Integrating Special Economic Zones into Economic Development Strategies, 7th Working Group Meeting on Investment Zones in Iraq, Thomas Flynn, Policy Analyst, MENA Division, GRS, Paris, France 17 February 2015

1. Integrating Special Economic Zones into
Economic Development Strategies
7th Working Group Meeting on Investment Zones in Iraq
Thomas Flynn, Policy Analyst, MENA Division, GRS
Paris, France
17 February 2015

2. Purpose of presentation
• Define utility of SEZs
• Examines ways to link SEZs to economic strategies
• Case study of Malaysia

3. What are SEZs? What do they offer?
For Iraq
• SEZs need to be tailored to
the Iraq context.
 Potential benefits: spur
industrialisation,
diversification; perhaps
resolve land allocation
problems
• However, SEZs can distort
the economy because of
preferred legislation,
incentives, etc.
 Could discourage wider
trade and investment
reform
• SEZs are…
 One of various economic policy
instruments to support private sector
development and stimulate
investment
 Can serve multiple policy objectives
• Similar goal: A secure, conducive
environment for enterprises
 Developed and managed land,
subdivided into plots
 Adequate on- and off-site
infrastructure and access to utilities
 Support services for existing or new
businesses (e.g. business licencing,
training, incubation)
 Perhaps offer fiscal or commercial
incentives, access to finance

4. Portfolio of SEZs
Why different zones? Depends on policy objectives
• Industrial Zones can be for both domestic and foreign investors, especially
in manufacturing and support services
• Export Processing and Free Zones work under specific customs regimes to
facilitate regional/international trade and support export-oriented
manufacturing
• Investment Zones offer streamlined regulations and licencing and
incentives to attract foreign investors and develop new industries
• In other countries, technology parks and business incubators offer high-
level support services
Therefore, one country can have different zones depending
on policy objectives

5. Different types of SEZs
5
Extent of support services and incentives provided
Leveloftechnologyandforeigncapital
Industrial Zones
Technoparks
and Incubators
Independent
Enterprises or
Clusters
Investment
Zones

6. Basis for an SEZ strategy (part 1)

7. Basis for an SEZ strategy (part 2)
• SEZ strategy should be integrated
into national development plans
 Funnel national policy into specific
policies, ensures linkages
 The policy framework for the
strategy must be flexible to adjust to
evolving economic development
priorities
 If not…
Possible
objectives
for SEZ
strategy
SME
developm
ent
Industriali
sation
Job
creation
Technolog
y and
innovation
policyRegional
developm
entInvestmen
t and
trade
policy
Sector
developm
ent
Economic
diversifica
tion
Foreign
Exchange
• Balance: the SEZ strategy should focus
on achieving specific policy
objectives, aligned with country
development objectives; however,
based on market demand

8. Putting together an SEZ strategy (part 3)
• Sample Content of a
Strategy
• Background and
Rationale
• Vision and Objectives
• Legal and Regulatory
Framework
• Zone Regulator
• Zone Governance and
Administration
• Regulatory Relief – One
Stop Shops
• Zone Designation and
Land Usage
• Fiscal and Other
Incentives
• Monitoring and
Evaluation
• Financing Zones
SEZ
Strategy
Country
advantages
Trade and
investment data
analysis
Investor
survey
Benchmarking
of SEZs

9. Developing the SEZ strategy: choosing the right
policy (part 4)

10. Implementing SEZ strategy (part 5)

11. 11
Vision 2020
ICT
Development
Plan
(Industrial
Development
Plans)
Multimedia
Super
Corridor
(MSC)
www.thecommonwealth.org
• Vision 2020:
Former Malaysian
PM; Industrial
Development
Plans (New
Economic Policy)
•Population: 29.2 million
•GDP per capita: USD
•Unemployment: 3.4%
•World Competitiveness:
25th place
•20th in the world for FDI
attractiveness
•Malaysia’s 2011 FDI
inflows jumped 31.5% to
US$11.97 billion from
2010
Example: Malaysia’s approach from plan to SEZ

12. • Multi-billion dollar project
launched in 1996
 Land area: 15 km by 50 km (size of
Singapore)
• “It was never just about building
parks”
 2011: MSC revenue: USD 10.4
billion
 119,138 jobs created since its
inception
• 2011: 26 Cybercities and
Cybercentres in the MSC
 Cyberjaya national Cybercity
capital
 Putrajaya seat of Malaysia’s
government administration
Multimedia Super Corridor (MSC) and results
12
• Characteristics of Companies
in the MSC?
 Basis Bay
 N2N Connect
 Nexustel
Yigitcanlar, et al.: “The case of Multimedia Super Corridor”

13. Lessons for Iraq
13
• Credible and long-term vision
 MSC was positioned on the national agenda, part of an overall
economic development strategy, and all the initiatives were
linked locally
 High level advisory boards and international experts on long-
term basis
 Engage with potential anchor investors; invest in infrastructure
• Monitor and evaluate
• Flexibility and pragmatism in approach!