SEZ delayed in lack of legal provisions

KATHMANDU, MAR 22 -

The government’s plan bring into use the special economic zone (SEZ) in Bhairahawa has been delayed due to the lack of legal provisions.

After the government failed to introduce the proposed SEZ Act on time, the Ministry of Industries (MoI) has started formulating working guidelines to bring the SEZ into operation. MoI Spokesperson Yam Kumari Khatiwada said the ministry plans to operate the SEZ soon after approving the working procedures.

A bill on the SEZ Act has been awaiting the Parliament’s approval for the last five years. Following the failure to approve the bill from the legislature, it was given a separate provision in the Industrial Enterprise Act, the draft of which is awaiting the Cabinet’s nod.

According to the SEZ Development Committee, they were facing problems in calling for the expression of interest even after the completion of the construction of the SEZ due to the absence of legal provisions. The committee had planned to launch the first SEZ of the country in February-end.

Shankar Man Singh, executive director of the committee, said they have finalised the operation manual and will be presenting the draft to the board soon.

“After board and the Cabinet approve the working procedures, we will initiate the process of issuing permits to interested companies to set up industries inside the SEZ,” he said.  

The government has spent around Rs 520 million for the construction of infrastructure and acquisition of land for the SEZ. The administrative blocks cost around Rs 60 million and the service centres around Rs 50 million.

The SEZ is spread over 35 hectares and has been divided into 68 plots of 2,200 sq m each. It is expected to house over 200 factories. The construction was started almost six years ago.

Last year, the government decided to run the SEZ through the SEZ Development Committee after its attempt to introduce a separate Act through an ordinance failed.

The proposed Act has provisioned offering special treatment to factories inside SEZs, including a 100 percent exemption from income tax for five years and a 50 percent exemption for another five years. Production units working inside SEZs will have to export at least 75 percent of their production. The act has provisioned refund of a specified amount of customs duty, excise duty and value added tax to the exporters.

The government has planned to operate SEZs in Simra, Pachkhal, Kapilvastu, Jumla, Dhangadhi Rautahat, Gorkha, Siraha and Dhanusha. Singh said the committee has also started construction of SEZs in Simra and Pachkhal. “We have completed almost 25 percent of the construction in Simra, while the land acquisition for the Pachkhal-based SEZ recently completed.”

Meanwhile, the Federation of Nepal Cottage and Small Industries (FNCSI) has urged the government to introduce necessary legal provisions to bring the already-constructed SEZ in Bhairahawa into operation as soon as possible. They have asked the government to give priority to cottage and small industries, including those being operated by women, in the SEZ.

Source: The Kathmandu Post