Nepal | July 12, 2020

EDITORIAL: Investors’ concerns

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In order to attract more investment in the productive sectors, both domestic and foreign, the government must plug such loopholes

It has been three years since the Special Economic Zone (SEZ) came into operation in Bhairahawa with a view to attract more domestic and foreign direct investment for export-oriented industries. Bhairahawa SEZ Operation Standard and Procedures was issued in 2014. The main objective of setting up industries in the SEZ is to export more than 75 percent of their products. In order to attract both domestic and foreign direct investment, the law and operation standard procedures have given special incentives such as exemption of income taxes, excise duty, VAT and other taxes and duties. They have facilities of repatriation of investment, immigration, export-import facility and foreign workers employment. Since the SEZ in Bhairahawa came into operation in 2014, 22 domestic firms have received operational approval from the SEZ Authority of Nepal out of the 69 plots allocated in the zone. The SEZ has been established close to the Nepal-India border from where the investors can import raw materials without any hassles and further transportation cost. The goods produced from the zone can also be easily exported to India and third countries due to proximity with the international border.

However, the government has yet to connect the SEZ with the needed power supply. The Nepal Electricity Authority (NEA) has been supplying a three-phase line which is enough only to light office buildings and for administrative work. The investors who have already set up their industries have demanded at least 10 MW of dedicated supply of energy to make all industries operational. The NEA officials however have said that it will take at least one-and-a-half years to supply energy as per the demand sought by the industrialists. There is lack of a transmission line which can wheel at least 10 MW of electricity. The dedicated transmission line is being built with financial assistance from the Asian Development Bank. But it will take over one year if everything goes according to plan. Electricity has to be brought from a 33-kVA Butwal-based sub-station. What it indicates is that the industries set up in the SEZ will not be able to start production until next year.

The concern expressed by the investors who have already started constructing their industries is genuine and serious, which should be addressed by the government and the NEA giving it high priority. Electricity is a major driving force for economic growth. If the NEA, sole distributor of energy, cannot provide required amount of energy through a dedicated transmission line how can the government expect the SEZ to grow as per its expectations and objectives? What was the NEA doing for the last three years when the government had already issued standard operational procedures? In order to achieve a specific goal of any targeted project all line agencies must work in tandem. Even if other infrastructures are completed the industries in the SEZ cannot start production in a full-fledged manner without enough supply of energy. If the government does not address this issue quickly it will set a bad precedent in other industrial estates which are under a planning stage. In order to attract more investment in the productive sectors, both domestic and foreign, the government must plug such loopholes on time.

Fine withdrawn

The traffic police will no longer collect fines of Rs. 200 rupees imposed on jaywalkers. This move comes after widespread complaints that there are not enough zebra crossings, subways, overhead bridges and pavements. The implementation of this provision had succeeded in that it had helped the smooth flow of traffic, but it was not a popular decision. No doubt, the fee of Rs. 200  on pedestrians who were guilty of violating the traffic rules is a bit too high. Those who could not pay the fine had to attend special classes on road safety carried out by the traffic police for three hours.

Considering that it is very dangerous commuting in the capital for pedestrians as well as vehicle drivers, it was believed that the fine would discourage the violation of traffic rules. Incidentally most of the traffic accidents in the capital city involve pedestrians and also two-wheelers driven by throwing caution to the winds. Though the fine has been withdrawn, jaywalkers are likely to attend special classes though of a shorter duration. We should come up with other innovative measures to make the roads safer.


A version of this article appears in print on June 14, 2017 of The Himalayan Times.

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