Within the trade industry, SEZs have had a major impact in recent years. Often coined as the future of global trade, Special Economic Zones are popping up at a rapid rate and here in the UK, they have been hugely beneficial. Supporting both national and international trade, SEZs, such as Thames Freeport, provide a massive contribution to the logistics and efficiency of running a business on a global scale. They provide the opportunity for existing businesses to expand. After taking a hit during the worldwide COVID-19 pandemic, SEZs have risen from the ashes and are undoubtedly driving the future of trade on a global scale.
Special Economic Zone Benefits to Trade
Special Economic Zones are specifically designed to boost the economy and business growth by having geographically-selected areas with different incentives, greater tax relief and many other benefits that attract companies to expand in the area. This two-way beneficiary system is highly advantageous to the local community by creating job opportunities and reinvesting into the local economy, however, they are just as beneficial to the trade industry.
Tax Relief
One of the leading benefits to the trade industry is the tax relief that Special Economic Zones provide. These geographically defined areas have greater financial benefits than setting up or expanding elsewhere, making them highly attractive destinations for both national and international businesses to grow. This reduces the financial burden that many overseas businesses face when wanting to expand in a new country. It makes it easier for international companies to grow at a global level by taking advantage of the tax relief that SEZs provide.
Relaxed Customs Arrangements
When it comes to the trade industry, customs arrangements can be a real hurdle. To support global trade, SEZs offer simplified customs arrangements to support trade between countries and international companies expanding overseas. The lean customs arrangements make administrative processes simple and provide duty exemption on re-exported goods.
Consumer Access
For international businesses looking to expand into a new country, their direct access to consumers is a huge benefit. Many SEZs are on the doorstep of huge consumer markets, including the likes of Thames Freeport with access to Europe’s largest customer base. This makes it exceptionally easy for businesses to get their products in front of new consumers with minimal effort and with reduced costs.
Diversify the Business Environment
For the trade industry to thrive, diversity is key and many businesses look to expand at an international level. SEZs diversify the business environment, providing companies with the opportunity to grow and expand in a new location with minimal financial complications. This is extremely attractive to overseas businesses hoping to grow overseas or get their products in front of a new customer base.
What are the Positive Effects of SEZs?
Expanding a business in an SEZ is a great financial benefit, however, there are other major positive effects that SEZs have.
Environmentally Conscious Trading Methods
At a global level, environmental impact is a major concern and in the 21st century, most companies are looking at alternative ways to operate to reduce their carbon footprint. The trade industry is a significant contributor to environmental damage and it is increasingly important for businesses to look at ways to minimise their own impact. Many Special Economic Zones are designed in an eco-friendly manner, especially Freeports. Freeports located at waterways, such as Thames Freeport, provide an efficient way to trade internationally in a more environmentally conscious way. By using the river to operate, with overseas connections via sea and ocean, Freeports provide an exceptional solution to the environmental issue of importing and exporting.
Secure Infrastructure
Special Economic Zones are designed with the infrastructure to support new and expanding businesses. They have received a serious investment to operate and are therefore built to support and sustain new businesses. Companies looking to grow within an SEZ have access to a high level of support from tax relief, simple administrative processes and robust legal frameworks that may not be as readily available outside of an SEZ.
Ongoing Training
Ongoing training is all part of the package with businesses in Special Economic Zones. It is a major benefit to companies building and expanding with the opportunity to deepen knowledge and expand the skill set of the local workforce. Surrounded by businesses in the same industry without competitiveness, there is a great opportunity to network and build.
Skilled Workforce
SEZs create a significant number of job opportunities, particularly in areas wherethere is a high unemployment rate. By growing within an SEZ, businesses have access to a skilled workforce ready and waiting to jump into work. This reduces competitiveness between businesses and makes it easy to secure the skilled employees crucial to business growth.
What are the Effects of SEZs on the Economy?
There is no denying that SEZs are exceptionally beneficial to businesses and the trade industry. However, as with anything, there is also an impact on the economy. As businesses become increasingly aware of their impact on the local economy and many look for ways to support them, it is also helpful to understand the effects that SEZs have on the economy. SEZs have a great number of indirect benefits that may not impact businesses directly but are additional positives of SEZs.
Job Opportunities
The biggest advantage of SEZs to the local economy is the job opportunities that they provide. In the UK, SEZs are typically developed in locations that have historically been underutilised but have access to a large local workforce. Located on the banks of the River Thames, Thames Freeport is expected to create 21,000 skilled jobs which is a major boost to London and the surrounding areas.
Cash Injection
By attracting businesses from overseas to set up business in these Special Economic Zones, the economy receives a huge cash injection from direct foreign investment. With this boost to the economy, there are greater opportunities for all industries to thrive, including the trade industry. This helps to support international partnerships and create a space for international businesses to expand into the UK.