Gwadar Port, the main construction project under the China-Pakistan Economic Corridor (CPEC) framework, holds immense importance in China’s Belt Road Initiative. This port is located on the shores of the Arabian Sea, just outside the straits of Hormuz, which is one of the major shipping routes for oil. Apart from constructing the deep-sea port, Pakistan and China have developed a Gwadar Free Zone to unlock the full potential of Gwadar Port.
Establishing this free economic zone will not only increase the country’s exports but will also help establish ties with all the major players in the region.
Gwadar Free Zone is located near the port and covers a total area of 2,281 acres. It is connected to all the major cities of the country via road and air. This economic zone is also an integral part of tapping the full potential of the port which will become a future hub for trade in the region.
To highlight the importance of this zone, Graana.com, Pakistan’s smartest property portal, shares a comprehensive guide to Gwadar Free Zone.
Gwadar Free Zone or Special Economic Zone (SEZ): Phase 1
Construction of the first phase of the Gwadar Free Zone started in 2015 and was inaugurated in 2018. The construction work on over 60 acres of land began with a focus on developing business centers, cold storage, warehouses, and fishery processing centers.
In SEZ phase 1, there are a total of 47 enterprises that have been registered in the free zone for investment. Additionally, six factories have been constructed, and three are fully operational. Besides these, there are six more factories that are still under construction.
Gwadar Free Zone (SEZ): Phase 2
Last year, former Prime Minister Imran Khan inaugurated phase 2 of the project, spread over 2,221 acres of land. According to China Port Holding Company, there is a $3 billion direct investment lined up that will create around 30,000 jobs.
This phase will focus on the manufacturing, trading, and service industries. The development work on phase 2 is underway, and expected to be completed in a year or two.
Benefits of Gwadar Free Zone
Gwadar Seaport is one of the flagship projects of the China-Pakistan Economic Corridor CPEC that will provide more excellent connectivity to Western China, South Asia, and Central Asian states.
To become a major player in regional trade, the Government of Pakistan decided to develop a free zone in collaboration with China. To promote economic activities, the CPEC authority has put the China Overseas Ports Holding Company (COPHC) in charge of the free zone.
This emerging company from Hong Kong has an agreement of 40 years with the Government of Pakistan. The main objective is to develop this port into a major trade hub. So far, the company has developed a modern industrial park over an area of 25 acres.The industrial facility has all the facilities like roads, electricity, communications, etc.
There are also plans to build an international airport and a power plant for Gwadar. The primary purpose of establishing this economic zone is to attract foreign investors to set up new manufacturing, logistics, and services businesses. These will have an immense impact on the country’s economy and will help in creating jobs for locals. Moreover, these free zones will also help build strong ties with China and other regional countries.
Incentives for Foreign Investors
In order to attract foreign investments to increase business activity in the area, the Government of Pakistan has introduced several incentives for foreign investors:
- 100 % ownership for foreign investors
- 23 years tax holiday for investors
- 100% tax exemption on customs duties for construction and operation
- 99 years lease for plots
- Flexibility in visa regulations
- Developed offices, light industrial units, warehouses
- World-class infrastructure and security arrangement
- A one-stop shop, one-window facility for clearances
- Easy licensing procedure
All these incentives can attract foreign investment in different industries. Businesses that can be set up in the free zone have been mentioned in a list published by COPHC.
- Bonded warehousing
- Container yards
- International purchasing, transit & distribution
- Ambient/temperature-controlled/refrigerated storage facilities
- Stuffing & de-stuffing
- Light end-assembly
- Imports & exports
- Value-added exports
- Value addition to imports
Registering a New Company
COPHC has made the registration procedure quite simple for investors. To register a new company in the free zone, you need to follow the steps given below.
- Investors have to submit the required documents to the Gwadar Free Zone Company (GFCZ) with payment of processing fees.
- They must also open a bank account in the free zone with a minimum capital deposit of US $500,000.
- Gwadar Free Zone Company will take around 10 days to scrutinize the documents and will issue the registration certificate and lease deed.
- Once a company receives the registration certificate, it has to apply for its staff’s visas.
- Finally, the investor and staff must undergo medical checkups before getting a residence stamp on the visa.
Required Documents to Get a Licence for Business
In order to get a licence for setting up a business in Gwadar, companies have to submit the following documents.
- Business plan or a feasibility study
- Passport photocopies
- Coloured photographs of all partners
- Bank statement showing the balance of US$ 500,000 in any bank in the Gwadar Free Zone
- Partnership agreement
- In the case of private limited companies, investors have to submit a Certificate of Incorporation and Memorandum of Association of the Company. They also have to appoint a representative with power of attorney for all the dealings in the free zone.
The companies in the free zone can apply for the following licences.
- General trading
- Industrial licence
- Logistics licence
- Services licence
- International transport (Trans-shipment) license
These special economic zones in Gwadar promise prosperity and the development of infrastructure in the country.
For more information, visit our Graana blog.
What is free zone of Gwadar?
The Free Zone of Gwadar refers to a special economic zone (SEZ) established in the city of Gwadar, Pakistan. It is a designated area that offers certain tax and business incentives to attract foreign investment and promote economic growth. The Gwadar Free Zone aims to enhance trade and industrial activities, particularly in the context of the Gwadar Port.
Is Gwadar Port leased to China?
Yes, the Gwadar Port is leased to China. In 2013, the Port of Singapore Authority (PSA) handed over the operations of the Gwadar Port to China Overseas Port Holding Company (COPHC) on a 40-year lease. This lease agreement between the Pakistani and Chinese governments has granted China strategic access to the Arabian Sea and the opportunity to develop Gwadar Port as a key hub for its ambitious Belt and Road Initiative (BRI).
When will Gwadar Port be complete?
The completion date of the Gwadar Port depends on the specific projects and infrastructure developments within the port. While the initial construction phase was completed in 2007, subsequent development and expansion have been ongoing. The development of the port and its related infrastructure is part of a long-term plan and is expected to be completed in various stages over several years.
What is Gwadar’s master plan?
The Gwadar Master Plan is a comprehensive urban development blueprint for Gwadar. It outlines the city’s development vision, goals, and strategies, considering various sectors such as infrastructure, housing, industry, tourism, and social amenities.
The master plan aims to transform Gwadar into a modern, sustainable, and well-connected city that can serve as a regional trade and economic hub. It includes the development of the Gwadar Port, the Gwadar Free Zone, road networks, residential areas, commercial zones, and other vital components necessary for the city’s growth and development.