ROADto PROSPERITY

PAKISTAN POLITICAL MAP

CHINA

AFGHANISTAN

INDIA

IRAN

SIR GREEK AT A GLANCE Pakistan is located in the South Asia, a recognized geographical region of southwestern Asia, and is situated in both the northern and eastern hemispheres. Thus, it is a gateway to the regional market with a large population, wide and diverse resources and untapped potential for trade.

Pakistan: basic facts Major Import & Export

Official name Islamic Republic of Pakistan Import Export

Capital Islamabad Steel Leather

Area (sq. km) 796,095 sq. km Automobile Fruits

Languages Urdu & English (official) Industrial Construction equipment material Government form Parliament Chemical Handicrafts Sea ports , Bin Qasim & Gwadar Rice Currency Pakistan Rupee (PKR)

Demographics

According to the Pakistan’s latest census, the total population is estimated to be 207 million, which is growing at a rate of 2.4 per annum.

Pakistan has a population with youth majority where the median age is 23.8 years with a 64:36 split between rural and urban residents.

03 PAKISTAN AT A GLANCE ECONOMIC SNAPSHOT

Inflation (Year-on-Year)

14.6% 12.7% 12.6% 12.4% 11.4% 11.0% 10.5% 10.2% 8.4% 8.5% 8.2% GDP 11% $ ~264bn Average CPI GDP per capita – USD1,355 p.a.

Jul-19Aug-19Sep-19Oct-19Nov-19Dec-19Jan-20Feb-20Mar-20Apr-20May-20 (July-May) FY20

Trade deficit Current account deficit Policy rate

July-April FY19 July-April FY19 The State Bank of USD USD Pakistan (SBP), has further decreased ~27.2bn ~11.45 bn the policy rate by 100bps since April July-April FY20 July-April FY20 to 8.00% effective 20th May 2020. USD USD ~19.1 bn ~3.34 bn 8.00%

Remittances Foreign Exchange Reserves May 2020 18.7 18.9 July-April FY19 17.9 18.4 USD 17.4 17.0 16.9 USD 15.7 15.6 16.0 14.9 15.0 14.9 15.1 15.2 15.4 ~16.9 bn ~17.8 bn 14.5 With SBP July-April FY20 USD USD Jul-19 Apr-19 Oct-19 Apr-20 Jan-20 Jan-19 Jun-19 Mar-19 Mar-20 Feb-19 Feb-20 Nov-19 Dec-19 Aug-19 Sep-19 May-19 ~18.8 bn May-20 ~10.4 bn

ECONOMIC SNAPSHOT 04 SOCIAL INDICATORS

Population 66 years 212 Million Life Expectancy

Urban Rural 64% 36%

PKR 14,000 to Literacy rate 15,000 per month (%age of adult population) (Minimum wage rate 24.3% 60% Current poverty rate

05 SOCIAL INDICATORS Sectoral Growth 14 12 10 8 6 4 % Growth Rate % Growth 2 0 2015-16 2016-17 2017-18 2018-19 2019-20 Agriculture Sector Industrial Sector Services Sector

GDP Composition in 2019-20 Agriculture Sector 19.31% Agriculture Sector Industrial Sector Services Sector Services Sector Industrial 61.40% Sector 19.29%

Source: Survey of Pakistan, Pakistan Bureau of Statistics

ECONOMIC OUTLOOK 06 EASE OF DOING BUSINESS Pakistan ranked among the top 20 global economic reformers. Pakistan has improved 28 ranks, from 136 to 108.

The World Bank has acknowledged Pakistan amongst top 10 economies that improved the most on the ease of doing business after implementing regulatory reforms.

Snapshot of Key Reforms taken by Pakistan

Starting a Business Trade across border 1 From 130 to 72 4 From 142 to 111 58 points 31 points

Getting electricity Construction permits 2 From 167 to 123 5 From 166 to 112 44 points 54 points

Registering property Paying taxes 3 From 161 to 151 6 From 173 to 161 10 points 12 points

100

77.90: China (Rank 31)

71.00: India (Rank 63) Ease of doing business index: Pakistan’s DB score for 2020 61.00: Pakistan (Rank 108) increased to 61.00 compared to

45.00: Bangladesh (Rank 168) 55.31 for 2019.

0

Source: Survey of Pakistan, Board Of Investment (BOI) and World Bank

07 EASE OF DOING BUSINESS SPECIAL ECONOMIC ZONES Special Economic Zone (SEZ) is a specific area of the land used to promote industrial growth in a country by providing special exemptions and tax incentives as compare to general economic policies in a country. According to World Bank’s 2008 annual report, "by some estimates, there are approximately 3,000 zones in 135 countries today, accounting for over 68 million direct jobs and over $500 billion of direct trade-related value added within zones."

Keeping in view the great success of SEZs around the globe, the Government of Pakistan passed Special Economic Zone (SEZ) Act in 2012. It was promulgated for attracting the investments, to revive and diversify the manufacturing and exports. SEZs will enhance overall economic connectivity, integration and competitiveness, as well as investments, exports and productivity, which are keys for economic growth, job creation, poverty alleviation and socio-economic development in the region.

