The Effect of Rising Oil Prices on the Indian Economy
The prices of oil have once again started going through the roof. In the past few years, the prices of oil have seen a steady downturn. This can be largely attributed to the supply gut that was created as a result of a new technology called “fracking.” The world has changed immensely since then. Geopolitical […]
How to Leverage the Demographic Dividend and Manage Demographic Deficit ?
What is Demographic Dividend and Demographic Deficit ? We often hear the terms Demographic Dividend and Demographic Deficit being written about and spoken about by experts and economists. These terms are mentioned in the context of how economies in the future can manage either the rising percentage of youth among their population or deal with […]
Approach to Exports and International Marketing Business Model
Today every individual entrepreneur owned businesses as well as Corporates have changed the way they look at their vision and business planning. Companies how ever big or small are no longer operating in domestic markets alone, for they have at their disposal the entire global market which is just waiting to be captured. The globalization […]
Mexico: The Auto Hub of the World
Bavarian Motor Works (BMW), which is a world famous car manufacturing company, has now set up its plant in Mexico. The company plans to use this plant to manufacture more of its famous 3 series vehicles. The unique thing about this plant is that it has been set up despite Trump’s constant blackmail to automobile […]
Planning Functionality of an ERP System – Setting up of Planning Engine
In customer centric business environment, it is critical to have an effective plan to manage production capacity, materials availability and shipment schedules. The planning functionality of an ERP system provides organizations the means of meeting such customer centric approach. Planners are able to simulate alternate scenario planning wherefrom they determine which assemblies and components to […]
Countries have long since realized the importance of furthering their interest by supporting the International Trade and Exports from in house and actively supporting the industries to become globally competitive. Besides this objective, many governments also aim to promote Foreign Direct Investment into the country and encourage Multi National Companies to set shop and manufacture goods for home consumption as well as Exports. In order to support such initiatives most countries set up Special Economic Zones in their country.
Governments develop certain underdeveloped or rural regions as industrial parks, provide international standard amenities and designate such zones as Special Economic Zones. These areas are normally exempt from most of the normal trade barriers, tariffs and national laws and seek to promote free market export oriented manufacturing activities. There are several sub categories of Special Economic Zones (SEZ) namely Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Parks, Free Ports etc.
The Governments give preference to large scale manufacturing or assembly units to be set up by Multi National Companies of repute and provide tax holidays as well as waiver of many of the formalities required to be followed by the Companies in the said Zone. Typically the Companies import Raw Materials and manufacture goods locally thus using local cheaper labor and Export the goods outside the Country. Both the Imports and Exports are exempt from Customs Duties and other levies. Only the goods that enter the local market as domestic sale product are taxed. Such manufacturing intensive zones help generate a lot of employment in the rural sector and lead to the overall development of the area and in turn stimulate economic growth in the area. Besides local growth of the area, it helps country earn huge foreign exchange as well.
Ireland was the first country to set up Shannon Free Zone which was followed up quickly by most of the developing countries like Philippines, Malaysia, China, India, Mexico, Costa Rica, Honduras, and Guatemala etc. The list of countries now having adopted EPZ has cross over 100 numbers.
While Jabil Ali FTZ made a huge impact on Dubai and its growth, China has benefited from its most successful SEZ - Shenzhen which helped employ over 10 million people. India has become one of the Asia’s largest outsourcing hubs thanks to establishment of SEZs through out the Country.
Though in many countries the SEZs are implemented by the Governments, quite a few SEZs have been implemented by private parties too as private operator, private developers. Quite a few countries have adopted a mid path of setting up public sector quasi-government agencies with a pseudo corporate institutional structure and autonomy in operations. In some other cases SEZs have also developed on the basis of public-private partnership arrangements.
SEZs can be said to be the precursor for establising liberal market economy and free trade. Today world over more than 3000 FTZs in over 116 countries are employing appx. 43 million people engaged in manufacturing of various consumer items such as clothes, shoes, electronic gadgets, computers and toys etc.
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