Special Economic Zones Bill - Portfolio Committee report

National Assembly, Tuesday 3rd May 2016

SPECIAL ECONOMIC ZONES BILL
REPORT BY PORTFOLIO COMMITTEE ON
FINANCE AND ECONOMIC DEVELOPMENT


HON. CHAPFIKA: Mr. Speaker Sir, I rise to present a report on the Special Economic Zones on behalf of the Committee on Finance.

1.0 INTRODUCTION
1.1 On 23 November 2015, the Special Economic Zones Bill was gazetted. The Bill seeks to provide for the establishment of Special Economic Zones (SEZs) and SEZ Authority among
other matters. This development is commendable as it is one of several efforts being implemented to attract investment in the economy. Other countries such as India and China
have made significant economic breakthroughs by establishing SEZs. For example Shenzhen, Zhuwai and the coastal port cities have contributed significantly towards the success of the Chinese miracle.

2.0 METHODOLOGY
2.1 This report is a product of various meetings including a briefing session with the Ministry of Finance and Economic Development to unpack the essence of the SEZs. The Committee also managed to conduct public hearings in line with Section 141 (b) of the Constitution of Zimbabwe which provides as follows:
“Parliament must ensure that interested parties are consulted about Bills being considered by Parliament, unless such consultation is inappropriate or impracticable”

2.2 The public hearings were held from 11 to 16 April 2016 in Harare, Mutare, Masvingo, Bulawayo, Victoria Falls and Kwekwe. The Committee expresses its sincere appreciation to
all stakeholders who attended and participated at the public hearings and those who made written submissions.

3.0 THE COMMITTEE’S OBSERVATIONS AND RECOMMENDATIONS
The Committee and stakeholders who participated welcomed the introduction of the Bill, as it is a tool for the promotion of both local and foreign investment in the country. In general, expectations were high that the Bill would have provided for the demarcations of the SEZs and the incentives that go with investments in the declared Zones. Participants at the public hearings, particularly those in Victoria Falls expressed great difficulty in discussing the provisions of the Bill in the absence of such information. The Committee and the public, therefore, eagerly await the publication of the regulations. The Bill is recommended to the House for approval subject to the following issues being seriously considered by Minister of Finance and Economic Development.

3.1 A new Authority
There was strong representation at the public hearings on why it is necessary to establish a new Authority and Board in view of the current economic situation. It was suggested that the Zimbabwe Investment Authority could be used with slightly amended responsibilities and the necessary powers to implement and service the new Bill. It was pointed out that the creation of the Authority would require funding for fees and charges and that these, in themselves, might become a disincentive.

3.2 Constitution of the Board
The Committee urges the Minister to consider regional balance when appointing members to the Board to ensure that its membership complies with the founding provision of fair regional representation enshrined in Section 18 of the Constitution of Zimbabwe.

3.3 Disqualification from appointment as a member
Sub section 7 (d) disqualifies a member from appointment to the Board on the basis of a conviction within a period of five years immediately preceding the date of appointment. It is
the Committee’s recommendation that anyone with a previous criminal conviction should be disqualified from holding office. Considering the rampant abuse of public funds, abuse of positions and failure by appointed members to practice good corporate governance, such a stance would sent a clear message to all Zimbabweans that it’s no longer business as usual and call upon those appointed to maintain good corporate practice. In addition to the above, the composition of the Board should comply with the current Corporate  Governance Code as amended.

3.4 Establishment of Special Economic Zones
The Committee is of the view that whilst it is a function of the Special Economic Zones Authority to declare any area or premises to be a Special Economic Zone, amend, add or abolish any Special Economic Zone, it is essential that all stakeholders must be consulted before such decisions are made. This would be consistent with Section 13 of the Constitution of Zimbabwe which calls for the involvement of the people in the formulation and implementation of development plans and programmes in their areas.

3.5 Validity of decisions and acts of Board
Section 15 provides for the validation of decisions of the Board arising out of meetings that do not have a quorum or are attended by Members of the Board who are disqualified as a member at the time of the meeting. Your Committee notes that this clause may be in violation of the rules of good governance and must be deleted.

3.6 Reports of the Authority
The Committee observes that while section 21 of the Bill makes it mandatory for the Authority to submit reports to the Minister, the Minister may or may not lay a report submitted to him or her by the Authority before Parliament. The Committee recommends that the Bill be amended to make it mandatory for the Minister to lay the reports before Parliament. This would ensure transparency and accountability.

3.7 Application for investment licences and developer’s permit
Sections 23 and 24 provide for the application for investment licences and developer’s permits. Participants at the hearings raised concern with the centralization of the licensing processes in the capital city. They, therefore, called for decentralization of the Authority’s offices to the provincial capitals of the country to afford them easy and cheaper access to relevant documents and other services associated with the processing of licenses and permits. In addition to the above, the Committee recommends the use of a website and agents as alternative measures to address the concerns of the stakeholders.

3.8 Consideration of applications for investment licenses
The Committee recommends that applications for investment licenses to manufacture on the basis of import substitution should be included under Section 25 of the Bill.

3.9 Register of licences
Section 29 (2) of the Bill provides for the inspection of the register of licences which may be at a fee. It is recommended that the inspection should be free of charge as imposing a fee may limit access to such important information. Such information should also be available on line in keeping with the E-government and transparency.

3.10 Appeals to Minister
Section 34 (2) of the Bill stipulates that the Minister may act on an appeal by a person aggrieved by the decision of the Authority within sixty days of an appeal being noted. The Committee strongly feels that the prescribed period is too long and should be reduced to five working days, consistent with the current Ease of Doing Business initiatives in Zimbabwe.

3.11 Preservation of Secrecy
Section 54 of the Bill provides for preservation of secrecy and the penalty for disclosing information coming to the knowledge of persons employed to carry out provisions of the Act
or persons that examine documents under the control of the Authority. The Committee seeks justification for the rationale for this provision as it feels such a provision may promote corrupt practices.

3.12 Chapter 28:01 and Chapter 14:33 not to apply
The Bill seeks to exempt the application of the Labour and Indigenisation and Economic Empowerment Act. The stakeholders expressed reservations with the exemption of the two
Acts. They felt that this exemption contravened Section 65 of the Constitution of Zimbabwe which guarantees the rights of workers and that indigenous Zimbabweans should benefit from the establishment of the Special Economic Zones. In line with the practice in SEZ throughout the world, the Committee recommends that the exemption should stand.

3.13 Chapter 57 and 58
Sections 57 and 58 relate to the Ministers making regulations and prescribing general fiscal and non-fiscal incentives to licenced investors. The Committee appreciates that until the
regulations and incentives are provided, it is almost impossible for firms to make plans or to respond to the promulgation of such Zones in any meaningful way. The Committee,  therefore, urges the Hon. Minister to treat the publication of the enabling statutes as a matter of urgency.
 

4.0 CONCLUSION
The Committee had a fair and constructive engagement with stakeholders on the SEZs Bill and therefore submits the above recommendations for consideration and approval by the House.

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