SEZs: GATEWAYS TO GLOBAL COMMERCE

Economic cooperation is central to the development of nations but perhaps more so for the countries in the Greater Mekong Sub-region (GMS). In the GMS, such cooperation has specially been given focus in the development of the economic corridors, designed to improve mobility and connectivity and more importantly, liven up economic activity. A certainly promising venture that offers great returns particularly if strategically positioned along these economic corridors are special economic zones (SEZs). First introduced by P.R. China as part of its open door policy in the 1980s, the concept was later adopted by Vietnam and Thailand and more recently, by the remaining countries in the region – Cambodia, Lao PDR and Myanmar.

While its development may require considerable investment, its long-term benefits are hard to discount. SEZs raise production competitiveness with the presence of more efficient operations infrastructure, and can attract foreign direct investment by offering business-friendl(ier) services, while at the same time serving as a hub for cultivating world-class firms and business practices. On a broader magnitude, SEZs help in reducing regional inequalities, according to the Asian Development Bank, as they push populations and economic activity off mega-cities and capitals and to budding periphery regions instead.

The establishment of cross-border economic zones (CBEZs) further amplifies these benefits as economic activities become even more strategically concentrated in the border between countries, creating a more conducive operational and administrative environment for business on both sides. This makes CBEZs more promising and attractive for foreign investors as they stand to gain more benefits from doing business with a more expanded market. In the GMS, the economic corridors linking border provinces between Thailand and Myanmar, Lao PDR and Thailand or Myanmar and China, offer perhaps the most convenient position for the setting up of CBEZs.

A Mekong Institute-commissioned study on the challenges and prospects of SEZs and CBEZs established that its success in the region is dependent on various infrastructural and policy mechanisms, hence reaping its benefits likewise takes time. The study, conducted as part of MI’s three-year project, Joint Development of Cross-Border Economic Zones with the Ministry of Commerce, Thailand and funded by the Lancang-Mekong Cooperation Special Fund, also revealed the need for capacity building on a host of issues including import-export procedures, investment promotion, establishing management committees, developing framework agreements, and trade negotiations with bilateral partners.

“SEZ is a very new concept for Myanmar,” shares Dr. Htein Lynn of the Myanmar Trade Promotion Organization, Ministry of Commerce, Myanmar, and one of the participants of the MI training course on the management of special economic zones practices in September 2018. “There are currently three SEZs in Myanmar but it is important for us to know the concepts, policies and practices of other countries when it comes to their own SEZs,” he adds.

Dr. Shwe Hein, another Myanmar participant in the training and who works in the Thilawa Special Economic Zone, concurs. “SEZ is very new in Myanmar,” he notes. “When we attended the training at MI, we felt that we are responsible for sharing the knowledge we learned so we decided to hold a national workshop in Yangon on the management practices of SEZs in Myanmar,” he additionally explains.

This national workshop engaged mostly relevant government agencies such as the ministries of commerce, finance, industry and foreign relations, as well as the private sector. Dr. Shwe Hein remarks: “I think it’s the first workshop held inviting the public and private sectors so it was very interesting for the participants to learn the idea of SEZs and CBEZs. We used the modules and lessons learned from the MI training we attended.”

Dr. Htein Lynn adds: “One of the lectures I delivered at the workshop that I especially learned from the training at MI was the concept of cross-border economic cooperation zone. In Myanmar, we have industrial parks and SEZs but we are also now working towards the implementation of cross-border economic cooperation zone, and it’s important to clarify to the government officers and the businesses how each differ from the other, and more importantly, what policy should be directed for industrial parks, SEZs or CBEZs.”

Myanmar is only one case in the GMS where enthusiasm over SEZs and CBEZs is high, and as Drs. Htein Lynn and Shwe Hein have pointed out, technical knowledge is an integral ingredient in pushing forward SEZs and CBEZs development.

“Changes in management have yet to be reflected but we have broadened our knowledge and we have a better idea now how to deal with investors and their needs,” Dr. Shwe Hein shares. “We have one-stop service centers in Yangon, and once the implementation of the Dawei and Kyaukphyu SEZs are done, they will also have these one-stop service centers. The people who joined our national workshop will be working in these one-stop service centers in these SEZs and so it is important to have a good understanding of foreign investor requirements,” he explains of the value of the needed technical knowledge on SEZs and CBEZs.

Dr. Htein Lynn also underscores the importance of knowledge and awareness about SEZs and what they can bring to the community. “When we implement SEZ in a region, there are many things that go into it, such as holding surveys for environmental and social impact assessment. It is important at this stage that we also make aware to the local community why the setting up of an SEZ in their region is important and what it can bring to them, otherwise they can easily misunderstand its purpose.”

Indeed, as negotiations with Thailand and China continue to advance for the development of the Dawei and Kyaukphyu Special Economic Zones, respectively, both Drs. Htein Lynn and Shwe Hein believe that there is an even more need for information and capacity building. Dr. Shwei Hein remarks: “After the national workshop that we organized, many of the participants are interested to know more information about SEZs and CBEZs in the region, and they want to have a more regular training or session.”

This is, certainly, one of the areas that organizations like MI hope to address.