The Legal effectiveness of the Export Processing Zone Act (number 7 of 2001) as a means of attracting foreign direct investment into Zambia
Musambula, Victor Musambula
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The World over with the demise of the cold war there has been a reversion tea liberal approach in the running of the economy entailing less direct involvement by the government in commerce. This has been done by adhering to principles mostly propagated by the World Bank and the International Monetary Fund which included; an intensive privatization of previously state run enterprises, removal of exchange control regulations, a shift from import substitution methods towards export oriented economy as well as structural adjustment program. Thus theeconomy is expected to be private sector driven with government providing a favorable atmosphere for the private sector to operate. It is expected that the private sector will bring competition into the individual economies and make it responsive to the needs of the international economy.However the liberalization of the economy and the privatization of most former state run enterprises, has instead resulted in massive job losses and it has been hoped that the jobs that have been lost during the process of privatization and liberalization of the economy will be regained as the new owners of the formerly government run enterprises will bring in new capital and other investors will come into the country and ensure that the jobs lost are soon regained. The task of attracting foreign direct investment is not an easy one as countries have to compete with each other leading to investors being the sole beneficiaries of the competition as standards are lowered in their favor.In a bid to attract the private sectot; most countries have come up with investment codes, which outline the rights that the investor will enjoy in relation to the government. Most codeagrant incentives to investors depending on the level of their investment. In Zambia the Investments Act can be said to be an example of an investments code in the quest to attract foreign direct investment. The Act, which has not yielded the much-desired results, has lead tostakeholders calling for a re-examination of the Act. The government has more recently passed the Export Processing Zones Act number 7 of 2001, which equallyaims at attracting fresh investment into the country as well as encouragingexisting enterprises to expand by providing incentives for those involved in exports. The incentives uncer the Export Processing Zones Act are similar in many respects to those that existed under the Investments Act prior to its amendment in 1996 via Act number 5 of that year.The idea of establishing export processing zones has found supportthe world over among various governments. This paper will analyze the Export Processing Zones Act number 7 of 2001 to gauge its efficacy in attracting foreign direct investment into Zambia as well as examining in brief the safeguards that have been placed against any negative impact that may result from full implementation of the program.
- Law