via Parly adopts Special Economic Zones motion | The Herald February 23, 2015
The National Assembly has adopted a motion calling on Government to expedite the creation of Special Economic Zones as part of measures to revive the economy.The motion was moved by Chegutu West representative Cde Dexter Nduna last week. He called on Government to urgently bring a Bill to Parliament that will establish SEZs.
In his remarks following the adoption of the motion, Cde Nduna urged Government to provide incentives that would attract Foreign Direct Investment.
“The incentives that can be proffered for those investors include 100 percent tax exemption for the first five years then 15 percent thereafter, 100 percent foreign ownership of companies operating in free trade zones or SEZs, 100 percent repatriation of capital, profits and the duty-free importation of capital goods and raw materials, hustle free licensing procedures and business facilitation,” he said.
Responding to the debate, Finance Minister Patrick Chinamasa said Cabinet was considering various options to establish SEZs.
“Last year, my ministry put a paper to Cabinet, basically to try to define this concept with a view that Cabinet should choose the option that they think is most relevant to our economic situation.
“We can have an option where we say we have a geographical area and we say everyone in this geographical area; the geographical area constitutes a Special Economic Zone. We then apply or give all the incentives that we want in order to locate any investor into that geographical area.
“Another option is that we identify as a country which products we think we have competitive advantage and this could arise from the fact that these products are produced in our country or we have developed expertise to produce world quality products,” Minister Chinamasa said.
Minister Chinamasa said Zimbabwe could also take advantage of its educated population to export expertise to various countries.
“Another option is to look at our comparative advantage as a country, an educated population, a skilled population and therefore, to emphasise the knowledge based industries in education, insurance and financing.
“Therefore, mobilise all the necessary resources and factors necessary to be able to be world-class producers of engineers and accountants which we can export in terms of expertise and services regionally and also globally,” he said.
Government’s economic blueprint, Zim-Asset, has also identified SEZs as one way of reviving the economy by attracting FDI through the provision of incentives.
COMMENTS
Free zones have emerged on the scene as a planning tool to help boost economic development. They have their advantages, but their policy pitfalls too.
Since antiquity, governments, emperors, kings and queens have been providing traders and investors with special sites offering respite from normal import-export tax regimes and regulations in return for a steady stream of much needed revenue for the public purse. Before modernity, such places were concentrated in the Mediterranean basin, at Delos in Greco- Roman times, and in Venice, Genoa and Marseilles during the Middle Ages. By the 19th century, they had spread to Southeast Asia. But it was not until the latter half of the 20th century that so-called free zones made their mark as deliberate tools of economic development, most notably in China in 1979 when one of the most famous free zones of all was set up at Shenzhen.
Nowadays there are several hundred free zones around the world, and the Middle East North Africa (MENA) region has a fair share of successes, from Dubai’s media and Internet cities that caught the early wave of the e-economy, through Egypt’s Gulf of Suez all the way to the Tangier Free Zone.
Located on the African side of the straits of Gibraltar, just 14 km from Europe, the Moroccan port of Tangier, a town that has long attracted writers, musicians and tourists from around the world, is now using free zones to build a new reputation as a business hub.
The Tangier Free Zone (TFZ) reflects the emerging trend of moving away from classical export-processing zone development towards zones with a multisectoral development approach. It was inaugurated in 1999 and became operational in 2000. Located inland near the airport, it covers some 345 hectares and houses some 400 companies. In the 10 years since its inception, the industrial users of the free zone have invested some €500 million in their facilities. Some 40,000 jobs have been created, and as Jamal Mikou, managing director of TFZ, explains, these workers have added significantly to Morocco’s exports. In 2008, the free zone accounted for a tenth of Morocco’s industrial exports, totaling €1.2 billion.
Free zones are also considered a lever for boosting technological skills, particularly in the auto-components industry. Major clients such as Yazaki, Sumitomo and Delphi now supply the automobile industry, and new demand is likely, thanks to investments by Renault. Tangier’s free zone is one of several successful such areas in MENA, though the landscape is also dotted with slower performing ones. While most have filled up in terms of investment spaces, their effect on development has been less clear. What do successful free zones have in common and how can they be made to benefit the wider economy?
As an American attorney and an investment banker I have proposed to the government of Zimbabwe through then Governor Gono of the Reserve Bank of Zimbabwe to start developing a very timely needed Free Trade Zone near Harare. With an expense of over $35,000 a team of experts in the USA we helped prepare a complete package for Zimbabwe’s Free Trade Zone (ZFTZ) that could truly create sizeable economical, industrial and technological progress to the entire country. I even lined up a very practical team of advisors who were willing to bankroll such an economic development zone in Zimbabwe. Our proposition was to set up one such Free Trade Zone (FTZ) in Muzerbani at the border of Zimbabwe and Mozambique and one in Harare. A 248 page plan for such a Free Trade Zone has been given to the government of Zimbabwe but nothing has been done yet. As a matter of fact, my group proposed a complete Free Trade Zone Building in Downtown Harare specifically to be developed to promote Zimbabwe’s diamond, color stones and gold jewelry tourism center where foreigners could visit Zimbabwe and purchase finished jewelry and even rough diamonds at greatly reduced prices (but lot higher prices than what Zimbabwe is getting for its rough diamonds now). We proposed to start with one or two full floors of a building to develop such a “jewelry tax-free zone” so a home grown industry can take a shape with the coordination from world’s largest diamond cutting and polishing center in Surat India as well as pan-African country’s participations. But nothing has come out of it yet.
I also understand the difficulties that Zimbabwe is undergoing and appreciate all the efforts and planning required to keep Zimbabwe’s fledgling economic afloat against its illegal and immoral economic embargo by the West.
I strongly believe that a fully functional Free Trade Zone is viable and very timely indeed! Zimbabwe can be another hub of such economic and transportation hub of Southern Africa similar to what Dubai is to the Middle East and Africa today!
Mmmhh