Special Economic Zones. An idea whose time has come?!

January 20, 2011 in General by Tania Saba Mazraani

Yesterday, I attended a workshop organized by USAID on the merits of establishing a special economic zone in Tripoli, that will aggregate different sets of industries, within three geographic clusters: The Rashid Karameh Fairgrounds, a reclaimed land in the Port area and the green-fields north of Kleiat airport. USAID and Sibley Int’l, the organization hired to do the assessment at a hefty cost of $1.2M, did a fairly good job at mapping existing industries, detecting needs and readiness of businesses to use the zones, proposing a set of appropriate fiscal and financial regulations to create traction, and restating some facts we already knew.

Discussions on economic zones and their importance are not alien to the Lebanese landscape. Such themes were long debated by the Investment Development Authority of Lebanon (IDAL) in different local and international arenas, and some special laws were even enacted, but they have yet to see concrete applications.

While Lebanon is busy studying the challenges and successes of different economic zones, from Shenzen in China which turned a small fishing village of the 1980s to an $80 billion financial and industrial hub today, to King Abdullah Economic City in KSA or Ras al Khaima in UAE, one important component was not taken into consideration: the large difference between those economic zones and the possible emergence of ones on Lebanese territory is based on a unilateral, uncontested political decision that would have the power to enact swiftly a prevailing regulatory framework, from tax holidays to special labor laws, coupled with a strong public private partnership, and linking the zone to a powerful infrastructure including energy supply, ICT links and adequate roads and ports to ensure transportation of people and goods, all at competitive prices to the businesses that will establish themselves there.

Unfortunately, to make this beautiful cookout, strategic ingredients are still missing: a government decision will that will be unchallenged by local political strife and tugs of war, and an infrastructure – that can actually exist- at cost-effective rates. In the mean time, do I foresee the emergence of special economic zones, capable of competing by international standards to regional physical clusters? I think not!