Two Chinese investors have shown interest in developing Special Economic Zone (SEZ) in Nepal after Nepal's Parliament endorsed the SEZ Bill last month which paved the way for the private sector to establish, operate and manage the SEZs.
According to a senior official of SEZ Development Committee of Nepal, Ping An Insurance (Group) of China in partnership with Lhasa SEZ have sought permission to conduct feasibility study of potential areas where SEZ could be established and run the SEZ.
"The Chinese investors have proposed to explore the areas in Nuwakot and Kavrepalanchowk districts in central Nepal as well other potential areas," Chandika Prasad Bhatta, executive director of SEZ Development Committee told Xinnua on Monday.
According to him, it is the first time foreign investors showed interest in developing SEZ in the country.
The Chinese proposal came after the SEZ bill, which has been sent to the president for a stamping after the parliamentary endorsement, made provision that the SEZ could be developed and operated under public private partnership or sole investment of the private sector. This paved the way for domestic and foreign investors to enter into the venture.
According to the SEZ committee officials, the Chinese investors had met with them a month ago and they received email from the Chinese side seeking permission to explore the possibility of establishing the SEZ in Nepal.
According to Bhatta, his office has notified the Industry Ministry about the proposal.
Dinesh Ghimire, joint secretary at the ministry, told Xinhua that they have got notification about the proposal from the Chinese investors and it would move ahead in an administrative process.
Nepal has sought to develop 14 SEZs in different parts of the country. But the infrastructure has only been developed in a single SEZ in Bhairahawa, a south western city of Nepal, so far.
The SEZ Committee has started infrastructure development in two other proposed SEZs. Construction of roads is ongoing in another proposed SEZ and a feasibility study is being conducted for another SEZ, according to Bhatta.
Nepal specifically aims to attract export industries inside SEZ and more foreign investment and the SEZ bill has offered several incentives.
According to the bill, the industries operating inside the SEZ will get special treatment including taxes and fees to be levied and leasing of buildings and lands.
It has made provision of full income tax exemption for five years for the industries operating inside the SEZ. The industries that use at least 60 percent domestic raw materials will get 50 percent tax exemption for additional 10 years while others will get additional five-year tax exemption.
The bill has also banned workers from holding all forms of protests that could affect the production of the factories in the zone. Strikes by different trade unions, caused by the interests of certain political parties, have been blamed for a major constraint for attracting investment in the Himalayan country.
The bill has also allowed foreign investors to repatriate dividends and payment of foreign loans and do transactions in foreign exchange.
