Kathmandu, January 5

The government is preparing to review the provision in the SEZ Act that requires factories established inside any SEZ to mandatorily export 75 per cent of their production.

The Ministry of Industry (MoI) and Special Economic Zone (SEZ) Authority, Nepal are currently holding discussions to narrow down the minimum export limit for industries within SEZ after the country’s private sector expressed difficulties for industries in SEZ to abruptly start exporting 75 per cent of their production.

However, the government is yet undecided on the new minimum export limit for factories inside SEZ.

“There is no doubt that SEZ envisions to promote the country’s exports and factories within SEZ should export a majority of their produce. However, along with concerns of the private sector to narrow down minimum export limit the government has also realised that factories inside SEZ should be allowed to increase export gradually,” said Chandika Bhatta, executive director of SEZ Authority, Nepal.

Similarly, the government also plans to review the land rent for factories inside Bhairahawa SEZ— the maiden and only SEZ of the country.  “We have felt that the land rent for factories at Bhairahawa SEZ is comparatively higher as compared to international practices,” said Bhatta.

Currently, the government is charging Rs 20 per square metre per month from factories inside Bhairahawa SEZ.

Meanwhile, Industry Secretary Yam Kumari Khatiwada said that the government is preparing to review all acts and policies related to the industrial sector in line with the new federal structure. “Not only SEZ Act, there is an urgent need to transform all our laws and policies as per the federal system. In this process, we will also amend different provisions in existing policies that are facing implementation challenges,” she said.

According to Khatiwada, a separate committee has been formed at MoI to drive the process to make necessary amendments in existing laws in line with new federal system.

Similarly, she also said that MoI will put factories inside SEZ and other businesses under high priority. She also confirmed that the electricity problem at Bhairahawa SEZ will be addressed within the next two months, which will encourage the companies that have received the permission to start construction of their factories inside the Bhairahawa SEZ.