August 23, 2022 by Mike Poverello

Digital nomads open door to new SEZ models

Even though the world has surpassed the heights of the Covid-19 pandemic, analysts predict that 25% of workers will continue working from home indefinitely.

The closure of office buildings is bad news for special economic zones (SEZs) reliant on traditional commercial real estate. The past three years have come with many shocks, all of which threaten to disrupt traditional business models. The pandemic, the supply chain crisis, inflation, war in Ukraine, and the OECD’s 15% minimum corporate tax have all taken their toll.

Unsurprisingly, the past six months have seen a wave of SEZs running into bankruptcies, including in Vietnam, India and the Philippines.

A very different type of SEZ has emerged to cater to so-called “digital nomads” — office workers and entrepreneurs who, thanks to the internet and trends following Covid-19, no longer need to be tied to a physical location.

Most SEZs look like industrial parks. Some, catering to digital nomads, look more like beachfront resorts. To see examples of SEZs successfully tapping into this new market, look no further than the Cayman Enterprise City or Prospera in Honduras. Some planned future SEZs — like Malaysia’s $1.2bn Iskandar Waterfront — are taking this strategy to an extreme.

The most savvy digital nomads practice ‘min-maxing’ — a video game term referring to the practice of using the mathematics behind games in order to win more using fewer resources. In the context of digital nomads, the term means maximising how far one’s income goes by deciding where to temporarily relocate. Typically, digital nomads attempt to min-max three key metrics: cost of living, tax rules and living standards.

If SEZs want to attract digital nomads, the first question that they must ask themselves is whether they can offer a low cost of living.

Many digital nomads work for companies that pay in strong currencies, such as the US dollar or euro. Their mobility gives them the ability to work from anywhere, and as a result, many choose to live in jurisdictions where their currency goes further. Although expensive jurisdictions such as the UAE, Singapore and Monaco have much to offer, the daily cost of living is simply too high to attract digital nomads. On the other hand, low-cost jurisdictions such as Thailand, Brazil and Morocco have a significant advantage.

The next metric digital nomads try to maximise is personal income tax rates.

For those who hold passports from countries that tax overseas income (such as the US or China), optimisation is possible, but significantly more complicated. However, many digital nomads from countries like those in the EU succeed in paying no income taxes whatsoever. SEZs that expect to suffer as a result of the OECD’s 15% global minimum corporate tax can instead shift their incentives to offer personal income tax incentives if they want to attract digital nomads.

Finally, what matters the most at the end of the day is quality of life.

Regardless of how a jurisdiction optimises the cost of living or taxes, intangible quality of life factors ultimately matter more than anything else. Many digital nomads base their decisions on factors such as the beauty of the scenery, the quality of nightlife, the presence of services like Uber, the quality of historical monuments, and the friendliness of local people.

Targeting digital nomads comes with drawbacks. They tend to create service sector jobs rather than export-oriented industries. They also are fickle and can leave at any moment. Most currently operating SEZs are zoned for industrial and commercial use rather than residential use. Countries like Portugal now offer digital nomad visas; countries with clumsy visa policies will be left behind.

While most SEZs are probably not good destinations for digital nomads, the few that successfully cater to them will become powerhouses over the next decade. As the world becomes more mobile, the collective economic power of digital nomads will become increasingly prominent.

Source: Article by Thibault Serlet, fDI Intelligence, 12 August 2022

June 23, 2022 by Mike Poverello

Global minimum tax – a head-scratcher for developing countries

In a meeting with prospect investors, Jamaican industry minister Aubyn Hill eloquently conveyed his vision for a new free zone in Caymanas, Kingston. A smirk appeared on his face as he delivered the final line.

“Developers will enjoy a 50-year total exemption on corporate income tax,” Mr Hill said on June 16, seemingly indifferent to the 15% global minimum tax rate that 136 countries, including Jamaica, are expected to implement from 2023 onwards.

His remarks embody the ambiguity of many developing countries towards the OECD-sponsored reform. While most of them subscribe to the idea behind the reform, they cannot help seeing fiscal incentives as a key pillar of their investment promotion strategies.

