Bangladesh hints at zero-tariff facility to Nepali products

Bangladesh has indicated it could provide duty-free market access to Nepali agricultural produces such as tomatoes and lentils when top trade officials of the two countries meet in Kathmandu next week.
“Bangladeshi officials have informed us that they are positive at providing zero-tariff facility to selected Nepali products, which have competitive edges in Bangladeshi market,” said a reliable source at Ministry of Commerce and Supply (MoCS).
He informed Republica that they were expecting a concrete announcement to this effect from Bangladesh when Commerce Secretary of the two countries will sit for talks starting from July 29.
Nepal had been requesting special treatment to its products, particularly agro produces, since almost a decade. But it has failed to secure the facility mainly as Bangladesh is also asking for the similar facility from Nepal.
Such demand from Bangladesh had forced officials to step back because existing bilateral treaty between Nepal and India restricts Nepal from providing equal or more favorable tariff treatment to any third country.
“Thankfully, Bangladesh has finally understood our constraint. We are optimistic the upcoming bilateral trade talks will finally bear fruit,” said the source.
Commerce Secretary Lal Mani Joshi, who is leading the talks, however, refused to talk on the message received by the ministry. He confirmed the date of the meeting though.
“We have not been able to penetrate the market despite the huge demand for lentils and tomato in Bangladesh,” he stated. During the talks, he said he would continue to his push for the duty-free facility to the Nepali products in order to expand the bilateral trade.
The commerce secretaries of the two countries, who are holding talks after a gap of two years, are also scheduled to discuss issues such as additional infrastructure development along the bordering areas, identify problems faced by their respective traders and work out ways to solve them.
They would also discuss over signing a mechanism for operating the transit routes between the two countries and work for sorting out quarantine related hassles. “We will also review the status of implementation of agreements that we had reached during the previous meetings,” said Joshi.
Nepal and Bangladesh had agreed on the draft of the operation mechanism of transit route during the commerce secretary-level talks in Dhaka in 2010. Once signed, it will pave the way for Nepal to use Mongla and Chittagong ports for international trade.
Likewise, it will also sort out problems faced by traders on the overland transit route of Kakarbhitta-Fulbari-Banglaband. Despite that, officials doubted smooth operation of this land route as India has not improved the roads conditions and ease movement of transit traffic along the Kakarvitta-Fulbari and Fulbari-Banglabanda segments of the route.
Nonetheless, if Bangladesh provided duty free facility for agro-produces, private sector believes Nepal´s export to this South Asian neighbor would rise significantly.
Records show, Nepal´s exports to Bangladesh presently stands at around Rs 3.3 billion, whereas its imports from Bangladesh stand at around a billion rupee.

Govt opens rice export with quantitative restriction

The government has lifted a four-year-old ban on rice export paving the way for the country to export of upto 10,000 tons of rice from the two customs points - Rasuwa and Tatopani - to China.
Initially, Ministry of Commerce and Supplies and Ministry of Agriculture Development (MoAD) had proposed that export be opened for 50,000 tons of rice from those customs for this year. But the Office of the Prime Minister and Council of Ministers (OPMCM) lowered the export ceiling when it issued the final decision.
“Traders can now export 5,000 tons of rice from each of the two customs points,” commerce secretary Lal Mani Joshi told Republica on Tuesday. “Prime Minister Babu Ram Bhattarai declined to approve export of 50 thousand tons of rice, citing the rising price of food in the domestic market.”
Officials said the amount of export opened was too little for farmers to enjoy better price for their produces.
According to MoAD, the country enjoyed food surplus of 443,000 tons in the fiscal year 2010/11. It has forecast a food surplus of about 800,000 tons for previous fiscal year 2011/12, of which 300,000 tons will comprise rice.
The preliminary estimation of crops production of MoAD shows that paddy reached 9.45 million tons in the fiscal year 2011/12, up 9.8 percent compared to the previous fiscal year and 21.8 percent compared to the fiscal year 2009/10.
“It might lead to unintended consequences,” Joshi said. “Opening export of rice in a large quantity might result in shortage of food in the domestic market.” The government´s decision to lift up the ban has been published in the gazette this week.
The Department of Commerce and Supply Management (DoCSM) is preparing to provide license to the traders. “Traders have to apply to get the license for export of rice and the DoCSM will make a decision to provide license with quota restriction for them to export,” Joshi said.

