World FZO Bulletin

October 2015 I Issue 03 Dear Members,

1090, 1st Floor, 7W-B, Dubai Airport Free Zone World FZO is pleased to present our third quarterly Bulletin PO Box 371113, Dubai, United Arab Emirates of 2015. T +971 4 204 5473 F +971 4 299 3866 This issue explores the most important factors in attracting E [email protected] investments to free zones and includes a feature on Airbus Group W worldfzo.org whose regional headquarters are in Dubai Airport Free Zone Authority (DAFZA). Also in this issue, we provide overviews by fDi intelligence of the latest investments around the world on a regional basis.

We would like to thank Jorge Mario Martinez Piva, Head of Unit International Trade and Industry, CEPAL, Mexico and Habib Fekih, President of Airbus Group Africa and Middle East for their valuable contribution to this issue.

We hope that this issue provides you with an in-depth insight to global investments trends and on the industry of free zones. As always, we welcome your feedback and input on the Bulletin and on any of the other serviceswe offer.

With best regards,

World FZO Knowledge Unit

“Articles [and/or videos] sourced from the Financial Times have been referenced and are used under license from the Financial Times Limited and were originally published in 2015. “FT and “Financial Times” are trade marks of the Financial Times Limited. The Financial Times Limited has not endorsed, verified or been involved in the creation of information provided from other sources in this publication, and is not responsible or liable for its accuracy, completeness and content.”

Disclaimer: The views expressed in this bulletin are solely those of the authors and do not in any way represent the views of World FZO.

By Jorge Mario Martinez-Piva consolidation Head of the International Trade and Industry Unit. UN-Economic Commission for Latin America and the Caribbean, Subregional of investments Headquarters in Mexico flows

