Most firms 'do not understand freeports'

22 July 2021

Most businesses do not understand how freeports in England will operate, according to research.

A survey by law firm Womble Bond Dickinson (WBD) of more than 500 UK businesses found 64% did not have a good understanding of how freeports would operate or be governed.

A report concluded businesses must be ready to collaborate to unlock the true potential of freeports.

In March the government announced plans for eight freeports across England that aimed to boost trade, jobs and investment. The special economic zones will have certain exemptions from tax and customs rules.

More than half of respondents (58%) said government plans for freeports were not easy to understand, with 44% saying they did not understand how freeports would impact a region and businesses within them.

A particular concern was regulation and the potential for fraudulent and criminal activity to impact imports and customs. There were also concerns that onerous governance regimes would outweigh the benefits of setting up operations in a freeport.

The report said freeports were setting up shadow boards but these were taking different forms in different locations and there was no defined governance model. It remained to be seen which structure was optimal for the running of a freeport, the report concluded.

The proposed benefits of freeports are that goods brought into it do not attract tariffs until they leave the area and enter the domestic market, while no duty is payable if they are re-exported. When raw materials are imported and processed into a final product, duties are only paid on the final product.

Almost half (46%) of businesses agreed freeports would enhance trade with the UK, while two-thirds (69%) said they would help to attract overseas investment.

The report said there was “guarded optimism” about freeports but they would only fulfil their potential if businesses and a range of organisations across the private and public sector were prepared to collaborate effectively.

Peter Snaith, partner and freeports specialist at WBD, said: “Businesses should not sit back and wait for others to make the first move, collaboration at every level will be needed to drive productivity, innovation and trade and to promote the freeports and the UK in the best possible light to attract inward investment.”

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