March 26: The private sector has urged the government to convert the Special Economic Zone (SEZ) in Simra, Bara into an industrial zone. The Birgunj Chamber of Commerce and Industries said that it is hard to attract entrepreneurs due to unreasonable provisions in the SEZ-related legal system which states that the industries operating under the SEZ must export goods.

The senior vice president of the association, Hari Prasad Gautam wrote a letter to the Ministry of Industry, Commerce and Supplies and asked them to bring Simra SEZ into operation like other industrial areas.

Gautam claimed that there is a provision that the industries opened in SEZ must export and because there is no permanent exportable product in Nepal, investors are not attracted to this facility. Despite repeated promises by the government, the industries are not willing to join Simra SEZ.

Industries established in SEZ must export 60 percent of their products. Previously, there was a provision to export 6 percent of the products in the year of establishment itself. But after realizing that investors did not join the SEZ  due to the same provision, it was revised to export 20 percent of the production in the first year, 40 percent in the second year and 60 percent in the following years. The private sector is also dissatisfied with this provision.

The SEZ located in Simra of Birgunj-Pathalaiya Industrial Corridor, which the government planned to operate since 2062, hardly falls in the preferred area of investment of the investors. Despite repeated calls from the SEZ Authority after not receiving expected proposals, the industrialists of Bara-Parsa have demanded that domestic market-targeted industries should also be allowed to operate in the SEZ.

As it is becoming difficult to find land for new industries in the Bara-Parsa corridor, the private sector has demanded that 833 bighas of SEZ land can be used as an industrial zone. The chamber claims that some industrialists recently started the process of leasing land in SEZ but backed away from it. Gautam suggests, “Industries are not attracted because of the provision of export. It is appropriate to operate this structure like any other industrial sector.”

He said that due to Nepal's geographical situation and production cost, export business cannot be competitive. Now, the industries that open targeting the domestic market should be prioritized.

The government said that income tax exemption will be given to industries set up in SEZ for two years. The private sector also demands that this deadline should be increased to 10 years.