Special Economic Zones in the OIC Region:

Learning from Experience

The emergence of public-private partnerships (PPPs) has also become more common place

within SEZ development, with a number of different models evolving, including:



Public sector provision of off-site infrastructure and services (utilities, connections,

roads etc.) as an incentive for private sector investment within on-site infrastructure

and facilities;



Public sector assembly of land parcels with secure title and development rights for lease

to private sector zone development groups;



Build-operate transfer (BOT) and build-own-operate approaches to on-site and off-site

zone infrastructure and facilities with government guarantees and/or financial support;



Contracting private management companies for the management of public sector

owned zones or lease of public sector owned assets by a private operator; and



Equity-shifting arrangements whereby a private contract manager of a government-

owned zone can exercise a purchase option once pre-defined performance levels have

been reached.

The role of the private sector within SEZ development has resulted in a more diversified offer

for investors, with zones incorporating a wider range of facilities, services and amenities. It has

also been observed that private zone development has resulted in SEZs and Industrial Estates

being developed on an integrated basis rather than a stand-alone basis, alongside the provision

of business support services and specialized facilities which cater to higher valued added

industries and thus subsequently higher rental values.

It has been noted

that in some cases private-led zones result in reduced development and

operational costs (from the perspective of the host country) and perform better in economic

terms, such as increased FDI and job creation. These zones typically offer better facilities and

amenities and attract ‘higher end’ types of activities and as a result have tended to be more

profitable and have better social and environmental performance standards than public sector

led zones.

2.6

Economic Rationale for Establishing SEZs

Whilst there are many multi-faceted reasons behind the deployed of SEZs, they are typically

concerned with achieving one or more of the following economic and policy objectives. These

are outlined in further detail in this section. The purpose of this section is to provide a broad

overview of the typical economic rationale behind the establishment of SEZ programmes.

OEDC (2009) Towards Best Practice Guidelines for the Development of Economic Zones.

FIAS (2008) Special Economic Zones: Performance, Lessons Learned and Implications for Zone Development.