Govt mulls new measures to safeguard local factories

The government is mulling over imposing quota restriction or additional customs duty on imported goods in case it found overseas exporters of supplying those goods at unjustifiably low prices, thereby hurting the Nepali industries unfairly.

The government has even incorporated such provision in a draft of new law - Safeguards, Anti Dumping and Countervailing (SADC) Act - which the Ministry of Commerce and Supplies (MoCS) finalized recently. 

“The draft of the SADC Act has been finalized and we have forwarded it to Ministry of Law and Justice (MoLJ), among others, for approval,” said the source. 

Once MoLJ approves it, the MoCS plans to forward it to the cabinet for its enactment.

MoCS has been drafting the SADC Act since a couple of years in a bid to safeguard the domestic industries from possible loss that they might incur in sales as well as market share due to inflow of excessively cheaper foreign goods. The draft Act also incorporates a provision whereby any industry facing losses due to ´dumping´ by overseas exporters can formally file a case against it, seeking compensation for the loss.

“However, the industry filing the case should have production amounting equal to or more than 25 percent of the total import of that particular product,” said the source.

Apart from responding to the case filed by any industry, the government too can impose additional customs duty on the imported goods in case it found them of being harmful to the domestic industries. 

“However, the government has to produce sufficient proofs before imposing additional customs duty,” the draft reads. 

Under the safeguard measure, the government can also impose higher customs duty or quota restriction on the import of any good if it finds such import of affecting the balance of payment of the country and foreign exchange reserve.

The draft Act envisages two types of safeguard measures -- interim and permanent. The interim safeguards can be lifted after certain span, while permanent will last for longer period.

Moreover, SADC Act puts the responsibility of showing proof on the shoulder of the overseas exporter. This means any overseas firms facing a case will need to prove that it is not dumping the product in Nepal. 

“The government will remove the additional customs duty and safeguards measures if the firm provides sufficient documents which demonstrate that the prices of goods were fair - not subsidized or kept lower than what it is priced in the exporting country,” said the source.

Industrial infrastructure program in limbo

When the government announced infrastructural support to cement factories utilizing local raw materials in 2008/09, the program had drawn praises from the private sector. Four years down the line, the priority program has completely lost steam. “

"This is sad. The program meant a lot to the private sector," said Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). 

Under the program, the government had promised to construct roads, drinking water facility and lay electricity lines to the factory sites. This, the government had claimed would encourage investors to make use of country´s huge limestone reserves, thereby saving billions of rupees spent on imports of clinker.

The private sector had welcomed the government´s announcement because the program had committed to relieve investors of the need for spending huge money in constructing basic infrastructures. 

However, the government over the last four years has constructed only one third of the total 32 km road it had promised to the four cement factories -- Ghorahi, Sonapur, Dang and Rolpa. Though the government had released Rs 175 million for road construction, only 48 percent of the amount has been spent so far. “

"The progress in laying electricity lines and setting up drinking water facili”y," Bishnu Prasad Dhakal, under secretary at the Ministry of Industry told Republica.

Promoters of the cement factories accuse MoI for the poor implementation of the program. MoI officials, on the other hand, passed the buck on other ministries. 

"It is true that MoI is the executing authority, but we rely on Ministry of Physical Planning and Works for the construction of roads, Ministry of Energy (MoE) for laying electricity lines and Ministry of Local Development (MoLD) for installing drinking water facility," said Yam Kumari Khatiwada, joint secretary at MoI.

Top MoI officials claimed they have always been exerting pressure on the ministries to implement the progra“. "Sadly, they have never given the program a priority," stated an MoI official.

However, top officials at MoPPWTM have their own explanations. "It´s not that this program is not in our priority," said Tulsi Prasad Sitaula, secretary at MoPPWT. "But how can we achieve results without any prior consultation and proper homework?"

Industrialists, meanwhile, expressed disappointment at the lack of progress in implementation of the program.

"If there is lack of coordination between the ministries, it is up to the government to sort them o”t," said a promoter of a cement factory.

Govt takes up herbs export issue with India

 The government has taken diplomatic initiative to resolve the problems in exporting medicinal herbs to India following the introduction of new rules in contravention to the spirit of bi-lateral trade treaty by India´s Uttar Pradesh (UP) state-government. 

The Ministry of Commerce and Supplies (MoCS) approached Indian embassy officials in Kathmandu in a bid to resolve the problem that has left Nepali medicinal herbs worth Rs 250 million stuck at Nepal Customs office for the last couple of months. 

“We spoke to the officials at the Indian Embassy in Kathmandu in an effort to settle the problem that has affected the exports of medicinal herb from our country to India. The embassy officials have assured that they would communicate the matter to the Ministry of Finance of India as soon as possible,” Lal Mani Joshi, secretary at the MoCS, told Republica on Sunday.

Traders had met Prime Minister Baburam Bhattarai last Friday and urged him to take immediate actions to resolve the problem.

The exports of medicinal herbs from mid-western and far-western regions have come to a grinding halt after the UP state-government of India made it mandatory for even the Nepali exporters to acquire a license from its Department of Forest to continue the exports.

Officials at the Indian embassy were maintaining ignorance about the problem. 

“As per the existing bi-lateral treaty, this problem shouldn´t have occurred. However, the state governments are not acting as per the treaty´s spirit,” said Joshi, quoting an embassy official.

UP state government had imposed the similar rule in 2000 prompting Nepali traders to file a petition at the Supreme Court of India. The Indian Supreme Court had issued a stay order asking the UP government not to disrupt the imports of Nepali medicinal herbs. 

But this time the UP state government imposed a new rule after the SC passed a verdict clarifying that the Ministry of Forest has the authority to deal with the issue. 

“We are trying to get a response from the Indian central government as soon as possible,” Joshi said. 

The bilateral trade treaty between Nepal and India clearly mentions that all goods of Indian or Nepalese origin shall be allowed to move unhampered to Nepal or India respectively without being subjected to any quantitative restrictions, licensing or permit systems.

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.