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US$ 24.5mn garment processing zone being built in Nepal

Nepali Government officials revealed that the government has started the construction of a Rs 2.5 billion (US$ 24.5mn ) garment processing zone in Simara, Bara to facilitate exports of Nepali readymade clothes. The facility, which will be spread over 300 bighas, is expected to be completed by 2018-19.

Chandika Prasad Bhatta, Executive Director of the Special Economic Zone (SEZ) Development Committee, announced that the site was being developed as an SEZ. The processing zone, he said, was expected to help the production of readymade garments and reduce manufacturing costs. “The services that will be offered at the processing zone will make Nepali products price competitive in the international market,” he added.

As per the Trade and Export Promotion Centre, exports of Nepali readymade garments have been falling in recent years due to lack of product diversification. In the last fiscal year, export earnings dropped by 9.9 per cent to Rs5.3 billion.

The US was the largest buyer of Nepali readymade garments till 2000. Exports to the US began falling from $171.39 million in 2003 onwards, touching a low of $60.51 million in 2010 after the US government stopped providing duty-free, quota-free market access to Nepali products.

Since February 2016, the US government has been providing duty-free access to 77 tariff lines under the Trade Preference Programme. Shawls, scarves, travel blankets, handbags and gloves are among the products that can avail of duty-free market access under the preferential treatment that will continue till 2025.

Bhatta said investors would receive a single window clearance in the area. “Services such as new licence issuance, licence renewal and tax and banking services will be available within the premises,” adding that visa related services would also be made available to foreign investors under the facility.

The SEZ will offer land plots to interested garment manufacturers at the rate of Rs 20 per square metre. They will be provided uninterrupted power supply and other logistics services at reasonable rates.

SEZ will offer facilities to firms that export at least 75 per cent of their output. Bhatta said that they would call for tenders post completion of the processing zone. “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,” he concluded.