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Why generous offers to land-seekers? By Ashfak Bokhari
Monday, 28 Sep, 2009 | 12:51 AM PST |
THE governments plan to lease or sell farmland to foreign investors to earn money has recently been under fire in the media.
Questions are being raised about prudence of such a strategy at a time when the country needs to produce more food to meet its populations growing requirements by encouraging local agriculturists and bringing more land under cultivation, rather than handing it over to foreigners.
The size of total land on offer has not been formally disclosed and newspaper reports put the figure between one to seven million acres. The government has not yet come out with a policy and a plan of action on this vital matter although the facilities and incentives intended to be given to foreign investors are reported to be too generous and are becoming a cause of alarm.
The minister for investment and officials are usually vague and evasive in their statements. It was only on the eve of a briefing to the National Assembly Standing Committee on Investment on September 14 that the minister Waqar Ahmed Khan made it clear that the government has not yet given any land to any country and that talks with several countries were still in progress.
A Saudi delegation will visit Pakistan after Ramazan to negotiate for a lease of five lakh acres of land, Tauqir Ahmed Faiq, regional secretary at the ministry of agriculture told Reuters in Dubai.
Meanwhile, a writ petition questioning the farmland offer to foreigners has been moved in the Lahore High Court. The court has sought a report from the federal government on the matter by September 29.
The petitioner says that the sale or lease of land on such a massive scale and on such attractive terms might pose a security risk to the country because the people of the subcontinent had faced the same problem when the East India Company came to this part of the world.
Foreign Minister Shah Mahmood Qureshi is not against the land sale and finds nothing wrong with it. But the government, he says, will have to negotiate the terms and conditions of the deals to ensure that the entire harvest was not taken away by foreigners.
Even without a firm policy in place, the government has already created an unusual welcome environment that foreigners may find hard to resist. A road show was recently held in Dubai to promote foreign interest. UAE, Saudi Arabia and China have already come up with requests for acquiring land to grow crops and set up livestock farms.
The governments corporate agriculture farming (CAF) policy as spelled out by the Board of Investment (BoI), meant essentially to attract foreigners, provides legal cover to foreign land acquisitions. Investors, it is obvious, go to countries, such as Cambodia for instance, which give strong legal protections. India does not allow agricultural land to be owned by foreigners and therefore there are a few investors there.
Following are the salient features of investment policy for corporate agriculture farming (CAF) posted on the website of the BoI. (1) 100 per cent foreign equity is allowed (only in CAF on case to case basis), (2) minimum $0.3 million foreign equity investment, (3) remittance of 100 per cent capital, profits, dividends allowed, (4) only such local and foreign companies will be entitled to corporate agriculture farming that are incorporated in Pakistan under the Companies Ordinance, 1984, (5) no upper ceiling on land holding. The size of the proposed corporate farm may be left to be determined by the prospective investor.
(6) State land can be purchased, or leased for 50 years through open auction, extendable for another 49 years, (7) all banks and financial institutions will earmark separate credit share for corporate agriculture farming (CAF), (8) labour laws may not be presently applicable to corporate agriculture companies. Due to special circumstances of the agriculture sector, however, appropriate labour laws will be developed for this sector within five years. (9) agriculture income tax regime applicable in provinces, on income from agriculture, would be applicable to corporate agriculture farming.
Following fiscal incentives are available to foreign companies that undertake corporate agriculture farming. (1) zero per cent custom duty and sales tax on import of agricultural machinery, equipment and implements under an SRO dated June 5, 2006, (2) exemption of duty on transfer of land for CAF, (3) tax relief, (4) initial depreciation allowance at the rate of 50 per cent of machinery cost, (5) dividends from corporate agriculture farms are not subject to tax, (6) farm income given more favourable treatment than income from other sources.
These facilities and incentives originally formed a package to attract local and foreign investors and was given approval by ex-president Pervez Musharraf in 2002 and then formally adopted by the cabinet for implementation in 2004.
The purpose was to make good money out of this kind of foreign investment. But the situation totally changed after global food crisis hit the entire world in 2006 that rendered food importing countries insecure. This gave rise to a wave of what is known as land grab. So it is the foreigners who now need land and the host states need not chase them. But the package remains unchanged.
