Forum on Developing Sustainable Economic Zones in the CAREC Countries

On September 13, the CAREC Institute, together with the Asian Development Bank, World Free Zones Organization, and the Ministry of Economic and Development of Mongolia, launched a two-day Forum on Developing Sustainable Economic Zones in the Central Asia Regional Economic Cooperation (CAREC) Countries in Ulaanbaatar, Mongolia. The forum informs participants about the trends and concepts related to the new model of special economic zones (SEZs), which embraces sustainable development goals and targets investments related to these goals, contributing to more inclusive, green, and resilient economies. Participants receive up-to-date information on priority areas for the development of the new generation of SEZs and learn about innovative and sustainable practices of SEZs, national development policies, and strategies. The forum promotes dialogue, close collaboration, and networking among CAREC policymakers, SEZ authorities, and international experts.

Mr. Khurelbaatar Chimed, Minister of Economy and Development of Mongolia, and Ms. Emma Fan, Director of the Public Administration, Financial Sector and Regional Cooperation Division of the East Asia Department of the Asian Development Bank, welcomed the participants, emphasizing the importance of the forum in promoting a new SEZ model focused on environmental sustainability, economic efficiency, inclusive job creation, and fair labor practices.

Mr. Syed Shakeel Shah, Director of the CAREC Institute, in his welcoming remarks, emphasized the role of SEZs in fostering investments and export led growth. The success of the SEZs in achieving these objectives depends heavily on how well SEZs are incorporated into broader development strategies and policies, and factors like the presence of large conglomerates, which demand their products and can exchange technology and skilled labor. Due to the landlocked and relatively low population density in some CAREC countries, high quality connectivity and lower connectivity costs, as well as the incorporation of Environment, Social, and Governance frameworks in investment decisions and availability of sustainable financing instruments will be key to the success of SEZs in the region.

The first session discussed about the characteristics and innovative and sustainable practices of the new generation of SEZs, responses to post-pandemic challenges and emerging opportunities of digitalization, onshoring of production, and ‘greening’ investments. Dr. Aradhna Aggarwal from Copenhagen Business School emphasized the need for a balanced and integrated development of SEZs, covering economic, social, and environmental aspects. The economic viability of the SEZs depends on job creation, investment, production, and exports. SEZs need to create the socially inclusive and just work conditions where workers can fulfill their potential in dignity and equality and have opportunities for skills development. And the environmental sustainability of the SEZs requires healthy environments for all, resource conservation using the green infrastructure, protection from degradation, and sustainable consumption and production.

Dr. Jong Woo Kang, Principal Economist of the ADB’s Economic Research and Regional Cooperation Department, spoke about success factors that make SEZs sustainable, such as the existence of rationalized fiscal and non-fiscal incentives for SEZs, improved innovative and institutional capacity, resilience, and environmental sustainability of SEZs, their strategic location and multimodal connectivity, and more importantly the government’s commitment and readiness to cope with international regulatory challenges. SEZs should continue actively using digital tools and real-time data to improve their own processes and performance, apply e-commerce with B2B and B2C transactions, and promote online shopping.

Participants were also introduced to the World Free Zones Organization by its CEO, Dr. Samir Hamrouni. The World Free Zones Organization, a non-profit entity operating as an association for all free zones around the world and their communities, is established in Geneva, Switzerland, and headquartered in the Dubai Airport Free Zone in the United Arab Emirates. The organization is dedicated to empowering free zones to achieve their strategic goals and improve operational efficiency by providing specialized knowledge, networking, and support services to help develop zones, their employees, and communities.

During other sessions of the forum, participants will learn about the best practices for the next generation of SEZs and building resilience and international cooperation to address global challenges, including the COVID-19 pandemic, climate change, and supply chain disruptions. Participants will also share their experiences in developing SEZs, promoting sustainability, and attracting investment, including public-private partnerships.

All presentation materials of the forum will be posted on the e-learning platform of the CAREC Institute for broader access.