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Updated till 15.12.2021
THE SPECIAL ECONOMIC ZONES ACT, 2012
CONTENTS
SECTIONS:
1. Short title, extent and commencement.
2. Act to override other laws.
3. Definitions.
4. Establishment of special economic zones.
5. Board of Approvals.
6. Functions and responsibilities of the BOA.
7. Approvals Committee.
8. Functions of BOI.
9. Responsibilities of Provincial investment promotion authorities.
10. SEZ Authority.
11. Requirements for all zone applications.
12. Approval of zone applications.
13. Approval of development agreements.
14. Simultaneous approval of zone application and development agreement.
15. Approval of existing zones.
16. Zone approval criteria.
17. Functions and powers of SEZ Authorities.
18. Suspension and removal of members of SEZ Authorities.
19. Eligibility as developer.
20. Responsibilities of developers.
21. Development agreements.
22. Sanctions against developers.
23. SEZ committees.
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24. Admission of zone enterprises.
25. Sanctions against zone enterprises.
26. Land regime.
27. Public utilities and transportation links.
28. Applicable operating administrative procedures.
29. Assistance by the BOI and SEZ Authorities.
30. Labour laws.
31. Employment of key persons.
32. Security.
33. Extra Territoriality of SEZs (Omitted).
34. Incentives for SEZs.
35. Protection of benefits.
36. Benefits for developers.
37. Benefits for zone enterprises.
38. Jurisdiction of court.
39. Alternative dispute resolution procedures.
40. Rules and regulations for implementation of this Act.
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THE SPECIAL ECONOMIC ZONES ACT, 2012
ACT No. XX OF 2012
[12th August, 2012]
An Act to provide for setting up and operation of special economic zones in Pakistan
WHEREAS it is necessary and expedient to promulgate a law for the creation, development and
efficient operation of special economic zones through provision of a legal and regulatory frame work
to encourage domestic and international investors for promotion and establishment of industrial
infrastructure and for other matters connected or ancillary thereto;
It is hereby enacted as follows:―
1. Short title, extent and commencement.—(1) This Act may be called the Special Economic
Zones Act, 2012.
(2) It extends to the whole of Pakistan.
(3) It shall come into force on such date as the Federal Government may, by notification in the
official Gazette, appoint and different dates may be appointed for coming into effect of different
provisions of this Act and any reference to commencement shall generally refer to the commencement
of this Act but commencement of any provision that comes into force subsequent to the general
commencement shall be treated from the date of coming into force of the respective provision and not
the general commencement.
2. Act to override other laws.―The provisions of this Act shall have force notwithstanding
anything to the contrary contained in any other law for the time being in force.
3. Definitions.―In this Act, unless there is anything repugnant in the subject or context,—
(a) “Approvals Committee” means the committee constituted under section 7;
(b) “arbitration” shall include arbitration under the applicable laws of Pakistan as
well as arbitration under any applicable international regime, whether selected
contractually through an agreement in writing or available to a party or parties
as a result of an international agreement accorded or ratified;
(c) “BOA” means the Board of Approvals constituted under section 5;
(d) “BOI” means the Board of Investment established under the Board of
Investment Ordinance, 2001 (XV of 2001) ;
(e) “capital equipment” means plant, machinery or equipment, accessories, and
component part of machinery and equipment identifiable for use in or with
machinery required for economic activities and machinery includes machinery
and equipment of any description, such as is used in industrial process,
manufacture, production or processing of other goodsand rendering services,
except the goods that are consumed in the manufacturing, production of
processing of goods or provision of services;
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(f) “developer" means an enterprise which has entered into a development
agreement with a SEZ Authority;
(g) “development agreement” means a duly approved agreement between SEZ
authorities and agreed to and endorsed by the BOA and a developer that
authorises a developer to develop, establish and operate a SEZ;
(h) “economic zone” means a geographically defined and delimited area which has
been notified and approved for economic, industrial and commercial activities;
(i) “existing zones” means the export processing zones, industrial zones and other
similar entities in existence at the time of the commencement of this Act and
includes but not limited to the following, namely:―
(i) “export processing zones” means and economic zone which is
established under the Export Processing Zones Authority Ordinance,
1980 (IV of 1980);
(ii) “extraterritorial zone” means an economic zone of a type that is to be
deemed to be outside the customs territory of Pakistan;
(iii) “free trade zone” means an economic zone that shall be deemed to be
outside the customs territory of Pakistan with respect to which the BOA
shall approve special facilities for trade, transshipment and re•export
operations in accordance with applicable legislation as for the time being
in force in Pakistan;
(iv) “hybrid export processing zone” means an economic zone that shall be
