SPECIAL ECONOMIC ZONES: SUBSIDIARY LEGISLATION

INDEX TO SUBSIDIARY LEGISLATION

Special Economic Zones Regulations

SPECIAL ECONOMIC ZONES REGULATIONS

(section 40)

(21st June, 2019)

ARRANGEMENT OF REGULATIONS

REGULATION

PART I
Preliminary

1. Citation

2. Interpretation

PART II
Establishment of special economic zones

3. Establishment of special economic zone

4. Requirements for proposal to establish special economic zone

5. Preliminary review by Authority

6. Review by local authority

7. Consultation with affected persons

8. Criteria for evaluation of proposal

9. Other types of special economic zones

10. Revocation of declaration

11. Expiration of declaration

PART III
Development of special economic zones infrastructure

12. Participation of public-private partnership and private sector in development of special economic zones infrastructure

13. Development agreement

14. Responsibilities of developer

PART IV
Management of special economic zones

15. Management of special economic zones

16. Reporting and financial statements of special economic zones

PART V
Appointment and licensing of developers and zone management companies

17. Evaluation criteria for developers and zone management companies

18. Application for developer or zone management licence

19. Requirements for issue of developer or zone management licence

20. Review of application for developer or zone management licence

21. Issue of developer or zone management licence

22. Rights and responsibilities of developer and zone management company

23. Rules for special economic zones

24. Co-operation requirements

PART VI
Licensing of special economic zone investors

25. Types of businesses or services permitted in a special economic zone

26. Application for investor licence

27. Application through one-stop service centre

28. Requirements for issue of investor licence

29. Review of application for investor licence

30. Issue of investor licence

31. No limit or quota on investors

32. Negative list

33. Service level agreements

PART VII
Cancellation, revocation, suspension or variation of licences

34. Cancellation, revocation, suspension and variation of licences

35. Register of licences

PART VIII
Annual returns by zone management companies

36. Annual returns

PART IX
One-stop service centres

37. One-stop service centres

38. One-stop service centre services

39. Authority oversight of one-stop service centres

PART X
Investment rules for special economic zones

40. Responsibilities of special economic zones entities

41. National treatment

42. Sale of special economic zone land

43. Safeguards against speculation

PART XI
Land use rules and building and utility controls

44. Master plans and zoning criteria

45. Maps, surveys, deeds and lease register

46. Regulation of construction in special economic zones

47. General environmental management and regulatory responsibility

48. Initial environmental management of special economic zones

49. Impact assessment, mitigation action plan, etc.

50. Environmental and social management system

51. Grant of environmental authorisation

52. Enforcement activities

53. Environmental audits

54. Dealing with non-compliance

55. Public health

56. Co-ordination relating to land use and environmental matters

PART XII
Application of national labour laws

57. Application of national labour laws

PART XIII
Inspection and enforcement

58. Enforcement of Act

59. Sanctions

60. Factors to guide determination of sanctions

61. Consultation with other stakeholders

PART XIV
Miscellaneous provisions

62. Delegation of functions

63. Offences and penalties

SCHEDULES

S.I. 71, 2019.

PART I
Preliminary

1. Citation

These Regulations may be cited as the Special Economic Zones Regulations.

2. Interpretation

In these Regulations unless the context otherwise requires—

"administrative committee" means a committee established under section 5(2)(i) of the Act;

"customs territory" means any part of Botswana excluding a special economic zone;

"developer licence" means a licence issued under regulation 20(5)(a);

"environmental authorisation" means a special economic zone environmental authorisation issued under regulation 54;

"environmental performance" means measurable results of the Authority’s or special economic zones entities’ environmental practices, policies, safeguards, and procedures, based on established environmental quality standards;

"facility" means any location in a special economic zone in which business activities are carried out;

"government entity" includes a ministry or department of central government, local authority, statutory or other parastatal in which government holds majority shares or organisations fully financed by Government;

