The successful development of a free zone requires the continued collaboration of all stakeholders. according to the participants of the free zone development session of the IAPH conference. Source: IAPH

Foreign direct investment (FDI) is the key to the development of a free trade area, but cooperation between all stakeholders is necessary for success.

This was the consensus of the participants in the free zone development session of the IAPH 2021 World Ports Conference, who underlined the role that ports can play in the development of the free zone.

Ahmed Bennis, secretary general of the Organization of African Economic Zones (AEZO) and development director of the Tanger Med group, said ports and special economic zones (SEZs) play a key role in Africa’s transformation. The SEZ should bring transformational change to the country concerned by attracting quality FDI, which can translate into an attractive volume of trade for the ports.

“Synergy between ports and economic zones would certainly help reduce trade costs, optimize logistics flows and streamline trade facilitation procedures, but this will not be possible without a strong partnership, continuous businesses and strong collaboration between ports and economic zones, involving all stakeholders.

A SEZ should be designed as a component of the country’s strategy and all stakeholders should be involved. The right business model as well as flexibility is necessary. He stressed that tax incentives alone are not enough to attract FDI and should not be the main differentiator.

Infrastructure, program planning and management, and attention to trade facilitation are among the factors that can determine the success of a SEZ.

He highlighted the Tanger Med zone in Morocco with more than 800 companies in the zone, the free zone of the port of Djibouti and the Special Economic Zone of Gabon (GSEZ) as successes.

Perspective of Abu Dhabi ports

Abdullah Humaid Al Hameli, Director – Industrial Cities and Free Zone – Ports of Abu Dhabi and Managing Director – Khalifa Industrial Zone of Abu Dhabi, said connectivity between the free zone and the port is accelerating industrialization and business development of a country.

He said efforts to attract FDI to Khalifa included diversification of the economy, cheaper services, better connectivity from ports to international markets. Government policy and regulations to help attract FDI are also essential.

“The ports and the economic zone work closely together as a single team. Investors in the economic zone see support for ports, its operations and services, and vice versa, he added.

However, he warned, “If they fail to deliver the best for the investor, they will fail. “

A broader vision

Kunio Mikuriya, Secretary-General of the World Customs Organization, said: “Free zones have served as engines of national and regional economic growth by encouraging foreign direct investment, in particular by providing tax incentives and less government regulations and of paperwork. “

He added: “It is undeniable that free zones have contributed significantly to the competitiveness of international ports. “

He said they also support e-commerce by providing logistics hubs, but acknowledged concerns from organizations, including the EU, that free zones should be implemented with caution as they attract illegal activity. .

The OECD Council adopted recommendations on the management of free zones to combat illegal trade in 2019. The International Chamber of Commerce collaborated with the WCO to conduct research, on the basis of which the WCO published Practical guidelines on free zones. The WCO Council formally adopted it in 2020.

Port authorities can improve the business environment and economic competitiveness of trade areas by joining a force to fight crime, Mikuriya noted.

Customs procedures in free zones are now more streamlined and can now contribute to the safety and security of supply chains without sacrificing the efficiency of trade flows, he said. Digitized processes also contribute to efficiency and safety.

The session was moderated by Dr. Amelia U. Santos-Paulino, Head of the Investment Research Section in the Investment and Enterprise Division of UNCTAD, and Deputy Editor-in-Chief of the Transnational Corporations Journal.

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