NBF fails to meet the target: Govt officials

After almost two years of formation of Nepal Business Forum (NBF) - a common platform to conduct public-private dialogues to remove barriers for entrepreneurship - experts and government officials have questioned its ability to coordinate, orient and institutionalize itself to achieve the targeted goals.
“The NBF has been inefficient to coordinate between private and public sector, failed to orient different stakeholders and most importantly it has not yet institutionalized even after two years of full-fledged work,” Mahendra Gurung, joint secretary at the Office of the Prime Minister and Council of Ministers (OPMCM) said. “This is unfortunate.”
The NBF was formed in May 2010 through an executive order of the government aiming to harmonize the business environment in the country with the help of International Finance Cooperation (IFC). Speaking in a program organized by the NBF secretariat in Kathmandu on Tuesday Gurung said, “There are multiple reasons for the NBF´s slackness, one of the major reasons is that the private sector has not owned this platform.”
Briefing the government´s initiation to launch the e-licensing portal within a couple of weeks to ease the process of getting license for businesses, Gurung said the private sector should be more competitive and sound in its work. “Definitely private sector has the right to knock the government´s door for different facilities, but they should come up with strong basis and measured arguments,” he said.
Anil Kumar Thakur, joint secretary at the Ministry of Industry (MoI) said that the growth rate of industrial sector was declining continuously despite various efforts. “We have failed to achieve the goals that we had set while forming the NBF,” he said in his inaugural speech in the program.
Meanwhile the NBF secretariat has claimed that there have been multiple achievements in last two years. “Tax payment days have been reduced from 34 to 22 days which has resulted in over USD 4.38 million cost saving for the private sector, the export of Pashmina has increased by 50 percent after registration of Pashmina trademark in 41 countries, elimination of provision of Rs 100 million authorized capital for issuance per MW hydro power survey license are major achievements,” Gopal Prasad Tiwari, coordinator of the NBF shared at the program.
Similarly, he presented achievements such as allocation of Rs 10 million to establish a Women Entrepreneurship Development Fund, harmonization of customs hours between India and China to facilitate trade related procedures and transactions, elimination of illegal tax collection in Biratnagar resulting easy movement of trucks and public buses.
Interestingly, private sector representatives didn´t agree with the achievements shared by the NBF coordinator. “I wonder where these achievements were made,” Manish Agrawal, an official from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said.
However, Surendra Bir Malakar, former president of Nepal Chamber of Commerce (NCC) blamed the political situation.

Fund crunch hits feasibility study of SEZs

The feasibility study for special economic zones (SEZs) in Dhanusha, Rautahat and Siraha is unlikely to happen this year even though the government has already finalized contractors for the study.
However, the industry ministry had failed to sign an agreement with contractors before the end of fiscal year 2011/12. As a result, the budget allocated for the project has frozen.
The government has not allocated budget for the project in the partial budget for the first four months of fiscal year 2012/13, according to an official at the industry ministry.
“The feasibility study for SEZs in those three districts is unlikely to happen,” Ministry for Industry Anil Kumar Jha said, confirming that there has been no budgetary allocation for the project in the partial budget.
The official said failure to ink deal with the contractors on time has affected the entire project.
Meanwhile, construction of SEZ in Bhairawa and Simara is going on in full swing. However, construction of SEZ in Bharatpur, Jumla and Kapilbastu is unlikely to begin anytime soon. Firms appointed by the ministry are currently conducting feasibility study of SEZ in these three places.
“Only Rs 10 million have been allocated for the SEZ project in the partial budget. The amount will be spent for SEZs in Simara and Bhairahawa,” the official said.
Though the ministry has already completed feasibility study for SEZ in Panchkhal and Kavre, construction works are unlikely to begin anytime soon owing to fund crunch.
The Ministry of Industry has decided to approach the Ministry of Finance (MoF) and National Planning Commission (NPC) for the allocation of funds for the feasibility of SEZs in Dhanusha, Rautahat and Siraha, according to the official.
However, Minister Jha maintained silence over the plan to seek funds for the feasibility study

FNCCI concerned over closure of Arghakhanchi cement factory

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has expressed serious concern over the closure of Arghakhanchi Cement factory due to the "locals´ irrational" activities.
According to a statement issued on Sunday, FNCCI called on the government to take immediate steps to create favorable environment for smooth operation of the factory. “The industry has done so much to protect the environment in the local area,” said the statement.
“We express grave concern over the locals´ irresponsibility such as violent attack on the factory staff,” the release states. “The government must take actions against those involved and punish them according to law.”
The industry with Rs 2.5 billion investment has provided jobs to 700 people. “We believe there can´t be any kind of foreign investment in the country until such attacks continue on domestic industries,” the statement said.
The factory has been closed since the last 9 months. “This is not tolerable to us. We ask the government to come up with a concrete plan to stop such activities,” the statement reads.

