'It’s a high time to apply import management'

Kathmandu, May 4

Experts have suggested the government to immediately resort to import management techniques to address the current pressure on foreign exchange and promote domestic industries.

"There is a need to adopt import management techniques like countervailing, tariff and non-tariff measures as well as quality control for foreign goods being imported to Nepal," said former secretary of government of Nepal, Chandra Kumar Ghimire at an interaction on export-based industry and foreign exchange, organised by Nepal Association of Financial Journalists (NAFIJ) on Wednesday.

He attributed the current economic crisis to the indifference of the government machinery in implementing trade deficit reduction measures. "In 2018, the role of 13 different bodies was discussed in formulating a trade deficit reduction strategy, but the strategy was never implemented. That is why we are facing the external sector pressure and threat to the domestic manufacturing industry today," said Ghimire who had served as the secretary of the Ministry of Industry, Commerce and Supplies.

He said that the Ministry of Finance was also adopting a wrong policy. "While we are talking about export-oriented economic growth, the MoF and its subordinate bodies are focused on import-oriented economic growth," he stated.

The private sector representatives said that the country failed to tap the export potential as the government couldn't incentivise and promote export.

Dr. Surendra Upreti, Senior Economic Adviser of the Ministry of Finance acknowledged that despite many policy reforms over the past four decades, there has been no significant achievement. "Now we need a policy departure. Our exports are not sustainable," he said.

According to him, the country should adopt two policies – promoting exports and replacing imports – simultaneously. He also said that the government has ralised that the policy and programmes for the next fiscal year 2022/23 should give top priority to export promotion.

 

 

Need of a policy

General Secretary of Garment Association of Nepal (GAN), Ashok Kumar Agrawal said the garment industry was pushed into an existential crisis due to the lack of good policy and long-term vision of the government. Garment export was about US$ 400 million two decades ago which is shrunk to about $50 million.

He said that the export industry was in crisis as Nepal's economic policies and activities were based on remittance and import revenue. Agrawal suggested that the competitiveness of Nepali products in the world market has been weakened due to high production cost and lack of cash subsidy.

The government currently provides 3 percent cash subsidy to export-oriented industries. He said that since Nepali products are 27 percent more expensive than those of neighboring countries, there would be problems in competing in foreign markets and at least 10 per cent subsidy should be given for exports.

Illegal imports hit local products

President of Nepal Yarn Manufacturers' Association, Pawan Golyan said that the textile industry has been contributing a lot to the growth of the value chain but such entrepreneurs have been losing out due to lack of attention of the state in its promotion.

He said that the domestic production was weakened due to illegal imports in Nepal. According to him, Nepal consumes cloths worth Rs. 600 billion in a year but about 84 per cent of it is under-invoiced or smuggled into the country.

He said that export-oriented industries also need easy refinancing and export credit insurance.

Resham Bahadur Pokharel, President of Export Council of Nepal, mentioned that the problem arises when the government body does not have a clear policy and vision.

 

One per cent to export promotion

Durga Bikram Thapa, Vice-president of the Federation of Export Entrepreneurs Nepal, pointed out that 1 per cent of the total export amount should be allocated for promotion campaign to expand exports.

Vice President of the Confederation of Nepalese Industries, Krishna Prasad Adhikari accused the government officials of being indifferent to the implementation of government policy.

Food imports raise trade deficit

Ravi Shainju, former joint secretary at the Ministry of Industry, Commerce and Supplies, said that petroleum imports, iron ore and food imports have raised the trade deficit graph in Nepal.

In the last five years, Nepal's export-import ratio has been in double digits. High trade deficit trend is expected to be continued this year as well.

Shainju suggested the export entrepreneurs to modernise the old technology of the industry in time, make the supply chain sustainable and adopt agility in logistics management. He also said that the country should arrange a couple of cargo planes to facilitate export of Nepali goods.

Similarly, Executive Director of the SEZ Authority, Dr. Chandika Prasad Bhatta, pointed out that the presence of the industry has increased in the Special Economic Zone in recent times as the industry-friendly policy has been adopted.

According to him all the plots at Bhairahawa SEZ are leased out and the authority had received the commitment of Rs. 10 billion investment there.

 Published in The Rising Nepal daily on 5 May 2022.