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Tuesday Jun 08 2021
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CPEC's Rashakai economic zone expected to be a game-changer for KP

Rashakai Special Economic Zone. Photo: Courtesy cpecinfo.com

  • Rashakai Special Economic Zone rolled out last week to kick off phase II of China-Pakistan Economic Corridor project
  • Rashakai zone, located close to Nowshera, is one of the nine special economic zones to be established under the CPEC between 2017 and 2030
  • Khyber Pakhtunkhwa’s Industrial Policy 2020-2023 states that the Rashakai SEZ is being set up with the help of a public private partnership and through joint ventures with Chinese enterprises.


The China-Pakistan Economic Corridor (CPEC) is now officially in its second phase of development, despite speculations that work on the $62 billion connectivity project had slowed down.

Last week, the Rashakai Special Economic Zone (SEZ) in Khyber Pakhtunkhwa was rolled out, kicking off phase II of CPEC. The Rashakai zone, located close to Nowshera, is one of the nine special economic zones to be established under the CPEC between 2017 and 2030.

The Rashakai zone will be spread over 1,000 acres of land and for it China’s Century Steel Pvt. Ltd. is also relocating to Pakistan.

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Khyber Pakhtunkhwa’s Industrial Policy 2020-2023 states that the Rashakai SEZ is being set up with the help of a public private partnership and through joint ventures with Chinese enterprises.

One reason, the Policy states, that the zone will be a success is that in China, the labour is graduating from low-paying to high-paying jobs. The introduction of improved labour laws is also leading to an increase in labour costs in China, it adds.

“The average labour cost of an operational hour in the coastal and inland regions of China is thrice the cost in Pakistan. These pressures are compelling Chinese manufacturers to look elsewhere to relocate. Rashakai is the best choice for them,” it notes.

According to Hassan Daud Butt, the former CPEC project director and KP Board of Investment and Trade CEO, Century Steel has so far invested $50 million for setting up a steel plant in the first phase at Rashakai. “It is highly likely that the second phase will probably see $100 million more investment by the firm,” he added.

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Furthermore, to attract foreign direct investments, the special zone offers a one-time exemption from custom duties and taxes for all capital goods imported into Pakistan as well as exemption from all taxes on income for a period of ten years, Butt explained.

Due to its location on the motorway and proximity to the Torkham border and Central Asia, the Rashakai SEZ is expected to be a game-changer for the Khyber Pakhtunkhwa province.