According to the 2001 budget, there are 78 companies registered out of which 52 are operational under the GFZB and the Ghana Free Zones regime. What about the remaining 26 companies?
The remaining 26 companies are in various stages of build-up or start-up.
When are they going to be operational?
Depending on the stages of build-up, the companies should be operational within six months to two years.
What are the general requirements to apply to the free zones?
The requirements for the registration of free zones is enumerated in the "Procedure for the establishment of free zones operations" attached.
Are the zones operations limited to one territory?
No. The companies are free to locate anywhere in the country. However, the GFZB is developing enclaves in Tema and Sekondi for investors who might be interested in locating in these areas. The enclaves would also provide the necessary infrastructure and factory shells to make it easy for investors to set up in the shortest possible time.
How are you funded as a Board?
Initially, government gave grants to the Board. At present however, the Board generate funds from the license fees paid by free zone enterprises and the sale of application and customs forms. Some of the Board's projects are also funded under the Gateway Project.
These companies employ a total of 6000 people. How do you see the role of the GFZB in the field of poverty reduction?
The GFZB can play a significant role in terms of poverty reduction. The free zone enterprises create employment directly in terms of the number of people employed in the factories. In 1999, free zone companies employed about 1,600 women. They are mostly women who form the large proportion of the poor or the vulnerable group in the country. Indirectly, these enterprises create employment for artisans in the construction/building industry, packaging, as well as utility providers. They also provide employment to the rural folk who supply the companies with raw materials. In this respect, the success of the programme will enhance the poverty reduction efforts of the country.
What is the relationship between the GFZB and the Ministry of Works & Housing?
The GFZB and the Ministry have no formal relationship. However being a government institution, the Ministry can advise on issues relating to its functions.
What is the difference between the work conditions in the GFZB and the rest of the country?
The work conditions in the free zones are the same as in the rest of the country, which is in line with the ILO Convention. However, the free zone enterprises being international companies i.e. producing for foreign markets must adhere to strict internationally acceptable working conditions. Also, most of the Directors of the companies are foreigners and therefore introduce work ethics that might not be existent in the rest of the country. Most of these companies also pay more wages/salaries than what pertains in the local economy.
Among the GFZB companies, how many are medium and small-scale companies?
Out of the fifty-two (52) operational enterprises, thirty-two (32) are medium scale and fifteen (15) are small-scale enterprises. However, this classification is not based on specified parameters such as number of employee, turnover or profit. It is based on the nature of their operations.
One of the requirements of the State for the establishment of a Foreign company is the minimum of 10,000 USD (for a joint venture)…
This requirement does not apply to the GFZB. Actually, there is no minimum capital requirement for free zone investments.
How many joint ventures are under the free zone regime?
Of the seventy-eight (78) companies registered, forty-two (42) are joint ventures.
The Board has registered two developers, the international land Development Company and Business Focus Group of Malaysia Ltd. When did this co-operation commence?
The two developers were licensed separately by the GFZB. Business Focus was licensed on 5th November 1997 and International Land Development Company was licensed on 5th October 2000.
Could you comment on the co-operation of these companies, providing factory space to free zone investors at Tema Export Processing Zone?
The developers are operating on separate section of the Tema EPZ. Business Focus has planned to provide factory space, offices, exhibition centre, hotel accommodation as well as serviced plots. ILDC is only providing serviced plots for investors who would like to build their own factories.
Is there any plan to have such developers in other free zone areas?
Yes. The GFZB is in the process of identifying a developer to develop the Sekondi EPZ.
One of the objectives of the Board is to encourage the production of value added products. How and with which results have these aims been accomplished?
Out of the 78licensed enterprises, only seventeen (17) are in the commercial or service industry. The remaining are in the manufacturing sector with sub sector distribution in furniture/wood products, metal fabrication, textile/garment, petroleum products, food processing, beauty products, pharmaceuticals and rubber products which are all value added activities.
The Board is assumed to assist these companies to attain the ECOWAS Trade Liberalisation scheme?
The Board encourages companies in the free zone to apply for the ETLS to enable them take advantage of the broader ECOWAS market which the Board sees as one of the advantages for investors in setting-up their industries in Ghana.
What are your objectives in Middle to Long Term view?
In the medium term, the objective of the Board is to provide the necessary off- and on-site infrastructure for the Tema EPZ while at the same time attracting strategic investors to locate in the enclave. In the Long term, the objective of the Board is to attract a developer for the Sekondi EPZ and source for funding for the development of the off-site infrastructure for that enclave. It is hoped that by the year 2010, the GFZB would be one of the best free zone destinations for investors in Africa.
The final aim of the Board is to enforce the penetration of the Free Zone products into neighbouring countries?
As already indicated, the Board is encouraging the
free zone enterprises to apply for the ETLS which
would give them duty free access to the neighbouring
countries and make their products more competitive
in these markets. At present, some free zone companies
have been given the ETLS status. In any case, it
has been indicated that most of the exports of free
zone enterprises are to the ECOWAS market though
with some problems. The Board is therefore in constant
touch with the ECOWAS Secretariat to make the concerns
of the free zone enterprises known and to find solution
to them. |
Could you also give example of a product that has gone through the programme with success?
