the border with India and ini!ated the basic physical infrastructuredevelopment works. A study rela!ng to the prospects of poten!alindustries that can be set up inside the zone and its managementand opera!on modali!es was also conducted. This study hasiden!fied 15 varie!es of poten!al industries that can be set upin the zone. They are: Food products, herbal products, leatherproducts, garments, handmade paper products, handicra#s, metalproducts, sports wears, jewelry, plas!c products, hosiery products,assembled electrical and electronics products, electrical/electronicparts and components, IT. Moreover, the products iden!fied by NTISlike ginger, instant noodles etc are also included.

The current status of the Bhairahawa SEZ is given in following table.

Undergoing Work Completed Work Remaining works

Parking area development,Strom Water Side Drain, SiteDevelopment, Construc!onof Generator House

Water Supply, Road, Tele-communica!on, Electricity,Drainage, Land Development,Service Building, AdministritaveBuilding, Security Checkposts,Treatment Plant

Weighing Bridge,Petrol Pump

2. Simara SEZ:

GoN has selected Simara and its vicinity for establishment of a SEZ.It is one of the main industrial city of the na!on, which lies in theCentral Development Region of Nepal and is about 270 km. fromKathmandu by road.

Significant numbers of export oriented industries of various kindshave been established in Parsa, Birgunj and its vicinity. HetaudaIndustrial District (HID) in Hetauda is only about 40 km. from Birgunjcity. Fer!le land and existence of numerous irriga!on schemeshave further enhanced the prospect of agro-based industries inParsa district and its vicinity. At present industrial products such asreadymade garments, woolen carpets, pashmina, woolen garments,handicra#s, medical herbs, precious and semiprecious stones andornaments, leather goods, handmade papers, co$on towels andclothes, agro products (fruits, vegetables etc.) are being exported toIndia and other countries.

Since Inland Container Depot (ICD) is constructed at Birgunj withbroad gauge railway line connec!on to the Indian railways, Birgunjhas the best opportunity to send the products to the different ci!esof India and third countries as well as to import raw materials fromthere.

The following table shows the current status of Simara SEZ

Undergoing Work Completed Work

Boundary Wall Construc!on Feasibility Study, Master Plan of Block A,Upgrading of 2km long approach road

Current status SEZs in Nepal:

1) Bhairahawa Sez:• Loca!on :- Rupandehi district , Bagaha VDC, Ward No 7• Area of land :- 36.8 ha• Present status :- At the phase of comple!on2 ) Simara SEZ:• Loca!on:- Bara district , Simara• Area of Land:- 564 ha approx.• Present Status:- Upgrading of 2km long approach road, Boundary wall under construc!on,3) Panchkhal SEZ :• Loca!on :- Hokse V.D.C, Panchkhal 3 km. east from Panchkhal Bazaar in Kavrepalanchowk district.• Area of land :- 50 ha. approx.• Present status :- Feasibility study completed, Environmental Impact Assessment Ongoing, land acquired4) Biratnagar SEZ :• Loca!on :- Amaduwa V.D.C of district Sunsari and Biratnagar Sub-Metropoli!an city , Morang

