SEZs Focus Export Industries: Baskota

At a time when Nepal is working to establish Special Economic Zones (SEZs) to promote industries, YAM KUMARI KHATIWADA (BASKOTA), the chief of the project, shared the state of SEZ's progress. Spokesperson and joint secretary of the Ministry of Industry, Khatiwada (Baskota) spoke to NEW SPOTLIGHT on various issues related to SEZ. Excerpts:

Issue Name : Vol.:06 No.-13 Dec.28-2012(Poush 13,2069)
SEZs Focus Export Industries: Baskota

YAM KUMARI KHATIWADA (BASKOTA)

What is the state of Special Economic Zone now?

The Ministry of Industry has already identified 10 areas to be developed as Special Economic Zone. Out of these, the feasibility study of four such zones has already been completed. In Panchkhal, a feasibility study of another area is going on. Feasibility studies of Biratnagar and Kapilvastu are going on.  Similarly, construction has already started in two areas, Bhairhawa and Simara, as Special Economic Zones.  Within 833 bighas of land owned by Birgunj Sugar Mill in Simara, construction of a Special Economic Zone is going on. We have divided the land into five blocks and the construction of primary infrastructure is now happening in A block.

What is the state of SEZ in Bhairahawa?

 In Bhairahawa, the project started in its pilot phase.  Our target now is to complete the construction of infrastructure in Bhairahawa.  The construction of road has already been completed and electrification process has already begun. As most of the construction of basic infrastructures in Bhairahawa is in its completion phase, the government is taking the initiative to operate the zone. We don't have legal documents at the operational level.  We sent the Special Economic Zone Act in the Legislature Parliament in 2009, but the parliament got dissolved without passing it. As the SEZ in Bhairahawa about to complete, we have sent an ordinance for approval. As the ordinance was not promulgated, the ministry is now considering making the first SEZ operational under the Development Board model. The ministry has already sent the proposal to the Ministry of Finance and the draft is now in the Ministry of Law for consent.

 

What kinds of industry will be established in SEZs?

The Ministry has not identified the types yet.  Space will be given to export oriented industries. As the government has already identified Bhairahawa as an export promotion zone, export oriented industries will get the priority here. As Nepal is already a member of WTO, we need to produce competitive products. Even our proposed act stressed the need to give priority to those industries which produce over 70 percent of products looking at the export market. How feasible it is for such industries to run here will be known only after the operation of the project.

When will Bhairahawa SEZ come into operation?

It will take a while. The process for its operation has already been initiated. Legislation is equally important to make it operational. For instance, the act has proposed SEZ Authority for operation.  As there is no act, we cannot constitute the Authority. This is the reason we are forwarding the model of Development Board. 

On what basis were the SEZs set up earlier?

As all SEZs are established by the budget speech, they don't have adequate legal and other infrastructure ready. This is the challenge before the ministry. The budget speech gave legitimacy to the SEZ. But, this is not enough to operate them. There is need to have more laws to lease out and do the administrative work.

 

How much interest have industrialists shown in the project?

Initially, industrialists were very much excited, but there is now certain despair among them due to the delay in the project implementation.  Establishment of SEZ will definite to increase the economic activities in the region. Actually, the SEZ concept started over a decade ago. It is yet to materialize in reality. Even the construction of infrastructure in Bhairahawa started five years ago. 

Why does Nepal need SEZs?

One of the objectives of this is to promote employment and industrialize the country.  The aim is also to increase the export and reduce the trade deficit of the country. Increased employment, more foreign investment, and increased export are the targets of SEZs. There will be all round benefits for Nepal.  We need to have the act before June. One of the major objectives is to promote export, this is the reason they are in the border.

How do you distinguish SEZs with industrial development areas?

Industrial development areas are part of the old concept and they are for the development of industries for internal consumption. They provided land for cheap prices. However, SEZs are for export promotion. SEZs are guided by special purposes, special acts and tax exemptions. The government has to provide basic infrastructure.  The SEZs are established to provide special treatment to some industries.

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