Viable tool

Policy-makers across the globe have resorted to tax cuts to lure foreign businesses as competition for investment went global in the past 40 years. The world’s weighted average statutory corporate income tax (CIT) rate has declined from 46.5% in 1980 to 25.4% in 2021, according to figures from the Tax Foundation.

Developing countries in particular have raced to lower national CIT rates to boost their investment appeal. The global minimum tax reform now puts them between a rock and a hard place.

“From a resource mobilisation perspective typical of a finance minister, the reform may be seen as a good base to stop the race to the bottom,” Bogolo Joy Kenewendo, an economist and former minister of investment of Botswana, tells fDi, on the sidelines of AICE2022, the annual gathering of free zones organised by the World Free Zones Organisation in Jamaica in June 13-17.

“However, from an investment promotion perspective, tax incentives are the tools we use to attract investment. OECD countries, in particular G20 countries, have already gone through that development phase and built their industries. They no longer need that race to the bottom, but what about countries that see this as a viable tool?”

The OECD proposal is built on two main pillars. The first proposes to re-allocate some taxing rights over multinational enterprises from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there. The second introduces a global minimum corporate tax rate set at 15%, which will apply to companies with revenue above €750m and is estimated to generate around $150bn in additional global tax revenues annually.

Free zones

Developing countries often resort to fiscal incentives to offset structural weaknesses that would otherwise sink their hopes of landing big ticket investments. Free zones are a case in point. They have flourished on their unique combination of fiscal incentives, customs facilitations and plug-and-play infrastructure. Unctad tracked as many as 5383 free zones in 2019, 89% of which were located in developing economies.

Almost 80% of the special economic zone (SEZ) laws worldwide provide for fiscal incentives, such as tax holidays for a defined period of often five to 10 years, or the application of a reduced tax rate, Unctad also found.

“Differentiated taxes are a necessary compensatory measure to offset the inherent inefficiencies and disadvantages of developing nations which suffer from high energy costs, deficient infrastructure, and higher inbound/outbound transportation costs,” Cesare Zingone, the CEO of Zeta Group Real Estate, a developer of free zones in Central America, tells fDi.

“Therefore an equal minimum tax would increase compliance costs, place developing countries at a competitive disadvantage, and finally favour the relocation of companies to wealthy, developed nations. However if the minimum global tax were to be implemented, it would be imperative for developing countries to implement other compensatory measures, such as reducing social security costs on labour, property taxes or import duties.”

Regardless of the OECD’s global minimum tax push, fiscal incentives continue to feature at the heart of the offer of some of the world’s biggest free zones under development. Among others, in Guatemala, developer Pacific Investment is developing 1200 hectares of land for the new Michatoya SEZ, which promises no CIT for 10 years; Indonesia has just named the island of Natuna Regency in the South China Sea as a SEZ, offering zero CIT for 10 years; Iraq is launching three SEZs to trigger development, also offering zero CIT for the duration of the project.

If policy-makers and zones developers seem unfazed by the global minimum tax reform, the OECD is equally unfazed.

“SEZs don’t seem to have done much to prepare for this. The reality is that this is happening, and they will have to get ready for this to come,” Pascal Saint-Amans tells fDi, oozing his confidence in the fact that once the EU and US approve the reform, a domino effect will prompt all the countries that endorsed the reform to fall in line.

However, the road for the OECD remains uphill. In the EU, Hungary has vetoed a key vote on June 17 to approve the reform.

Back in Caymanas, Mr Hill continued to mingle with prospect investors, pushing the CIT exemption as the icing on the cake for the package on offer. As with any other policy-maker in developing economies, he is taking his chances at the policy-making table — and so is the OECD.

Source: FDi Intelligence

May 20, 2022 by Mike Poverello

New Global Alliance of Special Economic Zones to boost development

*A special economic zone in the Dominican Republic.*

UNCTAD joined hands with seven global, regional and national associations representing over 7,000 special economic zones (SEZs) to launch a global alliance on 17 May.

