Question

Post A

Identify a Free Trade Zone (FTZ), Special Economic Zone (SEZ), or such in Mexico and make a sales pitch for it (like you are trying to attract a firm to come there!). Include web links to your resource information.  

What are the primary benefits it offers to an international company?

Post B

Review the options your peers provided.

Identify an international firm from Your Country that might benefit from participating in that FTZ, SEZ, etc. What advantages do you see that firm gaining by doing so?

Answer 1

Answer1.

A ifree itrade izone ialso icalled ias iforeign itrade-trade izone iis ian iarea iwhere igoods imay ibe ilanded, ihandle, imanufactured ior ireconfigured iand ire-exported iwithout ithe iintervention iof ithe icustom iauthorities. iOnly iwhen ithe igoods iare imoved ito ithe iconsumers iwhere ithe izones iare ilocated, ithey ineed ito iabide iby ithe iprevailing icustoms iduty. iFree itrade izones iare igenerally ilocated iin iareas iwhich iare igeographically iadvantageous ifor itrade. iFor iexample iaround imajor iseaports, iinternational iairports, iand inational ifrontiers.

A ispecial ieconomic izone iis ian iarea iin iwhich ithe ibusiness iand itrade ilaws iare idifferent ifrom ithe irest iof ithe icountry. iThe iobjective ibehind ithe iSEZ iis ito ienhance iforeign iinvestment, iincrease iexports, icreate ijobs iand ipromote iregional idevelopment.

We isales ipitch iwould ibe ito iconvince ithe icompanies ito icome iand iwork iin ispecial ieconomic izone ias iit ican iproduce iand itrade igoods iat ia ilower iprice iand iless irestrictions iand ialso iglobally icompetitive.

Benefits ito ian iinternational icompany

1. iReduce iTaxes/ iTax iexemptions

2. iRelief ifrom iinverted itariffs

3. iDuty iexemption ion ire-exports

4. i iIndefinite iStorage

5. iMinimum ibureaucratic iregulations.

6. iEncourage iexports

7. iExemptions iof icustom iduty

Answer2.

Special iEconomic iZones i(SEZs) ican ibe iregarded ias ian iinvestment iin iindustrial iinfrastructure iand ia iservices iprovider ito iattract iand ifacilitate iforeign iinvestment, iintegrate ilocal ifirms iinto iglobal ivalue ichains, ipromote iexport-oriented igrowth iand igenerate iemployment. iFor imany icountries, ithese izones iare ian iimportant iinstrument iof isocioeconomic idevelopment. iThey iare iwidely ideployed ito ikick-start iindustrial isectors iand ito ipromote itechnology itransfer ito ilocal ieconomies iand ican icontribute ito iimproving ithe ioverall iinvestment ienvironment, ilowering itransaction icosts ifor iFDI iactivities, iincreasing ithe iease iof idoing ibusiness iand istreamlining iadministrative iprocedures, iincluding ithe itime irequired ito iset iup ioperations. iAccording ito iUNCTAD’s iestimate, ithere iare inow iestimates iof iover i4,800 iSEZs iworldwide iand ithey iare istill ifront iof imind ifor iinvestment ipolicymakers.

Despite ithe iadvantages iand iclear isuccess icases, iSEZs ihave ia imixed irecord. iThe icost iof iinvestments iin izone iinfrastructure iand imaintenance iin imany icases ioutweigh ithe ibenefits. iInvestors imay ialso itake iadvantage iof itax ibreaks iwithout idelivering isubstantial iemployment ior iexport iearnings. iIt ioften iproofs idifficult ito iextend ibenefits ioutside ithe izones ior ito iupgrade idomestic iskills iand ithe iproduction ibase. iMany itraditional iexport iprocessing izones ihave ibeen isuccessful iin iattracting iinvestment iand icreating iemployment iin ithe ishort iterm ibut ibecame iuncompetitive iwhen iwages istarted ito irise, ior itrade ipreferences idisappeared.

Moreover, iSEZs itoday ioperate iin ian iever imore ichallenging ienvironment. iDue ito ithe inew iindustrial irevolution i(NIR) izones iwill ineed ito irethink itheir icompetitive iadvantages, ias ithe iimportance iof itraditional ilocational iadvantages iis ieroding. iAt ithe isame itime, iSEZs iwill ineed ito ipursue ibusiness iactivities iin ia imore isocially iand ienvironmentally iresponsible imanner ithat iadvances ithe iSustainable iDevelopment iGoals i(SDGs). iThese ichallenges icall ifor ia imodernization iof ispecial ieconomic izones.