About 3 K.M. west from Rani Customs in Biratnagar• Area of land :- 200 ha. approx• Present status :- Feasibility study completed and land acquis!on work on-going5) Kaspilvastu SEZ:• Loca!on :- Sauraha V.D.C , Kapilvastu 20 km. East from Krishnanagar Customs Point.• Area of Land :- 64 ha. approx.• Present status :- Feasibility study completed.6) Jumla SEZ:• Loca!on:- Pandugupha V.D.C, Jumla 1.5km. North from Nagma-Mugu road .• Area of Land :- 47 ha. approx.• Present status :- Feasibility study completed , Approach Road is under construc!on7) Dhangadi SEZ :• Loca!on :- Shreepur V.D.C , Haraiya, 3.8 km north of Khu!ya along East West highway.• Area of Land:- 180 ha. approx.• Present Status:- Feasibility study completed.8) Nuwakot SEZ:• Loca!on:- Ratmate, Jilling• Area of Land:- 70 ha. approx.• Present status:- Pre-feasibility study completed9) Nepalgunj SEZ:• Loca!on:- Naubasta VDC• Area of Land:- 348 ha. approx.• Present Status:- Pre-feasibility study completed10) Jhapa SEZ:• Loca!on:- Ratuwamai Forestry Land,Topganchhi V.C.D Ward no. 5, district Jhapa• Area of Land:- 300 ha. approx.• Present Status:- On-going Feasibility study but now under considera!on.11) Dhanusha SEZ:• Loca!on:- Umaprempur V.D.C• Area of Land:- 55 ha approx.• Present Status:- Feasibility Study on-going12) Rautahat SEZ:• Loca!on:- Jhunkhunwa V.D.C• Area of Land:- 106 ha. Approx.• Present Status:- Feasibility Study on going13) Siraha SEZ:• Loca!on:- Gobindapur V.D.C• Area of Land:- 106 ha. Approx.• Present Status:- Feasibility Study on going14) Gorkha SEZ:• Loca!on:- Deurali VDC• Area of Land:- 60 ha. Approx.• Present Status:- Feasibility Study on going

Background

Export industry sector is a major driving force for the Nepaleseeconomy. As the na!onal investment capacity is low, significantexpansion of the export industry depends on the a$rac!on offoreign investment bringing in technology, marke!ng exper!se andcapital.

Nepal a#er being a member of WTO, must li# its capacity ineconomic front to sustain and move forward through the highlycompe!!ve world economic market. Promo!on of export basedindustries and diversifica!on of export market are the major factorswhich can contribute significantly to the development of economicac!vi!es and thus to the overall upli#ment of the living standard ofthe people.

Government of Nepal (GoN) has adopted the concept of SpecialEconomic Zone (SEZ) to a$ract foreign and na!onal investorsto invest and establish industrial and business units, which willcontribute in increased promo!on of export .

SEZ refers to a totally commercial area specially established forthe promo!on of foreign trade. A Special Economic Zone is ageographical region that has economic laws more liberal than acountry’s typical economic laws. Usually the goal is flourishmentin foreign investment. Moreoever, SEZs are specifically delineatedenclaves treated as foreign territory for the purpose of industrial,service and trade opera!ons, with relaxa!on in customs du!es anda more liberal regime in respect of other laws, foreign investmentsand other transac!ons.

Concept of Special Economic Zone (SEZ)

Special Economic Zone (SEZ) is the advanced concept of ExportProcessing Zone, and is also called the "Free Trade Zones" whichincludes Export Processing Zones, Special Trade Zones, Tourism-Entertainment Zones, Informa!on and Technology Parks, Bankingetc. There is a likelihood of developing, opera!ng and maintainingSEZ on a Public Private Partnership (PPP) model also.

The main objec!ves of crea!ng "Special Economic Zone (SEZ) are:

– To develop compe!!ve capacity of export oriented goodsand services in the interna!onal market.

– To a$ract Foreign Direct Investment (FDI).– To a$ract domes!c and foreign capital and advanced state

of-the-art technology by providing appropriate facility forthe industry through one door.

– To widen the export trade all over the world.

Investment on land, infrastructures development and maintenanceby the government and investment by domes!c and foreigninvestor/entrepreneurs for se*ng up units in the zones andtaxes exempted are the costs to the na!on while labor return,rental of land and buildings, net income of SEZ administra!on andsuppor!ng agencies including u!li!es and taxes collectable arebenefits to the na!on.

The investors in SEZ are generally granted permission andadministered in all respect of export and import under strictlysimplified 'One Window Policy' or one stop service. They haveliberal tax regime with exemp!on to varying degrees in income tax,excise duty, VAT and other taxes and du!es. They have facili!es ofrepatria!on of investment, immigra!on, banking, export-importfacility, foreign workers employment etc. All relevant services suchas custom, banking, insurance, police, fire, medical etc. are at thedoor. SEZs are governed by liberal produc!on oriented labor lawwith policy of forbidding union and strikes. Instead, the labors havewages much higher than outside SEZs, fixed working period andliberal extra benefits and allowances.

