Venezuela creates five special economic zones ZEEs with tax and customs incentives

President Nicolas Maduro on Wednesday established special zones with tax and customs incentives to “attract investment” to Venezuela in the face of U.S. sanctions – an initiative the president said mimics “experiences” in China and other Asian countries.

This is a “way to attract productive investment,” Maduro said at the signing of the Special Economic Zones bill passed by the ruling parliament in late June.

“We know the experience that China has had for 40 years, the experience of South Korea, the experience of Vietnam and others (…) that inspired us to take this step,” the socialist leader said.

After Venezuela’s oil industry collapsed, Maduro had to relax the strict economic controls that prevailed over two decades of Chavista governments.

The Venezuelan economy rebounded in 2021 after GDP plunged 80 percent during seven consecutive years of recession marked by runaway inflation.

Maduro identified the first five areas that will offer “special conditions” to investors under the new law:

1. the Paraguaná industrial zone (northwest), home to one of the Caribbean country’s main oil refinery complexes;
2. the port of La Guaira;
3. the Puerto Cabello/Morón (center);
4. the tourist island of Margarita;
5. the tourist island of La Tortuga (north).

The legislation provides for the creation of zones with a “special socioeconomic regime” for the “development of economic activities” with public, private, and mixed “investments” and “tax and customs incentives.”

In the late 1970s and early 1980s, as part of its economic reform, China began to focus on “special economic zones” with special investment conditions with fewer restrictions than the rest of the country.

Maduro is seeking alternatives to attract capital in light of U.S. financial sanctions imposed on Venezuela, which include a ban on trade in Venezuelan oil for U.S. companies and citizens that started in 2019.

Washington rejected the Venezuelan president’s 2018 re-election, calling it a fraud.

“They dropped the missiles on us, the nuclear bombs of the sanctions (…) and they thought we would surrender,” said Maduro, who has one of his biggest allies in China.