COMCEC Trade Outlook 2019
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participants deliberated on the global practices and trends in special economic zones and the
current status of the OIC Member Countries regarding the special economic zones.
Special economic zones (SEZ) are important instruments for improving national and regional
economic growth and increasing national income. They enable countries to attract foreign direct
investments, facilitate economic diversification, create employment and deepen as well as
extend industry value chains. According to the research report prepared for this meeting,
through SEZs, governments can facilitate human capital development, generate government
revenue streams, reduce government expenditure on unemployment benefits and provide
markets for domestically produced goods and services. SEZs can also contribute to the host
country’s export rates due to their ability to produce goods and services, which are sold in
foreign markets.
The report reveals that there has been a rapid expansion of SEZs worldwide since 1980s. There
are approximately 242 SEZs operating within 33 OIC Member Countries. Approximately 36% of
SEZs in the OIC Region are Free Trade Zones, while approximately 25% are classified as Export
Processing Zones (EPZ). They are followed by Hybrid EPZs and other types of SEZs with 15%
and 14% respectively.
According to the report, the following challenges are faced by the Member Countries with
respect to the development of SEZs:
 Poor governance and regulatory environment - including ease of doing business,
 Poor business environment,
 Inefficient zone management,
 Unreliable utilities infrastructure,
 Poor quality transport infrastructure.
In order to address these challenges, the Working Group has come up with the following policy
recommendations:
 Designing and programming Special Economic Zones in line with the national economic
strategies for ensuring their complementarity with the national economic growth
targets and industry sector priorities,
 Improving economic performance of SEZ programmes through developing unique
incentives frameworks – fiscal and non-fiscal - which attract investments and foster
effective and efficient business environments,
 Improving the competitive advantage of SEZ programmes through effective site and
sector targeting based on a robust understanding of national economic priorities and
competitive advantages,
 Designing an efficient legal and regulatory framework to create a ‘special’ economic
operating environment which considers and complements the existing legal and
regulatory environment,
 Assigning/Establishing a single SEZ authority to regulate all SEZs within the country and
supporting SEZ programmes through active involvement of key stakeholders and
development of SEZ working groups.