China removes hurdles in citrus export

Nepal and China have signed a memorandum of understanding (MoU) in order to address the issues related to quality standard of Nepali agricultural products exported to China. The MoU was signed at the third meeting of the Nepal Tibet Trade Facilitation Committee (NTTFC), which concluded on Thursday in Tibet.

“We have signed an MoU with China so that our citrus products can have access to the Chinese market,” said Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and Supplies (MoCS). “Quarantine related issues are the major obstacles to increasing our export to China. This is a step towards further improvement.” 

The meeting that basically discussed problems related to tariff and non-tariff barriers has been successful in terms of removing barriers, Upadhaya said, “China has assured us that it would further support Nepal to upgrade the quality and capacity of Nepali laboratories at different customs points.”

The meeting that was led by Mei Yubao, deputy secretary general of the government of Tibet Autonomous Region China from the Chinese side had complained about Nepal´s certificate of origin (CoO). “Chinese side was expressing concerns over the Nepali CoO. Basically, they were saying that the CoO issued were not technically sound.” In response, the Nepali side has assured that the weaknesses would be improved. 

Additionally, China has agreed to construct parking yard on the border points so that the problem of congestion can be removed. “The meeting has been successful in developing a mechanism in order to resolve the day-to-day problems that the traders from both the countries face,” Upadhaya said. “There will be focal persons from both the countries in the border area to facilitate traders.” 

China has provided the preferential treatment to 4,721 Nepali products. However, Nepal has failed to tap the potential market of China and boost trade. According to Trade and Export Promotion Center (TEPC), trade deficit with China shot up to Rs 38.2 billion during fiscal year 2009/10 from Rs 11 billion recorded in 2005/06.

Different studies on Nepal-China trade reveal that the China has been negating the preferential treatment it has provided to the Nepali products. “China brings up different issues such as quarantine and language,” said Dr Ratnakar Adhikari, presenting a paper in a seminar organized by Institute for Foreign Affairs, on Friday in Kathmandu .

Locals for speedy development of Budi Gandaki project

Locals from Gorkha and Dhading have urged the government to speed up the implementation of the 600MW Budi Gandaki project and promptly commence processes for carrying out the feasibility study of the reservoir-based hydroelectricity project. 

The locals pushed for the early implementation of the project during their meeting with Prime Minister Baburam Bhattarai on Saturday. On the occasion, they expressed concerns over government´s reluctance in calling bid for the feasibility study. 

“We expressed our concerns with the prime minister and urged him to take immediate action to speed up the work of the project,” said Ram Chandra Poudel, a local who was also present at the meeting with PM. 

Responding to the locals, PM Bhattarai said the project was very important for the socio-economic development of the country and the government was committed to executing the project. 

“We have already included it among the national-pride projects. We will soon take necessary steps to develop it,” Poudel quoted PM as saying at the meeting. 

Budi Gandaki is one of the mega hydropower projects of the country which was identified almost 30 years ago in 1983. But the government had not taken any initiatives for developing the project as construction as well as resettlement and rehabilitation of people living in 23 VDCs in Gorkha and Dhading required a huge fund. 

Nonetheless, Budi Gandaki had received applications from 24 firms for conducting feasibility study of the project.

"Of them, we have shortlisted six companies, inlcuding firms from the US, Germany, Italy, France and Australia for carrying out the task," said Lila Nath Bhattarai, director of the project. 

The project office has already forwarded the list of short-listed firms to the government, requesting it to select one of them for the task.“"We hope the government will soon take a decision,” he added.

FDI inflow up by 10%

Nepal´s ranking in the global foreign direct investment (FDI) index has improved compared to last year, as the inflow of FDI went up by 10 percent, the World Investment Report 2012 published by the United Nation Conference on Trade and Development (UNCTAD) has revealed.

Nepal currently stands in 175th position out of 182 countries included in the index. The ranking, which is on the basis market attractiveness, availability of low-cost labor and skills, enabling infrastructure, presence of natural resources, was the same in 2007 as well. Nepal had secured 178th position the previous year. 