"infrastructure" means roads, power, water, drainage, telecommunication, sanitation or water treatment plants, networks, buildings or other facilities, necessary for the development and operations of special economic zones and appropriate for their particular sector or cluster focus;

"licensee" means holder of a licence issued under these Regulations;

"maximum load capacity" means the maximum amount of a pollutant that an environment medium, such are air land or water, can absorb without exceeding environmental quality standards;

"one-stop service centre" means the services of the Authority established under regulation 37(1);

"outside party" means a party other than the Authority, and includes other government, private-sector, foreign government, and non-government entities;

"public-private partnership arrangement" means the legal relationship between public and private parties based on a contractual agreement or other legal instrument, such as concession agreement, lease, joint venture, management contract, a build operate transfer, a build own operate, or a build own operate transfer, arrangement, where the parties jointly agree to develop, operate, maintain and promote a special economic zone;

"service level agreement" means a legally binding agreement between the Authority and government entities defining the operational framework in the implementation of the special economic zones programme;

"special economic zones entities" means—

(a) an investor;

(b) a developer;

(d) a zone resident; and

"special economic zones land" means land and other immovable property within a special economic zone, including infrastructure, buildings, and other facilities;

"zone management licence" means a licence issued under regulation 21(1)(b); and

"zone resident" means a person who resides in a residential area within a special economic zone.

PART II
Establishment of special economic zones

3. Establishment of special economic zone

(1) A special economic zone may be established on public or private land.

(2) A proposal for the establishment of a special economic zone may be initiated by—

(a) the Authority; or

(b) an outside party.

(3) A proposal under subregulation (2)(b) shall be submitted by the outside party to the Authority.

4. Requirements for proposal to establish special economic zone

(1) For the purposes of section 29(5) of the Act and regulation 3(3), a proposal for the establishment of a special economic zone shall—

(a) include the following—

(i) the geographical location, boundary specifications and map co-ordinates of the area;

(ii) the property registration details;

(iii) the planned economic activities of the proposed special economic zone;

(iv) the timetable for the proposed development; and

(v) any other information as the local authority may deem necessary; and

(b) specify the extent to which the proposal addresses the provisions of regulation 8(1);

(c) demonstrate sufficient access to financial resources and expertise for the development, operation, administration and management of a special economic zone;

(d) in the case of a public-private partnership, indicate its ownership structure, including requirements for transfer of shares and distribution of assets upon liquidation of the public-private partnership, revocation or expiration of the declaration in accordance with the provisions of regulations 10 and 11;

(e) be accompanied by a feasibility study report prepared in accordance with the guidelines set out in Schedule 1 except in the case of a single factory special economic zone.

(2) An outside party that submits a proposal to the Authority under regulation 3(2) shall in addition submit—

(a) an application for a developer licence;

(b) if the area is already developed and no additional development activity is planned, an application for a zone management licence; or

5. Preliminary review by Authority

(1) The Authority shall within 14 days after receipt of a proposal under regulation 3(2) inform the outside party, by notice in writing—

(a) whether the proposal is complete in accordance with the objectives set out under section 30(1) of the Act and the requirements under regulation 4; and

(b) if the proposal is not complete, in the notice referred to in this regulation—

(i) specify the outstanding information or documents, and

(ii) request the outside party to submit a complete proposal within 14 days of receipt of such notice.

(2) The Authority shall within seven days after receipt of a complete proposal, consider and determine whether to recommend the proposal to the local authority for approval.

(3) The Authority may—

(a) conduct such investigation into any matter related to a proposal submitted under regulation 3(3) as it may be deemed necessary; and

(b) conduct such inspection of the outside party related to the proposal as it may deem necessary.

6. Review by local authority

(1) Subject to the provisions of regulation 7, the local authority shall review a proposal within 60 days of submission by the Authority and may—

(a) approve the proposal; or

(b) reject the proposal.

(2) Where the local authority rejects a proposal, the local authority shall—

(a) inform the Authority of the decision, in writing, stating the reasons therefor; or

(b) recommend the modification of the proposal for compliance with the Act before it is approved.