deemed to beoutside the customs territory of Pakistan in which goods
are manufactured and from which services are provided, both for
exportation to countries other than Pakistan as well for export into
Pakistan;
(v) “multilateral economic zone” means an economic zone in which all zone
enterprises are required to be beneficially owned by national, residents
or corporate entities of one or more particular countries;
(vi) “reconstruction opportunity zone” means an economic zone from which
the exports of goods and services has been recognized by any country
or jurisdiction other than Pakistan as being eligible for reduced tariff
duties and other benefits;
(vii) “regional development zone” means an economic zone wherein
economic activates are promoted so as to develop particular regions and
industries; and
(viii) “sector development zone” means a regional development zone in
which permissible economic activity shall be limited to one or more
sectors as notified by the BOA;
(j) “misconduct” means any conduct of a member or Chairperson of the Provincial
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SEZ Authority that is prejudicial to the good order and management of the SEZ
Authority or a SEZ and includes but not limited to the following, namely :―
(i) a failure to disclose an interest of the member or Chairperson in a transaction
related to a SEZ or an interest of the member’s parent, spouse, brother, sister,
child, or spouse of a parent, brother, sister or child;
(ii) any act or omission which is ultra vires of this Act;
(iii) any act or omission which lacks good faith; or
(iv) any act or omission which is inconsistent with the fiduciary duties of such
member or Chairperson;
(k) “Provincial investment promotion authority” means an investment promotion
agency, by whatever name called, formed by a Province to work as focal authority
to promote domestic and foreign investment in that Province such as Sindh Board
of Investment established in Sindh and Punjab Board of Investment and Trade or
any other similar entity;
(l) “SEZ Authorities” mean the Provincial SEZ Authorities established under Section
10;
(m) “SEZ Committee” means the authority chartered by the BOA at each SEZ under
Section 23;
1
[(n) “Special Economic Zone” or “(SEZ)” means a geographically defined and delimited
area which has been approved and notified by the BOA;]
(o) “zone admission criteria” means the criteria under this Act and to be applied by
developers in deciding whether or not to admit an enterprise into a particular SEZ
including thereof zone approval criteria that means the criteria to be applied by the
SEZ Authority and the BOA in deciding whether to allow or not to allow a
particular area to be developed as a SEZ;
(p) “zone application” means an application submitted in accordance with the
provisions of this Act by an SEZ Authority seeking the notification of an area as a
special economic zone;
(q) “zone development plan” means a business plan for developing a SEZ;
(r) “zone enterprise” means an enterprise admitted into a SEZ by a developer; and
(s) “zone regulations” mean regulations made under this Act.
1
Clause “n” of sec. 3 subs. by The Special Economic Zones (Amendment) Act, 2016 (XLV of 2016), s.2
Page 5 of 21
4. Establishment of special economic zones.― The Federal Government and Provincial
Governments may establish special economic zones by themselves or in collaboration with private
parties under various modes of collaboration including public•private partnership or exclusively
through the private parties as provided under this Act.
5. Board of Approvals.—(1) There shall be a Board of Approvals, hereinafter called BOA,
consisting of—
(i) the Prime Minister of Pakistan who shall be the Chairperson of the BOA;
(ii) the Minister for Finance who shall be the Vice Chairperson of BOA;
(iii) the Minister for Industries;
(iv) the Minister for Production;
(v) the Minister for Commerce;
(vi) the Minister for States and Frontier Regions Division;
(vii) two members of Majlis•e•Shoora (Parliament) to be nominated by the Prime
Minister (one from each House);
(viii) the Chairman of the BOI;
(ix) the Deputy Chairman Planning Commission;
(x) the Chief Minister of each Province;
(xi) the Chairman of the Federal Board of Revenue;
(xii) Governor, State Bank of Pakistan;
(xiii) Secretary BOI;
(xiv) executive heads of the Provincial investment boards by whatever names known
or if no such board is established a nominee of the Government of such
Province, having adequate relevant professional experience, the tenure of such
nominees shall be three years;
(xv) the President of the Federation of the Pakistan Chambers of Commerce and
Industry;
(xvi) the President of the Pakistan Business Council;
(xvii) the President of the Overseas Chamber of Commerce and Industry; and
(xviii) a professional having relevant adequate experience to be nominated by the
Prime Minister of Pakistan.
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(2) The meeting of the BOA shall be convened on the orders of the Chairman BOA or on the
recommendations of BOI or the Provincial SEZ Authority.
(3) The BOA shall meet as frequently as required but not less than twice a year.
(4) Fifty percent of the members shall constitute quorum of the BOA.
(5) Where the Chairperson is not present, the Vice•chairperson shall chair the BOA’s meeting
and if both are not available, a member designated by the Chairperson shall preside.
(6) The decisions of the BOA shall be taken by majority of the total membership present and
voting.
(7) The BOA shall adopt its own rules of procedure.
(8) Secretary BOI shall also act as Secretary of the BOA.
