December: 9 Private sector has said that investors have not been attracted to Special Economic Zone (SEZ) due to impractical provisions for land acquisition.
The government had established the Special Economic Zone (SEZ) along Birgunj-Pathlaiya Industrial Corridor in Simara with the vision to promote export industry sector in 2062 BS. The zone, however, has failed to entice investors and industrialists.
According to Birgunj Chapter of Federation of Nepalese Chamber of Commerce and Industry Chairman Subodh Kumar Gupta, exorbitant rent for the land, and unrealistic export quantity criteria to be eligible to rent the land inside the zone have driven investors away from investing in the SEZ.
Investors and entrepreneurs demanded that SEZ should accord priority to industries that want to open industries focusing on the domestic market as Nepal’s export trade has failed to become competitive due to topography and high production cost.
“Current business trend and tendency are quite different from the past. Time has come to change export with import replacement”, Bara-Parsa Industry Association Vice-chair Binay Shah said “Such infrastructure should be prioritized for industries with vision to promote import replacement”.
Industries established in the special economic zone should export sixty per cent of their total production. Earlier, provision was even tougher. SEZ industries would have to export sixty per cent of their goods in the first year of their establishment itself.
Since the economic zone could not lure any investors, the provision to export goods and commodities was revised. Now, the industries in SEZ will have to export 20 per cent, 40 per cent and 60 per cent in the first, second and remaining years with the start of the production.
Chairman Gupta has urged the government to lower export quantity provision from 60 per cent to 25 per cent out of the total production. “Land rent was decreased from Rs 20 to Rs 10 per square. But, it is still expensive”, Gupta said adding “We have asked the government to lower the land rent to Rs 5 per square”.
The government has exempted income tax for industries established in the SEZ for two years. The private sector, however, wants tax waive for 10 years. If income tax exemption is increased for 10 years, industries will be attracted to the SEZ, said Bara-Parsa Industry Association Vice-chair Hari Gautam.
Investors have urged the government to provide all facilities through one-window system in the special economic zone. “Investors have shown no interest to the SEZ due to administrative hassles. So, all facilities and services should be provided through one window system”, said Gautam
Despite frequent calls, the Special Economic Zone Authority has not received enough proposals for the establishment of industries. Industrialists and investors along the Bara-Parsa Corridor say that SEZ should be allowed to establish all kinds of industries as land acquisition had become tough and rent had gone expensive along the corridor.
“Entrepreneurs and industrialists have a hard time getting land along the Bara-Parsa Corridor. But, the SEZ has not come into use for a long time. Thus, other industries should be allowed to establish their businesses even by changing criteria and standards in the SEZ”, Vice-chair Gautam added.
Simara Special Economic Zone is spread in 833 bigaha land. The government had prepared a garment processing zone in the SEZ a few years back. Unfortunately, the garment processing zone was scrapped after investors did not show any interest.