Special Economic Zones in the OIC Region:
Learning from Experience
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‘beneficiation’ again with a view to extending value chains and creating greater values in-
country from extraction and production processes.
Furthermore, some countries currently developing SEZ programmes are considering how the
zone format could be used to target investors and operators that can facilitate development of
more fully integrated production processes. Again this is often seen in the case of CTA and agro-
processing industries, but also with other manufacturing sub sectors. The aspiration here is to
attract anchor operators and additional components of supply chain networks and enable this
to become more integrated into the existing sectoral base. This is likely to generate higher values
from downstream integrated activity, to help embed the sector in-country and to build in
additional resilience related to economic or other structural shocks.
2.7 Incentive Schemes used in SEZs
The incentive schemes used in SEZs can broadly be separated into either fiscal or non-fiscal
incentives. Incentives are utilised to address pre-existing constraints or barriers to investment
which may otherwise deter investors from selecting the zone for investment. The different types
of incentive schemes are outlined in more detail below.
2.7.1 Fiscal and Financial Incentives
Fiscal incentives typically relate to forms of tax or duty reduction or exemption, ease of profit
repatriation and/or the provision of specific subsidies such as financial assistance for
infrastructure development or land purchases. Fiscal incentives are either standardised at the
country level or at the individual zone level. Almost exclusively, fiscal incentives will involve
lower import and export taxes and tariffs compared to the domestic economy.
Financial incentives typically consist of financial support to individual enterprises to encourage
them to locate within the SEZ. They may be used to overcome perceived disadvantages of the
location for investors and can often include investment in infrastructure to alleviate site
challenges or contributions to meet relocation, training or land costs.
Typical fiscal and non-fiscal incentives observed in global SEZ development include:
 Income tax allowances;
 Exemption of exported products from import duties;
 Exemption of exported products from indirect taxes;
 Exemption of imported goods used in production processes from import duties;
 Exemption of waste generated by the production process from export duties;
 Exemption of goods stored in the SEZ from duties and indirect taxes; and
 Exemptions from other non-specific tax subsidies, including taxes imposed by national,
regional and local authorities.