A WORLD Bank senior economist says Northern Australia could host two or three special economic zones to tap into the economic growth expected in Asia this century.
Douglas Zhihua Zeng said there was no reason Australia’s political system should be an obstacle to the move and special economic zones (SEZ) had already been successful in other democratic countries.
Australia currently has no special economic zones.
Professor Zeng made the comments at the Northern Development Summit in Townsville, North Queensland, where he spoke about China’s experience with SEZs.
However, he said the United States and Europe had proven the concept also worked in Western democracies.
There are now more than 2000 SEZs established in 120 countries, including 266 in North America and 161 in Europe.
Prof. Zeng, who is based in Washington and has written extensively on SEZs, said the lessons learnt in other countries could help create a blueprint for Northern Australia.
“There is no silver bullet,” Prof. Zeng said. “Many efforts have failed and it is a high risk undertaking.
“First of all, leadership (is needed) at the highest political level.”
He said SEZs in Northern Australia would only succeed if the objectives were clearly defined based on the area’s competitive advantages and if they were aimed at “high value-added industries”.
He suggested industries to be targeted by SEZs in the north could include the resources sector, especially equipment manufacture and maintenance; agriculture, including organic products that now appeal to affluent Chinese; knowledge industries; and tourism.
Prof. Zeng said if the Australian Government wanted to set up successful SEZs, it needed to make sure every ingredient was in place.
“You need the long-term vision and the clear objectives, using a local (analysis) of comparative advantages,” he said.
“Strategic planning must be linked into the regional development with a focus on the strengths (of the zone.)
“There is some legal and regulatory framework (and there must be) an emphasis on innovation and creating a conducive business environment with a dynamic ecosystem, including easy access to various services, skills and finance.”
He said strong public private partnerships were also vital.
The Northern Development Summit was organised by non-profit think tank ADC Forum to link in with the Federal Government’s process toward a white paper on developing Northern Australia.
It included high level delegates from government, mining, agriculture and other sectors.
In the year since Prime Minister Tony Abbott, then in opposition, announced his ambition to develop the north, SEZs have been one of the most debated strategies.
Some experts in Australia favour the idea, while others say the country’s constitution makes it difficult to establish a meaningful SEZ.
While China has been the most famous example of SEZ policies, Prof. Zeng said the first modern example was in Ireland in the 1950s.
Prof. Zeng also touched on the growing volume of capital available globally for foreign direct investment and how it could benefit Australian infrastructure projects.
He said Australia was well positioned to take advantage of a rising volume of capital available globally, especially as the Chinese economy evolves.
“Last year, China’s outbound FDI (foreign direct investment) was about $101 billion and China attracted inbound FDI of about $124 billion,” he said.
“But in about two or three years, China will be a net outbound FDI country.
“That is very important for Australia to know.”
Courtesy of Business Acumen