Govt preparing to amend SEZ operating guidelines

Kathmandu, August 8

As the Bhairahawa Special Economic Zone (SEZ) has received lukewarm response from investors to set up industries, the government has started the process of amending the operating guidelines of SEZ.

The current operating guidelines allow the SEZ Development Committee, which oversees SEZs, to permit industries to be set up only after all the 68 plots within the Zone are occupied. This is why the SEZ Development Committee has not evaluated the expressions of interest (EoI) that was received from 12 aspirants.

The SEZ Development Committee had called for EoI of Bhairahawa SEZ from entrepreneurs and investors in two phases in January and February.

SEZ will again seek EoI from interested parties, including foreign investors, according to Saroj Kumar Vaidya, acting executive director of SEZ Development Committee. Along with this, preparations are ongoing to adopt flexibility in operating guidelines so that the Committee can start evaluation of EoI received earlier and allow them to establish industries. Currently, Bhairahawa is the first and only SEZ in the country.

The committee formed to amend the operating guidelines will also conduct a study regarding the lukewarm response of investors to set up industries in the SEZ.

The committee, formed under the convenorship of Joint Secretary of the Planning Division of the Ministry of Industry (MoI) Dinesh Kumar Ghimire comprises representatives from private sector umbrella organisations — Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Confederation of Nepalese Industries (CNI) — and executive director of SEZ Development Committee.

Bhairahawa SEZ was inaugurated on November 18, last year, though the SEZ Act is yet to be approved by the Parliament. Private sector leaders have also urged for the Act to be introduced at the earliest citing that the legislation is a must for establishment, operation and management of the SEZ.

“Investors are waiting for the Act. The operating guidelines alone cannot gain the trust of investors, a situation which has been witnessed in the Bhairahawa SEZ,” said Pashupati Murarka, president of FNCCI.

MoI has been preparing to table the SEZ Bill in the Parliament for its endorsement. The draft of the SEZ Bill has envisioned that the industries established in the SEZ should export 75 per cent of their products. The Bill was drafted in 2006 and sent to the Parliament for approval but it was not endorsed then as it required a few amendments. It was, thus, sent back to the MoI.

The Bill has also proposed rebating the rental charge of land at the rate of 50 per cent, 40 per cent and 25 per cent in the first year, second year and third year, respectively, on the recommendation of the SEZ Development Committee, as per the draft of the Bill. The 11-member committee led by the industry secretary will be authorised to recommend the rental charge rebate for the industries established in the SEZ based on the performance of the respective industry.

Apart from Bhairahawa SEZ, the government is preparing to develop SEZs in 14 other locations across the country and has started acquiring land for the purpose. The proposed locations are Simara of Bara district, Panchkhal (Kavre), Biratnagar (Morang), Jumla, Nuwakot, Kailali, Siraha, Gorkha, Dhanusha and Rautahat, among others.

Executive director’s selection in limbo

KATHMANDU: Though the process to select the executive director for the SEZ Development Committee was initiated in January, the selection committee is yet to finalise the name. The selection committee formed under the chairmanship of Member of the National Planning Commission Swarnim Wagle was given the responsibility to select the executive director. The committee has announced vacancy twice — January 23 and June 4 this year — but the Committee is yet to get an executive director.