Plans afoot to operationalise Simara SEZ by next fiscal year

Kathmandu, January 16

With works related to infrastructure development going on at a good pace in the Simara Special Economic Zone (SEZ), the government plans to inaugurate the Simara SEZ in next fiscal year.

After the detailed project report (DPR) of Simara SEZ was completed a few months ago, SEZ Authority Nepal has been giving due priority to complete the infrastructural set up inside the planned Simara SEZ and bring it into operation as soon as possible.

“After Bhairahawa SEZ (the maiden SEZ in the country), the SEZ Authority is highly prioritising the Simara SEZ. As infrastructural development within the Simara SEZ is going on smoothly, we are hopeful that we will be able to operationalise the SEZ within the next fiscal year,” said Chandika Bhatta, executive director of SEZ Authority Nepal.

Bhatta informed that different infrastructural development works, including construction of office buildings, road construction and construction of compound walls, among others, is under way inside the Simara SEZ at present.

As soon as the infrastructural set up inside Simara SEZ is completed, Bhatta said that SEZ Authority will seek proposals from interested domestic firms to set up their factories within the SEZ.

Unlike Bhairahawa SEZ, where government has allowed companies to set up factories of wide range of products, SEZ Authority basically plans to develop a garment processing zone (GPZ) inside Simara SEZ to promote garment industry and enhance the competitiveness in production of locally manufactured readymade garments.

As production cost of garments in the country is relatively higher, the GPZ inside Simara SEZ is expected to bring down production cost of garments as industries set up inside any SEZ gets special treatments from the government.

The government has introduced the concept of GPZ especially after the United States extended zero tariff preference for 66 local products, including apparels, to Nepal.

Under the plan of the government to establish at least one SEZ in each province, Bhatta informed that SEZ Authority will soon start the process to conduct DPR of planned SEZ in all provinces. In addition to Bhairahawa SEZ in Province 5 and Simara  SEZ in Province 2, the government has planned to set up SEZs in Biratnagar (Province 1), Panchkhal, Kavre (Province 3), Gorkha (Province 4), Jumla (Province 6) and Dhangadi (Province 7).

As per Bhatta, SEZ Authority plans to complete the DPR of Panchkhal SEZ in this fiscal year.

In the long-term, the government envisions to establish 14 SEZs across the country. SEZs are set up especially to facilitate export-oriented industries. As per existing legal provisions, factories set up within the SEZ are mandatorily required to export 75 per cent of their produce. However, SEZ Authority is planning to revisit this export provision soon.