Towards transformation of the export processing zone regime in Namibia : a case for review of the enabling law

Abstract

Developing countries use EPZs as a policy strategy to transform from import-substitution industrialisation to export-led economic development. To make up for lack of comparative advantage, developing countries offer various incentives including better infrastructure, lax regulatory environment and tax exemptions, amongst others, to attract multinational corporations to invest in their countries. Although no specific international rules on EPZs exist, EPZs incentives such as tax exemptions and the relaxation of labour laws have been problematic at WTO and ILO, respectively. Like most countries, Namibia launched its EPZ programme following the promulgation of the EPZ Act 9 of 1995 with the objectives of attracting direct investments, creating employment, expanding exports, increasing foreign exchange earnings, and promoting skills and technology transfer. Generally, the Namibian EPZ programme has not been successful. Therefore, this study makes a comparative analysis of the EPZ Act as a policy instrument for the implementation of the EPZ programme in Namibia and the FIAS international best practice guidelines for the development of economic zones, to identify barriers to the achievement of the EPZ objectives and make a case for reform of the Namibian EPZ regime. The analysis identified a number of impediments to successful implementation of the EPZ programme, which includes a limited scope, absence of regulations, lack of private sector participation framework, conflicting roles of ODC, and the overly generous and WTO-inconsistent fiscal incentives. In the end, the study makes recommendations for the transformation of the Namibian EPZ programme into an effective policy instrument learning from international best practice guidelines for the development and management of economic zones.