'Nepal has underutilized trade opportunities with India'

Despite enjoying zero tariff entry facility on most of the goods to India, which has a huge market potential, Nepal has largely underutilized the opportunities it holds in penetrating market and expanding exports to the next-door neighbor in the south, shows a latest report.

For instance, the total import demand for iron and steel in India in 2010 was close to $8 billion.

But Nepal´s share of that was only 1.22 percent. Similarly, Nepal´s share of exports in India´s total imports of other exportable items on which Nepal has comparative advantage, including edible vegetables, copper articles, edible fruits and nuts among others, is below 2 percent.

According to the report unveiled in Kathmandu on Friday, the reason behind low exploitation of available market potential in India is due to supply side constraints such as infrastructure, human capital, access to finance and technology, and labor issues. Touching upon the debate over the pegged exchange rate with India, the report notes that there is no decisive evidence to change the peg despite real exchange rate appearing to be revalued.

"Devaluation is helpful if constraints like weak economic fundamentals, institutional and political fluidity and weak industrial and tradable sector is taken care of," reads the report.

The report that is totally focused on Nepal-India trade has outlined that Nepal has a highest degree of trade intensity with India after Bhutan. "Nepal´s export basket is heavy with low-value products like ferrous metals, chemicals, crops and food products," states the report. The report prepared by South Asia Watch on Trade, Environment and Economics (SAWTEE) with the help of United States Agency for International Development (USAID) argues that Nepal has not been diversifying its production to increase the volume of export.

According to the report, the non-tariff barriers that are hindering Nepal´s export to India are quarantine related issues, rules of origin, transport hassles, technical barriers to trade, quantitative restriction, domestic production and transit state permit. "Quarantine related issues have 39 percent of share in obstructing export to India," reads the report.

Moreover, the report argues that Nepal should ratify the Special Economic Zone bill as soon as possible. "There are issues that should be addressed in domestic level and by India as well," the report states, adding: "The Inter-governmental Committee meeting between Nepal and India should address the issues like transporters´ accessibility and transit issues."

The report also argues that the article III of Treaty on Control of Unauthorized Trade between Nepal and India should be reviewed and it should be open for the items that are imported for use in agriculture, manufacturing and service sector.

66-km network, 5 lines, 31 stations

KATHMANDU VALLEY METRO INCEPTION REPORT

The preliminary inception report on the much-awaited Metro Railway in Kathmandu that was submitted to the Department of Railways (DoR) by consulting companies this week has outlined five lines for the network -- four inside the Ring Road and one that will travel along the Ring Road.

The proposed 66.1-km network comprises 31 stations in total -- including transfer and ordinary stations. The main terminal of the metro will be located at Ratnapark, says the report, which is yet to be approved by DoR.

According to the report, the 27.35-km Line 1--which follows the Ring Road--will connect different locations between Kalanki, Satdobato, Chabhil and back to Kalanki.

The Line comprises 18 stations including transfer points at Kalanki, Balkhu, Satdobato, Koteshore, Tinkune, Sinamangal, Chabhil, Narayan Gopal Chowk and Gongabu, from where passengers can change trains. Line 1 will have pick-up and drop stations at Ekantakuna, Dhobighat, Sitapaila Chowk, Swoyabhu, Balaju, Machhapokhari, Tilangatar, Dhumbarahi and Gwarko.

Those who want to go from Kalanki to Sinamangal can take trains on Line 2. This Line will have six stations in places ranging from Kalanki and Sanogaucharan to Sinamangal. The Line will pass through the main terminal.

The preliminary report shows that Line 3 will link Koteshwore and Gongabu. It will have eight stations in places like New Baneshwore, Singha Durbar and Thamel and will pass through the main terminal.

Similarly, Line 4, which is 11.5-km long, will connect Satdobato and Narayan Gopal Chwok, while Line 5 -- the shortest at 8.4 kilometers -- will link Balkhu and Chabhil.

According to Rajeshwar Man Singh, superintendent engineer at DoR, the Metro Railway will travel above ground in some places, underground in some areas and on the surface in selected places.

“But how it travels in each specific area will be decided after the complete feasibility report is prepared,” Singh said.

DoR has given the consulting companies until November to prepare the complete feasibility report.

The feasibility report of the project -- which will be based on the preliminary inception report -- will be prepared by Korea Transport Institution, Chungsuk Engineering Company, Kunwa Cunsulting and Engineering Company, Korea Rail Network Authority and two local companies-- BDAnepal Private Limited and ERMC Private Limited. These companies were also involved in preparation of the preliminary inception report.

“We have paid around Rs 60.5 million (to the companies) to prepare the preliminary report and conduct the feasibility study,” Singh said.

IMF appreciates India's fiscal budget for 2012/13

International Monetary Fund (IMF), a global institution which develops the routes to connect and maintain the global economy has appreciated the steps that India took while framing the fiscal policy for 2012/13. Christine Lagarde, Managing Director of the IMF, who is in New Delhi and having discussion with high profile politicians, ministers along with senior government officials, appreciated the budgetary allocation of India.

Guidelines for selection criteria of investors on cards

The government will soon form a set of guidelines on selection criteria of investors who will participate in the bidding for construction of the much-awaited Kathmandu-Tarai Fast Track road project.

