Kathmandu, January 8:

People from the private sector today commented that despite talks on establishing special economic zones (SEZs) initiated some two years ago in a bid to boost private sector development and increase economic activities, the process of setting up an EPZ has been very slow.

Senior officials of the ministry of finance and representatives from the private sector discussed at length ways to kickstart the EPZ at a programme on ‘SEZ and the role of Revenue’ organised by the Ministry of Finance (MoF), Revenue Advisory Committee (RAC) and Confederation of Nepalese Industries (CNI).

Deep Basnyat, joint secretary at MoF and convener of the RAC, said at the programme that before establishing SEZ, some acts and laws are necessary. For this, the government has been actively working on reviewing Customs Act, SEZ Acts and other related rules and regulations.

Binod Chaudhary, president of CNI, opined that in the context China and India’s private sector development and role of SEZ fuelling economic growth, Nepal should also move accordingly making potential sectors more productive. He expressed concerns that for the last two years SEZ has been defunct.

Basnyat agreed that SEZ sho-uld have become functional already but has been delayed due to technical problems. “Before starting to establish SEZ, we nee-d to assess future implications.

Jagdish Agrawal, vice-president of CNI, presenting a paper on SEZ said that apart from tax-related exemptions and concessions, SEZ focuses on simplification of procedures. When it co-mes to SEZ, acquisition and development of land, providing la-nd to investors on a long-term lease, supplying regular electricity at concessional rate, supply of water, banking and postal services, dry port facilities and storage facilities are essential.

Agrawal said, as per India’s experience, SEZ needs to be established in an area of 1,000 acres of land investing Rs 10 billion. Only then the project will be viable. Existing proposed provisions in SEZ lacked some issues needed to attract the private sector and FDI, according to Agrawal. The government should make a provision for tax concessions, according to entrepreneurs.

SEZ should not have dividend tax, should allow full exemptions on tax on profits for a specified period and concessional duty, say entrepreneurs.

“As SEZ invites big investment, the government should make a provision to attract foreign investors. VAT and excise duties should not be applicable within SEZ including labour laws which can be applicable within SEZ to sustain the zone from an economic point of view.”