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The location of special economic zone is the important factor. Photo: Internet

This is the opinion of Mr. Teo Eng Cheong, CEO International (Singapore, Southeast Asia, and North Asia), Surbana Jurong Group- Singapore when making recommendations leading to the success in the establishment of SEZs.

According to Mr.Teo Eng Cheong, the factors for the success of SEZs include clear objectives, bold policy innovation, convenient location, specific design and effective management.

Regarding the setting of objectives, Mr. Teo Eng Cheong emphasized that the most important thing was to clearly set objectives of the establishment of a SEZ. These objectives include: creating employment, especially when the unemployment is high; promoting exports to create foreign currency reserves; especially the shortage of foreign currency reserves and trade deficit; developing specialized sector, such as tourism; technology transfer.

However, it is difficult to establish a SEZ which meet all the above objectives at the same time. Thereby, the important thing is to set the most important factor when establishing a SEZ.

With bold policy innovation, Mr. Teo Eng Cheong said that after setting objectives of a SEZ, new policies must be innovated boldly or current regulations must be expanded. These policies include incentive policies on Tax, Customs, labor policies and funds.

“A common failure of many Special Economic Zone (SEZs) is to delay the amendment to necessary policies due to the concern of liberalization that quickly takes place and is beyond the control. This is not effective because the idea of establishing of a zone as a special economic zone is to permit to pilot and liberalise policies but without affecting the remaining zones of the country. To this end, a SEZ needs to create difference from other zones in the country” the representative of Surbana Jurong Group said.

Regarding the SEZs’ location, the representative of Surbana Jurong Group emphasized that the location of the SEZ is the important factor. If a SEZ with an objective for export, its location near seaports and airport is very important. If a SEZ with an objective for development in the manufacturing sector, the location near the qualified human resource will decide its success.

For the specialized design, Mr. Teo Eng Cheong said that the planning and design of a SEZ must be implemented carefully to compensate for the limitations of location, to serve investor’s desire, to handle the Government’s requirements and to integrate with neighboring areas. This step is often not implemented or sparsely implemented, leading to harming the development of other SEZs in the future.

The fifth factor affecting the success of a SEZ is the effective management. Accordingly, the management team needs to have in-depth knowledge on the SEZ and comply with master planning and need to be confident and flexible to respond with changes in customer demand, population, and technological advances.

“The number of SEZs managed under the Public Private Partnership (PPP) mechanism is increasing. It means that a SEZ can be managed by a private company. Thereby, the contractual agreement between the company managing a SEZ and the Government, and the revenue model of management for a SEZ is an important factor to ensure the long-term stability of a SEZ” Mr. Teo Eng Cheong recommended.