Special Economic Zones: Is it a matter of opinion or a matter of interest?

Comment: Dear Sir/Madam,

I am R.B. from India. Presently I am pursuing my MBA in Germany. I am an Engineer by profession with 18 years of experience in Project/ Program management etc. in a leadership role.

I have been studying the Greek crisis and it has been a big topic of discussion during this MBA. We even had a visit to the ECB in Frankfurt where this issue was presented to us and discussed. I read the article with great interest and I have concrete proposals to share which I think can be implemented to resolve the crisis.

Since the space is short here, I am looking forward to a suitable response from your end to share my views.

Regards
R.B.

Dear R.,
Thanks for contacting EPAM.
We’d be delighted to listen to your proposals even a general idea.
Looking forward to reading from you soon.
Best regards,
T.L.
Dear Sir,Please find enclosed a proposal from my side. I am looking forward to your feedback on the proposal.
Regards
R.B.

T.L.
My answers in red:

Problem Statement.   As the unemployment numbers rise in Greece, the expenses of the Govt. (in welfare payments) also rises.

The expenses of the government in welfare payments are non-existent since Greece signed with troika (=IMF, ECB, EU). On the contrary, unemployement is due to the fact that the government does not spend because the governemewnt uses the taxes to pay the debt  which was produced by euro.

Further, the unemployed are also disruptive and so the traditionally profitable industries (like tourism) are also adversely affected. So this is like a downward spiral. What is the Govt. doing? They are trying to sell of the ‘crown jewels’ i.e the best run companies in the country to raise money. What the Govt. doesn’t realize is that even if they sell these companies (at a fraction of their true value), due to the possible disruption by the unemployed, getting work done in such companies inside Greece is uncertain and risky.

So, the direction of the solution has to be to find some sort of employment for the large number of unemployed. This has to be a private sector solution so that the burden of the Govt. (in welfare payments) is reduced. History has proved ( USA Great Depression etc) that private sector is not the solution when a country’s economy is in free fall like Greece’s is. On the contrary. The loss of this ‘burden’ in welfare payements is what led to this situation where an entire people is exploited by private Banks and private sector.

Lastly, it is about the pride of the Greeks who (like any other self-respecting nation) would like to get themselves out of this crisis by working hard and not by being unemployed. I don’t know about other nations but the Greeks will not get out of the crisis by working like slaves to pay the debts others (=political system) made for him.

Proposed Solution.      The solution lies in setting up of ‘Special Economic Zones’ (SEZ) in Greece where Multi National Companies (MNCs) preferably in the FMCG sector, can set up their plants and employ the Greeks. One very competitive MNC is TATA, who are into a lot of things (at least in India) from salt to luxury cars and even locomotives. Maybe in India it worked (although I would very much like to listen to someone who works in a SEZ in India what he has to say about that) but I wonder why France, Germany, Norway, Denmark, Finland, Italy, do not have SEZs in their countries? Do they know something India, China, South Korea do not?

Incidentally, this is not a new idea but has been proposed by the European Parliament President, Mr. Martin Schulz (from German democratic party) in Sep 12.

Of course this is not a new idea, nor Martin Schults’ idea is. It was the Nazis idea during the WWII. Do you remember ‘Arbeit macht frei’ ?

Also, you don’t say anything about who owns this SEZ. Some private investor? Some hedge fund? Some other country?

Allow me to develop the modalities of one such SEZ which has been say, allocated to TATA group (an Indian origin company).

1.    Taxes.    Initially low Corporate Taxes (for say next 15 years) of 5-7%, like a ‘Tax Holiday’. This means that the SEZ makes profit not for the coutry but for the owner of the SEZ.

2.   Real Estate.   Leased by the Govt. (not sold). Lease rate could be variable (based on the number of people employed by the Group) i.e. the more the number of local people employed the lesser the monthly rent. Again this is not a win win situation for the country and the ‘investor’  but only for the ‘investor’.

3.   Hiring & Firing Criteria.   The KPIs (Key Performance Indicators) could be mutually decided with the Govt. and the existing unions. The underlying idea should be that the standard of living of the employees has to be higher than those living on welfare. You are saying “could be”: this assumes that the country has no working legislation, no unions …in general a country where everything is decided by private businessmen or in this case by the ‘investor’. The ‘underlying idea’ remains an idea: it was in October or November the police in South Africa shot dead workers in some SEZ for….asking to be paid, to name just one example.  Therefore, I doubt very much that the idea is that the standard of living of employees in an SEZ is higher.

4.   Payments.   Keeping in view the above criteria (of standard of living), the payment basis could be both in cash and kind. This implies that the employees could also be given part of their salaries as food or other subsidized services (like medical aid, crèche for kids, education etc.) Above criteria do not imply that salary can be in kind. Maybe you refer to prisoners or past forms of slavery under feudalism.

5.   Import Flexibility inside the SEZ.    The govt. needs to allow the Company to import items (without tax embargo) for consumption inside the SEZ. This includes raw materials and food etc. This will ensure that the company is able to provide food at a cheaper rate to the employees. I understand that this SEZ is kind of a state into a state with its own rules, own tax system, own salary system and all an SEZ needs is a soil to produce its products and people to work in it no matter they are locals or foreigners. Since the standards of living are designed to be high why does the SEZ have to feed its employees? Does it imply bars so that employees do not escape, like it happened in one of the SEZ in China?

Advantages

1.   Advantage for the Govt.    Instead of a cash outflow (due to welfare payments), there would a positive inflow since the employed people would pay some taxes. Ah! Now I see! So, the employees will also pay taxes to the government ! This is why in the beginning of your proposal you mentioned nothing about the SEZ paying very little taxes to the government.

Further, the law and order problem would be easier due to lesser number of unemployed people coming on the streets. Of course, since the SEZ will have its own private army like in South Africa or China.

Finally, the productive industries like tourism could gain go back to business without fear of disruptions from the unemployed. Right, we could also start promoting sex-tourism like in Thailand and turn our daughters and sisters into prostitutes. It’s profitable and they are going to  enjoy it !

2.   Advantage for the Employees.    They become productive = better slaves and have a higher standard of living = living in prisons. They pay taxes which helps the economy. Just like farmers used to do back in the Middle Ages.  They increase the labor competitiveness of Greece. Just like the Chinese or Indian slaves.

3.    Advantage for the Company.    It is able to manufacture good inside the EU area at a very competitive cost which benefits all the consumers inside EU, due to price competition. = new slaves working for a plate of food, like in India. New business practices = tortures, hunger, killings, blackmailing are introduced which helps the competitors to strive harder to be more competitive.

Listen, dear R., thanks very much for bothering to make propaganda for the Special Economic Zones but you are losing time. I suggest that you try to make the same proposal to Germany. They will soon be like Greece ( besides, this explains the fact that new-Nazi Germany annexes European countries one after the other). If Germany accepts the SEZs, we’ll see about Greece….

If you have any other proposal that respects human rights, national sovereignty and democracy, please feel free to contact us again.

Regards to your bosses,

T.

SEZ

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