A year on, SEZ fails to get off the groundA year after its formal inauguration, the Bhairahawa Special Economic Zone (SEZ) is sitting idle in the absence of SEZ Act.
A year after its formal inauguration, the Bhairahawa Special Economic Zone (SEZ) is sitting idle in the absence of SEZ Act.
In a bid to expedite the construction and bring the maiden SEZ of the country into operation at the earliest, the government had inaugurated the dedicated zone for industries in November last year.
For all of the government’s efforts, there has been little progress.
As the SEZ Bill awaits its endorsement in Parliament, the government has decided to run the country’s first SEZ under Bhairahawa SEZ Operation Standard and Procedure 2014.
Subsequently, the SEZ Development Committee called for an Expression of Interest (EoI) in January 2015, seeking application from prospective industries willing to set up factories within Bhairahawa SEZ in line with the procedure. However, only 12 companies applied to set up manufacturing units at the country’s first dedicated area for the industrial operation.
“It will be difficult to win investors confidence so long as there isn’t an Act. We are awaiting Parliament to endorse the Act at the earliest,” said Chandika Prasad Bhatta, executive director of SEZ Development Committee.
A dozen companies, which have shown interest to operate in the Bhairahawa SEZ, have been unable to operate due the provision stipulating that all the plots must be occupied before the SEZ becomes functional. Even those companies had submitted their EoI past the first deadline.
Now, the committee has tabled an amendment proposal at the Industry Ministry to facilitate the interested companies to operate in the SEZ. According to Bhatta, the amendment will ease the provision that calls for compulsory occupation of all the plots in the SEZ before its operation.
Once the ministry gives a go-ahead, the committee will make necessary amendments to the provision and forwarded it to the Cabinet for approval.
Bhatta, however, pins little hope the amendment would make a big impact. “Until and unless there is an Act in place, it will not make much difference in operating an industry within the SEZ or outside,” he said, calling for an immediately endorsement of SEZ Act.
Amidst the souring Nepal-India relationship, Bhatta says, making the SEZ functional will help Nepal increase production as well as narrow down the trade deficit with India.
As per the procedure, 17 types of industries that deal in food and agro products, readymade garments, leather goods and herbal products could apply for space at the SEZ. Companies having fixed capital of Rs 50 million are eligible to set up a factory in the zone. The government has also announced reduction in income tax, excise duty, VAR and customs duty, among others, for those operating an industry in the SEZ. However, this too has failed to yield any result.
Spread over an area of 235 hectares, the SEZ in Bhairahawa has been divided into 68 plots each ranging from 1,468 square metres to 4,500 square metres. It boasts three blocks of buildings each of them can accommodate 200 factories. The process to set up country’s maiden SEZ was initiated in 2000 and a detailed project study was conducted in 2005. Subsequently, the government had awarded the contract to several contractors with a plan to operate the SEZ by fiscal year 2008-09.