Thursday, June 13, 2013

Bhairahawa SEZ to come into operation from next fiscal

The Bhairahawa Special Economic Zone (SEZ) that was planned to be operational within this fiscal year will come into operation from the beginning of next fiscal year. "The Bhairahawa SEZ will come into operation from next fiscal year," according to joint secretary at the trade ministry Jeet Bahadur Khadka.
However, lack of SEZ Act might be a stumbling block in the smooth implementation of the Bhairahawa SEZ as in an absence of legal teeth, it could not be fruitful. The law with clear labour rights with social security but strike free, and other bank and financial, customs facilities can only facilitate the SEZ operation that can promote exports. "The government should bring SEZ Act through ordinance for its smooth operations," he added.
The Bhairahawa SEZ, whose construction started in 2008, can generate 9,100 jobs over a decade, according to a report ‘Creating Competitive SEZ Regime’, prepared jointly by the International Finance Corporation (IFC), Foreign Investment Advisory Service, and IFC-South Asia Enterprise Development Facility.
"In a worst case scenario, the Bhairahawa SEZ will create 9,100 jobs," it projected, adding that it could generate around 13,300 jobs in a progressive case scenario and employ 20,500 people in the best case scenario.
"The Bhairahawa SEZ — the first of its kind in the country — will also fetch investments worth Rs 427.86 million in a decade in a conservative estimation, Rs 625.34 million in a progressive estimation, and Rs 883.94 million in the best case situation over a span of 10 years," it added.
The SEZ will not only create employment and attract investments, but also help the government earn revenue. "In a decade, it could earn Rs 4.5 million revenue for the operator in a worst case scenario," the report predicted, adding that in a middle case scenario it could generate Rs 6.65 million, and in the best case scenario it could earn Rs 10.25 million for the operator in 10 years.
Some dozen companies are interested in shifting their bases to the Bhairahawa SEZ but it depends on the government’s policy which will decide on what type of industries will be located in the SEZ, though earlier, it had planned to house only export-oriented industries.
However, some industries have been asking the government to allow industries that are domestic-market based also to have their bases in the SEZ with incentives.
Likewise, the smooth operation of the SEZ depends on how early the government brings the SEZ Bill. As there is no Parliament, the government should bring the Bill through an ordinance before the Bhairahawa SEZ comes into operation to address the facilities — like bank finance, lease facility, special labour Act for effective operation of industries — that it offers.
After the Bhairahawa SEZ comes into operation, the government will start building necessary infrastructure for the Birgunj SEZ.
According to the government's plan, it will look after the overall management of the SEZ but the private sector will establish export-based industries within the SEZ.

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