Country's first SEZ fails to attract investors Country's first SEZ fails to attract investors
KATHMANDU:
Bhairahawa Special Economic Zone (SEZ) — country’s first SEZ — received lukewarm response from entrepreneurs in the submission of expression of interest (EoI) to set up industries despite government’s commitment to provide all the facilities as well as tax exemption for a certain period to boost exports.
In the 45 days time that the government had given, which was until today, only 12 EoIs were submitted to the Special Economic Zone Development Committee (SEZDC). The number is about six times lower than the capacity of Bhairahawa SEZ, according to Saroj Kumar Vaidya, acting executive director of SEZDC. Initially, SEZDC had
provided a month’s time for EoI submission but it was extended for another 15 days as only eight EoIs were submitted in the one-month period.
No foreign investor has shown any interest in the SEZ though both domestic and foreign investors were invited to submit EoI to set up export-oriented industries. “We’ve received 12 EoIs from local entrepreneurs and some might be joint ventures,” said Vaidya, adding, “But there is no submission from any foreign investor.”
Apart from the eight EoIs submitted earlier, SEZDC received four more within the extended time from Jagdamba Synthetics, Kiran Shoes Manufacturers, Green IT Solutions and Swastik Industries. Likewise, the eight EoIs submitted earlier were from Siddhartha PET Plast Industry, Kailashkund Construction and Consultant, Panchakanya Group, Lumbini Apparels, Tayal Industries, High Himali Products, Prakash Agro Industries and Agromet Phegrains, according to SEZDC.
“We have 68 plots in Bhairahawa SEZ, but we received only 12 EoIs,” Vaidya said, adding, “Lack of adequate publicity is the major cause for low participation. We’ll first evaluate the EoIs submitted then invite more EoIs in the next phase.”
The 11-member committee of SEZDC led by secretary at Ministry of Industry will evaluate the EoIs. The names of short-listed firms will be published within two months from today, according to Vaidya.
According to SEZDC, the rental charge that they have fixed is lower when compared to other South Asian economies like Bangladesh. It would cost Rs 150 per square metre per month for industries that establish base within Bhairahawa SEZ and the rental charge would increase every year. However, SEZDC shall recommend rebating the rental charge of land at the rate of 50 per cent, 40 per cent and 25 per cent in the first year, second year and third year, respectively, as per the performance of the respective industry.
To set up industries in the SEZ, investors must have a minimum Rs 50 million as fixed capital to indicate their interest to establish and operate export-oriented industry.
SEZDC had invited investors to establish and operate industries related to food and agro, herbal products, leather goods, garments, carpets and woollen products, pashmina and silk, handmade paper, handicraft and ornaments and metal industries. Similarly, other export-oriented industries like sportswear, stones, plastic, hosiery, assembled electronics and electricals, electronic and electrical part production, beverage and Information Technology (IT) had been invited.
But the industrialists have said that the EoIs submitted in the first phase are encouraging while considering the export volume of the country. “The SEZ Bill has envisaged exporting 75 per cent of the total industrial production,” said Pashupati Murarka, senior vice president of the Federation of Nepalese Chambers of Commerce and Industry, adding, “The government should make procedural aspects of duty-free facility in import clear.” Many industrialists have said this provision is a bit ambiguous. They are not clear on whether or not they will have to deposit the tariff amount at the customs.
In addition, in the absence of required legislation (SEZ Act), the Bhairahawa SEZ has failed to win the trust of investors, as per Murarka. SEZ Bill is yet to be forwarded to the Parliament by the Ministry of Industry (MoI) and the SEZ is being operated under the Operating Guidelines. Construction of Bhairahawa SEZ was completed in 2014, at a total cost of Rs 540 million and was inaugurated on November 18 last year. It is spread over an area of 35 hectares and divided into 68 plots, ranging from 1,468 to 3,737 square metres.
Source: THT
