Kathmandu, September 6

The Bhairahawa Special Economic Zone (SEZ) — the maiden SEZ of the country — has failed to attract investors owing to various ‘infeasible’ legal provisions.

Consequently, only one company, Shakti Minerals, has been able to construct its factory and start production within the Bhairahawa SEZ, though the protected area was inaugurated in 2014.

Shakti Minerals, which has been producing and exporting flux and dolomite, is the sole factory that has come into operation within the Bhairahawa SEZ, though 19 domestic firms had earlier inked an agreement with the government to establish factories within the zone.

Though the SEZ Authority claims that a few other companies have also started constructing their factories, the private sector believes that the government should first make SEZ-related laws feasible for industries to lure investors.

“Though the government has relaxed the mandatory provision for businesses within SEZ to export 75 per cent of their produce right from the time they begin production to 60 per cent, and also allowed firms within the SEZ to sell 100 per cent of their produce in the domestic market for the first one year after their production starts, the government should keep the export provision ‘voluntary’ and ‘flexible’ for at least a few years,” said an industrialist seeking anonymity.

Citing that producers need ample time to promote their products in the international market, the industrialist said that the government should not fix export limits of goods produced within the SEZ. “Once they develop necessary markets in foreign countries, industries will gradually comply with the government’s export provision,” the industrialist said.

Against the backdrop of the entire country not being able to boost exports, a company cannot abruptly start exporting 60 per cent of its produce, as per Satish Kumar More, president of the Confederation of Nepalese Industries. “The government should formulate practical and feasible business policies to encourage investors,” he said.

Meanwhile, Chandika Bhatta, executive director of SEZ Authority, urged industrialists to complete construction of their respective factories within the Bhairahawa SEZ and start production soon.

“We have already reduced the mandatory provision for export to industries inside the SEZ and the government is open to discuss the problems faced by companies, if any,” said Bhatta.

Bhatta further hinted at the government’s willingness to further review the export provision for industries inside SEZ, if necessary.