GOVERNMENT has recorded an exponential increase in enquiries by foreigners, especially from China, who are willing to invest in Special Economic Zones (SEZs).
The SEZs Act, which was signed by President Mugabe into law on October 30, 2016, offers various waivers and incentives.
In particular, Section 56 of the Act does not oblige investors in these special industrial clusters to partner locals, as is stipulated under provisions of the Indigenisation and Empowerment Act.
Permanent Secretary in the Ministry of Economic Planning and Investment Promotion Dr Desire Sibanda told The Sunday Mail Business last week that over 12 companies from countries such as
China, Russia, Israel and South Africa have applied to be part of the SEZs. “A number of companies are applying for Special Economic Zones. They are coming mainly from China. . . “Most of these companies, especially foreign investors, qualify for Special Economic Zones because they are into manufacturing, bringing in new technology, creating employment, bringing in capital and ensuring that they are planning to export,” said Dr Sibanda.
So far, Government has created three SEZs in Harare, Bulawayo and Victoria Falls. ‘‘It is envisaged that through special economic zones in Bulawayo, Government will be able to revive the National Railways of Zimbabwe, Cold Storage Commission, the textile industry, furniture sector and other manufacturing industries, as well as ensuring the full use of the Zimbabwe International Trade Fair (ZITF) facilities.
Hotels are naturally expected to also benefit from increased economic activity.
SEZs in Victoria Falls are designed to turn the resort town into a financial and tourism hub, leveraging on international airlines such as SA Airlink, Ethiopian Airlines and Kenyan Airways that have begun servicing the route.
Statistics from the Civil Aviation Authority of Zimbabwe (CAAZ) show that passenger arrivals have increased to 20 305 and 17 017 in January and February this year, respectively, from 17 256 and 16 188 correspondingly a year earlier.
In January alone, an additional 3 000 passengers were processed through the airport than in 2016.
Dr Sibanda said Sunway City (Pvt) Limited — a subsidiary of the Industrial Development Corporation (IDC), which is mandated to develop world class integrated residential, commercial and industrial complexes, among others — has also been receiving enquiries from potential partners.
“Even the likes of Sunway City have had investors coming in to partner them. But I must say we still need more investors to achieve our goal of 25 percent of GDP from FDI (foreign direct investment, because the most important thing is that these companies also bring infrastructure,” added Dr Sibanda.
Government has since embarked on roadshows to popularise SEZs to locals. Licences under SEZs are valid for 10 years from the day of issue, and investors are entitled to 100 percent ownership of the business.
In addition to guaranteed power and water suppliers, investors willing to sink in more than US$50 million also get automatic work permits.
Income tax — just as is the case with capital gains tax on raw materials — is zero-rated for the first five years of the venture, while capital equipment can be imported duty-free. It is also now possible to repatriate 100 percent of profits, including borrowing offshore, under the current dispensation.
However, labour laws on SEZs have been benchmarked with international best practices.
SEZs have been proven to be a catalyst for economic growth. The World Bank says SEZs brought new technologies to China and helped it adopt modern management practices.
By 2007, these zones accounted for 22 percent of China’s gross domestic product (GDP) and 46 percent of foreign direct investment.
In the same period, 60 percent of exports were from SEZs, while 30 million jobs were created.
But, most importantly, they became centres for high-tech firms and technology incubators.
High-tech Industrial Development Zones (HIDZs) that have been established in the past two decades have accounted for half of China’s high-tech gross industrial output and one-third of high-tech industrial output and exports.