‘No encouraging customs reforms’

Himalayan News Service

Kathmandu, July 19:

Businesspersons today clarified their views about the ordinance budget of 2005-06 saying that there has not been any visible reform or any special steps taken for customs reforms, despite the business sector having demanding it for a long time now. Rajesh Kaji Shrestha, president of Nepal Chamber of Commerce (NCC), speaking at a programme organised by NCC today on ‘new provisions in the ordinance budget 2005-06,’ said that customs point is a strong and crucial gateway for businesspersons and the government as well. Therefore, strong customs entry point is inevitable for the government to encourage businessmen to explore ‘business and economic’ activities in the country. “Despite the demand to limit customs duty at 25 per cent, it continues to be at 40 per cent. Even this year’s budget has not made any changes in that,” commented Shrestha. Some procedures incorporated in the budget to improve customs procedures are noteworthy, but as a whole, budget has failed to address crucial issues, Shrestha said.

However, director general of Customs Department, Krishna Hari Banskota claimed that the government through its ordinance budget has brought in effective reforms to improve customs

points as per the commitments made under World Trade Organization (WTO) and SAFTA, which will help businesspersons to expand international trade. The ordinance budget has made provisions that agro-products being imported from India at the rate of 10 per cent import tax has been reduced to eight per cent, special export tax of 0.5 per cent has been removed from this fiscal year, export tax of 10 per cent on vegetable ghee has been reduced to eight per cent, post clearance audit will be made effective for making customs valuation system, more scientific and transparent. However, Him Bahadur Rawal, chairman of NCC-Revenue Committee said that post-clearance audit would not be effective unless we reform our mechanisms in the customs administration. “The government should give recognition for transaction price of goods to improve Post Clearance Audit to be workable,” Rawal opined.

“The rate of export duty on plastic goods, textured yarn as well as iron pipe and pipefitting has been reduced by 50 per cent,” said Baskota, DG of Customs Department. He also informed that considering the domestic demand and transactions, import duties on gold under baggage rules have been reduced to Rs 150 per 10 grams.

However, provisions have been made to levy only one per cent customs duty on the import of valves, stint and pacemakers used for transplant and treatment of heart patients, he said.

Budget has also made a strong provision of seizing vehicles if they are not being used as per the objectives stated while importing them, Baskota informed. Rawal opined that budget has failed to bring any special package to reform customs administration and to boost the morale of government officials, as it is very challenging to improve field-level customs reform. Budget has also skipped issues related to information technology, he added.

Revenue ills remain: CNI

KATHMANDU: Confederation of Nepalese Industries (CNI) commenting on Ordinance Budget for the fiscal 2005-06 has categorically said that despite some positive steps, the budget has not addressed procedural problems seen in the ‘revenue collection front’. CNI, issuing a press statement, said that the discretionary power for ‘tax collection officers’ has been increased which will create difficulties in the revenue front. “The flexible policy for VAT determination will not help in revenue collection in an effective way.” CNI thinks that low economic performance of the country is attributed to low investment and lack of reform package and it is not only due to conflict. “The budget seems silent on identifying new areas for investment as high-powered institutions were needed to attract investment in this environment.” The budget has not been able to analyse about ‘sick industries’ in a proper way, as sick industries have become sick because of an absence of ‘easy exit’ for them. The provision in the budget to reform labour law is a good step. “The contribution of tourism, carpet and readymade garments and employment generation is huge. However, the budget has not spelt out any programmes to rescue them.”— HNS