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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,QuEST Global SEZ,
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
[hide]
• 1 China
• 2 India
o 2.1 List of SEZs in India
• 3 Indonesia
• 4 Iran
• 5 Kazakhstan
• 6 North Korea
• 7 Pakistan
o 7.1 List of SEZs in the Pakistan
• 8 Philippines
o 8.1 List of SEZs in the Philippines
• 9 Poland
• 10 Republic of Korea (South Korea)
• 11 Russia
o 11.1 Technical/Innovational Zones
o 11.2 Industrial/developmental Zones
o 11.3 Tourist Zones
• 12 Ukraine
• 13 U.S.S.R.
• 14 References
• 15 External links
[edit] China
Main article: Special Economic Zones of the People's Republic of China
Currently, the most prominent SEZs 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.
[edit] 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.
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.
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.
India's first Aerospace SEZ at Belgaum S.A.B.C.A, Magellan Aerospace & Farinia GEIE
signs MOU with QuEST Global at its SEZ.
[edit] Indonesia
Main article: Batam Island#SEZ - Special Economic Zones
[edit] 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
[edit] Kazakhstan
• Astana
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.
[edit] 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.
[edit] 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.
[edit] 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
[edit] Russia
[edit] Technical/Innovational Zones
• Dubna
• Zelenograd
• Neudorf (Russian: Нойдорф) - industrial and business park in special economic
zone in Strelna near Saint Petersburg, Russia
• Novo-Orlovskoye (Russian: Ново-Орловское) - SEZ territory in Saint Petersburg,
Russia
• Tomsk
• Krasnodar Krai
• Stavropol Krai
• Kaliningrad Oblast (Yantar, Kaliningrad Special Economic Zone)
• Altai Krai
• Altai Republic
• Irkutsk Oblast
• Buryatia
[edit] 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.
till
Slavutych Slavutych, Kiev Oblast 2,000 ha 30.06.1998
01.01.2020
116,000 till
Yavoriv Yavorivskyi Raion, Lviv Oblast 17.02.1999
ha 01.01.2020
Kurortopolis
Truskavets, Lviv Oblast 774 ha 01.01.2000 20 years
Truskavets
* 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
[edit] 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)
[edit] References
1. ^ http://www.mg.gov.pl/Specjalne+strefy+ekonomiczne/Wykaz+SSE/
• 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.
Introduction
This policy intended to make SEZs an engine for economic growth supported by quality infrastructure
complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum
possible regulations. SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions of the
Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes.
To instill confidence in investors and signal the Government's commitment to a stable SEZ policy regime and
with a view to impart stability to the SEZ regime thereby generating greater economic activity and
employment through the establishment of SEZs, a comprehensive draft SEZ Bill prepared after extensive
discussions with the stakeholders. A number of meetings were held in various parts of the country both by
the Minister for Commerce and Industry as well as senior officials for this purpose. The Special Economic
Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of
June, 2005. The draft SEZ Rules were widely discussed and put on the website of the Department of
Commerce offering suggestions/comments. Around 800 suggestions were received on the draft rules. After
extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February,
2006, providing for drastic simplification of procedures and for single window clearance on matters relating
to central as well as state governments. The main objectives of the SEZ Act are:
It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure
and productive capacity, leading to generation of additional economic activity and creation of employment
opportunities.
The SEZ Act 2005 envisages key role for the State Governments in Export Promotion and creation of related
infrastructure. A Single Window SEZ approval mechanism has been provided through a 19 member inter-
ministerial SEZ Board of Approval (BoA). The applications duly recommended by the respective State
Governments/UT Administration are considered by this BoA periodically. All decisions of the Board of
approvals are with consensus.
The SEZ Rules provide for different minimum land requirement for different class of SEZs. Every SEZ is
divided into a processing area where alone the SEZ units would come up and the non-processing area where
the supporting infrastructure is to be created.
• " Simplified procedures for development, operation, and maintenance of the Special Economic
Zones and for setting up units and conducting business in SEZs;
• Single window clearance for setting up of an SEZ;
• Single window clearance for setting up a unit in a Special Economic Zone;
• Single Window clearance on matters relating to Central as well as State Governments;
• Simplified compliance procedures and documentation with an emphasis on self certification
Approval mechanism
The developer submits the proposal for establishment of SEZ to the concerned State Government. The State
Government has to forward the proposal with its recommendation within 45 days from the date of receipt of
such proposal to the Board of Approval. The applicant also has the option to submit the proposal directly to
the Board of Approval.
