Free Zones as Booster of Growth of Ports

Abstract

Free zones are defined as: “a field where the goods are not subject to the usual control from the customs service and its introduction and extraction are just only taxed with service tax which can be created and there is no economic prohibition on it”. In Argentina, Law N° 24.331 says that the free zones can be of storage, commercial, services or industrial. The tax benefits that this legal regime provides are that the goods in this area are not subject to export or import taxes, created or to be created. Despite the fact that the free zones are a key tool in developing economically deprived areas in a country or a region, those can not do it by themselves. Free zones must be integrated to the logistic and industrial system of the region, making, in this way, the necessary synergy in order to succeed. Port of Barranqueras which is located on the right bank of the Paraguay - Paraná Waterway in the province of Chaco, Argentina, at around 1,000 km North of Buenos Aires city. Historically, this is a marginal area of Argentina in terms of investment and development, with large infrastructure deficiencies. However, the Port of Barranqueras has unique advantages like its location on the geographic center of MERCOSUR with good road (RN11 & RN14) and railway (Belgrano Cargas) connections; unique possibilities for sustainable growth as it is not constrained by large urban areas and for being a multimodal port with facilities for container and general cargo handling as well as grain storage. Those characteristics make it ideal to set up a free zone. The objective of this paper is to analyze how a free zone integrated to the Port of Barranqueras will enhance it until converting it into an industrial and logistic center, making more competitive all the export industries in the zone. This analysis includes a map that will help others in similar conditions.