The government has sharply reduced the rental rate for factories inside special economic zones (sez) in a bid to attract industrialists to set up production lines inside the Bhairahawa Sez.

Industry Secretary Surya Prasad Silwal informed the parliamentary Industry Committee on Tuesday that the Cabinet had decided to slash the monthly rent from Rs150 per square metre to Rs20.

“We will soon invite tenders from companies by publishing the new rental rate. We aim to attract as many factories as we can,” said Silwal.

The rental rate has been cut at the request of the Sez Development Committee to bring it down to Rs20 per square metre. High rental charges have been blamed for the reluctance of companies to install production plants in the Bhairahawa Sez. 

The Sez Development Committee has called for expressions of interest twice in the last one and a half years, but there were only 12 applicants, according to the Ministry of Industry. The Bhairahawa Sez, which was officially opened on November 18, 2014, can accommodate 200 factories.

Vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Dinesh Shrestha said that high rental charges were the main reason why industrialists didn’t want to relocate their factories to the Bhairahawa Sez.

“Entrepreneurs can buy land outside the sez for that kind of money,” he said. 

Spread over 235 hectares, the Bhairahawa Sez has been divided into 68 plots, each ranging from 1,468 square metres to 4,500 square metres. A factory would have to pay around Rs3.6 million in rent annually under the old tariff.

Besides the high rental rate, another thing holding back industrialists is the Sez Bill which has been languishing in Parliament. In the absence of a Sez Act, the Bhairahawa Sez is being operated under Bhairahawa Sez Operation Standard and Procedure 2014. 

The Cabinet amended the procedure to reduce the rent. The government has identified 17 types of firms as being eligible to operate in the Sez.