Special Economic Zone

1 Extensive information on SEZs can be found on the Ministry of Commerce and Industry's dedicated SEZ website http://www.sezindia.nic.in/, including regular statistical (http://www.sezindia.nic.in/writereaddata/pdf/ListofFormalapprovals.pdf). The concept of Special Economic Zone is a new concept to Nepal. Hence in this literature review, it would be better to have a brief introduction of Special Economic Zone. SEZ refers to the special area for the development of the economic sectors which brings together all industrial and other related activities and may include General Industrial Zones and/or Export Processing Zones. Each Special Economic Zone shall have a Production Area which may have a Free Trade Area, Service Area, Residential Area and Tourist Area. updates

The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, free economic zones, Urban Enterprise Zones and others. The SEZ at Bhairahawa is a export processing zone. LAND ACQUISITION AND CHALLENGES FOR IT

Master Planning For Special Economic Zones The emergence of new market economies and an increase in the creation of new Special Economic Zones (SEZ) makes attracting foreign direct investment (FDI) increasingly challenging. As global competition for FDI intensifies, its critical that your SEZ or Industry Zone stands out from the crowd.

Today, there are approximately 3,000 SEZs operating in 120 countries, which account for over US$ 600 billion in exports and about 50 million jobs. By offering privileged terms, SEZs attract investment and foreign exchange, spur employment and boost the development of improved technologies and infrastructure. So it is a challenge for the designers and planners of a SEZ to have efficient and good design which attracts foreign investments by competing with all those 3,000 SEZs. The 4 Steps to Attracting Quality Investment in Manufacturing and R&D Developing a strategic master plan that is customer-focused and informed by current industry needs and trends is a major step towards the success of a SEZ. 1. Understanding the Motivations of the FDI market Understanding why multinational companies choose specific locations for investment in new manufacturing, R&D and other supply chain facilities is a key success factor. 3. Designing your FDI Master Plan An industrial zone master plan can then be designed. The masterplan must be flexible enough to change yet robust enough to meet the requirements of prospective industry clients and sustain their business needs for the long term. Your master plan must create an immediate impact with potential investors and FDI decision makers. It should be meaningful to each and every potential client and clearly distinguish how their project could be realised. 4. Marketing your SEZ or Industrial Zone Once the masterplan has been developed, we can provide sector-specific marketing material to address the needs of the sector you are targeting, and provide technical detail to back up your industrial zones strategic proposition. Whether you are targeting advanced manufacturing, pharmaceutical or food investors, customer-specific packages can also be developed to address the specific needs of individual FDI companies.

I think that the industries which uses our available resources like material, manpower and whose need of water, power, etc can be fulfilled by us need to be prioritized for establishing industries in sez. After deciding the permitted type of industries, I need to focus land planning, infrastructures and amenities for that type of industries.

SEZs create immense employment opportunities. The setting up of SEZs creates lot of indirect employment in terms of labour required. Then after the completion it enables employment in the relevant industries operating in the SEZ. Then there are lots of indirect employments generated wherein people start investing around SEZ. For example SEZs are townships of their own; thereby there are shopping malls, restaurants, amusement parks setup around to attract people, thus resulting in more economic development in that area.

Search the cultural challenges that may arise as sez attract multi-cultural related people. So design accordingly.

Social Impact Assessment..and taking water from the SunKoshi River may hamper the fishermen there.

Ujjaini Halim, who has studied the SEZs in Asia closely over the years, writes in her research paper, Special Economic Zones (SEZs): Untold Agonies:, Experiences from Asian countires: so search all these words in Google.

The above words are repeated intentionally for these words are required for two purposes. Ujjaini Halim, who has studied the SEZs in Asia closely over the years, writes in her research paper, Special Economic Zones (SEZs): Untold Agonies:, Experiences from Asian countires: 'Strong motivation of the governments behind the promotion of SEZs is the desire to overcome economic crisis and debt burdens. But the irony, in doing so most of these countries further expose themselves to a greater degree of vulnerability and risk, which was manifested in environmental, economic and social disasters at a later stage. So in my design, solve it.

{At risk of being labeled "anti-development" it is time to ask some basic questions about SEZs in Nepal: What are the priority industries that SEZ will cater to?

How much of the raw materials can be supplied internally for the proposed industries? What kind of manpower and skills are needed for the proposed industries are available locally?

