break – end of programme 1:30

Sponsored by: FATA Development Authority

v FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Invitation to the Participants

vi FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

List of Participants

S# NAME OCCUPATION AGENCY

1 Umar Saleem President Abaseen Welfare North Waziristan Agency

2 Zabihullah Social Worker North Waziristan Agency

3 Murtaza Khan Student North Waziristan Agency

4 M.Ayub Engineer North Waziristan Agency

5 Laiq Shah Malik North Waziristan Agency

6 Eng. Zaman Khan Rtd. Chief Engr. /Social Worker North Waziristan Agency

7 M.Sadiq Health Dealer North Waziristan Agency

8 Aslam Khan Business North Waziristan Agency

9 Ihsan Dawar Journalist North Waziristan Agency

10 Qismat Khan Business North Waziristan Agency

Member Fatta Reform 11 M.Khan Marjan Community North Waziristan Agency

12 Bakht Jehan Khan Malik North Waziristan Agency

13 Samiullah Journalist North Waziristan Agency

14 Aziz Dawar Engineer North Waziristan Agency

15 Inamullah MT.LRH FR Bannu

16 Gul Nasib Business FR Bannu

17 Taj Mohammad Business FR Bannu

18 Allah Khan Business FR Bannu

19 Liaqat Ali Business FR Bannu

20 Taj Mohammad Business FR Bannu

21 Umar Hayat Jirga Member FR Bannu

22 Naqibullah Social Worker FR Bannu

23 Gul Andaz Political and Social FR Bannu

vii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

24 Malik Khair Mohd Khan Social Worker FR Bannu

25 Mohayyuddin Property FR Bannu

26 M.Ilyas Business FR Bannu

27 Niamatullah Business FR Bannu

28 Malik Mohd Janan Farmer FR Bannu

29 Ahmad Munir Social Worker FR Lakki

30 Noor Mohd Bettani Professor FR Lakki

31 Kamran Khan Social Worker FR Lakki

32 Amir Muhammad Subject Specialist FR Lakki

33 Humayoun Social Worker FR Lakki

34 Matlaee Social Worker FR Lakki

viii FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Pictorial Glimpse of the event

ix FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Annexure – 8

Feasibility Study of Regulatory Regime for Industry, Commerce & Trade in FATA

Stakeholders consultative workshop Report Region - 4 08 FEBRUARY 2011

REGION – 4

XVII. SOUTH WAZIRISTAN AGENCY XVIII. FR TANK XIX. FR D.I. KHAN

Community Appraisal & Motivation Programme (CAMP) House # 25, Street 63, F 10/3, Islamabad, Pakistan Tel: +92-51- 2297 647 Fax:+92-51- 2297 648 Website: www.camp.org.pk www.understandingfata.org

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Table of Contents

Introduction ...... i

Objective of the Workshop ...... ii

Main Points Discussed in the Workshop: ...... ii

Recommendations by the Participants: ...... iii

Conclusion: ...... iv

Agenda of the Workshop ...... v

Invitation to the Participants ...... vi

List of Participants ...... vii

Pictorial Glimpse of the event...... viii

FEASIBILITY STUDY OF REGULATORY REGIME FOR INDUSTRY, COMMERCE & TRADE IN FATA SCW Reports

Introduction

The Federally Administered Tribal Area (FATA) is strategically located between the Pakistan-Afghanistan border and the settled areas of KPK (Khyber Pakhtunkhwa). FATA, both historically and traditionally had a unique administrative and political status from the British times since 1849. However, in 1893, a demarcation was raised with Afghanistan called Durand Line. They controlled the area through a combination of effective Political Agents and tribal elders, while leaving the people with their traditions and internal independence. Pakistan inherited this system and more or less continues with it even today. Since the independence of Pakistan, FATA has not been accorded the same priority in terms of the development process being undertaken in other parts of the country.

