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Industrial relief scheme runs into legal hurdles

KATHMANDU, DEC 18 - Government efforts to provide relief packages to sick industrial enterprises have suffered a setback after the Ministry of Industry (MoI) said that the proposal violated the Industrial Enterprises Act 1992 (IEA). The MoI said that it had to reject the recommendations made by the Sick Industry Rehabilitation High-Level Taskforce because the proposed measures are not in line with the IEA. The rescue package proposed by the taskforce on Dec 1, 2011 included easy exit measures for enterprises beyond rescue, three-to-five-year package for rehabilitation, loans at low interest rates and tax exemption, among other schemes. The taskforce’s report had divided sick enterprises into three categories: fully sick, sick and close to being sick, and had suggested the measures accordingly. Subsequently on May 24, 2012, the ministry formed a sub-committee to develop parameters and identify sick industries. As per the recommendations of the sub-committee, the ministry said that it was ready to provide relief packages to nine enterprises that were identified as sick. The ministry had named Aarati Wire Industry, Sirish Herbal, Birat Leather, Birat Shoes Industry, Bishesh Textile, Kharel Wooden and Metal Furniture and Sumi Pharmaceuticals as candidates to receive relief packages. Industry secretary Krishna Gyanwali said that the two types of rescue packages had created confusion and delayed the relief distribution process. “We cannot offer relief packages in contravention of the country’s laws,” he said. The ministry is working to settle the matter with other options of providing relief measures, he added. Sources said that the ministry would hold talks with NPC vice-chairman Dipendra Bahadur Kshetri along with representatives from a number of line ministries within two weeks to work out some additional measures. “The measures identified will be sent to the Cabinet for final endorsement,” he said. Ek Narayan Bhandari, section officer of the Industrial Promotion Division at the MoI, said that as the IEA has only mentioned providing subsidies on the import of machinery parts as a relief measure to ailing enterprises, it has been difficult to distribute the relief package recommended by the high-level taskforce. “The report submitted by the taskforce is not a legal document,” he said. “How can we offer the kind of package suggested by the report by going against the law?” The taskforce’s report has also asked the government to follow its recommendations even though it requires amending the IEA. “Though a draft of the new act has been readied, there is no Parliament to pass it; and getting it endorsed though an ordinance will take a long time besides being difficult in the present situation,” said Industry Secretary Gyanwali. The annual budget for the fiscal year 2011-12 had announced that sick industries would be provided relief packages for their revival. Prime Minister Baburam Bhattarai had also directed the MoI to implement the scheme under his quick relief measure. Meanwhile, ministry officials said that confusion regarding eligibility had arisen as a number of service industries including hotels and restaurants also applied for the relief packages which have been designed for manufacturing industries. The private sector has been urging the government to bail out sick industrial enterprises for a long time. The ministry has received requests for help from more than 200 enterprises belonging to the hydropower, tourism, hotel and restaurant, construction and service sectors.

Posted on: 2012-12-19 08:56

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