Chinese investors show interest in Nepal Special Economic Zone

Kathmandu, September 30

Following the Parliament’s endorsement of the Special Economic Zone (SEZ) Bill last month — which paved the way for the private sector to establish, operate and manage the SEZ — Chinese investors have shown interest to run such a zone in the country.

A privately-owned Chinese insurance company (name not disclosed) and Lhasa SEZ, which is owned by the Chinese government, have jointly proposed to the SEZ Development Committee to run a SEZ in joint venture (JV) in Nepal. Moreover, the SEZ Development Committee has already approved the proposal and is waiting for a green signal from the government.

“After some regular correspondence with the applicant, we found its proposal feasible,” Chandika Prasad Bhatta, executive director of SEZ Development Committee, told The Himalayan Times. “As of now, a draft regarding investment of Chinese parties in SEZ has been forwarded to the Ministry of Industry (MoI) for its approval.”

According to Bhatta, SEZ Development Committee will sign a memorandum of understanding (MoU) with the Chinese investor immediately after getting a ‘go-ahead’ from the MoI.

Bhatta hinted that should their proposal be approved, the Chinese investor would invest around Rs five billion to operate a SEZ. “The Chinese side is eyeing to construct a model SEZ in one of the five land blocks in Simara SEZ by investing around Rs four to five billion,” said Bhatta, adding that construction of a fully-equipped SEZ would cost less than Rs five billion.

Bhatta added that the SEZ guidelines have yet to be endorsed and once it comes into operation it will help clarify the various parameters regarding investment in SEZ.

The construction cost of Bhairahawa SEZ, the only SEZ that has been inaugurated in the country till date, was around Rs 2.5 billion, according to SEZ Development Committee.

However, the proposal forwarded by the development committee has yet to reach the concerned MoI official. “If it’s true, it is extremely good news. However, I haven’t received any such proposal till today,” Yam Kumari Khatiwada, joint secretary at MoI, said.

The endorsement of SEZ Act last month had paved the way to lure private and foreign investment in export-oriented industries of the country. Envisioning different tax waiver facilities to industries established within SEZ, the SEZ Act has also prohibited any activities of protest and strike within the SEZ — a provision that could be a major factor in attracting investors to set up shop in such special zones.

The government plans to set up SEZs in 15 locations of the country in due course. Also, government has already begun construction works of SEZ in Simara, Panchkhal, Nuwakot, Gorkha, Biratnagar, Nepalgunj, Mahendranagar and Kalaiya.