Burgeoning Trade Deficit:

Mind the gap, PM says

Kathmandu, Apr. 11: "We don't have trade deficit, we have no trade at all. It's not comparable, we don't have anything to sell. It's pathetic," When Prime Minister KP Sharma Oli's sarcasm echoed through the conference hall of Hyatt Regency Hotel, businessmen looked at each other and expressed their consent with a positive nod.

Our export is nascent while we import goods and services ranging from petroleum products, electronics, and vehicles to electricity and food items. We are a country that employs two thirds of its population in agriculture, yet we import food of more than 100 billion, he continued.

He was speaking at the 52^nd Annual General Assembly of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Commerce and Industry Day 2018. 

The PM of one of the Least Developed Countries (LDCs) went on to say that Nepal had largely failed to initiate industrialisation. Though there were efforts to initiate and promote export-oriented industries very few of them are faring well. 

The statistics are staggering. The country earns Rs. 1 in exports and spends Rs. 13.48 in imports. 

Nepal exported goods worth Rs. 73.06 billion in 2016/17 while the imports were of Rs. 984.30 billion. Exports went up by 27.05 per cent in the last fiscal from 2015/16, and the exports grew by just 3.96 per cent. 

According to the statistics of the Nepal Rastra Bank (NRB), trade deficit widened by 19.4 per cent to Rs. 613.60 billion in the first seven months of the current fiscal. 

PM Oli expressed serious concerns to the people living in absolute poverty. 

"About 36 per cent people are living in absolute poverty, much below the poverty line. The country has US $862 per capita income against the benchmark of $1242 or more needed to come out of poverty," he said. 

Nepal had an obligation to alleviate poverty in 12 years, by 2030, as set by the Sustainable Development Goals (SDGs). 

"We need a unique national commitment for the poverty alleviation, job creation and economic progress. We have wasted so many decades and centuries, there shouldn't be any 'buts'or 'ifs' in achieving the targets," remarked the PM. 

He said that Nepal need to use latest technology. The world has advanced in science and technology development, and Nepal must not lag behind in transferring new technology and harnessing its benefits.

According to him, commercialisation of agriculture, development of Special Economic Zones (SEZs) to promote export-oriented businesses, development of infrastructure and entrepreneurship promotion at the local level are the requisite for economic prosperity of the country. 

He urged the private sector to suggest the types of policies, behaviours, legal provisions, administrative reforms and other actions needed to create investment and business climate.

"The government is very positive to develop favourable policies for business and investment promotion," he said. 

He also said that reduction of trade deficit and investment promotion were among the major issues which were discussed during his India visit. 

He stated that with the development of Tamakoshi and other large hydropower projects, trade deficit will go down as it will reduce the imports of petroleum and electricity from India. 

Similarly, inland waterways will reduce the transportation cost Rs. 4.5 per kg to Rs. 1.7. Therefore we want to develop it at the earliest, he said. 

FNCCI President Bhawani Rana said that economic development initiative should begin from the local level not the centre. The country will be in the path of economic prosperity by creating entrepreneurs in every villages and cities. 

"There are many economic and business potentials in our villages, and we need to tap that potential with strategies and plans to promote entrepreneurship at every local level," she said. 

She also urged the government to facilitate the development of hydropower projects as energy was the fundamental requisite for the investment attraction as well as business and industrial development in the country. 

"I would like to request the government and private sector developer to complete their energy projects at the earliest," said Rana. 

Likewise, one door system for business operation was another private sector demand.

It takes months to get approval for business from authorities which has discouraged both the domestic and foreign investors.

According to Rana, entrepreneurs have to make rounds of Ministry of Agriculture, Soil Conservation and Cooperatives, Ministry of Forestry and other line ministries for land, forest and environment related issues. 

One door system will reduce the doing business cost and facilitate the businessmen in initiating their business in time which will contribute in employment generation and higher revenue earning. 

She said that the government should give special attention to the expansion of export-oriented businesses and industries, and announce the Nepali calendar decade 2075-2085 (2018-2028) 'Decade for Prosperity Campaign' and develop sector specific strategy and programmes for infrastructure development, industrialisation and tourism, energy and agricultural development. 

She urged the government to ensure that the businessmen need not pay double taxes and expedite the process of second generation reforms

The FNCCI awarded various district and municipal chambers of commerce and industry for their contribution on various business avenues and institutional development. 

Published in The Rising Nepal daily on 12 April 2018.