GREEN KASHMIR SKILLED KASHMIR

INVESTMENT OPPORTUNITIES IN
Azad Kashmir (Pakistan)

Department of Industries & Commerce

Azad Govt. of the State of Jammu and Kashmir

Muzaffarabad

Contact Nos.
Sectary Industries &Commerce 058810-39213
Director Industries &Commerce 058810- 42042
Joint Director Industries Mirpur 058610-44207
Message by Sardar Attique Ahmed Khan
Prime Minister of Azad Jammu & Kashmir

Nature has very

judiciously endowed the State of
Jammu & Kashmir with natural
recourses amongst which
hydropower generation, Minerals,
Tourism, Horticulture, Water
Sports, Cottage Industry, Kashmir
Handicrafts and Forests are
significant. However, these
resources have not been tapped
commensurate with their potentials. Govt. of AJ&K has
accorded priority to harness these endowments for socio-
economic development.

A comprehensive action plan has been prepared for

sustainable socio-economic development of the State. A
lucrative package of incentives for industrialization has also
been finalized.

My Govt. has established AJ&K Technical Education

& Vocational Training Authority (TEVTA) for skill
development required to translate the available potential in to
economic resources. All these efforts are aimed at making
AJ&K a model State.

Govt. has further simplified and liberalized the

prevalent rules, regulations and procedures aiming at creating
conductive environments for industrialization. All the
required Govt. approvals are made available within days. To
further facilitate investors a new Industrial Estate is being
established at Mirpur, besides, improving the existing
industrial estates at Muzaffarabad, Kotli, Rawalakot, Bhimber
and Mirpur Districts.
 My Govt. is committed to extend legal protection to
the private investment and guarantees repatriation of
investment, besides profits.

The earthquake of 8th October 2005 has damaged

severely infrastructure and other civic amenities in the four
Districts of the State. The reconstruction and rehabilitation
offer another investment opportunity to the entrepreneurs.

Government is planning to organize an Over seas

Kashmir Industrial Investment Conference, either in Mirpur
or Islamabad in near future, keeping in view the convenience
of the entrepreneurs.

I anticipate that interested investors shall plan project

proposals on the aforementioned endowment projects and
participate in the conference.

Sardar Attique Ahmed Khan

 AN INTRODUCTION TO AJ&K

Azad Jammu and Kashmir is the liberated part of the State

of Jammu and Kashmir. It lies between longitude 73o-75o and
latitude of 33o36o and comprises of 5,134 sq. miles or 13,297 sq.
kms area.

The topography is mainly hilly and mountainous with

valleys and plains. The districts of Neelum, Muzaffarabad, Bagh,
Sudhnoti and Poonch are mostly mountainous for being lying at
the foot hills of the Himalayas. The districts of Bhimber, Mirpur
and Kotli have broad valleys and flat areas. The mountainous areas
are full of natural beauty, with thick lush green forests, precious
minerals, fast flowing rivers and streams. The main rivers are
Jehlum, Neelum and Poonch. Climatically, Azad Kashmir enjoys a
considerable measure of variety. The North and North western
mountainous areas are extremely cold in winter while in summer
are very pleasant. The district head quarters of Mirpur, Kotli and
Bhimber are extremely hot in summer while cold and dry in
winter. Most of the area of the State receives monsoon rains with
average rainfall up to 1300 mm annually. The population of Azad
Kashmir is 3.5 million and 88% of this is living in rural areas. The
literacy rate is above 60%. The average per capita income has
been estimated to range from 500 to 600 US$.

GOVERNMENT
Azad Kashmir has a parliamentary form of Government.
The President of Azad Jammu and Kashmir is the constitutional
Head of the State while the Prime Minister supported by a council
of Ministers, is the chief Executive. Azad Kashmir has its own
Supreme and High Court, besides, Legislative Assembly
comprising of 41 directly and 8 indirectly elected members.

ADMINISTRATION
Capital of Azad Jammu and Kashmir is situated at
Muzaffarabad, while Azad Kashmir is divided into two divisions
i.e. Muzaffarabad & Mirpur and eight administrative districts. The
Muzaffarabad division comprises of the Districts Muzaffarabad,
Neelum, Bagh, Poonch and Sudhnoti whereas, Mirpur constitutes
the districts of Mirpur, Kotli and Bhimber.