The Board of Approval has been constituted by the Central Government in exercise of the powers conferred
under the SEZ Act. All the decisions are taken in the Board of Approval by consensus. The Board of Approval
has 19 Members. Its constitution is as follows:
(18) A professor in the Indian Institute of Management or the Indian Institute of Foreign Member
Trade
(19) Director or Deputy Sectary, Ministry of Commerce and Industry, Department of Member
Commerce Secretary
Administrative set up
The functioning of the SEZs is governed by a three tier administrative set up. The Board of Approval is the
apex body and is headed by the Secretary, Department of Commerce. The Approval Committee at the Zone
level deals with approval of units in the SEZs and other related issues. Each Zone is headed by a
Development Commissioner, who is ex-officio chairperson of the Approval Committee.
Once an SEZ has been approved by the Board of Approval and Central Government has notified the area of
the SEZ, units are allowed to be set up in the SEZ. All the proposals for setting up of units in the SEZ are
approved at the Zone level by the Approval Committee consisting of Development Commissioner, Customs
Authorities and representatives of State Government. All post approval clearances including grant of
importer-exporter code number, change in the name of the company or implementing agency, broad
banding diversification, etc. are given at the Zone level by the Development Commissioner. The performance
of the SEZ units are periodically monitored by the Approval Committee and units are liable for penal action
under the provision of Foreign Trade (Development and Regulation) Act, in case of violation of the
conditions of the approval.
The incentives and facilities offered to the units in SEZs for attracting investments into the
SEZs, including foreign investment include:-
• Duty free import/domestic procurement of goods for development, operation and maintenance of
SEZ units
• 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income
Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit
for next 5 years.
• Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
• External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity
restriction through recognized banking channels.
• Exemption from Central Sales Tax.
• Exemption from Service Tax.
• Single window clearance for Central and State level approvals.
• Exemption from State sales tax and other levies as extended by the respective State Governments.
• Exemption from customs/excise duties for development of SEZs for authorized operations
approved by the BOA.
• Income Tax exemption on income derived from the business of development of the SEZ in a block
of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
• Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.
• Exemption from dividend distribution tax under Section 115O of the Income Tax Act.
• Exemption from Central Sales Tax (CST).
• Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
Export Performances
Exports from the functioning SEZs during the last three years are as under:
By Ian MacLeod
Trade Information Center, Trade Development
Foreign Trade Zones (FTZs) were created in the United States to provide special customs
procedures to U.S. plants engaged in international trade-related activities. Duty-free treatment is
accorded items that are processed in FTZs and then reexported, and duty payment is deferred on
items until they are brought out of the FTZ for sale in the U.S. market. This helps to offset
customs advantages available to overseas producers who compete with domestic industry. The
Foreign-Trade Zones (FTZ) Board (composed of representatives from the U.S. Departments of
Commerce and Treasury) has its operational staff in the International Trade Administration's
Import Administration.
FTZs are considered to be outside of U.S. Customs Territory for the purpose of customs duty
payment. Therefore, goods entering FTZs are not subject to customs tariffs until the goods leave
the zone and are formally entered into U.S. Customs Territory. Merchandise that is shipped to
foreign countries from FTZs is exempt from duty payments. This provision is especially useful to
firms that import components in order to manufacture finished products for export.
There is no time limit on goods stored inside a FTZ and certain foreign and domestic
merchandise held in FTZs may be exempted from state and local inventory taxes. This allows
firms to minimize their costs while their products are waiting to be shipped. In addition, quota
restrictions are in some cases waived for items entering an FTZ; however, the restrictions would
apply if the items were to enter the U.S. market.
A variety of activities can be conducted in a zone, including assembling, packaging, destroying,
storing, cleaning, exhibiting, re-packing, distributing, sorting, grading, testing, labeling, repairing,
combining with foreign or domestic content, or processing. Manufacturing and processing require
specific FTZ Board approval, however.
FTZ activity must not conflict with U.S. trade policy or harm domestic industry or other domestic
plants outside of zones. The FTZ Board requires that zone manufacturing activity result in a
significant public benefit and a net positive economic effect. In addition, the U.S. Customs Service
supervises all zone activity and ensures that all customs and FTZ Board requirements are
observed.
FTZs are divided into general-purpose zones and subzones. The Foreign-Trade Zones Board
accepts and reviews applications for both. State or local governments, port authorities, nonprofit
organizations, or economic development agencies typically sponsor general-purpose zones.
General-purpose zones involve public facilities that can be used by more than one firm, and are
most commonly ports or industrial parks used by small to medium sized businesses for
warehousing/distribution and some processing/assembly. Subzones, on the other hand, are
sponsored by general-purpose zones, but typically involve a single firm's site which is used for
more extensive manufacturing/processing or warehousing/distribution that cannot easily be
accomplished in a general-purpose zone.
