Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Entrepreneurs are unwilling to set up industries in the Special Economic Zone (SEZ) in Bhairahawa. Due to the export criteria brought by the government, industrialists are not attracted to SEZs.
There is a provision that industries established in SEZs should export at least 60 per cent of their production. So far, six industries have been set up there but one of them has met the export criteria.
Disputes between the SEZ and the industrialists have been rising due to non-export as per the standards, because of which other industries that have signed an agreement to set up industries have not started construction work.
According to the industrialists, the provision that the industry to be established in the SEZ should export 60 per cent of the total production is not practical.
Similarly, the customs policy of the government has also caused difficulties to the industrialists, they said.
The customs duty on imported raw materials is more expensive than some manufactured goods, so the products here cannot compete with the imported finished goods. Exports are not encouraged as production costs are high.
Only four months ago, the SEZ management banned Shakti Minerals from selling its products in the local market citing that it could not meet compliance.
As per the Article 6 of the Special Economic Zones Amendment Act 2075, the industry should export at least 60 per cent of its production.
Shakti Minerals had exported only 23.84 per cent of its production in the fiscal year 2019/20. Similarly, it has exported 2.56 per cent in the last fiscal year 20120/21 and about 12 per cent in the current fiscal year 2021/22.
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