The govt and the private sector need to identify the areas where investments can be made to harness the export potential
Given the varied topography, young and educated workforce and better connectivity of roads and communications facilities, Nepal is in a position to export merchandise 12 times more than what it has been exporting till date. As per Nepal Rastra Bank's macroeconomic update report published on Monday, Nepal's exports totaled just Rs 80.78 billion in the last eight months of the current fiscal whereas its imports stood at Rs 943.99 billion, causing a huge trade imbalance. The World Bank's latest Nepal Development Update has also highlighted the importance of improving its export competitiveness for resilient economic recovery. The World Bank estimates Nepal's untapped export potential to be around US$9.2 billion, which could also create an estimated 220,000 new jobs. This is not an unrealistic potential in the medium term. Unveiling its Vision Paper – National Economic Transformation-2030 – on Saturday, the Federation of Nepalese Chamber of Commerce and Industries (FNCCI) also came out with an ambitious plan of making heavy investments to the tune of over US$ 100 billion in the productive sectors, which will help create around 2.2 million jobs within a decade.
Both the World Bank and FNCCI have placed emphasis on agriculture and the tourism sector to lead the country towards sustainability.
The World Bank report outlines six key priorities for Nepal to achieve its export potential. They include reforming the tourism sector for a quick and resilient recovery; simplifying and streamlining processes to attract more FDI; modernising export promotion and upgrading exporters' capabilities; reducing trade costs; investing in phytosanitary and quality control-related infrastructure; and boosting digital trade and e-commerce for more opportunities linked to global value chains. However, Nepal's effort to achieve economic growth and expand its exports has been hampered by the coronavirus pandemic that has brought the national economy to a standstill since last year. Nepal's economic growth contracted to a minus for the first time in 40 years in 2019-20. Now it is projected to grow by just 2.7 per cent in the current fiscal.
Till date, Nepal's economy has been sustained due to the increased inflow of remittances even during the pandemic period. Although the number of Nepali workers taking approval for foreign employment slumped by 74.8 per cent in the last eight months, the remittance inflow grew by 8.6 per cent to Rs 642.14 billion after migrant workers started sending money through the banking channels. The remittance economy is a temporary phenomenon, and the government needs to plan for green, resilient and inclusive development. This is possible if the government and the private sector make huge investments in the productive sectors, and bring drastic reforms in the existing laws, as outlined by the World Bank. The government and the private sector need to identify the key areas where investments can be made to boost exports to support resilient recovery. As more than 1.5 million people have lost their jobs due to the pandemic, the government should take measures to adjust them in the productive and service sectors that can provide them jobs within a short period of time.
Time to act
With 13 coronavirus deaths recorded in a day, it is indeed time for the government to act to stop its spread. There has been a sharp increase in the number of COVID-19 cases in recent days, almost simultaneously with the spike seen in neighbouring India. From a few dozen daily cases, they have risen to almost 500 cases a day now, putting Nepal's COV- ID caseload at 280,524 as of Monday, and pushing the death toll from the virus in the country to 3,053.
Surprisingly, the people do not seem to realise the gravity of the situation, with jatras and festivals taking place as if we live in normal times. The people seem to have thrown caution to the wind, oblivious of the health protocols that they should be following, such as wearing a mask and practising physical distancing.
And with the wedding season just round the corner, could we be waiting for a COVID explosion in the near future? The people don't want a lockdown, having tasted its bitterness last year, but they also don't want to follow the health measures. So what option does the government have? The government must take a strong decision before it is too late and not be swayed by the opinions of one interest group or the other.
A version of this article appears in the print on April 14, 2021, of The Himalayan Times.