This sections answers the most commonly asked questions about Free & Special Economic Zones.
What is a SEZ or a Free Zone?
A Free Zone is a portion of clearly defined and isolated land or setting, with a special fiscal, customs or juridical status of extra-territoriality.
What are the advantages of a Free Zone?
The main advantages that a Free Zone enjoys, both fiscal and physical, include:
- Better infrastructure
- Established industrial processes
- Facilitated trade of products and services
- Higher access to capital
- Skilled labor.
The percentage of the fiscal benefits, as well as the period of application of the incentives varies according to the law of each country or region.
Who controls Free Zones?
Free Zones are regulated by the established laws from the government of each country, and in many locations by an entity, which controls the execution of the Free Zone law and its activities. This Free Zone authority guarantees to investors reliable services and well regulated and properly paid labor.
Most of the Free Zones have internal regulations which strictly control their development. These controls are exercised on the construction, security, hygiene, environment, and labor, in accordance with the local juridical basis of each country.
International organisations such as the ILO, UNIDO and UNCTAD supervise Free Zones and their development.
What activities take place in a Free Zone?
Free Zones can conduct the following activities:
- Industrial or Production Operations
- Commercial Activities
- Logistical, Financial or General Services
- Tourism or Hospitality industry
- Training Plans and University Studies
- Commercial Promotion through Fairs and Exhibitions
- Social Activities
How are Free Zone activities conducted?
Free Zone activities are:
- Regulated by a Free Zone Law
- Controlled by the zone concessionaire or operator
- Used by previously authorized tenant companies, which have decided to partially or entirely develop their economic activities in a Free Zone.
Who can invest and operate in a Free Zone?
Any person of recognized personal, professional and economic solvency can invest or operate in a Free Zone, regardless of their nationality. This requires the approval of the concessionaire and the competent authorities according to the effective legislation in each country.
What are the advantages of investing in Free Zones?
Investors in Free Zones benefit from:
- Efficient Customs Procedures
- Fiscal Advantages
- Free Currency Exchange
- Low Cost of Labor
- Logistical Efficiency
- Economies of Scale
- Economic Synergies
- Efficient Telecommunications
How many Free and Special Zones are there?
In 2002 there were 43 million people working in about 3000 FTZs (Free Trade Zones) spanning 116 countries producing from clothes and shoes to electronics and toys. The latest UNCTAD World Investment Report from 2019 found close to 5400 FTZs and SEZs (Special Economic Zones) in 147 economies, with more than 500 new zones in the pipeline.