THE Indigenisation and Economic Empower Act will not apply to investors in the Special Economic Zones, as Government bids to attract foreign investment and create more jobs, a senior official has said.
This means that foreign investment, which Zimbabwe urgently requires to drive growth and exploit limitless opportunities in various sectors, will be able to hold 100 percent of the equity in their enterprises.
At the moment designated SEZs include Sunway City in Harare, Bulawayo and Victoria Falls, which will be both an international financial centre and SEZ area focusing mainly on tourism related investments.
However, investors may apply to Government through the Ministry of Macro-economic Planning and Investment Promotion to have their activities classified under SEZs in order to enjoy the attendant incentives.
Deputy Chief Secretary to President and Cabinet Dr Ray Ndlukula said the provision was enshrined in the Special Economic Zones Act, promulgated by Parliament and signed into law by President Mugabe last year.
He made the remarks while addressing delegates at the 11th edition of the annual international business conference during the 58th Zimbabwe International Trade Fair, which ended in Bulawayo last Saturday.
“The Indigenisation and Economic Empowerment Act shall not apply to licensed investors operating in Special Economic Zones, hence SEZs investors can own up to 100 percent of their investment,” he said.
Dr Ndlukula said the objective around exempting investors from the indigenisation law, which compels foreign investors to sell at least 51 percent of the shares in their companies to locals or indigenous entities, was creation of jobs and generation and growing export earnings.
However, he indicated that there had been changes to earlier provisions also exempting investors in the SEZs from provisions of the Labour Act. As such, he said the SEZs authority shall liaise with the Ministry of Public Service, Labour and Social Welfare on world best practice.
“With regards to the labour laws, the authority must be in consultation with the ministry responsible for the administration of the Labour Act for regulations that apply to Special Economic Zones,” he said.
He emphasised the SEZs labour laws will conform to global best practice.
Dr Ndlukula said that Government would soon appoint board members of the Special Economic Zones Authority, which will administer and regulate activities in the SEZs in terms of provisions of the SEZs Act.
Investors in SEZs will enjoy both fiscal and non-fiscal incentives. Non-fiscal incentives entail automatic work permits for investments over $15 million and 5 days’ work permit processing for investments below $15 million.
Fiscal incentives include zero rated corporate income tax for the first five years, zero rated capital gains tax, duty free importation of capital equipment, 100 percent capital repatriation and duty free importation of inputs and raw materials meant for operations within SEZs.
Overall, Dr Ndlukula said the ultimate goal of establishing SEZs was creating better conditions for investment and business operations in the economy compared to what is prevailing in other sectors of the economy.
This was over and above reforms Government is undertaking to improve doing business conditions and environment with key milestones already having been achieved through the 100-day rapid results initiative.
He said when evaluating proposals for SEZs investment, the SEZs authority, provided for in the SEZs Act, will consider extent to which the investment will create jobs and develop human resources, extent to which it will go on import substitution and the impact on the environment.
The SEZs authority will also look at the extent to which the investment will result in transfer of technology and managerial skills, extent of establishing domestic linkages, extent of value addition and beneficiation and extent of promoting local industrialisation among others.