(3) The provisions of regulation 5 shall apply, with the necessary modifications to the review of proposal initiated by the Authority in accordance with regulation 3(2).

7. Consultation with affected persons

(1) Where in the opinion of the local authority, the establishment of a special economic zone is likely to raise public interest concerns, the local authority shall publish, by notice in the Gazette and in a newspaper of nationwide circulation, a preliminary notice, in accordance with subregulation (2).

(2) The notice under subregulation (1) shall—

(a) contain the information referred to under regulation 4(1)(a);

(b) invite any interested person to submit written comments or objections to the local authority within 14 days from the date of publication of the notice.

(3) The local authority shall, within 30 days after publication of the notice under subregulation (2)—

(a) consider the comments or objections submitted under subregulation (2)(b) and decide whether the comments or objections should be reflected in the proposal; and

(b) notify, in writing, the persons who submitted comments or objections, of its decision.

8. Criteria for evaluation of proposal

(1) A local authority shall approve a proposal to establish a special economic zone if it is satisfied that the proposal—

(a) furthers the country’s industrial development;

(b) contributes to the achievement of the objectives of the Authority set out under section 30(1) of the Act; and

(2) The local authority shall in evaluating a proposal under subregulation (1), consider—

(a) land availability, including—

(i) a sufficient dimension of the proposed special economic zone to support a diverse and competitive business environment, and

(ii) ease of identifying interests in the land of the proposed special economic zone and resolving any potential disputes and claims in respect thereof;

(b) industrial economics and dynamics within proximity of the boundary of the proposed special economic zone, including the presence of business activity and multiple investors engaged in formal, registered economic activity with potential to become business partners or anchor tenants in the special economic zones;

(i) access roads,

(ii) reasonable access to an airport, railway, or border post, and

(iii) reasonable access to adequate labour and consumption markets;

(d) infrastructure within proximity of the boundaries of the proposed special economic zone, including—

(i) water-distribution networks,

(ii) existing or reliably planned access to waste water treatment and sewerage,

(iii) roads outside the proposed special economic zone,

(iv) social infrastructure, including schools, hospitals, hotels and retail businesses,

(v) structures that may be converted for special economic zone use, and

(vi) suitable distance of the proposed special economic zone’s assets from hazardous infrastructure;

(e) socio-environmental factors, including—

(i) compliance with socio-environmental requirements under any relevant written laws,

(ii) suitable climate for the expected activities in the proposed special economic zone,

(iii) adequate security conditions in the area, and

(iv) ability to relocate the population in a socio-economically acceptable manner, if the proposed special economic zone would involve population displacement, as well as relocate agricultural, commercial or other industrial activities in a cost-effective manner;

(f) topographical and construction constraints, including—

(i) level and grading,

(ii) soil and subsidence conditions,

(iii) erosion conditions, and

(iv) soil contamination;

(g) development impact potential of the proposed economic zone, including the likelihood of—

(i) raising the quality of life and expanding opportunities for lower-in come populations,

(ii) positive social and economic spill-over effects outside the proposed special economic zone,

(iii) positive influence on regional or national infrastructure planning,

(iv) coherence with other development projects in the area,

(v) coherence with land-use master plans,

(vi) skills-development and training of the workforce,

(vii) increased economic diversification, and

(viii) national employment generation.

9. Other types of special economic zones

(1) Without prejudice to the provisions of section 30(2) of the Act, an area declared as a special economic zone may be established as a single sector or multiple sector special economic zone, which may be developed into—

(a) agriculture zones;

(b) tourist service recreation zones;

(d) convention and conference facilities; or

(e) such other zones as may be determined by the Authority.

