Analysis of the special economic zones act, 2015 analysis of the special economic zones act, 2015. In this article we will discuss about the advantages and disadvantages of free trade. Since antiquity, governments, emperors, kings and queens have been providing traders and investors with special sites offering respite from normal importexport tax regimes and regulations in. The act commenced in february 2016 and several sezs have been designated since. Usually, firms that operate in an sez are able to produce at a lower cost than. What is a special economic zone in south africa and how. Experience gained in the development of chinas special economic zones, china development bank continued from page 1 existing sezs in china in 2014, there were 6 sezs, 14 open coastal cities, 4 pilot free trade areas and five financial reform pilot areas. Benefits of special economic zones in indiaa special economic zones sez is a stipulated and duty free territorial domain having various economicregulations from those of the country in which it is situated. They have their advantages, but their policy pitfalls too. Sezs are located within a countrys national borders, and their aims include increased trade balance, employment, increased investment, job creation and effective administration. The impacts of special economic zones evans school of. The pros and cons posted on january 16, 2015 by the independent in main news the government has announced plans to introduce special economic zones sezs to attract direct investment, alleviate largescale unemployment, develop and diversify the economy.
Edited by thomas farole gokhan akinci international trade department investment climate department. Advantages 15 year corporate tax holiday on export profit 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment. A sez is a geographical region that has economic and other laws that are more freemarketoriented than a countrys typical or national laws. Thomas farole and gokhan akinci see sez rules and regulation as being more freemarket oriented than prevailing national and subnational prescriptions. Ftz free trade zone netx net exports exports minus imports obu offshore banking unit. On tuesday 29 may 2018, the oxford urbanists and cities that work, an initiative of the international growth centre, hosted a panel event titled can special economic zones sezs drive growth in developing cities. Special economic zones terms and condition with advantages.
Those advantages include relaxed labor, environmental, registration and land use laws, along with lower taxes, less cumbersome procurement of materials and more streamlined negotiation of projects. What are the disadvantages of special economic zones. A study on special economic zones sez in tamilnadu state. The world bank uses the term sez to encompass a variety of types of economic. Introduction a special economic zonesez is an economic region in a country which is created for the purpose of promoting manufacturing exports and economic development through a wide variety of special exemptions, relating to taxes, quotas, cu. Special economic zones sezs geographically delimited areas within which governments facilitate industrial activity through fiscal and regulatory incentives and infrastructure support are widely used across most developing and many developed economies. Pdf special economic zones sezs are insulated export areas that offer benefits such as duty concessions to manufacturing. Special economic zones sezs are generally defined as geographically delimited areas administered by a single body, offering certain incentives dutyfree importing and streamlined customs procedures, for instance to businesses that physically locate within the zone. Special economic zones sezs can be regarded as an investment in industrial infrastructure and a services provider to attract and facilitate foreign investment, integrate local firms into global value chains, promote exportoriented growth and generate employment.
India first passed the special economic zone act in the year 2005. The main policy statement of the first special economic zone policy statement states that these sez. Progress, emerging challenges, and future directions. Development and implementation of special economic zones. Thomas farole and gokhan akinci see sez rules and regulation as being more free market oriented than prevailing national and subnational prescriptions. Special economic zone sezs scheme in india was conceived by the commerce and industries minister murasoli maran during a visit to special economic zones in china in 1999. The main advantages of sez units in india can be summarized as promotion of industrialization and economic growth through sustainable development. They are fencedin, duty free areas, offering warehousing, storage, and distribution facilities for trade, transshipment, and reexport operations, without the intervention of the customs authorities.
