December 15 : Special economic zones(SEZs) were established with a vision to advance industrialization through export promotion and contribute to the fast economic development. However, they have gone useless after they failed to lure investors and entrepreneurs.
Nine months have passed since Special Economic Authority called for proposals to establish and operate industries in Bhairahawa and Simara SEZs. But, only half a dozen industries have signed an agreement to establish industries in Bhairahawa SEZ so far. SEZ Authority has called for the proposal second time as no one submitted proposals to operate industries in Simara SEZ in the first call.
Calling for proposals, SEZ Authority had issued a notice to establish industries in both SEZs nine months ago. Since then, SEZ authority has re-called for the proposal twice.
According to SEZ Authority’s Executive Director Dr Chandika Prasad Bhatta, number of investors signing the agreement is fewer than those taking permission.
According to the SEZ Authority, 45 plots of Bhairahawa SEZ and 68 plots of Simara SEZ are ready for the establishment and operation of industries.
SEZ Authority had issued notice saying that SEZs had become ready in March 2022 first time. Since then, the authority has re-issued calls in May and August as well. According to the authority, investors have received the permission for 69 plots. Out of them, 37 are from Simara and 32 from Bhairahawa.
Investors, who have paid Rs 25,000 per plot permission fee, have proposed investment of Rs 6 billion and Rs 4 billion in Simara and Bhairahawa SEZs respectively. Out of them, only seven investors and industrialists have signed an agreement to establish industries. As per the authority, five industries have signed an agreement in Bhairahawa SEZ while two have inked agreement in Simara SEZ.
Investors granted permission have shown reluctance despite repeated calls by the SEZ authority.
A seven-day deadline was given to the investors granted permission to establish industries on November 25. Since no one approached the authority, the authority has extended the deadline twice, said sub-Engineer Sagar Silwal of the authority.
“The authority will extend the deadline for the last time. If the investors granted permission do not come, their permission will be scrapped and fee will not be refunded”, added Sagar Silwal.
The government had started construction of SEZ in 2014. So far, as many as 113 plots have got ready. Out of them, only a few plots have come into use.In the first SEZ established in Bhairahawa, only seven industries are operating. Not a single industry is established in Simara SEZ.
Special Economic Zone Authority-2073 BS Act has provisioned to provide facilities to the industries in the SEZ through one-window system. But, its implementation is nowhere in sight.
As per the Act, Nepal Rastra Bank, Company Registrar’s Office, Custom Office, Post office and industry registrar’s desk have to be established in the premises of SEZ authority.
The government ha spent around Rs 4 billion to construct industrial infrastructure in Bhairahawa and Simara SEZs.
Panchkanya Group, Shakti Minerals, Lead Light, some plastic and utensil industries are operating in Bhairahawa SEZ.
To lure investors and industrialists in the SEZ, the government has slashed export limit from 75 per cent to 60 per cent. Likewise, they have to export product from the second year of the establishment of their industries. The government has also lowered rent. “We are preparing a draft to amend the act incorporating all changes made to attract investors”, said SEZ authority.
Tirupati Metal Industries’ Investor Bikash Agrawal said that they could not expand their investment in SEZ for failing to get bank loan.
Entrepreneurs and industrialists say that non-implementation of one-window system, lack of coordination among the government agencies, exorbitant rent, and 60 per cent export limit have discouraged potential investors and industrialists from establishing industries in the SEZ.
