OCO’s tracking tool, Locomonitor, captured 168 FDI projects locating into free trade zones (FTZs) or special economic zones (SEZs) since January 2002. This analysis shows that manufacturing and distribution activity within five clusters represents two-thirds of FDI into FTZs and SEZs. The key clusters locating in free zones are: logistics and distribution (15), heavy industry (29), light manufacturing (10), transport equipment (40) and electronics (17), with a mixture of various other industries accounting for the rest.

Key source markets for free zone FDI, according to Locomonitor, include the US, Germany and Japan with more than 80 projects between them. Analysis of the sources and destinations of FDI into FTZs reveals that China received 51 projects with Japan and the US being their key source markets. The United Arab Emirates attracted 28 projects, many of which went to Jebel Ali Free Zone. Poland attracted 26 projects, seven of which came from Germany and four from the UK.

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Emerging players in this space include the Czech Republic, Turkey and Iran. The study also noted new entrants from the Baltics, the southern Mediterranean and south-east Europe, and Africa.

Of the 57% of projects for which Locomonitor recorded the amount invested, the average project size was $145m. Electronics seem to be larger when compared with the other four clusters, and among the 327 projects stating number of jobs, the average workforce numbered 588. Logistics and distribution projects tend to be smaller with the majority under 100 jobs.

Mark O’Connell, managing director of OCO Consulting, said the information suggests some positive sector trends for free zones. Yet, as the market becomes more specialised, free zones will have to adapt and may need to reposition themselves in order to move up the value chain in terms of activities. “Free zones are not always on the investors’ map but a high-profile brand and marketing campaign can yield results,” he said, pointing to Jebel Ali as an example.

Projects in free zones are getting smaller, the study suggests, but on the up-side there are more of them – an average of 2500 per quarter, in fact.