INDUSTRIAL SET UP

At the time of Independence in 1947, the economy of Azad

Jammu and Kashmir was on subsistence level. It was early 70s,
when economic development of the area started. Despite financial
constraints, efforts were made in developing infrastructure for the
rapid development of the area.

The State of Azad Jammu and Kashmir by virtue of its

topography, meteorology, hydrology and administrative set up
provides adequate opportunities of investment in various sectors.
The Govt. of Azad Jammu and Kashmir is encouraging investment
in the following:-

(i) Medium and large Industries.

 (ii) Kashmiri Handicrafts.
(iii) Mineral Resources.
(iv) Hydropower Generation.
(v) Tourism.

MEDIUM AND LARGE INDUSTRIES

Owing to close proximity to the market of Pakistan district

Mirpur and Bhimber are most suitable locations for establishment
of Medium and large scale industries.

EXISTING INDUSTRIES

About 967 small, medium and large scale Industrial Units

have been established and operating in AJ&K.

DISTRICT-WISE INDUSTRIAL UNITS.

Type Public Private Total

Muzaffarabad 1 367 368
Mirpur 2 191 193
Bhimber - 187 187
Kotli - 131 131
Poonch - 36 36
Bagh - 37 37
Sudhnuti - 15 15
Total 3 964 967
 TYPE OF INDUSTRY
Name of Industry Nos. Name of Industry Nos.
Woodwork & 208 Paper and Paper 9
Furniture House Products
Flour Mills 7 Shoe Industries 13
Food Industries & 167 Vespa Scoter 1
Bakeries factory
Arms Factories 19 Cosmetics 3
Crush Machines 91 Poultry Forms 84
Main Hotels 48 Textile Mills 11
Plastic Industries 8 Printing Press 26
Steel Furnaces and 5 Tyre & Rubber 0
Re-rolling mills Factory
Pipe Industries 14 Steel Works 154
Ice Factories 12 Miscellaneous 67
Rice Mills 20

INDUSTRIAL POLICY, AVAILABLE

INCENTIVES AND FACILITATION

POLICY:
Govt. of AJ&K has adopted Industrial Policy of Govt. of
Pakistan. Except the following, all type of industries are
allowed to be established by the private sector in Azad
Kashmir.

a.) Arms and Ammunition b.) Security printing.

c.) Explosive material d.) Radioactive material.

SPECIAL INCENTIVES
1). Exemption of Industrial products from payment of
sales tax for a period of five years from the date of
production.
2). Repatriation of principal amount and profits without
any permission of the Government for foreign
investors.
3). Exemption of Octroi and Local Taxes for five years
from the date of commencement of production.
4). Industrial plots are allotted in the Industrial Estates on
easy installments and to be recovered in 20 years,
without profit while in new industrial area this recovery
is to be made in 5 years.
5). Provision of loan facilities in local as well as in foreign
exchange from the nationalized banks and developed
financial institutions.
6). To provide local skilled Labor, 17 vocational
training Institutes and centers are functional.
7). Establishment of Dry port at Mirpur is under Process.

FINANCING FACILITIES.
All commercial banks and following financial
Institutions in the country are providing various types of
industrial loan for establishment of new industrial Units as
well as for expansion, balancing, modernization and
replacement of existing industrial units within the frame work
of industrial/financial policies of the Govt. of Pakistan.
i. Industrial Development Bank of Pakistan (IDBP).
ii. Pakistan Industrial Credit and Investment
Corporation (PICIC).
iii. Small Business Finance Corporation (SBFC).
 iv. SME Bank Ltd.
v. Agricultural Development Bank of Pakistan (ADBP).
vi. Regional Development Finance Corporation (RDFC)

INDUSTRIAL ESTATES.
To accelerate the pace of development through
Industrialization, the Department of Industries of Azad
Jammu and Kashmir has established six industrial Estates in
various districts of Azad Jammu and Kashmir providing basic
infrastructure like roads, water supply, sewerage system,
telephone and electricity etc.
Following is the detail of Industrial Estates, graded plots and
price per Kanal:
Name of Price 100 50 25 8 4 2 1
Industrial per Kanal Kanal Kanal Kanal Kanal Kanal Kanal
Estate Kanal
Pak Rs.
New
Industrial 85,000 10 20 32 20 35 42 118
Area
Mirpur
Small
Industrial 67,000
25 29 64
Estate
Bhimber
Small
Industrial 1,00,000 34 92 111
Estate
Mirpur
Mini
Industrial 94,800 13 42
Estate
Muzaffara
bad
Mini
Industrial 1,26,900 7 53
Estate
Kotli
Mini
Industrial 1,13,220 17 43
Estate
Rawalakot

