Concern over removal of economic zones CEO by KP cabinet

PESHAWAR: In a move that has sparked concern among board members, the Khyber Pakhtunkhwa (KP) cabinet has removed Javed Khattak from his position as Chief Executive Officer (CEO) of the Khyber Pakhtunkhwa Economic Zones Development and Management Company (KP-EZDMC). The decision, made despite resistance from the special assistant to the chief minister on industries, has been criticised for allegedly violating established procedures.

Sources indicate that the correct protocol was bypassed, as the Board of Directors (BoD) is the competent authority for appointing and removing CEOs under Section 42 of the SECP rules.

Credible sources also confirmed that Khattak’s removal was not originally on the agenda of the cabinet meeting held in Islamabad on Thursday. However, the issue was raised unexpectedly, and formal approval was subsequently obtained from the provincial government. Javed Khattak, who was first appointed as CEO of KP-EZDMC in March 2020, had been reappointed by the provincial cabinet for another three-year term in March 2023.

Official sources said that Khattak’s second term as CEO was deemed illegal. The term of office for the CEO is clearly defined in Sections 186 and 187 of the Act, which do not allow for extensions. However, he is eligible for reappointment, provided that all requirements of the act, rules and guidelines are met.

A member of the BoDs described Khattak’s termination as a violation of the Securities and Exchange Commission of Pakistan (SECP) rules governing companies established under Section 42. Specifically, Clause 190 of the KP-EZDMC Act outlines the process for removing a chief executive. The Clause 190(1) states: “The board, by a resolution passed by no less than three-fourths of the total number of directors, or the company by a special resolution, may remove a chief executive before the expiration of his term, notwithstanding any provisions in the articles or any agreement between the company and the chief executive.”

The Clause 190(2) further states: “Notwithstanding anything contained in this section, the government or an authority or person authorised by it shall have the power to remove a chief executive of a company where more than seventy-five percent of the voting rights are held by the government.”

Close family sources told this correspondent that Khattak’s tenure was marked by significant achievements. Under his leadership, KP-EZDMC had made substantial strides in developing a robust industrial infrastructure, including the strategic establishment of economic zones (EZs) and special economic zones (SEZs). These efforts attracted substantial investment, generated employment opportunities and contributed to economic growth in Khyber Pakhtunkhwa.

During Khattak’s tenure, nine new economic zones were established in the province, including two SEZs and seven EZs. Currently, 1,736 industries are operating within these zones, significantly contributing to KP’s industrial output and supporting both local and national economies. Additionally, the revival of 160 industrial units and allocation of 419 new industrial plots in existing and new zones highlight the management’s proactive efforts to stimulate industrial growth. According to family sources, these initiatives have created 110,233 direct jobs, positively impacting the local economy, reducing unemployment rates and improving livelihoods across KP.

“The company has also secured a total investment of Rs355 billion for both existing and new EZs and SEZs,” the family sources added. “This impressive figure underscores KP-EZDMC’s success in attracting investors and fostering industrial growth, positioning Khyber Pakhtunkhwa as a prime destination for industrial development.”

Moreover, the Export Processing Zone (EPZ) has attracted USD 163 million in Foreign Direct Investment (FDI), further establishing KP’s potential as a hub for global businesses and enhancing the province’s economic stature.

This correspondent repeatedly attempted to contact Abdul Karim Khan, the Special Assistant to KP CM on Industries, Commerce, and Technical Education, for comments but was unsuccessful.