Can we provide sufficient energy, water, roads, etc to ensure a competitive economy of scale? Unless there are answers, there will be public skepticism about SEZs, and whether they will be any different than the industrial zones already existing in various parts of the country.} (ACHARYA 2011)

Moreover SEZs improve the countrys foreign export. Because of the increased FDI and Private Equity presence, the local manufacturers get to tie up with these big names and export their products which now carry a better brand value, therefore helping in creating a greater demand for the goods of local manufacturers. Moreover the massive capital required for expansion is brought in form of FDI resulting in increased economic activity.

Moreover SEZs provide a medium wherein it not only attracts foreign companies looking for cheaper and efficient location to setup their offshore business, but it also allows the local industries to improve their export through a proper channel and with the help of the new foreign partners to the outside world at a very competitive price. SEZs offer relaxed tax and tariff policies which is different from the other economic areas in the country. Duty free import of raw materials for production is one example. Moreover the Free trade zones attract big players who want to setup business without any license hassles and the long process involved in it. Most of the allotment is done through a single window system and which is highly transparent system. The bottom-line therefore is increased export and FDI (Foreign Direct Investments) enabling increased Public-private partnership and ultimately resulting in a development of world class infrastructure, boost economic growth, exports and employment.

For undertaking any kind of massive development program the government requires huge amount of funds. So it looks out for potential partners to help the government carry out the program. Now say for setting up an SEZ, the government may tie up with a private partner whose willing to invest in that area, thus a win-win situation for both. As in the government gets the capital needed to establish the required infrastructure and also the expertise. The private player on the other hand gets the right to market and use the SEZs with relaxed tax laws, thereby increasing its revenue generating capacity and also carrying out the economic growth of the company in a more efficient way with the better tax policies. Actually SEZs with relaxed import tariffs help the Import dependent and export driven industries to flourish by helping them develop manufactured goods at competitive prices.

The increased exports from the country bring in more revenue for the country which improves the economic growth.

SEZs help in creating a balanced economic growth in a country if they are properly located and implemented leading to tapping of local talent and contributing to increased economic activity in the area.

Drawbacks: The biggest challenges faced by SEZs in todays scenario are the taking away of agricultural land from the farmers. The farmers are being paid disproportionate money which is not in lieu of the current land prices. The best example could be seen in the case of farmers from Kalinganagar in Orissa where the money given was disproportionate to as high as 1:10 with respect to the market rates. Moreover SEZs are leading to decrease in crop production (arable Land Grabbing!) thus slowing down of agricultural activity in the country. (Though it may help boost it in other ways by increased export of local goods, both processed and non-processed). More and more farmers are moving towards the lucrative manufacturing side in search of greater economic security. Moreover the greatest problem that seems to be emerging out is that arable land is being used for non agricultural purpose which could lead to food crisis and loss of self sustenance in future. For example: Nadigram district of West Bengal. But FDI could also help in providing our farmers to gain access to technological better farming methods.

The SEZs if not properly located could lead to Supply Chain Management problems as well. Moreover improper planning could lead to unbalanced growth in the region giving an impression of pseudo-development. For example most of the SEZs in China are in proximity to the ports and also close to each other, while these have been at the helm of economic development most of the interior hinterland is vastly underdeveloped. SEZs could also lead to income disparities with divide between the rich and poor increasing if not properly planned.

SEZs mostly if setup for the manufacturing sector should be carefully planned to carry out proper pollution monitoring and control mechanism. Stringent measures may prove to be expensive but are also extremely important. Shenzhen in china has been the worst affected among SEZs in China where the sky is grey for most part of the day courtesy the polluting industries. The measures should be taken to make surroundings livable for multitude of people living in the SEZs. Moreover care should be taken to properly treat

effluents from industries not to affect surrounding rivers. Also the SEZs should be carefully planned not to affect the natural habitat around (Gurgaon SEZ affecting the Bharatpur bird sanctuary)

