The Chinese business community is expected to inject huge sums of money through major contracts into the country on the back of special economic zones (SEZ), a grouping of Chinese businesses in Zimbabwe has said.
BY TATIRA ZWINOIRA
Since the start of the year, interest among the Chinese business community to increase investment has risen as several incentives listed in the 2017 national budget went into effect.
Chinese Federation of Zimbabwe (CFZ) deputy president, Steve Zhao told NewsDay last week that Chinese businesses were excited to do business due to the SEZs.
“I think this is going to be a good year. From the information I have received and signals in terms of the special economic zones, a lot of people are looking forward to doing business in the country. Areas where they have shown interest are in agriculture, mining, and manufacturing,” Zhao said.
“With the SEZs there will be huge sums of money coming in, as they will attract big contracts into the country. People want to come at the moment as things are looking attractive for now.”
The SEZ Act, signed into law by President Robert Mugabe last October, is aimed at increasing trade and investment into the depressed economy.
Some of the incentives in the 2017 National Budget aimed at luring investors include an exemption from Corporate Income Tax for the first five years of operation after which a corporate tax rate of 15% would then apply.
Another incentive gives special initial allowance on capital equipment to be allowed at the rate of 50% of cost from year one and 25% in the subsequent two years.
Others include duty-free capital equipment and inputs imports, which include raw materials and intermediate products for SEZs.
The tax incentives will apply in demarcated geographical areas and are restricted to production for export.
The government enacted the SEZs legislation also to enhance the economy’s capacity to produce goods and services competitively, which at the moment it is not in the Sadc region.
However, the Sino-Zim relationship is not without its challenges.
Last February, the government broke a deal with China signed on March 1, 1998 when it suspended two big diamond mining firms from among a total of nine, namely, Anjin and Jinan, for not repatriating proceeds from their mining activities.
This soured relations between the two countries.
In a move to ease tensions, the following month, the government relaxed visa requirements for Chinese nationals visiting Zimbabwe by putting them in category B from C under the visa regime, where the nationals could now apply for visas upon entry into the country.
China is the country’s second biggest Asian import source market after Singapore while trading heavily-skewed in China’s favour. From January to August 2016, Zimbabwe imported $234,24 million worth of goods from China.