Pvt sector flays hike in rental charges in industrial estates

KATHMANDU, MAY 11 -

Two private sector bodies—the Federation of Nepalese Chamber of Commerce and Industry (FNCCI) and the Confederation of Nepalese Industries (CNI)—have condemned the Industrial District Management Limited’s (IDML) decision to hike the rental charge for land and building inside industrial estates across the country.

They have accused the IDML of violating the agreement reached with the Federation of Industries in Nepal Industrial Estate (FINIE) and of enforcing the rental charge unilaterally. The IDML board recently decided to hike the rental charge by 560-960 percent. After the increment, the rental charge for land inside the Balaju Industrial Estate has increased to Rs 1,000 per ropani per month from Rs 400 earlier.

The new land charge in Patan and Bhaktapur Industrial Areas stands at Rs 8,300 per ropani per year, while that in Hetauda, Dharan, Nepalgunj, Pokhara and Butwal has reached Rs 6,300 per ropani annually. Industrialists in Surkhet and Rajbiraj Industrial Estates now have to pay Rs 5,000 per ropani every year. As far as the charge for buildings is concerned, the annual rental has increased by 48.5 percent to 250 percent to Rs 5 per sq ft per month from Rs 3.38 previously.

Factories inside the industrial estate have demanded that the IDML decision be scrapped. The FNCCI and CNI accused the IDML of ignoring the bilateral agreement that it signed with the FINIE about three months ago. The bilateral agreement has provisioned that the government body could increase the rental charge by a maximum of 15-20 percent every two years, they said.

IDML General Manager Gautam Man Shrestha, however, termed charges revision “nominal”, as the charges had not been revised for the last five years. “An agreement reached with the private sector some 16 years ago had allowed the IDML board to increase the rental charge by 7.5 percent annually.

Based on the agreement, the revised rate, cumulative for the last five years, is justifiable,” he said, adding that the charges will not be increased for at least next two years. “After two years, we are ready to increase the charge by 15 percent every two years”

Shrestha said they were compelled to increase the charge amid growing financial loss of the IDML. According to him, the government entity has been facing a loss of Rs 2 million per year on an average, which is likely to soar up if they the charges are not hiked.

However, the FNCCI and CNI said multi-fold hike in the charges is “unscientific”. According to the organisations, over 500 production plants that have been operating inside the industrial estates will be affected adversely with the IDML’s decision.

FNCCI Vice-president Pradeep Jung Pandey accused the IDML of not providing adequate infrastructure and security and only focusing on hiking charges. “The IDML should concentrate on reducing overstaffing with it rather than raising the charges to reduce its management cost,” said Pandey.

CNI Vice-president Hari Bhakta Sharma said the government body should focus on facilitating the manufacturing industry amid ongoing slowdown in the sector. “Had the factories inside the estates been provided with credible services, entrepreneurs concerned would have been ready to pay the high rental charge,” he said.

Meanwhile, after the failure of multistage talks, the FINIE has padlocked the offices of IDML general manger and chairman since Thursday. According to IDML, they will hold another round of talks with FINIE representatives on Friday evening.

Source: The Kathmandu Post