Integrating Special Economic Zones into Economic Development Strategies7th Working Group Meeting on Investment Zones in Iraq
Thomas Flynn, Policy Analyst, MENA Division, GRSParis, France17 February 2015
Purpose of presentation
• Define utility of SEZs • Examines ways to link SEZs to economic strategies• Case study of Malaysia
What are SEZs? What do they offer?
For Iraq• SEZs need to be tailored to
the Iraq context. Potential benefits: spur
industrialisation, diversification; perhaps resolve land allocation problems
• However, SEZs can distort the economy because of preferred legislation, incentives, etc. Could discourage wider
trade and investment reform
• SEZs are… One of various economic policy
instruments to support private sector development and stimulate investment
Can serve multiple policy objectives• Similar goal: A secure, conducive
environment for enterprises Developed and managed land,
subdivided into plots Adequate on- and off-site
infrastructure and access to utilities Support services for existing or new
businesses (e.g. business licencing, training, incubation)
Perhaps offer fiscal or commercial incentives, access to finance
Portfolio of SEZs
Why different zones? Depends on policy objectives
• Industrial Zones can be for both domestic and foreign investors, especially in manufacturing and support services
• Export Processing and Free Zones work under specific customs regimes to facilitate regional/international trade and support export-oriented manufacturing
• Investment Zones offer streamlined regulations and licencing and incentives to attract foreign investors and develop new industries
• In other countries, technology parks and business incubators offer high-level support services
Therefore, one country can have different zones depending on policy objectives
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Different types of SEZs
Extent of support services and incentives provided
Leve
l of t
echn
olog
y an
d fo
reig
n ca
pita
l
Industrial Zones
Technoparks and Incubators
Independent Enterprises or
Clusters
Investment Zones
Basis for an SEZ strategy (part 1)
Basis for an SEZ strategy (part 2)
• SEZ strategy should be integrated into national development plans Funnel national policy into specific
policies, ensures linkages The policy framework for the
strategy must be flexible to adjust to evolving economic development priorities
If not…
Possible objectives
for SEZ strategy
SME developm
ent
Industrialisation
Job creation
Technology and
innovation policyRegional
developmentInvestmen
t and trade
policy
Sector developm
ent
Economic diversificat
ion
Foreign Exchange
• Balance: the SEZ strategy should focus on achieving specific policy objectives, aligned with country development objectives; however, based on market demand
Putting together an SEZ strategy (part 3)
• Sample Content of a Strategy
• Background and Rationale
• Vision and Objectives• Legal and Regulatory
Framework • Zone Regulator• Zone Governance and
Administration • Regulatory Relief – One
Stop Shops• Zone Designation and
Land Usage• Fiscal and Other
Incentives• Monitoring and
Evaluation • Financing Zones
SEZ Strategy
Country advantages
Trade and investment data
analysis
Investor survey
Benchmarking of SEZs
Developing the SEZ strategy: choosing the right policy (part 4)
Implementing SEZ strategy (part 5)
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Vision 2020
ICT Development
Plan (Industrial
Development Plans)
Multimedia Super
Corridor (MSC)
www.thecommonwealth.org
• Vision 2020: Former Malaysian PM; Industrial Development Plans (New Economic Policy)
•Population: 29.2 million•GDP per capita: USD•Unemployment: 3.4%•World Competitiveness: 25th place•20th in the world for FDI attractiveness•Malaysia’s 2011 FDI inflows jumped 31.5% to US$11.97 billion from 2010
Example: Malaysia’s approach from plan to SEZ
• Multi-billion dollar project launched in 1996 Land area: 15 km by 50 km (size of
Singapore)• “It was never just about building
parks” 2011: MSC revenue: USD 10.4
billion 119,138 jobs created since its
inception• 2011: 26 Cybercities and
Cybercentres in the MSC Cyberjaya national Cybercity
capital Putrajaya seat of Malaysia’s
government administration
Multimedia Super Corridor (MSC) and results
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• Characteristics of Companies in the MSC? Basis Bay N2N Connect Nexustel
Yigitcanlar, et al.: “The case of Multimedia Super Corridor”
Lessons for Iraq
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• Credible and long-term vision MSC was positioned on the national agenda, part of an overall
economic development strategy, and all the initiatives were linked locally
High level advisory boards and international experts on long-term basis
Engage with potential anchor investors; invest in infrastructure• Monitor and evaluate • Flexibility and pragmatism in approach!