Simara GPZ fails to attract investors

Kathmandu, June 3

 The Simara Garment Processing Zone (GPZ) has failed to attract investors and industries despite potentials of good economic returns due to international level industrial infrastructure, one-door business registration facility and economic incentives.

Private sector entrepreneurs said that the SEZ Authority (SEZA) did not consult them while developing the facility and policy framework for the GPZ.

"SEZA did not consult us while developing the facility and creating policy framework. We have not been the part of the project though there were some informal talks," Chandi Prasad Aryal, President of Garment Association of Nepal, said at roundtable discussion on 'Accelerating industrialisation in Simara GPZ'.

He urged the government to provide the facilities proposed for the industries in the GPZ to the industries operating elsewhere in the country. According to him, it will motivate the businesses to shift to the zone gradually.

He suggested lowering the land rent in the GPZ to Rs. 5 per square metre per month from current rate of Rs. 20 per sq. metre. "Mere appealing to the investors is not enough to attract investment. The government must work to improve the policy regime, including the One-Window System which is still not implemented although there have been rounds of announcements about it," said Aryal.  

The banks and financial institutions should mobilise at least 10 per cent of their loans to export-oriented industries, he demanded.  

Shyam Prasad Giri, President of Federation of Nepalese Cottage and Small Industries (FNCSI), said that the termination of multi-fibre agreement in 2005 caused lots of damage to the industry. He suggested the government to announce the incentives for the industries already in operation to motivate them to transfer the facility to the GPZ.

Former Vice-Chairman of the National Planning Commission (NPC) and Team Leader of Economic Policy Incubator (EPI) Dr. Shankar Sharma said that there were chances of the revival of the garment industry. He suggested that a lesson should be learnt from the Bangladesh experience of hiring workers at a competitive price and adopt the 'learning by doing policy'.

"Most of the managers are Korean in Bangladesh which created opportunities for human resources exchanges and skill transfer which helped  grow the industry at a higher speed," he said.

According to him, Nepal has already established credibility in the American and European markets which can be used as an opportunity in the days to come.

Neeru Rayamajhi Khatri, vice-president of Federation of Women Entrepreneurs Association Nepal, said that most of the women entrepreneurs are associated with garment, tailoring business.

"They are mostly using locally available raw materials such as natural fibres and developing fabrics. They need technological support to raise the level and standards of business. It has an immense scope," she said and suggested that the GPZ should have women-friendly environment.

Anjan Shrestha, Chair, Industry Committee at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said that as the businesses seek opportunity in all their business ventures, they need competitive business and investment climate.

"We are also working for the socio-economic transformation of the society so the perspective on the private sector must be changed," he said.

He said that existing industries must be given an opportunity to go to the GPZ in the beginning. Ancillary industries must be developed in the GPZ to support the garment industries.

Responding to the concerns of the business community, Executive Director of the SEZ Authority Dr. Chandika Prasad Bhatta said that the authority would try to study into the matter.

"I think we need to create even better investment environment than promised in the Special Economic Zone Act (SEZA)," he said.  

He said that although the SEZA had reduced the land rent from Rs. 150 per square metre per month to Rs. 20 per sq. m per month, about Rs. 100,000 a month, there have been demands to decrease the rent to Rs. 10 per sq metre.

He also said that the GPZ will keep the record of the raw materials and finished goods which checks the production of counterfeit items so some investors might have afraid of it.

"The SEZ will help in industrialisation and the development of export-oriented industry thus contributing to import substitution, foreign currency earning and employment generation," he said.

Ram Chandra Dhakal, Joint Secretary at the Ministry of Industry, Commerce and Supplies, said that the bureaucracy must be able to understand the challenges of the business sector and facilitate in providing incentives.

"The ministry is ready to coordinate with the government agencies and private sector associations and collaborate with the business community," he said.

The programme was organised by the Society of Economic Journalists – Nepal (SEJON), EPI and UK Aid.

Published in The Rising Nepal daily on 4 June 2019.