The report published by UNCTAD shows that the FDI inflow increased by 10 percent to US$95 million in 2011. However, the total inflow of FDI in 2011 contributed only 2.5 percent to gross fixed capital formation (GFCF), which is far below the South Asian average of 6.4 percent. 

The flow of the amount of total FDI has been continuously increasing since 2006, when the decade long armed conflict ended following the signing of the comprehensive peace accord. The report says, FDI had reached $5.89 million in 2007, up from the negative flow in 2006.

SAARC commerce Secy to review regional trade, cooperation

Commerce Secretaries from eight South Asian countries are meeting next week to review current status of all committed regional cooperations and ways to enhance trade integration and cooperation under South Asia Association for Regional Cooperation (SAARC) initiative.

"The meeting will be held in the Maldives from July 14 to 15," said Lal Mani Joshi, commerce secretary, who will represent Nepal in the fifteenth meeting of the Committee on Economic Cooperation (CEC) under the SARRC secretariat. "It will also review the implementation of trade facilitation measures," he told Republica. 

Though regarded as crucial body, the CEC is meeting after a gap of three years. During the meeting, the commerce secretaries are scheduled to discuss a range of issues including regional agreement on investment protection, avoidance of double taxation and SAARC trade fairs, among others.

The top commerce officials of SAARC, including Nepal, India, Bangladesh, Bhutan, Pakistan, Sri Lanka, Maldives and Afghanistan will also discuss the drafts of different agreements being worked out to promote investment and trade in the region.

"Fundamentally, the meeting will review progresses achieved so far and also develop new action plans for further improving the implementation of commitments made by the SAARC Summit," Joshi shared. 

Among others, the agendas of the meeting is shortening the ´sensitive list´, which include items on which the SAARC member countries have refused to trade at zero tariffs under South Asia Free Trade Agreement (SAFTA) pact.

The working group of SAFTA that met in Kathmandu last month to shorten the list had failed to make any headway after the countries remained divided over the modalities of reducing the items from the list. "The upcoming meeting of the CEC will also touch on that matter since it aims to further liberalize trade on services and goods," Joshi said.

Pashmina, tea struggle to find place in int'l markets

Though tea and Pashmina hold strong potential to churn in foreign currency through exports, producers and exporters have consistently failed to tap their prospects even in already available international markets due to lack of capacity and inability to mobilize funds to promote their products. 

“The trademark of the Nepali Pashmina has been registered in 40 countries all over the world but we neither have capacity nor capital to promote the brand in the international market,” Pushpa Man Shrestha, president of Nepal Pashmina Industries Association, told Republica on Tuesday. 

“As a result, we have not been able to take benefit from the trademark,” he added. According to Nepal Rastra Bank (NRB), the country received foreign currency worth Rs 2.63 billion from the export of Pashmina in the first ten months of this fiscal year. 

Tea producers too shared a similar story. According to them, in the absence of collection center at home and strong overseas market linkages, farmers and processors largely dump their produces in the Indian market, mostly in Calcutta. 

"This deprives Nepali producers from getting due prices for their products, whereas owing to better quality, the Indian firms easily sell our products at handsome prices branding it under their name," a leading tea marketeer said on the condition of anonymity since he has business with Indian importers. 

"Some 85 percent of Nepal´s total tea exports is consumed by Indian resellers," he shared with Republica. "We could do far better and earn huge amount of foreign currency if we could explore other markets and establish our brand in third countries including European countries such as Germany and others." 

Nepal produces 16.61 million kgs of tea. Of that, more than 8.49 million kgs - that is more than half of the productions - are exported. But owing to weak marketing and lack of direct access to global buyers, only 15 percent of total exports reach the third country markets.

The government has listed both tea and pashmina in the Nepal Trade Integration Strategy (NTIS) 2010 -- a blueprint to boost export -- as they have a comparative edge. 

However, traders blamed government´s failure to implement NTIS and develop concrete programs to gain the potential returns from those products for the less than expected level of foreign currency earning by these products. Former Commerce Secretary Purushottam Ojha agreed with the traders.

Given the situation, NPIA has pushed the government to provide it financial support to promote the trademark, Chyangra Pashmina. “We have requested the government to provide us Rs 10 million for the promotional objectives,” said Shrestha.