Mode of payment.
1. 25% down payment and remaining 75% to be paid in
5 installments in 5 years for New Industrial Area
Mirpur.

2. 20% down payment and remaining 80% to be paid in

20 installments in 20 years for all other Industrial
Estates.

PROPOSED INDUSTRIAL ESTATES

1. INDUSTRIAL ESTATE DUDYAL; DISTT. MIRPUR

Land measuring 400 Kanals has been acquired and
development of industrial estate is in progress.

2. KHURRI INDUSTRIAL ESTATE AT MIRPUR

Acquisition of land measuring about 10000 Kanal is in
process.

3. RECONSTRUCTION OPPORTUNITY ZONE (ROZ) AT MZD

Land measuring almost 1000 Kanal at Garhi Dopatta
has been identified for the establishment of ROZ at
Muzaffarabad.

4. ESTABLISHMENT OF EXPORT PROCESSING ZONE AT

MIRPUR.
Land measuring 200 acres has been acquired, survey
and contouring of the area is in process.
DEMAND BASED INDUTRIES
In view of the localized requirement of AJ&K there is a
substantial potential for industry like food, ready-made
garments, furniture & plastic products.

LIST OF IDENTIFIED PROJECTS FOR AZAD KASHMIR

Herbal Medicines Agricultural implements and tools

Nuts and Bolts plant Calcium carbide producing unit

Wooden crate making Poultry Farming

Light engineering work Rice mill

P.V.C Pipes Hotels

Flush Door making Transport

Filling station Capacitor manufacturing project

Furniture industry Chip board-manufacturing

Batten Board plant Marble chips and powder making

Ceramic tableware Fruit and Vegetable Dehydration

Spices grinding Steel furniture, grills rates etc

Cement Industry Pharmaceutical Industry

Silk Reeling Pre Fabricated Building Structures

Solar Penal and Products Mineral Based Industry

 PROCEDURE FOR ESTABLISHMENT OF
INDUSTRIAL UNIT

Following documents should be enclosed with

applications.
Two copies of feasibility report of proposed project.
Financial Soundness Certificate of the applicant from
a recognized Bank.
In case of a company, name of Shareholders/
Directors and other related details.
NOC from Environmental Protection Agency of AJ&K
Govt.
In case of a foreigner a copy of registration from the
Registrar of Companies of AJ&K Govt.
Single line plan of the proposed Industrial Unit
(Building).

FOR FURTHER DETAILS PLEASE CONTACT

Directorate of Industries and Commerce

Muzaffarabad AJK Pakistan.
Phone No. 058810- 42042, 43409, 62773, 43862
Fax No. 058810-43151
Joint Director Industries Mirpur AJK Pakistan
Phone No. 058610-44207, 44048
Fax No. 058610-42150
Project Manager New Industrial Area Mirpur.
Phone No. 058610-34471
Assistant Director Industrial Estate Bhimber.
Phone No. 058650-42421
Industrial Development Officer Kotli.
Phone No. 058660-47216
 KASHMIRI HANDICRAFTS

The territory of Jammu & Kashmir is well known for its

traditional handicrafts. Kashmir has a long history of
traditional crafts, including carpets weaving, embroidery,
Garments, Namda Gubba, Paper Machie, Wood Crafts and
Kashmiri Shawls. They all incorporate Persian designs
arranged in Kashmiri style.

