Nepal | September 28, 2020

Govt relaxes export provision for firms in SEZ

Himalayan News Service
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Kathmandu, January 15

The government has revoked the provision that made it mandatory for industries within Special Economic Zones (SEZs) to export 75 per cent of their produce right from the time they begin production.

The SEZ Bill registered by the Ministry of Industry, Commerce and Supplies (MoICS) at the Parliament today has not only relaxed the compulsory provision for industries within SEZ to export 75 per cent of their produce to 60 per cent, but has also allowed firms within SEZ to sell 100 per cent of their produce in the domestic market for the first one year after their production starts.

This means that industries inside SEZ can supply all their produce in the Nepali market for the first year after they start production, however they will have to export 60 per cent of their production mandatorily from the second year.

The government had turned flexible regarding the export provision for industries within SEZ that was incorporated in the SEZ Act following investors’ concerns on their inability to export a majority of their goods immediately after starting production.

“The government’s flexibility on export provision for industries within SEZ is the result of the realisation of the fact that firms need some time to look for international market for their produce and acquire different international quality certifications and accreditation,” said Chandika Bhatta, executive director of SEZ Authority.

Citing that the first year is the ‘relaxation period’ for industries inside SEZ, Bhatta said that firms will get time to look for an international market for their goods within that time. “The 60 per cent export provision for industries inside SEZ will ensure that industries will be able to sustain themselves by selling 40 per cent of their produce in the domestic market,” he added.

In a bid to facilitate the investors within SEZ, the government is also preparing to slash rental charge for industries set up in SEZ. Though the government envisions establishing 14 SEZs across the country in the future, Bhairahawa SEZ is the only one that has been inaugurated so far. As per existing provision, industries inside Bhairahawa SEZ are required to pay Rs 20 per square metre rental charge to the government every month.

This is the second time that the government is preparing to reduce rental charge for industries set up inside SEZs. Earlier in 2016, the government had slashed the monthly rental charges for the industries set up in SEZ from Rs 150 per square metre to Rs 20 per square metre.

A version of this article appears in print on January 16, 2019 of The Himalayan Times.

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