Indonesia's ban on the export of its palm oil is an eye-opener for the govt and policymakers
Indonesia's recent decision to impose a ban on the export of its palm oil and seeds will have severe impact on Nepal's oil refining business and its export to India. Up to 85 per cent of crude palm oil imported by Nepal comes from Indonesia. The ban will cut the export of refined palm oil from Nepal by more than 80 per cent, further widening the trade deficit with India, from where Nepal imported goods worth Rs 901.70 billion against its total export to India worth Rs 127.89 billion in the last nine months. According to the Department of Customs (DoC), Nepal imported crude palm oil worth Rs 34 billion in the last nine months, of which more than Rs 25 billion worth of vegetable oil was imported from Indonesia, which is the biggest producer of palm oil, widely used in almost all edible and non-edible products. The prices of other edible oil have already skyrocketed due to the ongoing war between Russia and Ukraine, which is also a major sunflower oil and wheat producer in the world. Should the ban on palm oil export continue for a long time, it is likely that Nepal will also face the same situation Sri Lanka is undergoing due to the dwindling foreign exchange reserve and remittances.
The Indonesian government said it had no option other than to impose the ban on the export of palm oil from April 28, in view of the severe shortage of and rising prices of edible oil within its country. The share of refined oil in Nepal's total export stands at around 24 per cent. A total of 22 oil refineries currently operating in Nepal had exported 177.57 million litres of refined oil produced from palm, soybean and sunflower seeds to India in the last nine months. However, Nepal has to import the raw materials of edible oil by paying in foreign currency, whose reserve has been depleting due to less inflow of remittance and sluggishness in the tourism business, two major sources of foreign currency earnings.
Even if the massive export of refined palm oil had, to some extent, helped reduce the trade deficit with India, it has never helped earn foreign currency as Nepali traders have been doing their business with India in Indian currency (INR). Buying raw materials in foreign currency and exporting the refined products in INR is actually a loss-making business. The country will not make any profit from doing this kind of business, only the traders will benefit. Indonesia's ban on the export of its palm oil is an eye-opener for the government and policymakers, who need to review their existing policies, while encouraging the private sector to set up industries that are entirely based on domestic raw materials, ranging from agriculture to minerals. Unless Nepal switches to industries based solely on the country's raw materials, the country's export will continue to fluctuate and remain unpredictable due to external factors that are beyond our control. Apart from exporting unskilled labour to the Middle East and Malaysia, what can Nepal immediately export to earn foreign exchange? So, it is high time that Nepal made huge investments in the agriculture sector that can not only create jobs within the country, but also help increase our export base.
Medical education
A career in medicine is highly coveted in Nepal as A in other countries of South Asia. As such, thousands of students aspire to become doctors upon completing their school-level education. Until the early-nineties, Nepal depended upon a host of friendly countries for training of its doctors, from the undergraduate level to specialisation. However, today, apart from state-run medical colleges, there are also institutions in the private sector, which train hundreds of the needed human resource for the country and other countries as well. But with more and more students wanting to take up a profession in medicine year after year, hundreds of them seek admission in colleges abroad, which is a heavy drain on our precious foreign exchange.
We could retain a large number of these students if we were to build many more medical colleges in the country itself and provide quality education. Against this backdrop, the Ministry of Education, Science and Technology, Nepal has initiated discussion with the stakeholders to ensure systematic and quality medical education in the country. Quality can be ensured if private colleges made medical education less of a business and if only qualified students found admission.
A version of this article appears in the print on April 28, 2022, of The Himalayan Times.