Govt plans to bring SEZ Act through ordinance

KATHMANDU, JUN 25 -  

The government is planning to bring a bill on special economic zone (SEZ) through ordinance.

Sources said Industry Minister Anil Kumar Jha and Secretary Umakant Jha recently met President Ram Baran Yadav and urged him to pass the bill through ordinance. “The minister and the secretary briefed the President about the need for having a

SEZ Act,” said a senior ministry official.

Once the President gives a green signal, the ministry will forward the proposal to the Cabinet, the sources said. They said the act was necessary as work on the SEZ in Bhairahawa is reaching its last stages. “If the bill is endorsed, it will pave the way for investment in the Bhairahawa SEZ,” said the official.

The then Industry Minister Astha Laxmi Shakya had registered the SEZ bill at the parliament in 2008. However, the bill could not be tabled for discussion due to the agitation of the UCPN (Maoist). Last year, Krishna Bahadur Mahara tried to table the bill when he was given the charge of the ministry. “However, he stepped back due to objections from within his party,” said the source.

The Maoists had reservations on clause 37 of the proposed Act that restricts workers and staffers of a SEZ from conducting activities that would have a negative impact on industry and production, according to the ministry sources.

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Vice President Pashupati Murarka said the private sector would welcome the SEZ Act’s endorsement through ordinance. “Any issue that is related to economic development should not be blocked for political interests,” said Murarka.

The private sector’s lobby for the act is understandable as they would get more facilities from the government. One of the major reasons for the private sector eagerly waiting for the act is that the labour law will not be applicable in industries inside SEZs. As per the provision in the SEZ Act, workers’ wage in industries inside SEZs would be set on the basis of agreement between workers and management and the management alone would determine other social security facilities.

As per the act, no other laws would be imposed on transactions carried out from SEZs. The act also talks about special treatment to industries inside SEZs. “The business transaction carried out in the Special Economic Zone, the tariff, fee and tax on goods or services produced in the Special Economic Zone shall be given special treatment similar to that of outside scope of taxes,” states the Act. Also, no industry established and operated in SEZs will be nationalised.

Industries in SEZs will be exempted from income tax for five years from the date of commencement and 50 percent exemption on the tax will be given for the next five years. If an industry uses 60 percent domestic raw materials, the fifty percent discount on income tax will be extended for 10 years.

Also, no income tax will be levied on dividend distributed by industries inside SEZs for the first five years.

The Act also says that industries will get Value Added Tax (VAT) exemption on the import of machinery, equipment, spare parts, raw materials, and up to three vehicles for transporting goods.

    Under SEZ Act

•    Special treatment to industries inside SEZs

•    No nationalisation of industries

•    Industries will be exempted from income tax for first five years 

•    No income tax will be levied on dividend distributed by industries for the first five years

•    VAT exemption on the import of machinery, equipment, spare parts, raw materials, and up to three vehicles


Source: http://www.ekantipur.com/2012/06/25/business/govt-plans-to-bring-sez-act-through-ordinance/356130/