2 © 2015 I World Free Zones Organization I Bulletin issue 03 © 2015 I World Free Zones Organization I Bulletin issue 03 3 estimates by the UNCTAD (2003) for middle-income developing The first strategy, focused on reducing production costs, Introduction countries to grow at rates that allow them to reduce the gap has been widely used in many developing countries and Public-private alliances that separates them from the developed countries, require for many of them it has been the only way to mobilize foreign Given that a combination of factors is critical for attracting and Policy makers have found an important tool for increasing stable investment rates of 25% of GDP. However, historically capital into their territory. However, this strategy exerts strong anchoring investment flows, how can countries identify the investments and facilitating production chains through the investment rates in many developing countries have been low. pressure on tax revenues and public resources by the process relevant set of factors to boost investments? How can countries establishment of Free Zones (FZ). These zones offer a set For instance, the gross fixed capital formation accounted for of tariffs reductions and increased tax exemptions. This improve these set of factors? Though there is no universal of factors that facilitate businesses, including factors that 21% of GDP in Latin America in the last 15 years, an insufficient raises two fundamental paradoxes: on the one hand, the tax formula to respond to these questions, according to a vast study increase business competitiveness, reduce operation costs rate that prevents countries from starting virtuous catching- waiver prevents the State from having sufficient resources of successful cases two factors are crucial: the development and and increases mobility and connectivity. up process (see Chart 1). For the above reason foreign direct for investment in public goods needed to improve their implementation of a medium - and long-term strategy to achieve investment (FDI) is of great importance for developing countries, competitiveness condemning the country to a low competitive economic growth and the support provided to this strategy by Free Zones have different names as they vary from country since it complements domestic investment increases linked equilibrium trap. On the other, the most dynamic and high- a public-private alliance (Devlin and Moguillansky, 2009). to country – Export Processing Zones, Free Industrial Zones, to the gross fixed capital formation rate. income sectors located in FZ do not contribute to the treasury, Free Trade Zones, etc. – However, in general, they relate generating a regressive tax system. A medium and long-term vision of development sheds light for to special regimes that promote investment and facilitate Gross Fixed Capital Formation, 2000-2013 private investors on future areas of development and provides businesses in a geographically defined area, commonly (in percentages of GDP) It is also important to underline that the cost reduction key information for investment planning. It also indicates the considered outside the customs territory of a country where strategy based on the reduction of taxes is the easiest to imitate, productive factors that will be created or strengthened by local special regulations apply. Firms located in these areas often 45 leading a race to the bottom competition among countries authorities, facilitating private investments decisions. receive tax benefits such as duty-free imports and tax by reducing regulatory and tax requirements. The main challenge exemptions as well as specialized public services – expedite 40 for countries implementing this strategy is designing a “new The success of this medium and long-term vision is greatly customs procedures, special security measures, etc. 35 generation incentives” to promote investment, moving from based on the capacity of organizing public-private alliances. a strategy based on cost reduction, to one in which companies These alliances require an open dialogue between policy For developing countries, the creation of Free Zones invites find further benefits by relocating into those countries. These makers and private sectors that facilitates the identification of exporting companies to relocate by offering a set of advantages. 30 new incentives can target investments in services, productive bottlenecks and its solution, as well as the creation of medium The conditions offered in the FZ for exporters offset the anti- 25 activities with higher value added, firms with intensive R&D to long-term arrangements. These alliances reinforce the mode export bias that may exist in some of these countries – poor activities, new environment oriented sectors and the creation of a countrie’s international insertion, bring timely responses to infrastructure, high tariffs on imported inputs, difficult access 20 of productive linkages between companies operating in the productive and investments constraints and creates mechanisms to products and components at international prices, export FZ and local businesses. In this new strategy, FZ play an for private and public sectors to remove them (Devlin and taxes, among others. For developed countries, free zones 15 important role by offering specialized services and attractive Moguillansky, 2009). facilitate the import and management of inputs that are part 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 factors that may be unique, facilitating the arrival of new firms. of complex supply chains. With increasing globalization, European Union Emerging and developing Asia In other words, FZ can help to overcome the low