Article – ‘Special Economic Zones success hinges on resources availability’

21 April 2014
Kudzai Chimhangwa
The Standard
THE availability of resources and private sector involvement should anchor the first project under the Special Economic Zones (SEZ) programme, Mines and Mining Development minister, Walter Chidhakwa has said.
Speaking at a SEZ workshop in Harare last week, Chidhakwa drew on experiences from the now redundant Export Processing Zones (EPZ) which was wound up by Zimbabwe Investment Authority (ZIA) Act of 2006.
An SEZ is a geographical area governed by special economic regulations that differ from other areas in the same country.
Moreover, the regulations usually contain measures that are favourable to foreign direct investment and a host of tax incentives.
“We have got a multi-pronged disease which requires a multi-pronged approach. Improving the regulatory and policy framework is imperative for us,” he said.
Chidhakwa said the economy was not moving at the desired pace, characterised by high unemployment, low Foreign Direct Investment (FDI) inflows as well as an acute lack of beneficiation.
“As we implement SEZ, there are other things that need to be done, the SEZ operates better if the macro-economic environment is performing well,” he said.
Chidhakwa said an incentive programme such as SEZ can be self-funding through licensing and dedicated services, adding that the EPZ Authority for instance was at 92% self-funding by 2005.
“Let’s pick winners; these can be geographical set-ups, for example, Beitbridge and its environs will also grow as an SEZ, Gokwe and its environs would also grow. This in turn will create linkages for the rest of the economy,” said Chidhakwa.
He drew on other Zimbabwean examples of areas of potential such as diamond cutting and polishing which bears a resource-based advantage and the Luvimbi Natural Gas Cluster in Lupane, which can obtain incentives through infrastructure support.
Delegates heard that industrial infrastructure built upfront was of importance as investors can relocate quickly and be provided with the best conditions for operation in terms of cost of production.
Speaking at the same event, Zimra’s commissioner of customs and excise, Happias Kuzvinzwa said tax incentives would need to be complemented by productivity lest the state loses out on potential revenue.
“We are given [revenue] targets to meet at the end of every quarter, so as we craft those [SEZs] let’s ensure industry that participates in these will generate revenue needed for the economy,” said Kuzvinzwa.
“Fiscal incentives should not be looked at in isolation, other supply side factors must be incorporated, for example, infrastructure and information technologies,” he said.
Some countries are focusing on knowledge-based industries such as aircraft engineering and call and financial centres among others as they seek to maximise on the benefits of SEZs.
Russia is already planning on setting up special economic zone of industrial type in Vladivostok, an administrative city in that country.
Russia’s Economic Development ministry noted that six of Russia’s SEZs were industrial and production zones, five technology and innovation zones, 14 for tourist and recreational purposes and three being port zones.
Courtesy of The Standard

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