6. Functions and responsibilities of the BOA.― The BOA may—
(a) approve such regulations for the implementation of this Act as are applicable to
all SEZs or to a particular group of SEZ or a particular SEZ;
(b) approve or reject zone applications;
(c) approve or reject development agreements;
(d) examine and decide upon policy issues submitted to it by SEZ Authorities or by
developers;
(e) co•opt on the members of the Approvals Committee as necessary;
(f) notify with approval of relevant authorities additional benefits under
sub•section (2) of section 34;
(g) cancel development agreement;
(h) review and direct actions on annual reports submitted by SEZ Authorities;
(i) annually review the implementation of this Act with a view to improving
policies relating to SEZs; and
(j) take any other steps it deems appropriate in order to advance the objectives of
this Act.
7. Approvals Committee.—(1) There shall be an Approvals Committee that shall be chaired by the
Chairman of the BOI and shall consist of the following, namely:―
(i) executive heads of the Provincial investment boards or companies or agencies,
and where these do not exist a representative equivalent to a Provincial
Secretary designated by the concerned Province;
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(ii) representatives of the Ministries of Finance, Commerce, Industries, Production
and States and Frontier Regions Division not below the level of an Additional
Secretary to the Government;
(iii) private sector representatives representing different sectors and regions to be
notified and two co•opted members by special invitation with a three•year term
extendable at the discretion of the BOA; and
(iv) with approval of BOA, co•opted members from concerned Federal and
Provincial Governments for specific cases.
(2) The Approvals Committee shall exercise all such powers and responsibilities as are
delegated to it by the BOA, subject to such conditions as it may deem fit.
(3) The BOA may delegate all or any of its remaining powers and responsibilities to the
Approvals Committee.
(4) A decision taken by the Approvals Committee shall be submitted to BOA at its meetings or
by circulation for approval.
(5) The BOA may, at any time, exercise any responsibility or any power which it has delegated
to the Approvals Committee.
8. Functions of BOI.—(1) The BOI as the Secretariat of BOA and Approvals Committee
shall—
(a) be responsible for the co•ordination of all activities pertaining to SEZs,
developers and zone enterprises, including the preparation of all documentation
for consideration by the BOA and for ensuring the implementation of all
decisions of the BOA;
(b) process all zone applications submitted by SEZ Authorities for consideration of
BOA;
(c) process all applications for additional incentives in accordance with sub section
(2) of section 34;
(d) review all development agreements proposed by SEZ Authorities;
(e) be responsible for the international and domestic promotion of investments into
SEZs; and
(f) facilitate the interaction of developers and zone enterprises with all other
Federal, Provincial and other governmental authorities as well us with
international financial and developmental institutions.
(2) BOI shall act as SEZ Authority for the Islamabad Capital Territory as provided in section
12.
(3) BOI shall support and facilitate the SEZ Authorities, if requested.
Page 8 of 21
9. Responsibilities of Provincial investment promotion authorities.—(1) A Provincial
investment promotion authority shall be responsible within its Province of jurisdiction for the
following, namely:―
(a) to assist in the operation of the Provincial SEZ Authorities;
(b) to be the focal entity responsible for the investment promotion;
(c) may assist the SEZ Authorities and the developers in acquisition and other land
related matters including but not limited to necessary easement issues;
(d) to ensure infrastructure development linkages between authorities within the
SEZ; and outside the SEZ;
(e) to facilitate the developers and zone enterprises in dealing with all Provincial
governmental authorities for smooth and systematic resolution of issues as and
when they arise; and
(f) to facilitate the developers and enterprises in complying with environmental
regimes and social development.
10. SEZ Authority.—(1) There shall be established for each Province, an authority to be
known as the SEZ Authority of that Province.
(2) Every SEZ Authority shall be a body corporate by the name aforesaid, having perpetual
succession and a common seal, with a power, subject to the provisions of this Act and any regulations,
to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by
the said name, be entitled to sue and to be sued.
(3) Each SEZ Authority shall consist of—
(a) a Chairperson, who shall be the Chief Minister of the concerned Province or a
person appointed by the Chief Minister;
(b) a Vice•Chairperson, who may be the Minister or the Advisor in charge of the
investment department and where no such department exists, any member of
the Provincial cabinet nominated by the Chief Minister of the concerned
Province;
(c) a Chief Executive Officer who may be appointed by the Chief Minister of the
Province concerned and may be the Secretary of the SEZ Authority;
(d) Secretary of the Provincial investment department and where no such
department exists, the executive head of the Provincial investment promotion
authority by whatever name it exists;
(e) Secretaries of the Provincial industries, finance, commerce, investment, works
and services, livestock, agriculture and planning and development departments;
(f) two members to be appointed by the Chief Minister of the Province concerned
and two other members to be appointed by the BOA; and
(g) a member to be appointed by the concerned Chamber of Commerce and
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Industry where the SEZ is proposed. If there is no Chamber of Commerce then
a member of the Chamberof Commerce of that respective area to be appointed.
