Free zone confab floats idea for cross-border SEZs

Jamaica is being encouraged to accelerate its digital transformation and the creation of more businesses within free zones and special economic zones, SEZs, that are fully integrated into technology-driven production and services delivery, with an emphasis on sustainability, or safeguarding against the depletion of resources.

At the same time, a proposal has also been put on the table to scale up SEZs in the Caricom trade bloc beyond national borders, transforming them into cross-border and multi-jurisdictional enterprises.

James Zhan, director of the division on investment and enterprises at the Geneva, Switzerland-based United Nations Conference on Trade and Development, UNCTAD, is among the persons recommending the high-tech SEZ path as being among the surest ways for Jamaica and similar small economies in the Caribbean region to achieve economic development.

“I think e-commerce is the future because that will overcome the distance. Also, continuing the expansion of high value-added business services using the digital means. That’s an opportunity, I think, and that’s part of the structural transformation that the country must complete,” Zhan told the Financial Gleaner on the margins of the annual international conference and exhibition, AICE 22, of the World Free Zones Organization, WFZO, now on at the Montego Bay Conference Centre, located on the outskirts of the city at Rose Hall.

“When countries are doing ‘servicisation’ of manufacturing, the big companies do not have to service their manufacturing products from the headquarters. They can do it from the Caribbean, in Jamaica, which has good skills – IT engineering centres, service hubs and other centres for high value-added services,” said Zhan, who is also co-chair of the Global Alliance of Special Economic Zones, GASEZ, a body led by UNCTAD.

The eight-member alliance of SEZs from around the world also held its inaugural meeting in Montego Bay on Monday, as part of the WFZO event that runs from June 13 to 17.

Speaking at the opening session of the conference, the UNCTAD director said the global alliance was focused on modernising SEZs, organising global support for them, and helping to maximise their contribution to sustainable development.

“The objective the GASEZ is to advance a new generation of SEZ for sustainable economic development. The core functions of the alliance include cross-border collaboration in trade, investment,” he said.

He noted that the alliance with foster collective policy efforts and frameworks at national, regional and global levels, and will enable shared learning through the exchange of experiences, best practices and lessons learnt among SEZs.

The founding members of GASEZ are Africa Economic Zones Organization, Free Trade Zones Association of the Americas, Green Partnership for Industrial Parks of China, International Association of Science Parks and Areas of Innovation, National Association of Foreign-Trade Zones, World Free and Special Economic Zones Federation, World Free Zones Organization and UNCTAD.

President of the United Nations General Assembly, Abdulla Shahid, told the opening summit that the GASEZ partnership is ensuring that SEZs, which employ more than 100 million people globally, are more sustainable and continue to play an important role in economic transformation and promoting participation in global value chains.

“At a time of multiple global crises and shocks related to the global pandemic, the ongoing crisis in Ukraine, and the effects of climate change, our progress in achieving the 2030 Agenda for Sustainable Development is seriously at stake. This ambitious initiative by the global alliance is timely and can help to mobilise support and galvanise action for sustainable development,” he noted.

Other conference speakers and participants from across the globe were upbeat about the benefits of free zones and SEZs, and stressed the importance of collaboration between private- and public-sector interests to advance the entities and enhance their contribution to employment creation and the expansion of economic opportunities.

Bold actions needed

But all is not rosy for free zones, particularly those made up of small and medium enterprises in the Caribbean, as pointed out by Annette Mark of St Vincent and the Grenadines and the president of the Caribbean Association of Investment Promotion Agencies, or CAIPA. Comparing smaller free zones in the region with concerted cross-border zone expansion in larger nations such as China, Mark underscored the need for bold actions to enable regional entities to catch up.

“We have seen that setting up cross-border SEZs is challenging but not impossible. What if, in the Caribbean, we can create a regional SEZ that covers all Caricom member territories? Such an approach would play a catalytic role in the economic growth and transformation of our Caribbean region,” Mark proposed.

In her presentation on the opening day of the AICE conference, she also proposed the establishment of a mega multi-jurisdictional SEZ within Caricom, focusing on technologically driven agriculture as the first cross-border SEZ in the region.

“The possibilities would be endless. We would attracting foreign direct investments, creating jobs, feeding our people and exporting,” the CAIPA head said.

huntley.medley@gleanerjm.com