EPZ & SEZ PROGRAMS IN TANZANIA

EXPOR T PROCESSING ZONES AUTHORITY (EPZA)

EPZ & SEZ PROGRAMS INTANZANIA

Presented by Dr. A. MeruDirector General - EPZA

May, 2010

INVESTMENT AVENUES IN TANZANIAINVESTMENT AVENUES IN TANZANIA

Tanzania Investment CentreTanzania Investment Centre -- TICTIC

Zanzibar Investment Promotion AgencyZanzibar Investment Promotion Agency --ZIPAZIPA

Export Processing Zones AuthorityExport Processing Zones Authority –– EPZAEPZA

�� Export Processing Zones (EPZ)Export Processing Zones (EPZ)

�� Special Economic Zones (SEZ)Special Economic Zones (SEZ)

EPZ PROGRAMy Investments in manufacturingyExport oriented (80%)yCan be Industrial parks or stand

alones (single factory units)

L EGAL FRAMEWORKyEPZ Act, 2002yEPZ Act amendments, 2006yEPZ Authority (EPZA),2006.

SEZ PROGRAMy Investment in all Sectors-Manufacturing,

Agriculture, Trade, Tourism, mining,forestry, etc

yExports and Local Sales

L EGAL FRAMEWORKyS E Z Act,2006

EPZA STRUCTUREEPZA Council is Responsible for overallis Responsible for overall

supervisionsupervisionCompositionComposition --12 Members:12 Members:

99 7 Ministers,7 Ministers,99 Attorney General,Attorney General,99 GovernorGovernor BoTBoT99 T P SF,T P SF,99 TNBCTNBC99 TUCTA.TUCTA.

• Minister Responsible for Industry –– isis Chairman ofChairman ofthe Council.the Council.

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STATUS OF EPZ SEZ IN TANZANIASTATUS OF EPZ SEZ IN TANZANIA1) 251) 25 GazettedGazetted ZonesZones

yy 5 industrial Parks5 industrial Parksyy 19 Stand alones19 Stand alones

2) 59 EPZ licenses have been issued :2) 59 EPZ licenses have been issued :yy 24 are EPZ Developers24 are EPZ Developersyy 35 are EPZ operators (Licensed Enterprises)35 are EPZ operators (Licensed Enterprises)

3) Land has been earmarked for EPZ & SEZ3) Land has been earmarked for EPZ & SEZestablishments in 14 regions with areas betweenestablishments in 14 regions with areas between500500 -- 9000 ha.9000 ha.

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STATUS OF EPZ SEZ IN TANZANIASTATUS OF EPZ SEZ IN TANZANIA CC

4) Social4) Social -- economic Impacteconomic Impact

yy Total capitalTotal capital –– US$ 350 millionUS$ 350 million

yy EmploymentEmployment –– 10,500 people10,500 people

yy Export turnoverExport turnover –– US$ 250 millionUS$ 250 million

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No of Zone Developers and Operators sinceNo of Zone Developers and Operators sinceestablishment of EPZAestablishment of EPZA

Z DO

ORIGIN

LF

INVES TOR ORIGINS

E

AP

M

MP

S ECTORS INVEST ED

Current Investment IncentivesEPZ Program

Fiscal Incentives Procedural incentives

� 10-year Corporate Tax Holiday

� 10-year Withholding Tax holiday

� Duty and VAT exemption¾ raw material,¾ capital goods¾ Administrative vehicle,

ambulances, firefightingequipment and two staff buses

� VAT exemption on Utilities andwharfage

� Exemption on taxes and levieschargedby Local GovernmentAuthorities

� Operation under onelicense issuedby EPZAuthority

� Visa at point of entry to keytechnical staff.

� Unconditionaltransferability of profits,dividends and loyalties

� One-stop-service center byEPZA for set-up, facilitationandaftercare (work permits,labour relations, Customs )

� On-site customsdocumentation andinspection

Current Investment Incentives (Cont.)

Developers of EPZ/SEZ Infrastructure¾Similar to EPZ incentives

S EZ Program¾Similar to EPZ incentives except :

no exemption on corporate tax,withholding tax, Local Govnt taxes andVAT on utilities.