But experts like Ojha, however, are of view that the government should rather focus on implementing NTIS more committedly, instead of pledging financial support to individual group of producers. "For this, MoCS has long been pushing for additional budget. But government has largely ignored the call," said Commerce Secretary Lal Mani Joshi.

The government had allocated Rs 35 million in 2010/11 for NTIS implementation and Rs 50 million in this fiscal year. Joshi said the ministry has requested for around Rs 120 million for its implementation in the next fiscal year 2012/13.

In the meantime, the Enhanced Integrated Framework (EIF), an initiation of World Trade Organization (WTO), has been supporting export of identified products such as Pashmina and ginger. “There might be some programs coming up in the near future for promotion of pashmina,” a source close to EIF implementation unit at the MoCS stated.

Country may not have next periodic plan

The country may not have a three-year or five-year periodic plans after 2012/13, as the National Planning Commission (NPC) has not been able to initiate the process for formulating such a plan due to political vacuum created by the dissolution of the Constituent Assembly on May 27.

NPC officials claim that the commission has so far failed to develop a base paper, the preliminary sketch of the periodic plan, due to the prolonged political transition and uncertainty on how the upcoming economic policies will be framed. This paper is required to frame the periodic plan, which is considered long-term development blueprint. 

“NPC, which develops the periodic development plans, normally begins the preparation for the base paper a year and half ahead of its launch,” NPC member Janak Raj Shah said. “The NPC has not even been able to form technical committees to work in that direction so far.” 

NPC has so far formulated 10 full-fledged five-year periodic plans, an interim plan and the existing three-year periodic plan. The current three-year plan, which has targeted to achieve 5.5 percent economic growth rate, will expire by the end of fiscal year 2012/13. 

“In order to develop a base paper for the next periodic plan, we need a clear roadmap of the country´s political course,” Shah shared, indicating the country may be devoid of a long-term development plan after the next fiscal year ends.

Suggesting alternatives, Dr Posh Raj Pandey, former member of NPC, said that the government can announce a ´Plan Holiday´ if it is fails to come up with a periodic plan.

“Plan Holiday can be an alternative if the NPC can´t come up with the periodic plan due to political uncertainties and absence of government that enjoys people´s mandate,” he said.

Nepal seeks more German support for product development

In a bid to streamline aid coming into the country for purposes of product development and value chain improvement, the government has requested the German government to provide assistance in a more consolidated way so that it could be more useful for production and export.

The Ministry of Commerce and Supplies (MoCS), which is carrying out the implementation of Nepal Trade Integration Strategy (NTIS) 2010 -- a blueprint to boost exports -- wrote a letter to the German government this week requesting for additional specific support. 

“We have approached the German government to provide assistance to enhance the production capacity and improve value chain,” Toya Narayan Gayawali, joint secretary at MoCS, said. “We need more support from our perspective development partners in a more consolidated way.”

According to an MoCS official, the German government has provided around US$1 million (Rs 91 million) for two years from 2010 to 2012. “That support is going to end by December,” the official said. MoCS has forwarded a letter to the German government this week with some additional requests for further support Nepal´s supply side constraint, such as infrastructure development and improvement of value chain.

Development partners including Germany, the US and the Asian Development Bank (ADB) provide aid for trade but those are not specifically for product development. “Germany is a development partner which has been providing assistance to MoCS,” the official said. “We are trying to make it more focused.”

According to the Organization for Economic Cooperation and Development (OECD), Nepal anually receives Rs 60 billion foreign aid on average, of which 35 percent comprises aid for trade. “We need to strengthen the supply side capacity to get returns from the trade,” Gayawali said. “Our request to the German government is an attempt to achieve something substantial in that direction.”

In the meantime, the government has not been able to allocate enough money in the yearly budget for the implementation of NTIS. According to MoCS officials, the government had allocated just Rs 30 million in the previous fiscal year and Rs 50 million this fiscal year. “We have requested for Rs 120 million for NTIS implementation from the Ministry of Finance for the upcoming fiscal year,” the official said preferring anonymity. “Against this backdrop, we are looking for Germany´s consolidated support on product development.”