PREFACE:
In 1980, China had started its 1st Export Processing Zone for Foreign Investors. American Industrialists had immediately asked Pres. Reagan to permit them to build their factories in China so, they could benefit from Chinese Cheap labor and stable government offering them a good deal.
There used to be not even Motor Cycles on Chinese Streets before 1980. Everybody biked. Now China is the 2nd largest Market for Automobiles. I was in former Canton now called Guangzhou, when I was told, we have Odd and Even Car License Plate system so, my Agent could not come to pick me up everyday. One day only Odd Number Cars are allowed to enter that city and the next day Even number License Plate Cars.
History of Foreign Investments in Pakistan:
* Industrialists of Great Britain were the first one to build factories in Pakistan in 1950's to take advantage of Cheap Labor Cost and secure Pakistani Market and manufacture enough for re-export. ICi Pharmaceuticals, Capstain Cigarette, Hillman, Prefect, Austin and Morris automobiles had started Assembly Plants in Karachi.
* Then came Americans assembling Dodge Dart under name Dodge & Seymour to Karachi.
* American Ford Cortina Sedan and Bedford Trucks Assembly Plant were built in Karachi.
* Germans had built Mercedes Benz and Vauxhall auto assembly plant and Siemens Plant in Karachi.
Then in 1960 came Japanese Suzuki automobile company and Gandhara was formed in partnership with Gen. Ayub Khan's protege Gen. Habibullah Khan (Brother in Law, who's Daughter was married to Ayub's oldest son Captain Gohar Ayub). All the Foreign automobile companies had somehow started dieing before even Suzuki started assembling small Trucks.
* Dutch had built Phillips Light Bulb Factory in Karachi in 1960's but when a resourceful Pakistani had built Hyesons Light Bulb Plant with an American manufacturer's partnership, it had died.
* In mid 1970's Dutch Phillips TV assembly Plant was built in Karachi but it had died because it could not compete with imported TVs that had started pouring in because of cheating of Customs Department of Pakistan, not charging correct amount of Custom Duties and letting smuggling business to operate freely. It had killed good paying jobs of Karachites.
* US Refrigerator and Air Condition Manufacturer's first choice was Pakistan in late 1980's and Westinghouse had built an Assembly Plant in Karachi, manufacturing Window Air Conditioners but it had to close down in 1990's because of high ratio of Protection Money being collected by Pak Military plus other kind of lawlessness like Pakistan Military Rangers confiscating its shipments from Train Station of Karachi Cantonment without any reason or rhyme and then court refusing to hear complaint of Westinghouse.
* KLM had operated from Karachi Airport since 1930's and it had to close down in late 1990's like all other International Airlines ending their flights to Pakistan because of Protection Money that they had to pay to 14 Pakistan's Secret and Non Secret Agencies and Department.
* Another big problem that Foreign Companies, Non Punjabi Factory and Business Owners faced was that despite they had reduced their Profit Margin because of Protection Money payments to Punjabi Officials running those 14 Secret and Non Secret Agencies and Departments, they had no Protection from Army people in Plain Clothes robbing their Headquarters.
* In mid 1980's Col. Qaddafi of Libya, who had built the only Cricket Stadium of Lahore that was named after him also had wanted Pakistan to explain, what it has done with his Donation for building Nuclear Bomb before he could contribute more. Gen. Ziaul Haque had instead had told Pak Embassy in Libya to reject Visa Applications of Libyan Auditors. Libya had then, ordered close down of Pak Embassay and deported tens of thousands of Paki Migrant Workers earning great Wages in Libya back to Pakistan.
* In 1990's some Saudi Billionaires had invested in building of factories in Pakistan in partnership with Pakis but all of them had lost all their money.
* Only Businesses and Industrialists, who's relatives were in Pak Military survived and this is why Pakistan has to earn more than half of her Foreign Exchange from Remittances of Pakistanis abroad now.
* Watching all the above, American Manufacturers of Air Conditioners and Refrigerators had given up on idea of building their factories in Pakistan and they had picked Malaysia thus, Malaysia manufactures about 70% of all of all Refrigerators and Air Conditioners used in world now.
* Following China's lead, Pakistan had started Export Processing Zone for Foreigners in Karachi in 1980's also but it required partnership with a Pakistani Investor. It failed because of corruption. An American Friend of mine, who had built an Assembly Plant in that Zone had told me that his Products going to port for Foreign Shipment (Export) were not allowed to leave the Zone unless Zone's Officials were paid a hefty Bribe because almost all the Assembly Plants there were not re-exporting. They were only selling their Products in Pakistanis Market killing the purpose of the Zone only getting Raw Material Custom Duty Free.
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In Bangladesh, corruption level has never been as high as in Pakistan but she has not been even considered for viable Foreign Investment because the Capitalist World thinks, Bangladesh is under water half of the year and fierce Storms and Cyclones are an everyday fact in B.D. besides, Bangladesh being an unstable country. World should be told that Bangladesh is not a Banana Republic.
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What should Bangladesh do to attract Foreign Investments to have Industrial Manufacturing start like in China?
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1. Bangladesh has to get rid of the General Assumption of Industrialists of world immediately.
2. She has to tell the world how much of her land does not go underwater during Monsoon Season and how long it lasts plus how many Cyclones have really devastated whole B.D. disturbing or disabling manufacturing or causing damage to other Industry.
3. Bangladesh has the most stable government amongst the group of the lowest wage countries of world right now with a Labor Pool larger than rest of the low wage countries combined and this should be made known to the Industrialists of World.