competitive The most successful public-private alliances cases were those FZ have become an important instrument to promote FDI Latin America and the Caribbean Middle East and North Africa equilibrium trap. with more stable dialogue and medium to long term agreements and through this, integration into global value chains. Sub-Saharan Africa USA Source: IMF, World Economic Outlook Database, April 2015 that provided a basis for consensus or public understandings The second strategy stems from the provision of special to underpin investments strategies oriented towards successful FZ are actually a complex set of instruments that seek multiple or unique investment factors. Location decisions are driven internationalization of the economy. goals simultaneously: to create the enabling environment for Although FDI is positive for growth, for the modernization at least for three main determinants: market seeking – being attracting FDI, facilitate businesses and create global value of the local business sector and for its international insertion, as close as possible to consumers –, efficiency seeking – Whether public-private alliances are formally structured, ad hoc chains, while the development of industries and services that it is an exogenous factor which should be considered to reduction of costs, timely delivery, energy access, etc. –, and ones, tacit or informal, or a hybrid of the above, has not proven complement domestic investment are encouraged. Given this complement local investment policy. FZ play the important role finally, special resources seeking – access to unique natural to be decisive. What is important is to have a serious public- complexity, it is important to identify the most important factors of matching FDI and local investments, serving national efforts resources or highly skilled labour. In real world, most location private dialogue in order to facilitate the solution of problems, for success in attracting investments into FZ. to increase foreign and local investment. To better perform this decisions are based on a mix of the three reasons explained create commitments from public and private sectors and to task, FZ have to explore, in a very creative manner, all existing above and that is why the competition for attracting and evaluate and amend the agreements if necessary. This brief note examines some of the most important factors incentives and determinant factors for attracting investments. anchoring investments are increasingly complex, overcoming related to attracting investment in free zones starting from the sole idea of tariffs and tax exemptions. Free Zones may play a key role inducing public-private alliance the importance of investment for growth, financial and fiscal on productive investment matters offering an ideal platform incentives to increase investment, creating unique factors Two main strategies for The creation of a unique investment’s attraction factors for public-private dialogue. In addition, FZ can offer an increasing that conform to the needs of firms and finally, stressing the increasing investment rates are comprised in a long list of endowments, most of them set of factors that are relevant for attracting and anchoring importance of reaching public-private agreements to facilitate In order to promote investments, countries have developed depending on public policies – education, quality infrastructure investments along with facilitating the provision of relevant productive investment. mainly two strategies: the first is to offer generous tax and IT services, access to energy, business facilitation, customs public services – customs, security, clustering, etc. This public incentives – tax exemption to imports: value added tax procedures, etc. Private services are increasingly providing - private relation has proven to be a fruitful alliance towards and tariffs –, exemption from income tax, sales tax or VAT, many of the above-mentioned factors are becoming a part business development. Investment as an engine exemption on municipal taxes, permits, etc. This first strategy of the solution for developing countries. is usually followed by a number of facilities for hiring local and It is crucial for free zones to constantly update their strategies for growth foreign labour, for importing capital goods, etc., which could Free zones offer a mix of factors to attract, anchor and facilitate for attracting investment and align them with the changes Investment flows are crucial for economic growth, and therefore be summarized as a strategy focused on reducing production a growing flow of investments. The bottom line in this strategy in global markets. The factors mentioned above are what increasing investments is a development policy pillar in all costs. The second strategy is to promote investments through is that the bigger the market that can be accessed from a FZ free zones nowadays should capitalize on to be successful countries. For poor or emerging economies, closing the gaps the provision of public goods such as access to specialized and the more sophisticated services the FZ can offer, the less and to ensure their competency. that separates them from developed countries is necessary infrastructure, highly skilled labour, to new technologies, relevant the tax exemptions for attracting investments. in their quest for development. The catching-up process ease of trade procedures –customs procedures, import permits, inevitably requires high investment rates and countries must operating permits, etc. We could summarize this strategy explore any feasible policy to boost investments. According to as based in the provision of specialized productive factors.

