Special Economic Zones in the OIC Region:

Learning from Experience

Box 10: Khorgos – Eastern Gate Special Economic Zones

3.4

Key Challenges to SEZ Success

The implementation of SEZs globally has been uneven, with SEZ development in some countries

drawing criticism with regards to negative social, economic and environmental impacts. This

includes impacts such as:



Discrimination of women – including lower wage levels, lack of training or skill

upgrading and use of trainees to lower wage costs;



Suppression of labour standards and core labour rights including trade unionisation;



Poor employment conditions – including workings hours and health and safety policies;



Lax environmental standards – including the relaxation of standards and regulations

within SEZs

; and



Creation of ‘enclaves’ at the expense of countrywide policy reform.

These key challenges and points of critique with regards to SEZ development globally are

explored in further detail below.

3.4.1

Labour Rights, Wages and Working Conditions

A key criticism of SEZ development, particularly within developing countries, has been with

regards to labour rights and working conditions. It has been observed that SEZ laws often

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

FIAS, USA.

The Khorgos Eastern Gate SEZ sits on the border of Kazakhstan and China and there is a vision to

create a 5,750 hectares trade and logistics zone which will capitalise on the zone’s geographic

location as a hub between China, South Asia, the Middle East and Europe. The zone is a key

element of the ‘New Silk Road’ and ‘One Belt, One Road’ programme which aims to expand links

between Asia, Africa and Europe and to increase trade. In 2017, an agreement was signed

between COSCO Shipping Corporation and Lianyungang port for the joint development of the SEZ.

The vision is to create a total of 50,000 jobs by 2020 and to create a residential area for 110,000

people. The zone will include a new dry port (including a container terminal), a logistics zone and

an industrial zone with ambitions to create a ‘one stop shop’ where products can be

manufactured, warehoused, imported, exported and transhipped.

The zone will focus on warehousing and transportation activities, food, leather, textiles, metals

and mineral products manufacturing as well as manufacturing of machinery and will boost

Kazakhstan’s export volumes.