SEZs are geographically delimited areas within which governments promote industrial activity through fiscal and regulatory incentives and infrastructure support.

They go by many different names, including free-trade zones and industrial parks, and are widely used by developed and developing economies.

The Global Alliance of Special Economic Zones (GASEZ) seeks to drive the modernization of these zones across the world and maximize their contribution to the UN Sustainable Development Goals (SDGs).

UNCTAD Secretary-General Rebeca Grynspan said: “The United Nations 2030 Agenda for Sustainable Development provides an opportunity for special economic zones to attract investment by putting SDGs at the forefront of their value proposition.”

Ms. Grynspan added: “A new model of sustainable special economic zones is therefore rapidly taking shape and they are contributing to more inclusive, resilient and sustainable economies in the countries where they operate.”

Pooling expertise

The alliance pools the expertise of its members to increase collaboration between SEZs, advocate on their behalf and enhance their contributions to sustainable development.

SEZs are faced with new challenges and opportunities that require them to adapt and innovate.

Some challenges are related to the COVID-19 pandemic, with new lockdown measures in some parts of the world or disruptions due to the war in Ukraine.

Other challenges and opportunities are longer term, stemming from changing global value chains, including reshoring and nearshoring, and increased digitalization and investments in digital assets.

In addition, ongoing global corporate tax reforms require governments to re-evaluate their fiscal tools and incentives, which SEZs have traditionally relied on.

Many zones are also embracing the SDGs and targeting investment related to these goals.

Towards a global platform

During the alliance’s launch, its founding members expressed their desire to make GASEZ a global platform to catalyse partnerships and bring on board more stakeholders, including governments, the private sector and international organizations.

John Denton, secretary-general of the International Chamber of Commerce (ICC), said: “We support this important initiative…Through collaborative efforts you will be able to help improve SEZ services to business and at the ICC global network we stand ready to work with you to achieve this objective.”

Deepak Bagla, president of the World Association of Investment Promotion Agencies, said: “As supply chains re-organize themselves in a post-pandemic world order, we have a great opportunity where we can work together and create economic zones which will be based on the core pillars of sustainability, of efficiency, of creating jobs and helping us all working together with our complementarities.”

Founding members

The alliance’s founding members include the Africa Economic Zones Organization, the Free Trade Zones Association of the Americas, the Green Partnership for Industrial Parks in China, the International Association of Science Parks and Areas of Innovation, the National Association of Foreign-Trade Zones of the United States of America, the World Free and Special Economic Zones Federation, the World Free Zones Organization and UNCTAD. The Alliance’s members represent 7,000 special economic zones in 145 economies, employing over 100 million people.

Source: UNCTAD, 17 May 2022

April 6, 2022 by Mike Poverello

Golden Triangle – The World’s Worst Special Economic Zone

The Golden Triangle SEZ in Laos is mired in scandal and criminality, but the silence from SEZ authorities on the matter is deafening.

In February 2022, authorities raided the Golden Triangle Special Economic Zone (SEZ) in Laos, freeing dozens of Chinese women from forced prostitution.

For years, the Golden Triangle SEZ has been home to numerous illegal industries including human trafficking, wildlife smuggling and drugs production. Despite this, the zone has announced significant expansion plans.

SEZs are business parks or cities that have been granted exemptions from most national-level economic regulations. They often enjoy tax breaks, different labour laws, special visa rights, import/export exemptions and streamlined regulations. There are more than 7,500 SEZs in 100 countries worldwide. The overwhelming majority of SEZs are legitimate centres of industry. They play key roles in the global tech, manufacturing, supply chain, logistics and tourism industries. However, a small minority of SEZs, such as the Golden Triangle, have been implicated in serious issues that threaten the credibility of the entire industry.

