Industrialists welcome govt's decision to cut Bhairahawa SEZ rent to Rs 5 per sq metre

KATHMANDU: Industrialists in Bhairahawa are excited after the government reduced the rent rate in the Special Economic Zone (SEZ) operating in Bhairahawa. Officials said not a single plot is currently empty.

Engineer Sabut Dumre, Office chief of Bhairahawa SEZ, said all 68 plots located within 52 bighas have already been rented out. He added that industries have opened in 52 of the 68 plots, while the remaining 16 plots have also been rented and are in the under‑construction phase.

Operating in the SEZ are Shakti Minerals, Bistar Global, Tirupati Metal, Brilliant Lighting Industry, Himalaya Granite, Eco Nepal Energy, RC Industries, S Polymers, Himalaya Eco Industries, CP Metal and Swastik Udhyog. Companies under construction include Super Electric, Imitation Metal, Data World, DIL Global, Almighty Overseas, OBT Nepal and Garment Gear. Panchakanya SS Exports of the Panchakanya Group and Jay Buddha Metal Craft, both located in the SEZ, have closed down.

Industrialists had complained about high rent, restrictive export requirements and difficulties obtaining loans, issues the government has been addressing. Initially, a rent rate of Rs 150 per square metre was fixed for SEZ Bhairahawa. As industries were unwilling to come to the SEZ because the rate was excessive, it was reduced to Rs 20 per square metre. Industrialists remained dissatisfied and demanded a further reduction. The Council of Ministers meeting on November 24 decided to cut the rent in Bhairahawa SEZ from Rs 20 to Rs 5 per square metre.

The Special Economic Zone Act, 2073, originally required industries established in the SEZ to export at least 60% of goods or services produced. An amendment under the Ordinance to amend Some Nepal Acts regarding Investment Facilitation on April 28, 2024, now requires export of at least 15% of production for four years from the date production commences, and at least 30% in subsequent years.

The provision in subsection (2) that allowed a licence holder to sell goods or services produced in the SEZ on Nepal’s domestic market within one year of operation has been extended to three years. A previous restriction preventing investors from transferring an already licensed or registered industry into the SEZ, and barring the transfer of machines, tools or equipment already in use, has been amended to allow such transfers.

Chief of Office, Dumre, said that since the SEZ was opened not to earn profit but to provide maximum opportunities to industrialists in Nepal, the Special Economic Zone Authority will adopt maximum flexibility to arrange the necessary environment for industrialists.

Industrialists expressed satisfaction after the Cabinet meeting reduced the SEZ rent. Netra Prasad Acharya, President of Siddhartha Chamber of Commerce and Industry, Rupandehi, the umbrella organisation of industrialists and businesspersons, said the demands of industrialists have been addressed. He said they had long requested that SEZ rent not exceed Rs 5 and that the issue has finally been resolved. “Policy‑level arrangements were made regarding this subject during the budget speech itself, but a rule to implement it after three months was included in that too,” Acharya said. “We had been raising this issue in the current Council of Ministers as well, and it seems to have been addressed now. We are optimistic that an easy environment for the establishment and operation of industries in the SEZ will be created now.”

Acharya added that the government still has much work to do. He said the core spirit of the SEZ, the one‑window system, has not been implemented yet and requested facilitation. He also complained of problems with basic necessities in the SEZ, such as drinking water, electricity and sanitation.

Sales data show fluctuating performance. In fiscal year (FY) 2019/20, the SEZ recorded sales of Rs 204.4 million, comprising export sales of Rs 148 million and domestic sales of Rs 56.4 million. In FY 2020/21, total sales were Rs 1,035 million, comprising exports of Rs 854.7 million and domestic sales of Rs 180.3 million. In FY 2021/22, sales totalled Rs 729 million, comprising exports of Rs 422.4 million and domestic sales of Rs 306.6 million.

Authority statistics show that in FY 2022/23, the SEZ recorded total sales of Rs 845.9 million, comprising exports of Rs 454.1 million and domestic sales of Rs 387.9 million, while in FY 2023/24 total sales were Rs 916 million, comprising exports of Rs 603.6 million and domestic sales of Rs 312.4 million. In FY 2024/25, total sales were Rs 1,886.6 million, comprising export sales of Rs 989.6 million and domestic sales of Rs 897 million. By mid‑October of the current FY 2025/26, sales of Rs 460 million have been made from the SEZ, comprising export sales of Rs 175.3 million and domestic sales of Rs 284.7 million.

The government decided to establish the Special Economic Zone project on January 29, 2004. Under the Special Economic Zone Act, 2073, the Authority was established on October 4, 2016. The Bhairahawa SEZ operates as a pilot project with objectives including export promotion, reducing the trade deficit, job creation, foreign currency earnings, and attracting foreign investment and technology.

(With inputs from RSS)