The statutory regime regulating industrial activity elsewhere in Pakistan does not apply to the tribal areas (Ali, 2003). Industry is not subject to direct taxes or regulation. In this sense, at least, FATA’s industrial sector is the ultimate free-market environment. In the absence of adequate legal cover, investment is a risky business. Acquiring land is also an issue since, under the tribal system, outsiders cannot own land in the region. Any industry that is set up in FATA requires some form of contract with the tribe on whose land it is established. Where lease agreements are in place, enforcement is only possible through a jirga. In general, all contracts and agreements are enforced under the Frontier Crimes Regulation by a jirga, and not through the judicial channels available elsewhere in Pakistan. The system does not provide a distinct codified framework under which business and contractual disputes can be resolved. Although a number of scheduled Pakistani banks operate in FATA (GoNWFP, 2005a), current State Bank of Pakistan restrictions prohibit these institutions from extending loans to people in the tribal areas. These factors serve as a disincentive for investment in general, and particularly for corporations and large firms. Under the circumstances, it is also difficult to employ and retain suitable workers.

Opportunities in commerce and trade are hampered by many factors. The absence of a robust legal framework to regulate financial services and commercial transactions makes the business climate uncertain, prevents small entrepreneurs from expanding their operations and deters new players from entering the sector. Educated professionals and skilled workers are in short supply, and bringing labour into the tribal areas is not a viable option. The security situation adds to the general level of uncertainty, which is exacerbated when conflict erupts between tribes or clans. Businesses must also contend with bad roads, disruptions in power supply, inadequate storage facilities, and a host of similar problems arising from poorly developed infrastructure and insufficient auxiliary services.For the government, valuable tax revenue is lost. Meanwhile, the lack of reliable statistical data concerning commercial activity makes it difficult to carry out meaningful plannin

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Objective of the Workshop

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest of Pakistan due to its non extension, thus creating a legal void. The absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA.

Main Points Discussed in the Workshop:

Regulatory regimes and laws regarding business is very necessary in order to flourish business e.g. there are a large number of regulatory laws in the developed countries like USA.

There are various laws in the settled area of Pakistan regarding Business due to which the people are promoting their own businesses, homes buying cars etc and make their lives standard but unfortunately there is no existence of such laws in FATA for business promotion. e.g. Bank has two functions (1), To take money from people on interest basis and (2) to gave the same money by the Bank to people in settled areas on interest basis, this is only in settled areas or in the cities not in the FATA. The Bank only take money from the people of FATA and the same Bank does not gave this money to the people of FATA on loan because there is no laws regarding that.

 Establishing Industries, roads, agreements with Land Lords, Elders etc.  By doing registration of Business with Government authorities provide protection to business class, these whole mechanism is called Regulatory Regimes.  It’s an established and universal fact that business flourish through the Government support by providing Laws, subsidies but this is only available for the registered businesses and for the people of cities not for FATA.  Loans are issued by mortgaging property however, absence of revenue record mechanism in Tribal Areas (except Kurram) are hindering loans assurance in Tribal Areas.  Regulatory System: Those laws should be extended in modified form according to the availability of natural resources then such industries will be flourished and Natural Resources would be explored.  Due to Law & Order situation the business remains limited in the Tribal Areas (FATA), however settled area laws cant be extended to FATA in its current spirit right now unless modified according to the ground realities so, registration procedure is must for business promotion in FATA.

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Recommendations by the Participants:

 Any law or regulatory regimes must be according to the nature, customs and traditions of the people of that area.  Awareness must be given to the people of that area and their skills must be developed regarding business and the resources must be given to the people for business establishment.  Visa facilities must be given to the people of FATA for abroad and they should be trained regarding import and export.  If any person having vague idea of specific business he / she must be cleared about their feasibility and that should not be confined to one sector instead multi – sectors.  Establishing factories by outsiders (from Punjab) but they need security, Law & Order stability in FATA so, Law & Order must be stored and then Regulatory Regimes.  There is no assurance of investment protection in FATA through law so, FCR must be amended in order to extend regulatory laws for business.  The regulatory laws must be made for these people according to the nature of terrain of these area and people.  There is a need to realize that for business in FATA – special laws should be made instead of general laws of business in settled areas, e.g. special provisions in FCR is needed. Mortgage of property for bank loans through surety of P.A & A.P.A due to lack of revenue record.  Due to security education opportunities are limited, education sector must be improved and at least one university in FATA and one college for each tehsil in each Agency of FATA is needed.  For business flourishing in FATA free loans with out interest must be given through Banks. Development of communication, infrastructure e.g. roads and cold storage establishment for vegetables and fruits storage system must be established.  There is a need of trust building between government institutions and common tribals, property mortgage for bank loans via P.A & A.P.A, need of reform in FCR like the Article 40 must be abolished.  There are 32 markets of vegetable and fruits in South Waziristan Agency, proper communication like roads and infrastructure for these markets are needed because about 200 trucks are daily dispatched for outside from South Waziristan Agency. These markets are the centre of business activities for Pakistan, Afghanistan and Iran.  One of the participants from FR, D.I. Khan again stressed on infrastructure, communication, electricity and education.  Small industrial states must be built in some areas of FR, D.I. Khan which is very near to the settled areas and to the main Highway of Karachi.

