A local/German joint venture is to invest $300 million to build and operate two industrial free zones in Lahore and Karachi. A memorandum of understanding was signed between the sponsors, Germany's VFI and the local EGEMI Private, and the Export Processing Zone Authority (EPZA) in May.

The project involves providing the complete infrastructure for two separate industrial zones in Karachi and Lahore, covering 112.3 hectares and 120.3 hectares respectively. After the construction phase, estimated to take two to three years, the sponsors will operate the areas as free zones for 30 years.

Companies setting up industries in the areas, to be known as export processing zones, will be subject to special regulations administered by EPZA. They will be exempt from customs duties and sales tax, and from income tax until 2000; after that income tax will be a preferential 25 per cent. EPZA also has its own labour laws, involving higher wages and making hiring and firing easier, according to EPZA. Goods sold from the zones to the local market will be subject to import duty. Karachi already has a functioning export processing zone.

UK consultant Organisation Management & Survey (OMS) has been appointed to do basic designs. It is working together with Invent Water Treatment and Farebrother, both of the UK.