(4) Each SEZ Authority may acquire land in its respective Province in accordance with the
Land Acquisition Act, 1894 (I of 1894).
(5) Each SEZ Authority shall, subject to the approval of BOA, establish its rules and procedures.
(6) Where the Chairperson is not present, the Vice Chairperson shall chair the SEZ
Authority’s meeting.
11. Requirements for all zone applications.—(1) Every zone application submitted for
approval to the BOA shall identify the type of SEZ proposed and include—
(a) a basic business concept or model for the proposed SEZ to be submitted;
(b) parameters for zone admission criteria; and
(c) a preliminary zone development plan which shall—
(i) define the geographic boundaries of the proposed SEZ;
(ii) set out the basic infrastructure development requirements, both
inside and outside the proposed SEZ, necessary for the proper
functioning of the proposed SEZ;
(iii) set out the land requirements of the proposed SEZ;
(iv) set out the manner in which land required shall be procured, including
specifically whether land will need to be acquired under the Land
Acquisition Act, 1894 (I of 1894); and
(v) set out what criteria shall be applicable to the admission of zone
enterprises into that SEZ.
(2) The zone application shall be submitted along with a proposed development agreement
under section 14 and the criteria on which a developer shall be selected for that SEZ.
12. Approval of zone applications.—(1) All zone applications shall be submitted to the BOA
by the SEZ Authority of the Province in which the proposed SEZ shall be located.
(2) The BOA shall review every zone application submitted to it by the SEZ Authority to ensure
that the proposal is in conformity with the provisions of this Act, any applicable regulations made
under this Act and other applicable provisions of law.
13. Approval of development agreements.—(1) If a zone application is approved by the
BOA, the concerned SEZ Authority shall select a developer in accordance with any applicable zone
regulations except as provided in Section 4. Such zone regulations shall require that envisaged
development agreements be notified for competitive bidding.
(2) After negotiating a development agreement, the concerned SEZ Authority shall submit a
final agreement for approval to the BOA.
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(3) There shall be a provisional approval by the concerned SEZ Authority subject to fulfillment
of all such conditions necessary for final approval according to laid down criteria.
(4) The BOA may condition its approval of a development agreement on the fulfillment of such
conditions as it deems fit and according to the laid down criteria.
(5) After final approval, the development agreement shall be signed jointly by the Secretary of
the BOA on behalf of the Federation of Pakistan and by the chief executive officer of the concerned
SEZ Authority on behalf of the respective Provincial Government.
(6) If the BOA does not approve a development agreement submitted to it, the concerned SEZ
Authority, that submitted the development agreement, may resubmit the development agreement after
either renegotiating the terms of the proposed development agreement with the developer concerned
or after reaching agreement with a different developer selected in accordance with the applicable zone
regulations.
(7) In case of any grievances, a developer may approach BOA directly or through the SEZ
Authority and BOA shall have the authority to consider, modify or set aside any decision.
14. Simultaneous approval of zone application and development agreement.― The SEZ
Authority may simultaneously submit both a zone application and a development agreement to the
BOA for provisional approval, provided that—
(a) the developer in question either owns all immovable property in the proposed
SEZ or holds leasehold rights; and
(b) no additional incentives shall be granted by the SEZ Authority under
sub•section (2) of section 34.
15. Approval of existing zones.—(1) Any existing zone may apply to the SEZ Authority in
which it is located for submission of a zone application on its behalf.
1
[(2) From the commencement of the Special Economic Zones (Amendment) Ordinance, 2015
(XVIII of 2015), only new entrants and new industries that are setup after the establishment of the SEZ
may avail SEZ enterprise benefits under this Act.]
1
[* * * * * * *
* * * * * * *
* * * * * * *]
16 Zone approval criteria.― 2[* * * * * * *]
2
[(1)] unless otherwise decided by the BOA, the following provisions shall form part of the
zone approval criteria, namely:―
(a) a SEZ shall have a minimum size of at least fifty acres:
1
Sub-sec 2 of sec 15 subs. and sub-sec 3,4 and 5 of sec 15 omitted by The Special Economic Zones (Amendment) Act, 2016 (XLV of 2016), s.3
2
Sub-sec 1 of sec 16 omitted and sub-sec 2 of sec 16 renumbered by The Special Economic Zones (Amendment) Act, 2016 (XLV of 2016), s.4
Page 11 of 21
(b) not more than thirty percent of the entire area of a SEZ shall be used for
amenities (including commercial areas), infrastructure and residential or labour
colonies;
(c) public•owned land, if used for SEZs shall be leased for a period of at least fifty
years extendable for further period as laid down by the competent forum;
(d) Developers must undertake to comply with all environmental, labour and other
applicable legislation in force in Pakistan;
(e) zone enterprises must begin construction of facilities within six months and
assume regularbusiness operations within twenty•four months of their approval
as zone enterprises and after receipt of all required licences and permits;
(f) within six months the developer is bound to take all necessary approvals to start
construction activities failing which that title will be withdrawn and agreement
will be terminated and land will be returned;
(g) title to land may be registered in the name of zone enterprises only after they
have performed business operations in the SEZ concerned for at least six
months;
(h) there shall be no real estate activities in the zone as this would result in
withdrawl of the title of land and termination of the agreement; and
(i) articles of association of the zone developer shall be approved by the Provincial
SEZ Authority in accordance with the regulatory framework prescribed by the
BOA.