By Habib Fekih partner in President, Airbus Group Africa and Middle East progress

6 © 2015 I World Free Zones Organization I Bulletin issue 03 © 2015 I World Free Zones Organization I Bulletin issue 03 7 Never before in the history of mankind has speed been crucial to a society’s development as it is today. From high bandwidth Internet connection to supersonic aircraft, Airbus Middle East and DAFZA we live in a world dictated by the need for speed. The UAE is growing at a very strong rate reinforced by a positive business outlook and investor confidence in the economy. The steps taken by UAE’s leaders to build an Today, businesses are required to be more rapid and innovation-based economy and to transition away from energy production into complementary sectors such as hospitality, efficient than ever before and aviation is one industry that aviation and infrastructure over the last 15 years have resulted in a diversified economy, boosting UAE’s presence on the DAFZA announced that they will open 36 new warehouses has been setting new benchmarks and riding the wave global map. in the Al Qusais area of Dubai this year as well as other facilities close to Dubai International Airport’s Terminal 3 because of Taking these growth opportunities into consideration, Airbus over the last 60 years or so. The industry can rightly be the incredible demand that exists. This is a testimony to how Middle East opened its regional headquarters in the Dubai successful free zone operations have been for companies based Airport Free Zone (DAFZA) back in 2006. called the harbinger of growth and development as it plays in the location. Apart from providing foreign firms with the platform to grow their presence in the country, such free zones a significant role in providing a seamless transportation help contribute to the strengthening of the sector and therefore the overall economy. system both for commercial and leisure travel. The vast array of opportunities Airbus has had, to positively contribute to the country, is a result of the versatile manner of operations free zones have made possible. In the Middle East, in the last five decades, the aviation One significant way it does this is by forging links between sector has not only contributed to economic and social developed and developing nations through travel and trade As businesses expand and the economy continues to flourish progress through local tourism but has also opened gates resulting in better access to global markets. in the coming years, free zones will need to think strategically to global markets which once were deemed impossible to and anticipate its customers’ needs to stay ahead of the access. As businesses expand and the movement of people According to the International Monetary Fund (IMF), the competition. One manner in which they could master this and goods across continents continue to grow, it is only natural outlook for growth in the UAE remains positive at 4.5 per cent is by looking into strategic partnerships that create long term that the demand for faster transport will drive economies in 2015, with Dubai expected to grow at 5 percent this year. value in logistics and services such as harnessing latest to open up and forge stronger trade links between developed This has been largely made possible due to the state-of-the-art technology to digitise day-to-day operations to reduce operating and developing economies. infrastructure, a conducive platform for connecting business cost and time, ensuring staff training and flexible regulatory that supports unrestricted flow of people, capital, goods and laws to cover off-site operations such as access to Abu Dhabi According to industry reports, the aviation industry’s impact services across the region. The UAE is an important market for Airbus as it houses some or remote locations within the UAE. It will also be reassuring on the global economy is estimated at $2.4 trillion, equivalent of its top customers and the company’s current footprint to see free zones improve their standard of incentives and make to 3.4% of world gross domestic product (GDP). It directly With its tremendous growth, development and market in the country is a core element of worldwide operations. earnest efforts in getting to know their tenants and business supports more than 58 million jobs and is also responsible potential, Dubai has become a significant destination for The share of passenger aircrafts operated by the region’s carriers partners better. for 35% of world trade by value. global multinationals from around the world in which to have has doubled in the past 10 years. Airbus expects that new a presence. One of the most alluring characteristics of free zones aircraft deliveries to the Middle East will total 2,242 between This mammoth figure demonstrates many positive aspects in this particular city is the chance to be a part of and maximise now and 2033, such expansion of business opportunities of the sector’s worldwide growth. The industry has helped its rapidly growing economy. Allowing a company to function is driven by a sustainable growth of the travel market. For all improve standards of living in various countries through within a business environment that has progressive regulatory these reasons and many more the company will continue facilitating tourism, commerce and job creation. In the coming framework, automatically opens up avenues and regulations to invest greatly in operations within its regional headquarters years, these impressive figures will only continue to grow, the enabling them to realise their full potential for growth. as it is based in one of the world’s most important and rapidly aviation industry will need the support of infrastructure platforms expanding aviation markets. such as free zones to encourage more business through local This practice is a vital step to diversifying the economy as and foreign expansions in their respective countries. it encourages companies from various industries, and also One can easily understand from this range of benefits competitors from the same industry, to launch operations why Airbus chose DAFZA as its base for regional operations. in the free zones. This openness helps create opportunities Not to forget that this prime location on the world map allows that widen the market and increase the number of firms one Airbus to access to over 1.5 billion customers and the ability Free Zones: A business necessity can work together with both for commercial and collaborative to meet rapidly increasing demand in the sector. DAFZA’s Free zone, as a business model is here to stay and by taking Free zones today have become business necessity in a nation’s purposes, in one pragmatic location. Being in close proximity state-of-the-art infrastructure and world-class facilities on offer the above factors into consideration, they will not only be in economic development as they make destinations an attractive to infrastructure and facilities such as research and development make the free zone the ideal base for companies in the aviation a stronger position to anticipate and react faster to issues place for commercial activity, especially for large international institutions, access to highly skilled workforce and trade entities, industry, with fast and efficient cargo services which are cleared and challenges at hand, but also continue to grow and remain firms who bring in great value to the domestic economy. aid possible synergic measures. within 24 hours. globally competitive, innovative and ahead of the game.