The shame of the Golden Triangle SEZ

On 5 February 2022, Laotian police raided the Golden Triangle SEZ, rescuing six women who were victims of human trafficking. The women came from impoverished backgrounds in southern China. Recruiters told them that they could have lucrative jobs as telemarketers in the Kings Roman Casino, the anchor tenant of the zone. When they failed to meet sales quotas, their employers declared that they were in debt. The women were then brought to local pimps, who separated the ones considered beautiful from the rest. Some of the women were sent to brothels; the others were forced to work in the laundry service of the casino.

In January, eight women staged a daring escape where, in the middle of the night, they met up with human rights activists who helped them escape the zone’s fence. After repeated complaints by the authorities, they carried out the raid, which would rescue six more women.

Authorities have now rescued 50 Thai women from the Golden Triangle SEZ, although, according to Laotian authorities, there may be up to 200 more women of other nationalities still trapped there. Some of the women have reportedly been enslaved there for up to a decade. In 2012, 50 women were rescued after similar complaints led to a similar bust.

Laotian authorities are powerless to act – the Golden Triangle’s status as an SEZ means that authorities cannot enter in the absence of a formal complaint. The zone is run by the Chinese-owned Kings Roman Corporation, based out of Hong Kong.

On 29 January, the second-largest drug seizure in Asian history occurred right outside of the Golden Triangle SEZ. Authorities caught four men in a nearby village attempting to smuggle 36 million pills of methamphetamine to Thailand. Authorities speculated that the meth was produced in the Golden Triangle SEZ, and was ultimately destined for lucrative markets such as China and Australia. An Australian federal police official stationed in the area estimated that between 60% and 80% of all of Australia’s methamphetamine came from the Golden Triangle region.

The World Wildlife Fund also warns that the Golden Triangle SEZ is a hotbed of wildlife smuggling. Endangered species such as tigers, elephants, bears and pangolins are sold and butchered there for use in Chinese traditional medicine. The number of illegally held animals has significantly increased since the beginning of 2022.

Why can’t Golden Triangle SEZ be closed down?

Human trafficking, methamphetamine production and wildlife smuggling barely scratch the surface, however. The zone was built on stolen indingenous land, workers are routinely unpaid and forced to work against their will, and the zone regularly dumps toxic waste into local streams.

SEZ officials do not deny any of the human trafficking, drug smuggling or wildlife smuggling. However, they say that this is being done by tenants and not by the zone itself. SEZ officials have agreed to pass new labour rules designed to protect women in the zone, but critics worry that these are just token reforms.

Despite everything, Laotian authorities are unwilling to shut down the zone. This is partially due to pressure from the Chinese, but also because the rest of the country outside of the zone is also chaotic. Local authorities are barred from entering and international inspectors are routinely turned away.

Instead, the government of Laos is doubling down. The Golden Triangle SEZ is currently building a new international airport to attract more Chinese tourists. Zone management is also investigating a possible expansion of the zone, which might result in more land expropriation from nearby communities.

The expansion of the Golden Triangle SEZ should be seen as an embarrassment to the global SEZ industry. Despite this, none of the major international SEZ trade associations – the World Free Zones Organisation, the Africa Economic Zones Organisation, or the Free Zone Association of the Americas have publicly condemned the Golden Triangle SEZ.

International SEZ organisations must issue statements publicly condemning the Golden Triangle SEZ. Doing so would cost them nothing – a single press release, an email blast to their newsletter audiences and a public statement condemning the project. It would, however, have a significant impact – it would give activists in Laos and the Mekong region more ammunition to pressure the government to shut down the zone. It would also send a message to international investors to stay away. Failure to properly address zones such as the Golden Triangle actively damages the credibility of the SEZ trade associations. It creates a false perception that these groups stand to gain by enforcing the status quo. In reality, international zone associations have everything to lose by failing to publicly condemn bad SEZs.

Strongly worded statements will not solve the problems of the Golden Triangle and other SEZs that fall below the required standards of decency, but they will send a message to the Golden Triangle – and other problematic zones – that they are being watched.

