The business community across the country has always been voiced for special economic zone (SEZ) for the proper development of trade and industry. In response to this demand and the need of the hour, the government is executing a plan to build at least one SEZ in each of the seven states of the country including in Biratnagar, Simara, Panchkhal, Gorkha, Bhairahawa, Jumla and Dhangadhi. Among these, the Bhairahawa SEZ has already been completed where business firms can run 17 different types of businesses including agro-based, readymade garments, footwear, construction materials, soap, and automobile, among others. A total of 26 firms had applied for space to set up their business in Bhairahawa SEZ out of which 19 had been chosen for the purpose. These business firms had pledged to invest over 7 billion rupees and create more than 5,000 jobs.

However, things seem to be transpiring rather differently with business entrepreneurs backtracking from their pledge to set up their business in the SEZ; a news report in this daily states that at least five of the companies that had been selected to run business from the SEZ have cancelled their agreements with the government citing absence of essential facilities like uninterrupted supply of power, drinking water and other amenities. As far as power is concerned, the NEA has pledged to supply 4-5 megawatt of power without interruption to the SEZ and also vowed to supply additional power from 33 KVA transmission line in Bhairahawa if necessary. But what seems to be the primary concern of the entrepreneurs is the mandatory provision of exporting 60 per cent of all production they make to enjoy the incentives they are entitled to.

The SEZ offers 100 per cent income tax exemption for the first five years from the beginning of transaction and 50 per cent concessions for another five years, while the industries using 60 per cent Nepali raw materials will get 50 per cent tax waiver for the next 10 years. The industries operating inside the SEZ will also get VAT waiver and discount on customs duty while importing required machinery, raw materials and packaging materials. Similarly, foreign investors can repatriate the income they make from share transaction, dividend and capital and interest of foreign loan.

Still, business entrepreneurs are reluctant to establish industries inside the SEZ. They maintain that there is no guarantee of services as promised by the government; they refer to hardships they face to get bank guarantee and tax exemption on the import of raw materials and necessary equipment. Entrepreneurs even state that the customs office does not recognise the letter issued by the SEZ. Besides, they now wish the government to cut the export ceiling to 50 per cent, though the current 60 per cent mark had been set as per the demand of the entrepreneurs from 75 per cent previously. They also want the government to make drastic cuts in rent from the proposed 20 rupees per square feet to 5 rupees per square feet.

There is no doubt that the government needs to address the genuine demands of the entrepreneurs, which it has demonstrated by pulling down the export ceiling to 60 per cent as demanded by them. But the entrepreneurs’ reluctance to base their business in SEZ and now their desertion of the same in one or another pretext appears unreasonable in view of their earlier demand, even pressure, to build SEZ for creating better business environment. Instead of pulling out of SEZ, they should have sought solution to their concerns in consultation with the concerned authority.