10 © 2015 I World Free Zones Organization I Bulletin issue 03 © 2015 I World Free Zones Organization I Bulletin issue 03 11 It used to be said that Latest Investments Plastics Software and IT Services Automotive Moderna in South Carolina Emarsys chooses Indiana one man’s boom leads Belgium-based Moderna Products, a company specialising Austria-based Emarsys, a cloud-based e-marketing company, Third Faurecia Plant in Mexico in plastics for the pet industry, is to open a new manufacturing is to locate its North American headquarters in Indianapolis, to another man’s doom. Faurecia, which supplies automotive equipment and is a facility in Gaffney, South Carolina, the US. The company Indiana, the US. The company will invest $3.2m on 1395 square subsidiary of France-based PSA Peugeot- Citroen, is to open will invest $6m to open the 10,775 square-metre facility. metres of office space, and plans to create 167 new jobs. But perhaps the M&A cycle its third plantin Puebla, Mexico by 2016 in an automotive sector It will be the company’s first manufacturing operations The company will be offered $3.83m in conditional tax project. The facility will manufacture exhaust components in the US, and is expected to open late 2015. credits and $135,000 in training grants. need not pan out that way. to meet growing demand in North America. Those doomed through a boom in M&A may also be seen as skilled staff, soon to be available.

This spring numbers were strong and they kept getting stronger. As the first half of 2015’s statistics were tabulated, it appears that worldwide M&A activity will reach its highest level since 2007. Electronic components Transportation In the US, M&A in the first half of 2015 set a new record of $1000bn. More than $260bn of this involves private EcoSolifer Opens in Brazil Metals Höegh’s Texas Venture equity deals, about twice the amount of private equity invested Switzerland-based EcoSolifer, a manufacturer of photovoltaic Höegh Autoliners, a provider of roll- on, roll-off shipping and in the first half of 2014. The large M&A totals reflect two Reynaers Expands in Arizona principal factors: private equity participation continuing to rise, modules, is to invest $8.7m to open a new plant in Brazil. The logistic services, which operates as part of Norway-based Leif and an increase of nearly 50% in the number of deals worth facility will assemble imported cells into 80 megawatts of panels Belgium-based Reynaers Aluminium, an aluminium systems Hoegh & Co, has opened a new terminal at the Port of Freeport, $5bn or more. Looking ahead, it is expected that the global a year by April 2016. It will start producing cells by 2020. The company, plans to expand its US headquarters in Phoenix, Texas, in a logistics, distribution and transportation project. The private equity market will double in value to $7000bn by 2020. company will own 55% and Brazilian investors will own the rest. Arizona. The development is part of a wider € 50m strategy facility will have two processing centres encompassing a VPC Sovereign wealth funds, large institutions and even small It is considering sites in five states: Pernambuco, Bahia, Minas which will see investment in the UK, France and Turkey. handling the automotive market and an EPC handling the heavy investors will seek ‘alternative investments’ as a way Gerais, Goias and Santa Catarina. EcoSolifer eventually expects Reynaers Aluminium expects the investment to conclude equipment market. The current development of phase one to diversify their portfolios. to form joint ventures to develop solar farms in the country. by 2017. and two has an annual throughput capacity of about 135,000 vehicles. The private equity investors’ narrative calls for savings from restructuring as a way to create profits or finance growth. Blockbuster merger deals also point to compatible and complementary strengths. Taken together, the very large deals and the growth of private equity deals will inevitably result in reorganisations, closings and other ‘synergistic savings’. Some communities may benefit from the consolidations, but in many communities what were once anchor employers may soon be anchors aweigh.

The greenfield investor has an opportunity. The increase in newly redundant staff provides a pool of talent. And it is a bit easier to be a new employer of choice when old employers are letting folks go. The M&A boom leads to redundancy doom, but it might also foster greenfield blooms.

Daniel Malachuk works with business and government leaders on global direct investment strategies. He had advised many of the world’s leading companies and served in the public sector as director of White House operations.

