November 21, 2019 08:58 AM NPT
By: Dilip Poudel
Say mandatory export requirement impractical
KATHMANDU, Nov 21: Nearly half a dozen industries, which were preparing to start operations in Bhairahawa Special Economic Zone (SEZ), have decided to move out, realizing that it would be impossible to meet the criteria to export at least 60% of their total productions.
SEZ was established by the government to reduce imports by facilitating export-oriented industries. But industries are showing reluctance to move into SEZ due to mandatory export requirement and lack of necessary infrastructure.
New Metal Industries Pvt Ltd, Siddhartha Pipe Pvt Ltd, two factories of Siddhartha PET Plast Pvt Ltd and Sugam Nano Herbal Pvt Ltd have already decided to move out of Bhairahawa SEZ.
The decision of industries to move out of SEZ does not bode well for the government which has taken a policy of discouraging imports and promoting exports.
Promoters of industries, which have decided to move out of SEZ, complained that the government made commitments to facilitate export but failed to live up to them.
These industries have paid rent of about a year.
New Metal Industries Pvt Ltd was preparing to start production of steel materials with an investment of Rs 1 billion. Rohit Gupta, managing director of New Metal Industries, said that they decided to move out of the SEZ due to policy that requires them to export at least 60% of their productions. “The requirement is impractical. We decided to move out as we didn’t find feasible the business of bringing raw materials from foreign countries and selling finished product in foreign countries,” Gupta added.
He claimed that import could be substituted by allowing industries to sell their products in the domestic market.
SEZ Bhairahawa has signed agreements with 22 industries so far. Of them, only three have started production.
Industries have not been able to start operation in SEZ even though it has already been one and half decades since the government decided to open Bhairahawa SEZ.
Pradip Kumar Agrawal, director of Siddhartha Pipe Pvt Ltd, said the mandatory export requirement was making SEZ less attractive for industrialists. “We do not get additional incentives,” Agrawal said, adding: “Mandatory export requirement and lack of infrastructure prompted us to move out (of SEZ).”
Sundar Thapa, an information office with SEZ, confirmed that five industries have terminated contract with SEZ.
“They have one year’s rent and have now decided to terminate contract,” he said, adding that only three of the 22 permitted industries have started operation in SEZ so far.
SEZ Authority charges industries Rs 20 per square feet as rent for the space in SEZ. “We could not build electricity substation on time. We must accept it as our weakness,” he said, blaming the delay to lack of coordination among different government agencies. “We are inviting bids for building substation this month,” he added.
Some industries operating in Bhairahawa SEZ, meanwhile, have started exporting their productions. Shakti Minerals, for example, have exported Rs 5 million worth of goods after starting production in SEZ.
Two firms – Global Steel Bhada Bartan and LED Light – started commercial production from October 15, while Panchakanya and Jaya Buddha Industries are busy setting up their plants.