How SEZs should be modelled to Benefit India: Size Does Matter: I was reading an article and found out the following fact, Chinas SEZs are huge. Shenzhen, the most important SEZ, covers 32,000 hectares. In India, there are just two or three privately developed SEZ, exceeding 1,000 hectares. Most of the others approved are less than 100 hectares. But it is heartening to realize that the government has decided to up the ante and have made guidelines to have a minimum of 1000 hectares of area for approving an SEZ. It hardly needs reiteration that only a large sized zone can generate economic activity on some reasonable scale. In a small zone, the requisite infrastructure and services cannot be provided nor can multiple economic activities be promoted. TAX Benefits: The incentive package in India is quite liberal and may even be a shade better than that for Chinese SEZs. In fact, it is more or less on a par with the package for the existing EPZs. Duty free import of capital goods and raw materials, reimbursements of Central Sales Tax, tax holiday for specified period, 100 per cent repatriation of profits for subcontracting facilities are allowed. The Government has done well by extending incentives for the infrastructure sector to zone developers and the units as well. This can attract foreign direct investment for providing internationally competitive infrastructure. Labor Laws: We can learn from china where initially labor laws where relaxed so that the companies could adopt Hire and Fire policy, once the Private and foreign players gained confidence in the Chinese workers productivity, this was replaced by the Contract system. India should take cue from this and understand that the import-export business is highly dependent on uncertain international market conditions, rejection of consignments etc. hence a flexible labor policy is the need of hour in the SEZs. Domestic Tariff Areas: We got to understand that the reason for the Foreign investors to invest in Industrial, Manufacturing sector in India is not only to cut down on their costs because of cheaper and competitive products but they also see the vast Indian consumer markets, which has seen great income rise and standard of living. So apart from exports itself, the domestic market itself provides immense opportunity for sale of products. The companies in SEZ being levied a full import duty on sale in domestic areas does not seem a bright idea. In this case SEZs will only promote export driven industries which are highly dependent on import of raw materials. To further make use of full potential of SEZs Industries which are capable of indigenous generation of raw materials should be provided with tax holidays in terms of benefits to facilitate competitive pricing in the domestic tariff areas.

Thinking about the Future and Possible Fallacies: As evidence over the years has shown, this single-minded pursuit of growth has lowered the efficiency and effectiveness of economic policies, besides incurring huge resource and environmental costs. The Chinese experience offers a valuable lesson for India. Neither the international nor the Indian experience with SEZs has been particularly happy. Globally, only a handful of SEZs, of the hundreds that exist, have generated substantial exports, along with significant domestic spin-offs in demand or technology upgradation. For each successful Shannon (Ireland) or Shenzhen (China), there are 10 failures in the Philippines, Malaysia, Brazil, Mexico, Colombia, Sri Lanka, Bangladesh, why, even India. A 1998 report by the Comptroller and Auditor General (CAG) on export processing zones (EPZs) says: Customs duty amounting to Rs. 7,500 crores was forgone for achieving net foreign exchange earnings of Rs.4,700 crores. The Reserve Bank of India says that large tax incentives can be justified only if SEZ units establish strong backward and forward linkages with the domestic economy which is a doubtful proposition. Even the International Monetary Funds (IMF) Chief Economist Raghuram Rajan has warned: Not only will [the SEZs] make the government forgo revenue it can ill afford to lose, they also offer firms an incentive to shift existing production to the new zones at substantial cost to society. As much as 75 per cent of the SEZ area can be used for non-core activities, including development of residential or commercial properties, shopping malls and hospitals. Developers will surely use this to make money via the real estate route rather through export promotion. This represents a potentially humongous urban property racket of incalculable dimensions. India will see a multiplication of Gurgaon-style development, under the aegis of big builders such as DLF, Marathon, Rahejas, Unitech, City Parks and Dewan.

And at last, As compared to china where majority of the SEZs were setup by the government, similar should be adopted in India, if not fully it should be a public-private partnership and regulatory bodies should be properly managed to weed out fallacies.

At this level, the controversy centres on the grave inadequacy of packages of compensation, resettlement and rehabilitation. While state authorities are required to compensate previous owners for the value of land and dwellings, such compensation, even if paid in full, is woefully inadequate to the loss of land and non-land assets, the loss of livelihood opportunities and the disruption to traditional rural life. Popular resistance to SEZs also contests the whole development model that replaces farming on fertile agricultural land with autonomous, private industrial enclaves that mostly just provide

jobs for urban skilled and semi-skilled workers. SEZs are charged with being a sop to corporate, rather than popular interests.

Presently it has been experienced that the drawbacks of sez are the problems created due to the need of acquisition of land and problems arising due to the pollution created by the industries and other social impacts created due to these things. In my design, provide good solutions to these problems. May be providing waste water treatment plant, providing appropriate type and number tree in appropriate location. (Vidya Bhushan Rawat 2011)

They worked in China. But will Nepal's zones boost investment, or just divert it? Mention this statement before what has been adopted in my design so that it attracts FDI in the crowd of 3000 sezs. The following chart show the FDI inflow in two country and from this situation, we can know that only the establishment of a sez is not enough to develop a country as it doesnt ensure the attraction of FDI.

Developers hope to acquire cheap land, put in a minimum of infrastructure and sell it. May be the already available social infrastructures of the site too can be used by the workers in the processing zone.

