Rental charge for factories within Simara GPZ to be reduced

The government is going to review the fee for factories within Garment Processing Zone (GPZ) in Simara as the manufacturers’ showed no interest to invest in the protected zone citing high rental charges.
The SEZ Authority has fixed the rental fee of Rs 20 per square feet per month for investors to establish factories within Simara GPZ. Since the investors seemed not interested in the current rate, the Ministry of Industry, Commerce and Supply (MoICS) has formed a rental fee fixation committee to revise rental rate inside the Simara GPZ.
According to joint secretary at the ministry Chandika Bhatta, who is also the former executive director of Special Economic Zone (SEZ) Authority, the government is going to reduce the rental fee as garment manufacturers have refused to invest – at the current rate – in Simara GPZ.
The SEZ Authority – six months ago in May – had asked for applications from interested garment manufacturers to invest within the GPZ. But not a single investor applied forcing the government to revisit the rate. The garment manufacturers, however, asked the government to reduce the rental fee at Simara GPZ to Rs 5 per square feet per month.
“The committee will soon determine a new rental fee rate to encourage garment manufacturers to invest in the Simara GPZ,” he said, adding that the investors did not express interest to invest within the GPZ, even after repeated notices stating the zone is open due to rental fee. “As the GPZ in Simara was developed to promote production and exports of garments, the government will give ear to the investors and encourage them to invest in the GPZ.”
Once the rental fee is competitive, garment manufacturers are expected to invest in the Simara GPZ, according to the Garment Association of Nepal (GAN).
The government – since long – is planning to start GPZ and SEZ – to promote export – offering the investors basic infrastructure, including internal road, electricity and water supply, sewage system, weighing bridge, waste water treatment plant, petrol pump, banks and insurance service.
After the US government extended zero tariff preference for 66 products – including apparels – into its market through the ‘Trade Facilitation and Trade Enforcement Act’ in February 2016, the government came up with the concept of GPZ expecting to bring down the production and export cost as Nepali garments are relatively higher compared to South Asian countries.
But the services and facilities, apart from rental fee in the GPZ has created dilemma. 
Likewise, the establishment of SEZ in Bhairahawa has already taken more than 18 years but it has not yet been operational hindering the government move to boost the export. 

Government opens Simara GPZ for investment

The Special Economic Zone (SEZ) Authority Nepal has called for applications from interested parties to invest inside the Garment Processing Zone (GPZ) in Simara.
Publishing a notice, the SEZ Authority has asked firms to submit their applications within May 31 to set up their factories across 68 blocks inside the GPZ. It has also fixed rental fee of Rs 20 per square feet for investors to establish their factories inside the Simara GPZ.
According to executive director of SEZ Authority Nepal Chandika Bhatta, the authority will analyse the applications that it receives for Simara GPZ and soon award the blocks for investors to invest in.
The authority will provide necessary land to investors on lease for 30 years with the possibility of an extension, according to the notice of the SEZ Authority Nepal that is hopeful that all 68 blocks will be booked within the application submission deadline
Bhatta claimed that investors in the Simara GPZ will be assured of basic infrastructures including internal road, electricity and water supply, sewage system, weighing bridge, waste water treatment plant, petrol pump, banks and insurance service.
The government had came up with the concept of GPZ after the US extended zero tariff preference for 66 products, including apparels, into its market through the ‘Trade Facilitation and Trade Enforcement Act’ in February 2016. Construction of the GPZ is expected to bring down the production and export cost of garments, which is relatively higher compared to other nations in the South Asian region, apart from reducing the cost of production and exports. The GPZ is also expected to slash the high transport and shipment costs incurred by Nepali garment traders due to the country’s landlocked status, as the Simara GPZ is located near the country’s only rail-linked dry port in Birgunj.

GAN for FTA with US, early passing of SEZ Bill

Garment Association Nepal (GAN) has asked the Ministry of Commerce and Supplies to propose for Free Trade Agreement (FTA) with the US in the next Trade and Investment Framework Agreement (TIFA) council meeting to be held in Kathmandu.
During the Readymade Garment Management Committee meeting chaired by secretary of Ministry of Commerce and Supplies Lalmani Joshi yesterday, the association asked the ministry to propose for FTA with the US to boost exports of readymade garments and pashmina to the US, take lead in passing the Special Economic Zone (SEZ) Bill that is in the parliament for the last three years and clarify on the 10 per cent countervailing duty (CVD) charged by India on the export of Nepali readymade garments to India.
"There is confusion over the 10 per cent countervailing duty charged by India on the export of Nepali garments to India," said president of GAN Uday Raj Pandey, adding that the Commerce Ministry has to clarify on the issue as the 10 per cent countervailing duty has made Nepali garments less competitive in the Indian market which in turn has hurt exports.
The Readymade Garment Management Committee has representation from the Ministry of Trade and Finance. "The concerned heads of the Customs Department themselves are not clear on the countervailing duty," he said, adding that the association, after getting the real picture, will decide on how to move forward.
Similarly, the association has also asked the Commerce Ministry to take the lead in passing the Special Economic Zone (SEZ) Bill that is in the parliament since the last three years. "The Industry Ministry alone has not been able to pass it, so we have asked the Commerce Ministry to help pass the SEZ Bill that is key to promote exports," said Pandey.
SEZ will also house Garment Processing Zone (GPZ) that will boost the exports of garment sector, according to the association.
The country is preparing for the Investment Year and needs to create a favourable investment climate and SEZ could ensure foreign as well as domestic investors of a conducive environment, he said, adding that FTA with the US will help US investors bring in investments to Nepal and Nepali readymade garments and pashmina will also get the most favoured nation status and Generalised System of Preferences (GSP) facility that could help boost exports. "It's a win-win situation for both countries."
"The TIFA council meeting that should have been held earlier has been postponed repeatedly, but this time the government should hold it and propose for FTA to make the TIFA a more practical vehicle for the promotion of Nepali garments and pashmina in the US market," according to the president of the association. "Nepal must propose the FTA during the TIFA council meeting that has been rescheduled for the last week of September."
At one time, the country used to export readymade garments and pashmina worth Rs 15 billion but it has come down recently. According to the central bank's data, in the first seven months of the current fiscal year, the country has exported readymade garments worth Rs 347.6 million to India and readymade garments worth Rs 2.80 billion to the third countries.
"Similarly, the country has exported pashmina worth Rs 1.87 billion to a third country and pashmina worth Rs 21.4 million to India," the central bank's data has revealed. However, exports of readymade garments and pashmina to third countries, except India, have increased this fiscal year as compared to the last three fiscal years.

Garment exports to third countries
Fiscal Year — exports
2009-10 — Rs 2.29 billion
2010-11 — Rs 1.89 billion
2011-12 — Rs 2.80 billion
(Figures of the first seven months of the fiscal year except India. Source: Nepal Rastra Bank)