Special Economic Zones (SEZ)
Candlefocus EditorSEZs are often located near a port, trading route, or major airport in order to attract foreign direct investment (FDI). Foreign companies looking to invest in a local economy may feel more secure doing so in a dedicated business-friendly region where certain labor laws, tax policies, minimum wages, and other regulations have been streamlined.
Developing countries often use SEZs to incentivize the inflow of capital from abroad. In these cases, the goal is to attract companies that will develop the local economy, create jobs, and keep revenues both inside the SEZ and outside it.
In addition to providing tax incentives, SEZs may also offer other non-financial incentives such as access to free trade agreements and even infrastructure development financing.
In summary, SEZs are special regions where foreign investors can access unique advantages provided by both the local and national governments. As a result, SEZs have become increasingly popular in various countries looking to attract FDI while incentivizing economic growth. By leveraging tax incentives and offering non-financial incentives, SEZs attract foreign companies, which in turn boosts local economic development.