Special economic zone

1. SPECIAL ECONOMIC
ZONE
MADE BY-
SHRIKRISHNA KESHARWANI

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Special economic zone
Introduction-
Special EconomicZones (SEZs) are specifically delineated duty-free enclaves treated as a foreign territory for the
purpose of industrial, service and trade operations, with exemption from customs duties and a more liberal regime in
respect of other levies, foreign investment and other transactions
What is Special?- The word "special" mainly means special economic systems and policies. That is, the central government gives sezs
special policies and flexible measures, allowing sezs to utilize a special economic management system.
 Special tax incentives for foreign investments in the sezs
 Greater independence on international trade activities
 Economic characteristics are represented as "4 primacies":
• Constructions primarily rely on attracting and utilizing foreign capitals;
• Primary economic forms are sino-foreign joint ventures and partnerships as well as wholly foreign-owned
enterprises;
• Products are primarily export-oriented;
• Economic activities are primarily driven by market.
 Sezs are listed separately in the national planning (including financial planning) and have province-level
authority on economic administration.

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 Attract foreign direct investment (fdi)
 Earn foreign exchange and contribute to exchange rate stability
 Boost the export sector, especially non traditional exports
 Create employment opportunities
 Introduce new technology
 Develop backward regions
 Stimulate sectors such as electronics, information technology, r &
d, tourism, infrastructure and human resource development that
are regarded as strategically important to the economy
 Create backward & forward linkages to increase the output and
raise the standard of local enterprise that supply goods and services
to the zone
Objectives-

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Salient features of the special economic scheme-
 no License required for import
 manufacturing, trading or services activities allowed
 full freedom of subcontracting
 No routine examination of export import cargo by customs authorities
 single window clearance
 financial incentives like tax holidays, duty free imports and exports
 high quality infrastructure
 strategic location and market access

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Special economic zone in India
 India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting
exports, with Asia’s first EPZ set up in Kandla in 1965.
 With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence
of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India,
the Special Economic Zones (SEZs) Policy was announced in April2000
• Generation of additional economic activity
• Promotion of exports of goods and services
• Promotion of investment from domestic and foreign sources
• Creation of employment
• Development of infrastructure facilities
• Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and
conducting busines
• Single window clearance on matters relating to Central as well as State Governments
• Single window clearance for setting up of a SEZ and an unit in SEZ
Objectives of setting up SEZ in India-

6. PROCESS FOR GETTING APPROVAL FOR SETTING
UP SEZ IN INDIA
According to SEZ Act 2005, a Special Economic Zone
can be established either jointly or severally by the
Central Government, State Government, or any
other person involve in the manufacturing of goods.
Even a foreign company can also set up SEZ in
India.
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A. Identification of the area for sez.
B. Submit the proposal to state govt.
C. State govt. approval
D. Make direct proposal to BOA.
E. BOA approval
F. Terms and condition specified by central govt.
G. Approval by central govt.
H. Make list of items .
I. Get Certified by chartered engineer.
J. Project details submission to the approval
committee.
K. Getting approved by approval committee.
A
B C
D
E F G H I
J
K
BY - SHRIKRISHNA KESHARWANI- (181109005)

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CASE STUDY-
1. MIRERSHORAI ECONOMIC ZONE- Bangladesh
• The proposed Mirershorai Economic Zone (EZ) will be the first multi-sector
EZ in the Bangladesh.
• The proposed Mirershorai EZ has the potential to fulfill the conditions
which are necessary to become a successful economic zone in the country.
Formal establishment of the EZ is expected to immediately address the
huge demand for industrial plots among both the local and foreign
investment communities
• The proposed Mirershorai EZ site is located at the end of the eastern side
of the Bay of Bengal, surrounded by the coast and Mirershorai Town.
• The objective of the project is to attract and leverage private investment
from multiple sources in the development of the economic zones.These
investors will act as the zone developers or operators and in the provision of
tailored infrastructure services, such as the private provision of power,
effluent treatment, etc. Selected on a public-private partnership (PPP) basis.
Objectives-
BY - SHRIKRISHNA KESHARWANI- (181109005)

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A.- Identification of all land pockets based on secondary data and analysis of
municipal record.
B.- Prioritization of the location for further analysis
C.- Site visit to area to collect the realistic field data .
D.- Literature review. (Plan, policy and acts).
E.- Gap analysis.
F.- Preliminary design and site plan .
G.- Stake holder consultation ,(govt. Agencies, authorities and community
outreach.)
H.- Preliminary financial viability analysis.
I.- Design guidelines.
J.- Project phasing and implementation plan.
PROCESS FOR SETTING UP MERSHORAI ECONOMIC ZONE-
NETWORK ANALYSIS DIAGRAM
c
a d e f
g
i
h
j
b
BY - SHRIKRISHNA KESHARWANI- (181109005)

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Cost-Benefit Analysis of China’s Shenzhen
Special Economic Zone
The Shenzhen Special Economic Zone , was
established in May 1980, and is the first special
economic zone in the People's Republic of China. Five
other special economic zones have since been
established.
Until 2010, Shenzhen Special Economic Zone (SEZ)
comprised four of the nine districts of Shenzhen City in
Guangdong Province, namely Luohu, Futian, Nanshan,
andYantian, with a total area of 493 km². In 2010, it
was expanded to include the rest of the city,
substantially increasing the geographical size of the
SEZ.
Many manufacturers oriented towards export markets
produce and assemble goods in the zone.

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Incentive package for the Shenzhen SEZ cost-benefit analysis
The analytical method used in this study derives
from Little and Mirlees (1968) as modified by Warr
(1983, 1986). Some further modifications are
required
when this model is applied to China; for instance,
income distributional considerations are
disregarded and technologies transferred are all
considered as labour-intensive.

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The benefits of the zone to China include: foreign-exchange earnings, employment opportunities, technology
transfer, tax revenues and insurance premiums and Chinese partners’ share of the net profits.Costs consist of:
infrastructure expenditures, administrative expenditures and electricity provided by the Chinese government
Benefits and costs of the zone to China

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Results of the social cost-benefit calculation
.These internal rates of return are calculated under three different assumptions about the life of the zone: a 20-year life; a 25-year life
and a 30-year life.The table shows that, under most assumptions, the zone generates a high positive net present value and also an
internal rate of return higher than the estimated real discount rate of 7.5%.The base case, i.e. the actual situation in China (row 3).
shows a net present value of US$58.59m. and an internal rate of return of 10.69%.
The net present values of the benefits from the zone
are calculated for the real discount rates ranging from
2.5 to 12.5%.The calculation of the base case, i.e. the
actual situation in China, is based on a real discount
rate of 7.5% and an assumed life for the zone of 25
years, with a 56% wage difference between the firms
in the zone and the firms outside the zone.The
streams of annual net benefit estimated for the period
1979 to 1988 are assumed to remain at the 1988 value
over the rest of the life of the zone.The internal rates
of return are also computed and are shown on the
right side of Table .

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Conclusion
The social cost-benefit analysis indicates that the Shenzhen SEZ is a beneficial public investment
from the standpoint of China’s economic welfare.The government’s objectives of using the zone
as the vehicle for expanding employment and earning foreign exchange have been fulfilled.
Although considerable public expenditure was incurred in establishing the zone in an isolated
agricultural area, the benefits, such as employment, tax revenue, foreign-exchange earnings and
technical training, which the zone has brought to China, have exceeded the costs.The
infrastructure, for instance, roads and buildings, will remain and will benefit China after the
termination of the zone.
The high rates of return show that the zone is profitable both in the commercial sense, from the
viewpoint of foreign investors, and in the social sense, from the national economic viewpoint.