Currently Pakistan has 9 Priority SEZs (Proposed):

1. Dhabeji, Thatta 2. Rashakai Economic Zone 3. Port Qasim, Karachi 4. ICT Model Industrial Zone 5. Allama Iqbal Industrial City 6. Moqpondass SEZ, GB 7. Mirpur SEZ 8. Bostan Industrial Zone 9. Momand Marble City

SPECIAL ECONOMIC ZONES 08 DHABEJI SEZ - PROJECT BACKGROUND The Government of has allotted 1530 acres of land to be developed as Dhabeji Special Economic Zone (DSEZ) in Thatta, a 30 YEARS 120-19 ACRES Priority Project under China-Pakistan Economic

382-05 ACRES Corridor (CPEC). 256-09 ACRES 53-21 41-33 ACRES ACRES The project will facilitate 32-096 ACRES potential investors of China, Japan and other countries to establish new enterprises or transfer

their facilities to Dhabeji GOTH AREA SEZ in Pakistan. 207.7 ACRES

DSEZ DSEZ will offer state of the 939-11 ACRES art infrastructure, utilities

NTDC GRID STATION and other amenities at the 7.0 ACRES doorsteps of the enterprizes.

DSEZ DSEZ will provide a 558-20 ACRES

gateway to Central Asia, KOLI GOTH FUTURE South Asia, Middle East EXTENSION OF DSEZ RESERVED FOR DHABEJI SEZ (FUTURE) 163-00 ACRES and Africa. 363-20 ACRES

09 DHABEJI SEZ - PROJECT BACKGROUND IDEAL LOCATION FOR AN ECONOMIC ZONE Project Land

1,530 acres Flat, non-mountainous, Balanced chemistry.

Location & Connectivity

Karachi - 50 km National Highway - 0.5 km Karachi-Hyderabad M9 - 35 km Port Qasim - 22 km - A direct Dhabeji SEZ access road connecting Port Qasim Allotted to Dhabeji Zone being developed by Land Parcel GoS, to be completed by 2022. Landhi Industrial Area - 20 km Hyderabad - 140 km Thatta - 40 km Gwadar - 700 km

Commercial Hub Proximity

Access to: Karachi - 20 million people | Hyderabad - 7 million | Thatta - 3 million

Strategic Industry Clusters Foundries – Steel | Building Material | Petrochemical Automotive & Allied | Light Engineering | Textile & Garments FMCGs Logistics | Warehousing

IDEAL LOCATION FOR AN ECONOMIC ZONE 10 INCENTIVES FOR DEVELOPERS One time exemption from all custom duties and taxes for all capital goods imported into Pakistan for the establishment of an SEZ. Exemption from all taxes on income accruable in relation to the development and operation of the SEZ for a period of five (5) years starting from the date of signing of the Development Agreement.

INCENTIVES FOR ZONE ENTERPRISES One time exemption from custom duties and taxes on imports of capital goods into the SEZ for installation. Zone enterprises, shall be exempted from income tax for the next ten years

ROADS & CONNECTIVITY A direct access road (8km) connecting Port Qasim to Dhabeji Zone is being developed by GoS. A dedicated cargo deck connecting the zone with ML-1 from Dhabeji Junction. A Jetty to connect Port Qasim alongside Dhabeji zone from creek side is envisaged to facilitate export oriented industries.

11 INCENTIVES FOR DEVELOPERS UTILITIES It shall be the obligation of SEZMC to provide gas, electricity and water at the zero point of the project site. The Developer shall also have a right to procure gas and electricity through its private arrangements.

The federal government has already approved funds of ~ PKR 4.3 billion to construct a dedicated grid for the SEZ which will provide up to 250 MWs of power at zero point of the project, to be completed by 2023.

The federal government has approved funds of ~ PKR 429 million for SSGC to supply up to 15 MMCFD at doorstep of the project, to be completed by Dec 2021. SSGC

c Up to 10 MGD water supply connection shall be arranged by GoS through Karachi Water & Sewerage Board (KW&SB).

12 UTILITIES TRANSACTION STRUCTURE As per Sindh Public Procurement Rule no. 15(2)(a) the procurement GoS process for Developers' will be Sales launch of (Land) Induatrial and conducted through International commercial plots Competitive Bidding, Single stage Transfer of Land PPP agreement – two envelope procedure. to SPV The Developer(s) will be required to Equity - Project design, construct, finance, develop, Private sector Company operate and maintain the Project on Developer (PC) build, own, operate and transfer basis. Developer(s) shall be responsible for inter alia procuring financial and commercial arrangements for the Customer Project design, construction, operations and advances Escrow maintenance work. (Plot sales) Account Dhabeji Industrial Zone has been proposed to be constructed in 2 phases comprising of 750 acres for Project Phase I and 780 acres for Phase II. Contractor Total Concession term for the Project is 20 years of which 5 years are for construction of the zone and Sub - remaining 15 years are for the O&M. Contractor (s) Project/SPV will be transferred at a nominal cost at the end of concession term through a buy-back option.