Yes. One company, Top Industries Limited that deals in plastic products has successfully been registered under the ETLS and is actually exporting into the ECOWAS sub-region.
Could you briefly explain the organisational aspect of the GFZB, and its relation with the Ministry of Trade & Industry?
The GFZB is established by an Act of Parliament, The Free Zone Act, 1995 (Act 504). There is established by this Act a Board to be known as the Free Zones Board, and its chairman shall be the Minister of Trade and Industry. The GFZB Secretariat is established to implement decisions taken by the Board. In this connection therefore, the Minister for Trade Industry being the Chairman of the Board has vested in him all the powers in respect of the governance and programmes of the Board. The day-to-day administration of the Secretariat is however vested in the Director who is the head of the Secretariat.
Do you have common project with the Ghana Export Promotion Council (GEPC)?
The GFZB participates in programmes organised by the Ghana Export Promotion Council. The GFZB has participated in an investment promotion mission organised by the GEPC. The Chief Executive of GEPC is also a co-opted member of the Free Zones Board and therefore furnishes the Board with information or programmes of GEPC that might benefit the GFZB.
Are you involved in any project related to the GATEWAY Project?
The GFZB is one of the implementation agencies under the Gateway project and has about 70% of the funds for the Project. The off-site infrastructure of the Tema EPZ, capacity building and investment promotion programmes of the GFZB are funded by the Project.
It is well known that the GFZB attracts foreign investment due to its light fiscal policy? Are the losses in Fiscal Revenues for the government balanced with other beneficiary aspect of the free zone?
The GFZB gives tax incentives to investors locating in the free zone. This can be considered as a loss to the government. However, it is expected that the promotion of the free zones programme would lead to the creation of jobs, transfer of modern technology, backward and forward linkages, and, a diversification of exports. It is expected that these benefits would out weigh the fiscal loses to the country. It should be noted that, the companies attracted into the free zones would not have located in the country if these incentives were not given and the country would not have benefited anyway from any taxes.
Is there a role for the GFZB in the covering of the government objective to eliminate the balance of trade deficit?
The free zone programme is mainly export oriented. In line with this therefore, it is expected that there would be an increase in export revenues as a result of the exports from the free zones. This increase would go a long way to reduce the balance of trade deficit. It should be noted that even though the free zone enterprises import machinery and other materials, their exports in the long run would outweigh the initial imports thus leading to a surplus in their balance of trade, which would affect the balance of trade of the country as a whole.
What other incentives does the board provide to the investors besides common light fiscal policy?
Apart from the tax incentives the free zone programme offers other incentives that include:
1. No import licensing requirements
2. Minimal customs formalities
3. 100% ownership of shares by any investor - foreign or local - in a free zone enterprise is allowed
4. no condition or restriction on: repatriation of dividends or net profit, payment for foreign loan servicing, payment of fees and charges for technology transfer agreements, and remittance of proceeds from sale of any interest in a free zone investment
5. free zone investors are permitted to operate foreign currency account with banks in Ghana
6. up to 30% of goods and services of annual production of goods and services of a free zone enterprises are authorised for sale in the local market
7. Free zone investments are guaranteed against nationalisation and expropriation
According to your information does the government plan to introduce additional incentives?
No. However in the short term, there would be the provision of highly developed enclaves with reliable utility services that are not readily available now. In the long term, very generous and negotiable tax rates after the expiration of the ten years tax incentives would be considered.
What is the contribution of the GFZB companies to the 4% rate of growth of the GDP?
This cannot be quantified, however, the production schedule of a sample of operational free zone enterprises in 1999 was about USD17 million, export schedule was about USD184 million, wages and salary bill was about USD8 million, cumulative investment capital for 1996 - 1998 was about USD 117 million and, VAT paid on local sales and Income Tax amounted to about USD 610,000 and USD 528,000 respectively.
What are the figures of growth and the profitability of the companies under the free zone regime?
This comparative analysis of the performance of the free zone enterprises have been compiled in the 1999 annual report attached.
Are they better than in regular fiscal zone?
This comparison has not been made. However, since the free zone enterprises do not pay duties and other taxes, it is expected that their profitability would be higher than in the regular fiscal zone. Also, their exports would bring in more revenue than sales in the domestic market by local companies.
What is the profile of your ideal investor?
The investor should:
1. Invest in priority sectors such as agro processing, textiles/garments, jewellery, Information Technology (Data Processing, Computer Assembling, etc.)
2. Employ over fifty people
3. Transfer modern technology and provide staff training
4. Be a good corporate citizen (providing assistance to the community it invests in)
What final message would you address to Forbes Global’ s readers?
Ghana has provided very attractive and generous
incentives for prospective investors. The country
also offers certain unique advantages such as stable
political environment, easily trainable workforce,
competitive minimum wage and excellent sea and air
connections with Europe and United States. Potential
investors are therefore encouraged to consider Ghana
as one of the best investment locations in Africa.
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