Nepal Initiates SEZ For Exporting Competitively Priced Garments

Economy

Nepal Initiates SEZ For Exporting Competitively Priced Garments

The Nepal government has come out with a breather for its garment industry by initiating the construction of an INR 2.5 billion garment processing zone. The park will be situated in Simara’s Sepcial Economic Zone (SEZ). The gestation period for this project is expected to be over by 2018-19 season.

The project comes as a breather because it is expected to lower the cost of production of garments in Nepal and at the same time make it export oriented. As of today, the cost of production of garments in Nepal is high compared to its neighboring countries. The Nepal government was of the view that the services and the infrastructure that will be made available at the processing zone will enhance the lowering of prices of Nepali products and hence render it competitive in the global markets.

“The facility is located in the Bara district of Nepal. It’s likely to be spread out over more than 300 bighas. In all it will house at least 30 production units of apparel,” Nepali media quoted Chandika Prasad Bhatta, executive director of the Special Economic Zone (SEZ) development committee as saying.

According to the local media coverage, “The garment manufacturers can purchase the plot at the rate of INR 20 per square metre with infrastructure such as electricity, drainage and other such logistics at an affordable price. Firms exporting at least 75 per cent of their production can also benefit from the services.”

"Companies with a history of being a large exporter, providing jobs to a large number of people and making large investments will be given priority to operate their production units inside the processing zone," Bhatta said.

High cost of shipment and transport are bound to be offset by the setting up of this garment processing zone said Nepal ministry sources. As Nepal is a landlocked country, the logistics of managing transport render costing very high. However, the zone being located near the country’s only rail-linked dry port, namely Birgunj will help in offsetting the costs.

The recent move by the US government to extend zero tariff preference for 66 products including apparels, accelerated the decision making process for setting up of the said zone by the Nepali government. The move by the US government falls under the aegis of Trade Facilitation and Trade Enforcement Act.