Private sector welcomes SEZ Act amendment

Kathmandu, Jan. 24:

Industrial sector stakeholders have said that the recent amendments to the SEZ Act will encourage investors towards injecting investments in the Special Economic Zones (SEZs).

They said that the government’s decision to reduce the compulsory export provision for industries inside SEZs to 60 per cent from existing 75 per cent was investment-friendly and would encourage the private sector towards investing in such protected zones.

They made the comments at a roundtable discussion on ‘Problems faced by industries inside the Bhairahawa SEZ' organised by the Society of Economic Journalists of Nepal in the capital on Thursday.

With various amendments intended to lighten up the export provisions for industries inside SEZs and assure further tax incentives, the Cabinet had endorsed the SEZ Bill last week. As of present, the SEZ Bill has been tabled at the Parliament for the final nod.

Along with reducing the mandatory export provision for industries operating within the SEZ to 60 per cent of their production, the new SEZ Bill also assures 100 per cent income tax waiver for such industries for the first five years and 50 per cent income tax waiver thereafter. Similarly, the Bill has also reduced the rental fee for industries within SEZ to Rs. 20 per square meter per month from Rs. 150 per square meter month.

Furthermore, the SEZ Bill has also reduced the minimum investment ceiling for industries inside SEZs to Rs 20 million from Rs 50 million.  

“The SEZ Act has been amended keeping in priority to boost the morale of investors inside the SEZs. If necessary, we can be further flexible in the export provision for such industries in future,” said Dr. Chandika Prasad Bhatta, executive director of SEZ Authority Nepal.

He said that the new SEZ Bill has also incorporated a provision whereby industries inside SEZs would get all assured tax waiver facilities under the recommendation of SEZ Authority itself.   

Speaking at the discussion programme, Dr. Shankar Sharma, former vice-chairman of the National Planning Commission (NPC), said that although the SEZ Bill had attempted to promote investment inside the SEZs, the government should now focus on effective implementation of the SEZ Bill.

“The new SEZ Bill has addressed some of the key issues raised by investors inside the SEZs. However, it is crucial that the government implements the law properly through enhanced cooperation between the government agencies,” said Sharma.

Similarly, Toyam Raya, Director General at the Department of Customs, said that available laws of the government were contradictory resulting to difficulty in their effective implementation. “Therefore, the government should ensure that no law should contradict with one another while bringing them,” said Raya.

Hara Raj Neupane, Deputy Managing Director at the Nepal Electricity Authority (NEA), assured that the authority was serious in providing necessary power supply in the industrial sector, including the Bhairahawa SEZ.

Published in The Rising Nepal daily on 25 January 2019.