According to Unctad’s World Investment Report 2019, the 2030 agenda to achieve the sustainable development goals (SDGs) provides an opportunity for the development of entirely new types of special economic zones (SEZs).
Moving beyond typical labour-intensive manufacturing activities, new types of SEZs are emerging in industries like tourism, industry 4.0, financial and other professional services with a new focus on environmental performance, science commercialisation and regional development.
Such zones aim to attract investment in SDG-relevant activities, adopt the highest levels of ESG standards and compliance, and promote inclusive growth through linkages and spillovers.
Following in the footsteps of China and south-east Asia, there is an increasing interest in the development of eco-industrial parks, low-carbon development zones and green zones in Europe, which provide an ecosystem for companies seeking to achieve enhanced environmental, economic and social performance.
Examples of new generation zones can be found outside Europe too. Kenya is piloting the Kilifi Project, an eco-industrial park spreading over 1370 acres, 70km north of Mombasa, that will reach small and medium-sized enterprises, and farmers in the Kilifi and Tana River coastal counties. The area has abundant tropical fruit production for agro-processing and also significant potential for the development of a textiles and garments cluster, creating jobs for women and youths in particular.
Saudi Arabia has also spearheaded SEZs as enablers to attract foreign investments for sustainable economic growth to diversify sources of income and provide quality jobs for the Saudi youth. The Covid-19 pandemic and low oil prices have accelerated the launch of SEZs in 2021 with a vision of localising industries such as pharmaceuticals, medical supplies and food, as well as developing industry 4.0 and aquaculture.
Regenerative tourism is also identified as a growth sector. The Red Sea Project, a luxury tourism destination that brings together nature, culture and adventure. With its 100% environmentally responsible renewable energy, water production, wastewater treatment and district cooling, Saudi Arabia is setting new standards in sustainable development.
Protecting the environment can generate cost savings through increasing resource efficiency; strengthen international competitiveness through corporate social responsibility enhancement; reduce business risks through increased resource security and better stakeholder relationships; and increase access to finance and higher value real estate within the zone due to a more liveable environment.
Institutional capital is increasingly looking for value-creating projects in infrastructure, renewable energy, water and sanitation, food and agriculture, and healthcare. SEZs are well-positioned to enhance their value proposition to attract such impact investment projects.
Zoë Harries is the managing director of Impact Zones.
This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.