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Chapter 4 Outline of Nepal's International Trade Chapter 4 Outline of Nepal’s International Trade Chapter 4 Outline of Nepal’s International Trade Chapter 4 Outline of Nepal’s International Trade 4.1 Past Trend Nepal’s external trade is characterized by large trade deficits and overly high dependency on trade with India. As summarized in Table 4.1-1, the value of total imports surpasses that of total exports by more than six times in the recent three years, and the trade deficit has been expanding year after year. While the total trade is on the rise, imports have been growing at much higher rates than exports. Strong import growth – led by consumer goods - seems to be partly attributable to the increase in remittance made by overseas workers, which more than compensates for a sluggish domestic industry. Table 4.1-1 Foreign Trade Composition of Nepal Value Billion Rs. Total Export: Import Total Imports Total Trade Trade Deficit Exports Ratio F.Y. 2009/10 60.95 375.61 436.56 314.66 1: 6.2 Share % in Total Trade 14.0 86.0 F.Y. 2010/11 64.56 397.54 462.10 332.98 1: 6.2 Share % in Total Trade 14.0 86.0 F.Y. 2011/12 74.09 498.16 572.25 424.07 1: 6.7 Share % in Total Trade 12.9 87.1 Percentage Change in F.Y. 2010/11 5.9 5.8 5.9 5.8 compared to previous year Percentage Change in F.Y. 2011/12 14.8 25.3 23.8 27.4 compared to previous year Source: Current Macroeconomic Situation, NRB According to the 2011/12 trade statistics, exports to India account for 68.75% of Nepal’s total exports and imports to it occupy 64.51% of total imports in terms of monetary amounts (Figures 4.1-1 and 4.1-2). Table 4.1-2 shows detailed trade record by country in recent years. India’s dominance with more than a 60% share is not a recent trend but has been consistent for a long period of time. China Italy Canada Japan Other 1.06% France P.R 1.07% 1.04% Countries U.K 1.43% 1.33% 8.38% 1.97% Bangladesh 3.48% Germany India 4.00% 68.75% U.S.A 7.49% Source: Trade & Export Promotion Center 4 - 1 Chapter 4 Outline of Nepal’s International Trade Figure 4.1-1 Composition of Export Counterparts (2011/12) Saudi Arabia, 0.91% U.S.A, 0.98% Other Countries, 9.66% Korea R., 1.10% Malaysia, 1.20% Argentina, 1.31% Indonesia, 1.55% Thailand, 1.63% India, 64.51% U.A.E, 6.53% China , P.R., 10.62% Source: Trade & Export Promotion Center Figure 4.1-2 Composition of Import Counterparts (2011/12) Table 4.1-2 Major Trading Partners of Nepal EXPORTS IMPORTS Value in '000 Rs. Value in '000 Rs. F.Y 2011/12 F.Y 2011/12 S.N Countries F.Y 2009/10 F.Y 2010/11 S.N Countries F.Y 2009/10 F.Y 2010/11 % % 1 India 39,902,811 42,868,108 50,933,222 68.75% 1 India 214,261,109 259,162,277 321,346,419 64.51% 2 U.S.A 3,867,223 4,392,600 5,551,916 7.49% 2 China , P.R. 39,218,203 45,635,962 52,924,945 10.62% 3 Germany 2,391,036 2,768,972 2,965,891 4.00% 3 U.A.E 33,398,621 13,615,677 32,540,181 6.53% 4 Bangladesh 3,373,718 3,471,938 2,578,080 3.48% 4 Thailand 7,504,724 7,039,735 8,098,446 1.63% 5 U.K 1,228,188 1,389,528 1,461,905 1.97% 5 Indonesia 8,093,843 8,403,085 7,740,468 1.55% 6 France 1,152,930 1,206,172 1,062,887 1.43% 6 Argentina 5,036,656 7,369,341 6,529,625 1.31% 7 China P.R 1,008,696 746,023 985,693 1.33% 7 Malaysia 4,207,297 4,962,553 5,978,247 1.20% 8 Italy 716,188 758,283 792,245 1.07% 8 Korea R. 5,885,329 5,737,191 5,461,033 1.10% 9 Canada 768,090 820,351 782,059 1.06% 9 U.S.A 5,384,826 3,930,988 4,885,225 0.98% 10 Japan 554,158 652,352 767,227 1.04% 10 Saudi Arabia 1,832,945 3,172,754 4,538,443 0.91% 11 Turkey 276,970 865,692 548,770 0.74% 11 Japan 6,267,573 3,957,915 4,479,354 0.90% 12 Bhutan 1,554,824 425,484 543,836 0.73% 12 Ukraine 2,499,366 445,606 3,462,359 0.70% 13 U.A.E 255,032 326,300 440,792 0.59% 