Email: [email protected]

14 © 2015 I World Free Zones Organization I Bulletin issue 03 © 2015 I World Free Zones Organization I Bulletin issue 03 15 Megacities are those with 10 million inhabitants or more. Warehousing and Storage Nanox Expands in Philippines In 2014, there were 28 megacities worldwide, 16 of which The UN estimates that 66% Nanox Philippines, a subsidiary of Japan Display, plans to expand were located in Asia. In contrast, small cities or urban Forval Vietnam Joint Venture its manufacturing plant in Angeles, the Philippines. Located settlements with fewer than 500,000 inhabitants are of the world’s population Japan-based Forval Corporation has entered into a 35-55-10 within Clark Freeport Zone, the $16.06m expansion is expected numerous and many are growing rapidly. joint venture to build a logistics centre to accommodate tenants to create 1000 new jobs by 2020. The 20-hectare expansion will at the Nhon Trach 3 Industrial Park in Dong Nai Province, significantly expand capacity at the site, which produces liquid will live in urban areas in The World Bank reports that the largest urban area in the world Vietnam. The company will partner with Tin Nghia Corporation crystal display panels, fibre optic lenses and glass modules. is the Pearl River Delta in China, covering the cities of Hong and Dong Nai Container Terminal. A facility with 182,960 square 2050, compared with 54% Kong, Macau, Guangdong and Shenzhen. metres of storage space will be constructed with about $35.5m being invested. in 2014. Asia, despite its While cities around the world grow and evolve naturally into megacities, the difference for Asia is the faster pace lower level of urbanisation, of development. Entrepreneurs from all over are attracted to these Asian megacities due to both pro-urban policies is home to 53% if the and incentives as will as the greater market size potential and faster market growth. An example is that more healthcare and pharmaceutical manufacturers are ‘Asianising’ their R&D world’s urban population. to tailor the Asian market. Such inward FDI and export-led market entries into Asia have in turn created more higher In Asia, the largest urban paying jobs and increase household income growth. Rural to urban migration is permanent in Asia, where younger workers growth will take place in flock to and stay in megacities as their new adoptive homes. Industrial Machinery, Equipment and Tools India and China. By 2050, Already in Asia, sustainability is showing signs of weakness: over-crowding traffic jams, bursting public transport systems. Electronic Components Sembcorp’s news Vietnam Hub India is projected to add The trend is for Asia’s tier two and three smaller cities to grow into megacities and for megacities to grow into behemoth Singapore-based Sembcorp Industries, a company engaged in Ahcof’s Indonesia Plans 404 million urban dwellers, metacities. These are exciting times in Asia indeed, with utilities, marine and integrated urban development businesses a positive long-term outlook despite short-term hiccups. Ahcof International Development, a subsidiary of China-based worldwide, has established a new logistics hub in the Vietnam- Anhui Cereals Oils & Foodstuffs, plans to establish a new joint- Singapore Industrial Park, Hai Phong, Vietnam. The $7.9m while China will add 292 Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based venture optic fibre cable plant at the Technopark in Subang, facility will allow the firm to enhance product delivery to markets consultancy that provides Asia market research and investment/ Indonesia. It will be built on a 2500-square-metre site and is including the US, Europe, China and India as well as customers million. trade promotion services. scheduled to be operational by early 2016. The firm will partner across the Southeast Asian region. with Len Industri and Newstar Energy International to help meet Email: [email protected] demand in Indonesia and south-east Asia. Paper, Printing and Packaging Latest Investments NTPM movies to Ho Chi Minh Malaysia-based NTPM Holdings, a provider of paper and Aerospace personal care products, has established a new production facility in Ho Chi Minh City, Vietnam. The plant has the capacity to ST Aerospace In Guangzhou produce 1000 tonnes of tissue products per month. The firm ST Aerospace, a subsidiary of Singapore-based ST Engineering, has invested between $10.4m and $13m in the project. plans to establish a new maintenance, repair and overhaul facility in the city of Guangzhou, China. It will be built on a 147,000-square-metre plot with four hangars. The firm’s second facility is scheduled to be operational by the end of 2016.

