SEZ factories mostly reliant on imported raw material

Published On: February 2, 2019 10:59 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 2: Goods that Nepal will export in the coming months from Special Economic Zone (SEZ) will be made of imported raw materials, save for a handful products that will use Nepal’s own raw materials. 

It means Nepal will miss an opportunity to value-add on the production with locally available resources, for which the country boasts. 

Coffee, medicinal herbs, tea, pashmina, and ginger are locally available raw materials that are also listed as products of competitive advantages. But few of the 22 plants being installed in the country’s first zone dedicated for exporting will produce these products. Experts worry the level of value addition will be lower if the plants are mostly of import-based.

Most of the SEZ plants will produce pipe and fittings, water tanks, steel products, and other plastic products to export. There are few firms, which have got allotments in the 68 lots provided to different companies for the 22 plants, that have announced to produce medical herbal extracts, cosmetic herbal extracts, herbal supplement extracts, lentils, walnut, cashew nut, mouth freshener, limestone, dolomite lumps, and soap berries using domestic resources. 

The industries have a mandatory provision of exporting 75 percent of their products. The government is providing an array of facilities and incentives including zero customs tariff on import of technology and machineries and equipment, and only one percent customs tax on import of up to three vehicles to each manufacturing plant. 

Executive Director of SEZ Chandika Prasad Bhatta admitted that manufacturing industries are mostly targeting to tap Indian market by manufacturing goods using imported raw materials. 

Former Commerce Secretary Purushottam Ojha said that domestic raw materials could have higher value addition and make huge economic impacts. 

“However, implementation of SEZ is important as it is the first of its kind in the country. Its success will pave way for more investments in the country,” said Ojha, adding that the government should establish similar economic zones at other places. 
Creations World Wide Pvt Ltd has planned to produce footwear and accessories, while Sugam Nano Herbal Industries Pvt Ltd will produce medical herbal extracts, cosmetic herbal extract, essential oil, and herbal supplement extract. Arihant Agro Processing Industries Pvt Ltd will produce lentil, walnut, cashew nut and mouth freshener among others, and National Organics Pvt Ltd will produce soap berries. 

All other industries including Panchakanya HDPE Pipes Manufacturing Company, Neer Industry Pvt Ltd, and Grow-well innovation Pvt Ltd are based on imported raw materials.

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