Source: Investment Monitor, article by Thibault Serlet, 28 March 2022

October 20, 2020 by Mike Poverello

fDi’s Global Free Zones – the 2019 winners

Each year, fDI recognises the worlds best Free Zones in terms of Foreign Direct Investment (FDI). Access the Global Free zones of the Year 2019 Report here!

October 9, 2019 by Mike Poverello

WCO – Free Zones and the Necessity for Enhanced Customs Involvement

The expansion of Free Zones has been mainly driven by political decisions closely affiliated with national economic development strategies. In some countries Customs is the primary governmental authority that regulates and governs Free Zones, while in others Free Zones are governed by other authorities, with less involvement from Customs. Depending on the institutional set-up, the scope and degree of Customs control in Free Zones and the economic operations carried out there varies considerably from one Free Zone to another.

Existing literature reveals that Free Zones attract not only legitimate business but also illicit trade or other illicit activities that take advantage of the regulatory exemptions of Free Zones.

Numerous papers have outlined the risks associated with Free Zones, along with economic benefits. Most of them deal with the legality of Free Zones policies, particularly in relation to export subsidies as governed by the WTO Agreement. Several other papers have dealt with illicit activities that have been perpetrated by exploiting characteristics of Free Zones. Such illicit activities include money laundering, tax-evasion and trade in counterfeit goods or other illicit goods.

The WCO research paper deals with Customs-related aspects of Free Zones, considering both the associated benefits and risks. The risks primarily concern illicit trade that exploits key aspects of Free Zones.

Literature that focuses on risks associated with Free Zones, particularly illicit trade or other illicit activities, have several things in common. They tend to highlight the fact that supervision over cargoes/companies in Free Zones is somewhat relaxed in comparison with other parts of the national territory. The following factors have been pointed out or quoted, although details are rarely provided due to the technical nature of the topic.

Relaxed controls inside Free Zones
Insufficient Customs’ involvement in the operation of Free Zones
Ease in setting up companies inside Free Zones
Insufficient integration of Information Technology(IT) systems by governmental agencies inside Free Zones

The WCO research paper’s key observations fall in line with those outlined above. It describes the low-level involvement of Customs in monitoring cargo movement and companies’ activities inside Free Zones. This includes Customs’ low-level involvement at the establishment phase of Free Zones, at the approving companies permitted to operate in Free Zones pahse, and during the day-to-day monitoring of cargoes in Free Zones. Limited Customs’ authority inside Free Zones is also mentioned. This paper touches upon relaxed Customs procedures/controls related to Free Zones and observes that they stem from Customs’ limited involvement and limited authority inside Free Zones. These limitations, combined with insufficient integration and utilization of IT, result in a lack of the requisite data concerning cargoes inside Free Zones, and render Customs’ risk-management-based controls – conducted for the purpose of preserving security and compliance without hindering legitimate cargo flows – virtually useless.

The research paper considers the concept of ‘extraterritoriality’ concerning Free Zones, stemming from a misinterpretation of the definition of Free Zones contained in the WCO Revised Kyoto Convention (RKC), to be behind the aforementioned limited involvement by and limited authority of Customs. The definition within Annex D, Chapter 2 of the RKC does not state that Free Zones are geographically outside the Customs territory. The definition means that the Free Zone itself falls within the Customs territory. ‘Goods’ located in Free Zones are considered as being outside the Customs territory for duty/tax purposes only.

WCO Research Paper No. 47 – ‘Extraterritoriality’ of Free Zones: The Necessity for Enhanced Customs Involvement

Source: WCO, Kenji Omi, September, 2019

June 18, 2019June 19, 2019 by Mike Poverello

WCO News – June 2019

November 4, 2018 by Mike Poverello

WCO News – October 2018

wco_news_87

Another feature filled WCO News e-publication featuring Blockchain big time!

August 1, 2015 by Mike Poverello

Rwanda banks on special economic zones to attract investors

Rwanda - Wikipedia Rwanda is wooing investors to invest in the country through building special economic zones. The Rwanda Special Economic Zones (SEZs) is a programme within the Rwanda Development Board that is designed to address domestic private sector constraints such as availability of industrial and commercial land, availability and the cost of energy, limited transport linkages, and market access among others.

