Making economic zones work: The case of China
Flying between Beijing and Malawi takes almost the whole day. Between the flight connections and some unforeseen circumstances, the trip can be rather hectic and exhausting.
Although a shorter route between the two destinations exists, it would not take you directly to Beijing but rather Hainan. And this in only three hours and a half.
Twenty African journalists currently on a 10 month stay in China took a flight to Hainan Province, the second largest island located in the South China Sea. Never mind the international dispute around the sea as it is located a respectable distance from the place in dispute a trip from Haikou Airport to the downtown reveals it all. Haikou is the Capital of Hainan Province and observably it is a world class city under construction. The sight of mango trees, rice and maize gardens with the weather rekindles memories of the common Malawian sceneries during rainy season, especially along Lake Malawi in Nkhata Bay or Mangochi.
“This feels like home in Africa,” one of the journalists said as we travelled from the airport through the countryside towards the city. The official tour guide, Sunny, helped with some back ground of Hainan.
It used to be an exile to those convicted of defying the Emperor or involved in breaking the law thousands of years ago, then it was known as “the end of the world.”
“But now Hainan is known as ‘the beginning of the new vision of the future’ because of its development plans and activities since it was declared as Special Economic Zone in 2010,” he said.
However, with all the similarities with Malawi in that both countries have touristic, agricultural and mining opportunities, Hainan presents evidence of how development is a matter of choice.
With a population of just over nine million, Hainan is one of the least developed provinces in China but had a turning point five years ago. Now agriculture and tourism are among the sectors driving the economic transformation.
Naturally, Mangochi offers even more than what Hainan has, especially for tourism and that includes the world’s largest fresh water lake with fine sand beaches, cultural heritage, historical features, friendly people, clean air and clear skies, among others.
However, despite all these opportunities, Mangochi is not a Special Economic Zone (SEZ) like Hainan hence remains under-developed with no development guide.
The SEZ concept offer s favourable environment for investments through special tax regimes, simplified land access, and supporting infrastructure in transport, communication and energy for smooth entry and operations by any investors.
In Hainan, this concept has already started to show fruits just after five years. Deputy Director for Foreign and Overseas Chinese Affairs office of the Hainan Province, Chen Kangle who was flanked by officials from departments of tourism, agriculture and commerce briefed the journalists on the concept, progress and the next five year plan.
He said policies that induce productivity, value addition and marketing in agriculture have helped to more than double farmers’ average annual income to 10,900 Chinese RMB (over K1 million) from 5,300 RMB (about K530 000) in five years. With average inflation rate of 2.8 percent during that time, this has improved purchase power of the small farmers.
In Malawi, land is one of the difficult issues when it comes to actualising investments in agriculture and tourism as most of the potential sites are under customary land ownership hence owners frustrate projects sometimes.
To the contrary, Hainan’s opening up has so far attracted 400 foreign companies that are in large scale agricultural production, leasing over 15,000 hectors.
Having successfully laid the ground on policies to attract investors, Hainan’s next five years plan are on supply side reforms to further increase production volumes in agriculture and adequately supply the growing market.
In tourism, the opening up has, for example, seen 88 five star hotels opening in the central touristic town of Sanya with over 22 world’s top hotel operators.
This has been possible as government investments have boosted marine, culture and vacation tourism to attract investors who are assured of a boom of tourists.
The high speed train, new airports, express ways, cruise facilities have eased travelling hence attracting more tourists while international conference facilities like the Boao International Conference Centre boosts business tourism. Resorts like Mission Hills with world class Golf course attract sports events and vacations.
The Miao Cultural Heritage Park at Binlanggu is marvel to visit. It offers museums, traditional performances, a wide range of traditional artifacts for souvenir and many more. One should never leave Hainan without visiting Sanya Romance Park, especially the amphitheater where ancient stories are told through plays and breathtaking acrobatic performances.
All these efforts have so far helped to attract over 100 million tourists last year and the Miao Cultural Village alone attracted over four million, a number the whole Malawi needs to quadruple to match, and this has created thousands of jobs and billions in revenue.
Perhaps Malawi could borrow a leaf from these concepts and how they can be implemented in hot spots like Mangochi, Salima, Nkhata Bay, Mulanje among other areas and according to Hainan officials they are open to partnerships with African cities having already partnered with a few.
Meanwhile, the government of Malawi, through Malawi Investments and Trade Center (MITC) has been hatching the idea of opening some SEZs.
According to MITC, a consultant was identified to undertake a feasibility study for the establishment of an agro processing industrial park in the Southern part of Malawi around Zalewa-Liwonde area.
“This exercise is expected to be completed in July 2016 and shall deliver a step by step implementation plan for the establishment of the agricultural processing special economic zone. It will also deliver a bill for its governance and regulatory framework,” said MITC through Public Relations Manager Deliby Chimbalu in an email response to a questionnaire.
According to Chimbalu, government has also started to identify parcels of land that would be leased to MITC for the development of the economic zones and industrial estates, saying some land at Chigumula in Blantyre has been earmarked for light industrial park and implementation roadmap is being drafted to be considered for approval by MITC board by May.
According to Chimbalu, studies are also underway in Nkhata Bay for the establishment of an industrial park around an energy and water transport logistics project.
“The feasibility study for the energy and water transport logistics project will expectedly be completed in December 2016,” said Chimbalu, adding that there are prospects of designating the ongoing Shire Valley Irrigation Project into a special economic zone depending on viable project design.
The case of Hainan shows that development is a matter of choosing where to go and how to get there, a thing Malawi can learn from. Otherwise the rhetoric of private sector led growth has been sung for too long now with nothing to show.
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