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How EZ is it to build and own your own city?
Pergamon
doi:10.1016/S0264-2751(02)00091-4
Cities, Vol. 20, No. 1, p. 1–2, 2003 2002 Elsevier Science Ltd. All rights reserved. Printed in Great Britain 0264-2751/02 $ - see front matter
www.elsevier.com/locate/cities
Editorial
How EZ is it to build and own your own city?
My attention was caught recently by a full page advertisement that contained the prominent tag line “CIDCO—we make cities” (Economist, 2002). The summary information was even more intriguing: “close to Mumbai, India’s vibrant commercial capital, a new city will emerge. The Special Economic Zone—Navi Mumbai (New Bombay) will be a city with just commerce on its mind. It’s a city that can be yours—to build, to plan, to market, to own”. While the concept of cities devoted exclusively to making hard cash is not exactly new (Commerce City and City of Industry in the US spring to mind), the notion of creating such a city through the marketplace seems to go one long step further, as does the suggestion that once a corporation has built it, it can keep it. Appropriately, the advertisement was in the trade magazine of the economics profession—not a group noted for its modesty—but even so, the ambition attached to the project is enough to make one sit up and take notice; as the introduction reads, “even at a time of unusual products, the offer of a city is admittedly rather out of the ordinary.” Perhaps this is the perfect opportunity for the overpaid CEO who already has everything that money can buy. CIDCO is the City & Industrial Development Corporation of Maharashtra, which will maintain only a minority stake in the new special economic zone (SEZ). The latter will occupy over 4,000 hectares and is expected to provide employment eventually for over 150,000 people. The current advertisement requests expressions of interest from corporations that have participated in the construction of at least one infrastructure project worth in excess of $20 million and that have a tangible net worth of at least $50 million [for more information on the project, see also www.navimumbaisez.com]. The way that the SEZ is pitched is informative and is quoted here at length. “The SEZ-Navi Mumbai. A city with the advantages Mumbai never had. [It] will occupy a distinctly favoured position. It will function as a duty-free enclave. A ‘delineated territory’ with hassle-free administration, enjoying a host of special
concessions from the Government of India. The SEZ will be a city inspired by Shenzen and Jebel Ali. It will be exempt from all taxes, levies, charges and customs and excise duties on the import of capital goods, raw materials and spares. It will enjoy a corporate tax holiday until 2010…Offshore banking units operate freely here. While the SEZ will be insulated from the domestic tariff area, it will have unrestricted access to it.” The advertisement concludes “full autonomy will be granted for development. The allocation and pricing of land, facilities and services will be left to the [joint venture]. It’s your city, it’s your decision!” There’s clearly much to digest here for those of us in traditional cities where business and political practice has evolved over decades or longer (e.g. O’Hare, 1998). Interestingly, CIDCO’s own website helpfully provides a number of press clippings, which, with the typical thoroughness of the Indian media, provide the reader with a fairly balanced overview of the project’s strengths and weaknesses. The potential is relatively clear. Based on the Shenzen model, the EZ concept can be enormously profitable, as it allows FDI to occur without the restrictions of corporations having to deal with multiple ministries and endless layers of bureaucracy. As CIDCO points out, Shenzen was responsible for $45 billion trade in 1998, which exceeded all of India’s exports in that year. The down side is also fairly plain. Latecomers, such as India, are now competing with China and Dubai, and must offer larger incentives. This will include restrictive labour legislation, wherein all employees will be held to the standards that bind utility workers not to take industrial action. Moreover, state governments will be responsible for larger infrastructural provision than has been offered in the past. So, should an evolving economy be keen to allow its cities to be offshore holdings of foreign corporations? There is no a priori reason why the urban endeavour has to be thought of as a public/private compromise rather than a strictly commercial effort. And this will remain a joint development, despite the gushing claims that “It’s your city, it’s your decision!” 1
Editorial
Yet there are signals here that make this reader skeptical. The proud claim that the entire site will be surrounded by a high fence seems destined to bring back memories of earlier, colonial, enterprises—in this instance, with echoes of the East India Company, although at least there is no talk of corporate armies and navies in this century. The equally enthusiastic choice of Arthur Andersen to lead up the investment process points now (albeit with perfect hindsight), to precisely the wrong kind of model for a country like India, which has had some success with the creation of a domestic software industry via government incentives and especially the provision of a sophisticated educational system. Andersen is now associated with a different kind of capitalism, marked as rapacious at the least, criminal at worst. As the Navi Mumbai advertisement concludes, “it is only appropriate that a tale of two cities should be accompanied by great expectations”. The question is,
2
of course, whose expectations are to be met? Those who work in the SEZ, whose labour will be governed by restrictive contracts; the state and local governments, who will expect returns on their expenditure on infrastructure to offset their opportunity costs; or the offshore investors who are looking for ways to make up for their domestic losses during a prolonged recession and an economy impacted by preparation for war? Ideally, everyone’s expectations can be met, but we also remember the first line of Dickens’ story; another bonanza of Enron-style offshore development might be an opportunity for investors, a disappointment for residents and workers—the best of times, and yet the worst of times.
