Fri | Jul 1, 2022

Economist wants digital SEZs to help small businesses leapfrog setbacks

Published:Wednesday | June 22, 2022 | 12:11 AMHuntley Medley/Associate Business Editor

An Africa-based economist is proposing that developing countries like those in Africa and the Caribbean, which are busy hunting big foreign investors to grow their SEZ footprint, should not ignore the opportunity created by the COVID-19 pandemic...

An Africa-based economist is proposing that developing countries like those in Africa and the Caribbean, which are busy hunting big foreign investors to grow their SEZ footprint, should not ignore the opportunity created by the COVID-19 pandemic for cooperatives of local micro, small and medium-sized enterprises focused on technology, innovation and e-commerce, to be granted special economic zone status.

“How can we make sure that we stimulate growth and development with e-commerce for MSMEs that have been harmed by COVID? Creating an SEZ does not necessarily have to be by physical location. Another threshold can be a single industry status to SEZs,” said Botswana-based global economist, Bogolo Kenewendo.

She proposed that cooperatives of small companies producing the same types of products that are looking to tap into an external market with the possibility of earning more from greater value-added output should be considered by governments of developing countries as part of a more inclusive and sustainable approach to industrial policy and SEZ expansion. These firms would be focused on building applications and providing other digital support, particularly to service and drive the back-end of e-commerce that is mushrooming globally, especially since the advent of the pandemic.

Kenewendo was speaking on June 14 as a panellist during a discussion on “charting the future of an inclusive e-commerce”, during the World Free Zones annual international conference and exhibition, AICE 2022, held last week in Montego Bay.

“From an inclusive standpoint of e-trade, digital trade and e-commerce, that is the kind of model that is being looked at cooperative to cooperative or cooperative to business to ensure that we are not leaving behind small and medium enterprises,” said Kenewendo, who is a former minister of trade and industry in Botswana.

She added that with e-commerce having been elevated by the experience of the pandemic, as an essential business, more governments are now open to having a discussion about digital SEZs.

“Speaking about post-pandemic recovery policies with regard to special economic zones, now we speak more freely about digitisation in SEZs, when we didn’t before COVID. I worked with a network of digital corporations (and) when we were approaching African and some Caribbean governments, they were not very open to having an e-commerce discussion. It was seen as a rescue mission. I think there is now a greater opportunity for digital SEZs in developing countries incentivising the development of apps and tech-based facilitation of trade of multinational corporations. That will ensure that there is a much easier flow of trade abroad, payment platforms, logistics, centred around technology,” she explained.

She emphasised that that concept of digital SEZs targeted at micro, small and medium business were left out of the equation pre-pandemic when the digital divide served to increase inequalities among and within nations.

“The whole point of trade, we like to think, is to encourage sustainable and inclusive development. Now we can help MSMEs to leapfrog when we adopt proper economic strategies and policies,” Kenewendo challenged governments.

Meanwhile, Walter Trezek, chairperson of the Universal Postal Union Consultative Committee of Austria, noted that global trade was now being characterised by harmonised data exchange structures, not only for the postal sector, but also for freight and transport.

“These will be required in Europe for 2024 even to move a truck. Carbon emission information will be available before items are packed, fulfilled and shipped. A perfect storm is brewing because these harmonised data constructs, and the supply chain management and facilities for fulfilling the contract entered into by consumers at the point of sale, are prerequisites. Those who are not ready for that will be out of business. Those who are ready for that will be empowered and will take even further seconds off the market into their network,” he suggested.

Outlining the impact of the growth in e-commerce on the operations of Jamaica Customs Agency, Commissioner of Customs Velma Ricketts Walker told the AICE 2022 panel discussion that the expansion was requiring more personnel, scanning equipment and sniffer dogs to manage the risk assessment and clearing of growing e-commerce transactions.

“Getting that data in advance and having the automation to drive the process is important. E-commerce is data driven and data-rich and so having a proper customs management system that is linked to other systems makes it much easier,” she said, noting that the agency operates within the framework of international protocols on transparency, predictability, standardisation of operations and trade facilitation.

“With e-commerce, people want their packages immediately. The business model is about speed, convenience and ease, so you don’t want Customs to be a bottleneck in the process,” she pointed out, adding that the agency was utilising big data analytics to get its job done.

Audley Deidrick, president and CEO of the Airports Authority of Jamaica, added to the Jamaican perspective, noting that with an estimated more than 99 per cent of world trade in goods being routed by sea, aviation still accounted for more than 35 per cent of world cargo value.

“Goods and services with greater value, requiring greater care, greater protection go by air. We facilitate players in e-commerce business who require speed and agility,” he said, conceding that the challenge for Jamaica’s airports were to create the enabling environment and physical infrastructure to keep pace with advances and growth in e-commerce.