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Nepal begins construction of garment processing zone

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Construction of garment processing zone
Construction of garment processing zone

The government of Nepal has started the construction of a Rs2.5 billion garment processing zone in Simara, Bara in order to facilitate exports of Nepali readymade clothes. The facility, which will be spread over 300 bighas, is expected to be completed by 2018-19, government officials said.

Chandika Prasad Bhatta, executive director of the Special Economic Zone (SEZ) Development Committee, said that the site was being developed as an SEZ. He added that the processing zone was expected to facilitate 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 said.

As per the Trade and Export Promotion Centre, exports of Nepali readymade garments have been declining in recent years due to lack of product diversification. In the last fiscal year, export earnings fell 9.9 percent to Rs5.3 billion. The US used to be the largest buyer of Nepali readymade garments till 2000. Shipments to the US began sliding from $171.39 million in 2003 onwards, hitting 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 Program. Shawls, scarves, travel blankets, handbags and gloves are among the products receiving duty-free market access under the preferential treatment that will last till 2025.

According to Bhatta, the SEZ Development Committee has been building a connecting track, dam, compound wall, drainage system and buildings in the area. Various logistics services will be provided to exporters of Nepali readymade garments from the 69 plots that will be built in Block A. The plots are expected to house a minimum of 30 garment production units.

Bhatta said investors would receive one-stop service in the area. “Services such as new licence issuance, licence renewal and tax and banking services will be available within the premises,” said Bhatta, 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 Rs20 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 percent of their output. Bhatta said that they would call for tenders after the 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,” Bhatta added.