EPZA Value Proposition for BPO and ITES Sector Investors
Presentation for NASSCOM delegates on 17th Sept 2013,
Venue: Stanley Hotel.
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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
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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
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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
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SHARE OF EPZ INVESTMENT
BY SOURCE COUNTRY
EPZ investors
Joint Venture
24.1%
Kenyan
19.3%
Foreign
56.6%
Foreign investors from: Bahrain, Belgium, China, Germany, Hong Kong,
India, Netherlands, Qatar, Sri Lanka, S. Africa, Taiwan, Tanzania, UK and
USA among other countries
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SHARE OF EPZ ENTERPRISES
BY LICENCE
EPZ Enterprises by licensed activity
Service
16%
Commercial
14%
Manufacturing
71.6%
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SHARE OF ENTERPRISES BY SECTOR
EPZ Enterprises by sector
Textile
24%
Agro-processing
19%
Services
16%
Textile accessories
10%
Electricals/electronics
6%
Wines & spirits
2%
Relief supplies
2%
Pharmaceuticals
4%
Printing
1%
Metals/minerals
5%
Crafts & Curios
1%
Cigarettes
1%
Chemicals
3%
Candles
1%
Plastic
5%
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EPZ BUSINESS INVESTMENT
TARGET SECTORS
EPZ target sectors (1):
Electrical/Electronic :
Lighting, switchgear,
Consumer electronics,
transformers
Apparel & textile: fabric,
garments, accessories,
Cat. 9, sub-contracting
EPZ
ICT based services: call
centres, BPO/back office
operations
Humanitarian Relief
Supplies and Services
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EPZ BUSINESS INVESTMENT
TARGET SECTORS
EPZ target sectors (2):
Agro-processing: food,
fruits, fibres e.g. sisal,
flowers, fresh produce
Regional Corporate HQ
and corporate services
EPZ
Pharmaceutical and Medical
Supplies
Leather products: luggage,
footwear, apparel, wallets,
gloves
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WHY INVEST IN Kenya’s EPZS?
Value Proposition
Benefits of operating in Kenya’s 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
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WHY INVEST IN Kenya’s 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
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WHY INVEST IN Kenya’s 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
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WHY INVEST IN Kenya’s 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
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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 $100,000 stand premium for 50 years
 Set up own EPZ on own/leased land - EPZA
physical requirements must be met
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EPZ Export-Oriented Opportunities for
NASSCOM Investors
Services
• Software Applications Development
• Customer support services including Call Centers and
mobile phone data based customer care
• Back office operations including data entry, accounting
services, document editing,
• Data mining, web design and web based research
• Shared Service Centers for global ICT companies
• Professional Consultancy including in ICT related fields
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EPZ Export Oriented
Opportunities for NASSCOM Investors
Services
– Data Centers
-Animation and computer graphics
– ICT related training
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Opportunities for NASSCOM Investors
Real Estate Development (incentives apply)
– Development of ICT compatible real estate
• ICT Towers
• ICT Office Park Campuses
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HOW TO INVEST IN EPZ
SERVICE ENTERPRISE
 Investor makes enquiry on area(s) of interest
 Investor submits a short project proposal
 On acceptance, investor completes application form
and submits with application fee of US$ 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$1,000) and gets license
 Commences operations
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HOW TO INVEST IN EPZ
SERVICE ENTERPRISE
 Major criteria for EPZ service enterprises
 Export orientation (over 80% sales outside EAC
partner states)
 Local sales subject to Ministerial approval and taxes
 New investment ( not conversion of going
concern)s in Kenya)
 EPZ location as primary place of business (not shell
companies)
 100% foreign shareholding allowed
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HOW TO INVEST IN EPZs -Developers
 Major requirements for New Zones including ICT
towers and ICT parks
 Individual land parcels on LR no. (not sectional
title)
 Land tenure > 30 years; Unencumbered title
 Access roads, power and water supply suited to
service-related activities
 Limited tenancy by non-EPZs under Business
Service Permits(BSP)
 EPZA facilitates designation of land as EPZ by Minister
for Industrialization & Enterprise Development
 Investor pays license fee (US$ 5,000) and gets annual
licence fee and begins operations!
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We invite you to explore the
attractive opportunities available
under our EPZ Program.
You can count on us for support!
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HOW TO CONTACT EPZ AUTHORITY
Chief Executive
Export Processing Zones Authority
Athi River EPZ, Off Namanga Road
P.O. Box 50563 - 00200 Nairobi, Kenya
Tel: +254-45-6626421/2/3/4/5/6, Fax: +254-45-6626427
Email: info@epzakenya.com, Website: www.epzakenya.com
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