Why Islamabad still insists to offer so many benefits and concessions, as outlined above, to attract investors defies logic particularly when it is clear that foreigners are desperate to buy or lease land. And they will just take away the entire produce from this land to their own countries.
Regarding land available for investors, the BoI says that compact blocks of 500 acres and more have been reserved for corporate farming in districts Muzaffargarh, Rajanpur, Bahawalpur and D.G. Khan. The total area available is 31,111 acres. In addition, 6.6 million acres of land is available in Cholistan of which two million acres is relatively plain but it can be developed only if canal water is made available.
The problem is that sub-soil water is either saline or too inadequate for irrigation. There are also problems of infrastructure and other logistics. The Board of Revenue, Punjab, has identified a compact block of 25,000 acres for corporate farming in Cholistan but the irrigation department says there is acute shortage of canal water.
Several livestock farms are also on offer in Punjab. These include a farm of 1,538 acres in Sargodha and of 900 acres in Khushab, four farms of 8,943 acres in Bhakkar, two farms of 3,488 acres in Bahawalpur and two farms of 1,639 acres in Khanewal. Total land in livestock farms available comes to 22,170 acres. There are eleven sites identified for enhancing foreign investment in agriculture sector in the NWFP province. The biggest site is located in Drab Kutch in Kohat, measuring 5,293 acres. Besides, four livestock farms are available for investment. Land for agriculture is available in D.I. Khan, Bannu, Mardan, Charsadda and Haripur.
In Sindh, a total cultivable area on offer comes to 29,841 acres, mostly in the jurisdiction of forest department. Land is available in district Shikarpur, Badin, Matiari and Thatta. In Balochistan, land on offer for corporate farming exceeds other provinces.
It comes to 1.4 milion acres. The biggest chunk is available in district Lasbela which is 7.5 lakh acres followed by 5.1 lakh acres in district Chagai. But most of the area is cultivable waste, meaning it is fit for cultivation but has not been yet cropped.
Monday, 28 Sep, 2009 | 12:51 AM PST |
THE governments plan to lease or sell farmland to foreign investors to earn money has recently been under fire in the media.
Questions are being raised about prudence of such a strategy at a time when the country needs to produce more food to meet its populations growing requirements by encouraging local agriculturists and bringing more land under cultivation, rather than handing it over to foreigners.
The size of total land on offer has not been formally disclosed and newspaper reports put the figure between one to seven million acres. The government has not yet come out with a policy and a plan of action on this vital matter although the facilities and incentives intended to be given to foreign investors are reported to be too generous and are becoming a cause of alarm.
The minister for investment and officials are usually vague and evasive in their statements. It was only on the eve of a briefing to the National Assembly Standing Committee on Investment on September 14 that the minister Waqar Ahmed Khan made it clear that the government has not yet given any land to any country and that talks with several countries were still in progress.
A Saudi delegation will visit Pakistan after Ramazan to negotiate for a lease of five lakh acres of land, Tauqir Ahmed Faiq, regional secretary at the ministry of agriculture told Reuters in Dubai.
Meanwhile, a writ petition questioning the farmland offer to foreigners has been moved in the Lahore High Court. The court has sought a report from the federal government on the matter by September 29.
The petitioner says that the sale or lease of land on such a massive scale and on such attractive terms might pose a security risk to the country because the people of the subcontinent had faced the same problem when the East India Company came to this part of the world.
Foreign Minister Shah Mahmood Qureshi is not against the land sale and finds nothing wrong with it. But the government, he says, will have to negotiate the terms and conditions of the deals to ensure that the entire harvest was not taken away by foreigners.
Even without a firm policy in place, the government has already created an unusual welcome environment that foreigners may find hard to resist. A road show was recently held in Dubai to promote foreign interest. UAE, Saudi Arabia and China have already come up with requests for acquiring land to grow crops and set up livestock farms.