1
[(2)] In case the SEZ Authority is satisfied with the justification put forward for delay in
performance of a responsibility by an enterprise in a SEZ, it may give reasonable relaxation in time
frame for performance of the particular responsibility.
17. Functions and powers of SEZ Authorities.― The SEZ Authority shall be responsible
to,—
(a) prepare zone applications in accordance with this Act and applicable zone
regulations;
(b) select developers in accordance with the provisions of this Act and the
applicable zone regulations;
(c) negotiate development agreements in accordance with the provisions of this Act
and applicable zone regulations;
(d) assist developers upon award of a development in acquiring land and accessing
public utilities in accordance with the zone development plan;
(e) prepare zone regulations for particular SEZ;
1
Sub-sec 3 of sec 16 renumbered by The Special Economic Zones (Amendment) Act, 2016 (XLV of 2016), s.4
Page 12 of 21
(f) co•ordinate with Federal and Provincial authorities and ensure the building of
infrastructure outside the boundaries of SEZ;
(g) serve as liaisons and facilitating agencies in accordance with the provisions of
section 29;
(h) facilitate the availability of public utilities to zone enterprises in accordance
with the zone development plan;
(i) liaise with all relevant Federal and Provincial authorities to ensure the security
of SEZs;
(j) monitor the proper implementation of streamlined administrative procedures in
SEZs under section 28;
(k) monitor the compliance of developers with zone regulations as well as the
compliance of developers with their obligations under development agreements
and suspend development agreements, in case of violation of terms of
development agreement by the developer, pending final decision by BOA.
(l) monitor the compliance of zone enterprises with their obligations under zone
regulations;
(m) review of the activities of the developers and zone enterprises regularly but not
less than once a year; and
(n) report bi•annually to the BOA with respect to SEZs in the Provinces concerned.
18. Suspension and removal of members of SEZ Authorities.—(1) The Chief Minister may
order removal of either the Chairperson, if so appointed by him, or any member of the Provincial SEZ
Authority.
(2) If either the Chairperson or any member of a Provincial SEZ Authority is removed, their
replacement shall be appointed by the Chief Minister.
19. Eligibility as developer.― Unless otherwise decided by the BOA with respect to a
particular SEZ or type of SEZ, any entity shall be eligible as a developer which is incorporated under
the laws of Pakistan.
20. Responsibilities of developers.—(1) With the exception of existing zones which have been
approved as SEZs, all SEZs shall be developed and operated by developers within a specified time
period as mentioned in the development agreement.
(2) All developers shall—
(i) implement their zone development plans in accordance with the terms of their
development agreement;
(ii) approve zone enterprises and allot land to such enterprises in accordance with
theapplicable zone admission criteria, zone regulations and the terms of the
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development agreement; and
(iii) monitor and ensure the compliance of zone enterprises with all applicable zone
regulations.
(3) Subject to default on the foregoing unless otherwise, the agreement shall stand terminated.
21. Development agreements.—(1) Each development agreement shall include―
(a) all undertakings of the developer regarding the development and operation of
the SEZ concerned, with the zone development plan or business concept of
proposed SEZ model as an integral part of the development agreements; and
(b) all authorities conferred on the developer with respect to the SEZ concerned,
including specifically any provisions pertaining to the developer’s authority
to—
(i) admit enterprises into the SEZ in accordance with the zone admission
criteria and allot land to them in accordance with agreed eligibility
criteria and procedures;
(ii) act as a liaison and facilitating agency between the relevant SEZ
authority and zone enterprise;
(iii) all financial obligations of the developer, including any obligation to
make payment for the allocation of land and provision of services by
public authorities; and
(iv) clear provisions regarding the responsibility of maintenance of
infrastructure and utility services.
