THE Government has tabled a Bill in the House of Representatives which is aimed at setting up a comprehensive regulatory framework for special economic zones.

According to the Bill’s Memorandum of Objects and Reasons, it seeks to implement a comprehensive regulatory framework for the operation of Special Economic Zones (SEZ) and provide for consequential amendments to any related legislation which may be affected by its implementation.

The major provisions include: the establishment of a Special Economic Zone Authority (SEZA); the empowerment of the authority to establish a special economic zone fund to support the development of the zones; and provisions relating to the designation, promotion, development operation and management of the SEZs.

The Bill also provides for the grant of benefits and other economic measures, in order to attract domestic and foreign investment. The SEZA will be able to raise its own capital by issuing shares on terms and conditions prescribed by the responsible minister by Order.

However, the Government, or an agency of the Government, shall at all times hold no less than 50.1 per cent if any shares issued under this arrangement.

The authority’s functions will include: to regulate and supervise the zones; acquire real property; advise the minister on general policy matters; consider and determine applications from developers; negotiate agreements and concessions; deal with complaints from developers, occupants and zone users; establish subsidiaries; and perform other functions relating to the administration and operation of zones.

The eligibility criteria to be applied by the authority includes that: a developer and an occupant shall be a company limited by shares registered under the Companies Act; on the effective date of the masterconcession or licence agreement, the amount of issued and paid up share capital of a developer shall not be less than US$3 million; and an occupant shall have proven potential to extend its market beyond Jamaica and participate in global value chains.

However, notwithstanding anything to the contrary, even if a Medium, Small and Mirco Enterprise does not meet the criteria, the authority may issue a written approval to establish itself in a zone as occupant, in the event that it has sufficient development potential as shown in a business plan approved by the authority.

Free Zones in Jamaica are operated under the 1976 Jamaica Export Free Zone Act, which dictates the incentive and regulatory framework for their operation and which will be repealed by the new Act.

Approved free zone enterprises benefit from: Duty-free importation of capital goods, consumer goods, office equipment, raw materials or articles for use in connection with the approved product; No import licensing requirements; Total relief from income tax in respect of profits or gains earned from approved activities.

At least 16 locations are to be designated SEZs under the Government’s logistic hub initiative. These include the Kingston Container Terminal, Norman Manley International Airport, Vernamfield in Clarendon, and the Goat Islands project.

Changes in global production and market conditions are opening up new opportunities for small developing economies like Jamaica to actively participate in global value and supply chains.

The Ministry of Industry, Investment and Commerce says that, through these efforts to develop the new SEZ Policy regime, it is seeking to place the country at the vertex of international trade lanes in order to attract large corporations that are eager to benefit from its value proposition.

The term special economic zone is commonly used as a generic term to refer to any modern economic zone. In these zones, business and trade laws differ from the rest of the country. The aims of the zones include: increased trade, increased investment, job creation and effective administration.