Joint-Venture bank to ease Nepal-China trade

Kathmandu, July 3

The government is planning to establish a Nepali-Chinese joint-venture bank to facilitate the trade between the two countries with proper banking facility.

Talks are underway with the Chinese authorities to establish a JV financial institution to make the trade with the northern neighbour through the banking system.

"Establishment of such bank will make the LC (Letter of Credit) opening easy and will also help make the trade formal," said Finance Secretary at the Ministry of Finance Rajan Khanal at an interaction with the traders and entrepreneurs at the Nepal Chamber of Commerce on Wednesday.

He said that a Chinese bank is likely to come to Nepal soon and there was a probability to create a joint-venture institution with a government-owned bank.

Khanal said that the trade in the south has local nature while the trade in the north is not done through the banking channel. The traders are using TT (Telex Transfer) also known as wire transfer or draft to make the payment to the Chinese traders. The LC is an instruction from the importers to a bank in a foreign country to pay the money to the exporters when the required conditions are met while TT is the transfer of money from one bank account to another through electronic means.

Nepal imported goods worth Rs. 186.6 billion in the first 11 months of the current fiscal year 2018/19 from China and exported goods worth Rs. 1.96 billion.

Khanal said that the government was serious about addressing the grievances of the private sector and was working to create better investment climate with better incentives and tax waiver policies.

"But forget about running the businesses on tax incentives always. As we are the members of the World Trade Organisation (WTO) and South Asia Free Trade Area (SAFTA), duties on import of foreign goods will go down gradually so you have to develop competitiveness," he warned the entrepreneurs.

He also said that the government wanted to interact with the business association in the country to create list of actual raw materials.

According to him, the government wanted to promote domestic industry and products. But some finished goods are raw materials for some industrialists. Therefore, some concerns of the traders/importers cannot be addressed.

Khanal said that 5 per cent incentives on domestic garment and 10 per cent customs duty on imported books will not be reconsidered.

Revenue Board in the offing

Secretary of Revenue Lal Shankar Ghimire said that the government was planning to establish a Revenue Board in the first month of the next fiscal year.

"The government has promised to establish a permanent Revenue Board. It will come into existence from the beginning of the next fiscal. As the government wants to facilitate the business environment in the country, it wants to have an intensive discussion with the private sector to make the board more effective," he said.

He also said that the Ministry was developing a home delivery system for the Permanent Account Number (PAN) cards which would be implemented soon.

Ghimire said that the government was trying to protect the goods that have potential to make the country self-reliant.

"The government is clear that the protection could sometimes be harmful for the consumers and the country as the consumers have less choice and the country losses revenue, but protection measures are being applied to let the domestic business grow," he said.

President of the NCC Rajesh Kazi Shrestha demanded that the industries that import raw materials that have adverse impact on land and agriculture should not be promoted.

Published in The Rising Nepal daily on 7 July 2019.