OECD Investment Policy Review for Tanzania Misleading, Says Export Processing Zones Authority

According to the Tanzania Export Processing Zones Authority (EPZA), the latest OECD (2013) Investment Policy Review Report for Tanzania, is misleading in relation to the performance of Export Processing Zones (EPZs) and Special Economic Zones (SEZs).

The Director General of EPZA Dr. Adelhelm Meru explained to TanzaniaInvest that the researchers used wrong data in the making of the report.

According to the report (page 137) the Mini-Tiger plan 2020 was launched in 2004 and by the time of the study (2011) it had “proved to be weak”.

“The truth is that the Special Economic Zones Law, which was the major component of the plan was enacted in 2006 and was made operational in 2012 after developing the respective SEZ Regulations. The researcher was therefore, condemning a plan which was in fact non-operational at the time of the study in 2011”, remarked Dr. Meru.

Dr. Meru also indicated that the greater inaccuracy is on page 130 of the report where the funds invested by the private investors in their business operations (US$ 710 million), are then considers to be Government investment, thereafter dividing the funds by the 15,000 direct jobs created by then (2011), mistakenly concluding that Government if Tanzania has invested a total of US$ 47,000 for every one job created in the EPZs.

“How can money spent by the private sector (investors) be a measure for employment performance by the Government (EPZA)? There are so many companies in this world, whose investment capital is enormous whereas the number of direct jobs created is minimal. Is that the criteria to disqualify the respective governments for the employment status?” remarked Dr. Meru.

Dr. Meru further indicated another inaccuracy of the OECD report in relation to tax exemptions.

On page 130 it is quoted that in last three years Tanzania has lost more revenues from Tax exemptions given to corporations amounting to US$ 288 million a year than it has received in all foreign investment since the enactment of EPZ Act in 2002.

“While analyzing that amount, we observed that the said average annual exemption figure had no relationship with EPZ corporations” explained Dr Meru, indicating that such figure is composed of exemptions granted by private companies and individuals, exemptions granted by the mining sector, and exemptions granted by the Tanzania Investment Centre (TIC). How do the three exemptions relate to EPZs?” asked Dr. Meru.

He also added that it was improper to say that issuance of incentives to EPZ companies is a loss of Government revenue because such incentives are given to new investments where there was no revenue in the first place.

Giving a testimonial on how the EPZ and SEZ Schemes have been effective in Tanzania, Dr. Meru indicated that since EPZA has been in operation, a total of 98 companies have been registered, injecting a total capital of USD 1.02bln, and creating over 27,000 direct jobs, and with the operationalization of the SEZ scheme in 2012 and the establishment of Bagamoyo SEZ and Mtwara Freeport Zone, several investors including large multinational companies have submitted their applications for setting up business entities in Tanzania.

Dr. Meru advised both national and multinational researchers to make scientific analysis in their studies rather than relying on perceptions or imposing pre-conceived conclusions.

The OECD (2013) Investment Policy Review Report for Tanzania is available on this link: http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/oecd-investment-policy-reviews-tanzania-2013_9789264204348-en