The government is preparing to enact special economic zone (SEZ) bill --
which was long shelved in parliament due to differences among the
political parties over some of its provisions -- through an ordinance.
“We have forwarded the bill to the Ministry of Law and Justice (MoLJ), seeking its clearance,” said Umakant Jha, secretary at the Ministry of Industry (MoI). “Once the MoLJ gives its consent, we will instantly forward it to the cabinet for approval and enact the bill through ordinance,” he told Republica.
The SEZ bill was already endorsed by the government in 2009. However, it failed to get endorsed in parliament as some of the trade unions, particularly the one associated with UCPN (Maoist), criticized the bill for not have provisions to protect the rights of laborers. A faction of the UCPN(Maoist) is still against enactment of the bill.
Among others, the bill mainly upholds three broader principles: incentives to industries, one-spot service and labor flexibility in the zones, which are being developed to give impetus to the country´s export trade.
It also cites that SEZ will be treated as a land wherein other domestic laws related to labor and industries would not be applicable. The bill allows workers to unite and practice collective bargaining, but prohibits them from undertaking activities that affect production and normal operations of industries.
“The workers of industries established in SEZ are not allowed to carry out any activities that would have a negative impact on the industry and its production,” reads the draft of the bill.
In order to address workers´ concerns, the bill provisions better facilities for workers in SEZ than what workers receive outside of the zone. “Autonomous SEZ Authority that will be formed to oversee the zone´s operations and SEZ regulations will determine the extent of workers pay scale, medical and insurance facilities, among others,” reads the bill.
A source at MoI disclosed that the bill also allows entrepreneurs to hire workers on a contract basis.
In order to lure investors in SEZ, the bill promises them with facilities such as duty-free import of raw materials, value added tax (VAT) exemption and waiver of excise duty and other local taxes.
The industries in SEZ have also been offered income tax holiday for five years. “After five years also, they will continue to enjoy 50 percent discount on income tax,” said the source. In order to safeguard investors´ interests, the bill says the industries established at present would continue to enjoy all the facilities, even if later amendments changed the structure and extent of facilities.
MoI proposes basket fund for developing SEZs
The Ministry of Industry (MoI) has proposed setting up a Basket Fund for developing special economic zone (SEZ) in the budget for the upcoming fiscal year 2012/13.
“We have proposed creation of basket fund so that the state could prioritize, raise allocations and speed up constructions for developing SEZ in different parts of the country,” a high level official at the MoI told Republica.
The MoI pushed for the special fund mainly as the governments so far have been allocating only around a few hundred millions for developing SEZ. For instance, the government in 2011/12 has allocated just Rs 140 million for the purpose, and according to the officials the amount was too less to execute its plan to build such zones in different parts of the country including Panchkhaal, Simara, Jhapa, Kapilvastu, Jumla and Biratnagar, among others.
“The basket fund will be used to construct SEZ,” the official said. However, officials at the Ministry of Finance refused to comment as to how it would resond to MoI´s proposal.
“We have forwarded the bill to the Ministry of Law and Justice (MoLJ), seeking its clearance,” said Umakant Jha, secretary at the Ministry of Industry (MoI). “Once the MoLJ gives its consent, we will instantly forward it to the cabinet for approval and enact the bill through ordinance,” he told Republica.
The SEZ bill was already endorsed by the government in 2009. However, it failed to get endorsed in parliament as some of the trade unions, particularly the one associated with UCPN (Maoist), criticized the bill for not have provisions to protect the rights of laborers. A faction of the UCPN(Maoist) is still against enactment of the bill.
Among others, the bill mainly upholds three broader principles: incentives to industries, one-spot service and labor flexibility in the zones, which are being developed to give impetus to the country´s export trade.
It also cites that SEZ will be treated as a land wherein other domestic laws related to labor and industries would not be applicable. The bill allows workers to unite and practice collective bargaining, but prohibits them from undertaking activities that affect production and normal operations of industries.
“The workers of industries established in SEZ are not allowed to carry out any activities that would have a negative impact on the industry and its production,” reads the draft of the bill.
In order to address workers´ concerns, the bill provisions better facilities for workers in SEZ than what workers receive outside of the zone. “Autonomous SEZ Authority that will be formed to oversee the zone´s operations and SEZ regulations will determine the extent of workers pay scale, medical and insurance facilities, among others,” reads the bill.
A source at MoI disclosed that the bill also allows entrepreneurs to hire workers on a contract basis.
In order to lure investors in SEZ, the bill promises them with facilities such as duty-free import of raw materials, value added tax (VAT) exemption and waiver of excise duty and other local taxes.
The industries in SEZ have also been offered income tax holiday for five years. “After five years also, they will continue to enjoy 50 percent discount on income tax,” said the source. In order to safeguard investors´ interests, the bill says the industries established at present would continue to enjoy all the facilities, even if later amendments changed the structure and extent of facilities.
MoI proposes basket fund for developing SEZs
The Ministry of Industry (MoI) has proposed setting up a Basket Fund for developing special economic zone (SEZ) in the budget for the upcoming fiscal year 2012/13.
“We have proposed creation of basket fund so that the state could prioritize, raise allocations and speed up constructions for developing SEZ in different parts of the country,” a high level official at the MoI told Republica.
The MoI pushed for the special fund mainly as the governments so far have been allocating only around a few hundred millions for developing SEZ. For instance, the government in 2011/12 has allocated just Rs 140 million for the purpose, and according to the officials the amount was too less to execute its plan to build such zones in different parts of the country including Panchkhaal, Simara, Jhapa, Kapilvastu, Jumla and Biratnagar, among others.
“The basket fund will be used to construct SEZ,” the official said. However, officials at the Ministry of Finance refused to comment as to how it would resond to MoI´s proposal.