Special Economic Zones in the OIC Region:

Learning from Experience

businesses

. When looking for a site for a new project, investors begin by conducting a search

across numerous countries and hundreds of sites with a view to specifying the optimal place for

doing business. Corporate advisers Ernst & Young, in discussions with investors, have been

observing a noticeable trend that the tax exemption within the SEZs is becoming less important

in the process of selecting sites, particularly in the developed-world context. This is because

given the high investment costs, investment projects lasting several years and market pressure

reducing profitability in many industries, the effective time for taking advantage of the

exemption sometimes becomes shortened to 3 years. Therefore other aspects of the operating

environment, including provision of infrastructure, skilled labour and effective routes to market

become more important.

Another major trend in global development of SEZs focusses primarily on their environmental

and sustainability credentials and this has led to the increasing emergence of the ‘Eco-Industrial

Park’ as an SEZ format. It is suggested that in the next era of industrial zone development,

sustainability and eco-industrial growth will play paramount roles inminimizing environmental

and social risks while generating profits for firms.

This combination will help governments

scale-up and leverage sustainable infrastructure to fulfil their commitments to meet the UN

Sustainable Development Goals

and other international climate actions.

There are tangible drivers behind this changing paradigm of industrial zones including a visible

shift in the procurement preferences of the leading global buyers whom the zone enterprises

primarily cater to, especially in the light manufacturing sector. Multinational buyers are showing

strong preferences for greener and more sustainable supply chain management that compels

suppliers to produce in an environmentally compliant, resource-efficient, safe, and socially

responsible manner. The growing availability of ‘reduce-reuse-recycle’ technology for industrial

waste has also heightened the pressure on industries to improve their management of waste

and resources and look for mechanisms to grow and operate in a symbiotic fashion.

The efficiency and strategic agglomeration of firms will enable companies to take advantage of

joint infrastructure, efficient management of operating risks, and improved resilience to

climactic condition

he trend toward EIPs has been growing organically in most developing

countries. Although consensus is absent on what definitively constitutes an EIP, World Bank

preliminary research has identified over 254 operating or planned zones or parks that would

likely fit a stringent definition. The bulk of these EIPs employs some level of ecological and

Ernst & Young (2011) Special Economic Zones beyond 2020 Analysis of current activities and an outlook for their existence

Kechichian, E. and M.H. Jeong, (2016) Mainstreaming Eco-Industrial Parks: Conclusions from the Eco-Industrial Park 2015

Event in Seoul, Washington D.C.: World Bank