SEZs exempt from indigenisation law

SEZs exempt from indigenisation law | The Herald April 11, 2016

Golden Sibanda Senior Business Reporter
LICENCED investors operating in Special Economic Zones will be exempt from the provisions of two key legislations; Indigenisation and Economic Empowerment Act and Labour Act, Section 56 of the proposed SEZ Bill provides. The Bill, which also sets up the Special Economic Zones Authority, proposes that the SEZ authority, in consultation with the minister responsible for administration of the Labour Act provides rules for conditions of service, termination of contract, dismissal from service and disciplinary hearing in SEZ.

“This clause provides for the approval to not have the Labour Act (Chapter 28:01) and the Indigenisation and Economic Empowerment Act (Chapter 14:33.”)

The Indigenisation and Economic Empowerment Act is Government’s affirmative law deliberately crafted to bring locals into the mainstream economy. The law is blamed for disappointing foreign investment inflows.

The term “special economic zone” is commonly used as a generic term to refer to only specific modern economic zone.

In these zones business and trades laws differ from the rest of the country. SEZs are located within a country’s national borders and are aimed at increasing trade, investment and creating jobs.

SEZs encourage investors to set up in designated areas, as such financial policies which may not be applicable to other economic spheres are introduced. Policies in the SEZ typically regard investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays.

Government mooted SEZs with a view to attract investment and facilitate trade following economic instability and negative growth over the decade to 2008. While economic growth picked pace after dollarisation in 2009, it has petered out due to a myriad of reasons including lack of funding, antiquated equipment translating into high cost of production and uncompetitiveness of local firms.

Government has projected the economy to grow 1,2 percent this year, having registered lukewarm growth last year, weighed down by the plunge in global commodity prices with minerals making up the bulk of the country’s exports.

The special economic zones Bill has already sailed through the Parliamentary Legal Committee, which has reportedly given a non-adverse report, which was announced in the National Assembly on the 5th of April this year.

Finance and Economic Development Minister Patrick Chinamasa is now expected to deliver his second reading speech on the Bill in the National Assembly once the legal committee has presented its report.

The Indigenisation and Economic Empowerment Act requires all foreign-owned firms operating in Zimbabwe to sell at least 51 percent of their shareholding to indigenous black Zimbabweans or entities that are owned by Government.

Minister Chinamasa told a recent reception function for Afreximbank president, Benedict Okey Oramah that the SEZ Bill will become law by mid year. He said that the new legislation will start with an SEZ in the tourism sector.