Special Economic Zones in the OIC Region:
Learning from Experience
65
Establishment of backward linkages can be hampered by the placement of zone enterprises
within global markets meaning that many companies import inputs through established supply
chain networks rather than procuring inputs within the domestic economy. This is often
facilitated through exemptions from customs and VAT on imported raw materials and
machinery. At the same time, domestic suppliers face issues in meeting the quality standards
necessary to supply inputs to zone enterprises. This can result in the suppression of backward
linkages apart from within low value added products such as bulk packaging and service and
maintenance activities.
Box 24 - Backward Linkages in Tunisian SEZs58
58 Moran, T (2011) International Experience with Special Economic Zones – Using SEZs to Drive Development in Countries
Around the World
Tunisia’s EPZs struggled to generate backward linkages with the domestic economy primarily due
to a tax regime which limited the potential for trade between the garment sector within the EPZs
and the textile sector within the domestic economy. Whilst seemingly complementary in terms of
linkages, Tunisia’s EPZ have historically generated very little in the way of domestic supply chain
linkages given import duties are payable on domestic inputs to EPZ companies. In contrast EPZ
companies are able to access high quality, established global supply chains and import inputs
exempt of duties and often at a lower price and better quality than domestic inputs.