Govt renews consultations with farmers for developing ADS

The government has started fresh consultations with local farmers and farmer´s groups in the mid- and far-western regions in order to collect their inputs for Agriculture Development Strategy (ADS), a long-term vision document that will chart the course of country´s agriculture sector for the next two decades.
Ministry of Agriculture Development (MoAD) started the consultations afresh after the government restructured the steering committee, incorporating farmers´ representatives, and decided to adopt field-based feedback approach to develop the ADS, scrapping the previous assessment report.
“The new steering committee, which was formed after intense protest from different farmers associations and civil society leaders, has completed consultations for fresh assessment in the two regions,” an official from the Ministry of Agriculture Development (MOAD) told Republica.
The committee would hold similar consultations with farmers in the other regions of the country soon, said Prabhakar Pathak, joint secretary at the MoAD.
Through the consultations, the committee is fundamentally generating farmers´ perspectives on areas wherein the government failed while implementing Agriculture Perspective Plan (APP): 1995-2015.
The APP, much-regarded as a reform-oriented vision document, had among others scrapped the government subsidy and promised reforms in supply chain of agricultural inputs and technology so that farmers could access quality fertilizers, seeds and equipments easily.
As concerned officials admit, APP remained a total failure in transforming the agriculture sector and farmers´ lives. Through the fresh consultations the committee hopes to generate new programs and inputs for future policy guidelines.
“We are raising issues such as land-reform, agriculture revolution and demands of farmers in the new consultation meetings,” said Prem Dhangal, general secretary of the Nepal Peasants Federation (NPF).
Meanwhile, referring to the complete restart of the ADS process and fresh consultations being held at different regional level, the MoAD has said that the budget allocated for the ADS will now be insufficient. The government had allocated US$ 2 million (about Rs 160 million) for developing ADS.
“The consultations also has raised the cost by Rs 2 million. Hence, we have requested the government to provide us with the additional sum that was not included in the previously planned budget,” said Pathak.
The government has received assistance from various donors, including Asian Development Bank, World Bank and United State Agency for International Development (USAID), among others, for developing the ADS.
The ADS, which will replace the APP, will deal on cross-cutting issues like irrigation, agriculture inputs and other crucial sub-sectors of the agriculture. “The APP failed to address the core problems of the farmers. We want to make sure ADS does not repeat the same history,” Dhangal said, referring to perennial scarcity of seeds and fertilizers in the country.

Nepal fails to report country policy updates at WTO in time

The government has dragged its feet to timely report the country´s policy updates to the fellow World Trade Organization (WTO) members even as Nepal´s commitment at the Organization required it to report them by April, 2012.
Though submission of such report, under which Nepal needs to clearly inform the changes and update it effects in trade and other national policies, is not a binding obligations, its compliance is considered crucial in sending a message that the country is investment and trade friendly.
“Submitting policy briefs on time builds a good image of the country among the other member in the WTO regime. Sadly, apathy to adhere to this moral obligation have repeatedly portrayed our image negatively,” said Dr Posh Raj Pandey, former member of the National Planning Commission (NPC), who was also engaged in the process of country´s accession to the WTO.
Officials at the Ministry of Commerce and Supplies (MoCS) supposed to carry out this task admitted of the adverse impact. But they failed to give convincing reasons behind the delay.
“We have already started the preparations and are trying to forward the policy updates at the earliest,” said Ravi Bhattarai, under secretary of MoCS. Though he too remained silent on the reason behind Nepal consistently failing to comply with the obligations, knowledgeable sources said lack of zeal and dedications of the concerned staff themselves were the main reason.
“The reality is that maintaining a good working relationship with the multilateral trading partners is simply not in the priority of the Ministry. Hence, not even the top MoCS care whether the ministry carried out tasks as committed at the WTO,” said the source.
This is not the first time the country missed complying with the WTO commitments since it joined the multilateral trading regime in 2004.
Records of the MoCS shows the country had failed to enact competition and other laws and update trade and other policies on time in the initial years of membership. Though the country has presently fulfilled almost all binding commitments, it has always been dragging its feet to comply with commitments that are not compulsory, but exist as moral obligations.
“Very recently, the Ministry had missed the deadline to submit trade policy review as well,” said Dr Pandey. Although the WTO commitment schedule had sought Nepal to submit the trade policy review in December, 2011, the MoCS did so only in February 2012.
Under the WTO norms, all WTO members need to submit their policy updates to the organization so that other member countries can clearly know the status of tariff lines, rules and regulations related with goods and services they trade on.
Such transparency is considered crucial in maintaining effectiveness of the multilateral trading.