Sez to scrap full occupancy proviso

- SANJEEV GIRI, Kathmandu
Sez to scrap full occupancy proviso

Jul 6, 2015-

The Special Economic Zone (Sez) Development Committee has planned to amend the working procedure of the Bhairahawa Sez in a bid to get it up and running even with a few factories as the private sector has shown little interest in moving here.

The amendment will strike out the provision that all the 68 plots in the Sez must be occupied before it can go into operation. The change will allow the Sez to open even with a small number of factories.  

Only 12 companies have applied to set up manufacturing units at the country’s first such dedicated area for industrial operation, and since the working procedure says that all the plots must be taken, the Sez has remained in limbo since its inauguration, said government officials.

“The working procedure is being amended to allow the 12 factories to be set up in the Sez so that it can be operated at the earliest,” said Sundar Thapa, under secretary at the Sez Development Committee.

Even these dozen applications were received only after the deadline was extended to submit expressions of interest (EoI). There were no takers for the first call for applications which was issued on January 9 with a deadline of February 9.  

Industrial establishments like the Panchakanya Group, High Himal Products, Prakash Agro Industries, Siddhartha PET Plastic Industry, Tayal Industries, Kailash Kund Construction and Consultant and Lumbini Apparels are among those which have shown interest in operate factories in the Bhairahawa Sez.

“We will be changing the working procedure to allow the 12 companies showing interest to operate in the Sez,” Thapa said. According to him, a draft of the amended regulation was sent to the Ministry of Industry (MoI) on Monday. Once the ministry gives its agreement in principle, the committee will amend the working procedure. It will then be sent to the Cabinet for the final endorsement.

The Bhairahawa Sez, the first in the country, was inaugurated amid huge fanfare in November last year. Deputy Prime Minister and Home Minister Bam Dev Gautam and Industry Minister Mahesh Basnet had inaugurated the industrial space. However, the Bhairahawa Sez failed to gain momentum due to the private sector’s cool response in the absence of a Sez Act.

The Bhairahawa Sez is currently being operated under Bhairahawa Sez Operation Standard and Procedure 2014. The Cabinet has passed the Sez Act and it is close to being presented to Parliament for its formal endorsement. “We have tried boosting the confidence of investors. However, the private sector has not been properly motivated due to the absence of an act,” Thapa said.

Apart from the act, the other reason industrialists are not so enthusiastic about the Sez is the high rental, according to the committee. Factory owners have to pay Rs150 per square metre in the Sez. Spread over an area of 235 hectares, the Bhairahawa Sez contains three blocks of buildings. The overall area has been divided into 68 plots each ranging from 1,468 square metres to 4,500 square metres. The Sez can accommodate 200 factories.

“One of the prospective investors calculated that he would have to pay Rs3.6 million in rent annually. He backtracked saying that buying land would make more sense,” Thapa said. The notice inviting EoIs states that 17 kinds of manufacturing industries like food and agro products, readymade garments, leather goods and herbal products could apply for space at the Sez. Only companies with a fixed capital of Rs50 million are eligible to apply to set up factories in the zone.

The government has failed to lure industrialists to the Sez despite its offer of reduced income tax, excise duty, VAT and customs duty.

Published: 07-07-2015 08:21

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