“What is Special Economic Zone’’

INTRODUCTION

A Special Economic Zone (SEZ) is a geographical area with more liberal economic laws than the rest of the country. It’s a mechanism for building trade capacity, with the purpose of promoting rapid economic growth by attracting foreign investment and technology through tax and corporate benefits. Special Economic Zones (SEZs) attract investment and foreign cash, create jobs, and accelerate the development of new technologies and infrastructure by granting preferential terms. Special Economic Zones are being formed in India in an effort to address infrastructural deficits, procedural complexity, bureaucratic annoyances, and hurdles posed by monetary, trade, fiscal, taxes, tariff, and labour policies Because of the infrastructure development across the country is costly and structural reforms take time, (Special Economic Zones/Export Processing Zones) are being built as industrial enclaves to speed up the industrialization process.[1]

Special economic zones (SEZs) have developed fast over the last 20 years, including in many low- and middle-income countries wanting to attract private investment for industrial development. However, while great attention has been paid to their economic performance and success factors, there are worries about land expropriation, terrible labour conditions, and lost public revenues. These issues are frequently inherent in the legal systems that govern SEZs – their failure to safeguard impacted individuals, their exemption of SEZs from national legislation, or their poor procedures to ensure compliance. Simultaneously, campaigners have used the law in a few cases to oppose SEZs and their effects. This briefing explores these patterns and suggests possible next steps for research, policy, and practise.

SEZs are geographical zones where business rules differ from those in the rest of the country. They intend to catalyse economic revolution by promoting industrial development in crucial regions. Many SEZ policies encourage foreign direct investment (FDI) in labour-intensive export businesses. SEZs have several characteristics with other types of spatial development projects, such as growth corridors.[2]

Keywords: Investment, Economic incentives, Investment treaties, legal tools

Law As An Arena to Contest SEZs

While the law has played an important role in the construction and maintenance of SEZs, it has also offered platforms for labour, agrarian, and other social movements to oppose their creation and operation. Activists have filed complaints with the International Finance Corporation’s compliance advisor ombudsman and national courts in Cambodia and India, respectively, as part of broader strategies to demand adequate compensation for expropriated land and compel the authorities to revoke land allocations to SEZ promoters.  In Madagascar, despite civil society resistance, the constitutional court threw down numerous elements of a planned SEZ statute before eventually passing a revised bill[3].

Transnational strategies have also been used by activists, such as seeking redress in the home country of parent businesses that promote SEZ implementation or influencing governments in major export markets. This includes requesting that Thailand’s National Human Rights Commission investigate suspected human rights breaches related to Thai corporations’ involvement in the development of Special Economic Zones in Mekong countries. In late 2016, wage strikes in Bangladesh caused the closure of nearly 60 enterprises in one industrial zone for a week, prompting the European Union — a crucial export market — to threaten to withhold trade incentives under the Generalised System of Preferences law.[4]

CONCLUSIONS

SEZs have gained popularity as a policy to promote industrial growth in low-, middle-, and high-income nations. However, they must be linked to land, labour, and human rights constraints. SEZs, if not adequately planned, will violate human rights and destroy the foundations of democratic organisation.


[1] https://economictimes.indiatimes.com/news/economy/policy/what-is-special-economic-zone/articleshow/1164460.cms?from=mdr

[2] For example, Dei Ottati, G (2018) Marshallian industrial districts in Italy: the end of a model or adaptation to the global economy? Cambridge Journal of Economics 42(2) 259–284

[3] Sampat, P (2010) Special economic zones in India: reconfiguring displacement in a neoliberal order? City & Society 22(2) 166–182; and Bedi H (2013) Judicial justice for special economic zone land resistance, Journal of Contemporary Asia 45(4) 596–617.

[4] Hossain Ovi, I (24 March 2017) EU warns Bangladesh of GSP suspension over labour rights. Dhaka Tribune.

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