Himalayan News Service

Kathmandu, July 27:

Five leading organisations of export-oriented industries have criticised government’s failure to address problems related to the export sector through the recently-launched budget for fiscal year 2005-06.

Issuing a joint press statement, the Garment Association of Nepal (GAN), Handicraft Association of Nepal (HAN), Central Carpet Industry Association (CCIA), Nepal Pashmina Industry Association (NPIA) and Nepal Freight Forwarders’ Association (NEFFA) stated that the government has just paid lip service for the promotion of the ailing export industry.

“The new budget document has completely ignored the fact that export industries are contributing greatly in terms of employment generation as well as earning a hefty sum of foreign exchange for the conflict-tattered economy of Nepal,” says the release. Though the budget talked about some initiatives for the sector’s promotion, but they are mere ‘hollow promises’, as they don’t have proper programmes and budgetary allocation, it added. Despite repeated requests to formulate a long-term export policy, the budget has not mentioned a single point in this regard, which shows the government’s total indifference towards the export sector.

“Though we had requested simplification of income tax on export earnings, the budget has not spelled out any tax reforms. Instead, the government has given more ad hoc authority to tax officers, which will create havoc,” says the statement. Scrapping of 1.5 per cent Special Tax and imposing an additional tax of 1.5 per cent on taxable income is a tricky business that will increase tax burden.

The new provision of removing woollen carpet and pashmina industry from the list of cottage industries is ‘totally impractical’ and against the spirit of industrialisation in Nepal. The government’s new move is unfortunate for leading exports like carpet and pashmina, in the name of just widening the tax net.

“It’s completely ironical. The government wants to attract foreign investment in areas where we already have competitive and comparative advantages. When there is not even environment for domestic investors, how can foreigners come to Nepal,” questioned A G Sherpa, president of CCIA. The budget has proposed to set up a rehabilitation fund to rescue sick industries. But it has only sta-ted to rehabilitate tourism related industries, ignoring other sick units, such as export-oriented industries. “It means a complete ignorance about the export sector,” said Kiran Prakash Sakha, president of GAN.

The budget has failed to take initiatives regarding banking facilities for export industries in terms of reducing spread rate, special loan provision and simplification in bank guarantee. “At a time when overall export sector is dwindling, the budget should have given directives to banks and financial institutions to float loans at concessional rates, increase repayment period and reschedule old loans for the export sector.”

Despite Nepal having been touted to be developed as a transit point to facilitate trade between China and India, the budget has failed to incorporate steps to develop Nepal as an international air cargo hub, said Namgyal Lama.