Gopal Tiwari

Kathmandu, May 25:

In the light of the fact that the budget for fiscal year 2005-06 is scheduled to be announced in mid-July, the export sector is intensifying its dialogues with the government on Export Trading Houses (ETH), which mainly purchase goods from locals and export to other countries.

Of the total 350 registered ETH with the Department of Commerce (DoC), only 60 trading houses are in operation currently, exporters disclosed. They are urging the government to introduce a new policy to remove existing hurdles and unnecessary taxes.

Namgyal Lama, president of Nepal Freight Forwarders Association (NEFFA), giving his comments to The Himalayan Times said, “Since ETH are meant for boosting exports from the country, they need to be given certain incentives when in crisis. ETH can generate huge amounts of foreign currency, provide employment and add revenue to the national coffer, if we do not let them fall into a trap.”

A discouraging environment for export business has gained momentum, which needs to be curbed if we are really serious to protect this sector, he said. “ETHs have been playing a crucial role for buyers, tourism promotion, international marketing and promotion of carpets, garments and various other local products.”

Every year more than 100,000 tourists visit Nepal as buyers and purchase goods from us, Lama disclosed. In such a situation, we should not discourage them by charging high prices compared to other countries.

Udaya Raj Pandey, general secretary of Garment Association of Nepal (GAN) opined that exporters are still weak in lobbying for the sector with the government. The government policy is not treating all big and small entrepreneurs equally, complained Pandey.

“In Nepal, large scale industries are given VAT, bonded warehouse facilities but small entrepreneurs have no access to it,” informed he. Therefore, flexible policies are required to boost small businesses, he suggested.

A government official disclosed that the government might introduce an EXIM policy to facilitate the export business, making a provision for bonded warehouses with tax incentives for small scale industries as well. Pandey of GAN said that in order to boost the export sector, coordination between the ministry of finance and department of commerce is lacking. “Policies are good but implementation is weak.”

During the first six months of the current fiscal year, export has increased by only 6.2 per cent compared to 12 per cent in the same period in last fiscal year. Following the expiry of MFA on December 31, 2004, exports declined sharply to third countries by 18.9 per cent during the first six months of 2005. Readymade garment exports were 35.7 per cent lower, with a sharp 63.1 per cent decline in mid-December to mid-January 2005, as MFA quotas expired.

Imports grew only by 2.1 per cent year-on-year basis in the first half of fiscal year 2005, compared with an increment of 10.2 per cent in the first half of 2004. Despite a 37 per cent increase in the import of petroleum products and appreciation of Nepali rupees, Nepal’s import, mainly comprising of raw materials for export products or capital goods, remain stagnant.