(2) A development agreement shall also include—
(i) rights, protections and entitlements of the developer with respect to the
SEZ concerned, established or allowed under this Act or any other
applicable law:
(ii) rights, protections and entitlements of zone enterprises in the SEZ
concerned established or allowed under this Act or any other applicable
law, together with a prescribed procedure for the invocation of such
rights, protections and entitlements by the developers;
(iii) provision for the settlement of disputes, including disputes on behalf of
zone enterprises through arbitrations; and
(iv) rights or titles and other legal authority of the Provincial SEZ
Authorities superior to it in terms of the provisions of this Act.
22. Sanctions against developers.—(1) The SEZ Authority may, if it is satisfied after
notice anda hearing that a developer is not acting in accordance with the terms of its development
agreement or is acting in violation of applicable zone regulations or applicable legislation and has
Page 14 of 21
failed to rectify such violation despite notice to this effect, suspend the development agreement of that
developer and move for cancellation of such agreement to the BOA or impose such other penalty as
may be provided under the applicable zone regulations or the development agreement.
(2) Upon receipt of an application from the Provincial SEZ Authority seeking cancellation
of a development agreement, the BOA shall give notice to the developer concerned, asking it to show
cause why its development agreement should not be cancelled or why such lesser penalty as may be
provided under applicable zone regulations should not be imposed.
(3) Pending the final decision of the BOA on a proposal for cancellation of a particular
development agreement, the SEZ Authority may appoint an interim administrator or take such interim
measures as it is necessary to do so—
(a) in the public interest; or
(b) to prevent any of the affairs of any SEZ being conducted in a manner
detrimental to the interests of stakeholders, zone enterprises or other persons
whose interest are likely to be affected or in a manner prejudicial to the interests
of the SEZ.
(4) Pending the final decision of the BOA, on a proposal for cancellation of a particular
development agreement, the SEZ Authority may, if it is satisfied that it is necessary to secure the
proper management of any zone, issue directions to developers generally or to any developer in
particular to carry out such changes as are necessary to rectify the situation and the developers shall
be bound to comply with such directions.
(5) Following a hearing in person, in which the developer may be represented by counsel, the
BOA may impose such penalty as is provided by the applicable zone regulations or the development
agreement, which may include cancellation of a development agreement or cancellation of any benefits
allowed to a developer, provided that any cancellation of benefits to a developer shall be without
prejudice to the rights and privileges of zone enterprises.
(6) The BOA may only cancel a development agreement if it finds that—
(i) the developer has violated its development agreement; and
(ii) that the developer has failed to rectify such violation despite notice.
(7) In addition to the rights of a developer to seek relief through arbitration, a developer
aggrieved by any decision of the BOA, BOI or by the imposition of sanction by the SEZ Authority or
by the suspension or cancellation of its development agreement may appeal before the High Court of
the relevant Province.
23. SEZ committees.—(1) The BOA shall charter an SEZ Committee for each SEZ as per the
applicable zone regulations.
(2) The membership of a SEZ committee shall consist of representatives from the developer, BOI,
Provincial investment promotion agency, SEZ Authority and concerned district Government. The
developer shall appoint the chairperson of the committee.
(3) Each SEZ committee shall have responsibilities to administer and enforce SEZ benefits and
rules as well as provide facilitation between the SEZ, its enterprises and the government with
responsibilities including to—
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(a) examine and approve SEZ entry applications in accordance with zone admissions
criteria;
(b) provide for certification of zone enterprises;
(c) conduct oversight of enterprises;
(d) enforce the building code of the SEZ;
(e) coordinate between the developer and government entities and utility providers
during construction;
(f) assist Zone enterprises in obtaining approvals and registrations;
(g) serve as the point of contact between the zone enterprise and utility providers; and
(h) facilitate between enterprises and government regulators and tax authorities.
(4) SEZ Committees shall execute their responsibilities according to their standard operating
procedure in accordance with zone regulations.
24. Admission of zone enterprises.—(1) Enterprise shall be admitted into a SEZ by the
developer in accordance with applicable zone admission criteria, the zone regulations and the terms
of the development agreement.
(2) Any enterprise which is refused admission into a SEZ by a developer may appeal to the
SEZ Authority of the relevant Province, which shall have the power to direct the relevant developer to
allow admission to the enterprise in question in accordance with the applicable zone regulations and
development agreement.
25. Sanctions against zone enterprises.—(1) The BOA shall issue zone regulations which
provide for sanctions against zone enterprises and the manner in which such sanctions may be imposed.
(2) The BOA may, with respect to particular SEZs, delegate its authority under sub•section (1)
to SEZ Authorities.
(3) The SEZ Authority may if it is satisfied that it is necessary to do so to secure the proper
management of any zone enterprise, issue directions to zone enterprises generally or to any zone
enterprise in particular to carry out such changes as are necessary to rectify the situation and the zone
enterprise shall be bound to comply with such directions.
