Chairperson calls for investment indaba
MBABANE – In order to enhance the country’s efforts to attract more foreign direct investment (FDI), the Kingdom of Eswatini needs to host an investment indaba that will bring together all stakeholders.
The call was made by the Director of Doing Business reforms and Chairperson of the Special Economic Zones Committee in Eswatini Albert Chibi during the Special Economic Zone Single Window Development Seminar which was held last Wednesday at the Hilton Hotel.
Chibi highlighted over the past five years since the Special Economic Zones (SEZ) Act commenced in 2018, they have realised a lot of challenges that were faced by the country in terms of attracting investors. There are two designated economic zones, namely the Royal Science and Technology Park (RSTP) and King Mswati III International Airport.
The director said while the country was facing all those challenges which included unreliable internet among other things, there was no umbrella approach to address the whole thing concerning investments. “We are doing things bit by bit and there are those overlaps here and there,” he said.
Chibi further lamented that even the 20-year exemption from all corporate taxation, followed by taxation at the rate of 5 per cent incentives was not guaranteed that the country would be able to sustain it.
He said when one compares the incentive packages with the neighbouring countries; one would see that Eswatini was far behind. He highlighted that for instance in South Africa, SEZs in all provinces, have deliberate budgets from the government. He highlighted that in that country, investors get their factory shells ready-made for them to occupy among other things. “We don’t have such in Eswatini,” he said.
Chibi said inasmuch as the country was in the processes of reviewing the SEZ Act, there were a lot of other issues that were falling outside the Act that needed to also be looked into. “To cut the long story short, Eswatini needs to hold an investment indaba which will be some kind of an investment forum where all these things will be addressed,” he said.
The director said they have seen the necessity to review the Act and at the same time, they were comparing themselves with the neighbouring countries. “We are again identifying gaps that even after the review we would still fall short in terms of competing shoulder to shoulder with the giants in the SADC Region when it comes to Special Economic Zones,” he said.
Chibi mentioned that the Ministry of Commerce, Industry and Trade was spearheading the review of the SEZ Act together with all other ministries. He said they had come together and agreed that they needed to look into deeper reforms and incentives besides the tax incentives. He said all this was done to make Eswatini more attractive to investors.
As part of reviewing the SEZ Act, a diagnostic process was carried out by the Export Processing Zones Authority (EPZA) from the Republic of China on Taiwan through an intergovernmental co-operation arrangement agreed to assist Eswatini in reforming the SEZ legislation.
He presented that indeed the SEZ Act needed significant amendment to increase legal transparency and strengthen the organisation and functions of the SEZ Committee. He said the enforcement rules and related regulations of the SEZ Act must be completed to facilitate investment promotion and development of the Royal Science and Technology Park (RSTP).
It is worth noting that South Africa, following its National Development Plan in 2016, had established 11 economic zones. Notable among them are Coega and East London in the Eastern Cape Province, Richards Bay in KwaZulu-Natal, Dube Tradeport, Saldanha Bay in the Western Cape, Maluti-a-Phofung in the Free State, OR Tambo in Gauteng and Musina-Makhado in Limpopo.
These zones offer a range of investment incentives, including exemptions on salary income tax, a reduced corporate income tax rate of 15 per cent, value-added tax (15 per cent), tax refunds, tariff exemptions and accelerated depreciation for certain assets. Zambia features four multifunctional economic zones, including Chambeshi MFEZ, Lusaka South MFEZ, Lumwana MFEZ and Lusaka East MFEZ.
Incentives within these zones comprise land concessions, tax breaks (including five years’ exemption from profit income tax and reduced tax rates for the following years), and duty exemptions on imports such as raw materials and capital goods for the initial five years