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CHALLENGESCHALLENGESyy Inadequacy of EPZ physical infrastructureInadequacy of EPZ physical infrastructure –– servicedserviced

land, factory buildings.land, factory buildings.

yy Erratic supply of utilitiesErratic supply of utilities –– power, waterpower, water

yy Contradictions between the EPZ and SEZ SchemesContradictions between the EPZ and SEZ Schemes

yy Availability of skilledAvailability of skilled labourlabour forceforce

yy Inadequacy of funds to run EPZ operationsInadequacy of funds to run EPZ operations

yy Commencement of the EAC common marketCommencement of the EAC common market

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EDZ CONCEPTEDZ CONCEPTyy TheThe GoTGoT has made a decision to merge thehas made a decision to merge the

EPZ and S EZ schemes to formEPZ and S EZ schemes to form EconomicEconomicDevelopment ZonesDevelopment Zones (EDZ)(EDZ)

yy New Act :New Act : Economic Development Zones ActEconomic Development Zones Act(EDZ Act, 2009)(EDZ Act, 2009)

yy New Body:New Body: Tanzania Economic DevelopmentTanzania Economic DevelopmentZones Authority (T EDZA)Zones Authority (T EDZA)

WHY EDZ?WHY EDZ?y To develop an integrated investment promotion scheme that

enables various sectors of the economy to utilizecommoninfrastructure (Zones);

y To adopt the latest proven business model of economic zoneswhich integrates economic, social and logistical activities in onezone in the form of townships;

y To ensure effective exploitation of available resources

y To respond to challenges and opportunities to be brought in by theEAC Common Market

y To comprehensively exploit available competitive advantages -strategic location (a gateway for regional and international trade);peaceand stability; Political will etc.

y To harmonise the EPZ and SEZ schemes – overlapping, confusesinvestors.

BENEFITS OF EDZBENEFITS OF EDZ

yPromote industrializationyLinkages with the local economyyPromote exports – ForexyEmployment creationySkills & Technology transferyFast-tracking economic growth andpoverty

reduction

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EDZ SET UPEDZ SET UP

ECONOMICDEVELOPMENT

ZONE (EDZ)

EXPORTORIENTED EDZs

SPECIALIZEDEDZsTOWNSHIP EDZs

TOWNSHIPTOWNSHIP EDZsEDZs

yy Large economic areas in the form ofLarge economic areas in the form of ““ TownshipsTownships””..

yy Include all forms of zonesInclude all forms of zones

yy Have basic onHave basic on--site infrastructuresite infrastructure(Railways, Roads, ports, airports, Utilities,(Railways, Roads, ports, airports, Utilities,Communication etc)Communication etc)

yy Integrates social and economic activitiesIntegrates social and economic activities(industries, trade, tourism, social services, residencies(industries, trade, tourism, social services, residenciesetc)etc)

yy 4 areas identified for township4 areas identified for township EDZsEDZs ((BagamoyoBagamoyo,,MtwaraMtwara,, TangaTanga andand ArushaArusha))

SPECIALIZEDSPECIALIZED EDZsEDZs

yy Can be developed in any sector (agricultural,Can be developed in any sector (agricultural,agroagro--industrial, industrial, tourism, commercial,industrial, industrial, tourism, commercial,forestry, ICT, etc.)forestry, ICT, etc.)

yy Involves production for Export or for sales in theInvolves production for Export or for sales in thelocal marketlocal market

yy May include Industrial Parks; Free T radeMay include Industrial Parks; Free T radeZones;Zones; Free Ports;Free Ports; Science and TechnologicalScience and TechnologicalParks;Parks; TouristTourist Parks; TradeParks; Trade and Logisticsand LogisticsHubs;etcHubs;etc

EXPORT ORIENTEDEXPORT ORIENTED EDZEDZ

yProduces goods mainly for export

yCan be in a township EDZ or Specialized EDZ

yCan be established as single factory units.

Planned EDZ Incentive CategoriesPlanned EDZ Incentive Categoriesyy Category ACategory A: for development of EDZ infrastructure; and: for development of EDZ infrastructure; and

for provision of utility services to thefor provision of utility services to the EDZsEDZs;;

yy Category BCategory B : for undertaking commercial activities,: for undertaking commercial activities,services and production for sale in the local markets;services and production for sale in the local markets;

yy Category CCategory C: for production for sale in the Export: for production for sale in the ExportMarkets;Markets;

yy Category DCategory D: for investments in special sectors: for investments in special sectors(agriculture, tourism, etc)(agriculture, tourism, etc)

T EDA CHINA

9000 Ha - Bag.Township EDZ

3,000 Ha - SocialInfrastructure,

6,000 Ha -Industrial,services andcommercialinfrastructure.

500 Ha allocatedfor the port;

10,000 Ha -airport

THANK YOU FOR YOUR KINDTHANK YOU FOR YOUR KINDATTENTIONATTENTION