Special economic zones (SEZ) are not a panacea for nation’s economic and developmental challenges. However, they are proven tools, if implemented correctly, to rapidly diversify a country’s industrial base, attract foreign direct investment (FDI), increase job creation and improve economic growth. Examples of such success range from Singapore, to China (the factory of the world), to Ethiopia( the fastest growing economy in 2017) to Rwanda. Jamaica, for its part, is seeking to be on this list of successes.
Can Jamaica do it?
Yes, I believe Jamaica can do it. In fact it has already started.
Having being on the ground for the development of Jamaica’s modern Special Economic Zone Regime I know for a fact that not only have these and other successes been studied but so too have been the failures. Knowing what not to do is just as important, and in some instances more important, as what to do. This journey has been a case of adopt and adapt what works to Jamaica’s specific circumstances (social, economic , legal, etc ) and one of alignment with Jamaica’s vision of itself as a global logistics hub.
On a personal note the development of Jamaica’s Special Economic Zone Regime has not only been an interesting one but professionally truly gratifying having participated in its development from day one -authoring the initial concept paper, assisting with the drafting of the SEZ policy, the law, the Regulations and now the implementation and operationalization of the Jamaica’s Special Economic Zone Authority.
Now having said all that, what exactly are special economic zones (SEZ)?
Is defined by the World Bank:
A geographically delimited area, usually physically secured (fenced-in); single management/administration; eligibility for benefits based upon physical location within the zone; separate customs area (duty-free benefits) and streamlined procedures.
Special economic zone : performance, lessons learned, and implication for zone development by Akinci, Gokhan; Crittle, James. Washington DC: World Bank, 2008
Special economic zones are geographically designated trade areas that are used to attract foreign investors and boost industrialisation. They generally have trade laws that differ from the rest of the country and companies are offered tax incentives to set up operations
While Special Economic Zone (SEZ) come in a variety of configurations they generally have six common features: (i) a geographically defined area that is usually fenced in; (ii) is under a single management or administration; (iii) flexible and streamlined business regulations; (iv) businesses operating within the zone are eligible for benefits (tax incentives) from being located in the zone; (v) support infrastructure that is designed to optimize the operations of businesses. Additionally zones are located proximate to key transport infrastructure such as port, airports, highway interchanges, that are used to facilitate the business operation of the zones and; (vi) the zone is considered a separate customs area.
SEZs come in a variety of forms, names and functions — free trade zones, free zones, export processing zones, enterprise zones, etc — that reflect a Government’s priorities and positioning of its economy. However, what unifies them all is that they are development tools used by governments to attract and facilitate investments that act as catalysts to diversify whole or targeted segments of their economies.
This post was first published on my blog Commercial Law International.