In ithis isession, iorganized iin icollaboration iwith iFEMOZA, ilessons ilearned ifor idesigning ithe iright iinfrastructure, ifacilitation iservices, iand iincentives, icreating ieconomies iof iscale iand ipromoting itransfer iof ithe ilatest itechnologies iin ithe izones iwill ibe ishared iand isynthesized ifor ideveloping izone imodels ithat ican ibe iadopted iand iadapted ito iindividual icountries’ ineeds. iIt iwill ispecifically iaddress ichallenges irelated ito ithe imodernization iof iSEZs, isuch ias ithose irelated ito isustainable ieconomic izones, istrategic ialliances, idigitalization, idomestic iand iregional ilinkages iand inew isources iof ifinancing ifor iinnovation-driven izones, iputting itheory iinto ipractice

The imain iAdvantages iof iSEZ iUnits iin iIndia ican ibe isummarized ias ipromotion iof iindustrialization iand ieconomic igrowth ithrough isustainable idevelopment. iThe imain ipolicy istatement iof ithe ifirst iSpecial iEconomic iZone ipolicy istatement istates ithat ithese iSEZ iunits iof iIndia ishall ibe ioffered itax irebates, ifiscal iincentives iand ilands iat isubsidized irates iand ithese iare ithe iprimary iAdvantages iof iSEZ iUnits iin iIndia. iThe iimplementation iof ithe ifirst idrafted iSpecial iEconomic iZone ipolicy itook iplace ifrom ithe iend iof ithe iyear i2000.The ifirst ipolicy istatement ifor ithe idevelopment iof iSpecial iEconomic iZones iin iIndia iwas idrafted ias ia ifive-year iproject, istarting ifrom i1.11.2000 ito i09.02.2006. iFurther, ithe ifirst ipolicy istatement iof ithe iIndian iSpecial iEconomic iZones iwas iamended ito iaccommodate iand icompliment ithe igrowth iattained.

Key iAdvantages iof iSEZ iUnits iin iIndia

1. 10-year itax iholiday iin ia iblock iof ithe ifirst i20 iyears

2. Exemption ifrom iduties ion iall iimports ifor iproject idevelopment

3. Exemption ifrom iexcise i/ iVAT ion idomestic isourcing iof icapital igoods ifor iproject idevelopment

4. No iforeign iownership irestrictions iin ideveloping izone iinfrastructure iand ino irestrictions ion irepatriation

5. Freedom ito idevelop itownship iin ito ithe iSEZ iwith iresidential iareas, imarkets, iplay igrounds, iclubs iand irecreation icenters iwithout iany irestrictions ion iforeign iownership

6. Income itax iholidays ion ibusiness iincome

7. Exemption ifrom iimport iduty, iVAT iand iother iTaxes

8. 10% iFDI iallowed ithrough ithe iautomatic iroute ifor iall imanufacturing iactivities

9. Procedural iease iand iefficiency ifor ispeedy iapprovals, iclearances iand icustoms iprocedures iand idispute iresolution

10. Simplification iof iprocedures iand iself-certification iin ithe ilabor iacts

11. Artificial iharbor iand ihandling ibulk icontainers imade ioperational ithroughout ithe iyear

12. Houses iboth idomestic iand iinternational iair iterminals ito ifacilitate itransit, ito iand ifro ifrom imajor idomestic iand iinternational idestinations

13. Has ihost iof iPublic iand iPrivate iBank ichains ito ioffer ifinancial iassistance ifor ibusiness ihouses

14. A ivibrant iindustrial icity iwith iabundant isupply iof iskilled imanpower, icovering ithe ientire ispectrum iof iindustrial iand ibusiness iexpertise

15. Well iconnected iwith inetwork iof ipublic itransport, ilocal irailways iand icabs

16. Pollution ifree ienvironment iwith iproper idrainage iand isewage isystem

17. In-house iCustoms iclearance ifacilities

18. Easy iaccess ito iairport iand ilocal iRailway iStation

19. Full iauthority ito iprovide iservices isuch ias iwater, ielectricity, isecurity, irestaurants iand irecreational ifacilities iwithin ithe izone ion ipurely icommercial ibasis

20. Abundant isupply iof itechnically iskilled imanpower

21. Abundant isupply iof isemi-skilled ilabor iacross iall iindustry isectors