World FZO 5th Annual International Conference & Exhibition ...€¦ · World output IfW-Indicator for business expectations (rhs) Quarterly data, seasonally adjusted. Indicator is

KOOTHS | WFZO AICE 2019 | Global Free Zones Outlook

Global Free Zones Outlook

Stefan Kooths, Klaus-Jürgen Gern, Saskia MösleForecasting Center

World FZO 5th Annual International Conference & Exhibition | Barcelona, 26-28 June 2019Free Zone 4.0 meets Economy 4.0


▪ Global Economic Outlook

▪ The World FZO‘s Business Excellence and Economic Contribution (BEEC) Survey

» Concept

» Preliminary results

▪ The Freezones World Economic Barometer (F-WEB)

Outline

2


Global growth remains sluggish, despite a temporary pick-up in world production at the start of the year

3

-0,8

-0,6

-0,4

-0,2

0,0

0,2

0,4

0,6

2012 2013 2014 2015 2016 2017 2018 2019

0,0

0,2

0,4

0,6

0,8

1,0

1,2

World output IfW-Indicator for business expectations (rhs)

Quarterly data, seasonally adjusted. Indicator is based on business expectations in 42 economies. GDP: price adjusted, change over previous quarter.

Source: national sources, IfW calculations.

Percent Index

World Economic Activity


Sentiment has deteriorated and world trade isweak amid high global economic policy uncertainty

4

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2012 2014 2016 2018

World

Advanced Economies

Developing and ermerging economiesIndex

Monthly data, seasonally adjusted. Indicators are based on buisness expectations

in 42 countries (34 advanced economies and 8 emerging economies).

Source: OECD, Main Economic Indicators; national sources; IfW calculations.

Business expectations by groups of countries

2012 2013 2014 2015 2016 2017 2018 2019

90

100

110

120

130

World trade total

Advanced economies

Developing and emerging Economies

Monthly data; seasonally and price adjusted.

Source: CPB, World Trade Monitor; IfW calculations.

2012=100

World Trade


Business Excellence and Economic Contribution (BEEC) Survey


▪ World FZO‘s free-of-charge annual survey open to all free zones around the globe

▪ Insights on economic developments in the Free Zones community

▪ Optional: Izdihar („Prosperity“) Index journey that helps Free Zones fulfill their own potential

What is the BEEC Survey?


▪ To participate, visit https://www.worldfzo.org/BEEC-2019

▪ Web-based questionnaire with questions on:

» Free Zone characteristics

» Incentives & business environment

» Key economic indicators

How can I be part of the BEEC Survey?

https://www.worldfzo.org/BEEC-2019


BEEC participation so far…

8

40+ Free Zones

20+ Countries

350 000+ Employees

30 000+ Companies


Global coverage, but some regions still under-represented

9

Regional distribution of BEEC participants

21%

11%

42%

11%

16%

0%

10%

20%

30%

40%

50%

Europe and Central Asia Latin America and theCaribbean

Middle East and NorthAfrica

South Asia Sub-Saharan Africa


Public free zones and general-purpose zones are most represented in the BEEC survey until now

10

BEEC participants by ownership BEEC participants by type of zone

Government

Private

Public-Private Partnership

Airport Dry port

General High-Tech

Specialist


On average, BEEC participants report an increase in economic activity in 2018

11

Development of key economic indicators in Free Zones participating in the BEEC

0%

10%

20%

30%

40%

50%

60%

70%

decrease no change some increase strong increase

Investment Sales Value added Exports Imports Firms Employees


Free Zones World Economic Barometer(F-WEB)


▪ Quarterly, survey-based sentiment indicator

» Based on qualitative, easy-to-answer questions (max. 10 minutes!)

