Economic experts have hailed the country’s drive towards establishment of Special Economic Zones (SEZ) rating it as a catalyst for economic development.
Parliament recently passed into law a bill establishing the SEZs across the country, a move the experts say will attract foreign direct investment by providing incentives to investors.
In an exclusive interview, Research Manager for Charter Cities Institute Jeff Mason said SEZs play an important role in economic development.
He added that SEZs will allow for entire population centres to enjoy an improved business environment and allow those communities to more closely integrate with domestic and foreign businesses that invest in the zone.
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“Where the new Malawi law is unique, however, is that it allows for urban areas and secondary cities to be included within a special economic zone, rather than the more typical industrial park model,” Mason said.
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A special economic zone is an area within a country that is subjected to different economic regulations from the rest of the country.
These often include tax and customs duty incentives, streamlined regulatory requirements, a one-stop shop for licenses and permits, and other policies.
In a separate interview, National Planning Commission (NPC) Public Relations and Communications Manager Thom Khanje also praised the move to establish the SEZs, saying the government identified the SEZs as a strategic tool for realising the Malawi 2063 vision.
He said the establishment of SEZs is driven by the imperative to accelerate economic growth and diversify exports, offering economic incentives that can stimulate national income growth, especially through export diversification.
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“The Malawi 2063’s main goal is wealth creation mainly through industrialisation as outlined in Pillar II of the national vision. The Special Economic Zones are one of the tools through which Industrialisation will be achieved as the zones will create space where industries will be promoted under preferential terms as outlined above,” said Khanje.
In a separate interview, Minister of Finance Simplex Chithyola, who promoted the SEZs bill in parliament, said the ministry was optimistic the SEZs will be up and running very soon.
“Industrialisation will lead to value addition. Expanded Export base and increased foreign earnings. Very soon the construction will start, and immediately after that is completed, the zones will be operational,” said Chithyola.
According to the Ministry, Area 55 in Kanengo Lilongwe, Matindi, Chigumula in Blantyre, and Dunduzu in Mzuzu, have been identified as areas where SEZs will be located.
The majority of Asian countries such as economic powerhouses China, India, and Malaysia, have special economic zones, while African countries with SEZs include Kenya, Egypt, Mauritius, Ethiopia, and Nigeria.
Critics, however, caution that while economic zones spur business and investment they pose risks of money laundering and tax abuse.
