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GLOBAL OUTLOOK NEWS


Pakistan to set up SEZ


There are plans to establish a special economic zone (SEZ) in Gilgit-Baltistan, part of greater Kashmir bordering India and China, in a bid to promote trade networks and attract foreign businesses. Ali Amin Gandapur, minister


for Kashmir affairs and Gilgit- Baltistan, said on 30 January that the government had acquired land for setting up the zone under the China–Pakistan Economic Corridor (CPEC) project. The CPEC project, under which


Beijing has pledged over $60bn of infrastructure investments as part of its Belt and Road initiative, has prompted criticism fromthe US officials. According to Reuters, the Chinese


embassy in Islamabad, Pakistan, responded in January, saying that if the US “truly cares about the develop- ment and prosperity of Pakistan” it should “bring cash and funds, and promote win–win cooperation” on the basis of mutual respect, fairness and justice, rather than “provoking China–Pakistan relations”.■ SETHO’FARRELL


Mozambique betson agribusiness


On January 26, the Mozambican government announced the crea- tion of the country’s first special economic zone for agribusiness: the Limpopo Agribusiness SEZ. Located in the Limpopo


Development Corridor in the south- ern province of Gaza and covering over 7000 square kilometres, the zone has been set up under the government’s agricultural develop- ment programme‘Sustenta’, whose aim is to increase production and productivity among low-income families and small-scale farmers. Inocencio Impissa, the deputy


minister of state administration, said the purpose of the SEZ is “to transformthe agro-ecological poten- tial of the region”.■ SETHO’FARRELL


February/March 2021 www.fDiIntelligence.com FREE ZONE FOCUS


Thefutureoffree zonesintheUAE


A


verywelcome announcementcame


tothosecloselywatching theUAEmarket in December,withthenews


thatArticle10oftheCommercial CompaniesLawhadbeenchangedto removetherequirementfor51% Emiratiownershipandallowfor100% foreignownership. Thequestioneveryonewas then


askingwaswhatwill thismeanfor local freezones,where100%foreign ownershiphasbeenallowedforyears, thusbecomingakeyelement in their success?Todelveinto thisalittle more, it isimportant tonotewhat the changein thelawactuallywas. Despitewhatsomereportssay, the lawdidnotstate foreignerscouldnow own100%ofmainland businesses; rather, the federal lawwas delegating responsibility toanEmirate level wherebyacouncil willbeconvenedto decidewhichactivitieswould require Emirati participation, atwhatlevel andif therewereanyadditionalcapi- tal requirements. So, are free zones still relevant? In


short, yes. Free zones offermany advantages overmainlandcompa- nies in theUAE,not least of which beingfaster entry into themarket. Formany free zones, there is addi- tional infrastructure that companies canutilise. Often, free zones will have a list of activities that are indus- try-specific and also have access to facilities such as sea ports, airline


terminals andwarehousing. Another distinctadvantageof free


zonesis the ability tocombinediffer- ent businessactivities—something mainlandcompaniescansometimes haveissues with.Dependingonthe selected freezone,newmarket entrantsmayfindtheyhavefewer externalapprovals (ornone)when comparedtoasimilarmainland licensedactivity. Froma cost perspective, it can be


more affordable to open shop in a free zone in theUAE. With mainland companies requiring a minimum 200ft office to obtain a commercial license, free zones will still hold a major advantage as they offer flexi- desks as a market-entry option. Also, visas for free zones are valid for three years—a full year longer than mainland visas. Finally, corporate documents do not need to be trans- lated into Arabic, also helping reduce the costs. There isnodoubt that the easing


of foreignownership restrictions will havenewmarket entrants consider- ing their options a littlemore closely. Weanticipate that the removal of the localownership restriction will boost foreign investmentinto theUAE once thenewlawsare betterunder- stoodand applied;however, there will still be roomfor free zones once the dust settles.■


ScottCairnsismanagingdirectorof CreationBusinessConsultants.


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