Kathmandu, August 29

The Parliament today endorsed the Special Economic Zone Bill tabled by Industry Minister Nabindra Raj Joshi.

Garnering majority of votes, the bill has paved the way to lure private and foreign investment in export-oriented industries of the country.

After the Parliament’s endorsement, the bill will be enforced as law after receiving the president’s stamp.

The SEZ Bill envisages developing export-oriented industries in the country by offering raft of incentives to the industries established in SEZ. Industries established in SEZ will get income tax exemption for the first five years of establishment.

Industries that use up to 60 per cent of domestic raw materials will get 50 per cent income tax exemption for the next five years and 25 per cent exemption for another five years.

Industries will also get zero customs duty facility while importing raw materials for export.

SEZ will offer infrastructure — road, electricity grid connectivity, drinking water, among — necessary to set up industries. Most importantly, strikes and protests will be prohibited within the SEZ.

The bill provisions one-window service for industries that are established in SEZ. Services like company registration, registration in tax net, banking, insurance, freight forwarding, transit and issuance of certificate of origin for export and other administrative formalities required to operate the industry will be provided in SEZ.

Industries established in SEZ will have to mandatorily export 75 per cent of their production, which is expected to boost the country’s flagging export sector.

The country faced premature de-industrialisation because of rampant power cuts, labour unrest, decade-long insurgency, strikes and bandhs, and many industries were forced to pull their shutters, as their production costs sky-rocketed and they failed to compete with foreign goods.

Establishment of SEZ is expected to improve the country’s industrial environment and boost its weak production base, which have been identified as major barriers in boosting exports.

The SEZ Bill, approved by the Parliament today, has also paved way for the private sector to establish, operate and manage SEZ, in addition to being developed under the public-private partnership model or solely by the government.

Bhairahawa Special Economic Zone is the only SEZ in operation at present and it has recently allowed investors to set up industries.

The government is preparing to develop SEZs in 15 places, including Simara, Panchkhal, Nuwakot, Gorkha, Biratnagar, Nepalgunj, Mahendranagar and Kalailya, where pre-feasibility study has already been carried out.

The private sector has welcomed today’s endorsement, as it had been around 10 years since the SEZ Bill was tabled in the Parliament for the first time.

Pashupati Murarka, president of Federation of Nepalese Chambers of Commerce and Industry, said the private sector was hopeful this law would give a new lease of life to the country’s industrial sector.