Special Economic Zones in the OIC Region:
Learning from Experience
7
2 Special Economic Zone Typologies
2.1 Introduction
This section aims to define what SEZs are, the different typologies which exist, as well as the
governance structures, incentives regimes, infrastructure offerings and the economic and
financial objectives which drive development of SEZs within different zones both in OIC Member
Countries and elsewhere.
This section will outline the broad typologies of SEZs and the broad motivations and objectives
behind the deployment of SEZs as a policy tool as well as the various incentive schemes used in
SEZ development.
2.2 Definition of SEZs
In broad terms, SEZs can be defined as demarcated geographic areas contained within a
country’s national boundaries where the rules of business are different from those that prevail
in the national territory. These differential rules principally deal with:
 Investment conditions – including the provision of infrastructure, serviced land and
flexible lease and purchasing options;
 International trade and customs - typically access to imported inputs free of tariffs
and duties;
 Taxation – including the elimination of corporate taxes, VAT, other taxes and labour
contributions; and
 The regulatory environment – such as more efficient processes for company set up,
licensing and operations, often through establishment of a ‘one-stop-shop’
arrangement.
The result of these enhanced conditions is that the zone is providedwith a business environment
which is intended to be more conducive to value added through private sector investment from
a policy perspective, and more effective from an administrative perspective, than that of the
national territory. In this sense SEZs can be characterised by three distinctive attributes:
1. A dedicated regulatory regime;
2. A dedicated physical infrastructure; and
3. A dedicated governance structure.
With regards to the regulatory regime, SEZs typically require a separate legal framework that
has to be passed by national government and/or parliament.
In addition to specific legal, regulatory and administrative conditions, SEZs are also defined by
their spatial characteristics. Development of SEZs globally shows that zones are typically