A collective voice: World FZO
World Free Zones Organisation is offering members a platform to share their voice as well as providing assistance and support to thrive in a challenging environment
Globalisation continues to the boost the logistics sector as increased production of goods means the increased movement of commodities. The formation of free zones in 1959 at Shannon, Ireland, was created to improve international trade and ease business operations.
Over the past few decades, free zones have gained prominence in the world of business, especially in developing countries such as Asia, the Middle East and Africa, there are an estimated 3,000 such zones across the world, supporting more than 70 million jobs, according to the World Free Zones Organisation.
As the establishment of free zones across the world increased, a governing body was set up in 2014 – the World Free Zones Organisation (World FZO). “We represent the interests of this large and diverse group and operate as a not-for-profit global entity, which offers a platform for these free zones as a collective voice,” says Dr Samir Hamrouni, the Chief Executive Officer of World Free Zones Organisation.
Integration of services
The free zones integrate services such as logistics and transportation networks within a modern infrastructure and offer job opportunities to boost the economy of the host countries. Dr Hamrouni adds: “For them to have a significant impact in the industry, World FZO plays an important role in bringing them together. The organisation acknowledges their accomplishments and supports them in moving towards success.”
The logistics industry plays a particularly important role in the future of free trade zones (FTZs) as the sector has a direct impact on a country’s competitiveness. To become a key international player, it needs to have a strong logistics support.
Dr Hamrouni reveals: “Increased production of goods and services and international trade have changed the dynamics of the logistics operations in free zones. This has given rise to node-to-node logistics. These nodes, also called logistics clusters, are locations where shipments are shipped and received from different places through various means of transportation. These clusters involve heavy investments and are beneficial for regional economies in terms of employment opportunities.”
Close to 23% of global trade, valued over USD3.5 trillion, flows through free zones, Dr Hamrouni tells us. “As an integral part of the global value chain, free zones play an important role in ensuring that responsible trade practices – from production to distribution and final consumption – are maintained.
“However, illicit trade continues to be a global problem which affect 3.3% of global trade, where counterfeit and pirated goods continue to enter the trade flow. This involves illegal works such as relabeling, repackaging, or even falsifying paperwork,” he says.
To tackle these challenges and promote the security and safety of free zones, World FZO has designed the Safe Zone Certification programme, in line with the WCO’s SAFE Framework and strictly follow the OECD’s Code of Conduct.
It is a voluntary compliance model which helps protect free zones’ reputation and ensure stakeholders of free zones’ integrity, transparency, and clean governance, as well as commitment to responsible trading.
A helping hand
The pandemic has further given rise to unprecedented challenges for these businesses in free zones across the world. The impact has been such that several trade facets including exchange of resources have been affected drastically.
“Turning the situation around to benefit rather than harm the trade is important. We can do that by understanding the magnitude of the damage and figuring out how it can be steered towards positive change so businesses under free zones can pivot to the new industry normal,” Dr Hamrouni adds.
World FZO has been supporting the global free zones by offering conversations with global experts and specialists and has come up with the New World Model.
He explains what the model does: “The model aims to offer solutions for businesses to cope and thrive in this disrupted economic environment. The New World Model focuses on cash management for businesses, supports disruption of current trends to establish sustainability, digitalisation, risk management through data, information transparency, and inclusivity.”
With businesses today facing challenges which are different from what companies were tackling in the past decade alone, free zones are mindful that there is a need to implement new programmes that would facilitate industrial development. “However, to achieve that, companies need a different strategy, deriving from the experience of past decades,” he says.
He adds: “For rapid growth, it is important for businesses to be agile in their decision making and daily operations to cope with the continuously evolving trade sector of emerging economies. If businesses have a central platform which oversee all processes, it is easier for companies to enter new markets faster with less risk.”
Transparency and communication
Along with agility, transparency and open communication is also vital to the success of businesses in free zones. He states: “The success of the New World Model relies on transparency when it comes to exchange of information. With a more open communication channels, partners will mutually benefit from collaborations and customers will be able to make a more informed decision over companies to choose from.
“It will further provide clarity to governments as to which policies work best and which require reforms. Transparent communication will boost the brand value while creating awareness among employees, increase customer engagement and lead to better coordination between stakeholders and business partners.”
He adds: “Through our Global Certification Standard, free zones will have access to a solid framework for transparent governance that complies with international standards set by the World Trade Organisation (WTO) and the World Customs Organisation (WCO). These tools can work towards improving product safety, personnel training, and trade monitoring for free zones.”
Sustainability and social responsibility
Sustainability is another important aspect that World FZO is pushing forward with its members. Free zones must align their goals to sustainability and social responsibility if they want to maintain business and economic leadership, he says.
The organisation has been developing ways to enhance free zones’ engagement in sustainable development, particularly its role in contributing to the achievement of the 17 Sustainable Development Goals of the United Nations or the SDGs 2030.
He reveals: “To help free zones measure their performance level, we launched the FZF Izdihar Package, which is part of our ‘Free Zones – The Future (FZF) Programme’ initiative.”
The package comprises several tools such as the Izdihar Index, Maturity Curve, and Tailored Training and Consultancy. The Izdihar Index measures the performance of free zones in terms of their use of natural resources, adherence to ethical and labour standards and sustainability, and other qualitative indicators.
“Their performances are rated and revealed through an annual survey and free zones which deliver strong performances are awarded and certified. This inspires them to improve their performance and contribute to achieving global goals,” he notes.
“The Maturity Curve offers a benchmarking tool where areas of improvement of the individual free zones are identified. A specific recommendation or roadmap is then developed for the free zone to help improve its performance. In this regard, the Tailored Training and Advisory provides free zones with customised solutions that will enhance its value proposition and make the free zone future ready.”
Concluding, Dr Hamrouni says: “The World FZO is a representative and collective voice for all the free zones across the globe. The organisation treats the issues and challenges of these free zones as its own and strives to solve them with the best possible outcome.”