Nepal imports good of Rs. 15.3 for Rs. 1 export

Kathmandu, Nov. 11: Nepal’s foreign trade has continued to take a nosedive trend in the last couple of years.

Despite government’s efforts and high claims of working to improve the degrading trade balance for many years in the past, the export-import gap – both in size and amount – is ever increasing.

The country imports goods worth Rs. 15.3 for every Rs. 1 export.

The export-import ratio in the fiscal year 2017/18 has jumped to 1:15.3 from 1:13.5 in 2016/17, according to the Trade and Export Promotion Centre (TEPC), a national export trade promotion organisation of the country.

Three years ago, the export-import gap was 1:11.

While the export was of Rs. 81.33 billion, just 6.1 per cent in total trade, in the last fiscal, import was of Rs. 1,245 billion making almost 94 per cent shares in Nepal’s total international trade.

The TEPC statistics show that the exports have come down to about 6 per cent share in foreign trade in the last fiscal from more than 8 per cent in FY 2015/16.

“Exports in the last fiscal increased by 11.2 per cent but the import was up by more than 26 per cent. The overall trade in FY 2017/18 increased by just 1 per cent from 24.3 per cent from 2016/17,” said the export promotion body.

Major contributors to the widening trade deficit are the petroleum products, iron and steel products, machinery and parts, electronic and electrical equipment, gold, cereals and cement clinkers.

The country imported petroleum products worth Rs. 172 billion, iron and steel Rs. 103 billion, machineries Rs. 81 billion, cereals Rs. 40 billion and gold Rs. 37 billion.

Petroleum imports alone has more than double share in the country’s foreign trade since it earned only Rs. 81.33 billion in the last fiscal.

The import of petroleum products – petroleum oil and gas – had increased by 41 per cent the last year. Similarly, iron and steel import went up by 36 per cent, machineries by 52 per cent, cereals by 11 per cent and gold by 37 per cent.

All 22 major import items had witnessed an upward trend last year pushing the country in even severe trade deficit.

Export of yarn, readymade garments, cardamom, tea, jute bags and ginger increased last year.

Except for some small trading partners like the United Arab Emirates (UAE), Argentina and Canada, Nepal’s import had witnessed an impressive growth. It imported goods worth Rs. 812.55 billion from India in 2017/18 which is about 26 per cent higher compared to the previous year.

Import from China, France, Vietnam and Thailand went up by about 23 per cent, 56 per cent, 78.5 per cent and 24 per cent last fiscal.

The government has shortened the custom clearance process, implemented online recording system and facilitated the smooth movement of cargo both nationally and internationally. But all these changes have been exploited more by the importers than the national producers and exporters.

However, export is more complex business in Nepal than import.

According to the Doing Business Report 2019 published by the World Bank, exporting is costlier than the importing as the average cost for border compliance to export is 288 US dollars while the same process for import costs 190 USD.

Likewise, the documentary compliance for export is 110 USD and import 80 USD.

Published in The Rising Nepal daily on 12 November 2018.