Exports grow double-digit driven by garment, carpet rebound

Though labor unrest continues to trouble major industries, Nepali readymade garment and woolen carpet exporters managed to post more than 44 percent rise in exports. The healthy rise in garment and woolen carpet exports also made country´s total exports to grow by 11.2 percent over the first six months of the current fiscal year.
Nepal´s total exports over the first half of 2011/12 jumped to about Rs 36 billion, says a latest report of Nepal Rastra Bank. It was Rs 32.29 billion in the same period last year.  Although government officials tag readymade garment as a ´dying industry´, its exports to the third country markets soared by 44.5 percent and touched Rs 2.48 billion during the review period.
Exports of garment have increased to the European countries - mainly Spain, Germany, UK and France, according to Udaya Raj Pandey, president of Garment Association of Nepal (GAN). "We have got no new costumers, but our old clients are placing more demand," he told Republica.
As EU countries have provided zero tariff facility to Nepali products, exports of garment in the European market has increased in recent months. However, no such sign is visible in the US, which previously used to be the largest buyer of the product.
Despite such a healthy export growth, garment remained the country´s second largest export during the review period. Nepal´s largest export during the period was hand-knotted woolen carpet.
According to NRB statistics, exports of woolen carpet during the first six months of 2011/12 stood at Rs 3.36 billion, which was 44.2 percent higher as compared to export figures of same period of last year.
Pashmina - another prime export products - was the country´s third largest exports during the period. Nepal exported pashina products worth Rs 1.52 billion, a rise of 63.5 percent recorded in the same period last year.
Entrepreneurs like Kabindra Nath Thakur, president of Nepal Carpet Exporters Association, however, caution that present rise (in value terms) could be faulty because the central bank figure does not acknowledge some 8 percent rise in value of third country exports has come from depreciation of Nepali currency. "The actual growth in exports is lesser than what the NRB says," Thakur stated.
Irrespective of the situation, the rise in their exports income enabled the country to enjoy 6 percent rise in exports to overseas markets over the first six months. Exports to those markets had declined by a percent in the same period last year.
Likewise, rise in exports of products like zinc sheet (Rs 2.95 billion), textiles (Rs 2.37 billion), jute goods (Rs 2 billion) and polyester yarn (Rs 1.91 billion) helped the country expand its exports to India by almost 14 percent.
Despite encouraging export growth, NRB data shows the total export income for the period did not even suffice to finance import of petroleum products. According to NRB, Nepal imported petroleum products worth Rs 40.60 billion during the period. Gold (Rs 11.61 billion) was the country´s second largest import during the review period, flowed by vehicles and spare parts (Rs 9.45 billion), MS Billet (Rs 8.50 billion) and medicines (Rs 4.98 billion).
Thanks to their increased consumption - country´s imports increased by 16 percent and touched Rs 216.68 billion during the review period. Such higher rise in imports, meanwhile, widened the country´s trade deficit by about 18 percent to Rs 180.76 billion.

Nepal for operations of all types of rail cargo

REVIEW OF BILATERAL RAILWAY SERVICE AGREEMENT

Nepal and India are finally reviewing bilateral Railway Service Agreement (RSA) in March to pave the way for movement of rail cargo between any Inland Container Depots (ICDs) and Integrated Check Posts (ICPs) in Nepal and additional sea ports in India.
Naindra Prasad Upadhyay, joint secretary at the Ministry of Commerce and Supplies, said officials of the two countries are convening for the review in Kathmandu on March 1 and 2. He, however, refused to divulge details.
Officials of the two countries had met for review talks in New Delhi in 2009. Though nothing transpired during the meeting, they had agreed to hold follow up meeting in six months. But no such meeting was held over the past two years due to Indian apathy for the review of the agreement.
Reliable sources at the ministry said Nepal, during the meet, would seek India to expand movement of rail cargo to and from any ICDs in Nepal and agreed sea ports in India. The existing agreement signed in 2004 limits movement of bilateral rail cargo to Birgunj ICD and Indian ports of Kolkata and Haldia.
“As broad understanding to this connection was build during previous review meeting, we are confident that India will agree to our proposal,” said the source.
Nepali officials and private sector, including Federation of Nepalese Chambers of Commerce and Industry, have long been saying that unhindered movement of railway containers to any ICDs of Nepal from all assigned Indian ports was important to enhance the flow of overseas goods to Nepal.
Most importantly, such a revision was necessary if Nepal is to make use of and best utilize the newly agreed Indian port - Vishakapatnam - for third country trade. “The review is needed also if Nepal is to make use of Rohanpur-Singhbad railway route for trade with Bangladesh and other third countries,” said the source.
Currently, Birgunj ICD has been brought into operation to carry railway wagons from Kolkata and Haldia ports. Similarly, Birgunj ICP is expected to be operationalized from this year. Other ICPs in Biratnagar, Bhairahawa and Nepalgunj are under construction.
Nepal is also requesting India to allow operations of all types of rail cargos and containers under the reviewed RSA. Currently, RSA allows movement of closed cargo only. As a result of the delay in reviewing the agreement, Nepal has been left deprived of enjoying benefits of operations of bulk open cargo and refrigerated wagons.
“This is inflicting us a loss of around Rs 7.3 million each day since more than two years,” said Rajan Sharma, president of Nepal Freight Forwarders´ Association (NEFFA).
Nepali traders also complain that the Container Corporation (Concor) of India -- the Indian partner in the Himalayan Terminal that is managing the Birgunj ICD and also responsible for arranging containers -- has not been providing proper services. Referring to it, Sharma said freight forwarders have event suggested to the government to ask India to allow Nepali traders to take services from private rail service providers.
Apart from that, Nepal would also seek India to incorporate a provision of waiver of detention charge. It would also request India not to treat placement of trains as placement unless handling is possible.