All the crafts ware of Kashmir is made by hand,

sustained by history and tradition and imbued with the very
soul of the artisans. These handicrafts possess a magical
power which captivates the heart of the beholder. Azad
Kashmir Small Industries Corporation (AKSIC) a public
sector enterprise established in 1992 is committed to
promote the development of handicrafts and the economic
betterment of the working craftsmen. AKSIC not only
provides education and assistances to working craftsman in
the field of designing but also in quality control and
facilitating marketing of the products. Equipped with
necessary God gifted natural resources and manned with
requisite expertise, the AKSIC commits itself to honor buyers
preferences and requirements in export trade and offers
most generous cooperation all the time.
INVESTMENT OPPORTUNITIES
Investment opportunities are available in almost all
traditional handicrafts.
Kashmir Handicrafts Sector offers opportunities of
investment to domestic and foreign entrepreneurs.
A relatively low marketing cost is involved in this
business because Kashmiri crafts are known World-
wide since centuries.
A reasonable profit margin is available in both
manufacturing and marketing of Kashmiri crafts.
Crafts are environmentally friendly, hence, getting
importance day by day.
Technical advisory is available for project
preparation, feasibility studies, loan documentation
and marketing.
Plots may be allotted to investors in the Industrial
Estates (subject to availability) at the time of
application.
Tax and some other incentives are available.
Experienced manpower endowed with aesthetic
creativity migrated from occupied Jammu & Kashmir
is now available in Azad Kashmir.

FOR FURTHER DETAILS PLEASE CONTACT

Azad Kashmir Small Industries Corporation, Muzaffarabad.
Phone No 058810-42848
058810-46389
 MINERAL RESOURCES

The geological environment of AJK is comprised of

three types of rocks, i.e. sedimentary, igneous and
metamorphic. The type of mineral deposits found are;
industrial Minerals, gemstones, precious metals and base
metals. The Industrial minerals and base metals are found in
all the three rock types and thus spread in the whole of the
AJK territory, whereas gemstones are confined to
metamorphic terrain and occur in the upper parts of Neelum
Valley. The most economically promising mineral resources
of Azad Kashmir are Gemstones and Industrial minerals.

In AJK mineral exploration activities started in 1973

by a State Owned Corporation (AKMIDC). Initially the
emphasis was laid on assessment of potential of economic
mineral deposits, having high unit value and import
substitute. With the assistance of donor agencies like UNDP
the Corporation succeeded in discovering various and
assessing following mineral deposits.
Proved Reserves
S.No Name of Mineral Location
(million tons)
District Muzaffarabad
1 Limonite Reshian 00.065 tons
2 Marble Nuseri-Jhugian 19.000 tons
3 Ruby Neelum Valley 26.000 gms
4. Graphite Neelum Valley 01.000 tons
5. Cement material Muzaffarabad In-exhaust able
Lime Stone+ Shale
6. Gypsum Muzaffarabad 04.000 tons
7. Feldspar Kundalshahi 00.100 tons
8. Soapstone Machyara 00.050 tons
District Kotli
1. Marble Dhanwan 02.000 tons
2 Bauxite Djamwam- Sawar 05.000 tons
Nikial etc.
3. Fireclay Dhanwan-Sawar- 05.000 tons
Nikial etc.
4. Coal Tatapani-Bangang 00.200 tons
District. Mirpur/Bhimber
1. Bentonite Newat-Dudyal 04.000 tons
District. Bagh.
1 Slate Kalamula 01.000 tons
2. Pozolana Tholangar 00.500 tons
DIRECTORATE OF MINERAL RESOURCES

Under National Mineral Policy 1995, Govt. of Azad

Jammu and Kashmir has established department of Mineral
Resources in 2002. The main function of the department is
to issue/grant mining leases and exploration Licence to
private and public sector. The department functions as
regulator and ensures safety during exploitation.

LICENSING PROCEDURE

For mineral exploration of a virgin area a

reconnaissance license is granted by department of Mineral
Resources, initially for a period of one year. In case of
identification of any exploration target, the entrepreneur is to
apply for Exploration Licence having one to three years
duration & extendable up to 5 years. On proving workable
mineral deposits, the Exploration License is converted into
long term Mining Lease for a period not exceeding thirty
years.
The application should be on the prescribed
application form accompanied with the following documents:-
a. Documents showing financial soundness.
b. Chalan showing receipt of application fee of Rs.
2000/- deposited in the National Bank of Pakistan
in the specified head of account.
c. Copies of the topographic map of the area.
 d. Companys credentials confirming its financial &
technical soundness.
Generally, the application is finalized within a period of
three months. No objection certificate from Forest and
Revenue Department is to be obtained prior to the issuance
of license.

