Pakistan offers financial, tax-free incentives to foreign investors
Pakistan has offered major financial and tax-free business incentives and infrastructure facilities to foreign investors as a big Saudi steel mills goes on stream.
These incentives were offered at the highest level by Prime Minister Raja Pervez Ashraf. The prime minister’s came on the occasion of the inauguration of production at the just-built state-of-the-art Tuwairqi Steel Mills Limited (TSML), built by Al Tuwairqi Group of Industries of Saudi Arabia, and South Korea’s Pohang Iron and Steel Company (Posco). Al Tuwairqi Group has invested $350 million and Posco $16 million in the project. This first phase of TSML has been completed at a cost of $366 million. It will produce 1.28 millions tonnes of steel annually. It is the first steel mill in Pakistan built by the private sector.
The inauguration ceremony was highlighted by the prime minister’s unveiling of the pro-FDI incentives plan. Prime Minister Ashraf invited foreign and local investors to come up with industrial projects to be located at Pakistan’s Export Processing Zones (EPZs).
Pakistani EPZs have all modern infrastructure. “I urge foreign investors from across the globe to invest in Pakistan. I assure you full government support, facilities, a business-friendly environment and policies. At our EPZs we provide you with a huge number of incentives and exemptions,” he said.
The key features of Pakistan’s investment policy include, equal treatment to Pakistani and foreign investors, 100 per cent share holding in projects and businesses, an unlimited repatriation of the dividends, annual and accumulated profits. Highlighting these incentives, and still many more, the prime minister asked foreign investors, particularly those from Islamic countries, “to benefit from Pakistan’s EPZs.”
Prime Minister Ashraf, underlining the need and scope for investment, as well as the huge profit potential for investors, including expansion of the steel sector, said: “At present the per capita steel consumption in Pakistan is 37 kilogramme a year, which is among the lowest in the world, in comparison to the regional average of 208 kilogrammes, and the world average of 181 kilogrammes a year. This presents an opportunity to the steel sector to grow manifold and for investors to tap into a largely unexplored market with significant upside potential.”
Pakistan, has so for, relied heavily on import of steel to meet its growing domestic demand. The demand is projected to increase at an average of five per cent a year as per the global trends.
The TSML marked Pakistan’s first direct reduction iron (DRI) plant of Midrex process. It is located near Port Qasim of the country’s industrial and business hub of Karachi. Its location just across the Straits of Hormuz, provides it with the huge potential of exporting steel and numerous stale-based products to the UAE, before and after completing its Phase-2 and Phase-3 expansion. DRI will have a positive impact in developing steel and construction industry, besides attracting other foreign investor in this growing and important sector. The government believes that steel industry must be developed in a manner as to enable it to meet the needs of the strategic emerging industries.
Dr Hilal Hussain, Al Tuwairqi group chairman, applauding the help and financial incentives provided by Pakistan, said: “By successfully completing the project, Tuwairqi Steel Mills Limited has demonstrated that investment process, infrastructure, and the cost of doing business are very favourable in Pakistan. I am confident that our project will provide impetus to those who are contemplating to open their businesses in Pakistan. I applaud the support and cooperation from government of Pakistan in timely execution of TSM project.”
“We at Al Tuwairqi, feel honoured in introducing the world’s most advanced DRI technology, based on the Midres process, owned by Kobe Steel of Japan, in Pakistan,” he said.
TSML is also embarking upon several new projects, subsequent to commercial operation of DRI project. It plans to work on the upstream and downstream production processes, involving billet/thin slabs production, and iron ore exploration in Pakistan, its beneficiation and pelletisation.
“As our social corporate responsibility, we are also focused on the clean power generation in Pakistan,” Dr Hussain said. “We see Pakistan as a land of immense opportunities. We are very clear in our perception that Pakistan, as a country has to grow, and we are determined to play an instrumental role towards its development. In the survival of Pakistan is the survival of the entire Muslim Ummah,” he said.
Posco chairman and CEO Joon-Yang Chung, said: “The TSML will significantly contribute towards Pakistan’s economy.”
“Today, Pakistan’s economic development and structural adjustment calls for a higher quality steel products to be manufactured in this country. At TSML, we will develop high-performance products, featuring high strength, corrosion resistance, sustainability and light- weight, and improve the technological competence related to such products. To add to its success, Posco is determined in building a successful partnership with Al Tuwairqi to benefit from its presence in Pakistan and is fully focused to make TSML a world class steel making unit through possible expansion of initially set DRI plant using forward and backward integration,” added Chung.
With all stakeholders so determined, and so upbeat, output of high-grade products, and larger investment inflows look all set to benefit Pakistan.
Views expressed by the author are his own and do not reflect the newspaper’s policy
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