Social and economic implications The SEZ policy is seen as a part of a larger objective of grabbing control of natural resources. The issue of water resources was seen to be of particular importance. From which sources would huge water needs of many SEZs be met? It is feared that water will become more and more a marketed commodity, with diminishing control of ordinary people over it. Water being vital for human survival, water wars are likely to result. Land grab and water grab could seriously jeopardise food security. Some representatives of the people

Border of two types of literature review NOT REQUIRED FOR LITERATURE REVIEW BUT BETTER TO BE KNOWN. SEZs in China were initially exempted from national Labor Laws (despite being a communist country!). This model sustained initially because the foreign investors were given the leverage to train the workers and even fire them if incompetent. This Hire or Fire policy initially helped in sustaining foreign investors confidence in the Chinese domestic labor competence, but in the long run such laws must be made more stringent once the confidence is reposed so as to hedge the workers from hostile company policies.

I think the establishment of a sez in Nepal is automatically an advantage because because of cheapness (check it), Nepali labors are in greater demand hence Nepali people go to foreign land as labor. Hence sez can easily find cheap labor in Nepal.

The fear of many economistsincluding some in the Ministry of Financeis that rather than promoting new business, the SEZs will merely attract investment that would have been made anyway. Instead of finding fresh sources of money for its infrastructure, India would thereby have made things worse by depriving itself of tax revenue.

By comparison, Shenzhen, biggest and most famous of China's original SEZs, covers 126 square miles. That scale was a huge factor in its initial success along with the presence, just over the border in Hong Kong, of labour-intensive

manufacturers wanting to lower their costs. Enjoying neither of these advantages, India's smaller SEZs may do more for their promoters than for India.

These letters with this coloured background need editing. A 2008 World Bank study estimated that there are 2301 SEZs in 119 developing and transition economies (clustered mainly in Asia and the Pacific and Latin America) Typically most of the industries in SEZs are labor intensive and assemblyoriented activities, including light manufacture goods such as textiles, apparel, leather, and light electrical and electronic goods. Sector specific zones such as Agriculture and Herbs Processing Zone, Export Processing Zone, and Garment Processing Zone inside SEZs are established to boost exports of and investment in particular sectors. There are numerous advantages of having SEZs in a least developed country like ours which is losing competitiveness and manufacturing base. First, infrastructure facilities, tax incentives and subsidies provided to industries that locate inside the zones will help boost their competitiveness, which in turn will aid our struggling exports sector, generate revenue and diversify exports. Second, due to policy certainty and economic incentives, multinational companies will come and bring in investment and technology with them. This will help to not only spur economic activities but also increase employment. Third, in most of the manufacture -oriented zones, a large chunk of employment is secured by women, accounting for almost 60-70 percent of total employed workforce in such zones worldwide. Empowering women via gainful employment will be much more effective than the shallow talk on women empowerment and inclusiveness at the political level. Fourth, ancillary firms and local suppliers of raw materials, which are needed for industries in such zones, will emerge when entrepreneurs see a stable market inside the country. It will not only help in stimulating local economies but also accelerate backward supply linkages and dissemination of technology, leading to increase in productivity. Fifth, there will be economies of scale, which means decrease in average cost of production as output increases, when similar or near-similar industries operate in the same place, resulting in cost competitiveness of our products. Sixth, most of the firms in Nepal are operating below their capacity, leading to low production and productivity. With the supply of infrastructure guaranteed inside SEZs, these firms will be able to operate at full capacity. They will not only export items to contribute foreign exchange reserves, but also sell items in the domestic market, which is flooded with imported goods, by paying appropriate local taxes.

None of these benefits are in any way against our national interest, at least when viewed in terms of stimulating growth, employment and poverty reduction. There is no reason why our political leaders should not do the necessary for the enactment of SEZ Act. Specifically, the Minister for Commerce and Supplies and the Minister for Industry should personally push for the enactment of this Act by amending few provisions in the existing SEZ bill. These include, among others, lowering mandatory export requirement of 75 percent of total production for companies inside SEZs and a more flexible and industry-friendly labor law regime, which as of now includes fixing wages and welfare based on agreement between industry and employee. The enactment of SEZ bill will help to realize the objectives of Trade Policy 2009 andIndustrial Policy 2010, and in the effective implementation of NTIS, which identified 19 products having export potentials. Currently the government has proposed establishing SEZs in Bhairawa, Panchkhaal, Simara, Dhangadhi Jhapa, Kapilvastu, Jumla and Biratnagar. The International Finance Corporation (IFC) recommended SEZs in Simara and Biratnagar as being the most feasible ones. The construction of SEZ in Bhairawa is expected to be completed by the end of this fiscal year. The delay in enacting SEZ Act will negatively impact investment plans by companies considering locating plants inside the zone. For a long time now, finance ministers, including FM Bharat Mohan Adhikari, have been regularly mentioning about SEZs in their budget speeches, but without concrete effort later on to push for the enactment of the Act. For the sake of the struggling exports and manufacturing sectors and for national interest, the political parties should at least leave aside partisan differences over political issues and collectively endorse SEZ Act, and also create enabling environment for operation of such zones. This is the surest and best way to revive our exports and manufacturing sectors for now.

