We support the initiative and urge both the government and the labor unions to do likewise. The government should, besides facilitating the process, provide soft loans as demanded by the industry for setting up the processing zone. The garment industry, though struggling to survive, has great prospects of revival. It may not regain past glory as the single largest exportable item -- in the year 2000, Nepal exported over 13 billion worth of readymade garments, chiefly to the United States -- but it can capture the growing market potential in India by exploiting the widening wage differences between the Nepali and Indian garment industries.
The proposed processing zone will allow employers to recruit workers on contract basis and is expected to free the delivery-sensitive garment industry from the hassles of strikes and other production-related obstructions. But such a zone cannot be set up unless labor unions also buy into the idea and properly negotiate the contracts and terms of employment in such processing zones. In the absence of laws governing industrial zones, entrepreneurs and labor unions should negotiate work contracts in adequate detail so that there is no room for differences of interpretation subsequently. Once negotiated and implemented in earnest, the contracts can act as a test case and go a long way in building confidence between labor unions and employers for setting up Special Economic Zones in future.
We also urge the government to enact a Special Economic Zone (SEZ) Act without delay. We have already seen from the Bangladeshi experience what miracles SEZs can do to boost manufacturing in the country. Once enacted, such a law will facilitate the setting up of SEZs, providing blanket protection to any industry inside an SEZ against strikes and other forms of industrial obstruction.
There is, unfortunately, a lack of enthusiasm among policy makers for the whole idea of industrialization in Nepal. We seem to have already concluded that Nepal, sandwiched between two manufacturing giants, has no industrial future. That is a faulty and fatalistic conclusion. With rising living standards and a huge surge in labor demands, the industrial wage is also increasing very fast in both India and China. Given our proximity to the Indian and Chinese markets, there is no reason why manufacturing industries cannot grow in Nepal if we can improve the power supply, stabilize our politics, and reform our rigid labor laws, at least for the SEZs.
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