In pursuit of a sustainable future for our economy
Special Economic Zone
Special Economic Zone
Kwinana and the Western Trade Coast is an ideal location within the Indian Ocean Rim for a Special Economic Zone (SEZ) that can accelerate WA’s global competitiveness. Additionally the creation of a Federal Trade Zone (FTZ) within the Latitude 32 area would enable value adding industries to be on a more level playing field with world competitors.
An international economic development specialist recently released the report Accelerating Global Competitiveness: Special Economic Zones. This report outlines how WA could be a global competitor in niche markets such as energy metals for battery manufacturing and value-add opportunities including agri-business and recycling.
This report proposes a SEZ management structure be developed and coupled with an FTZ it would provide the Western Trade Coast (WTC) with the ability to enhance and grow regional investment opportunities. The proposed structure will further assist the WTC region in being more globally competitive as it relates to key measures often considered as part of the site selection process such as ease of doing business, workforce capabilities, land use assembly, incentives and general services and support.
This proposal is merely one approach to activating the WTC region (as laid out through the Westport planning process) and does not profess to solve all of the myriad challenges. However, continued inaction will only serve to compound the issues, and though WA has weathered many economic hardships, the region is losing its competitive global edge.
Western Australia must become more globally competitive and the time to act and implement is now. The Western Trade Coast should be envisioned, planned and developed as a major independent economic hub – cultivating new, niche industries and serving as the next generation gateway to the world.
benefits due to infrastructure improvements, general enhancements and a focus on workforce development opportunities within the SEZ (SEZs often result in higher paying, quality jobs for the local community).
benefits as SEZs encourage and engage partnerships and investment between universities and industry, often leading to the development of consortiums or incubators (AMC is one such example).
benefits from co-location efficiencies, streamlined operations, cost savings associated with operating in an FTZ/SEZ and single management of a district as well as marketing opportunities.
benefits from direct and indirect investment made within an SEZ from both domestic and foreign businesses (FDI) resulting in enhanced workforce development opportunities, business growth and quality of life enhancements within the WTC.
benefit from workforce development opportunities resulting in higher skilled workers, enhanced membership and (quality) employment opportunities (especially important in WA where there exists considerable under employment).
Does an SEZ Result in Weaker Compliance?
No. SEZs do not avoid regulatory compliance and many SEZs actually result in more pronounced compliance due to innovations resulting from co-location/proximity to like-minded industry.
How can we utilise the Western Trade Coast (WTC) to correct for trade imbalance and missed economic development opportunity?
The answer lies in developing the WTC as a Special Economic Zone (SEZ) coordinated by one single management entity (with an independent revenue arm) specifically focused on leveraging economic advantages and undertaking business development within the district.
It is important to note that the proposed SEZ is not intended to usurp any existing state or federal compliance; the SEZ should be seen as a tool to streamline and strengthen governance (created by jurisdictional overlap) rather than a means of bypassing existing industrial regulatory controls.
The SEZ should serve as the lead governing/branding entity, fostering a unified vision for the Western Trade Coast as a major economic and international trade hub characterized by strong business development practices and workforce opportunities, particularly related to value-add manufacturing. The current management structure of the WTC is convoluted; multiple state, regional, local agencies and business entities share jurisdiction and undertake independent planning, business development and marketing within the district. These jurisdictions often act at cross purposes, failing to produce a broader unified, economic vision (and corresponding economic action plan) for the area.
The WTC lacks global scale, often rendering the region invisible from a global site selection standpoint. A more streamlined governance structure is needed to enhance global visibility while simultaneously addressing broader business development issues within the WTC, including assisting industry with navigating compliance, land use and planning/zoning challenges.
A well-developed and independently managed SEZ could position the region as a competitive area for future investment, especially as the WTC evolves into supporting a 5th generation port in Kwinana. An SEZ paired with a Federal Trade Zone (FTZ) (as a sub-area) has the added ability of specifically incentivizing the development of more value-add manufacturing. This type of incentive area strengthens existing investment and encourages the growth of emerging niche sectors such as recycling, agri-business, energy metals and materials.
Developing an FTZ as part of the Western Trade Coast serves as an economic differentiator, essentially leveling the playing field for Australian businesses by eliminating and/or reducing duties on imported goods that are then re-exported through value-add manufacturing activity. Duty reduction and/or elimination within the FTZ attracts and retains both domestic and foreign manufacturing, resulting in a dual-directional benefit to both foreign firms and local suppliers who become part of the domestic and global supply chains. Both large and small businesses alike thrive in FTZs, in fact, in the U.S., seventy percent of Foreign Trade Zone users are small businesses many of which directly serve the domestic market.
Federal Trade Zone (FTZ): Creating Value-Add Opportunity
FTZs incentivize value-add manufacturing, particularly in high value products (medical devices, accessories, commodities, batteries, ICT products). Australia has relatively high import duties compared to the EU, USA and Canada so an FTZ is likely to be a useful tool in creating the much-needed high value-add industries.
An FTZ will help level the playing field with other countries and incentivize more value-add manufacturing opportunities (enhance exports) in WA by eliminating and/or reducing duties on imported goods that are then re-assembled and exported. If an imported component or product is re-assembled within the FTZ, this added value activity is not subject to duties and can then be exported at a more preferential level. Because an FTZ eliminates or reduces duties, it can also serve as a management supply tool for the inventory of high duty goods. Many types of industries locate within an FTZ, including major retail distribution centers looking to take advantage of inventory savings.
An FTZ is a federally designated (and highly secure) tax free area that is designed to assist domestic businesses by creating efficiency within the regulatory environment associated with customs oversight and export duties. The FTZ not only allows the sale and importation of merchandise domestically, but in many cases enables companies to reduce or eliminate duties on products manufactured for domestic consumption (thus incentivizing local and international commerce).
An FTZ is generally located within a port district, airport or major industrial hub (such as within the Latitude 32 area). An FTZ can provide warehouses, storage such as cold storage, processing and distribution facilities intended for export/trade opportunities.
