Lessons from experiences of SEZ developments

ၤFishermen in Kyauk Phyu/ Photo by: Kaung Htet
Paper author: 
This paper was written by Robert Nash. Oxfam acknowledges the assistance of Nicola McIvor, Lisa Scharinger, Jasmine Burnley, Vicky Bowman, Lies Craeynest and Sean Bain
Paper publication date: 
Tuesday, February 7, 2017

Special Economic Zones (SEZs) are clearly demarcated geographic areas where different legal and regulatory regimes relating to business and trading activities apply. Originally established as a way of circumventing trade restrictions, SEZs are usually intended to create an environment that will boost manufacturing, stimulate trade and foreign direct investment (FDI), and act as a testing ground for new governance reforms and incentives. SEZs vary in size as well as in their objectives and performance. Some have become huge centres of growth, while others have either failed to get off the ground, failed to increase exports or benefits beyond its enclaves, or have not been able to sustain success over time. Some have had serious negative impacts on the surrounding environment and on local communities, particularly women and girls.

As Myanmar continues to navigate its rapid economic expansion triggered by the end of military rule in 2010, the development of SEZs forms a key element of the country’s industrialisation plan. Myanmar now has the opportunity to learn from its neighbours to pursue the success factors and avoid the pitfalls that lead to failed SEZs. Most research focuses exclusively or largely on the economic impacts of SEZs as a measure of their success, with less attention devoted to the wider social and environmental impacts and to the political economy of such zones. This report draws on evidence from the South-East Asia region to explore the wider social and environmental impacts of SEZs, with case studies from Thailand, Indonesia, Cambodia and Vietnam.

Oxfam has been providing humanitarian assistance and working with local communities to improve livelihoods and reduce poverty in Kyauk Phyu township – one of the sites of Myanmar’s three SEZs. Based on experience of SEZ developments in the region, this report identifies issues and lessons with relevance to the Kyauk Phyu context.

Key factors for a successful SEZ include (but are not limited to): a clear vision and objectives; the location, depth and skill levels of local labour markets; linkages to domestic markets; and strong coordination and consistent support for policies across central and local government.  Transparent and accountable planning, decision making and implementation are also crucial. The context in Kyauk Phyu and available information about the SEZ development indicate that there are many risks to be mitigated and challenges to overcome if it is to succeed, while avoiding serious environmental damage and bringing greater prosperity to local communities.

If the Government of Myanmar decides to pursue development of an SEZ in Kyauk Phyu, Oxfam proposes the following recommendations to support responsible investment, maximise positive opportunities and minimise any potential negative impacts.