Special Economic Zone: Wikis

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A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC).

In the People's Republic of China, Special Economic Zones were founded by the central government under Deng Xiaoping in the early 1980s. The most successful Special Economic Zone in China, Shenzhen, has developed from a small village into a city with a population over 10 million within 20 years.

Following the Chinese examples, Special Economic Zones have been established in several countries, including Brazil, India, Iran, Jordan, Kazakhstan, Pakistan, the Philippines, Poland, Republic of Korea, Russia, Ukraine, United Arab Emirates, Cambodia. Currently, Puno, Peru has been slated to become a "Zona Economica" by its president Alan Garcia.

A single SEZ can contain multiple 'specific' zones within its boundaries. The most prominent examples of this layered approach are Subic Bay Freeport Zone in the Philippines, the Aqaba Special Economic Zone Authority in Jordan, Sricity Multi-product SEZ and Mundra SEZ in India and According to World Bank estimates, as of 2007 there are more than 3,000 projects taking place in SEZs in 120 countries worldwide.

SEZs have been implemented using a variety of institutional structures across the world ranging from fully public (government operator, government developer, government regulator) to 'fully' private (private operator, private developer, public regulator). In many cases, public sector operators and developers act as quasi-government agencies in that they have a pseudo-corporate institutional structure and have budgetary autonomy. SEZs are often developed under a public-private partnership arrangement, in which the public sector provides some level of support (provision of off-site infrastructure, equity investment, soft loans, bond issues, etc) to enable a private sector developer to obtain a reasonable rate of return on the project (typically 10-20% depending on risk levels).

Contents

China

Currently, the most prominent SEZ's in the country are Shenzhen, Xiamen, Shantou, Zhuhai and Hainan Province. It is notable that Shenzhen, Shantou, and Zhuhai are all in Guangdong province, and all are on the southern coast of China where sea is very accessible for transportation of goods.

India

Considering the need to enhance foreign investment and promote exports from the country and realising the need that a level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally, the Government of India had in April 2000 announced the introduction of Special Economic Zones policy in the country, deemed to be foreign territory for the purposes of trade operations, duties and tariffs. As of 2007, more than 500 SEZs have been proposed, 220 of which have been created. This has raised the concern of the World Bank, which questions the sustainability of such a large number of SEZs. The Special Economic Zones in India closely follow the PRC model.

India passed special economic zone act in 2005. In India, the government has been proactive in the development of the SEZs. They have formulated policies, reviewed them occasionally and have ensured that ample facilities are provided to the developers of the SEZs as well as to the companies setting up units in the SEZs.

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List of SEZs in India

The policy provides for setting up of SEZs in the public, private, joint sector or by State Governments. One of them is Sricity Multi product SEZ, part of Sricity which is a developing satellite city in the epicentre of AP & TN. It was also envisaged that some of the existing Export Processing Zones would be converted into Special Economic Zones.


Currently, India has more than 1022 units in operations in over 9 functional SEZs, each an average size of 200 acres (0.81 km2). 8 Export Processing Zones (EPZs) have been converted into SEZs. These are fully functional. All these SEZs are in various parts of the country in the private/joint sectors or by the State Government. But this process of planning and development is under question, as the states in which the SEZs have been approved are facing intense protests, from the farming community, accusing the government of forcibly snatching fertile land from them, at heavily discounted prices as against the prevailing prices in the commercial real estate industry. Also some reputed companies like Bajaj and others have commented against this policy and have suggested using barren and wasteland for setting up of SEZs.

Attempts to set up a Special Economic Zone in Nandigram have led to protests by villagers in the area. A Parliamentary Committee to study and give recommendations on SEZs has said that no further SEZs be notified unless the existing law is amended to incorporate the changes related to the land acquisitions.

Genpact has announced its plans to expand its presence in Hyderabad by setting up a Special Economic Zone (SEZ) across 50 acres (200,000 m2) in the city at Jawahar Nagar.

Indonesia

Iran

  • Arg - e - Jadid Special Economic Zone: Vehicle Manufacturing Hub.
  • PetZone: Petrochemical special economic Zone, Mahshahr.
  • Kish: Kish island special economic zone.
  • Sarakhs
  • Sirjan
  • Shahid Rajaee Port[1]
  • Amirabad Special Economic Zone[2]
  • Bushehr Port

Kazakhstan

Multiple Economic zones created by the mandate of the President. Each zone has a different focus. South Kazakhstan "Ontustyk" special economic zone is dedicated to the development of the textile industry in Kazakhstan.

North Korea

The Rajin-Sonbong Economic Special Zone was established under a UN economic development programme in 1994. Located on the bank of the Tuman River, the zone borders on the Yanbian Korean Autonomous Prefecture (or, Yeonbyeon in Korean) of the People's Republic of China, as well as Russia. In 2000 the name of the area was shortened to Rason and became separate from the North Hamgyeong Province.

Pakistan

Taking the example of the Chinese success with their SEZs, China is helping Pakistan develop the Haier-Ruba economic zone on the outskirts of Lahore.

