Multi-Facility Economic Zones
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The Zambian government has undertaken a number of strategies to ensure rapid and sustainable economic development. One of the strategies is the establishment of Multi-Facility economic Zones (MFEZ). MFEZ will attract investment in the manufacturing sector and act as engines for economic growth, wealth and job creation and increased foreign exchange earnings. The MFEZ are expected to make Zambia a centre of excellence in economic development in the region through increased activities in the manufacturing sector. The Zambia Development Agency Act defines MFEZ as;
“An area or premises or building declared as an MFEZ by the minister of Commerce, Trade and Industry in accordance with section 18 of the ZDA Act No.11 of 2006”
The following incentives have been put in place to attract investors in the MFEZ:
· Exemption from tax on dividends for five (5) years from first of declaration;
· Corporate tax at zero percent for the first five (5) years from the first year profits are made;
· Zero percent tax rate on dividends of companies operating under the MFEZ/Priority Sector for a period of five years from the year of first declaration of dividends;
· Zero percent on profits made by companies operating in the MFEZ/Priority sector or a period of five years from the -first year profits are made. From 6 to 8 years only 50 percent of the profits should be taxed and for years 9 and 10, 75 percent of profits should be taxed;
· Zero percent import duty rate on raw materials, capital goods, machinery including trucks and specialized motor vehicles for five years for enterprises operating in MFEZ; and
· Deferment of VAT on machinery and equipment including trucks and specialized motor vehicles imported for investment in the MFEZ/priority sector.
DECLARATION OF MFEZS
The ZDA (Zambia Development Agency) act provides that “the minister may, on the recommendation of the board after consultation with the Minister responsible for finance and with the approval of Cabinet, by Statutory Instrument, declare an area, premises or building to be a multi-facility economic zone”.
A. CHAMBISHI MFEZ
The first MFEZ has been created by China Nonferrous Metal Company (CNMC) in Chambishi on the Copperbelt. CNMC has pledged an investment of US$800 million in the Chambishi Economic Zone which is expected to create 6,000 jobs. The other area identified for establishment of an MFEZ, is in Lusaka South, which will be developed jointly by GRZ and Kulim High Tech Park Corporation of Malaysia with the support of the Japanese Government through Japanese International Cooperation Agency (JICA)
The Minister of Commerce, Trade and Industry declared the area belonging to China Nonferrous Metal Mining (Group) Corporation as Chambishi Multi-Facility Economic Zone. The Chambishi MFEZ with an estimated investment of US$900 million over a period of five (5) years is poised to attract about 50 to 60 enterprises. It will lead to the creation of employment for about 6,000 Zambians over the five-year period
The notable developments that have been undertaken at the zone are development of the Chambishi Copper Smelter including a road network to the site and the establishment of Sino Metals Limited and Sino Acid Limited respectively. The main water pipe line from Kafue River to the Zone has been constructed while the construction of a power substation has commenced.
B) LUSAKA SOUTH MFEZ
The Government through the Ministry of Commerce, Trade and Industry has been spearheading the development of the Lusaka South MFEZ. To this effect a study team from Kulim Hi-Tech Park in Malaysia was engaged in 2007 to develop a Master Plan. The Japanese International Cooperation Agency (JICA) has also offered to assist Government in the formulation of a Master Plan and have also attached a study team to work on the Lusaka South MFEZ development plans and feasibility study. A Local Expert Team appointed by Government is coordinating the two teams. Both teams have already commenced their studies and are scheduled to complete their respective assignments in December 2008 and March 2009.