Nepal | January 23, 2021

Bhairahawa SEZ not in full operation even after 20 years of launch

Rastriya Samachar Samiti
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KATHMANDU: The Special Economic Zone (SEZ) of Bhairahawa is yet to come into full operation even after 20 years of its launch.

The SEZ was established in a bid to promote trade, create jobs, and replace imports. Businesspersons complained that the SEZ has not come in full operation for lack of infrastructures and hostile provisions in the SEZ Act.

SEZ authority, however, has said it would gradually solve the problems including development of infrastructures.

Initially, industries denied entering the SEZ due to the condition of exporting 80 per cent of products. The SEZ Act was later amended and the export percentage was lowered to 60, which still failed to attract industrialists.

They are now saying that the provision of 60 per cent export is still much and the land lease was quite expensive. During a virtual dialogue held by Society of Economic Journalists Nepal (SEJON) Thursday, the speakers stressed the need to wipe out the faults in policy.

Former vice-chair of the National Planning Commission, Shankar Sharma, expressed worry over the future of SEZ, saying it did not become functional despite the passage of two decades from its launch. He suggested easing the restrictive provisions.

Although the Act came into existence, there was no regulation, which too obstructed implementation. Similarly, former secretary Bimal Wagle viewed that unless infrastructural development including electricity supply was ensured, it would not entice businesspersons.

President of the industry committee at FNCCI, Bharat Raj Acharya, argued that the concept of SEZ itself has changed. The debates on SEZ so far were limited to mere development of industry with sheer lack of innovation and trade. Time has come to stress innovation and trade, he stressed.

Moreover, vice-president of the industry committee of Conference of Nepalese Industries, Rahul Agrawal, said they could not launch their products in the market having to wait for such a long period of 25 years.

The provision of 60 per cent export and expensive land lease were factors repelling them from the SEZ. President of industry committee at Nepal Chamber of Commerce, Deepak Shrestha, said industries entering the SEZ would also leave if attention was not paid to the integrated customs check pass and facilitation.

Deputy executive director at Nepal Electricity Authority, Harhar Raj Neupane, however, committed that although it would take time to provide 22KV transmission line to the SEZ, NEA would supply some power immediately. NEA was effortful to solve the problems of power supply in 1.1-kilometre (out of 12-km transmission line) that connects Bhairahawa SEZ with Dhakdhai transmission line.

Executive director at SEZ, Balaram Rijal, also said efforts were underway to ensure there are infrastructures, other facilities, and policy changes for smooth functioning of Bhairahawa and other SEZs.

The Finance Ministry was sent a proposal to reconsider export per cent and rate of land lease so that it would address industrialists’ concern. The government has planned to set up SEZ in each province. Including these, the places to have SEZ are Simara, Panchkhal, Biratnagar, Kapilvastu, Jumla, Dhangadhi, Nepalgunj, Nuwakot, Gorkha, Dhanusha, Siraha, Rautahat and Jhapa.

On January 29, 2004, the government had decided to set up SEZs at different places in the country. The SEZ Act was introduced on October 4, 2016.

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