EPZs may lose 20% domestic sales facility as IMF condition remains unresolved

Business Recorder reported that the government has not succeeded in getting the International Monetary Fund to drop its demand that Export Processing Zones (EPZs) stop selling into the domestic market, and the question is set to come up again at a review later this month. Industries Secretary Saif Anjum told a Senate sub-committee that Pakistan has agreed under the Extended Fund Facility to meet the requirement by September 2026. The condition would end the current facility letting EPZ firms sell up to 20% of output locally.

Anjum said EPZ-based industries contribute about $800 million in exports and described the domestic sales window as an important buffer for manufacturers selling abroad. Business groups, including Mian Zahid Hussain of FPCCI, oppose ending the 80/20 arrangement, because B-grade, C-grade and off-grade output plus process wastage makes up nearly 20% of production. At present such goods can reach the local market only once customs steps, value-addition checks and taxes are complete.

An FBR official said the EPZ issue is sub judice and the IMF does not intervene in court cases, though it could still ask the government to act. The panel convened by Muhammad Talha Mahmood urged talks with the Fund to revisit EPZ and SEZ terms, protecting national industrial and investment interests. Separately, a battery policy is under review and Rs3 billion of viability gap support is on offer for 3,000 EV charging stations.