China Agrees to Construct Flagship Special Economic Zones

The zones, which will be in Kombolcha, Hawassa, Dire Dawa and Addis Abeba, will provide special conditions to businesses

The Chinese premiere’s visit to Ethiopia brings along China’s first attempt outside of China to develop Special Economic Zones (SEZs). The businesses located in such zones will get special treatment not available to businesses outside.

A Memorandum of Understanding (MoU) was signed at the Sheraton Addis Hotel on Tuesday March 6, 2014, between Sisay Gemechu, state minister for Industry, and representatives of four Chinese companies that will be involved in the endeavour. These include the China Civil Engineering Construction Corporation (CCECC), China Railway Engineering Corporation (CREC), China Communications Construction Company (CCCC) and China to Overseas Construction Group Co (CGCOC).

This agreement is an extension of one of the 16 agreements that Ethiopia and China signed during Prime Minister Li Keqiang’s visit to Ethiopia. The specific agreement about cooperation in special economic zones was signed by Sufian Ahmed, Minister for Finance amp Economic Development (MoFED), and Gao Huncheng, China’s Minister of Commerce, following the discussion on Sunday May 4, 2014, between Li Keqiang and the Ethiopian Prime Minster Hailemariam Desalegn.

The four companies will undertake the development of the SEZ’s in Kombolcha, Hawassa, Dire Dawa and selected areas of Addis Abeba. The government prepared 1,100ha at Kombolcha and 1,000ha each at Hawassa and Dire Dawa two years ago.

A Chinese company is conducting a feasibility study of the proposed sites and, as soon as the study is finalised, the Ministry will sign a construction contract with the companies, according to Seleshi Zegeye, deputy director of Public Relations at the Ministry of Industry (MoI).

“The Ministry’s approach shifted from the establishment of industrial zones to the establishment of fully fledged special economic zones, due to our estimations of the success of special economic zones in China,” said Seleshi.

The Chinese earlier developed the 200ha Eastern Industrial Zone in Dukem, 37km southeast of Addis Abeba. Eleven companies are already involved in the manufacture of leather and leather products, textile and garment and car assembly at this zone.

At the Bole Lemi Industrial Zone, five sheds were constructed by the Ethiopian government, worth 2.5 billion Br, and given to investors. The remaining 15 shades are under construction through a loan, which the government has obtained from the World Bank (WB). The Ministry is expecting an additional loan from the WB for the development of the Legetafo Industrial Zone.

There are also three other industrial zones, in Akaki Kaliti, Sendafa and Mekanisa Lebu, where the government lets plots to various investors.

The government is drafting a special law for the SEZ’s, but Sisog declined to give further information on that.

In China, the official state policy from the mid-1970s, according to the political economist D.K.Y Chu, has been to use the zones as free trade zones and laboratories to absorb western technology and innovation and to adapt it to state capitalism, while reducing any unwanted affects. This is a policy that has been termed ‘Territorial Containment.’

Source : Addis Fortune

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