'Production base needs to be enhanced'

Kathmandu, September 9

As domestic supply constraints have hit the export sector hard, the country should immediately address critical aspects to enhance its production base.

A joint effort by the private sector and the government can change the dynamics of burgeoning imports against sluggish exports, according to Commerce Secretary Naindra Prasad Upadhyay.

Speaking at a programme titled ‘Minimising Barriers of Export to the European Union’, organised by the European Economic Chamber-Nepal, Upadhyay stated that the government has set a priority to address the lack of trade-related infrastructure, including internationally accredited lab, harmonisation of policies and other crucial aspects, to enhance the supply capacity of the country.

The country has huge opportunities to export to the European market that has remained untapped due to supply-side constraints.

“The European Union has been offering zero duty facility for products of least developed countries, except arms and ammunition, in the European market, but we have been exporting very limited products like carpets, garments, pashmina and handicraft products,” said Upadhyay.

It has to be noted that the country has also not been able to utilise the generalised system of preference (GSP) facilities offered by other developed countries as well.

Citing the current trade scenario, Upadhyay said that the export and import ratio will further widen to 1:15 by 2020 from the current 1:11, if the similar trend continues. He emphasised that the government, private sector and development partners need to work together to address the key bottlenecks to expand the export base of the country. “Without expanding its export base, the country cannot ensure robust and sustainable economic growth through rapid development of enterprises within the country.”

Andreas Roettger, head of Cooperations, EU mission in Nepal, said that the EU along with providing market opportunity is also providing support to enhance the capacity of the government and private sector in least developed countries like Nepal.

Also speaking at the event, trade expert Prachanda Man Shrestha said the EU market is very important for specific industries in Nepal like carpets and garments as 30 per cent of total carpet exports and 37 per cent of readymade garments are being exported to the EU market. Nepal should focus on the market scenario in EU and develop products based on the demand there for export growth in EU market.