References Economist, (2002) ‘A tale of two cities’ Economist 8291, p 21. O’Hare, G, Abbott, D and Barke, M (1998) A review of slum housing policies in Mumbai. Cities 15(4), 269–284.
doi:10.1016/S0264-2751(02)00091-4
Cities, Vol. 20, No. 1, p. 1–2, 2003 2002 Elsevier Science Ltd. All rights reserved. Printed in Great Britain 0264-2751/02 $ - see front matter
www.elsevier.com/locate/cities
Editorial
How EZ is it to build and own your own city?
My attention was caught recently by a full page advertisement that contained the prominent tag line “CIDCO—we make cities” (Economist, 2002). The summary information was even more intriguing: “close to Mumbai, India’s vibrant commercial capital, a new city will emerge. The Special Economic Zone—Navi Mumbai (New Bombay) will be a city with just commerce on its mind. It’s a city that can be yours—to build, to plan, to market, to own”. While the concept of cities devoted exclusively to making hard cash is not exactly new (Commerce City and City of Industry in the US spring to mind), the notion of creating such a city through the marketplace seems to go one long step further, as does the suggestion that once a corporation has built it, it can keep it. Appropriately, the advertisement was in the trade magazine of the economics profession—not a group noted for its modesty—but even so, the ambition attached to the project is enough to make one sit up and take notice; as the introduction reads, “even at a time of unusual products, the offer of a city is admittedly rather out of the ordinary.” Perhaps this is the perfect opportunity for the overpaid CEO who already has everything that money can buy. CIDCO is the City & Industrial Development Corporation of Maharashtra, which will maintain only a minority stake in the new special economic zone (SEZ). The latter will occupy over 4,000 hectares and is expected to provide employment eventually for over 150,000 people. The current advertisement requests expressions of interest from corporations that have participated in the construction of at least one infrastructure project worth in excess of $20 million and that have a tangible net worth of at least $50 million [for more information on the project, see also www.navimumbaisez.com]. The way that the SEZ is pitched is informative and is quoted here at length. “The SEZ-Navi Mumbai. A city with the advantages Mumbai never had. [It] will occupy a distinctly favoured position. It will function as a duty-free enclave. A ‘delineated territory’ with hassle-free administration, enjoying a host of special
concessions from the Government of India. The SEZ will be a city inspired by Shenzen and Jebel Ali. It will be exempt from all taxes, levies, charges and customs and excise duties on the import of capital goods, raw materials and spares. It will enjoy a corporate tax holiday until 2010…Offshore banking units operate freely here. While the SEZ will be insulated from the domestic tariff area, it will have unrestricted access to it.” The advertisement concludes “full autonomy will be granted for development. The allocation and pricing of land, facilities and services will be left to the [joint venture]. It’s your city, it’s your decision!” There’s clearly much to digest here for those of us in traditional cities where business and political practice has evolved over decades or longer (e.g. O’Hare, 1998). Interestingly, CIDCO’s own website helpfully provides a number of press clippings, which, with the typical thoroughness of the Indian media, provide the reader with a fairly balanced overview of the project’s strengths and weaknesses. The potential is relatively clear. Based on the Shenzen model, the EZ concept can be enormously profitable, as it allows FDI to occur without the restrictions of corporations having to deal with multiple ministries and endless layers of bureaucracy. As CIDCO points out, Shenzen was responsible for $45 billion trade in 1998, which exceeded all of India’s exports in that year. The down side is also fairly plain. Latecomers, such as India, are now competing with China and Dubai, and must offer larger incentives. This will include restrictive labour legislation, wherein all employees will be held to the standards that bind utility workers not to take industrial action. Moreover, state governments will be responsible for larger infrastructural provision than has been offered in the past. So, should an evolving economy be keen to allow its cities to be offshore holdings of foreign corporations? There is no a priori reason why the urban endeavour has to be thought of as a public/private compromise rather than a strictly commercial effort. And this will remain a joint development, despite the gushing claims that “It’s your city, it’s your decision!” 1
Editorial
Yet there are signals here that make this reader skeptical. The proud claim that the entire site will be surrounded by a high fence seems destined to bring back memories of earlier, colonial, enterprises—in this instance, with echoes of the East India Company, although at least there is no talk of corporate armies and navies in this century. The equally enthusiastic choice of Arthur Andersen to lead up the investment process points now (albeit with perfect hindsight), to precisely the wrong kind of model for a country like India, which has had some success with the creation of a domestic software industry via government incentives and especially the provision of a sophisticated educational system. Andersen is now associated with a different kind of capitalism, marked as rapacious at the least, criminal at worst. As the Navi Mumbai advertisement concludes, “it is only appropriate that a tale of two cities should be accompanied by great expectations”. The question is,
2
of course, whose expectations are to be met? Those who work in the SEZ, whose labour will be governed by restrictive contracts; the state and local governments, who will expect returns on their expenditure on infrastructure to offset their opportunity costs; or the offshore investors who are looking for ways to make up for their domestic losses during a prolonged recession and an economy impacted by preparation for war? Ideally, everyone’s expectations can be met, but we also remember the first line of Dickens’ story; another bonanza of Enron-style offshore development might be an opportunity for investors, a disappointment for residents and workers—the best of times, and yet the worst of times.
References Economist, (2002) ‘A tale of two cities’ Economist 8291, p 21. O’Hare, G, Abbott, D and Barke, M (1998) A review of slum housing policies in Mumbai. Cities 15(4), 269–284.