Nepal | April 20, 2019

Amendment bill on SEZ Act gets House nod

75 per cent mandatory export provision for industries within SEZ reduced to 60 per cent

Himalayan News Service

Kathmandu, March 10

The Parliament today gave its nod to the first amendment bill of the Special Economic Zone (SEZ) Act introducing a new provision under which industries located in SEZs will have to mandatorily export only 60 per cent of their produce.

Earlier, the SEZ Act had a mandatory provision for industries inside SEZs to export 75 per cent of their production.

The amendment bill on the SEZ Act, which will come into effect following authentication from the president, has not only relaxed the compulsory export provision for industries within SEZ to 60 per cent of their produce, but has also allowed firms within SEZ to sell 100 per cent of their produce in the domestic market for the first one year after their production starts.

This means that industries inside SEZ can supply all their produce in the Nepali market for the first year after they start production, however they will have to export 60 per cent of their production mandatorily from the second year.

The government had reduced the mandatory export provision for industries within SEZs and also turned flexible regarding other export provisions after investors within the SEZs expressed their inability to export a majority of their goods immediately after starting their production.

Chandika Bhatta, executive director of SEZ Authority Nepal, said that the government had relaxed the export provision for industries inside SEZs acknowledging that firms might not be able to export goods immediately after starting production as they need to look for international markets and taking various international quality certifications would take time.

Similarly, Bhatta said that relaxing the mandatory export provision to 60 per cent of the production will ensure sustainability of firms inside SEZs as 40 per cent of their production will be allowed to be sold in the domestic market.

Along with reducing the mandatory export provision, Bhatta said that the new amendment bill of the SEZ Act has also addressed various other contradictions and tried making all provisions friendly to industries and investors.

Meanwhile, Bhatta hinted that the government will also reduce rental charge for industries set up in SEZ. As per the existing provision, industries inside Bhairahawa SEZ are required to pay Rs 20 per square metre rental charge to the government every month.

 


A version of this article appears in print on March 11, 2019 of The Himalayan Times.


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