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Special Economic Zones in Africa
Box 7.4
Overcoming a Landlocked Location: Integrated Customs and Trade Facilitation at Suzhou Industrial Park The China-Singapore Suzhou Industrial Park (SIP), a joint venture between the governments of Singapore and China, is one of China’s most successful industrial parks. Despite its generally advantageous location in China, the park is landlocked. Thus, one of the most important areas for government support in the development of the park has been transport, logistics, and trade facilitation. The continued streamlining of customs procedures and port handling, which have been adapted and upgraded over the years, has been one of the most important contributions of government to the success of the zone. From the inception of the park in 1994, a customs subadministration was planned; it was formally launched in 1999. SIP now operates as a virtual port and is allowed to handle customs clearance of exports and imports directly. SIP firms enjoy an efficient “green lane” and independent customs supervision, which has run 24 hours a day, seven days a week since 2003. An integrated free trade zone (IFTZ) was established in SIP in 2008 by integrating two processing trade zones, one bonded logistic center, and one customs checkpoint.7 The IFTZ serves as a platform to promote the development of a business process outsourcing (BPO) industry in SIP. Some multinational corporations—including Fairchild Semiconductor Inc., Samsung, and Chi Mei Optoelectronics—have established or are planning to establish their distribution centers in the IFTZ, so an international logistics and distribution base is gradually taking shape. Source: Zhao and Farole (2010).
SEZ models have a significant advantage over traditional EPZ models in facilitating improved links. Traditional zone programs, built around labor-intensive assembly designed to exploit trade preferences, face structural barriers to achieving integration between the zones and the domestic economy. This is because the structure of trade preferences often works against sourcing from the local market. For example, many of the trade agreements that allowed African and other low-income countries to gain duty-free access to the U.S. and EU markets for apparel were originally designed so that firms would source fabric from those end markets. In some cases (e.g., under