Instating a Free Commercial Zone at Penang’s North Butterworth Container Terminal

Executive Summary

• The idea of instating a free commercial zone (FCZ) status at the North Butterworth Container Terminal (NBCT) has been floated by many since the abolishment of the state’s original free-port status in 1967, owing to the belief that such an allowance would have profoundly beneficial economic impacts for the state.
• While it is almost a theoretical economic truth that the lowering of taxes and duties, and the simplification of bureaucratic processes induce increases in economic activity, localised conditions and factors may impinge upon the full realisation of these hypothesised gains.
• This report aims to assess the rationality and efficacy of awarding the NBCT FCZ status, through an analysis of the context of Penang in relation to the factors that determine the success of free zones generally.
• We place a particular emphasis on the localised conditions that would influence the magnitude of any potential economic benefits.

Managing Editor: Ooi Kee Beng, Editorial Team: Alexander Fernandez and Nur Fitriah (designer)