MoC brings plan to cope with widening trade deficit
- Govt will provide help to bring down cost and time of international trade
Kathmandu, November 29
The Ministry of Commerce (MoC) has presented a plan to the chief secretary to cope with the alarming trade deficit caused by the supply side constraints that have not helped boost exports. Low productivity, which is considered one of the major structural constraints of the Nepali economy, has posed a critical challenge in narrowing down the widening trade gap.
The country has been importing goods from around 128 countries, however, export is being carried out with only around 30 countries, according to Chandra Kumar Ghimire, commerce secretary. Out of the total exports, 82 per cent of the exports is made to only four countries namely, India, the United States of America, Germany and the United Kingdom.
Nepal has been importing petroleum products from India, which is the major import item of the country but it can be minimised by generating hydropower and solar energy that are also clean sources of energy. Consumption of liquefied petroleum gas in the dry season is going down along with regular electricity supply, according to MoC. Erratic power supply in the past had raised the import of petroleum products. Along with hydroelectricity development, the government has also brought a plan for the use of renewal energy and bio gases to bring down the consumption of fossil fuels.
The MoC in its plan has identified the role of sectoral ministries to minimise the widening trade gap. The Ministry of Energy and Ministry of Agricultural Development can play a significant role to minimise trade deficit. Import of agro products has also been growing exponentially.
“It is an irony that we are an agrarian country but gradually turning out to be a net importer of food,” said Ghimire. “The Ministry of Agricultural Development should formulate and execute a plan to be self-reliant in agro products that we have been importing.”
The Ministry of Commerce itself will play a role in trade facilitation to bring down the cost and time of international trade and for this the MoC has urged the ministries developing infrastructure projects like roads and agencies developing border infrastructure to accelerate the implementation process.
The MoC has also said that it will conclude the protocol exchange of the Transit and Transport Agreement with China and also look for feasible ports and transit facility with the northern neighbour to establish trade relations with third countries via China. This will help industries that are importing raw materials to be competitive in production.
MoC has also urged Ministry of Finance to ensure low interest credit for the production sector for a certain number of years. It has further asked the Ministry of Industry to create a prudent intellectual property regime and also reduce other hassles to increase foreign investment.