Rental charge for factories within Simara GPZ to be slashed

Kathmandu, October 30

Following the reluctance of garment manufacturers to invest in the Garment Processing Zone (GPZ) in Simara citing high rental charges, the government is set to review the fee for factories within the government protected zone.

The Ministry of Industry Commerce and Supply (MoICS) recently formed a rental fee fixation committee to determine a new rental rate inside the Simara GPZ, informed Chandika Bhatta, joint secretary at MoICS.

Bhatta, who is also the former executive director of Special Economic Zone (SEZ) Authority, said that the government is obliged to reduce the rental fee as garment manufacturers have refused to invest in the GPZ in Simara at the current rate.

Currently, the SEZ Authority has fixed the rental fee of Rs 20 per square feet per month for investors to establish factories within Simara GPZ.

“Not a single investor has expressed interest to invest within the GPZ even though we have issued numerous notices stating the zone is open for investment. Their main concern is the rental fee,” said Bhatta, adding that the committee will soon determine a new rental fee rate encouraging garment manufacturers to inject investment in the Simara GPZ and start construction of garment factories.

In May, the SEZ Authority had called for applications from interested garment investors to invest within the GPZ. However, not a single garment entrepreneur applied for investment within the zone. As a result, the government had even thought of seeking investment within the Simara GPZ from other industries and investors.

However, as the GPZ in Simara was developed to promote production and exports of garments, Bhatta said that the government will address the concerns of garment investors and encourage them to invest in the GPZ.

Meanwhile, garment manufacturers have said that the government should reduce the rental fee at Simara GPZ to five rupees per square feet per month.

“The rental fee that government is trying to impose within the GPZ is too high compared to what other countries have been levying on such protected areas. Once the rental fee is competitive, garment manufacturers will certainly invest in the Simara GPZ,” said Chandi Aryal, president of Garment Association of Nepal (GAN).

The government came up with the concept of GPZ after the United States extended zero tariff preference for 66 products, including apparels, into its market through the ‘Trade Facilitation and Trade Enforcement Act’ in February 2016. The GPZ is expected to bring down the production and export cost of garments in Nepal, which is relatively higher compared with other nations in South Asian region.

The GPZ offers basic infrastructure, including internal road, electricity and water supply, sewage system, weighing bridge, waste water treatment plant, petrol pump, banks and insurance service, among other facilities.