In one way or another, special economic zones (SEZs) have been one of the ways that TT attracted foreign investors to our shores since before independence.
The reliefs and exemptions that are identified as some of the key aspects of SEZs were provided to businesses through the Pioneers Industries Act, passed in TT in 1950. That act offered modest concessions to industries, including income tax exemptions and import duty relief on plant and machinery. These concessions were advertised to foreign investors through government as one of the benefits of doing business in TT.
These reliefs and exemptions were expanded in the Free Zones Act of 1988. To date, there are ten areas in TT where 18 businesses operate that have been designated as free trade zones.
Now, there's a plan to return to SEZs, as announced by Finance Minister Colm Imbert on October 4, during the 2021 budget presentation. Imbert proposed repealing the Free Zones Act to implement SEZs to be regulated through a special economic zones authority.
Imbert said the authority, aside from assessing the current performance of all free trade zones, would have to formulate standards and prescribe codes of practice, facilitate an enabling environment, develop the infrastructure needed to attract investors, stimulate domestic investment and in the long run further advance diversification of the economy.
TT in this exercise will join more than 140 economies that utilise more than 5,000 SEZs which employ over 60 million people worldwide.
Free trade zones
According to the World Bank, a free trade zone (FTZ) is an enclosed area that allows businesses exemptions from duties for warehousing and distribution facilities which support trade. These areas are usually located near a point of entry like an airport, port or land border, or on a “corridor” – a direct route to a point of entry with the same exemptions.
Nestle Caribbean has operated a free zone since 1993. On the TT Free Zones Co Ltd (TTFZ) website, Nestle shared how it received clear guidance from the the state regulating body. The communication between Nestle and TTFZ allowed the local subsidiary of the Swiss-owned food and beverage group to keep abreast of changes in business processes that allowed it to maintain compliance and expand opportunities.
Nestle was also able to resolve a few challenges in interpreting customs regulations.
“As one of the larger businesses operating with the TTFZ we have also been a reference, as a positive example, for others to emulate when considering a similar business model,” it said in its online testimony.
Special economic zones, however, are areas which governments use to facilitate industrial activity through fiscal and regulatory incentives as well as infrastructural support. Much like FTZs, tax breaks and customs relief allow businesses in SEZs to cut through red tape and improve the ease of doing business. SEZs, like science parks, regional development zones and urban regeneration zones, invite foreign direct investment (FDI).
The best examples of SE
