The Senate panel IMF economic zones phaseout debate has intensified after a Senate finance subcommittee urged the government to renegotiate with the International Monetary Fund over plans to phase out Pakistan’s Export Processing Zones and Special Economic Zones by 2035. The panel warned that the move could hurt industrial activity, exports and investment if implemented without adjustment.
Why the Senate Panel IMF Economic Zones Phaseout Concern Arose
The Ministry of Industries and Production told the Senate Standing Committee on Finance and Revenue that the phaseout is part of the IMF’s Extended Fund Facility conditionality, aimed at bringing different sectors under a uniform tax regime. After reviewing the issue, the subcommittee recommended that the government seek changes to prevent EPZs and SEZs from being adversely affected by the phaseout timeline.
Export Processing Zones and Special Economic Zones have historically offered tax incentives and simplified regulatory environments to attract industrial investment in Pakistan. A phaseout of these benefits, even gradual, could shift the calculus for both existing and prospective investors weighing where to locate manufacturing operations in the region.
Banking Transaction Alternatives for Exporters
The panel, chaired by Senator Talha Mahmood, also examined difficulties faced by exporters and businesses in banking transactions. It called for practical alternatives to bank guarantees and cheques, including insurance guarantees where permitted, a change that could ease compliance burdens for exporters navigating complex banking documentation requirements. The Federal Board of Revenue said it would examine the issue further.
Tax Administration and Facial Recognition
The committee also discussed measures to improve tax administration and taxpayer facilitation. It recommended the use of facial recognition technology for taxpayers whose fingerprints cannot be verified, directing the FBR and National Database and Registration Authority to coordinate on implementing the technology. Separately, the FBR was asked to provide a list of officials holding dual nationality or permanent foreign residency, part of a broader transparency push within the tax bureaucracy.
EV Charging Infrastructure and Power Outages
The panel was separately briefed on the National Auto Policy and measures to support electric vehicle adoption. It was told that viability gap funding is available to support the initial establishment of 3,000 EV charging stations across the country, a significant infrastructure push aimed at accelerating EV uptake in Pakistan.
The committee also discussed early market closures affecting businesses during power outages, with officials linking recent power constraints to disruptions in RLNG supplies and subsequent load management measures, highlighting the ongoing challenges Pakistan’s energy sector poses for everyday commercial activity.
SECP Briefing on Share Market Fraud
The Securities and Exchange Commission of Pakistan also briefed the committee on unauthorized share transfers and legal disputes involving forged signatures and other unlawful practices. The committee was told that SECP is digitalizing the share market and taking action against individuals and companies involved in illegal activities, while lawmakers called on the FBR to strengthen engagement with businesses and improve the overall ease of doing business in Pakistan.
For more on IMF program conditionalities affecting Pakistan, visit the IMF’s Pakistan country page. For more government policy and economic news, see our business news section.