Physical infrastructure includes electricity, buildings and transport. A free trade zone takes this concept further by reducing any trade barriers and is an exclusive area within special economic zones. Advantages and disadvantages of special economic zone. Sez, act an attempt made to assess advantages and disadvantages of sezs in india. What is a special economic zone in south africa and how can it benefit my business. India over the past decade has progressively opened up its economy to effectively face new challenges and opportunities of the 21st century. Pdf a study on special economic zones sez in tamilnadu. Demerits of special economic zones sezs loss of revenue to government generally government gets huge tax from industries. Many nations have relied heavily on their sezs, and are considered to be a vital ingredient in a developing countrys economic strategy. Special economic zones sezs are generally defined as geographically delimited areas administered by a single body, offering certain incentives duty free importing and streamlined customs procedures, for instance to businesses that physically locate within the zone. They are fencedin, dutyfree areas, offering warehousing, storage, and distribution facilities for trade, transshipment, and reexport operations, without the intervention of the customs authorities. An overview of south african special economic zones 3. Pecial economic zones in outh sia harvard university. Free trade zones are organized around major seaports, international airports, and national frontiersareas with many geographic advantages for trade.
While special economic zones are often treated as an innovative topic in development economics, citywide free zones with goals and methods not too different from those employed in modern zones were in place in gibraltar and singapore as early as 1704 and 1819, respectively. Advantages of sez and important special economic zones in. Designing economic zones for effective investment promotion working group 1. Oct 18, 2018 special economic zone advantages and disadvantages pdf download 23 pdf special economic zones sezs are insulated export areas that offer benefits such as duty concessions to manufacturing. What are the disadvantages of special economic zones answers. An assessment of potential costs and benefits of sezs in india. A special economic zone sez is an area in which the business and trade laws are different from the rest of the country. Sezs are generally defined as geographi cally delimited areas administered by a single body, offering certain incentives generally duty free importing and streamlined customs procedures, for instance to businesses which physically locate. Despite decades of international experience, there is still no blueprint for successful sez policies, and the majority of sezs fall well below expectations. Within these zones, more specialized zones are now set up to incentivize further investments. The concept of sez is described by different countries of the world is no less than 19 different terms, such as free trade zone ftz, industrial zone singapore. Special economic zones sezs are geographically designated areas set aside for specifically targeted economic activities. Stay uptodate on breaking news, regulatory updates and asia briefing publications. Sez advantages are quite far more as compared to its disadvantages which are almost negligible.
Professor riano argued that sezs should aim to relieve particular economic distortions, rather than try to provide an economic panacea. What is the advantage of sez special economic zone. The advantages and disadvantages of constructing freetrade. The advocates of free trade put forward the following advantages of free trade. A freetrade zone ftz is a class of special economic zone. The category sez covers a broad range of more specific zone types, including free trade zones ftz, export processing zones epz, free zones fz, industrial estates ie, free ports, urban enterprise zones and. Jul 08, 2016 a free trade zone takes this concept further by reducing any trade barriers and is an exclusive area within special economic zones. What are the advantages and disadvantages of special economic zones in china.
Advantages or sezs special economic zones offer many advantages to investors otherwise wary of dealing with an unfamiliar foreign regime. These preferential rules are presented in the graph below. Designing economic zones for effective investment promotion. Special economic zones are the oldest of all, thus they have advanced infrastructures, flexible legislations and great locations. But, as government is providing tax holidays for industries, it loses most of the revenue from it. What are the advantages and disadvantages of special economic. Freetrade zones are more popular than everwith politicians, if not economists. This is a very important topic that features in the indian economy section of the upsc syllabus. Advantages of the export processing zone with over nations providing epzs within their borders, the advantages of creating epzs appear to be very clear for developing countries. This chapter argues that this is largely due to flaws in the political economy of sez schemes, which prevent replication of. The indian special economic zones policy intends to make sezs a powerhouse for economic growth. Freetrade zones are organized around major seaports, international airports, and national frontiersareas with many geographic advantages for trade. Advantages and disadvantages of special economic zone answers.
Special economic zones political priority, economic gamble. What are the advantages and disadvantages of special. Special economic zone advantages and disadvantages pdf download 23 pdf special economic zones sezs are insulated export areas that offer. The president assented to the special economic zone act, 2015 sez act on 11 september 2015 and the act was subsequently. Definition of sez a special economic zone, in short sez is a geographically bound zone where the economic laws in matters related to export and import are more broadminded and liberal when compared to rest of the country. A special economic zone sez is a piece of serviced land, typically industrial, that provides. The special economic zones act 16 of 2014 provides for the designation, promotion, development, operation and management of sezs.
