As global trade becomes increasingly competitive, countries are leveraging special economic zones (SEZs) to attract investment, boost exports, and strengthen their economies through incentivized trade. Pakistan is one such country actively developing SEZs to promote industrialization and economic diversification. These zones are designed to support knowledge and technology transfer, create employment opportunities, and encourage skill development across various sectors.1
Among Pakistan’s SEZs are designated free trade zones (FTZs), special areas where businesses benefit from tax incentives, customs duty exemptions, and simplified regulatory processes.
If you’re looking to expand into new markets or streamline your export operations, understanding the various special economic zones and free trade zones in Pakistan is crucial for making informed strategic business decisions.
Overview of special economic zones and free trade zones in Pakistan
The Government of Pakistan introduced its Export Processing Zone (EPZ) policy in 1980 to accelerate industrialization by promoting exports. This policy aimed to create a supportive environment for investors to launch export-oriented projects. However, over time, several challenges emerged. According to the Karachi Chamber of Commerce, the EPZs faced issues such as low export sophistication, weak integration with global value chains, an uncompetitive business environment, and inadequate public service delivery to investors.
To address these shortcomings, the government introduced the Special Economic Zones (SEZ) policy in 2012 under the SEZ Act. This new policy marked a significant shift by streamlining the establishment of SEZs, formalizing regulatory bodies, and clearly defining incentives for both developers and investors. SEZs are now governed by the Board of Approvals (BOA) at the federal level and SEZ Authorities (SEZAs) at the provincial level. The policy also introduced a transparent approval process to fast-track zone development.
Under this framework, SEZ developers and enterprises benefit from a range of incentives, most notably tax exemptions. In addition to income tax holidays, businesses operating within SEZs are eligible for expanded customs duty exemptions on a wide variety of imported machinery and capital goods. These benefits apply to both manufacturing operations and approved service sectors, including IT, storage, communications, and infrastructure development.2
What are some of the key special economic zones and free trade zones in Pakistan?
These are some of the notable examples of free trade zones and special economic zones in Pakistan:
1. Gwadar Port Free Zone
The Gwadar Port Free Zone (GFZ) is pivotal in Pakistan’s efforts to strengthen its position in global trade. Developed under the direction of the China Overseas Ports Holding Company (COPHC), the Free Zone is strategically located to serve as a vital hub for international shipping, logistics, and manufacturing. Its development is divided into two segments: the Southern Initial/Pilot Zone and the Northern Main Zone, each designed to accommodate various industrial and commercial activities.
The Pilot Zone has more than 20 enterprises that are already registered in the Free Zone, operating in diverse sectors. This includes banking, insurance, financial leasing, fishery and edible oil processing, electric vehicle assembly, furniture manufacturing, trade, and logistics.
On the other hand, the Northern Main Zone is being developed to expand the GFZ’s capabilities even further. It will include industrial units, logistics centers, and commercial services, reflecting the zone’s growing economic impact.
To attract both local and foreign investors, the Gwadar Port Free Zone offers a highly competitive incentive package. These include a 23-year complete tax holiday from all federal, provincial, and local taxes, 100% exemption from import duties on materials and equipment, and the ability for foreign investors to retain 100% ownership. Additional benefits include 99-year lease terms, world-class infrastructure, enhanced security arrangements, and a One Window Facility Service that simplifies administrative processes.3
2. Karachi Export Processing Zone
The Karachi Export Processing Zone (KEPZ) is one of Pakistan’s flagship industrial zones designed to facilitate export-led growth. Strategically located next to the Landhi Industrial Area (Extension), KEPZ provides easy access to major global markets, including the Middle East, the Far East, Africa, Europe, America, and Central Asia. Its close proximity to Quaid-e-Azam International Airport (18 km), Port Qasim (20 km), and Karachi Seaport (35 km), along with immediate access to national highways (just 7 km away), makes it a prime location for exporters aiming to streamline international shipping and logistics.
The KEPZ is divided into two phases. Phase I is primarily occupied by investors in the garment, electronics, and chemicals sectors. Meanwhile, Phase II is for those in the hi-tech, gem & jewelry, software development, IT-based, and precision engineering sectors.
KEPZ offers multiple advantages to its investors, including:
- Developed land and factory-ready infrastructure
- Cheaper electricity with no load shedding
- Duty-free import of all goods
- Unrestricted foreign currency movement (offshore banking status)
- No requirement for building control approvals for multi-storey construction
- Enhanced road access with one flyover completed and two nearing completion4
3. Islamabad Model Special Economic Zone
The Islamabad Model Special Economic Zone (IMSEZ) is Pakistan’s milestone industrial development under the China-Pakistan Economic Corridor (CPEC). Located near T-Chowk in Rawat, at the strategic intersection of the N-5 National Highway and Islamabad Expressway, it offers excellent connectivity for trade and logistics, enhancing its appeal for both local and international investors.
While it is still in development, the zone is designed to support low-carbon industries, supporting the country’s shift toward environmentally conscious economic development. As Islamabad’s first SEZ under the CPEC initiative, the IMSEZ is also seen as a platform for deeper industrial collaboration between Pakistan and China, especially in areas involving advanced technologies and sustainable manufacturing practices.5
4. Rashakai Special Economic Zone
The Rashakai Special Economic Zone (RSEZ) is a flagship project under the China-Pakistan Economic Corridor (CPEC) industrial cooperation framework. It is being developed through a joint venture between China Road & Bridge Corporation (CRBC) and the Khyber Pakhtunkhwa Economic Zone Development and Management Company (KPEZDMC).
Strategically located in Nowshera, Khyber Pakhtunkhwa, RSEZ enjoys exceptional connectivity, providing access to key trade routes that connect Southwest China, Central Asia, Afghanistan, and major Pakistani markets like Punjab. The zone is positioned to attract foreign direct investment (FDI) and facilitate the relocation of high-tech industries, driving technology transfer and industrial growth.
RSEZ is designed to support various industrial clusters, including processing and manufacturing, home appliances, pharmaceuticals, building materials, automotive parts, agriculture, and horticulture.6
Benefits of operating in free trade zones
Businesses operating in Pakistan’s Free Trade Zones can take advantage of several strategic benefits:
- Tax Incentives: Income tax holidays of up to 20 years or more and exemptions on import duties for various goods and materials.
- Simplified Customs Procedures: Accelerated clearance processes for imports and exports, improving delivery times and reducing red tape.
- Duty-Free Imports: Exemption from customs duties on goods imported into the FTZ for processing or re-export.
- State-of-the-Art Infrastructure: Ready-to-operate industrial plots, access to utilities, and proximity to transport hubs for international shipping.
These advantages not only reduce operational costs but also make international trade more predictable and scalable for exporters and manufacturers.
For Deliveries Associated with SEZs or FTZs, Trust DHL Express
For businesses involved in international shipping and overseas exports, operating within Pakistan’s FTZs and SEZs presents a valuable opportunity to scale operations more efficiently.
To fully capitalize on these advantages, it’s essential to work with a logistics partner that understands the complexities of cross-border trade and zone-specific regulations.
DHL Express brings decades of international shipping experience and in-depth knowledge of SEZ and FTZ compliance requirements. Whether it’s navigating customs procedures in Pakistan or overseas, handling documentation, or offering time-definite delivery services, DHL ensures your goods move seamlessly in and out of Pakistan’s economic zones.
With DHL Express, you gain a trusted shipping and logistics partner committed to helping your business grow with speed, reliability, and compliance at every step of the supply chain.
Open a business account with us to get started.
For more export insights, check out our guide on how to navigate FTAs when shipping internationally from Pakistan.
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