Assessment of Achievements and Challenges of Export Processing Zone (Epz) in Tanzania

Topics: International trade, Foreign direct investment, Free trade zone Pages: 12 (3735 words) Published: January 15, 2013
ASSESSMENT OF ACHIEVEMENTS AND CHALLENGES OF EXPORT PROCESSING ZONE (EPZ) IN TANZANIA Authors: Kimaro, Joseph.,Rwehikiza, Davidi and Mbura, Japhet: E-mail: jmkimaro@yahoo.com

ABSTRACT

Over the past few years, the idea of establishing “export processing zones” (EPZs) has found support among several developing countries. This development is linked to the increasing acceptance of” globalization” and neoliberal policies across the region. Developing countries have tried to stimulate exports of nontraditional manufactures. Efforts have been undertaken to establish the Export Process Zones. Tanzania as one of the developing countries, has been advocating EPZ since 2002. These struggles are evidenced by the enactment of the EPZ Act 2002, amended 2006 and establishment of the zone in 2003. Since its establishment, the EPZ has been striving towards attraction and promotion of investment for export-led industrialization, increase of foreign exchange earnings, creation and increase employment opportunities and promote processing of local raw materials for export (value addition). In spite of the objectives their realization has not been impressing. This paper aims to asses the achievements and challenges of the 4th phase government on this respect. In undertaking this study case study approach is used in collecting the primary data where the Chief Executive officer was interviewed from the fact that data of this nature of study are strategic and centered on one office. Secondary data were collected through documentary reviews. The study found that EPZ has established industrial parks in 11 regions, creation of infrastructure for Dar es Salaam industrial parks, and the challenges are poor transportation systems connecting industrial parks to the source of raw materials, labour and port access. Port congestion and power instability have also been hampering the efforts. There is little promotion of the incentives and little capitalization of the international agreements. If these are worked on EPZ can deliver the expected results to the Tanzanian Economy.

1.0INTRODUCTION TO STUDY

Export processing zones (EPZs) are not a new phenomenon and, according to the ILO, the first zone was set up in 1929 in Spain. The 1970s saw a boom in EPZs, mostly in low- and middle-income countries of Latin America, the Caribbean, Asia and, to a lesser extent, Africa (Jauch, 2002).

Export Processing Zones (EPZs) are special industrial parks providing duty relief to export oriented firms operating in the zones. They are enclaves within a country where foreign and domestic goods may enter duty free in order to be stored, distributed, combined with other foreign and/or domestic products, or used in manufacturing operations. EPZ have become rather popular trade policy instruments in the last three decades. An EPZ is a trade policy instrument used to promote non-traditional exports (Armas and Sadni-Jallab, 2002).

In Tanzania, EPZ was established under EPZ act 2002. (URT,2002).Currently Tanzania has Eight (8) companies licensed as EPZ Developers Industrial Parks, 6 Single Factory Units),ten (10) companies licensed as EPZ Operators which are five in textiles/garments, one in Mineral processing (jewellery),one in Fruits Processing ,three in reconditioning ,mechanical, electrical and,electronic devices (URT, 2006). The Tanzanian EPZ objectives are such as to attract and promote investment for export-led industrialization, to increase foreign exchange earnings, to create and increase employment opportunities, to attract and encourage transfer of new technology and lastly to promote processing of local raw materials for export(value addition). Although much literature exists as far as export processing zones is concern, little has been written to address challenges and achievements of the objectives of EPZ Tanzania. This research aims at achieving better understanding of the challenges and achievements on objectives of EPZ...

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