SEZ formation order lacks teeth

The government is soon coming up with a legal tool to pave way for establishment of long-awaited special economic zones (SEZs), albeit it lacks the teeth to extend facilities demanded by industrialists.
The government recently approved SEZ formation order to start developing special economic zones in the country and bring industrial units inside them.
"The cabinet has taken a decision to this effect. We will soon form a committee to implement the decision," Krishna Gyawali, secretary at the Ministry of Industry (MoI), told Republica.
The government resorted to issuance of formation order after it failed to promulgate SEZ Bill through ordinance. “The formation order, however, can´t provide any facilities such as income tax waiver and special treatment for export oriented and import substituting industries," Gyawali said.
Business community, which was long waiting for introduction of the SEZ Bill, has expressed disappointment over the government decision.
“We have no reason to be happy about. The government´s fresh move has killed the essence of SEZs,” Pashupati Murarka, vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said.
The SEZ Bill mainly upholds three principles: incentives to industries, one-spot service and labor flexibility in the zones. These factors are important to give impetus to the country´s export trade.
"The formation order can do only one thing -- provide one-spot service to the industries," Gyawali said.
The SEZ Bill was endorsed by the government in 2009. However, the government failed to get it endorsed by the parliament as some of the trade unions, particularly the one associated with UCPN (Maoist), criticized the bill for not having provisions to protect the rights of laborers.
According to Gyawali, the formation order for SEZ opens up ways for procedural activities of SEZs in the country. "We can install different facilities such as electricity and water and other prerequisites for industrial operation inside the SEZs," Gyawali said. "But it can´t provide any facilities that need amendment to existing laws.”
The issuance of formation order, however, will authorize the MoI to form a committee to work on SEZs. “We will now hire an executive chief through open competition once the government publishes the order in the Gazette," Gyawali said. “SEZs are supposed to be treated as a place where other domestic laws related to labor and industries aren´t applicable. This order, however, lacks teeth.”
The government has been working to develop SEZs in 10 different places in the country, including Bhairawa, Birgunj, Jhapa and Panchkhal.