August 24: The Special Economic Zone (SEZ) Authority last issued a notification on July 11 to lease the plots of SEZ located in Bhairawa and Simara for the establishment and operation of industries. The same notification was issued earlier on April 30 as well. In two months, the authority made two public calls to businessmen to establish and operate industries in those newly-built facilities, but there was no encouraging response from the industrialists.

A study conducted amid the reluctance of businessmen to join the SEZ has shown that the locations selected for the SEZ are not suitable. It is mentioned in the study report that both SEZs, which are partially operational, and those under construction are not in suitable locations.

The report on 'Special Economic Zones in Nepal: Current Situation, Problems and Effective Operation Measures', prepared by the Policy Research Foundation under the coordination of former Industry, Commerce and Supply Secretary Chandra Kumar Ghimire, states that the location selected for the SEZ is not suitable. The report added, "Location is one of the key factors that makes SEZs successful in the world.”

It has been mentioned in the report that the places selected for SEZ should be connected with roads and railways, dry ports, in addition to having transport and transit agreements with the nearest sea ports and within quick access to air cargo and international airports. However, the report points out that this is not the case in Nepal.

Additional SEZs have been proposed in Jumla, Gorkha and Nuwakot. It has been mentioned in the report that these places are also not suitable for export promotion.

The report of the foundation shows that the subsidiary industries were not allowed to operate in the areas designated for the main industry.

Simara is named as garment SEZ. However, it has been made clear in the report that industries such as stitching, thread, cloth, embroidery, dyeing, fashion designing services, semi and fully skilled workers are not allowed to open schools for teaching skills.

The report points that the current policies and procedures are not SEZ-friendly. The Forestry Act 2076, Environment Protection Act 2076, Labor Act 2074 and the procedures related to providing subsidies to exports have not given any due attention to the industries established in SEZ. Nepal Trade Integrated Strategy 2016 and Commercial Policy 2072 are also silent on the issue of industries to be established in those areas.

Similarly, Section 9 of the Electricity Distribution Regulations 2069 states that 11 KV or 33 KV feeders can be taken for more than one industry in a SEZ compound. However, the provision of providing electricity to industries there at subsidized rates has not been mentioned anywhere in the existing policies related to SEZ.

The reasons for the success of SEZ in other countries are also mentioned in the report. It states that the SEZ of other countries has been successful due to the location advantage and the country's macroeconomic situation, support for industrial investment, cost and trade volume and transaction value, the level of skill and the availability of human resources. Similarly, management and service quality, government policies, laws, regulations and political and government stability are mentioned as reasons for the success of SEZ.

According to the report, there are 5,383 SEZs worldwide. Out of them, there are 4046 SEZs in Asia alone. There are 173 SEZs in underdeveloped countries. The number of SEZs in neighboring India has reached 373.