Exploration license can be granted for area exceeding

not more than 5 sq. miles and there is no bar to hold more
than one license/mining lease.

Foreign investors can apply for exploration

license/mining lease upon incorporation of firm/company in
Pakistan/Azad Kashmir.

Note:- The procedure of mining concessions is being further

simplified.

INVESTMENT OPPORTUNITIES
Cement Material: Large deposits of mineral used in
cement manufacturing (Limestone, Shale and Gypsum) are
available in surrounding area of Muzaffarabad town. Keeping
in view reconstruction of the earth quake affected area and
construction of Kohala Hydro-Electric Project, there shall be
great demand of cement in near future.

Ruby: Forty million grams of Ruby has been assessed in

Neelum Valley in collaboration with United Nations
Development Program. Mining/marketing studies have
revealed that these deposits are viable for commercial
exploitation. Top quality Ruby of AJK is considered to be
similar to Burma Ruby (No. 1 in the World Gem Market).

Graphite: Foundry and crucible type of Graphite deposits

are found in upper Neelum Valley (AJ&K), having one end
0.1 million tons reserves respectively. The mineral has been
processed and up graded on pilot plant scale and found
suitable for Industrial use. Pakistan is importing 5000 tons of
Graphite annually worth Rs. 60 million. Exploitation of these
deposits can become an import substitute.

Bentonite: Five million tons of good quality Bentonite is

available in Mirpur AJ&K. The mineral is suitable for
bleaching edible oil and has substantial demand in the
country and has also has export potential.

Kashmir Ruby
 FOR FURTHER DETAIL PLEASE CONTACT
Directorate of Mineral Resources Muzaffarabad AJK Pakistan
Azad Kashmir Mineral & Industrial Development Corporation Muzaffarabad.
Phone No. 058810-49109, Fax 05-8810-34306
 HYDRO POWER GENERATION

The State of Azad Jammu & Kashmir by virtue of its

topography, meteorology and hydrology is blessed with
abundant hydropower potential. A comprehensive planning
of the hydropower resources of the State has been carried
out by WAPDA in collaboration with international agencies.

The study area comprised of a part of Jhelum River,

upstream of Mangla reservoir, which lies within the territory
of Azad Jammu & Kashmir. The preliminary investigations
identified potential sites and recommended detailed studies
on most viable sites.

These investigations identified a number of sites for

hydro power generation. Preliminary estimates have
assessed about 5000 MW. potential power in the three major
river catchments and their tributaries.

HYDRO ELECTRIC POTENTIAL

S.NO. District Potential MW
1. Muzaffarabad 2800
2. Bagh 1030
3. Kotli 865
4. Sudhnoti 410
5. Poonch 145
6. Mirpur 79
Total 5329

At present, total demand of electricity of AJK is about

250 MW, which would increase up to 300 MW during 2007.
Out of the identified potentials only 36.20 MW has been
converted into resource and another 70 MW is being
developed.
THE POWER POLICY 2002 PROVIDES THE FOLLOWING
INCENTIVES FOR INVESTORS IN PRIVATE SECTOR

1. GOVERNMENT POLICY AND SUPPORT.

The power policy 2002 amended by the Govt. of
Pakistan has been adopted by Govt. of Azad Jammu
& Kashmir which provides guide line for investment in
the development of Hydro Power having following
salient features
Award of raw sites on first come first served
basis to interested investors who established
their financial soundness to meet the equity
component of investment.
Award of solicited sites on the basis of
competitive bidding to investors / interested
investors on reimbursement of feasibility study
costs.
Leasing of State owned land on concessional
rates for project development to investors/
developers without provision for escalation of
lease rates.
Support in acquisition/leasing/ purchase of
private owned land through land revenue
department.
Support in setting up regional Receipt/
Dispatch grid for optimal utilization of capacity.
 Generous package for BOT implementation
including 5 years grace period for extension of
operation.
Generous Tax/levies incentives to promote
cottage industrial/agricultural units running on
Hydropower projects on the concept of captive
generation.

