Free trade zone to be established on Tunisian-Libyan border
In an attempt to contain contraband and smuggling, the Tunisian government approved the development of an economic free zone for commercial and logistical activities in Ben Guerdane, near the Libyan border.
Officials said their motivation is to bolster trade and contain black market activity, which has debilitated the economy, especially since 2011.
Experts have repeatedly stressed the need for a clear, well-defined plan to contain the effects of the informal economy. Former governments allocated millions of dollars to combat contraband but their efforts did not produce tangible results.
The Tunisian government announced the 150-hectare project on the third anniversary of the Battle of Ben Guerdane, a symbolic move meant to show that combating terrorism goes hand in hand with developing border regions.
“This project, which is to create 8,000 jobs directly and indirectly, is part of efforts to integrate informal economic activity into the formal economy,” said Tunisian Commerce Minister Omar al-Behi after the ceremonial laying of the free zone’s foundation stone.
The new free zone is only 10km from the Ras Jedir border crossing with Libya and 50km from the commercial port of Zarzis, in south-eastern Tunisia.
There are two other free trade zones in Tunisia: one in Zarzis, covering 60 hectares, and a 30-hectare site in the northern governorate of Bizerte. However, they have proven insufficient, even operating at maximum commercial capacity.
Behi said the Ben Guerdane free zone would make the region a gateway to African markets.
Sources in Tunis said Algeria expressed a desire to build a freeway to link the free zone with the Algerian border to the west to facilitate the transit of Algerian goods to Libya and Europe through the port of Zarzis.
The project’s blueprint indicates that 70% of the free zone’s area would be dedicated to logistical services, re-exportation and international trade. It would be under the control of the customs authorities, meaning that it would be integrated into Tunisia’s formal economy.
The remainder of the area would be allocated to retail trade, storage and warehouses, in addition to hotel and entertainment complexes and administrative and support services buildings.
After reaching an agreement with China last year that includes a free zone with Chinese factories in Zarzis under the framework of China’s Belt and Road Initiative, Tunisia is betting on attracting more foreign investment to such promising projects.
The first phase of the project is to begin in April. This would include the construction of infrastructure, including a power plant, a waste treatment plant, roads and the laying of drainage and sewage canals.
The Tunisian government is relying on partnerships between the public and private sectors to benefit the country’s economy. The government is diversifying incentives to attract investors.
Tunisia’s trade office, the public service entity overseeing the project, said construction would begin following the establishment of a company to manage the five phases of the project, with the final phase to be completed by December 2020.
Tunisian Office of Commerce Director-General Ilyes Ben Ameur, in a statement, said the value of the project is about $105 million and technical studies for the project would soon be ready.
Ben Ameur said the project would be promoted during an international symposium in June to attract local and foreign capital contributions to the construction of the free trade zone.
He mentioned that the free zone would provide incentives to informal traders in border areas and would encourage them to carry out their activities within the formal market to curb smuggling activities, thus securing additional revenue for the state.
Contraband, particularly fuel smuggling, is a chronic headache for Tunisia. A World Bank report stated that 1 litre of petrol smuggled from Libya can be sold in Tunisia at six times its purchase price. Smuggled food and consumer products of unknown origin have caused considerable damage to local industries.
Tunisia aims to reduce the size of the informal economy from 50% to 20% by next year, official estimates state, but analysts said they doubt it will be able to do so.
The free trade zone project introduction coincided with the inauguration of the first private hospital in Ben Guerdane and the opening of the Bou Hamed bridge linking Medenine and Zarzis, a move expanding the road network in southern Tunisia.
Tunisia’s minister of public works said work to complete the freeway leading to the free zone through Ben Guerdane continues and would help the city by including it in the country’s development plans.
Tunisia seeks to bring in more than $500 million in annual revenue from its free zones, with that number estimated to double once the Ben Guerdane project is operational.