Francois Kanimba, Rwandan minister of trade and industry told Xinhua on Sunday that the country was ripe for investments especially in manufacturing, service industry, tourism and hospitality, skills development among others.

“We are planning to construct SEZs economic zones across the country where investors will have the opportunity to explore the untapped potentials in Rwanda,” he said.

Kanimba said that Rwanda’s business environment is secure and the cost of doing business is friendly and the World Bank’s doing business reports have for several occasions ranked Rwanda among fastest growing economies in world that have eased the cost of doing business.

The small East African nation has so far constructed Kigali Special Economic Zone (KSEZ) located in Gasabo District within the country’s capital Kigali with phase one and two occupying 98 and 178 hectares of land respectively.

The government is now planning for phase three, which is expected to occupy 134 hectares. Phases one and two of the zone cover a surface area of 277 hectares while the third phase will cover approximately 134 hectares.

The trade zone is well equipped with tarmac roads, water and electricity rollout in all designated plots and a waste water treatment plant.

Kanimba continued that the commercial zones are designed to provide investors with industrial and commercial land, improve availability of electricity and transport linkages.

Official data show last year Rwanda attracted 500 million U.S dollars worth of investments and the government is targeting to double the investments in 2015.

According to 2014 World Bank’s Doing Business ranking, Rwanda was ranked 46 out of 189 economies surveyed globally registering improvements in the ease of obtaining construction permits, getting electricity and getting credit. Source: http://www.xinhuanet.com

June 25, 2015 by Mike Poverello

Shanghai’s FTZ plans to improve customs service

A man, right, speaks to a motorbike taxi driver in front of the gate to China (Shanghai) Pilot Free Trade Zone's Pudong free trade zone in Shanghai, China, on Thursday, Oct. 24, 2013. The area is a testing ground for free-market policies that Premier Li Keqiang has signaled he may later implement more broadly in the world's second-largest economy. Photographer: Tomohiro Ohsumi/Bloomberg via Getty Images

Pilot Free Trade Zone’s Pudong free trade zone in Shanghai, China. Photographer: Tomohiro Ohsumi/Bloomberg via Getty Images

Shanghai’s pilot free trade zone unveiled several measures aimed at improving customs services for high-technology companies in the zone.

An air cargo service center will be set up in Zhangjiang High-Tech Park to provide one-stop customs services including delivery of import manifest, customs declaration and customs inspection, Shanghai Customs said yesterday.

The center will cut customs clearance time to six to eight hours from at least two working days previously.

Customs formalities for imports of reagents, samples and equipment by high-tech companies, bio-pharmaceutical firms and microelectronics manufacturers will be streamlined, benefiting about 900 companies in Zhangjiang and neighboring areas, it said. Customs has also pledged to cut the threshold for small and medium-sized firms to offer offshore outsourcing services and encourage clusters of advanced manufacturing such as aircraft and new-energy vehicles in the FTZ.

Other measures include introducing customized customs services for high-tech companies, setting up bonded warehouses for small businesses and strengthening intellectual property protection.

“These new measures are market-oriented and based on enterprises’ need, and aim to tackle actual problems and boost trade facilitation,” said Zheng Jugang, vice director of Shanghai Customs.

Also yesterday, customs unveiled another eight measures to simplify customs clearance process and boost trade facilitation for all FTZ-based enterprises. They include trading of bonded commodities in the zone and simpler customs procedures for imports of art supplies.

In the first five months of this year, trade in the FTZ totaled 287.1 billion yuan (US$46.3 billion), accounting for 26 percent of the city’s total.

February 11, 2015 by Mike Poverello

Mozambique – conditions ideal for ‘Chinese model’ of Special Economic Zones

Maputo1 Mozambique has the necessary conditions to successfully adopt the Chinese model of Special Economic Zones, which helped to boost the Chinese economy, according to researchers Fernanda Ilhéu and Hao Zhang.

