The Free Trade Zone is a catalyst to business growth and economic expansion. It is also known as the export processing zone, free export zone and special economic zone.
Whatever name it is called should not bother us, as it has been noted that the different terms over time and space often reflect the specific activities carried out within a particular zone. What should bother us is why we have not taken advantage of this opportunity to grow our economy?
Clearly defined, a free trade zone is one or more special areas of a country where normal trade barriers such as taxes, tariffs and quotas are eliminated and bureaucratic requirements are lowered to attract new business and foreign investments.
Corporations operating within a FTZ may also be granted certain host country income tax breaks or holidays as an additional incentive. These zones are often located in an underdeveloped part of the host country, and the zones are expected to promote economic activities and thus reduce poverty and unemployment.
Research has established a strong correlation between the presence of FTZs and increasing export trade, and it appears clear that FTZs have become increasingly popular as a policy instrument for the promotion of export oriented foreign direct investment.
So, what are we waiting for?
It is noted that economies that have efficient customs, good transport network and fewer document requirements, making compliance with import and export procedure faster and cheaper are more competitive globally. It translates into more exports and exports are associated with faster growth and more jobs.
Could this be the reason why countries such as Singapore and UAE are enjoying unparalleled economic growth? In the World Bank Doing Business report, 2010, Nigeria ranked 146 in trading across borders. Ghana and Benin Republic ranked 83 and 128 respectively.
In July, consultants from the Ras Al Khaimah Free Trade Zone (RAK FTZ)invited Nigerians to Sheraton Hotel in Lagos to discuss the opportunities available in setting up business in their FTZ. They informed the participants that the costs of living and doing business in RAK are markedly lower than in other Emirates, allowing for greater margins for investors.
As if that was not enough, they went further to inform the Nigerians and other foreign nationals present that the FTZ, barely eleven years since its founding serves as the SME hub to emerging markets and is now home to more than 5,000 companies from 106 countries. Can you beat that?
While Nigerians looked on in amazement, the young consultant reeled out the reasons why RAK FTZ is now the preferred business address. Among the 15 reasons given include the following: simple and fast registration, state of the art communication facilities, transparent laws and regulation, 100% foreign ownership, 100% income and corporate tax exemption, 100% capital and profit repatriation and furnished offices with ‘flexi’ and standard facilities packages etc.
It was not a surprise when it was revealed that RAK’s GDP stood at US$5 billion in 2009, an increase of 8% on the previous year, despite the global economic challenges. Remember 2009 in Nigeria…tumbling oil prices, stock market crash and massive capital flight etc.
The poor performance of many African economies has been associated with low growth of exports in general and of manufacturing exports in particular.
The establishment and effective running of Free Trade Zones in Nigeria would promote export and open up the country for further development and growth. By this singular action, the country would have the opportunity to join other export oriented economies such as Singapore and Dubai, UAE and in sub Saharan Africa, Mauritius, Botswana, South Africa and to a lesser extent, Ghana.
For more inquiries on the RAK FTZ opportunity, email Infoplus/IBG Nigeria on firstname.lastname@example.org