Economic Regulation: The ‘visible hand’ guiding special economic zones
What is Economic Regulation?
Why is Economic Regulation so important to both investors and Zone regulators and administrators?
Let me answer the second question with:
- Economic Regulation provides business confidence by creating a stable and predictable environment for investment.
- The ‘visible hand’ guiding and enabling the special economic zone (SEZ) ecosystem to work more effectively to achieving the stated economic development objectives of a SEZ Programme.
Economic regulation refers to rules that limit who can enter a business (entry controls) and what prices they may charge (price controls).
However, in a more context sees economic regulation being less about correcting for market failures and more about enabling markets to work more effectively. As the Essential Services Commission of Victorian, Australia explains
Where the disciplines of competition are weak or absent, an economic regulator acts as a ‘visible hand’ seeking to guide service providers towards outcomes that would have occurred had the market been subject to those competitive disciplines.
SEZs being ‘specially’ designated regulated spaces with an economic development objective have both entry and price controls. SEZ programmes mandate which investors and investments will be allowed entry and be part of the regime and some have direct price controls eg types of service charges allowed, while all have some from of indirect price controls eg. no discrimination of lease payments based on a company’s ability to pay more.
Watch and find out more.
Originally posted on Commercial Law International.