The government of Nepal has initiated the construction of the Rs 2.5 billion garment processing zone within the Simara Special Economic Zone (SEZ). The project expected to complete by 2018-19, will lower the cost of production while increasing the scope of exports. The production cost in Nepal is considered to be relatively high in the region.
The services that will be offered at the processing zone will make the price of Nepali products competitive in the international market.
The facility located in Bara district, likely to be spread in more than 300 bighas, will house at least 30 production units of apparel, Nepali media quoted Chandika Prasad Bhatta, executive director of the Special Economic Zone (SEZ) development committee as saying. Garment manufacturers can purchase the plot at the rate of Rs 20 per square metre with infrastructure such as electricity, drainage and other such logistics at an affordable price. Firms exporting at least 75 per cent of their production can also benefit from the services.
“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 said.
The garment processing zone is expected to compensate high transport and shipment costs due to Nepal’s landlocked status because the proposed zone is located near the country’s only rail-linked dry port in Birgunj. The garment processing zone concept gained traction after the US extended zero tariff preference for 66 products, including apparels, into its market through ‘Trade Facilitation and Trade Enforcement Act’.