Tuesday, March 12, 2019

Amended SEZ Act and Forest Act approved, West Seti in offer to investors and weak consumer demand

From The Himalayan Times: The Parliament today gave its nod to the first amendment bill of the Special Economic Zone (SEZ) Act introducing a new provision under which industries located in SEZs will have to mandatorily export only 60 per cent of their produce. Earlier, the SEZ Act had a mandatory provision for industries inside SEZs to export 75 per cent of their production.

The amendment bill on the SEZ Act, which will come into effect following authentication from the president, has not only relaxed the compulsory export provision for industries within SEZ to 60 per cent of their produce, but has also allowed firms within SEZ to sell 100 per cent of their produce in the domestic market for the first one year after their production starts. This means that industries inside SEZ can supply all their produce in the Nepali market for the first year after they start production, however they will have to export 60 per cent of their production mandatorily from the second year.

The government had reduced the mandatory export provision for industries within SEZs and also turned flexible regarding other export provisions after investors within the SEZs expressed their inability to export a majority of their goods immediately after starting their production.

Law amended to ease acquisition of forest land

From The Kathmandu Post: The government has amended the Forest Act and included a new provision which will allow the developer of certain infrastructure projects to acquire forest lands required for the construction of the project by paying a fee. According to the new clause included in the act, national priority projects, national pride projects, transmission line projects of national priority and projects that have got investment approval from Investment Board Nepal are eligible to acquire wooded areas by paying money.

The new clause paves the way for the establishment of the Forest Development Fund which will charge the project developer a fee for forest lands for the construction of its permanent structures. The fund will use the fee paid by the developer to create new forests in an equivalent area of similar ecology at similar geographic regions.The amendment has been endorsed by Parliament, and the Forest Ministry is currently drafting a work plan which will determine the fee that project developers will need to pay for the type of land they acquire.  

West Seti among projects government will showcase at investment summit

From The Kathmandu Post: As the government gears up for the Nepal Investment Summit, senior officials told the Post that it is planning to invite foreign investors again for the development of West Seti Hydroelectric Project. The Investment Board Nepal has said that the West Seti project will be one of the four dozen projects which the government plans to showcase during the investment summit scheduled for March 29-30.

The multi-billion project was in limbo after the China Three Gorges International (CTGI) backed out in August 2018, citing financial infeasibility. After the deal with the Chinese developer collapsed, the government had formed a three-member task force comprising the energy minister, the finance minister and the chief executive of the Investment Board to work on a new modality for developing the project. The task force is yet to submit its final report.

Slow demand for construction material leaves industrialists worried

From myRepublica: Minister for Finance Yuba Raj Khatiwada last week said 42 percent growth in import of industrial materials indicates healthy economic growth. But same imports have become a matter of worry for industrialists in Birgunj. Steel and cement producers in Birgunj and surrounding areas increased their output, expecting robust demand for construction materials with the formation of the government with two-thirds majority. But slow demand for construction materials due to weak capital spending, among other factors, have dampened their confidence. Abrupt hike in interest rates on bank loans and high cost of production have further worsened the situation for them.

As there is not much demand for steel, GI pipes, cement, corrugated sheets, water tank and paints, among others, in the market, many industries have these products in full stock in their warehouses. Many industries say that they are selling products on credit of up to six months. Earlier, they used to sell products on credit of only up to one month.