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Free Economic Zones
Free Economic Zones (FEZs), also known as Free Economic Territories (FETs) or Free Zones (FZs), are a specific class of Special Economic Zones (SEZs) established by various countries' trade and commerce administrations. These designated areas are designed to attract businesses by offering significant tax incentives, often including very low tax rates or even complete tax exemption.
The primary goal of these zones is to stimulate economic activity, boost foreign investment, increase exports, and create employment opportunities. It's important to note that the specific taxation rules, customs duties, and regulatory frameworks for these zones are determined individually by each host country. In many places, they are highly disputed.
While Free Trade Zones (FTZs) are sometimes used interchangeably with FEZs, they typically focus more narrowly on trade facilitation and logistics. In contrast, FEZs often encompass a broader range of economic activities, including manufacturing, services, and research and development. The common thread among all these zones is the provision of special incentives and reduced trade barriers to businesses operating within their boundaries.
To lean more and get personalized advice and quotes for your specific warehousing needs, you can request multiple quotes here or advice here.
Types of Special Economic Zones
The World Bank recognizes several types of SEZs, each with specific objectives, characteristics, and target markets. Understanding these distinctions is crucial for businesses and policymakers alike.
According to the World Bank, the main types of special economic zones are:
1. Free-trade zones (FTZ)
2. Export processing zones (EPZ)
3. Free economic zones (FZ/FEZ)
4. Industrial parks/estates (IE)
5. Free ports
6. Bonded logistics parks (BLP)
7. Urban enterprise zones
| Type | Objective | Size | Location |
|---|---|---|---|
| FTZ | Support trade | <50 hectares | Port of entry |
| EPZ (traditional) | Export manufacturing | <100 hectares | None |
| EPZ (single Unit/free enterprise) | Export manufacturing | No minimum | Countrywide |
| EPZ (hybrid) | Export manufacturing | <100 hectares | None |
| Free port/SEZ | Integrated development | >1,000 hectares | None |
| Urban enterprise zone | Urban revitalization | <50 hectares | Urban/rural |
| Type | Typical Activities | Markets |
|---|---|---|
| FTZ | Entrepôts and trade related | Domestic, re-export |
| EPZ (traditional) | Manufacturing, processing | Mostly export |
| EPZ (single Unit/free enterprise) | Manufacturing, processing | Mostly export |
| EPZ (hybrid) | Manufacturing, processing | Export, domestic |
| Free port/SEZ | Multi-use | Internal, domestic, export |
| Urban enterprise zone | Multi-use | Domestic |
Examples of SEZs Worldwide
To illustrate these concepts, here are some examples of different types of SEZs from around the world:
| Country | Zone Name | Type | Location | Key Features |
|---|---|---|---|---|
| UAE | Jebel Ali Free Zone | FTZ | Dubai | 0% corporate tax, 100% foreign ownership |
| China | Shanghai Free Trade Zone | FTZ | Shanghai | Simplified customs, financial reforms |
| Philippines | Cavite Export Processing Zone | EPZ | Cavite | Tax holidays, duty-free imports of raw materials |
| South Korea | Incheon Free Economic Zone | FEZ | Incheon | Tax incentives, streamlined regulations |
| Singapore | Jurong Industrial Estate | IE | Jurong | Sector-specific infrastructure, business support |
| Panama | Colon Free Zone | Free Port | Colon | Duty-free imports and exports |
| USA | Philadelphia Keystone Opportunity Zone | Urban Enterprise Zone | Philadelphia | Tax credits, exemptions for businesses and residents |
All Free Economic Zones on a map
This project displays all special economic zones in an interactive map.
