Special Economic Zones in the OIC Region:
Learning from Experience
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Design of Institutional and Administrative Frameworks
A clear and well defined institutional and administrative framework must be defined in the law,
where the role of different government departments or agencies is strictly laid out. The
oversight of the SEZ programme must, first and foremost be defined – e.g. if it is decided the
ultimate oversight is to be handled by a SEZ board, then the role of make-up of that board must
be laid out. Once the oversight body is defined, then there must a clear path for SEZs to be
designated, developed and operated, with a clear understanding of each – i.e. who designates an
SEZ as such, who qualifies to apply for designation (public sector agencies, private sector
organisations), and what are the processes to follow to achieve successful designation. The same
detail needs to apply for the development and operation of the SEZ.
Alignment with Domestic Legal and Regulatory Environment
A key challenge for countries initiating SEZ programmes is to ensure that the SEZs do not create
unnecessary distortions in terms of either the national trading or legal environment. For
example, where SEZs are targeted towards sectors that are already present to some extent in
the country, there is a need to avoid any perceptions of ‘unfairness’ on the part of sectoral
operators already located in the mainstream economy. It is common for existing industrial
players to feel aggrieved that newcomers are being given special treatment or additional
incentives that are not available to incumbents. This can be avoided where the SEZ strategy is
clearly defined and targeted at anchor operators or value chain segments that are either missing
in the country or very under developed.
Consideration of Investor Requirements
The legal and regulatory framework should specifically consider investor requirements. It
should consider the individual needs of the specific target sectors and particular regulatory
challenges which need to be overcome in attracting inward investment in particular industries
and from a range of origin countries. Experience suggests that legal and regulatory frameworks
which reduce administrative burdens, costs and time relative to the domestic environment will
foster increased amounts of FDI. The most common tool for achieving this is through the
provision of a ‘one-stop-shop’.
Implementation of One-Stop-Shop (OSS) Arrangements
Evidence from the case study examples and global SEZ experience indicates that the
establishment of one-stop-shops can be effective tools for targeting inward investment in SEZs
and to facilitating a significantly more attractive environment for potential investors with
regards to ease of doing business. This helps to increase investor confidence and one-stop-shops
can help to appease investor concerns about the domestic regulatory and investment
environment.