by A. Sivananthiran Introduction
Over the past three decades export processing zones (EPZs) have become popular instruments of trade policy, offering enterprises located in them free trade conditions and a liberal regulatory environment. Many countries see export promotion as an important policy for economic growth in developing countries. Various measures are being adopted by the governments in these countries to promote export competitiveness. As a policy means of achieving this goal, the concept of EPZs has gained noticeable significance in recent years. Terms such as EPZs, free trade zones (FTZs), special economic zones (SEZs) and export processing factories (EPFs) refer to similar concepts, with variations in policy prescriptions and objectives. As EPZ is most commonly used, this paper uses it interchangeably with FTZ and SEZ. In creating the EPZs, the immediate goal for Sri Lanka was to generate direct foreign investment, exports, foreign exchange, and employment. As in most countries, in Sri Lanka EPZs do not account for a large percentage of the total national employment but gains must be weighed against the cost of generating the benefits of EPZs, in particular the possible loss of taxes and revenues. The basic objective of this paper is to examine emerging issues concerning EPZs in Sri Lanka, focusing on decent work, and setting out recommendations to address these issues. EPZs provide customs-free and tax-exempt, export-oriented manufacturing facilities, investment incentives and streamlined administration, cheap utilities, and better infrastructure. According to Jayanthakumaran (2002), most enterprises in EPZs are engaged in processing intermediate imports for exports. Also included are labour-intensive light manufacturing such as garment production, assembly of light electrical goods and electronics. Among the benefits offered are exemption from: some or all export taxes; some or... [continues]
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