CASE STUDY

SHENZHEN SPECIAL ECONOMIC ZONE SEZ formed

1 May 1980

Area Sub-provincial city Urban Elevation 2,050 km2 (790 sq mi) 412 km2 (159 sq mi) 12 m (40 ft)

More than US$30 billion in foreign investment has gone into both foreign-owned and joint ventures, at first mainly in manufacturing but more recently in the service industries as well. Shenzhen is now considered one of the fastest-growing cities in the world.

The city was originally a hilly area, with fertile agrarian land. However, after becoming a special economic zone in 1979, Shenzhen underwent tremendous change in landscape. The once hilly fishing village is now replaced by mostly flat ground in city center area, with only Lianhua Shan (Lotus Hill), Bijia Shan (Bijia Mountain) and Wutong Shan the only three places that have some kind of elevation as viewed from satellites. With the influx of migrants from inland China, Shenzhen is experiencing a second stage boom, and it is now expanding peripherally and the hills in surrounding areas such as Mission Hills are now being levelled to make land for more development. So for my design these things will have considerable effects.

Location: Near Sachin Railway St., Sachin, Surat, Gujarat Connectivity (Road, Rail, Air and Port): Road Network: 1.7 kms from Navsari- Surat (SH), 13 km-National Highway (NH 8) Rail Network 1 km from Sachin Railway Station on main Mumbai Ahmedabad/Delhi Rail Route Nearest Port: 260 km from JNPT Port, Mumbai Nearest Airport: 15 km from Surat Airport

Type of SEZ: Multi-product; 50 Hectares Key Industries: Diamond Cutting & Polishing, Jewellery Making, Textiles-Home Furnishings, Healthcare and Engineering Land availability: Limited number of developed plots is available. Extension of SEZ is proposed. Lease rate: Available on request

Available Infrastructures Internal Roads;Network of roads existing Power: Available through dedicated Feeder of South

Gujarat Electricity Distribution Co.; Water: Treated water supply available. Treatment plant in premises Effluent treatment plant: Sewage Treatment Plant with a capacity of 1200 cu. mts, is present. If required, CETP of Sachin GIDC can be used

Urban infrastructures 140 residential dwelling units Adequate space earmarked for social amenities/ facilities in the non- processing area School, canteen and medical center established Adequate space recreational facilities- Shopping Centre, Club House etc

SITE (May be most of the data below is better to be shown in google map, photos, graphs, etc. and also as data.) Exact location: Area: Nearby villages and towns: Connectivity Nearest town: Nearest airport Nearest road: Social Economic Settings Medical: Educational:

Transport: Water Supply: Power Supply: Irrigation:

Present Land Use: Nearby river and water bodies: Nearby forest area: Soil type: Grown crops: Seismic Zone: Climatic Data: Climate type Highest daily maximum temperature Max. dry & wet bulb temperature Min. dry & wet bulb temperature Rainfall Average annual rainfall Period of water scarcity Wind velocity Max. wind velocity Predominant Wind direction Relative humidity Annual mean humidity Max. Humidity Min. Humidity

sezs attract other developmental activities and hence create a populated area. Hence the site need to be a less developed area so that the creation of a sez helps in uniform development of Nepal which is a great concern in the case of Nepal. So the selection of Panchkhal as a site fo sez is very justified. Its closeness to Araniko Highway and the border to China is another good point. There is resources like stone, trees,............in abundance which helps for the industries in sez to have raw materials in cheaper price and also our resources will be used properly.

The local availability of labour is necessary for a sez so show the data of total population, educated ones and non-educated ones, child and young and old and male and female. Mention present land use and analyse how the acquisition of land has affected the people there and the owners of the land.

Sez need to be established where the population density is less so that the effect due to establishment of sez is less and regarding that Panchkhal is a good site.

Bibliography ACHARYA, ANURAG. "SEZ who? ." Nepali Times, 2011. Vidya Bhushan Rawat, Mamidi Bharath Bhushan, Sujatha Surepally. The impact of special economic zones in India:. January 2011.