13 Singapore 5,007,334 3,347,521 2,646,484 0.53% 14 Netherlands 258,139 300,991 411,447 0.56% 14 Germany 2,321,819 2,330,043 2,569,290 0.52% 15 Australia 333,140 304,824 354,270 0.48% 15 Brazil 620,858 1,184,859 2,510,432 0.50% 16 Vietnam 49,754 82,305 276,534 0.37% 16 Taiwan 1,519,883 1,450,077 2,270,523 0.46% 17 Spain 181,061 279,556 273,516 0.37% 17 Australia 4,950,297 1,829,768 1,996,628 0.40% 18 Hongkong SAR 369,414 179,455 255,482 0.34% 18 Vietnam 281,436 1,035,585 1,980,528 0.40% 19 Belgium 265,807 244,631 247,215 0.33% 19 Switzerland 2,743,879 2,456,573 1,914,382 0.38% 20 Kuwait 2,232 77,233 246,526 0.33% 20 U.K. 7,298,818 2,040,553 1,899,390 0.38% 21 Pakistan 78,971 142,338 225,907 0.30% 21 France 1,662,686 1,322,207 1,639,948 0.33% 22 Switzerland 370,959 215,288 219,901 0.30% 22 Russia 436,032 647,369 1,511,754 0.30% 23 Denmark 175,945 192,884 199,851 0.27% 23 Bangladesh 764,830 1,104,150 1,502,817 0.30% 24 Austria 100,969 163,061 176,016 0.24% 24 Italy 949,066 771,544 1,279,641 0.26% 25 Malaysia 110,324 76,416 113,589 0.15% 25 Netherlands 511,998 768,096 1,035,074 0.21% 26 Singapore 305,665 349,865 108,144 0.15% 26 Canada 551,039 1,089,558 905,949 0.18% 27 Brazil 73,961 54,217 107,969 0.15% 27 New Zealand 1,091,571 1,038,232 841,303 0.17% 28 Russia 33,876 117,119 95,152 0.13% 28 Finland 1,214,488 606,892 554,646 0.11% 29 Taiwan 71,187 80,936 73,747 0.10% 29 Egypt 403,626 838,911 502,747 0.10% 30 Korea R 41,324 87,826 38,532 0.05% 30 Turkey 404,577 1,849,869 420,301 0.08% 31 Other Countries 1,077,012 921,696 1,250,738 1.69% 31 Other Countries 9,281,141 8,391,053 12,194,496 2.45% Grand Total 60,949,603 64,562,444 74,089,060 100%Grand Total 375,605,870 397,535,942 498,161,074 100% Source: Trade & Export Promotion Center Next to India, Nepal’s exports go to the United States, Germany, Bangladesh, the UK, and France, in order of share. That is, major importers are neighboring countries (South Asia) and western countries although shares of the other countries are fairly small in contrast to India’s whopping 68% share. Note that the share of the United States is decreasing after the termination of the import quota for garment products from Nepal. 4 - 2 Chapter 4 Outline of Nepal’s International Trade The second largest exporter to Nepal is China, which shows a certain degree of presence (10.62% of the total), followed by the United Arab Emirates, Thailand, Indonesia, Argentine, Malaysia, and South Korea. Nepal imports from these countries raw materials, machinery and consumer goods. Asian countries are not major export destinations probably because Nepal’s major export items (agricultural products, processed food, and textile and apparel) compete with those exported by those countries. Japan ranks 10th as an impostor from Nepal and 11th as an exporter to it. Although Japan’s presence as a supplier seems to be small, it is probably because Japanese companies export some products to Nepal from factories operating in Southeast Asia. Major exports from Nepal to Japan are ginger, pashmina, honey, and coffee, and major imports from Japn include machinery, industrial products, auto parts, and steel and iron products. Thus, Nepal’s trade pattern is characterized by India’s predominant presence, while major importers of its products are neighboring countries, the U.S. and Europe and major exporters China and South Asian countries. 4.1.1 Export Trend in terms of Items Tables 4.1-3 and 4.1-6 list major export and import items in the recent three years, respectively (order based on the trade value in the 2011/12 data). Textile and apparel products including yarns (such as polyester and cotton) and carpet continue to rank high in the country’s exports.
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