Do SEZ need barriers and checkpoints to control access?

 By George ELIOT

There are three overriding reasons why a special economic zone (SEZ) may need to limit access by creating checkpoints at the entrance and exit:

A) To prevent goods from entering the rest of the country duty-free or under a lighter customs regime (in cases where the SEZ benefits from customs tariff concessions, e.g. bonded zones, duty free zones, etc.).

B) To prevent goods produced in the zone from being exported if companies operating in the SEZ benefit from preferential tax treatment. For example, if the SEZ companies have a tax rate reduction or waiver; or if there is a preferential taxation / depreciation statute on investments and machinery within the SEZ, then the competitive landscape puts the SEZ companies at an advantage and they may unfairly compete against companies in the rest of the country. So it would be only fair to limit exports from the zone to the rest of the country.

For example Bangladesh export processing zones (EPZ) are allowed to sell no more than 10% of their output to the rest of the country, and this quota is reduced to zero for the garments industry operating out of EPZs.

C) To ensure the safety and security of the people work or living in the zones (especially in countries with higher crime rate).

However, if none of these constraints applies, then there are no reasons why a SEZ would need to limit access with barriers and checkpoints.

Security check point (Source: Wikipedia)