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Chennai , Aug. 28

ADMINISTRATIVE capability to enable a `hassle free' environment, providing facilities and delivering services as promised are the key factors for successful special economic zones (SEZs) rather than just infrastructure facilities and policies, according to Mr Ravi Shankar, Partner, Ernst & Young Pvt Ltd.

Referring to some of the successful SEZs in China, Mauritius and Jebel Ali, Mr Shankar said that the common feature in these varied models was the delegation of powers to local authorities for enabling easy paper work and a problem-free environment. A strong administrative backbone for provision of services is key for long-term success. The Government's role should be in `parenting' while the private sector's capability in project management, fund raising and marketing should be exploited, he said.

The Shenzhen SEZ is primarily a manufacturing units based zone utilising cheap labour and locally available raw material to become a major base for exports.

Jebel Ali has more than 2,000 companies from 97 countries and 74 per cent of these hold trading licenses and 22 per cent industrial licenses.

Mauritius consists of apparel units with the advantage being close to consumer markets. But all these have provided the needed administrative backbone, he said.

Policy environment and infrastructure though prerequisites are features that can be duplicated anywhere and are not key differentiators of success, he said. They are part of key development components with the offsite infrastructure such as power and roads, which need to be made available to the tenants.

Onsite infrastructure such as land development and utility services and social infrastructure such as residences and educational institutions are facilities that the tenant would be able to pay once the occupancy crosses a particular threshold in the SEZ, he said addressing a seminar on Business Opportunities in Special Economic Zones organised by the Confederation of Indian Industry, here today.

Mr R. Veeramani, Chairman, Export Promotion Council for EOUs and SEZs, said that the SEZs account for over 35 per cent of the $6 billion exports from the export-oriented units. But there is yet to be a green field SEZ and those in operation were export processing zones converted to SEZs.

Among the constraints in establishing the SEZs were problems associated with fund mobilisation and infrastructure gaps in establishing 1,000 hectare zones that the Government was targeting. The policies should provide for flexibility in the size of the SEZs, he said.

Cost of funds need to be brought down to 5 - 6 per cent and the foreign reserves should be utilised to set aside funds for making available $-loans to SEZs and EOUs.

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