E PZ & SEZ PROGRAMS IN TANZANIA

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1 EXPOR T PROCESSING ZONES AUTHORITY (EPZA) E PZ & SEZ PROGRAMS IN TANZANIA Presented by Dr. A. Meru Director General - EPZA May, 2010

2 INVESTMENT AVENUES IN TANZANIA Tanzania Investment Centre - TIC Zanzibar Investment Promotion Agency -ZIPA Export Processing Zones Authority EPZA Export Processing Zones (EPZ) Special Economic Zones (SEZ)

3 EPZ PROGRAM ❺Investments in manufacturing ❺Export oriented (80%) ❺Can be Industrial parks or stand alones (single factory units) L EGAL FRAMEWORK ❺EPZ Act, 2002 ❺EPZ Act amendments, 2006 ❺EPZ Authority (EPZA),2006.

4 SEZ PROGRAM ❺ Investment in all Sectors-Manufacturing, Agriculture, Trade, Tourism, mining, forestry, etc ❺Exports and Local Sales L EGAL FRAMEWORK ❺S E Z Act,2006

5 E PZA S T RUCT U R E E P ZA Council is Responsible for overall supervision Composition -12 Members: 7 Ministers, Attorney General, Governor BoT T T P S F, TNBC T UCTA. Minister Responsible for Industry is Chairman of the Council.

6 STATUS OF EPZ SEZ IN TANZANIA 1) 25 Gazetted Zones ❺ 5 industrial Parks ❺ 19 Stand alones 2) 59 EPZ licenses have been issued : ❺ 24 are EPZ Developers ❺ 35 are EPZ operators (Licensed Enterprises) 3) Land has been earmarked for EPZ & SEZ establishments in 14 regions with areas between ha.

7 STATUS OF EPZ SEZ IN TANZANIA C 4) Social - economic Impact ❺ Total capital US$ 350 million ❺ Employment 10,500 people ❺ Export turnover U S$ 250 million 7

8 No of Zone Developers and Operators since establishment of EP ZA Z O D 8

9 INVES TOR ORIGINS ORIGIN L F

10 S ECTORS INVEST ED E A P M M P

11 Current Investment Incentives EPZ Program Fiscal Incentives year Corporate Tax Holiday 10-year Withholding Tax holiday Duty and VAT exemption raw material, capital goods Administrative vehicle, ambulances, firefighting equipment and two staff buses VAT exemption on Utilities and wharfage Exemption on taxes and levies charged by Local Government Authorities Procedural incentives Operation under one license issued by EPZ Authority Visa at point of entry to key technical staff. Unconditional transferability of profits, dividends and loyalties One-stop-service center by EP ZA for set-up, facilitation and aftercare (work permits, labour relations, Customs ) On-site customs documentation and inspection

12 Current Investment Incentives (Cont.) Developers of EP Z/S E Z Infrastructure Similar to EPZ incentives S E Z Program Similar to EPZ incentives except : no exemption on corporate tax, withholding tax, Local Govnt taxes and VAT on utilities.

13 CHALLENGES ❺ Inadequacy of EPZ physical infrastructure serviced land, factory buildings. ❺ E rratic supply of utilities power, water ❺ Contradictions between the EPZ and SEZ Schemes ❺ Availability of skilled labour force ❺ Inadequacy of funds to run EPZ operations ❺ Commencement of the EAC common market 13

14 EDZ CONCEPT ❺ The GoT has made a decision to merge the EPZ and S E Z schemes to form Economic Development Zones (EDZ) ❺ New Act : Economic Development Zones Act (EDZ Act, 2009) ❺ New Body: Tanzania Economic Development Zones Authority (T ED ZA) 14

15 WHY EDZ? ❺ To develop an integrated investment promotion scheme that enables various sectors of the economy to utilize common infrastructure (Zones); ❺ To adopt the latest proven business model of economic zones which integrates economic, social and logistical activities in one zone in the form of townships; ❺ To ensure effective exploitation of available resources ❺ To respond to challenges and opportunities to be brought in by the EAC Common Market ❺ To comprehensively exploit available competitive advantages - strategic location (a gateway for regional and international trade); peace and stability; Political will etc. ❺ To harmonise the EPZ and SE Z schemes overlapping, confuses investors.

16 BENEFITS OF EDZ ❺ Promote industrialization ❺ Linkages with the local economy ❺ Promote exports Forex ❺ Employment creation ❺ Skills & Technology transfer ❺ Fast-tracking economic growth and poverty reduction

17 EDZ SET UP ECONOMIC DEVE LOPMENT ZONE (EDZ) TOWNSHIP EDZs S P ECIALIZED EDZs EXPOR T ORIENT ED EDZs 17

18 TOWNSHIP EDZs s ❺ Large economic areas in the form of Townships. ❺ Include all forms of zones ❺ Have basic on-site infrastructure (Railways, Roads, ports, airports, Utilities, Communication etc) ❺ Integrates social and economic activities (industries, trade, tourism, social services, residencies etc) ❺ 4 areas identified for township EDZs ( Bagamoyo, Mtwara, Tanga and Arusha)

19 SP ECIALIZED EDZs ❺ Can be developed in any sector (agricultural, agro-industrial, industrial, tourism, commercial, forestry, ICT, etc.) ❺ Involves production for Export or for sales in the local market ❺ May include Industrial Parks; Free T rade Zones; Free Ports; Science and Technological Parks; T ourist Parks; Trade and Logistics Hubs;etc

20 EXPORT ORIENTED EDZ ❺ Produces goods mainly for export ❺ Can be in a township EDZ or Specialized EDZ ❺ Can be established as single factory units.

21 Planned EDZ Incentive Categories ❺ Category A: for development of EDZ infrastructure; and for provision of utility services to the EDZs; s ❺ Category B: for undertaking commercial activities, services and production for sale in the local markets; ❺ Category C: for production for sale in the Export Markets; ❺ Category D: for investments in special sectors (agriculture, tourism, etc)

22 T EDA CHINA

23 9000 Ha - Bag. Township EDZ 3,000 Ha - Social Infrastructure, 6,000 Ha - Industrial, services and commercial infrastructure. 500 Ha allocated for the port; 10,000 Ha - airport

24 THANK YOU FOR YOUR KIND ATTENTION

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