How can I locate a FTZ near me and who do I contact to begin doing business with it?
In order to take advantage of FTZ procedures, you should contact a local FTZ. A geographic list
of all FTZs and their telephone numbers is available on the FTZ Board website,
http://ia.ita.doc.gov/ftzpage/. Each FTZ has its own requirements for firms that wish to do
business with them, but there is a general process that is followed by all. Many FTZs will counsel
prospective clients to determine how they can best use the FTZ. Additionally, many FTZs will
discuss with their local U.S. Customs Service offices the qualifications of the prospective clients
for the zone. If you are interested in finding out more information on zones, you may contact the
nearest zone in your state, visit the FTZ website, or call the FTZ staff at 202-482-2862.
Many other countries operate similar special customs zones, such as export processing zones
and free trade zones. Interested parties should contact the embassy or customs officials of that
country for information and documentation requirements. Contact information for foreign
embassies is available by calling 1-800-USA-TRAD(E). Many U.S. freight forwarders also have
established contacts with many of these foreign zones and can provide information on the
appropriate documentation needed to ship goods through them.
The following is a partial list of the many benefits you can attain when
using Foreign-Trade Zones or Foreign-Trade Zone Subzone:
To learn more about Foreign-Trade Zones, visit the FTZ Resource Center by
Clicking on the Banner Below
A free trade zone (FTZ) or export processing zone (EPZ) is an area of a country where
some normal trade barriers such as tariffs and quotas are eliminated and bureaucratic
requirements are lowered in hopes of attracting new business and foreign investments. It
is a region where a group of countries has agreed to reduce or eliminate trade barriers.[1]
Free trade zones can be defined as labor intensive manufacturing centers that involve the
import of raw materials or components and the export of factory products.
Most FTZs are located in developing countries: Brazil, China, the Philippines, Malaysia,
Pakistan, Mexico, Costa Rica, Honduras, and Madagascar have EPZ programs.[2] In 1997,
93 countries had set up export processing zones (EPZs) employing 22.5 million people,
and five years later, in 2003, EPZs in 116 countries employed 43 million people.[2]
Corporations setting up in a zone may be given tax breaks as an incentive. Usually, these
zones are set up in underdeveloped parts of the host country; the rationale is that the
zones will attract employers and thus reduce poverty and unemployment, and stimulate
the area's economy. These zones are often used by multinational corporations to set up
factories to produce goods (such as clothing or shoes).
Free trade zones in Latin America date back to the early decades of the 20th century. The
first free trade regulations in this region were enacted in Argentina and Uruguay in the
1920s. However, the rapid development of free trade zones across the region dates from
the late 1960s and the early 1970s.
Free Trade Zones are also known as Special Economic Zones in some countries. Special
Economic Zones (SEZs) have been established in many countries as testing grounds for
the implementation of liberal market economy principles. SEZs are viewed as
instruments to enhance the acceptability and the credibility of the transformation policies
and to attract domestic and foreign investment.
In 1999, there were 43 million people working in about 3000 FTZs spanning 116
countries producing clothes, shoes, sneakers, electronics, and toys. The basic objectives
of EPZs are to enhance foreign exchange earnings, develop export-oriented industries and
to generate employment opportunities.
Contents
[hide]
• 1 Criticism
• 2 List of Free Trade Zones
• 3 See also
• 4 References
[edit] Criticism
Free trade zones are domestically criticized for encouraging businesses to set up
operations under the influence of other governments, and for giving foreign corporations
more economic liberty than is given indigenous employers who face large and sometimes
insurmountable "regulatory" hurdles in developing nations. However, many countries are
increasingly allowing local entrepreneurs to locate inside FTZs in order to access export-
based incentives. Because the multinational corporation is able to choose between a wide
range of underdeveloped or depressed nations in setting up overseas factories, and most
of these countries do not have limited governments, bidding wars (or 'races to the
bottom') sometimes erupt between competing governments.
Sometimes the domestic government pays part of the initial cost of factory setup, loosens
environmental protections and rules regarding negligence and the treatment of workers,
and promises not to ask payment of taxes for the next few years. When the taxation-free
years are over, the corporation that set up the factory without fully assuming its costs is
often able to set up operations elsewhere for less expense than the taxes to be paid, giving
it leverage to take the host government to the bargaining table with more demands, but
parent companies in the United States are rarely held accountable.[3]
The widespread use of free trade zones by companies such as Nike has received criticism
from numerous writers such as Naomi Klein in her book No Logo.