Pakistan's economic growth has lagged behind most of its South Asian neighbors. Still, the country's recent geo-political developments may change this outlook. Gwadar, Pakistan's largest port has just become the center of an industrial zone and home to an international airport that is set to provide an unprecedented opportunity for business growth and investment in the country. This blog post will tell you everything you need to know about Gwadar Free Zone so you can start investing immediately!
Gawadar Port And Gwadar Free Zone
Gwadar port is situated on the Arabian Sea coast, just outside one of the leading oil shipping lanes, i.e., the straits of Hormuz. The Gwadar Port is crucial to China's Belt Road Strategy. To maximize the potential of this Port, Pakistan and China have created a Gwadar Free Zone in addition to the deep-sea port. The 2,281-acre Gwadar Free Zone is situated close to the port. It has air and transportation connections to all of the main cities of Pakistan. In addition to boosting the nation's exports, creating this free economic zone will facilitate relations with the leading regional powers.
This zone is divided into two phases
Gwadar Free Zone: Phase I
Construction on the first phase of the Gwadar Free Zone began in 2015, and it became operational in 2018. A total of 47 businesses have been authorized in the free zone for development under phase 1. This phase was constructed on 60 acres of land to create business centers, refrigerated space, storage areas, and fishery processing centers. Additionally, 12 factories in all have been built during this period. Six have already been erected, and the remaining six are presently being built.
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Gwadar Free Zone: Phase II
Imran Khan, a former prime minister, inaugurated this phase in 2021, extending over 2,221 acres of land. Phase 2 development is currently underway and will end within the next year or two. This phase's development projects will concentrate on the manufacturing, trading, and service sectors. In addition, a $3 billion direct investment is planned. It suggests there will be about 30,000 open positions in the following years.
Goal Of The Gwadar Port Free Zone
The purpose behind constructing the Gwadar Free Zone is to promote international markets by luring new enterprises in the service, essential trade, transportation, industrial, and cross-container shipping sectors. As a result, it was created per the specific requirements of organizations in the production, service, and commerce sectors.
The Pakistani government also wanted to have a big part in the trade in the territory. It chose to establish a free zone with China for this reason. The CPEC authorities have given control of the free zone to the China Overseas Ports Holding Company (COPHC) to stimulate commercial activity. These will have a significant impact on the nation's economy and aid in creating jobs for locals.
Benefits Of Gwadar Free Zone
The Gwadar Free Zone will offer a unique opportunity for businesses to get a foothold in Pakistan.
- With its strategic location and infrastructure development, the Gwadar Free Zone is poised to become a central regional and international trade hub.
- Businesses in the Gwadar Free Zone will enjoy preferential treatment in terms of taxes and duties. Additionally, they will avail of several other incentives designed to increase local economic activity.
- In addition, free zone investors are exempt from customs duty on imports used for manufacturing processes or re-exports from the free zone.
- Investors may import materials into the free zone without paying any customs duty if they are not locally available and necessary for production because Gwadar has been designated a tax-free area by Pakistan.
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Business Growth With Gwadar Free Zone
Gwadar Free Zone offers ample opportunities for businesses to grow and prosper. The benefits of setting up shop in Gwadar include tax exemptions and easy access to markets in Central Asia, the Middle East, and China.
In addition, businesses in Gwadar will be able to take advantage of the deep- international airport, which is currently under construction. Gwadar offers excellent opportunities to invest. Due to its deep seaport and closeness to vital shipping lanes, the Gwadar Free Zone will play a significant role in global commerce.
Incentives For Foreign Investors
The Pakistani government has established many attractions for foreign investors to draw them and boost business activity in the region. According to Government:
- Foreign investors will own 100% of the company
- Plots will be leased for 99 years.
- Well-developed modest industrial buildings and factories
- simple authorization process
- integrated security measures of the finest quality
- convenience in the immigration rules
- complete tax relief for both building and maintenance
- Tax benefits for investors will last 2.23 years
Additionally, the Gwadar Port is primed for growth and development, making it an ideal location for businesses in various industries.
Companies That May Be Established In The Free Zone
A list released by COPHC includes companies that may be established in the free zone.
- Trans-shipment
- exports and imports
- limited end-assembly
- Stuffing & de-stuffing
- international transportation, distribution, and buying
- Bonded storage
- yards for containers
- Value-added exports
- environmental, temperature-controlled, and chilled storage spaces
- Adding value to imports
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Method Of Setting Up A New Company In Free Zone:
For investors, COPHC has made the reservation relatively straightforward. To start a new business in the free zone, you must follow the guidelines listed below.
- Investors must pay processing fees and provide the Gwadar Free Zone Corporation (GFCZ) with the necessary documentation.
- Additionally, they must create a savings account in the free zone with a minimum capital deposit of $500,000 US.
- It will take the Gwadar Free Zone Company approximately 10 days to review the paperwork and provide the licensing certificate and lease contract.
- Once a business obtains its registration certificate, it must apply for the visas of its employees.
- Before receiving a residency stamp on the visa, the investor and personnel must undergo medical examinations.
Documents Needed To Obtain A Business License
Companies must submit the following paperwork to obtain a license to operate in Gwadar.
- Colorized images of each companion
- A business strategy or feasibility analysis
- copies of passports
- Investors must provide a Certificate of Registration and the Company's Article of Agreement for private limited enterprises.
- For all transactions in the free zone, they must select a person with power of attorney.
- A bank statement from any Gwadar Free Zone bank displaying a balance of US$ 500,000
Final Thoughts
To sum up, the Gwadar Free Zone is a zone of opportunity. It is an excellent example of what Pakistan can do when it puts its mind and resources together. It offers Pakistan an opportunity to invest in and trade with other countries. The success of the Gwadar Free Zone is not just in being able to offer favorable conditions for business but in how it can change Pakistan's economy from what it is now into something that can offer growth and stability.
