Bhairahawa SEZ finally receives overwhelming response

Kathmandu, June 6

Altogether 23 investors, including reputed industrialists, have submitted requests for proposal (RfPs) to set up industries in the Bhairahawa Special Economic Zone (SEZ).

“We have received RfPs for 48 plots out of the total 69 in the country’s first SEZ,” said Chandika Prasad Bhatta, executive director of SEZ Development Committee.

An overwhelming response from investors has been witnessed after the amendment of Bhairahawa SEZ Operation Standard and Procedure, which has slashed rental charge to set up industry in the zone and simplified some other provisions.

On May 2, SEZ Development Committee had asked domestic and foreign investors to submit their RfPs within a month. The RfP evaluation committee, led by executive director of the SEZ Development Committee, has said that it will conclude the evaluation within the next two weeks and invite applicants to set up their factories.

It seems Nepali investors will occupy 70 per cent of the plots in first lot. Executive Director Bhatta confirmed that no foreign investor has submitted the RfP.

Once the RfP evaluation is completed, the SEZ Development Committee will again seek RfPs for the remaining 21 plots, with a deadline of 15 days. If the plots are not booked fully even after calling for RfP twice, the SEZ Development Committee — as per the new operating procedure — can award the contacts through negotiation with the interested parties.

As of now, prominent local industrialists and business groups have expressed interest to set up industries in the country’s first SEZ. As per Bhatta, Golchha Organisation, Lohiya Group, Jagadamba Group, Mc Group, Kiran Shoes, Vaidya’s Organisation of Industries and Trading Houses (VOITH), Sarawagi Group, Siddhartha Group, among others have submitted RfPs to set up industries. Reportedly, Lohiya Group plans to set up a soap factory, Jagadama will set up a steel plant, Mc will establish a gutkha factory, Kiran Shoes will set up a shoe factory and VOITH will set up a meat processing factory.

Investors have finally been lured to set up industries in Bhairahawa SEZ as a Cabinet meeting, in the last week of April, had slashed monthly rental charges by 86.67 per cent or from Rs 150 per square metre to Rs 20 per square metre by endorsing amendment to Bhairahawa SEZ Operation Standard and Procedure. The SEZ Development Committee, led by industry secretary, had proposed to slash rental charge because despite asking for expression of interest (EoI) from interested parties twice, the response was not very encouraging.

Similarly, through the amendment, the required fixed capital of the industry in SEZ has been brought down to Rs 20 million from Rs 50 million earlier.

The Bhairahawa SEZ was inaugurated on November 18, 2014. Due to lack of SEZ Act, the government had developed operation procedure to operate the SEZ. SEZ Bill was tabled by industry minister in the Parliament just a few months back.

The amended version of SEZ Operation Standard and Procedure has shortened the procedure of EoI and provisioned to directly ask for RfP. The earlier rental charge was the highest across the South Asian region and had also been cited as the major barrier in attracting investors to set up industries in Bhairahawa SEZ. The revised rates are at par with the charges in SEZs of South Asian economies.

The amended version has also incorporated additional industries, except security printing, arms and ammunition, among others listed in the negative list of the proposed Industrial Enterprises Bill. Earlier, only 17 types of industries were prioritised for setting up factories in the Bhairahawa SEZ.

Likewise, the amended version has also scrapped the earlier provision requiring all plots to be leased at once and now the interested industries can set up shop in Bhairahawa SEZ without having to wait for all the plots to be occupied.

SEZ has also provided numerous incentives, including rental charge rebate, duty-free facility to import raw materials, and corporate tax exemption, among others. However, industries set up in SEZ should mandatorily export 75 per cent of their production.

Government has been developing other SEZs in various parts of the country to promote export-oriented industries in a bid to attain higher and sustainable growth by boosting exports.