The governments corporate agriculture farming (CAF) policy as spelled out by the Board of Investment (BoI), meant essentially to attract foreigners, provides legal cover to foreign land acquisitions. Investors, it is obvious, go to countries, such as Cambodia for instance, which give strong legal protections. India does not allow agricultural land to be owned by foreigners and therefore there are a few investors there.
Following are the salient features of investment policy for corporate agriculture farming (CAF) posted on the website of the BoI. (1) 100 per cent foreign equity is allowed (only in CAF on case to case basis), (2) minimum $0.3 million foreign equity investment, (3) remittance of 100 per cent capital, profits, dividends allowed, (4) only such local and foreign companies will be entitled to corporate agriculture farming that are incorporated in Pakistan under the Companies Ordinance, 1984, (5) no upper ceiling on land holding. The size of the proposed corporate farm may be left to be determined by the prospective investor.
(6) State land can be purchased, or leased for 50 years through open auction, extendable for another 49 years, (7) all banks and financial institutions will earmark separate credit share for corporate agriculture farming (CAF), (8) labour laws may not be presently applicable to corporate agriculture companies. Due to special circumstances of the agriculture sector, however, appropriate labour laws will be developed for this sector within five years. (9) agriculture income tax regime applicable in provinces, on income from agriculture, would be applicable to corporate agriculture farming.
Following fiscal incentives are available to foreign companies that undertake corporate agriculture farming. (1) zero per cent custom duty and sales tax on import of agricultural machinery, equipment and implements under an SRO dated June 5, 2006, (2) exemption of duty on transfer of land for CAF, (3) tax relief, (4) initial depreciation allowance at the rate of 50 per cent of machinery cost, (5) dividends from corporate agriculture farms are not subject to tax, (6) farm income given more favourable treatment than income from other sources.
These facilities and incentives originally formed a package to attract local and foreign investors and was given approval by ex-president Pervez Musharraf in 2002 and then formally adopted by the cabinet for implementation in 2004.
The purpose was to make good money out of this kind of foreign investment. But the situation totally changed after global food crisis hit the entire world in 2006 that rendered food importing countries insecure. This gave rise to a wave of what is known as land grab. So it is the foreigners who now need land and the host states need not chase them. But the package remains unchanged.
Why Islamabad still insists to offer so many benefits and concessions, as outlined above, to attract investors defies logic particularly when it is clear that foreigners are desperate to buy or lease land. And they will just take away the entire produce from this land to their own countries.
Regarding land available for investors, the BoI says that compact blocks of 500 acres and more have been reserved for corporate farming in districts Muzaffargarh, Rajanpur, Bahawalpur and D.G. Khan. The total area available is 31,111 acres. In addition, 6.6 million acres of land is available in Cholistan of which two million acres is relatively plain but it can be developed only if canal water is made available.
The problem is that sub-soil water is either saline or too inadequate for irrigation. There are also problems of infrastructure and other logistics. The Board of Revenue, Punjab, has identified a compact block of 25,000 acres for corporate farming in Cholistan but the irrigation department says there is acute shortage of canal water.
Several livestock farms are also on offer in Punjab. These include a farm of 1,538 acres in Sargodha and of 900 acres in Khushab, four farms of 8,943 acres in Bhakkar, two farms of 3,488 acres in Bahawalpur and two farms of 1,639 acres in Khanewal. Total land in livestock farms available comes to 22,170 acres. There are eleven sites identified for enhancing foreign investment in agriculture sector in the NWFP province. The biggest site is located in Drab Kutch in Kohat, measuring 5,293 acres. Besides, four livestock farms are available for investment. Land for agriculture is available in D.I. Khan, Bannu, Mardan, Charsadda and Haripur.
In Sindh, a total cultivable area on offer comes to 29,841 acres, mostly in the jurisdiction of forest department. Land is available in district Shikarpur, Badin, Matiari and Thatta. In Balochistan, land on offer for corporate farming exceeds other provinces.
It comes to 1.4 milion acres. The biggest chunk is available in district Lasbela which is 7.5 lakh acres followed by 5.1 lakh acres in district Chagai. But most of the area is cultivable waste, meaning it is fit for cultivation but has not been yet cropped.
