Focus on getting assistance for trade and production: UN

At a time when Nepal has been expressing concerns over developed countries not fulfilling their pledge of supporting trade growth, experts from United Nation Conference on Trade and Development (UNCTAD) Tuesday suggested the government to utilize more overseas aid for the development of industry and trade.
Presently, foreign assistance makes around 26 percent of the government´s annual expenditure and officials at the Ministry of Commerce and Supplies complain that only a nominal portion of that is being used to support meaningful projects on trade growth.
Interestingly, statistics of Organization for Economic Co-operation and Development (OECD) says one third of total international assistance comes in Nepal as aid for trade.
Despite such contradiction, experts said Nepal must make efforts to win more assistance and use them more aggressively for the development of exportable products, industrial infrastructures and trade facilitating logistics services if the country is to leverage its share in the international trade.
But as such flow of resources in a particular sector is unlikely to happen unless it is given due priority and included in the National Development Strategy (NDS), UNCTAD representative Maneula Tortora urged the government to integrate trade as a central component of the strategy.
“No plans and strategies can generate effective growth and poverty reduction if they ignore trade that has served as engine of growth and development worldwide,” said Tortora.
Tortora said this while addressing the three-day long regional workshop on ´Integrating the Trade Dimension in the UN Development Assistance Framework´ that kicked off on Tuesday in Kathmandu.
Although OECD data shows high flow of aid for trade in Nepal, officials said the assistance pledged so far have come in the form of technical assistance to carry out various studies and those have largely failed to transform the trade´s reality.
“Aid for trade is important, but it must come in meaningful amount and for projects that make contribution on ground,” said Lal Mani Joshi, secretary of the Ministry of Commerce and Supply (MoCS).
He said the government has been attempting to mainstream trade since last few years, referring that Nepal Trade Integration Strategy (NTIS) formulated in 2010 was the first step toward that path.
The NTIS has identified 19 goods and services that can boost country´s exports in a sustainable manner. “NTIS has given us a ground to take steps for advancing trade and gain more share in the regional and international trade,” said Joshi, adding that government was working together with the development partners aiming to tap potentials of those products and achieve NTIS goals.
Other speakers stressed the need to garner more international assistance to create long-term growth and jobs in the domestic market. They urged the government to play a proactive role and asked the private sector to be more innovative in tapping global market potentials.

Additional Rs 300m sought for Ktm-Tarai fast track

The Ministry of Physical Panning and Works (MoPPW) has said it will need additional Rs 590 million to complete the land acquisition -- barring 8 km stretch in Khokana, Lalitpur -- for Kathmandu-Tarai Fast Track Project and has sought Rs 300 million from the Ministry of Finance to pay compensations to landowners during this fiscal year.
So far, the ministry has received Rs 550 million for paying compensatin to landowners in Bara, Makawanpur, Kathmandu and Lalitpur districts along the fast track.
"Though the actual funds requirement for completing the track opening is much higher, we have asked for additional Rs 300 million for this fiscal year," said Tulasi Prasad Sitaula, secretary at MoPPW.
He also told that acquisition of land along the stretch of 8 km in Khokna has become a tough job as locals are demanding huge compensations. Though MoPPW has not done the exact valuation, it has estimated that acquiring land for the 8-km stretch for the six-lane expressway could cost more than Rs 1 billion.
Given that the locals have refused to compromise on the compensation amount, MoPPW has already reported to the Prime Minister´s Office that it will not be able to open the track within the current fiscal year.
As for the fund disbursed so far, officials said MoPPW was using the amount to compensate landowners in Kathmandu and Lalitpur districts. "The initial plan was to distribute compensation to landowners in Makawanpur. But after they agreed on the terms of compensation they agreed to wait for some time so we decided to pay compensations to landowners in Kathmandu and Lalitpur first," said the source.
The government had allocated Rs 400 million for land acquisition in the 2011/12 budget. The Ministry of Finance had released additional Rs 150 million for the project a few weeks ago.
"I think MoF will provide us the amount we have sought," said Sitaula, referring to the prime minister´s commitment that the government would make sure national priority projects do not suffer from funds crunch.
The proposed Kathmandu-Tarai Fast Track is 76 km and so far MoPPW has opened 51 km.
The Ministry even initiated works to prepare the guidelines in order to screen investors in the project that will be developed under build-operate-own-transfer (BOOT) policy.
The Asian Development Bank that studied financial viability of the expressway in 2008 had estimated that the project would cost around Rs 67 billion.

