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Minister of Trade and Industry, Dr Rob Davies recently commented on the proposed SEZs Regulations to be Gazetted

10 AUGUST 2018

The proposed regulations seek to provide for the following options; for the management and operation of the Industrial Development Zone (IDZ) entity not to be separated; for the existing SEZ operator or entity to hold a licence and permit to function as both the management entity and State-owned operator; or for the separation of the SEZ entity from the operator, where a private company is appointed to either operate the SEZ wholly or in part.

The SEZ Act commenced by Presidential Proclamation on February 9, 2016, and introduced a new regulatory framework for the planning, design, development, management and operation of SEZs. This new regulatory framework replaces the old framework for IDZs, which was based on the IDZ Regulations.
The difference in the governance and institutional framework required in the new SEZ Act from the old IDZ regulatory framework is very significant and most IDZ operators, at the time of the enactment of the SEZ Act, would require time to comply.

Recognising this need, the SEZ Act provided for a transitional period where the IDZs were given three years to amend their governance and institutional structures to comply with the requirements of the Act.
The most significant section impacting on this transition is Section 25, which deals with the establishment of an SEZ entity. Section 25 of the SEZ Act makes provision for the establishment of the SEZ entity and the appointment of the SEZ operator, whereas under the IDZ Regulations, the IDZ applicants would be issued with the IDZ operator permits, effectively making them SEZ entities and operators at the same time.

The SEZ Act and the current regulations now require a new entity with a board to manage a State-owned entity. On the same token, the operator would have its own board.

“The introduction of the SEZ entity in addition to the SEZ operator has in some instances resulted in more implementation complexities . . .;  there is really not much value being added by the introduction of the SEZ entity particularly if the operator is an existing State-owned company,” noted Davies.

Further, “In terms of the current arrangements, the licensee or the SEZ applicant must establish or appoint an existing State-owned company as an SEZ entity with its own boards, to manage the SEZ, as well as appoint an operator to develop and manage the same zone,” said Davies.

Members of the public have until September 14 to comment on the draft regulations.