Positioned as the largest free trade zone (FTZ) in Africa, the
China-established Djibouti FTZ is expected to open this week,
attracting wide attention in the country strategically positioned in the
China-proposed Belt and Road initiative.
China-established Djibouti FTZ is expected to open this week,
attracting wide attention in the country strategically positioned in the
China-proposed Belt and Road initiative.
The zone’s first phase, a 2.4 -square-kilometer area that
includes a logistics park, an area for processing export products and a
services center, will begin operating this week.
includes a logistics park, an area for processing export products and a
services center, will begin operating this week.
The park is expected to handle trade worth $7 billion within two years.
With an initial investment of $340 million, construction began
in January 2017 and over 20 Djibouti and Chinese companies signed
letters of intent to open an office at the park, and over 30 companies
are negotiating similar letters, according to a statement the China
Merchants Group Limited (CGM), a co-founder of the park, sent to the
Global Times.
in January 2017 and over 20 Djibouti and Chinese companies signed
letters of intent to open an office at the park, and over 30 companies
are negotiating similar letters, according to a statement the China
Merchants Group Limited (CGM), a co-founder of the park, sent to the
Global Times.
The free trade zone is a “touchstone” of whether Djibouti can
become Africa’s commerce, trade and travel hub, Meng Guangwen, a
professor specializing in free trade zone studies at the Tianjin Normal
University, told the Global Times.
become Africa’s commerce, trade and travel hub, Meng Guangwen, a
professor specializing in free trade zone studies at the Tianjin Normal
University, told the Global Times.
“Aside from its strategic international trade location, the
country has very few natural resources and infrastructure to attract
foreign investors. The free trade zone, with extensive policy support,
could set an example of how Chinese enterprises run their business in
the region,” Meng said.
country has very few natural resources and infrastructure to attract
foreign investors. The free trade zone, with extensive policy support,
could set an example of how Chinese enterprises run their business in
the region,” Meng said.
The zone is significant to Djibouti’s companies and companies
in other African countries, as it can show what they can do and how they
could realize win-win cooperation with Chinese companies, Babara Manzi,
UN resident coordinator of Djibouti, told the Global Times on
Wednesday.
in other African countries, as it can show what they can do and how they
could realize win-win cooperation with Chinese companies, Babara Manzi,
UN resident coordinator of Djibouti, told the Global Times on
Wednesday.
China’s investment in Djibouti has brought visible changes to
the country, such as in infrastructure and employment, and there’s more
to come, Manzi said.
the country, such as in infrastructure and employment, and there’s more
to come, Manzi said.
More private small and medium-sized enterprises are expected to
come and provide more jobs and experience to boost the country’s
development, Manzi noted.
come and provide more jobs and experience to boost the country’s
development, Manzi noted.
Companies located in the park can enjoy tax breaks, according to the CGM statement.
Though a small country, Djibouti is strategically located facing the Gulf of Aden.
China opened its first overseas logistics supply base for the Chinese navy in Djibouti last year.
Not a white elephant
Volume of China’s investment in Djibouti has been rising.
Chinese projects include a water pipeline from Ethiopia, a railway to
Addis Ababa and a new international airport 25 kilometers south of its
capital.
Chinese projects include a water pipeline from Ethiopia, a railway to
Addis Ababa and a new international airport 25 kilometers south of its
capital.
Western media has recently expressed concerns over the risks of
investing in a country with an underdeveloped infrastructure, immature
business environment and political risks, saying that investing in
Djibouti could be a “white elephant” for China due to large costs and
risks with few returns.
investing in a country with an underdeveloped infrastructure, immature
business environment and political risks, saying that investing in
Djibouti could be a “white elephant” for China due to large costs and
risks with few returns.
“CGM’s investment in the region will not be a white elephant.
For a listed company, profits are always a priority and studies have
shown that the zone is a profitable project,” China Merchants Port
Holdings Company’s Wu Xuan told the Global Times on Wednesday.
For a listed company, profits are always a priority and studies have
shown that the zone is a profitable project,” China Merchants Port
Holdings Company’s Wu Xuan told the Global Times on Wednesday.
Wu said the company also regards the challenges as an
opportunity to showcase its social responsibility, as every investment
not only generates profit but also improves the local people’s lives.
opportunity to showcase its social responsibility, as every investment
not only generates profit but also improves the local people’s lives.
By 2025, the zone is expected to create over 50,000 jobs, and
surpass 100,000 jobs in 2045, or one-sixth of the country’s labor force,
the CMG statement said.
surpass 100,000 jobs in 2045, or one-sixth of the country’s labor force,
the CMG statement said.
While risks always exist, it’s important to manage the risks and ensure that all parties involved benefit, Manzi said.
The park is also a safe haven for Chinese investments, as the
Djibouti leadership’s courageous policies toward Chinese investors have
shown, she said.
Djibouti leadership’s courageous policies toward Chinese investors have
shown, she said.
The government of Djibouti set aside 48.2 square kilometers of
land, 10 percent of the country’s available real estate, to develop the
international free trade zone that features manufacturing, transport and
warehouse facilities.
land, 10 percent of the country’s available real estate, to develop the
international free trade zone that features manufacturing, transport and
warehouse facilities.
For China, investing in Djibouti means better access to
opportunities in Africa, which is home to several promising emerging
economies, Meng said.
opportunities in Africa, which is home to several promising emerging
economies, Meng said.
It also satisfies China’s strategic need for energy security and to build the image of a responsible country, Meng added.
China’s non-intervention policy also assures the government of
Djibouti of more mutually-beneficial cooperation, as the investment is
politics-free, Meng stressed
Djibouti of more mutually-beneficial cooperation, as the investment is
politics-free, Meng stressed
