Separate rents for industrial, trading units being mulled

KATHMANDU, MAY 13 -

Industrial District Management Limited (IDML) is mulling imposing separate rental rates for industrial and trading units in industrial zones.

Although industrial estates were established five decades ago to provide facilities to factories in an integrated way, IDML has allowed trading units to be set up in the zones too. It is now considering hiking the rent almost two-fold for them.

“We have finalised a working guideline which has fixed the annual rent at Rs 28,000 per ropani for industrial units and Rs 48,000 per ropani for trading units,” said IDML general manager Gautam Man Shrestha.

Currently, business men involved in both industrial and trading activities have been paying the same rent to IDML. Attracted by the rock-bottom rent at the industrial estates, trading and services business es have been flocking here in droves.

There are around 700 production and selling units at the 10 industrial estates situated in Balaju, Patan, Bhaktapur, Hetauda, Dharan, Nepalgunj, Pokhara, Butwal, Surkhet and Rajbiraj. Among them, 42 are non-production business like automobile showrooms, hospitals, banks and financial companies, cooperatives and petrol pumps, among others.

According to IDML, there are 20 such business es operating in Balaju, nine in Hetauda, eight in Patan, three in Nepalgunj and two in Pokhara. They have been paying the minimum rent. IDML said it would send a draft of the working guideline to the Ministry of Industry soon after getting its board’s approval.

Due to lack of a proper policy at present, IDML has not been able to manage the rental charge properly. Moreover, those who have obtained space at the industrial estates on lease have been sub-leasing them at a higher rent. Meanwhile, IDML said that it had been forced to increase the rent as it has been suffering an annual loss of Rs 120 million. According to Shrestha, IDML’s annual income is Rs 33.3 million while its expenditure amounts to Rs 150 million. The IDML board recently decided to hike the rental charge by 560-960 percent. As per the new tariff, the monthly rent for land inside the Balaju Industrial Estate has increased to Rs 1,000 per ropani from Rs 400.

Two private sector bodies, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Confederation of Nepalese Industries (CNI), have condemned the rise terming it an unilateral move.

The FNCCI and the CNI accused IDML of ignoring the bilateral agreement that it signed with the Federation of Industries in Nepal Industrial Estate (FINIE) about three months ago. The accord has provisioned that the government body can increase the rent by a maximum of 15-20 percent every two years, they said.

Meanwhile, Shrestha said that it has been a tough task revising the rent due to opposition from all sides. Recently, a trade union related to IDML’s employees and the FINIE padlocked the offices of IDML’s general manager and chairman when it decided to raise the rent.

Source: The Kathmandu Post