Govt Likely to Approve New $3 Billion Petrochemical Policy

The government is likely to approve a new petrochemical policy designed to attract an investment of $3 billion, reported a national daily.

The Overseas Investors Chamber of Commerce and Industry wrote a letter to the Prime Minister’s Advisor on Commerce and Investment, Abdul Razak Dawood, to propose an initiative to support the local petrochemical sector.

According to the Overseas Investors Chamber of Commerce and Industry’s (OICCI) member companies’ estimate, Pakistan can attract up to $3 billion worth of investment by providing policy support. The support they request is in line with the incentives provided to petrochemicals in other countries such as India, South Korea, Egypt, and Brazil.

The OICCI said that Pakistan needs to develop policies in the areas of cost competitiveness, market volume and access to demand, and the ease of doing business. It suggests strategies like duty-free imports and tax exemptions, protection for the local industry in free trade agreements, and the simplification of the bureaucratic processes.

The association said that this scheme will allow the country to secure import substitution up to $800 million per year to create up to 50,000 jobs and raise tax revenue of Rs. 50 billion per year in the medium term. In the long run, they will facilitate the expansion and development of large-scale petrochemical investments.

Official sources told Business Recorder that the petrochemical industry is organized into the following segments:

1. upstream products such as ethane, propane, and ethylene, that are used to manufacture engineering plastics, and are not produced locally due to the unavailability of naphtha cracker;
2. imported midstream products such as polyethylene (PE) and acrylonitrile butadiene styrene (ABS), and locally manufactured midstream products such as manufactured locally, polyvinylchloride (PVC) and polystyrene (PS);
3. downstream products such as auto parts, home appliances, and electrical items, etc.