Advantages of the euro the efficiency of resource allocation is based on the ability of economic system to use the specialization and the exchange. What is a special economic zone in south africa and how can. The competitive advantages of zones may also be explained within the frame work of the cluster approach. Although the performance of many zones remains below expectations, failing either to. The case of szes in chinashenzhen chinas special economic zones chinas special economic zones 1. Free zones have emerged on the scene as a planning tool to help boost economic development. Special economic zones sezs or industrial parks can be an effective instrument to promote industrialization if implemented properly in the right context, as shown in some of the emerging countries, particularly those in east asia. Those advantages include relaxed labor, environmental, registration and land use laws, along with lower taxes, less. Free trade zones, also known as a free commercial zone, are a subcategory of special economic zones.
Free trade zones are generally organized around major seaports, international airports, and. The pros and cons of sez policy as implemented from 1. Benefits of special economic zones in indiaa special economic zones sez is a stipulated and dutyfree territorial domain having various economicregulations from those of the country in which it is situated. Special economic zones terma and condition with advantages and disadvantages of sez. Advantages of sez and important special economic zones in india. A special economic zone sez is a piece of serviced land, typically industrial, that provides infrastructure and connectivity for private firms investing in the sez. Note, sezs and special administrative regions sars, which describe the status of hong kong and macau, are very different concepts, and should not be confused. May 22, 2012 benefits of special economic zones in india 1.
It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured and reexported under specific customs regulation and generally not subject to customs duty. Sezs were first developed in 1980 as part of deng xiaopings drive to open up china to the rest of the world and cement chinas place on the global stage as a major economic. Nationwide laws may be suspended inside a special economic zone. Pdf special economic zone sez problems, promises and. Special economic zone advantages and disadvantages pdf. Special economic zone sez is an administratively separated part of polish territory where investors may run their business activity based on specific preferential conditions. The main policy statement of the first special economic zone policy statement states that these sez units of india shall be offered tax rebates, fiscal incentives and lands at subsidized rates and. Online export import data search select period last day last week last month last year last 7 days last 30 days janmar 2016 janmar 2014 janmar 2015 custom.
The economic benefits of sezs are well documented across the world. Special economic zones background information a special economic zone sez is an area within a country that has special economic treatment and policies, for example lower corporation tax rates, better access to economic advisors, and more flexible labour laws. Development and implementation of special economic zones economics essay. This paper generically uses the term special economic zone to encompass. Sezs are generally defined as geographi cally delimited areas administered by a single body, offering certain incentives generally dutyfree importing and streamlined customs procedures, for instance to businesses which physically locate. Free trade causes international specialisation as it enables the different countries to produce those goods in which they have comparative advantage.
The category sez covers a broad range of more specific zone types, including free. Special economic zones terms and condition with advantages and disadvantages of sez. The promises and challenges of special economic zones. Oct 18, 2018 sez, act an attempt made to assess advantages and disadvantages of sezs in india. The advantages and disadvantages of constructing free trade zones as an industrialisation strategy christabel boakye dankwa essay business economics economic policy publish your bachelors or masters thesis, dissertation, term paper or essay. The category sez covers a broad range of more specific zone types.
African countries have sought to replicate the success of east asia by implementing special economic zones sezs. A free trade zone ftz is a class of special economic zone. A customs controlled area where goods are offloaded for transshipment, storage and may. If it is not laid government may not fulfill its stint properly. Introduction a special economic zone sez is an economic region in a country which is created for the purpose of promoting manufacturing exports and economic development through a wide variety of special exemptions, relating to taxes, quotas, cu. A special economic zone or sez is a specially marked territory or enclave within the national borders of a country that has more liberal economic laws than the rest of the country. This paper discusses the advantages and disadvantages of a special economic zone and how it benefits foreign direct investors and the scope of project development in india in a special economic zone.
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