Kathmandu, January 8

The government has reduced the mandatory export provision for industries operating within the Special Economic Zone (SEZ) to 60 per cent of their production. As provisioned in the SEZ Act, firms operating inside such areas should mandatorily export 75 per cent of their production.

However, the Cabinet meeting on Monday approved the proposal of the Ministry of Industry, Commerce and Supplies (MoICS) to amend SEZ Act and bring down the export provision to 60 per cent.

Despite the Cabinet’s nod to the concerned proposal of MoICS, the amendments in the SEZ Act are yet to be endorsed by the Parliament.

The government became flexible to narrow down the minimum export limit for industries within SEZ after the country’s private sector expressed difficulties for industries within SEZ to immediately start exporting 75 per cent of their production.

Chandika Bhatta, executive director of SEZ Authority, informed that though the government had tabled the proposal to reduce the export provision for firms inside SEZ, the SEZ Authority is yet to receive the decision of the Cabinet.

“Instead of keeping high export provision for industries within SEZ, we felt that firms should be allowed to increase exports gradually. The decision to bring down the export provision also ensures that firms within SEZ can raise their operational cost from the internal market even if they find it difficult to export all their produce,” said Bhatta.

Citing that firms within SEZ might not be able to export 75 per cent of their produce immediately, Bhatta said that the new decision will give some respite to the industries inside the SEZ.

Though the concept to develop SEZ across the country to address the supply-side constraints and boost exports was initiated a long time back, only one such area in Bhairahawa has been inaugurated so far. Meanwhile, the government plans to construct at least one SEZ in every province and altogether 14 SEZs across the country in the long run.

Following the inauguration of Bhairahawa SEZ in 2015, the government had approved the proposal of 24 domestic firms to set up their factories within the zone. Business houses like Golchha Organisation, Jagadamba Group, Vaidya’s Organisation, Lohiya Group and Siddhartha Group, among others are in the process of setting up their factories at the Bhairahawa SEZ, which range from bottling plants, metal processing units and industries to manufacture polymers, beverages, electric products and noodles, among others.

As per Bhatta, Shakti Minerals  has already started building its factory and is expected to start production within the next few months. The company is injecting an investment of Rs 400 million within Bhairahawa SEZ.