India and several other nations bordering the Indian Ocean have decided to evolve a regional mechanism for cooperation on Special Economic Zones (SEZ) – or duty-free enclaves with tax holidays — to boost exports.
- The first-of-its-kind meeting between SEZ authorities from these Indian Ocean Rim (IOR) nations was held on May 19-20 at Chabahar, Iran, which houses a Free Trade Zone (FTZ) – a synonym for SEZs.
- The meeting comes at a time of global economic and trade slowdown and attempts are being made by countries to boost growth through trade.
- “Thanks to their strategic locations and access to major waterways, these zones have formed a virtual network of trade connections” spanning continents including Asia, Australia and Africa, according to a concept note for the event.
- Participants at the Chabahar meet also considered a proposal to form a “joint FTZ” among the IOR Association (IORA) member countries since most of these FTZs are situated or are being built in coastal regions. The meeting also assumes importance given that India had on Monday signed a pact with Iran to develop the Chabahar port, and agreed to provide $500 million for the purpose.
- A World Bank (Trade & Competitiveness Global Practice) report in February 2015 said, “More and more countries have begun to implement this instrument (SEZs) for their industrialization process, especially as a way of attracting foreign direct investments mostly in the manufacturing sector, creating jobs, generating exports and foreign exchanges.” It noted that some countries have been successful while others, particularly those in sub-Saharan Africa, were still struggling. The meeting discussed ways to share information on SEZ best practices and common objectives including trade facilitation.