Kathmandu, April 28
The government has slashed the rental charge of the Bhairahawa Special Economic Zone (SEZ) by a whopping 86.67 per cent after the country’s first SEZ failed to lure industrialists to set up factories there.
A recent Cabinet meeting has approved the amendment to the Bhairahawa SEZ Operation Standard and Procedure, confirmed Chandika Prasad Bhatta, executive director of SEZ Development Committee. The document had been submitted by the SEZ Development Committee through the Ministry of Industry, which had proposed slashing the monthly rental charges for the industries set up in SEZ from Rs 150 per square metre to Rs 20 per square metre.
The SEZ Development Committee, led by industry secretary, proposed to slash rental charge because despite asking for expression of interest (EoI) from the interested parties twice, the response was not very encouraging.
The Bhairahawa SEZ was inaugurated on November 18, 2014. However, even as it has called EoI two times, less than a dozen companies submitted EoI. There are altogether 69 plots in Bhairahawa SEZ.
The amended version of SEZ Operation Standard and Procedure has also shortened the procedure of EoI. As per the new procedure, the SEZ Development Committee can directly ask for request for proposal (RfP) from the interested domestic and foreign investors.
The amended version has also incorporated additional industries, except security printing, arms and ammunition, among others listed in the negative list of the proposed Industrial Enterprises Bill.
Earlier, only 17 types of industries were prioritised for setting up factories in the Bhairahawa SEZ. Likewise, the amended version has also scrapped the earlier provision requiring all plots to be leased at once and now the interested industries can set up shop in Bhairahawa SEZ without having to wait for all the plots to be occupied.
The SEZ Development Committee has been identified as having the highest rental charge across the South Asian region. It was also cited as the major barrier in attracting investors to set up industries in SEZ. The revised rates are at par with the charges in SEZs of South Asian economies.
“Rental charge per square metre per month in the SEZs in other South Asian countries range from two rupees to Rs 19,” informed Bhatta.
After the revision in rental charge, the SEZ Development Committee is now preparing to call for RfP from investors. The EoI of the firms that had shown interest to set up shop in SEZ will be scrapped and they will have to start the new process for leasing the plots at the SEZ.
Along with the entire required infrastructure to set up industry, SEZ has also provided numerous incentives including rental charge rebate, duty-free facility to import raw materials, and corporate tax exemption, among others.
Government has been developing SEZs to promote export-oriented industries in a bid to attain higher and sustainable growth by boosting exports. Private sector had also suggested SEZ Development Committee to bring down rental charges and lobby for approval of SEZ Bill from Parliament to lure investors in SEZ.