Kathmandu

The Tatopani customs point, which is a major trade route linking China to Nepal, was closed after sustaining damage during the devastating earthquake of 2015.

All bilateral trade with China from the trade point came to a halt. The Nepal-China trade transit point was reopened on May 29 after four long years and trade with the country’s northern neighbour is likely to resume in the coming days.

CURRENT SITUATION

According to Navaraj Dhakal, Joint Secretary, Ministry of Commerce and Supplies, the Tatopani trade route holds immense socio-economic and historical importance for the country.

“Contrary to the type of the news that has been circulating regarding the closure of the trade route after only four trucks entering the border in recent days, the route is principally open.”

Using a clever analogy, he explains, “The house has been built, the religious rites have been performed, now what is only left is for people to start living there.”

He further states, “There are several works related to customs and immigration which are yet to be systematised; except for that, the trade route is open for business.”

According to Bed Bahadur Shrestha, President at Sindhupalchowk Chamber of Commerce Industry, though the route opened recently, not much flow of goods has been observed in the area.

Dhakal argues, “It will probably take a few months to observe regular and active flow of goods in the Tatopani trade route as traders often decide the trade route which they are going to use prior to placing the order of the goods. The route has not essentially seen movement due to this.”

He adds, “Larcha dry port in Sindhupalchowk has also been handed over to Nepal, which will ease operation and decrease logistic costs.”

Larcha dry port’s construction began six years ago, which was delayed as the project site was damaged due to the earthquake and saw completion this year.

EASING IMPORTS

As per Dhakal, Araniko Highway is the first highway connecting Nepal and China and the importance of Tatopani trade route for the economic and social development of Nepal cannot be quantified.

He shares, “Memorandum of Understanding between China and Nepal to intensify cross-border and bilateral trade through six border points have been agreed upon. Among the six, Tatopani, Rasuwagadhi and Purang-Yari have been identified for international trade.

Through Tatopani, Nepali traders can also establish trade relationships with other third countries which is equally beneficial for is. All in all, this route will also decrease the trade cost.”

As per Prakash Singh Karki, Chairperson of the Export Promotion Committee, Federation of Nepalese Chamber of Commerce, Tatopani customs point will ease imports as the distance is shorter and the road infrastructure is comparatively more developed there than the Kerung-Rasuwa customs point, which is the only other major Nepal-China border point.

He says, “The roads through which the goods arrive are narrow and cannot facilitate huge containers and trucks.

Kerung-Rasuwagadhi road is incredibly congested.”

While Kerung-Rasuwagadhi border is 175 km from Kathmandu, the Tatopani trade point is only 116 km away from the Capital.

He adds, “The supply chain also won’t be halted since the trade point is open now.”

“When two countries are connected for trade, there are two benefits that can be enjoyed.

First is travel of people to and fro, which has stopped since people will not be allowed to pass through the border; and the second is the import and export which helps in revenue generation through customs,” shares Gyanendra Lal Pradhan, Executive Member at Nepal China Chamber of Commerce and Industry.

He adds, “Since Khasa Bazaar is not being operated like before, it is highly unlikely that it will develop as a market point like earlier. However, import will be facilitated.”

Citing that the operation of Larcha dry port will systemise import and export, he shares, “Custom leakages and unethical and illegal trade will also be controlled due to dry port’s operation.”

INCREASING EXPORTS

According to the official site of Ministry of Foreign Affairs, China is the second largest trading partner of Nepal and in the fiscal year 2017/18, total exports to China stood above $23 million while import from China stood above $1.5 billion. This data is evidence of the trade deficit of Nepal with China. Even though China has given zero tariff entry facility to over 8,000 Nepali products since 2009, Nepal has not been able to create a trade balance among the two countries and has failed to exploit the benefit from trade ties.

Pradhan opines, “To date, there are only a handful of items which are being exported to China through roadways as the volume of goods to be exported needs to be massive to ship through containers. Most of the handicraft items are exported through airways, so there are not many things that Nepal is exporting.”

He adds, “The government has not been able to identify items which can be exported to China at present which is why imagining that export will increase through the trade route’s operation is not logical.”

According to Pradhan, as China is self-sufficient in many goods, it is important to classify items that China’s market will actually need. He shares, “China imports things like petroleum and natural minerals which Nepal cannot produce to export.

So, I think that the only long-term benefit we can amass from this trade route is improvement of import facilities.”

Pradhan also shares that the roadway connectivity in the Tatopani border area is not up to the mark and says, “Looking at the state of the road, it cannot be operated year-round.”

He suggests, “The road should be maintained and constructed as soon as possible and the transportation cost should be decreased. Similarly, taxation system should be simplified to increase revenue generation.”

Dhakal feels that there are many opportunities rather than challenges of Tatopani border re-opening.

He expresses, “We have to increase export and we are working towards increasing the quality of the road.”

He adds, “Work related to infrastructure must be completed as soon as possible and to increase export and decrease imports, foreign investments must be attracted. We need to substitute import items as soon as possible to merge the trade gap.”

Likewise, Shrestha opines, “The government must make provisions to produce raw materials here itself so that we can decrease the import of raw materials and increase productivity in general.”

ADDITIONAL BENEFITS

As soon as the movement of trade increases and regular operation takes place Shrestha feels that hotel entrepreneurs and other local business men of the area will benefit immensely. He shares, “Prior to the closure of the trade route, hundreds of vehicles used to pass from the Tatopani customs point but after the earthquake it halted at once and everyone including traders and the local people were affected. The entrepreneurs who had set up businesses there had to relocate to other locations. And those businessmen who could not relocate to Kathmandu had difficulty sustaining their livelihoods.”

He adds, “The operation of trade route will have a positive impact everywhere.

For instance, the road connecting Tatopani to Kavre, Bhaktapur and Kathmandu — if developed fully — can help tourism flourish and attract businesses in the border area.”

However, Shrestha feels that there is much left to be done to enjoy these benefits and suggests, “The government must systemise custom and logistic operations in the border as soon as possible so that people living around the area also can benefit fully.”

“From strengthening the bond of Nepal and China to developing bilateral trade and intensifying economic and social activities in the border area, Tatopani trade route plays an important role in many sectors,” concludes Dhakal.