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Regardless of the many industries within the industrial districts in our country, these districts have been facing their own share of problems.
Since the establishment of Nepal’s first industrial estate—Balaju Industrial District—in Balaju, Kathmandu, in 1960, the country has seen development of 11 such zones, with several others in the pipeline.
However, these industrial zones have failed to operate in full capacity and yield desired results, thanks to persisting problems such as lack of infrastructure, energy crisis, human resources crunch, age-old policies, and the government’s apathy towards addressing problems facing the sector.
The contribution of these estates to the country’s Gross Domestic Product (GDP) stands at an estimated 6 percent, while that of the entire industrial sector is around 16 percent, according to Nanda Kishor Basnet, chairman and general manager of Industrial District Management (IDM) Limited—a government of Nepal undertaking that oversees the industrial estates.
Given this sector can play a crucial role in boosting the country’s economic growth, and creating much-needed employment opportunities, it’s high time the government accorded due priority to industrial promotion and development.
In the Kathmandu Valley alone, there are three industrial districts—Balaju Industrial District, Patan Industrial District established in 1963 and Bhaktapur Industrial District set up in 1979. And, they too are grappling with aforementioned problems. Hit hard by the 2015 Gorkha earthquakes, the government is yet to come up with a concrete plan to address their reconstruction needs, even as two years have passed since the deadly tremors struck.
Balaju Industrial District
Balaju Industrial District is spread across 670 ropanies of land and has offered employment to 4,000 individuals. The country’s largest industrial estate in terms of revenue generation has the capacity to house 137 industries, but only 97 industries are currently operating, while eight have closed down.
“We need around Rs 200 million to revive the industrial estate. We generate yearly revenue of around 190 million, but as we operate under the IDM, that revenue is shared among other industrial estates,” said Rajendra P Kandel, acting manager of Balaju Industrial District Management Office.
“We need around Rs 200 million to revive the industrial estate. We generate yearly revenue of around Rs 190 million, but as we operate under the IDM, that revenue is shared among other industrial estates", said Kandel.
The 2015 earthquakes have damaged the estate’s boundary wall and water pipelines. Many structures and sanitation systems also need repair and maintenance. “We have not been able to operate in full capacity. We still face three to five hours of daily power cuts even as the Kathmandu Valley has been declared load-shedding free,” he said.
Kandel suggested revision to policies that have been barring them from carrying out reconstruction works.
Patan Industrial District
Similar is the story of Patan Industrial District that is spread on 293 ropanies. But it also faces a different problem: industrialists residing inside the estate. “The industrialists should realize that the industrial zone is not a residential area and empty those spaces,” said Sirjana Shrestha, manager at Patan Industrial District Management Office.
Originally developed as a hub for the promotion of Nepali art and handicrafts, Patan Industrial District currently houses 102 industries and has offered employment to 2,274 individuals. These industries are reeling under severe shortage of skilled human resources, largely due to mass departure of Nepali youths for foreign employment, according to Shrestha.
Bhaktapur Industrial District
Baktapur Industrial District, the smallest among the three Valley-based estates, was also set up for promoting Nepalese art and handicrafts. But its scope has been widened and houses a wide range of industries, from international paint manufacturers and to domestic dairies. Spread on 71 ropanies, it has 37 industrial spaces and employs 800 individuals.
Stakeholders say these industrial areas need massive infrastructure overhaul to realize their true potential.
These estates should be developed in such a way that they have everything that a typical industry requires to operate smoothly, such as logistics, packaging materials, water, and electricity, according to Dr Posh Raj Pandey, executive chairman of South Asia Watch On Trade, Economics And Environment (SAWTEE).
“If these services required for industries are available within the industrial estates, it will be much easier for industries to operate efficiently,” he said, adding this will also make their products affordable and boost their competitive advantage.
Dr Pandey also urged all not to be contented with the growth of the services sector. “Once the remittance inflow slows down, the revenue of the services sector will nosedive,” he said. “So, to ensure sustainable growth, industrial development is imperative. But the existing industrial estates are not in good shape.”
“If services such as logistics, packaging materials, water, and electricity are available within the industrial estates, it will be much easier for industries to operate efficiently” , said Dr Pandey