(2) The Authority may classify a special economic zone as one or more of the types of zones specified in section 30(2) of the Act and subregulation (1), if—

(a) there is a strong market demand for the specialisation indicated by the classification;

(b) the specialisation advances the identified development goals of Botswana; and

10. Revocation of declaration

(1) The Minister may, upon the recommendation of the Authority, revoke, in whole or in part, a declaration under section 29(6) of the Act, where the Minister is satisfied that—

(a) the declaration no longer serves the objectives of the Act;

(b) the revocation would not amount to discrimination; and

(c) the revocation will be carried out in accordance with the applicable written laws and ensure the protection of private property.

(2) The Minister shall, before revoking a declaration under subregulation (1)—

(a) inform the licensees and businesses located in the affected special economic zone and any other affected persons, in writing, of the intention to do so stating the reasons for the intended revocation; and

(b) request the licensees, businesses or other affected persons referred to in paragraph (a), in writing, to submit written comments or objections to the Minister, within 30 days of receipt of such request.

(3) The Minister may, after consideration of the comments or objections submitted under subregulation (1)(b), reject or accept the recommendation of the Authority.

(4) Nothing contained in these Regulations shall prevent the Minister from declaring as a special economic zone any area whose declaration as a special economic zone has previously been revoked.

11. Expiration of declaration

Unless otherwise stated in the notice under section 29(6) of the Act, a declaration of a special economic zone shall expire after a period of five years from the date of publication of the notice, if—

(a) the Authority or outside party, as the case may be, has not developed the land in accordance with section 5(2)(c) of the Act; or

(b) a developer licence has not been issued by the Authority in respect of the special economic zone.

PART III
Development of special economic zones infrastructure

12. Participation of public-private partnership and private sector in development of special economic zones infrastructure

(1) For the development of special economic zones infrastructure, the Authority may—

(a) carry out the development on its own initiative;

(b) enter into a public-private partnership arrangement; or

(2) Where the Authority enters into a public-private partnership arrangement or appoints an independent developer, the public-private partnership partner or the independent developer, as the case may be, shall also be responsible for the administration and management of the operations of the special economic zones.

(3) Where a special economic zone is established under regulation 3(2)(b), the outside party may—

(a) develop the special economic zone; or

(b) appoint a developer to carry out the development of the special economic zone infrastructure.

(4) Where the Authority or outside party appoints a developer under subregulation (1)(c) or (3)(b), the Authority or outside party, as the case may be, shall conclude a development agreement with the developer.

13. Development agreement

A development agreement under regulation 12(4) shall include—

(a) the obligations of the developer regarding the development and management of the operation of the special economic zone concerned, with the zone development plan or business concept of the proposed special economic zone model as an integral part of the development agreement;

(b) the authorities conferred on the developer with respect to the special economic zone concerned, including provisions regarding—

(i) the developer’s authority to admit entities into the special economic zone and allocate land to them in accordance with specified eligibility criteria and procedures,

(ii) the developer’s authority to act as a liaison and facilitating agency between the Authority and special economic zone entities, and

(iii) the developer’s responsibility for the maintenance of infrastructure and utility services;

(d) rights, protections and entitlements of the developer with respect to the special economic zone concerned, established or conferred under the Act or any other relevant written law;

(e) rights, protections and entitlements of the investors with respect to the special economic zone concerned, established or conferred under the Act or any other written law;

(f) the procedure for the invocation, by developers, of such rights, protections and the entitlements under paragraph (e);

(g) the procedure for settlement of disputes; and

(h) the rights of the Authority with regard to the special economic zone concerned.

14. Responsibilities of developer

The developer shall—

(a) implement the special economic zone development plans in accordance with the master plans approved by the Authority and the development agreement;

(b) develop the special economic zones—

(i) in a commercial manner,

(ii) in accordance with the Act, and

(iii) consistently with the long-term sustainable economic development goals of the Authority;

(c) adhere to performance requirements of the phased development schedule for the special economic zone as specified in the development agreement, as well as the development obligations required by the Authority, such as regarding the amount of, and the time schedule for, capital and debt financing;

(d) pay all fees or taxes due to the Authority or any competent authority;

(e) maintain company books, records, accounts and financial statements in accordance with the financial reporting standards issued under the Financial Reporting Act (Cap. 46:10);

(f) obtain the prior written approval of the Authority when transferring any occupancy rights with respect to the special economic zone land and other assets;

(g) set fees for any utilities or other basic services provided by the developer in the special economic zone in accordance with commercial considerations as regulated by applicable written laws;

(h) construct other assets including on site infrastructure, transportation connections, residential areas; and

(i) comply with any other obligations under the Act or any other written law and the development agreement.

