Nepal | July 08, 2020

Stakeholders stress effective application of SEZ Act

Himalayan News Service
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Kathmandu, January 24

Stakeholders have said that the government should give high priority to implement provisions in the SEZ Bill to lure investors to the Special Economic Zones (SEZs).

Addressing a roundtable discussion on ‘Issues of industries inside the Bhairahawa SEZ’ today, they said that though the government has assured of lucrative incentives to investors inside the SEZ, the government has not been able to implement them properly.

“It is good that the new SEZ Bill, which has been tabled at the Parliament, has tried to encourage investors inside SEZs by reducing the mandatory export provision for
industries operating within the SEZ and has also added some more tax incentives for such industries,” said Shankar Sharma, former vice-chairman of the National Planning Commission (NPC). “However, investors are still suspecting the ability of the government to execute these provisions properly.”

The new SEZ Bill, which was endorsed by the Cabinet last week, has reduced the mandatory export provision for
industries operating within the SEZ to 60 per cent of their production from 75 per cent enforced earlier. Along with this, the Bill has also assured 100 per cent income tax waiver facility for industries inside SEZ for the first five years after they begin production and 50 per cent income tax waiver thereafter.

Likewise, the government has also reduced the rental fee for industries within SEZ to Rs 20 per square metre per month from the earlier fee of Rs 150 per square metre per month.

On the occasion, Bimal Wagle, former government secretary, informed that drawing huge private sector investment, especially in government protected areas like SEZ is not an easy task. “Any investor looks for comparative advantages, credibility and documentation process in a country before injecting investment. Thus, the government should keep these things in priority while formulating any policies,” he said.

Meanwhile, Prakash Maharjan, chief executive officer of Shakti Minerals and one of the investors inside the Bhairahawa SEZ, informed that contradiction in policies, ambiguity and lack of proper coordination between the government agencies have been discouraging investors inside SEZs.

Echoing what Maharjan stated, Toyam Raya, director general at the Department of Customs, said that different laws of the government are contradictory thus resulting in difficulty in their effective implementation.

However, Chandika Bhatta, executive director of SEZ Authority Nepal, said that necessary amendments have been made to the existing SEZ Act keeping in mind the need to boost the confidence of investors within the SEZ. “The government can be more flexible in the export provision for such industries in the future if necessary,” said Bhatta.


A version of this article appears in print on January 25, 2019 of The Himalayan Times.


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