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 There is a need of small industries and Dams in FR, Tank so, the authorities must be noted these needs under their kind considerations.  There is a need to constitute a survey team and provide facilitations in business visits across the countries must be given to Tribals. Conclusion:

Any law or regulatory regimes must be according to the nature, customs and traditions of the people of FATA. For business flourishing in FATA free loans with out interest must be given through Banks in order to establish the business for themselves and to improve their living standard. Development of communication, infrastructure e.g. roads and cold storage system for fruits and vegetables must be established. There is no assurance of investment protection in FATA through law so; FCR must be amended in order to extend regulatory laws for business.

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Consultative Workshop – Agenda

Mr. Rustam Shah Mohmand Rtd. Chief Secretary will moderate the event

08 February 2011 - Hotel Grand, University Road Peshawar

S. # Agenda Item Time

01 Arrival and Registration 10:00 02 Recitation from the Holy Quran 10:30 03 Welcoming the participants 10:35

Consultative Dialogue objectives

As FATA currently have no primary laws relating to starting business, property rights, contracts, getting credit, collateral, mortgage, insurance, employing workers and a host of related laws already in vogue in rest of Pakistan due to its non extension, thus creating a legal void. The 04 10:40 absence of legal cover not only makes investment highly risky but serves as a disincentive in general and particularly for large firms. Therefore this consultative workshop aims to discuss & propose a mechanism for placement/extension of these Laws & Regulations or alternatively propose statutory amendments in the existing legal & administrative set up in the FATA.

05. Tea break 11:00

Open Discussion:

Perception on Extension of Regulatory Framework to FATA

Reasons for non existence/extension of Regulatory Framework in FATA 06. 11:15 Losses/disadvantages of non existence/extension of Regulatory Framework in FATA

Advantages/benefits of extension of Regulatory Framework in FATA

Laws that should be extended to FATA for business development

07 Lunch & prayer break – end of programme 1:30

Sponsored by: FATA Development Authority

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Invitation to the Participants

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List of Participants

S# Name Occupation Agency

1 Dilawar Khan Property Dealer South Waziristan Agency

2 Bahadur Zaman General Share South Waziristan Agency

3 Malik Khan Fruit Vegetable Commission Agent South Waziristan Agency

4 Taj Muhammad Hotel Manager South Waziristan Agency

5 Irfanullah General Dore South Waziristan Agency

6 Jildal Khan Wazir Transporter South Waziristan Agency

7 Akhir Jan Shopkeeper FR Tank

Monsa Jan 8 Mohammad Transporter South Waziristan Agency

9 Salam Khan Fruit Dealer South Waziristan Agency

10 Haji Azam Jan Tanber FR Dera Ismail Khan

11 Malik Baghdad Import and Export FR Dera Ismail Khan

12 Salam Shah Diesel Agency FR Dera Ismail Khan

13 M. Musa Khan Food Agent FR Dera Ismail Khan

14 Abdul Saleh TAKERAR FR Dera Ismail Khan

15 Gul Akbar Sociak Worker FR Tank

16 Gul Janan Businessman FR Tank

17 Haji Jan Transporter FR Tank

18 Naki Gul Communicator FR Tank

19 Abdullah Businessman FR Tank

20 Inayatullah Cement Dealer FR Tank

21 Saleh Muhammad Business of Wood FR Dera Ismail Khan

22 Yousaf Khan Business of Shoes FR Tank 23 Niaz Mohammad Medical Store South Waziristan Agency

24 M. Noor Fruit Agent South Waziristan Agency

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Pictorial Glimpse of the event

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