PART IV
Management of special economic zones

15. Management of special economic zones

(1) The Authority may in managing a special economic zone—

(a) undertake the management on its own; or

(b) appoint a zone management company,

except where the special economic zone is under occupation of another person as contemplated under section 35(2) of the Act, or is developed through a private-public partnership arrangement or by an outside party.

(2) Where the Authority appoints a zone management company under subregulation (1)(b), the Authority shall conclude a zone management agreement with the zone management company.

(3) The Authority shall, in its administration or management of a special economic zone—

(a) implement the strategic plan for the special economic zone within the framework of the special economic zones strategy;

(b) make improvements to the special economic zone and its facilities;

(c) facilitate the provision of infrastructure and other services required for the special economic zone to achieve its strategic and operational goals;

(d) provide adequate demarcation of the special economic zone from any applicable customs territory for the protection of revenue together with suitable provision for the movement of conveyances, vessels and goods entering or leaving the special economic zone;

(e) provide adequate security for all facilities in the special economic zone;

(f) adopt rules and guidelines for businesses within the special economic zone in order to promote their safe and efficient operation;

(g) promote the special economic zone as a foreign and domestic direct investment destination;

(h) facilitate a one-stop service centre that delivers the required services under regulation 38 to businesses operating in the special economic zone; and

(i) undertake any other activity and exercise any other right in accordance with the Act to promote the effective functioning of the special economic zone.

(4) Where a special economic zone is established under regulation 3(2), the outside party may appoint a zone management company to manage the special economic zone.

(5) Where an outside party appoints a zone management company, the outside party shall conclude a zone management agreement with the zone management company.

(6) A zone management company may—

(a) acquire and maintain occupancy rights in accordance with the Act and these Regulations; and

(b) exercise such other rights under the Act, these Regulations and the zone management agreement between zone management company and the Authority or the outside party, as the case may be.

16. Reporting and financial statements of special economic zones

(1) The provisions of sections 24, 25, 26 and 27 of the Act shall, with the necessary modifications apply to a zone management company.

(2) The annual report and financial statements required in terms of subregulation (1) shall—

(a) fairly present the state of affairs of the zone management company and its performance against pre-determined objectives for the financial year concerned; and

(b) include particulars of—

(i) any material losses through criminal conduct and any irregular or wasteful expenditure that occurred during the financial year concerned,

(ii) any criminal proceedings or disciplinary steps taken as a consequence of such losses or irregular or wasteful expenditure,

(iii) any losses recovered or written off, and

(iv) any other matter as may be determined by the Authority.

PART V
Appointment and licensing of developers and zone management companies

17. Evaluation criteria for developers and zone management companies

A person shall not be appointed as a developer or a zone management company, unless the person—

(a) is a corporate body registered under the Companies Act (Cap. 42:01) or is a foreign registered company;

(b) has sufficient financial resources and expertise to develop, operate, administer and manage a special economic zone; and

18. Application for developer or zone management licence

(1) A person shall not carry on the development or management of a special economic zone without a licence issued by the Authority under these Regulations.

(2) A person appointed under regulation 12(1)(c) or (3)(b) or regulation 15(1)(b) or (4), shall apply to the Authority for a developer licence or zone management licence, as the case may be.

(3) An application for a developer licence or a zone management licence, as the case may be, shall be in Form 1 set out in Schedule 2.