Nepal asks developed world to remove domestic barriers

Nepal has requested developed countries to help overcome domestic barriers of least developed countries (LDCs) such as infrastructure bottlenecks, lack of knowledge, administrative and institutional shortfalls in order to advance the productive capacity.
Underlining the importance of trade as an engine of growth, Shanker D Bairagi, permanent resident of Nepal to the United Nations and other International Organizations in Geneva, reiterated that LDCs should get open access to the global market to ensure prosperity and growth.
Bairagi, speaking during a meeting of the UN Inter Agency Cluster on Trade and Productive Capacity in Doha, Qatar, under the ongoing meeting of United Nations Conference on Trade and Development (UNCTAD XIII), shared with other stakeholders about the country´s blueprint - Nepal Trade Integrated Strategy - 2010 and prospects it has for the future growth.
“Aid for trade should not divert resources away from other development priorities such as poverty eradication,” the release quoted Bairagi as saying during the meeting.
“The commitments made by the international community in the Istanbul Program of Action (IPoA) -2011 to provide enhanced financial and technical support to develop productive capacities in line with LDCs´ priorities are vital,” said Biragi. “International community should work on implementing the commitments made in Istanbul and respective works and program as envisaged in the IPoA.

India to settle DRP dues by March 2013

A month after terminating long-practiced duty-refund procedures (DRP), Nepal and India have agreed to close down all accounts and settle outstanding dues related with DRP by March 2013.
During the bilateral talk, which was led by Director General of Customs Department of the two countries, the two sides have decided to form a technical committee to ascertain and quantify the amount (of unpaid excise duty in bilateral trade) that India needs to refund to Nepal.
The talks were held earlier this week in Kathmandu on formally closing the DRP. Laxman Aryal, deputy director general of the Department of Customs (DoC) told Republica that the technical committee will be formed after having a letter of exchange between two countries.
"Its primary responsibility will be to calculate out the total outstanding duty amount that Nepal is yet to get from India," said Aryal, adding that the committee was being formed mainly to avoid any mismatch of refundable amount.
The committee will have representatives from Customs Department and Ministry of Finance from both the countries. "However, we have not yet finalized who exactly will be in the committee," said Aryal.
Nepal and India had put DRP mechanism in place in 1961 to facilitate import of excisable items from India. Under this mechanism, Nepali customs allowed Indian goods without charging any excise duty, and later claimed the due duty from the Indian government. The volume of claim depended on the basis of import volume and valuation.
But the two sides had agreed to scrap the mechanism while singing bilateral trade treaty in 2009 and terminated it on March 1 this year. The new arrangement has enabled Nepali importers to acquire the goods without paying any duty to the Indian government. It has also empowered the local customs to collect excise duty on all applicable Indian goods at import point.
Officials at DoC said India has not made any DRP refund to Nepal over the last two years. Given that the government used to get some Rs 3 billion in duty refund from India every year, they estimated that the outstanding DRP amount stands at well over Rs 6 billion.

