Friday, March 29, 2013

Free Ports / Free Trade Zones(FTZ) / Special Economic Zones(SEZ)

A Free Port ( or Free Trade Zone or  Special Economic Zones ) is a port, a port area or other area with relaxed jurisdiction with respect to the country of location. Many international air/sea ports have free ports, though they tend to be called customs areas, customs zones, or international zones.  Earlier in history, some free ports like Hong Kong enjoyed political autonomy. 
 
 
The modern free port is an area of a port separated from the customs area of a nation by a stockade. Ship may enter such a port , discharge, load and depart without custom formalities. The goods may be stored, repacked, manufactured  and re-exported without customs formalities. Only when the goods pass the barriers to reach the consuming public of the country do they undergo customs inspection and pay the necessary duty. A free port is a “customs out land “ within the political boundary of a country.
 
In short Free port is a fenced, patrolled area, not necessarily include the entire port. It is “Free” and “foreign territory” in respect to application of customs formalities within its boundaries.  It accepts legally admissible merchandise and the accompanying transportation media from all nations with the minimum of customs procedures
 A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market-oriented than a country's national laws. "Nationwide" laws may be suspended inside a special economic zone. The SEZ includes free trade zones (FTZ), export processing Zones (EPZ), free Zones (FZ), industrial parks or industrial estates (IE), free ports, free economic zones, and urban enterprise zones.
 
Though, India experimented with the concept of Export Processing Zones (EPZ) from 1965 onwards , it did not work out as expected. Special Economic Zones are a new feature of Indian economic policy which provide tax-free enclaves for investors from India and abroad. According to the Prime Minister of India, Dr. Manmohan Singh,  “SEZs are here to stay”.
 
World’s first known SEZ seems to have been an industrial park set up in Puerto Rico in 1947 to attract investment from the US mainland. Many other countries,  like  China, Iran, Jordan, Poland, Kazakhstan, the Philippines, Russia etc,  have been established SEZs successfully.
 
The main goal of setting up SEZs is to providing an internationally competitive and hassle-free environment for EXIM trade. All the import/export operations of the SEZ units are on a self-certification basis, no routine customs examinations is required. Besides providing state-of-the-art infrastructure and access to a large, well-trained and skilled workforce, the SEZ policy also provides enterprises and developers with a favourable and attractive range of incentives.

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