In the study “The Role of Special Economic Zones in Developing African Countries and Chinese Foreign Direct Investment (refer to link below),” researchers from the Lisbon School of Economics and Management noted that over 35 years, the Special Economic Zones have had “a decisive role in the development of places like Shenzhen, Zhuhai, Xiamen, Shantou, Hainan and Shanghai, and that African countries can leverage this experience.

In 2006, the Forum on China-Africa Cooperation gave “significant priority” to creating up to 50 SEZs abroad, which are being implemented, with US$700 million invested by Chinese companies in 16 EEZ, according to information from China’s Trade Ministry.

Increasingly focused on business abroad, China needs raw materials and African markets to which to export its products, but can also benefit from shifting some of its industries to Africa, as the cost of Chinese labour increases.

The approach to Africa has involved through loans and financing for the construction of infrastructure, and “the development of African countries requires China’s increasing involvement,” including “collaborating in the development of SEZs,” the authors argue.

Regarding Portuguese-speaking countries, the average annual growth of trade between 2002 and 2012 totals 37 percent, turning China into the largest trading partner and largest export market for those countries.

The relationship has proved to be “dynamic in both directions,” they added, with hundreds of companies from Portuguese-speaking countries operating in China and Chinese investment in those countries of around US$30 billion, according to China’s Trade Ministry.

As for the SEZ, the two researchers focused their attention on the Mozambican Manga-Mungassa (Beira, Sofala province) SEZ, established in May 2012, under the management of China’s Dingsheng International Investment Company (Sogecoa Group), which has plans to invest close to US$500 million.

Nearing completion, the first phase includes the construction of warehouse units, followed by the “operational” phase, with construction of additional infrastructure such as hotels and housing, and finally the free industrial zone, where high tech units will be installed.

“In terms of knowledge transfer, Mozambique has made active steps in learning from the experience of Chinese SEZs and using this model to attract foreign investment,” they said.

In 2012 the Mozambican government created the Office for Economic Areas with Accelerated Development (Gazeda) that in addition to Manga-Mungassa, is responsible for the projects of the Belulane Industrial Park, the Locone and Minheuene Free Industrial Zones and the Crusse and Jamali integrated park.

On 6 May, 2014 the Mozambican government approved the establishment of the Mocuba SEZ, a sign of the “determination to create more conditions and to look for more opportunities and economic measures to create jobs and generate wealth,” in the country, the study said.

According to the authors, Mozambique has a strategic location, the ability to attract investment through the diaspora, as well as its model of economic growth and development in its favour, although there remain difficulties in infrastructure and technological development.

“The Chinese SEZ model can be successfully applied to the Manga-Mungassa area,” they concluded. Source: macauhub / MZ

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November 13, 2014November 13, 2014 by Mike Poverello

SEZs – SARS proposes changes to current Rules

Trade policy - a balancing act A draft Notice for the rules under section 21A relating to Special Economic Zones has been made available for public comment. The draft rule amendments proposed under section 21A refer to the substitution of Industrial Development Zone (IDZ) for Special Economic Zone (SEZ). The draft rules can be accessed on the SARS website. Stakeholders have until 28 November 2014 to lodge any comments. Source: SARS

October 31, 2014 by Mike Poverello

First Special Economic Zones on the way

manufacturing-gear-wheels The roll-out of special economic zones is under way, with the first two in KwaZulu-Natal and the Free State to be proclaimed shortly, Trade and Industry Minister Rob Davies said on Wednesday.

The Dube trade port and the Tshiame industrial development zone in Harrismith would both be transformed into special economic zones as soon as the regulatory framework had been established, which the minister said would take place within the next 100 days.

The regulations and guidelines would be finalised. The special economics zones board would be established, as would a one-stop-shop for fast-tracked support to investors.

The Dube trade port industrial development zone will specialise in high-value, niche agricultural and horticultural products, as well as manufacturing and value-addition for the automotive, electronics and clothing industries.

The Tshiame industrial development zone at Maluti-a-Phofung near Harrismith in the Free State will focus on automotive, clothing and agro-processing activities.