(4) The SEZ Authority may only expel a zone enterprise from a SEZ if it finds that—
(i) the zone enterprise is in violation of its obligations; and
(ii) the zone enterprise has failed to rectify such violation despite notice.
(5) The SEZ Authority may appoint an interim administrator or take such interim measures for
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a period of not more than one month if it is satisfied that it is necessary to do so―
(i) in the public interest; or
(ii) to prevent any of the affairs of any SEZ being conducted in a manner,
detrimental to the interests of stakeholders, developers, zone enterprises or
persons whose interests are likely to be affected or in a manner prejudicial to
the interests of the SEZ.
(6) The action taken by the SEZ Authority in accordance with sub•section (5) shall be referred
to BOA within seven days for ratification by BOA, The BOA shall decide the matter and issue the
guidelines and instructions about operations of zone enterprise within fifteen days.
26. Land regime.—(1) The Provincial Government of each Province or any concerned
authority shall nominate, for each SEZ, a sub•registrar who shall be the exclusive authority with which
all documents relating to that SEZ shall be liable to be registered under this Act, zone regulations and
any other applicable law.
(2) Notwithstanding any other law in force, a developer may not sell, sub•lease or otherwise
transfer any rights with respect to any immovable property within a SEZ except through a duly
registered instrument.
27. Public utilities and transportation links.—(1) Unless provided otherwise in a particular
development agreement, it shall be the responsibility of—
(i) the Federal and Provincial Governments to ensure the provision of gas,
electricity and other utilities at the designated zero point of each SEZ;
(ii) the Federal and Provincial Governments to ensure adequate road access to the
SEZ; and
(iii) each developer to ensure, within a particular SEZ, the supply of gas and
electricity to all zone enterprises as well as the availability of all other public
utilities required for such areas as envisaged in the development agreement.
(2) Unless provided otherwise in a particular development agreement and notwithstanding
anything to the contrary contained in the Regulation of Generation. Transmission and Distribution of
Electric Power Act, 1997 (XL of 1997), each developer shall have the right to set up a captive electric
power generation plant or install a hydel power generator of sufficient size to cater to the expected
demand for electricity within a particular SEZ and to sell and distribute only the excess electricity so
generated within and outside that particular SEZ in accordance with the applicable regulations.
28. Applicable operating administrative procedures.—(1) The BOA, the BOI and the SEZ
Authorities shall promote the adoption of simplified administrative procedures for SEZs and zone
enterprises with the relevant Federal and Provincial authorities and agencies. Such procedures shall in
particular facilitate the—
(i) issuance of licences, permits and other approvals to zone
enterprises required for their business activities;
(ii) satisfaction of customs and other export or import requirements by
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zone enterprises;
(iii) fulfillment of tax obligations by zone enterprises; and
(iv) authorization of electronic communications and Modes of e•governance.
(2) Procedures under sub•section (1) shall endeavour to—
(i) substitute notifications and registrations for licence, permit and other
approval requirements; and
(ii) authorize approvals on a no objection basis within a specified period.
29. Assistance by the BOI and SEZ Authorities.—(1) The BOI shall act as a liaison and
facilitating agency between,—
(i) all Federal Ministries, authorities and agencies; and
(ii) SEZ Authorities, developers and zone enterprises.
(2) The BOI shall act as a one stop shop in its responsibilities under sub•section (1).
(3) The SEZ Authorities shall act as a liaison and facilitating agency between—
(i) all departments, authorities and agencies of the relevant Province,
including all local government and municipal authorities and agencies;
and
(ii) developers and zone enterprises.
(4) To the extent practicable, SEZ Authorities in the Provinces or in any other area shall seek
to enter into administrative arrangements with tax, customs, labour and other authorities under which
SEZ authorities may exercise certain administrative functions on behalf of such authorities, which
arrangements may include a secondment of officials with decision•making power from such
authorities to SEZ Authorities.
(5) All Federal and Provincial Ministries and departments, authorities and other agencies shall
fully co•operate with the BOI and SEZ Authorities in facilitating the activities of developers and zone
enterprises and carry out the requisite functions within the time frame stipulated under the regulatory
framework prescribed by BOA for the implementation of this Act.
30. Labour laws.― All labour and employment laws of Pakistan shall be applicable to SEZ
in the same manner as they are applicable to all territories within Pakistan.
31. Employment of key persons.―Notwithstanding anything contained in any other law, the
BOA may issue special rules for the employment by zone enterprises of key managerial and technical
persons who are not citizens of Pakistan, relating to the terms and conditions of their contracts as well
as with respect to the issuance of visas, temporary residence permits and temporary work permits for
such key persons and their dependents provided further that such rules shall only be issued after
consultation with—
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(i) the Ministry of Interior;
(ii) the Ministry of Foreign Affairs; and
(iii) such other Ministry or Department as the BOA may direct.
