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Deadline Looms for Investment in Nepal's First Special Economic Zone

Overseas operator sought to launch export-oriented production facilities in the Bhairahawa Special Economic Zone.

Photo: The Bhairahawa Special Economic Zone: An artist’s impression.
The Bhairahawa Special Economic Zone: An artist's impression.
Photo: The Bhairahawa Special Economic Zone: An artist’s impression.
The Bhairahawa Special Economic Zone: An artist's impression.

The application deadline is rapidly approaching for those looking to operate production facilities in Nepal's first dedicated Special Economic Zone. Interested parties have until 12:00 hours (local time) on Sunday, 8 February, to register interest in establishing a plant in Bhairahawa, a municipality close to the Indian border.

With applications welcome from both overseas and local operators, interested parties have to prove they have operating capital of at least US$800,000 for their submissions to even be considered.

According to documentation issued by the Government of Nepal's Special Economic Zone Development Committee (SEZDC), part of the Ministry of Industry, an initial licence period of 30 years will be issued to successful applications, with subsequent five-year extensions negotiable.

The SEZDC is said to be particularly interested in applications relating to the following sectors: food; herbal products; leather goods; garments; carpets and woollen production; pashmina and silk products; handmade paper production; handicraft and ornaments; metallics; sportswear; ornaments and precious stones; plastics; hosiery; assembled electronics and electrical items; electronic and electrical parts; information technology; and beverages.

The Economic Zone was officially launched in November 2014, and was the result of 11 years of planning and development. It has been introduced as part of the country's bid to accelerate its process of domestic industrialisation, attract higher levels of FDI and boost its overall level of export activities. It is also hoped that the zone will play a key role in raising local employment and promoting technology transfer.

The designated zone currently extends across some 35 hectares of land and has been subdivided into 69 plots measuring 1,468 to 3,737 square metres. The proposed monthly per square metre rent has been set at INR150 (US$2.40), with rebates available on a negotiable basis. The zone is expected to house more than 200 factories, with more than 95% of the building work already completed. At present, work is still continuing on some of the supporting infrastructure for the development, including the adequate provision of fuel and power resources.

Successful applicants will be expected to demonstrate their technical capacity, as well as an appropriate level of financial resources. Clear preference will also be given to those parties with a track record of accomplishments in their chosen sector.

To date, the development of the zone has been mired in controversy, with a number of local businesses critical of the time taken to bring the project to fruition. There have also be concerns over the government's failure, to date, to implement the SEZ Actwhich will regulate the operation of the new zone. Currently the development is subject to enabling legislation – The Bhairahawa SEZ Operation Manual and Working Guidelines 2014 – which has already received government approval.

Interested parties can email their submissions to seznepal@wlink.com.np. A notice on the success of an application is expected to be issued within 75 days of the deadline.

Sunny Chau, Bangkok Office

Content provided by Picture: HKTDC Research
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