Industrial Policy 2010: The Industrial policy, 2010 has been issuedhaving the salient feature where export oriented industries andindustries based in export promo!on house and Special EconomicZones are en!tled to get declared facili!es and assistance on customsduty, excise duty and VAT. Industries established in Special EconomicZone are en!tled to get the declared income tax exemp!ons, VATrelated facili!es and assistance, and exemp!ons on customs dutyand local tax.

Vision: Promo ng Special Economic Zone (SEZ) in Nepal as a totallycommercial area specially established for the promo on of foreigntrade that has economic laws more liberal than a country’s typicaleconomic laws a"rac ng both: foreign and domes c investment.Also develop SEZ as a delineated enclave treated as foreign territoryfor the purpose of industrial, service and trade opera ons, withrelaxa on in customs du es and a more liberal regime in respect ofother levies, taxa on, foreign investments and other transac ons.Mission: Establish and opera!onalize SEZ: Achieve steadyimprovements in the establishment by:

• Proposing measures to create a steadily improvinginvestment friendly environment

• Removing and simplifying outdated unnecessaryprocedures, approvals and legisla!on

• Facilita!ng greater private sector role in SEZ developmentfor opera!on and development

Achieving mission and vision

• A!rac"ng FDI: As one stop agency which facilitates and supportlocal and foreign investors in both manufacturing, and servicessectors as they move up the value chain to achieve highersustainable returns and seek out new opportuni!es.

• Growing industry ver"cals: While Nepal may be a regionala$rac!on in various areas, we have to focus on expanding andextending exis!ng industry ver!cals. Exploring new growthareas will contribute towards crea!ng good bond and sustainingour compe!!veness.

• Enhancing business environment: while interac!ng withinvestors and promo!ng investments, we have to providefeedback to other government agencies to ensure thatinfrastructure and public services remain efficient and costcompe!!ve.

Special Economic Zone Development Committee (SEZDC)

Special Economic Zone Development Commi$ee(the then SpecialEconomic Zone Project) was established on 2069/10/19 (Feb. 11,2013) under Ministry of Industry to prepare the SEZ law andrelevant rules and regula!ons, to conduct the pre-feasibility andfeasibility studies for establishment of SEZ in different areas ofthe country, and to construct required infrastructure in SEZ areas,throughout Nepal. The SEZ Development Commi$ee was formedunder the SEZ Forma!on order 2069 B.S.(2013).

Presently,SEZDC is engaged in helpingand assis!ng in theprepara!onof policy formula!on, making of special law, rules and regula!onsand project proposals. It is also responsible for preliminary siteiden!fica!on, technical and environmental feasibility study, financialviability of the sites iden!fied and the infrastructure developmentworks in Bhairahawa SEZ and Simara SEZ.

Special Economic Zones Under Construction

Inspired by the success of Export Processing Zone (EPZ) in Taiwan,Bangladesh and Sri Lanka, Nepal Government conducted a feasibilitystudy of EPZ in 2000. The feasibility study recommended differentloca!ons such as Bhairahawa, Birgunj, Biratnagar etc as feasibleplaces to establish SEZ on the basis of interna!onal demand,na!onal and local compara!ve advantages, loca!ons of ICDs andother infrastructures. Government of Nepal, in 2000, declared toestablish EPZ in Bhairahawa. In 2004, three more places Simara,Panchkhal and Nuwakot were declared as Special Economic Zone.The Government in 2008/09 budget speech announced that theSEZs would be established in Dhanusha, Dhangadhi and Jumla. Bynow 14 different loca!ons have been declared to be developed asSEZ.

The current status of SEZs (under construc!on) are as follows:

1.Bhairahawa SEZ –

Bhairahawa SEZ lies in Rupandehi district of the WesternDevelopment Region of Nepal & is about 280 kilometers fromKathmandu. GoN acquired 36.8 ha. of land to develop EPZ near

(Infracture development in Bhairahawa SEZ)