Special Economic Zones to replace EPZs
Namibia’s Export Processing Zones - areas that offer incentives and a barrier-free environment to promote economic growth by attracting foreign investment for export-oriented production - have not yielded the desired results.
It is for that reason that industrialisation minister Tjekero Tweya yesterday unveiled a new policy on Special Economic Zones (SEZs), which will replace EPZs.
At a media briefing in Windhoek, Tweya said: “EPZ has not been an appropriate tool in terms of new realities.”
The minister said the Special Economic Zones (SEZs) would govern Namibia’s incentives to fast-track the country’s industrialisation agenda.
Investopedia defines an SEZ as an area in a country that is subject to unique economic regulations that differ from other areas in the same country. SEZ areas are set aside for specifically targeted economic activities, supported through special arrangements and systems that are often different from those that apply in the rest of the country.
Tweya said a special economic zone will be implemented in each and every region.
“We cannot just say let’s have it in Walvis Bay because of the fish, no,” he said.
“There are many idle sites in the regions; many that are not utilised and just a waste of resources.”
According to him, yesterday’s unveiling of the SEZs was a new beginning to change the country’s economic setup.
According to the Special Economic Zones Draft Policy Framework document released to the media yesterday, the SEZ programme aims to allow enterprises to produce goods and services that are globally competitive and thus trade effectively with neighbouring countries and the rest of the world.
“This morning someone gave me a present and that present is gin. That gin was made out of devil’s claw. Namibia has plenty of devil’s claw and we export it raw to the Americas and other countries and they make medicine which we use here,” the minister said.
According to the document, the policy will serve as one of the execution tools to achieve the goals of Vision 2030, the investment legislation, industrial policy, the Growth at Home Strategy and the national development plans through provision of targeted economic incentives.
“We only have 11 years left,” Tweya said yesterday.
The eligibility criteria for admission to SEZs are greenfield projects, manufacturing and processing activities, employment creation, value addition, investment value, linkage to the domestic economy, innovation, profitability, compliance and skills transfer. If the applicant is foreign owned, the amount of equity by Namibians in the company should be indicated.
Manufacturing, automotive, jewellery, mineral processing, pharmaceuticals as well as agro-processing are the main industries that the new policy is targeting.
In addition to the Growth at Home Strategy, other industries to be targeted include tourism, specifically high-end accommodation facilities.
For manufacturers and processors, a tax rate of 18% on taxable income for ten years is one of the incentives.
While many of the incentives have to do with tax, other incentives such as preferential access to public procurement are highlighted in the draft document.
There will be exemption from payment of tax on dividends for residents and non-residents.
Other incentives such as cash grants towards construction costs and optional financing securing from national institutions such as the Development Bank of Namibia (DBN) and Agribank will be offered.
Incentives for the tourism industry include a 10% tax allowance on the wage bill as well as 50% training allowances.