Special Economic Zones in the OIC Region:
Learning from Experience
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6.2.6 Zone Development and Operation
Successful zone development and operation require a clear understanding of who is responsible
for each task. The development of an SEZ is often an expensive undertaking if additional
infrastructure is built. The organisation / authority (if not the same as the operator) responsible
for the development of a zone must see a return on the capital outlay (whether economic or
financial). The development must also take into account the requirements of the potential
investors – e.g. kinds of businesses and their needs; additional infrastructure, which connects
the zone to major transport nodes (e.g. roads, railway lines, ports and airports).
The operation of the zone is as key as the development. A successfully operated zone will provide
efficient services to the investors, while also making a financial return. Successful development
and operation is often likened to a real estate development, where money spent on building of
real estate and servicing of tenants is recovered through rent and sales.
Coordination across relevant ministries, departments and agencies is a critical success factor for
SEZ performance, either through a dedicated autonomous SEZ authority or through other means
such as a ‘one-stop-shop’.
The effective coordination of administrative, legal and regulatory policies is essential to
fostering an efficient business environment and attracting FDI. Less successful zones have
deployed ‘one-stop-shop’ models but often these are utilised for marketing purposes rather than
providing the efficient investment processing functions which are required. These institutional
bodies often come up against political resistance given perceptions of power transfer from
ministries and departments. A common mistake is to implement options which cause the least
resistance however it is recommended that the model of one-stop-shop is considered separately
from its political merits.
6.2.7 Involvement of the Private Sector in Zone Development and Operation
Particularly within fragile economies, the involvement of the private sector within SEZ
development and operation can help to bridge the gap between institutional and capacity
weaknesses. This could include assistance with the design and management of zones including
determination of incentive regimes.
Experience suggests that the most successful zones do tend to be those operated by the private
sector and where the relationship between private operator and government regulator is clear
delineated, positive and open. A careful balance needs to be struck between the private operator
achieving a suitable revenue and profit level from the SEZs operation, while at the same time the
Government parties are able to achieve their stated economic and social goals. This requires
clear and positive dialogue between all parties in order that public and private objectives can be
aligned appropriately.