Other economic zones include the China-Pakistan economic zone open only to Chinese investors and also the future crown jewel of Pakistan, Gwadar.

There are also talks of creating a Japanese city for foreign investors from Japan only.

There has also been new SEZ proposed on the currently under construction Sialkot-Lahore motorway, Qatar has proposed an investment for $1 billion in a new SEZ along the motorway.

There is also a new zone under construction in Faislababd, which will be the biggest industrial estate of Pakistan when complete, it has sections for each country and the first phrase is already complete with a special Chinese zone in it.

List of SEZs in the Pakistan

Philippines

Philippine economic zones (ecozones) are collections of industries, brought together geographically for the purpose of promoting economic development. Although designed to operate separately from the political and economic milieu of surrounding communities, Philippine economic zones do in fact interact with their neighbors. There are 41 private-owned economic zones and 4 government owned economic zones in the Philippines. Of the 41 private economic zones, the biggest exporter is Gateway Business Park in General Trias, Cavite and the second biggest private ecozone is Laguna Technopark Inc. The four governmentally owned are Cavite Economic Zone, Bataan Economic Zone, Mactan Economic Zone and Baguio City Economic Zone. Thus it is a useful act for the growth of economic zone of the country.

List of SEZs in the Philippines

Poland

There are 14 Special Economic Zones in Poland[1]:

  • Kamiennogórska SSE
  • Katowice Special Economic Zone
  • Kostrzyńsko-Słubicka SSE
  • Krakowski Park Technologiczny
  • Legnicka SSE
  • Łódzka SSE
  • SSE EURO-PARK MIELEC
  • Słupska SSE
  • SSE Starachowice
  • Suwalska SSE
  • Pomorska SSE (Pomeranian Special Economic Zone)
  • Tarnobrzeska SSE
  • Wałbrzych Special Economic Zone "INVEST-PARK"
  • Warmińsko-Mazurska SSE

Republic of Korea (South Korea)

The Daegu-Gyeongbuk Free Economic Zone (DGFEZ) is located in the Southeastern part of South Korea. As the name suggests, DGFEZ encompasses parts of Daegu Metropolitan City and parts of North Gyeongsang (Gyeongbuk) Province (Gumi, Pohang, Gyeongsan, and Yeongcheon cities). In total there are 11 specialized districts spanning 39.54 km2. DGFEZ is a Knowledge-Creative Free Economic Zone with 7 of the districts specialized on knowledge-based service industries and 4 for knowledge-based manufacturing industries.

Russia

Technical/Innovational Zones

Industrial/developmental Zones

  • “Alabuga” (special economic zone)
  • Lipetsk

Tourist Zones

Ukraine

Special Economic Zones existed in Ukraine until March 31, 2005. The first created was the Nouth-Crimean Experimental Economic Zone Syvash (since 1996). From 1998 to 2000 11 new zones were created.

Name Location Area Established Time limit*
NCEEZ Syvash Autonomous Republic of Crimea 1996 5 years
Slavutych Slavutych, Kiev Oblast 2,000 ha 30.06.1998 till 01.01.2020
Azov Mariupol, Donetsk Oblast 315 ha 21.07.1998 60 years
Donetsk Donetsk, Donetsk Oblast 466 ha 21.07.1998 60 years
Zakarpattia Uzhhorodskyi Raion and Mukachivskyi Raion, Zakarpattia Oblast 737 ha 09.01.1999 30 years
Yavoriv Yavorivskyi Raion, Lviv Oblast 116,000 ha 17.02.1999 till 01.01.2020
Interport Kovel Kovel, Volyn Oblast 57 ha 01.01.2000 20 years
Kurortopolis Truskavets Truskavets, Lviv Oblast 774 ha 01.01.2000 20 years
Mykolaiv Mykolaiv, Mykolaiv Oblast, shipyard territory, and adjoining area 865 ha 01.01.2000 30 years
Port Krym Kerch, Autonomous Republic of Crimea 27 ha 01.01.2000 30 years
Porto-Franco Odessa, part of Odessa Trade Sea Port's territory 32 ha 01.01.2000 25 years
Reni Reni, Odessa Oblast 94 ha 17.05.2000 30 years
* Initially planned time of operation given. All zones were shut down on March 31, 2005.

NCEEZ — Nouth-Crimean Experimental Economic Zone.

Sources: [3] [4] [5] and Пехник А.В., Іноземні інвестиції в економіку України. Навчальний посібник, Вид. «Знання», Київ 2007, pages: 49, 310–319

U.S.S.R.

As for Finland and Yugoslavia, the reason for their rapid economic growth was the Soviet Union’s policy of treating those states as special economic zones, through which it gained access to technologies and the know-how of the West. Export of such products to the USSR was often prohibited due to their dual purpose. (U.S.S.R. Special Economic Zones)

References

  • Chee Kian Leong, 2007, A Tale of Two Countries: Openness and Growth in China and India [6], Dynamics, Economic Growth, and International Trade (DEGIT) Conference Paper.

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