19. Requirements for issue of developer or zone management licence

An application under regulation 18(2) shall include—

(a) the name, address and contact details of the applicant;

(b) proof of appointment of the applicant as a developer or zone management company, as the case may be;

(d) information on the applicant’s current size, capacity financial status, access to financial resources, references and operational standards;

(e) information on the applicant’s experience, skills and qualifications of the applicant’s management team; and

(f) information on the proposed number of employees, skills and proposed organisation of the applicant.

20. Review of application for developer or zone management licence

(1) Where the Authority determines that an application under regulation 18(2) is incomplete or deficient, the Authority shall, within seven days of receipt of the application, notify the applicant of such determination and specify the reasons therefor.

(2) The applicant shall, within 14 days of receipt of the notification referred to under subregulation (1), submit a complete or corrected application to the Authority.

(3) Where the Authority fails to notify the applicant within the period specified under subregulation (1), the application shall be deemed to be complete:

Provided that the Authority may, at any time during the evaluation of the application, request an applicant to provide additional information as may be deemed necessary to complete or supplement its application.

(4) The Authority may conduct such investigation into any matter related to an application submitted under regulation 18(2) as it may deem necessary.

21. Issue of developer or zone management licence

(1) The Authority shall, where it is satisfied that the applicant meets the requirements of regulation 19 and upon payment of the fee specified in Schedule 3, issue the applicant with—

(a) a developer licence, in Form 2 set out in Schedule 2; or

(b) a zone management licence, in Form 3 set out in Schedule 2.

(2) The Authority shall, within seven days after the decision to approve an application under this Part, notify the applicant, in writing, that the application has been approved.

(3) Where the application is refused, the Authority shall notify the applicant, in writing, within seven days of the decision, stating the reasons for the refusal.

(4) The Authority may impose such conditions on the issue of a developer or zone management licence as it considers appropriate.

(5) A developer licence or zone management licence shall remain valid until—

(a) the developer’s land lease expires;

(b) the development agreement or zone management agreement, as the case may be, expires; or

22. Rights and responsibilities of developer and zone management company

(1) For purposes of the management of special economic zones, a developer or zone management company, as the case may be, shall be entitled to—

(a) acquire and maintain occupancy rights with respect to special economic zones land and other assets situated on such land in conformity with the Act;

(b) subject to subregulation (2)(c), transfer occupancy rights with respect to the special economic zones land and other assets located on such land to an investor in accordance with the Act and the developer’s or zone management company’s licence, including by entering into sub-lease arrangements with such persons and to receive payment or collect rental fees for such transactions;

(c) subject to approval by the Authority, subcontract private third parties business entities for the design, financing, development and servicing of the special economic zone land, on-site infrastructure and other assets;

(d) the incentives determined by the Authority, subject to compliance with the applicable requirements; and

(e) such other rights under the Act and the developer’s or zone management company’s licence.

(2) A developer or zone management company shall—

(a) manage the operation of their respective special economic zones—

(i) in a commercial manner,

(ii) in conformity with international best practices and relevant written laws, and

(iii) in accordance with the long-term sustainable economic and human development goals of Botswana;

(b) comply with the conditions in their respective agreements;

(d) develop and implement an effective environmental and social management system approved by the Authority in accordance with these Regulations;

(e) ensure equal treatment and avoidance of discrimination in the delivery of services to special economic zones entities;

(f) monitor and supervise activities in the special economic zones for compliance with the Act and these Regulations;

(g) notify the Authority immediately upon becoming aware of any contravention of, or non-compliance with, the Act or these Regulations within their respective areas of operation; and

(h) comply with all of the obligations imposed on developers and zone management companies under the Act and these Regulations.

23. Rules for special economic zones

(1) Subject to subregulation (2) the Authority may delegate to a developer or zone management company the responsibility for making and enforcing special economic zones rules on the following matters—

(a) building structure design, aesthetics, density, height, buffer zones and set backs;

(b) obstruction of public areas;

(d) use of hazardous or flammable materials;

(e) hours of operation;

(f) noise and disturbance;

(g) waste management;

(h) water and energy management;

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