What is Special Economic Zone?

Special economic zone or SEZ is a geographical area where the economic activities take place within the country’s national boarder with special license. In these zones business and trade laws that differ from the rest of the country. The concept of SEZ emerged just after the industrialization. The first recoded economic zone was created in Puerto Rico in 1947, followed by Island and Taiwan in 1960, One of the most famous SEZs was founded by the government of the People's Republic of China under Deng Xiaoping in the early 1980s. The most successful SEZ in China is in Shenzhen. Following this example, SEZs have been established in several countries, including Brazil, India, Iran, Jordan, Kazakhstan, Pakistan, the Philippines, Poland, Russia, and Ukraine.

The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC). Generation of additional economic activities, Development of infrastructure facilities, promotion of exports of goods and services, and creation of employment opportunities. It is estimated that around 52 million people secured their jobs in SEZs, and roughly US $ 600 billion worth of exports are channeling through various SEZs around the world.

It is known fact that not all the economic zones are successful. There are over 3570 economic zones established in 132 countries around the world, among them 14% of the zones are failed projects. The reasons why these zones are unable to fulfill its purpose is due to various political influence.  

Since SEZ is governed by a special act, most of these acts facilitates; 

• Tax concessions for both development and utilities,
• Simplified compliance procedures and documentation with an emphasis on self-clarification
• Single window clearance on matters relating to central as well as state government for setting up units in a SEZ
• Assurance of investment security by the state

INTRODUCTION OF SEZ IN MALDIVES 

The concept of SEZ act is one of the most criticized act in recent years, it was on the discussion table in the past decades, specially in 2007 when Hon Gasim Ibrahim was Minister of Finance.  Special Economic Zone came to light in its full swing under the leadership of Yamin Abdul Gayyoon. The flagship project “iHaven” is one of the most dramatic projects ever to be taken place in Maldives. The project is comprised of many components such as International Airport, Export Processing Zone, Tran-shipment Port, Bunkering Facility, Dry Dockyard etc. 

What is Special Economic Zone?