Nepal seeks meaningful assistance for trade, development

Nepal has urged the developed countries - that have been dragging their feet to fulfill long overdue trade and development related promises - to provide special market opportunities and extend meaningful support for the development of trade to the least developed countries (LDCs) so that low income countries could enjoy poverty reduction and other benefits from global trade regime.
Commerce Minister Lekh Raj Bhatta made such a call to the developed countries while attending Investment Advisory Council (IAC) of United Nations Conference on Trade and Development (UNCTAD) in Doha, Qatar, on Saturday.
Speaking at the Council, which was convened to discuss raising investment and productive capacity of the LDCs, Bhatta said that low income countries have been facing diverse obstacles in integrating their trade with the competitive global economy. Even though developed countries have promised support to overcome those obstacles, he said they have failed to live up to their words so far.
“LDCs are constrained by poor infrastructure and other structural problems. Unless these constraints are overcome, we LDC´s will continue to attain meaningful integration into the global economy,” a press statement of Nepal´s Permanent Mission to the United Nations and Other International Organizations in Geneva quoted Bhatta as saying.
Bhatta mainly sought support on areas like enhancing LDCs´ resilience to external shocks, building critical physical infrastructure such as roads, energy, electricity, telecommunications, development of science and technology and social and human development.
“LDCs by virtue of their characters face resource scarcity and even the foreign investment barely flow to such constrained countries,” he said, and called on the development partners to adopt, expand and implement policies that encourage and promote their investors to invest in the LDCs.
IAC, as a joint initiative of UNCTAD and the International Chamber of Commerce (ICC), offers a platform for consultations between government leaders, heads of international organizations and CEOs of international companies.

Nepal offers stable investment opportunities to foreign investors: Minister

Commerce Minister Lekh Raj Bhatta, addressing the thirteenth United Nations Conference on Trade and Development (UNCTAD XIII), said that the country was ready to offer a stable investment environment to foreign investors with peace process gradually coming to a logical conclusion.
According to a press release issued on Thursday by the Permanent Mission of Nepal to the United Nations in Geneva, Bhatta said that despite visible constraints, Nepal offers very attractive and stable investment opportunities in hydroelectricity and tourism sectors.
The conference, which kicked off on Thursday in the Qatari capital of Doha, focuses on economic development and modernization of least developed countries (LDCs).
“Service sector is emerging as a vibrant component of Nepali economy in recent years and its share in the gross domestic production, employment generation and foreign exchange earnings is increasing,” the release quotes Bhatta as saying during the conference.
Underscoring multiple constraints LDCs like Nepal face in the development process of the service sector, including high transaction costs, supply-side problems, stringent market access conditions, inequalities, and formidable structural problems, Bhatta stressed that effective national efforts and adequate and appropriate international support are essential to overcome the deep-rooted challenges.
“Support measures should encompass special treatment for LDCs in the WTO negotiations on trade, and special priority should be accorded to modes and sectors of export interest to the LDCs,” says the statement.

Committees and reports unable to revive sick industries

The government formed around a dozen committees in last 10 years to study and revive sick-industries in the country. All of them recommended ways to revive them but none could precisely categorize which were sick-industries.
As a result, there has been no change in the situation of sick industries since 1994 when the first committee was formed.
Recently the government formed 8-member Sick-Industries Rehabilitation High-Level Task Force (SIRHLTF) under the leadership of Dipendra Bahadur Kshetry, vice-chairman of the National Planning Commission (NPC) to categorize sick-industries, their problems and find solutions. However, the 20-pages report does not clarify on definition of sick-industries.
"It has already been six months since the report was finalized," a ministry official said on condition of anonymity "Report says what facilities to give to the sick industries but does not say precisely which are the sick industries and that is the main reason for not getting anywhere."
“Six industries have applied for immediate relief at the Ministry of Industry,” the official said. “But we can´t proceed since there is no legal categorization of the sick-industries.”
SIRHLTF paves the way for sick industries to multiple facilities such as postponement of bank loan repayment, restructuring of loan, waiver of tax.
In the annex, the report has listed 26 companies that applied to be categorized as sick-industries . "These are the industries that applied for benefits that we have set for sick-industries," Kshetry said, "But, we are yet to make a technical committee which will fix criteria for sick-industries."
Contrary to the Keshtry´s claim, Umakant Jha, secretary of the MoI, said the ministry was preparing to submit the report to the cabinet for approval. The MoI has reserved the process of implementation saying that it doesn´t have any legal ground to execute them without cabinet´s approval.
Previously, a similar high level committee was formed in 2010 under the leadership of secretary of the MoI. The report however, was replaced by a new one of SIRHLTF. “But there is not much difference between two reports,” said a source at the MoI.
According to Anil Kumar Thakur, joint secretary of the MoI, preparations were ongoing to incorporate definition of sick-industries in the Industrial Enterprises Act (IEA) which is in final stages.