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EPZA Value Proposition for BPO and ITES Sector Investors Presentation for NASSCOM delegates on 17 th Sept 2013, Venue: Stanley Hotel. 1.

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Presentation on theme: "EPZA Value Proposition for BPO and ITES Sector Investors Presentation for NASSCOM delegates on 17 th Sept 2013, Venue: Stanley Hotel. 1."— Presentation transcript:

1 EPZA Value Proposition for BPO and ITES Sector Investors Presentation for NASSCOM delegates on 17 th Sept 2013, Venue: Stanley Hotel. 1

2 PRESENTATION OUTLINE – Introduction to EPZs – Eligible EPZ activities – Status of Program – EPZ Value Proposition – EPZ service business opportunities – How to invest in service EPZs – How to invest in new ICT zones – EPZA contact 2

3 INTRODUCTION TO EPZS Background: EPZs established under EPZ Act, CAP 517 Program managed by EPZ Authority, a government agency under the Ministry of Trade Scheme intended to: provide for the promotion and facilitation of export oriented investment address infrastructural and institutional constraints to efficient export-led production 3

4 ELIGIBLE EPZ ACTIVITIES Activities licensed under EPZ: Enterprise licences: manufacturing or processing commercial activities – trading, breaking bulk, relabeling, repackaging, regional distribution centres (no 10-year tax holidays, no domestic sales (EAC) service – export related e.g. information, repair, brokerage, consultancy services excl. financial services (includes BPO/ITES Developer/Operator licence: for development of zone infrastructure EPZ Business Service permit: for non-EPZ activities within the EPZs providing support services e.g. banks, catering, freight, consultancy e.t.c 4

5 SHARE OF EPZ INVESTMENT BY SOURCE COUNTRY Foreign investors from: Bahrain, Belgium, China, Germany, Hong Kong, India, Netherlands, Qatar, Sri Lanka, S. Africa, Taiwan, Tanzania, UK and USA among other countries 5

6 SHARE OF EPZ ENTERPRISES BY LICENCE 6

7 SHARE OF ENTERPRISES BY SECTOR 7

8 EPZ BUSINESS INVESTMENT TARGET SECTORS EPZ BUSINESS INVESTMENT TARGET SECTORS EPZ target sectors (1): Humanitarian Relief Supplies and Services Electrical/Electronic : Lighting, switchgear, Consumer electronics, transformers ICT based services: call centres, BPO/back office operations Apparel & textile: fabric, garments, accessories, Cat. 9, sub-contracting EPZ 8

9 EPZ BUSINESS INVESTMENT TARGET SECTORS EPZ BUSINESS INVESTMENT TARGET SECTORS EPZ target sectors (2): Leather products: luggage, footwear, apparel, wallets, gloves Agro-processing: food, fruits, fibres e.g. sisal, flowers, fresh produce Pharmaceutical and Medical Supplies Regional Corporate HQ and corporate services EPZ 9

10 WHY INVEST IN Kenyas EPZS? Value Proposition Benefits of operating in Kenyas EPZs a) Improved competitiveness as a result of lower operating costs b) Increased shareholder value due to increased profitability c) Increased efficiency due to hassle-free operation d) Increased employee satisfaction and productivity due to convenient EPZ locations 10

11 WHY INVEST IN Kenyas EPZS? Value Proposition : Benefits to You (a) Improved competitiveness as a result of lower operating costs Labor costs guided by minimum government wage rates and statutory deductions (starting at US$ 59/mo plus 15% housing in outlying towns to US$ 112 plus 15% in major cities). Application fees (non-refundable US $250) License fees (US $1000 for Enterprise licenses, $5000 for Developer/Operator licenses) Rentals – land (USS 5,000 /ha/yr) & buildings (ranging from US $2-$3.50/ sqft/yr) Utilities – exclude VAT 11

12 WHY INVEST IN Kenyas EPZS? Value Proposition : Benefits to You b) Increased shareholder value due to increased profitability, resulting from tax exemptions 10-year Corporate Tax holiday and 25% tax rate on profits thereafter (except for commercial activities) 10-year Withholding Tax holiday Duty and VAT exemption on inputs Stamp Duty exemption 12

13 WHY INVEST IN Kenyas EPZS? Value Proposition : Benefits to You c) Increased efficiency due to hassle-free operation as a result of reduced bureaucracy & faster project start up: Operation under essentially one license issued by EPZ Authority No minimum level of investment Rapid project approval (under 30 days approval on application) One-stop-shop service by EPZA for set-up, facilitation and aftercare (work permits, labour- relations, port, utilities etc.) On-site customs documentation and inspection 13

14 VALUE PROPOSITION – Benefits to You d) Increased employee satisfaction and productivity due to convenient EPZ locations, with requisite infrastructure, close to housing and social amenities with 24 hour security, Lease ready factory shells and start immediate operations - rentals range from $2-3.5/sq. ft/year depending on location Lease serviced land for construction of customized buildings - Athi River EPZ offers 1ha plots for $5,000 land rent annually + service charge or $100,000 stand premium for 50 years Set up own EPZ on own/leased land - EPZA physical requirements must be met 14

15 EPZ Export-Oriented Opportunities for NASSCOM Investors Services Software Applications Development Customer support services including Call Centers and mobile phone data based customer care Back office operations including data entry, accounting services, document editing, Data mining, web design and web based research Shared Service Centers for global ICT companies Professional Consultancy including in ICT related fields 15

16 EPZ Export Oriented Opportunities for NASSCOM Investors Services – Data Centers -Animation and computer graphics – ICT related training 16

17 Opportunities for NASSCOM Investors Real Estate Development (incentives apply ) – Development of ICT compatible real estate ICT Towers ICT Office Park Campuses 17

18 HOW TO INVEST IN EPZ SERVICE ENTERPRISE Investor makes enquiry on area(s) of interest Investor submits a short project proposal On acceptance, investor completes application form and submits with application fee of US$ 250 EPZA evaluates project and provides investor with letter of approval in principle within 30 days Investor incorporates EPZ company, locates a zone, obtains environmental approval if required Pays annual license fee (US$1,000) and gets license Commences operations 18

19 HOW TO INVEST IN EPZ SERVICE ENTERPRISE Major criteria for EPZ service enterprises Export orientation (over 80% sales outside EAC partner states) Local sales subject to Ministerial approval and taxes New investment ( not conversion of going concern)s in Kenya) EPZ location as primary place of business (not shell companies) 100% foreign shareholding allowed 19

20 HOW TO INVEST IN EPZs -Developers Major requirements for New Zones including ICT towers and ICT parks Individual land parcels on LR no. (not sectional title) Land tenure > 30 years; Unencumbered title Access roads, power and water supply suited to service-related activities Limited tenancy by non-EPZs under Business Service Permits(BSP) EPZA facilitates designation of land as EPZ by Minister for Industrialization & Enterprise Development Investor pays license fee (US$ 5,000) and gets annual licence fee and begins operations! 20

21 We invite you to explore the attractive opportunities available under our EPZ Program. You can count on us for support! 21

22 HOW TO CONTACT EPZAUTHORITY HOW TO CONTACT EPZ AUTHORITY Chief Executive Export Processing Zones Authority Athi River EPZ, Off Namanga Road P.O. Box Nairobi, Kenya Tel: /2/3/4/5/6, Fax: Website: 22


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