In this regard, the Ministry of Physical Planning and Works (MoPPW), which has undertaken the responsibility of building the six-lane 76-km track that links Kathmandu and Nijgad, has formed a six-member high-level committee under Birendra Bahadur Deuja, former director general of the Department of Roads (DoR).

The committee also comprises two external experts Ram Ayodhya and Hari Prasad Dhakal, both former division engineers of DoR, and Rajendra Nepal, director general of the DoR.

“We have informed the cabinet about the formation of the committee,” Tulsi Prasad Sitaula, secretary of MoPPW, told Republica on Wednesday. “We hope the cabinet will endorse it within a few days.”

The committee will be entrusted with the task of criteria for selection of investors for the project. According to Asian Development Bank´s 2008 estimate, the project will cost Rs 67 billion.

Sitaula, however, refused to disclose whether the committee will have the authority to select eligible investors.

Kathmandu-Tarai Fast Track is one of the prioritized projects of the government. Track opening works on 51 km of the 76-km expressway has already been completed. The government is planning to develop the project on build-operate-own-transfer (BOOT) model.

Nepal for stronger global partnership for LDCs development

Nepal has urged the developed countries to fulfill their commitments and support trade and development of least developed countries (LDCs).
Speaking at a 25th special session of UNCTAD in Geneva, Shankar Bairagi, permanent representative of Nepal in Geneva said Nepal, like all LDCs would like to graduate from LDC status, and for this the support of the developed nations as well as UN bodies was important. He also urged for renewal of global partnership in order to uplift the situation of LDCs.
According to a press release, Bairagi said the UN had more special responsibilities to advance the lives of millions of people living under extreme poverty and hunger. Around more than 700 million people in 48 LDCs live under the poverty and minimum standards of basic facilities.
“International community can´t afford to remain silent when a large chunk of humanity is still grappling with dehumanizing condition of poverty and hunger,” the release quotes Bairagi as saying.
He viewed the upcoming thirteenth conference on trade and development of UNCTAD in Doha on April 21 to 26 could contribute towards renewed realization of strengthened global partnership for the development of LDCs.
“LDCs are not asking for the best of affluence; they are seeking to meet the minimum developmental standards of their people and UNCTAD has a special responsibility to assist LDCs in their development process,” he argued.

Entrepreneurs to utilize zero-duty facility

Trade and Export promotion Centre (TEPC) and Nepal Freight Forwarders´ Association (NEFFA) have agreed to develop programs to utilize the duty-free market access facility provided by European Union to the least-developed countries.
At a program organized in the capital on Tuesday, representatives from TEPC and NEFFA agreed to hold discussions for tapping the trade opportunity in the EU countries.
In the context of the Doha Development Agenda, participants stressed the need to ensure better economic integration between developing and developed countries through improved access to the markets of developed countries, NEFFA said in a press release.
The participants also urged the developed countries to simply rules of origin so that LDCs could benefit from exports trade

SEZ bill through ordinance: Minister Jha

Minister for Industry Anil Kumar Jha on Monday said the government will enact the Special Economic Zone (SEZ) bill through ordinance before the upcoming session of parliament to address investors´ concerns and promote industries.
“I have already discussed the possibility of enacting SEZ bill through ordinance before the next session of parliament with the prime minister,” said Jha.
Speaking at a program organized to discuss on draft Industrial Enterprise Act (IEA), Jha said the government was prepared to enact the law through ordinance as opposition from a faction of UCPN Maoist forced him to withdraw the bill from regular agenda during the last session of the parliament.
“SEZ bill was the top agenda of the first parliament meeting of last session. But we had to withdraw it after Chief Whip of Maoist Dev Gurung warned his party would protest it strongly and even disrupt proceeding if the bill was added in the official business list of the house,” said Jha.
Jha said the government was holding talks with major political parties to put in place SEZ Act through ordinance. “I am also planning to approach President Ram Baran Yadav in this regard.”
SEZ bill was tabled in the parliament three years ago. Initially, labor unions protested saying it does not protect labor rights. But after trade unions softened their stance, resistance from a faction of Maoist emerged.
Gurung said the bill was against the national interest and would exploit natural resources and labor rights.
Industrialists, meanwhile, requested the government to implement the IEA through ordinance. “As the next session of parliament will begin only after few months, chances of IEA being ratified do not appear anytime soon. It might also face similar dilly dallying,” said Lawmaker and President of Confederation Nepalese Industries Binod Chaudhari said.
He also urged the government to provide all the facilities promised in the new Industrial Policy through upcoming budget for fiscal year 2012/13.
Commenting on the draft IEA which Ministry of Industry circulated for wider consultation, industrialists urged the government to list major manufacturing industries in the Act itself so there were confusion over facilities and incentives they should get.
“The draft should also incorporate a provision for forming Investment Promotion Trust and Technology Development Fund, which are incorporated in the Industrial Policy,” said Hari Bhakta Sharma, vice president of CNI.
In addition to that, entrepreneurs also demanded the government to clearly define small, medium and large scale industries and make the provisions of incentives more specific for them.