The Department of Trade and Industry is evaluating the feasibility of special economic zones focusing on the beneficiation and value-addition of platinum in Limpopo and North West. These zones would be used to encourage investors in beneficiation to locate their plants close to the mineral deposits.

Opportunities to partner with international producers of fuel cells are available, and have the potential for South Africa to become an established hub for the production of fuel-cell components. The Dti opines that this would be a very significant development because fuel cells are new technology used for back-up power generation in telecommunication masts, base-load power generation in rural areas, and fuel-cell passenger vehicles. The technology is fast becoming the subject of intense international competition for investment and is also a technology well suited to South Africa’s comparative advantage in platinum mineral resources.

The department is also assessing the feasibility of a solar industrial development zone in Upington in the Northern Cape.

The Saldanha Bay industrial development zone was well positioned to become a hub for oil, gas and marine repair, engineering and logistics. An application to operate as a Customs Control Area to service the West and East African offshore oil and gas industry is being finalised. To date 18 companies, nine local and nine foreign, have signed nonbinding expressions of interest.

The Coega, Richards Bay and East London industrial development zones had together generated R3.4bn in investments and created more than 67,000 direct and indirect jobs. A number of new investments worth several billion rand were also under negotiation. Source: BDlive.co.za

July 25, 2014 by Mike Poverello

Special Economic Zones roll-out

The roll-out of special economic zones is under way, with the first two in KwaZulu-Natal and the Free State to be proclaimed shortly, Trade and Industry Minister Rob Davies said yesterday.

The regulations and guidelines would be finalised. The special economics zones board would be established, as would a one-stop-shop for fast-tracked support to investors.

The Tshiame industrial development zone at Maluti-a-Phofung near Harrismith in the Free State will focus on automotive, clothing and agro-processing activities.

Mr Davies said the department was evaluating the feasibility of special economic zones focusing on the beneficiation and value-addition of platinum in Limpopo and North West. These zones would be used to encourage investors in beneficiation to locate their plants close to the mineral deposits.

“What we know is that significant opportunities to partner with international producers of fuel cells are available, and that these partnerships have the potential for SA to become an established hub for the production of fuel-cell components,” Mr Davies said.

“This would be a very significant development because fuel cells are new technology used for back-up power generation in telecommunication masts, base-load power generation in rural areas, and fuelcell passenger vehicles.

“This technology is fast becoming the subject of intense international competition for investment and is also a technology well suited to SA’s comparative advantage in platinum mineral resources.”

The department was assessing the feasibility of a solar industrial development zone in Upington in the Northern Cape.

“We have no doubt the support available through the special economic zones programme will lead to increased investment by the private sector and contribute to building new economic infrastructure in provinces,” the minister said.

The Saldanha Bay industrial development zone was well positioned to become a hub for oil, gas and marine repair, engineering and logistics. “An application to operate as a Customs Control Area to service the West and East African offshore oil and gas industry is being finalised. To date 18 companies, nine local and nine foreign, have signed nonbinding expressions of interest.”

July 22, 2014 by Mike Poverello

Chinese invest US$260 million in Mozambican SEZ

To date Chinese company Dingsheng International Investments has invested US$260 million of a total US$500 million to build infrastructure in the Manga-Mungassa Special Economic Zone, in Mozambique’s Sofala province.

Aiuba Cuereneia, Mozambique’s Minister for Planning and Development, says, “The investment was used to build basic infrastructure, including the power and water supply, roads, industrial warehouses and other facilities, as part of a project that includes construction of an administrative building, customs warehouses, and an exhibition area, as well as a hotel.”

“The infrastructure built in the Manga-Mungassa SEZ would play a crucial role in supporting manufacturing and trading companies that, in turn, would reduce the cost of the initial investment made by Dingsheng International.”

The Manga-Mungassa SEZ was set up following a July 2012 law and covers an area of 217 hectares, which may be increased to 1,000 hectares. Dingsheng International manages the SEZ. Source: macauhub

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