4. It should be told to the world, what percentage of B.D. is never flooded by Monsoons and all such areas are open for building factories by Foreign Investors.
5. B.D. should adopt almost the same rules that China had adopted to attract Foreign Manufacturing Giants but since China and other countries now have a lot higher Wages and Per Capita Income, she can come up with some new additions that I am going to suggest to benefit even more without turning Foreign Investors off.
What had the Industrialists of the biggest Capitalist Anti Communist Country USA had found in Communist China that had attracted them?
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1. A stable Non corrupt government that had its population in 100 % control.
2. China was promising that Foreign Investments or Assets of Foreign Investors would never be confiscated by its new Constitution.
3. A Promise added in its Constitution that it would never harm or jeopardize the Profit Earning of Investors as long as they abide by Chinese Laws and pay Taxes.
4. No Trade Unions would be allowed in Export Zones but Foreign Investors will have to pay a bit higher wages than Chinese Per Capita Income.
5. Taxes would not be too high to defuse Profit of Investors.
6. Government of China or any China Nationals would not copy Technology of Foreign Investors to become their competitors.
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All this details do not have to be posted to attracts Foreign Investors or Industrialists because even China does not do this. Some details have to told after an Investor arrives in B.D. but in a way that does not bother him so much.
The General info about Chinese Export Processing Zones is below copied from a Shanghai Export Processing Zone Document:
Export Processing Zone (EPZ) Shanghai >
Taxes
In order to encourage and attract processing style corporation to enter Export Processing Zone, government has made a series of relative policies to support it.
1. Tariff-Free Imports
Machines, equipment, molds and maintenance accessory parts required for production; machines, equipment, and construction materials required for the construction of infrastructures; and office supplies for private use are all exempt from customs tariffs and import linkage tariffs.
2. Tax Refunds on Products Entering the Zone
Enterprises within China operating outside the zone that ship in commodities can benefit from national preferential policies regarding refunds of value-added tax on exports. Any domestic machines, equipment, raw materials, spare parts, components, wrapping materials, and reasonable amounts of construction materials, etc., will be treated as exports and receive tax refunds.
3. Bonded Imported Materials
Imported raw materials, spare parts, components, wrapping materials, and consumables required for processing export products are all considered to be fully bonded goods.
4. Tax-Exempt Exports
Products re-exported after processing are exempt from taxes. Products, raw materials, mechanical equipment and other goods transferred between export processing zones are exempt from taxes.
5. The trade of import products within the EPZ is tax free
the goods like products, raw materials and machine can be transferred and exchanged freely from one EPZ to another EPZ.
6. Foreign Exchange Policies
When goods produced in the zone are to be sold to international destinations, there is no need to undergo the receipt of remittance and sale verification procedures for exports, and when making payments to international destinations, there is no need to undergo remittance payment and sale verification procedures for imports.
7. Quotas and Licensing
Commodities can move freely between the Export Processing Zone and other countries. Not otherwise provided by the state, no quotas or licenses are required.
Enterprises can also enjoy other preferential policies offered by the Shanghai Fnegpu Industrial Park.
We make things easy for you. Just fill out the following form and you will quickly get the valuable information, like "Why Top 500 Companies gather in this Industrial Park", "China Investment Guide", etc.
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What I want added in?
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1. Bangladesh should add Pay Roll Tax to the Wages of Employees so, it can have some money to improve Living Conditions of Workers and her Infrastructure because B.D. has very low Per Capita Income. ... I know, despite such Tax, Expense of Foreign Investors would not be so high that could reject the offer.
2. All Foreign Owned factories will have to abide by B.D. Health & Protection of Lives of Workers Laws. ... Strict Laws can be written so nothing like present Tanneries and Ship Wrecking Businesses can exist anymore without providing enough safety and Health Hazard Insurance to Workers.
3. All Foreign Investor building their factories will have to abide by Environment Protection Agency of B.S. ... And an Environment Protection Agency based on Laws of such Western European Governmental Agencies can be formed by an Amendment in B.D. Constitution.
4. A Foreign Company can be fined by any Agency or Department of B.D. but it would have a right to appeal in a B.D. Court.
5. As long as a Factory owned by Foreign Investors is following guidelines of B.D. Government it could not be sued in a court of Law by its Workers unless in some special cases, where some Agency or Department failed and in such case, not only the Foreign Company but also B.D. Government could be sued for Liable Damages as a collaborator.
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How to make Foreign Investment Bureaucracy Non Corrupt and competitive?
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1. Even in Cold War days, when any Prospective Foreign Importer of USSR Products arrived, USSR Government Representatives were there at the Airport to welcome him.
2. All people explained above were treated as Govt. VIPs.
3. When they went to meet any Officials of Soviet Bureaucracy, he sat next to a KGB Agent to make sure that Official does not accept any Bribe from the Foreigner.
4. Final Approval of sale of Products, which normally used to be Machinery was approved by Central Authorities instead of local authorities.
5. The same Model was followed by all Eastern Block countries. ... I know because one of close Friends had bought Oxygen Cylinder Factory Machine in Karachi that he had bought from Romania. It still exist in Karachi, 'National Gases'.
6. B.D. has to form a secret Economic, Financial and Industrial KGB force and secretly deploy in all Departments of Government to end corruption. None of the Soviet Government Officials had known that their Assistant sitting in negotiations with Foreigners was actually a KGB Officer.
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I am here revealing secrets that built Super Powers of world out of nothing despite opposition of Capitalists of world. Can B.D. become smart enough to learn from, what I am disclosing here?
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