Gwadar Free Zones May Get Exemption from Dollar Conversion — Direct RMB-to-Rupee Trade Likely Soon
Independent Report
Islamabad, October 14:
The Government of Pakistan is considering a major policy shift that could exempt the Gwadar South Free Zone and Gwadar North Free Zone from the existing Foreign Exchange Policy, allowing companies to directly convert Chinese Yuan (RMB) into Pakistani Rupees without the need to use the U.S. dollar.
According to a report by Gwadar Pro, a high-level committee has been formed to recommend the exemption, aiming to streamline transactions and attract more Chinese and international investment into the China-Pakistan Economic Corridor (CPEC)’s flagship project — Gwadar Port.
Currently, export-oriented enterprises in the Gwadar Free Zones—primarily Chinese companies—must first convert RMB into U.S. dollars and then into Pakistani rupees for local payments. This double conversion process causes two layers of exchange deductions, resulting in significant financial losses.
A senior official from the Gwadar Port Authority (GPA) told Gwadar Pro that the new policy proposal is in line with directions issued by the Minister for Planning, Development, and Special Initiatives during the 82nd CPEC Progress Review Meeting held last month. Once approved, all companies will be able to convert RMB directly into Pakistani Rupees, eliminating the dollar’s intermediary role.
“This reform will remove the double conversion burden and protect companies from avoidable financial losses,” the official said.
The committee includes representatives from the Gwadar Port Authority, Ministry of Industries and Production, CPEC Secretariat, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Ministry of Maritime Affairs, Board of Investment, and the Ministry of Finance.
During the CPEC review meeting, SBP proposed that Gwadar Free Zones be brought in line with other Export Processing Zones (EPZs) by granting a waiver from the Foreign Exchange Regulation Act, 1947 through legislative amendments — providing a sustainable, long-term solution.
As a short-term measure, SBP suggested allowing Gwadar-based companies to retain up to 50% of their export proceeds in Special Foreign Currency Accounts (SFCAs), which can be used for payments abroad and settlements within the zone in foreign currency.
The Ministry of Maritime Affairs will act as the committee’s secretariat, and the final report with recommendations is expected within a month.
Under existing laws—specifically Section 25 of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980)—the Federal Government has already exempted EPZs from provisions of the State Bank of Pakistan Act, 1956, and the Banking Companies Ordinance, 1962, paving the way for similar flexibility in Gwadar.
If implemented, this initiative could boost trade efficiency, attract investment, and enhance CPEC’s economic integration, making Gwadar a key financial gateway for regional commerce between Pakistan, China, and beyond.
