Special Economic Zones in the OIC Region: Learning from Experience COMCEC Coordination Office October 2017 Special Economic Zones in the OIC Region: Learning from Experience COMCEC Coordination Office October 2017 This report has been commissioned by the COMCEC Coordination Office to BuroHappold Engineering Ltd and opinions expressed in the report are solely those of the author(s) and do not represent the official views of the COMCEC Coordination Office or the Member Countries of the Organization of Islamic Cooperation. The final version of the report is available at the COMCEC website. Excerpts from the report can be made as long as references are provided. All intellectual and industrial property rights for the report belong to the COMCEC Coordination Office. This report is for individual use and it shall not be used for commercial purposes. Except for purposes of individual use, this report shall not be reproduced in any form or by any means, electronic or mechanical, including printing, photocopying, CD recording, or by any physical or electronic reproduction system, or translated and provided to the access of any subscriber through electronic means for commercial purposes without the permission of the COMCEC Coordination Office. For further information please contact: The COMCEC Coordination Office Necatibey Caddesi No:110/A 06100 Yücetepe Ankara/TURKEY Phone : 90 312 294 57 10 Fax : 90 312 294 57 77 Web: www.comcec.org E-book: http://[email protected] ISBN: 978-605-9041-96-6 Table of Contents EXECUTIVE SUMMARY 1 Defining Special Economic Zones 1 Global SEZ Experiences 1 SEZ Development in OIC Member Countries 2 Conclusions and Recommendations 4 1 INTRODUCTION AND BACKGROUND TO THE STUDY 6 1.1 Purpose of this Report 6 1.2 Report Structure 6 2 SPECIAL ECONOMIC ZONE TYPOLOGIES 7 2.1 Introduction 7 2.2 Definition of SEZs 7 2.3 Working SEZ Typologies 8 2.4 Organisational Structure 10 2.5 Ownership of SEZs 10 2.6 Economic Rationale for Establishing SEZs 11 2.7 Incentive Schemes used in SEZs 18 3 LEARNING LESSONS FROM GLOBAL SEZ EXPERIENCE 23 3.1 Introduction 23 3.2 Emerging Global Trends 23 3.3 Development of Cross Country and Tripartite SEZs 27 3.4 Key Challenges to SEZ Success 29 4 TRENDS IN SEZS IN OIC MEMBER COUNTRIES 34 4.1 Profiling SEZs within OIC Member Countries 34 4.2 SEZ Benchmarking within OIC Member Countries 38 4.3 Evaluation of SEZ Development in OIC Member Countries 53 4.4 Key Successes of SEZ Development in OIC Member Countries 57 4.5 Challenges of SEZ Development in OIC Member Countries 59 5 LESSONS LEARNT FROM SEZ CASE STUDIES 66 5.1 Methodology 66 5.2 Case Study 1: Penang SEZ, Malaysia 68 5.3 Case Study 2: Jurong SEZ, Singapore 89 i 5.4 Case Study 3: Tanger Med SEZ, Morocco 104 5.5 Case Study 4: Aqaba Free Zone, Jordan 127 5.6 Case Study 5: Lekki Free Zone, Nigeria 141 5.7 Case Study 6: Bole Lemi Industrial Park, Ethiopia 153 6 SYNTHESIS AND CONCLUSIONS 162 6.1 Introduction 162 6.2 Key Organisational Factors 162 6.3 Key Economic Success Factors 171 6.4 Key Physical / Spatial Factors 174 7 ANNEX I – CASE STUDY SITE VISITS – ADDITIONAL DETAILS 176 7.1 List of Interviewed Persons 176 7.2 List of Interview Questions 177 8 ANNEX II – BIBLIOGRAPHY 180 ii List of Tables Table 2-1 - Special Economic Zone Typologies ......................................................................................................................... 9 Table 4-1 - OIC Member Countries with SEZ Development .............................................................................................. 34 Table 4-2 - Zones Selected for Comparative Benchmarking within OIC Member Countries ............................ 39 Table 4-3 - Comparative Matrix of Incentives within Selected OIC Member State SEZs .................................... 50 Table 4-4 - Comparative Analysis of Selected OIC member state SEZs ....................................................................... 54 Table 4-5 - Estimates of Direct Employment and Exports in SEZ Regions ................................................................ 60 Table 5-1 - Detailed Case Studies – Selected Zones .............................................................................................................. 67 Table 5-2 - Penang SEZ Overview ................................................................................................................................................. 68 Table 5-3 – Penang Industrial Zone Development ............................................................................................................... 70 Table 5-4 – Spatial Profile – Penang SEZ ................................................................................................................................... 71 Table 5-5 – Penang Sector Focus .................................................................................................................................................. 75 Table 5-6 – Penang SEZ - Economic Performance Summary ........................................................................................... 77 Table 5-7 - Jurong SEZ Overview .................................................................................................................................................. 89 Table 5-8 – Jurong FTZ – Spatial Components ........................................................................................................................ 92 Table 5-9 - Jurong Qualifying Criteria ......................................................................................................................................... 94 Table 5-10 – Jurong Island FTZ Economic Performance Summary .............................................................................. 98 Table 5-11 – Tanger Med Zones ................................................................................................................................................. 104 Table 5-12 – Tanger Med Zones Overview ............................................................................................................................ 104 Table 5-13 - Spatial Profile – Tanger Med Zones ................................................................................................................ 107 Table 5-14 – Tanger Med Zones Primary Sectoral Focus ............................................................................................... 116 Table 5-15 - Commercial and Lease Offer – Tanger Med Zones .................................................................................. 117 Table 5-16 – TMZs Economic Performance Summary ..................................................................................................... 118 Table 5-17 – Aqaba Free Zone Overview ............................................................................................................................... 127 Table 5-18 – Aqaba Ports Overview ......................................................................................................................................... 130 Table 5-19 – Aqaba Economic Performance Summary ................................................................................................... 136 Table 5-20 - Costs within Lekki Free Zone ............................................................................................................................ 148 Table 5-21 – Lekki Free Zone Economic Performance .................................................................................................... 149 Table 5-22 – Bole Lemi Free Zone Economic Performance ........................................................................................... 158 Table 7-1 - Details of Stakeholders Interviewed – Tanger Med Zones ..................................................................... 176 Table 7-2 - Details of Stakeholders Interviewed – Penang FIZs .................................................................................. 176 Table 7-3 - Details of Stakeholders Interviewed – Lekki Free Zone .......................................................................... 176 iii List of Figures Figure 1 – Total Number of SEZs by OIC Member State ..................................................................................................... 35 Figure 2 – Total SEZs by Typology within OIC Member Countries ............................................................................... 36 Figure 3 – SEZ Typologies by OIC Member Countries ......................................................................................................... 37 Figure 4 - Size of Selected SEZs within OIC Member Countries ...................................................................................... 42 Figure 5 – Distance from Major Ports (km) within Selected OIC Member State SEZs ......................................... 43 Figure 6 – Distance from Major Airport (km) within Selected OIC Member SEZs ................................................. 45 Figure 7 – Capacity of Ports in Proximity to Selected OIC Member SEZs (million TEU) ..................................... 46 Figure 8 – Capacity of Airports in Proximity to Selected OIC Member SEZs ............................................................ 47 Figure 9 - Firms by Hectare within Selected OIC Member SEZs ..................................................................................... 48 Figure 10 - Jobs per Hectare within Selected OIC Member SEZs ................................................................................... 48 Figure 11 – Average