2. FISCAL REGIME.
a. Customs duty at the rate of 5% on the import of
plant and equipment not manufactured locally.

b. Exemption of sales tax on such plant,

machinery and equipment.

c. Exemption is already available from income tax

including turnover tax and withholding tax on
imports.

d. Repatriation of equity along with dividends is

freely allowed, subject to the prescribed rules
and regulations.

e. Parties may raise local and foreign finance in

accordance with regulations applicable to
industry in general. GoP approval may be
required in accordance with such regulations.

f. Maximum indigenization shall be promoted in

accordance with GoP policy.
3. FACILITATION
a. Permission for power generation companies to
issue registered bonds.

b. Permission to issue shares at discounted

prices enabling venture capitalists to
provide higher rates of return, commensurate
to the risks.

c. Permission for foreign bank to underwrite the

issued shares and bonds by the private power
companies as permissible under the laws of
Pakistan.

d. Non-residents are allowed to purchase

securities issued by Pakistani companies
without the permissions of the State Bank of
Pakistan and subject to the prescribed rules
and regulations.

e. Abolition of 5% limit on investment of equity in

associated undertakings.

f. Independent rating agencies are operating in

Pakistan to facilitate investors in making
informed division about the risk and profitability
of the project companys Bonds/TFCs.
 PROCEDURE FOR POWER PROJECT PROPOSALS

Request of Registration As project Developer /

1
investors with PPC

Submission of Financial prequalification

2
documents in accordance with Policy of PPC

Evaluation of financial prequalification

3
documents and intimation to investor
3

Typ
Raw solicit

Review of Proposal Open bidding on

3-R by POE Min. Tariff Basic & 3S
evaluation

Issuance of LOI against Negotiations and

3R-1 Bank Guarantee for Agreement of tariff with 3S-1
preparing feasibility study lowest Bidder

3R-2 Negotiation of Tariff 4

by purchase

Signing of PPA, IA
FA and WUL

Issuance of LOS against

5
performance Guarantee

POE : Panel of Expert LOI: Letter of Interest LOS: Letter of support

PPA: Power purchase Agreement IA: Implementation Agency
FA: Facilitation of Agreement WUL: Water Use license
FOR FURTHER DETAIL PLEASE CONTACT
Azad Jammu and Kashmir Private Power Cell
B-95 Upper Chatter Housing Scheme, Muzaffarabad.
Phone No. 058810-32620, Fax No. 058810-32621
 TOURISM
Nestling in the lapse of the Himalayas, Azad Jammu
and Kashmir has very generously being blessing with scenic
beauty. Its snow covered peaks, dense forests, winding
rivers, turbulent streams; sweet-scented valleys, velvet
green plateaus and climate varying form arctic to tropical, all
together make it an excellent tourist resort. Valleys like
Neelum, Jhelum, Leepa, Rawalakot, Banjosa, Samahini and
Baghser unfold delightful scenic beauty and provide a feast
of pleasure to discerning tourists eyes.

Azad Kashmir is also blessed with a varied

mountains landscape ranging from low hills to high
mountains (2000 to 6000 meters) most suitable for soft to
medium adventure tourism. The area provides excellent
opportunities for rock climbing, trekking, mountaineering and
summer camping. Moreover, blessed with large number of
rivers streams Azad Kashmir offers great potential for white
water sports, especially, rafting, canoeing and Kayaking.

Infrastructure; a pre-requisite for the development of

Tourism comprises wide ranging and diverse activities which
requires heavy investment. The Govt. of AJ&K has
developed basic infrastructure envisaging a good road net-
work, electricity, building a large number of rest houses in
the scenic areas and provided telecommunication network.
FACTS FOR THE VISITORS: Tourist/Visitors from all
parts of the State & Pakistan can visit Azad Jammu &
Kashmir without any restriction. However, they are advised
to keep their identity with them. Foreign tourists can visit
Azad Kashmir except the areas situated 16 kilometers along
the Line of Control (LOC). Foreigners before visiting Azad
Kashmir Should contact AJK Home Department at
Muzaffarabad for issuance of NOC.

Note: - The Government has declared tourism as an

industry; therefore, Hotels/Motels/Restaurants promoting the
tourism are treated as industrial concern / units.

FOR FURTHER DETAIL PLEASE CONTACT

Azad Jammu and Kashmir
Tourism Department Muzaffarabad.
Phone No. 05-8810-39176, Fax 05-8810-34623