▪ Benefits of regular participation:

» Get preferential access to detailed results and commentary

» Evaluate the relative performance of your Free Zone

▪ Web: www.ifw-kiel.de/FWEB

▪ Email: [email protected]

What is the F-WEB?

http://www.ifw-kiel.de/FWEB

mailto:[email protected]


Current economic conditions in free zones have deteriorated recently but remain positive overall

14

F-WEB: Current economic situation 2019Q2 F-WEB indicator on current economic situation

47% 47%

7%

0%

10%

20%

30%

40%

50%

60%

good normal poor

46

54

25

44

51

40

0

20

40

60

80

2018Q1 Q2 Q3 Q4 2019Q1 Q2


Expectations about future economic conditions in free zones have become less optimistic

15

F-WEB: Expected economic situation 2019Q2 F-WEB indicator on expected economic situation

49%

42%

9%

0%

10%

20%

30%

40%

50%

60%

improved unchanged deteriorated

6264 64

4446

40

0

20

40

60

80

2018Q1 Q2 Q3 Q4 2019Q1 Q2


Elevated levels of global economic policy uncertainty affect activity in free zones

16

Global economic policy uncertainty Special Question: Impact of global economic

uncertainty on activity in free zones

0

200

400

600

800

1000

2010 2012 2014 2016 2018

China

World

Europe

United States

Monthly data. Measured by the Economic Policy Uncertainty Index constructed

by Baker, Bloom and Davis based on news data. Source:

www.policyuncertainty.com.

Index

8%

29%

63%

0%

10%

20%

30%

40%

50%

60%

70%

strong negativeeffect

somewhatnegative effect

no significanteffect


@kielinstitute

www.ifw-kiel.de

Prof. Dr. Stefan KoothsHead of Forecasting Center

T +49 431 8814-579F +49 431 8814-525M [email protected]

Participation welcome!


Back-up


7 Sections:

1) Free Zone Charceristics2) Business Excellence3) Economic Contribution4) Labor5) Past performance6) Incentives7) Infrastructure and Facilities8) Competitiveness

What is the BEEC Survey? Part II

▪ Both quantiative and qualitative questions

▪ Participation possible even if not all data is available for your Free Zone

▪ NO ranking of participants due to heterogeneity of Free Zones


▪ Automatic eligibility to participate in the Izdihar Index of the World FZO

▪ Special incentives for participation:

» If you are not yet a member of the World FZO, you receive a temporary guest access to exclusive WorldFZO content.

» If you are already a member of the WorldFZO, you receive exclusive access to a dedicated online Izdihar Index-based training seminar.

Benefits for BEEC participants


Company size is heterogeneous within BEEC Free Zones, and investment dominated by foreign investors

21

BEEC participants by company size (% of large

companies)

BEEC participants by origin of investment (% of

investment by foreign companies)

13%

33%

8%

25%

21%

0%

10%

20%

30%

40%

0-19 20-39 40-59 60-79 80-100

4%

12%

8%

42%

35%

0%

10%

20%

30%

40%

50%

0-19 20-39 40-59 60-79 80-100


BEEC Free Zones offer substantial fiscal incentives

22

Fiscal Incentives offered in Free Zones participating in the BEEC

0%

10%

20%

30%

40%

50%

60%

70%

80%

Corporate tax exemptions Duty exemptions Value added tax exemptions Personal income taxexemptions

no some substantial 100


Companies face few restrictions within Free Zones and some benefit from special regulations

23

Business environment in BEEC Free Zones I Business environment in BEEC Free Zones II

0% 20% 40% 60% 80% 100%

Foreign ownership

Local ownership

Number of visas for employees

Type of legal entities

Repatriation of capital andprofits

Foreign exchange operations

Are there any restrictions on the following...

yes no

0% 20% 40% 60% 80% 100%

Resolve commercial disputes

Resolve insolvency

Resolve conflicts of interest

Get access to credit

Protect investors

Are there any special regulations to...

yes no


BEEC Free Zones are linked to their host economies to different degrees

24

Backward linkages in BEEC Free Zones I Forward linkages in BEEC Free Zones II

31%

34%

14%

7%

14%

0%

10%

20%

30%

40%

50%

0-19 20-39 40-59 60-79 80-100

13%

42%

33%

8%

4%

0%

10%

20%

30%

40%

50%

0-19 20-39 40-59 60-79 80-100


F-WEB: Current and expected economic conditions by detailed economic dimensions

25

F-WEB Components 2019Q2

0

20

40

60

80

turnover employment investment profitability

current expected

Documents

World FZO 5th Annual International Conference & Exhibition ...€¦ · World output IfW-Indicator for business expectations (rhs) Quarterly data, seasonally adjusted. Indicator is