13 TRANSACTION STRUCTURE PROJECT IMPLEMENTATION STRATEGY The project is structured on revenue model. The Developer will be entitled to and shall be responsible to collect revenues through sub-leasing of the plots to zone enterprises in accordance with the PPP Agreement. Developer will be required to share a percentage of their revenue during the construction phase of the project and from sale (upfront lease rent) proceeds. The minimum PV of this revenue share shall not be less than the base price of PKR 1.725 Billion. The Project shall be financed by a combination of customer advances, Developer’s finances.

FINANCIAL BID Bidder who quotes the highest present value (“PV”) of revenue share using a fixed percentage share of revenue for each phase will be considered as the Preferred Bidder. This PV shall be computed at a discount rate of 10% over a period of 7 years (phase 1: 3 years plus phase 2: 4 years) on the revenue arising from sales / sub-lease of industrial and commercial plots. The minimum PV amount of any Bidder shall be above PKR 1.725 Billion. The bidder is required to share at least PKR 500 Million of revenue in Phase 1 in PV terms.

PROJECT IMPLEMENTATION STRATEGY 14 DEVELOPMENT TIMELINES

Start of construction COD O&M

Commercial Phase II – Completion Operations date 24 months from Phase I – Completion the Phase II Commencement Date 30 Months from the Commercial Close & Commencement Date Start of CP period

SEZ Status Land transfer 4 Utility connections 3 2 1

15 DEVELOPMENT TIMELINES CONNECTIVITY JAMSHORO KARACHI

SUPER Developments HIGHWAY DCK NORTH BAHRIA M-9 TOWN DCK SOUTH EDUCATION CITY

LINK ROAD 18 Km KINJHER JIAP

MDA N-5 HADERO 30 Km to JINNAH HALEJI INTERNATIONAL AIRPORT

NATIONAL HIGHWAY- N5 THATTA CONCEPTUAL MASTER PLAN DHABEJI SEZ

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NTDC GRID STATION 7.0 ACRES

Medium Industries

AREA No. of Area Area Type of Industry Percentage Land-Use Percentage Plots (Acres) (Acres) Power Plot 1 42.53 3.96%

Indus trial 1072.25 70.1% Heavy Industry 130 457.75 42.7% Amenities, Medium Industry 145 225.68 21.0% Infrastructure, and Light Industry 211 232.11 21.64% residential/ labor 457.75 29.9% colonies Warehouse 82 114.66 10.7% Total 569 1072.25 100% Total 1530 100%

PUBLIC PRIVATE PARTNERSHIP (PPP) IN SINDH PPP Unit Sindh global standing & Completed Projects & Projects in Pipeline Accomplishments The Intelligence The Economist Magazine’s Intelli- Economist Unit gence Unit’s Report. “Introscope 2018”, PPP Unit Sindh was ranked as Overall Scores Asia Infrascope 2018 6th Best Performer in Asia. Rank Score/100 The rating only considers countries. 1 Thailand 83 However, owing to exceptional 2 Philippines 81 performance Sindh PPP Units has 3 PRC 80 have been evaluated separately. 4 India 77 5 Gujarat State 75 Accomplishments 6 Sindh Province 67 =7 Banglades 66 1. Hyderabad Mirpurkhas =7 Vier Nam 66 dual carriageway (HMDC) =9 Indonesia 61 PKR 6.8 billion =9 Kyrgyz Republic 61 =9 Pakistan 61 2. Jhirk Mullah Katiyar 12 Kazakhstan 58 road & bridge (JMK) 13 Mongolia 54 PKR 4.5 billion 14 Georgia 48 =15 Armenia 45 =15 Sir Lanka 45 3. Karachi Thatta dual 17 Timor-Leste 44 carriageway (KTDC) 18 Tajikistan 41 PKR 8.8 billion 19 Papua New Guinea 28

18 PUBLIC PRIVATE PARTNERSHIP (PPP) IN SINDH ENABLING ENVIRONMENT FOR PPPs IN SINDH

Commanding PPP Policy 1st PPP Law In Pakistan, Board, led by Chief Minister enacted in 2008 with assistance of ADB Seasoned professionals staffed in PPP Unit (Expers of Dedicated part in SPP Rules Project Finance, Law, Contract for PPP projects Management, Technical) PPP Nodes in line agencies

Regulatory Institutional Framework Capacity

Public Streamlined Financial Administrative Management Procedures

Dedicated funds for PPP Independent monitoring of Projects funding (VGF, PDF) performance and payment Issued Guidelines For VGF certificateion and PDF for streamlined flowe Payment through escrow A new company (PSF) has account been formed with assistance of No involvement of public ADB to finance potential & sector in performance current PPP initiatives payments

ENABLING ENVIRONMENT FOR PPPs IN SINDH 19 ADVERTISMENTS

20 ADVERTISMENTS www.sezmc.gos.pk [email protected] +92-21-99225126-27 +923407202795 Government ofSindh SEZ ManagementCompany, China PakistanEconomicCorridor A PriorityProjectunder Ea ConsultingPvtLtd #RoadtoProsperity #SindhIsOpenforBusiness #DhabejiSindhIsOpenforBusiness #Dsez

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