Economists and industrialists have said that immediate implementation of Special Economic Zone (SEZ) projects was required to revive the exports of the country.
In a concept paper about SEZ presented at the seminar entitled ‘Special Economic Zones and Revival of Nepali Exports’, jointly organised by South Asia Watch on Trade, Economics and Environment (SAWTEE) and Action Aid Nepal on Monday, economic analyst Jagadishwor Nath Shrestha said that adoption of the SEZ would minimise the imbalance in the foreign trade of the country.
He said because Nepal has entered into the open global market by joining the World Trade Organisation (WTO), its prime focus should be to build competitive industries, produce quality goods and timely delivery of products to the customers, which he claimed would be simplified by the projected SEZs.
General Secretary of Nepal Garment Association (NGA) Uday Raj Pandey said that implementation of SEZ and Inland Clearance Depot (ICD) should go together if the government aims at increasing the export of Nepali products. He said the weak competitive strength of Nepali industries has to be improved by attracting foreign investment so that their products would be able to compete in the international market.
Senior Consultant of Federation of Nepalis Chamber of Commerce and Industries (FNCCI), Dr Chiranjibi Nepal, however, said that proposed SEZ concept was not economically viable at the time industrial estates have failed to attract massive industrial development. He said laws on customs, tax and labour needed to be amended before SEZ comes into force.
Acting Director General of the Commerce Department, Shanti Ram Sharma, said that the government has not been able to adopt the laws regarding SEZ because it overlaps and conflicts the existing income tax policies.
SEZ were proposed in the budget speech of 2001/02 in four places – Bhairahawa, Birgunj, Panchkhal (Kavre) and Devighat (Nuwakot). It is estimated to cost around Rs 3.88 billion which is expected to be covered from among industrial groups interested to come under the project.
Once set up, investors in SEZs will be granted a liberal tax regime with exemption of varying degrees in income tax, excise duty, VAT and other duties. The SEZs will have facilities of investment, immigration, banking, export-import, foreign workers employment provided they export at least 80 percent of their production.