18 © 2015 I World Free Zones Organization I Bulletin issue 03 © 2015 I World Free Zones Organization I Bulletin issue 03 19 Europe is fairly modest when it comes to the presence of Financial Services Industrial Machinery, Equipment and Tools When we talk about megacities. The UN’s ‘World Urbanisation Prospects’ report only puts Istanbul, Moscow, Paris and London in the more than State Street Opens in Gdansk FDM Relocates in Germany 10 million-population club (the standard definition of megacity), megacities, we naturally US-based State Street Corporation, which provides products FDM, a manufacturer of feeding, dosing and mixing industrial and only Istanbul gets the top 20 list of the world’s largest and services for institutional investors, plans to open a new machines and a subsidiary of Italy-based Piovan, has relocated urban agglomerations. Most of the big-big cities are in office in Gdansk, Poland. The office space can accommodate to a larger manufacturing facility in Troisdorf, North Rhine- focus on their large size. Asia and the Americas. more than 1000 employees and will provide investment fund Westphalia in western Germany. The 1900-square-metre For some, this can be For Europe, its megacities are an asset to be appreciated accounting, securities valuation and financial reporting. plant is located in the Airport Gewerbepark Junkersring industrial and exploited. Paris and London offer the highest population The financial services facility is planned to open in early 2016. park and has room for further expansions on the 6000-square- a bad thing, bringing densities in Europe, with an incredible 21,516 people per square metre site. kilometre in Paris (more then double London’s 9843 people per vulnerability through year). In urban development circles, population density is viewed as a good thing. It can bring efficiencies in energy consumption a high concentration and minimise environmental impacts; it can have positive impacts on productivity and innovation; and can provide of people and extreme a high quality of life and liveability for people. Megacities are Europe’s show window to present to the world dynamics, with potential it best ideas, its high-growth businesses and its financial power and innovation. They offer diversity, and the bump-and-grind for conflict, social dynamic to make things happen. They connect, collaborate and trade with other world cities. They are big markets in their own disintegration, various right and their high density allows beta testing of new business models. One example is their lead in the development of the Food and Tobacco sharing economy. Some think that big cities cause problems, Metals crises and disasters. when in fact they can actually help us solve the big problems. Mondelez Grows in Austria Reynaers moves to Turkey US-based snack food company Mondelez International has Douglas Clark is director of Location Connections, increased production capacities at its manufacturing facility Belgium-based Reynaers Aluminium, an aluminium systems a site selection and FDI consultancy. in Bludenz, Austria. The € 45m expansion has added a new company, plans to open a new office and warehouse facility. For others, the large scale Email: [email protected] production line for the firm’s Milka branded products and has a The facility’s development is part of a wider € 50m strategy daily production capacity of 350,000 units. The facility serves which will see investment in the UK, US and France. of people rubbing together the European market. Reynaers Aluminium expects the investment to come to completion by 2017. is a good thing, and from Latest Investments an investment and business Automotive Components Pharmaceuticals UK NSI Expands in Redditch Amneal’s new Ireland Facility growth perspective that UK NSI, a provider of instrument clusters for vehicle US-based Amneal Pharmaceuticals a pharmaceutical manufacturers and a division of Japan-based Nippon Seiki, manufacturer and supplier plans to open a new facility in Cashel, is where I see things. has expanded its operations in the Midlands town of Redditch Ireland. The 18,580-square-metre site will focus on R&D and in the UK, just south of Birmingham. The firm has extended on the production of metered dose and dry powder inhalers Megacities are a great its sales and manufacturing base and taken two units at Manor as well as biosimilars. The firm expects to hire between 250 Side Industrial Estate to allow for continued growth within and 300 new staff at full buildout. The investment is supported business opportunity. the UK automotive industry and across global exports. by IDA Ireland.

