What is an export processing zone (EPZ)?

An export processing zone (EPZ) refers to specific areas set aside by governments for the purpose of manufacturing and exporting goods, typically with reduced or eliminated tariffs and customs duties. These zones are highly attractive to foreign investors and businesses because they offer favorable conditions for production. The characteristics of EPZs generally include streamlined customs procedures that facilitate quick manufacturing and re-export of products, enabling companies to operate efficiently and cost-effectively in the international market.

The unique aspect of an EPZ is its focus on creation and export without the usual customs barriers, allowing companies to benefit from tax breaks and other incentives aimed at encouraging exports and attracting foreign investment. Being able to produce goods at lower costs and quickly move them out of the zone enhances global competitiveness for businesses operating within these areas.

In contrast, other choices do not accurately capture the essence of an EPZ. For example, areas strictly limited to agricultural processing, while relevant to some sectors, do not encompass the broader manufacturing focus of EPZs. Additionally, regions designated for research and development do not align with the primary function of EPZs, which is production for export. Similarly, while government-controlled trade areas exist, the key component of EPZs is their emphasis on manufacturing goods specifically for the