32. Security.—(1) Each Province or any concerned authority shall be responsible for providing
security for the protection of SEZs.
(2) Pending the creation of a special police force, each Province or any concerned authority
shall designate special police units responsible for the protection of SEZs within that area.
1
[* * * * * * *]
34. Incentives for SEZs.—(1) On execution of development agreements, the developer of the
particular SEZ as well as all zone enterprises in that SEZ shall be entitled to benefits set out in sections
36 and 37 respectively.
(2) With the objective of promoting hi•tech industries or particular regions, the BOA may
grantadditional benefits to a particular category of SEZs, zone enterprise, regions or sectors provided
that—
(i) such additional benefits may only be granted if the BOA finds them to be
justified on the basis of an economic impact assessment;
(ii) such additional benefits, if granted conditionally, may be liable to be forfeited
with retroactive effect if it is finally determined that a developer or zone
enterprise has failed to comply with the conditions prescribed for the additional
benefits in question; and
(iii) the BOA shall make the economic impact assessment of a SEZ within five years
from thedate the agreement is signed and within the first year of the operation
of an enterprise.
(3) Any additional benefits granted by the BOA—
(i) shall be deemed to be included in the relevant development agreement; and
(ii) shall become effective on such conditions as the BOA may stipulate.
(4) Nothing in this Act shall be construed to limit the authority of any Federal, Provincial or
LocalGovernment authority to grant such additional benefits to developers and zone enterprises as are
within the scope of their respective statutory powers.
1
Sec 33 omitted by The Special Economic Zones (Amendment) Act, 2016 (XLV of 2016), s.5
Page 19 of 21
35. Protection of benefits.—(1) All incentives under this Act shall be additional to all
incentives,benefits and protections which may be applicable to developers and zone enterprises under
generally applicable legislation and international agreements of Pakistan.
(2) These benefits shall not be withdrawn prematurely and any change therein shall be to the
advantage of the developer of the SEZ or the enterprise.
36. Benefits for developers.―Unless otherwise provided in a development agreement,
developers shall be entitled to the following benefits, namely:―
1
[(a) one time exemption from all custom•duties and taxes on plant and machinery
imported into Pakistan except the items listed under Chapter 87 of the Pakistan
Customs Tariff, for the setting up of an SEZ subject to verificatiion by the BOI;]
and
(b) 1[exemption] from all taxes on income accruable in relation to the development
and operation of the SEZ for a period of 1[five] years, starting from the date of
signing of the development agreement.
37. Benefits for zone enterprises.―All zone enterprises shall be entitled to the following
benefits, namely:—
1
[(a) one time exemption from customs•duties and taxes on import of plant,
machinery into SEZ except items listed under Chapter 87 of the Pakistan
Customs Tariff, for installation in that zone enterprize subject to verification by
the BOI;] and
1
[(b) exemption from all taxes on income for enterprises commencing commercial
production by the thirtieth June, 2020, in the SEZs for the next ten years:
Provided that exemption from all taxes on income for those zone
enterprises or firms which commence commercial production after the aforesaid
date shall be for the next five years.]
38. Jurisdiction of court.― Without prejudice to the provisions of section 39,—
(a) the High Court of the Province in which a SEZ is located shall have exclusive
original civil jurisdiction with respect to all disputes between the developer of
that SEZ and any governmental authority or agency, to the extent that such
dispute arises out of, or relates to, a development agreement; and
(b) the district court of the district within whose boundaries a SEZ is located
shall have exclusive original civil jurisdiction with respect to—
(i) all disputes between the developer of that SEZ and a zone enterprise
located within that SEZ; and
(ii) all disputes between two or more zone enterprises located within that
same SEZ.
1
Subs. by The Special Economic Zones (Amendment) Act, 2016 (XLV of 2016), s.6&7
Page 20 of 21
39. Alternative dispute resolution procedures.—(1) Development agreements may provide for
the resolution of disputes through arbitration between developers and any Federal, Provincial or Local
Governmental authority or agency arising out of, or relating to, such development agreement.
(2) Development agreements may authorize developers to pursue and defend the rights of zone
enterprises within a particular special economic zone through arbitration.
(3) Zone regulations may provide for the resolution of disputes between zone enterprises in the
same SEZ or between zone enterprises and developers through arbitration and mediation in accordance
with procedures approved by the BOA for this purpose.
40. Rules and regulations for implementation of this Act.―The BOI, in consultation with SEZ
Authorities and with approval of the BOA, may make rules and regulations as deemed necessary for
implementation and to carry out purposes of this Act.
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Source: Pakistan Code, Ministry of Law and Justice (pakistancode.gov.pk). Text on this page is reproduced verbatim from the official PDF and is provided for reference only. For the authoritative version, always consult the source document or a current reported edition.
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