22 © 2015 I World Free Zones Organization I Bulletin issue 03 © 2015 I World Free Zones Organization I Bulletin issue 03 23 In this highly competitive environment, the countries of the Beverages Communications For decades, business Middle East and Africa (MEA) are constantly losing ground to Asia, eastern European and even South American destinations. Diageo Mozambique Expansion Tigo grows in Ghana The Maghreb countries and Ghana and Kenya are still considered process outsourcing Diageo-Mozambique, a subsidiary of UK-based Diageo, Tigo Ghana, a subsidiary of Luxembourg-based Millicom as attractive BPO destinations in the regional contest. However, has expanded its production facility in Marracuene, International Cellular, plans to expand its network in Ghana. only South Africa is outperforming in the region and boosted its Mozambique. The $20m expansion has increased the factory’s The $24m ICT and internet infrastructure development (BPO) has in large part BPO sector from 10,000 companies in 2010 to 25,000 in 2015. capacity to 9000 bottles per hour, which will supply the local has seen 124 new cell sites established across the country, market as well as be exported to other countries within the with 150 further sites to become operational by the first defined the development One might blame the weak performance of other MEA countries Southern African Development Community. The factory quarter of 2016. The initiative aims to expand the on political instability. However, a much more interesting – predominantly produces Smirnoff Spin. company’s 3G coverage. of many industries and host and for the MEA countries, more worrying – reason is the BPO industry’s trend towards robotic process automation. countries. Having doubled Technological advances in automation and communication technology will enhance overall computational power and in value globally to $104bn lead to the replacement of offshore employees by machines. This leads to enormous savings potential for companies through geographic independence and higher productivity. However, in the 15 years to 2014, they will face a bottleneck concerning access to and availability of a suitable and qualified talent pool. A young and highly BPO is one of the main educated population and a good education system are crucial attributes, which South Africa has in common with other drivers of FDI and can successful BPO players such as Indian and Vietnam.

These countries understand best that the future of BPO is about also serve as an indicator Business Services Electronic Components making savings through knowledge and skills rather than through cheap labour and tax incentives. If the MEA countries do not to the attractiveness of host Nigeria call for ISON Kenya shines for SkyPower react to these needs, they risk losing one of the best sources countries to the global FDI of FDI in their development. ISON BPO, a subsidiary of India-based ISON, plans to open Canada-based SkyPower, a renewable energy specialist, a new call centre in Nigeria. An exact location has not yet been plans to establish solar power structures in Kenya. Mazdak Rafaty is managing partner of Ludwar International decided upon, but the company is thought to be considering The development will see 200 megawatts of fabrication community. Consultancy and SME advisor to the joint Emirate-German Kano. The development is part of a wider growth initiative and assembly facilities established in Kenya by 2020. As part Chamber of Commerce. which will see additional centres established in Abeokuta of this $2.2bn initiative, 1000 megawatts of solar projects and Ilorin and Ibadan. The developments are expected will also be established alongside a commitment of $173m Email: [email protected] to create 4000 new jobs. toward education, training and R&D. The investment aims to help Kenya realise its electrification goals.

Latest Investments Leisure and Entertainment Alternative/Renewable Energy Macau gambles on Cape Verde Siemens enters Nigeria Macau-based Macau Legend Development, an casino Germany-based industrial conglomerate Siemens plans gaming company, plans to invest $277.37m to develop a to establish a new solar power generation facility in Nigeria. 152,700-square-metre integrated resort and gaming facility To be located in the Plateau region, the $170m facility will complex in Praia, Cape Verde. The firm has entered into several have a capacity of 70 megawatts and will supply the domestic agreements with the government to construct the complex. grid. The generation plant is to be developed through a joint venture with local firm CT Cosmos and is scheduled to become operational in 2017.

This investment news and data has been provided by fDi Markets, a crossborder investment tracking service that is part of The Financial Times Ltd’s fDi Intelligence division (www.fdiintelligence.com)

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