Nepal Trade Integrati on Strategy 2010

Background Report

Government of Nepal Ministry of Commerce and Supplies

Kathmandu, June 2010 MoCS/GoN. 2010. Nepal Trade Integrati on Strategy 2010: Background Report. Kathmandu: Ministry of Commerce and Supplies, Government of Nepal.

© 2010 Publishers

Published by: Government of Nepal Ministry of Commerce and Supplies Singha Durbar Kathmandu Phone: 4211450 / 4211292 / 4411623 Fax: 977-1-4211167 Email: [email protected] Website: www.mocs.gov.np

With the support of Department for Internati onal Development (DFID), Internati onal Finance Corporati on (IFC), Government of Finland, and Enhancing Nepal’s Trade Related Capacity Programme (ENTReC)/UNDP

Edited by: Anil Shrestha

Design and layout by: Mahesh Khadka, PagePerfect, Kathmandu

Printed by: PagePerfect at Format Printi ng Press Government of Nepal Ministry of Commerce And Supplies

SINGHA DURBAR KATHMANDU, NEPAL

Foreword

Poverty alleviati on and improvement in the living standard of people have remained prime agendas in the nati onal development plans of Nepal since they were fi rst launched in 1956. The development focus in the changing politi cal and social setti ngs relies on sustained and inclusive growth with wider parti cipati on of people from all segments of society. Export orientati on of various sectors is very important to drive the economy to export-led growth and reach out to the rural populati on for sharing the benefi ts of trade. Recognizing the role of trade in economic growth, the Government of Nepal (GoN) brought out a new trade policy in 2009, which aims at making export trade competi ti ve, pursuing, among others, the measures of product development, export promoti on, and trade facilitati on. Nepal’s exports growth remained below sati sfactory level last decade despite conti nued eff orts to harness benefi ts from the regional and multi lateral trading systems. Major exportable items have witnessed sharp decline, thereby steadily raising the trade defi cit. Politi cal instability and conti nued confl ict further eroded Nepal’s export performance during the period. A silver lining in the deteriorated export performances can be traced in the ongoing peace and consti tuti on-building process, which has unlocked prospects for building of New Nepal. However, to make it happen, the trade sector should get high priority on the country’s development agenda. Hence, addressing the ‘supply-side constraints’ is imperati ve for achieving the desired economic growth through export orientati on. It is perti nent to note that the study undertaken for developing Nepal Trade Integrati on Strategy (NTIS) will create a base for the removal of the constraints and seize the opportuniti es of trade liberalizati on and integrati on of the Nepalese economy at regional and multi lateral level. The NTIS 2010 is a follow-up to the earlier Nepal Trade and Competi ti veness Study 2004, as substanti al changes are taking place in the internati onal trading regimes and the country has faced new challenges to streamline its trading practi ces. The accession of Nepal to the multi lateral and regional trading systems during the mid 2000s has necessitated profound transformati on of the trade sector in order to benefi t from integrati on of the Nepalese trade and economy. The study charts out a course of acti on for the development of the country’s export sector over the next three to fi ve years, conti nued with capacity development acti ons and selected short- to medium-term prioriti es that are supporti ve of ‘inclusive growth’. I would like to thank the various insti tuti ons that put their sincere eff orts to bring out this strategic document. The United Nati ons Development Programme, the Government of Finland, the UK’s Department for Internati onal Development, the Internati onal Finance Corporati on, and the Internati onal Trade Centre deserve special appreciati on for their fi nancial and substanti ve support in the preparati on of the NTIS 2010. The private sector organizati ons and academia also deserve special appreciati on for their support and feedback during the preparati on of this strategy. I am also thankful to all NTIS contributors and all the offi cials of the GoN who were involved in its preparati on. Finally, I appreciate the hard work of my colleagues in this initi ati ve, parti cularly Mr. Chandra Kumar Ghimire, Joint Secretary, Mr. Jib Raj Koirala, Under Secretary, Mr. Hemlal Devkota, Secti on Offi cer, MoCS, and Mr. Shiv Raj Bhatt , Nati onal Programme Manager of the Enhancing Nepal’s Trade Related Capacity (ENTReC) Programme. The GoN expects acti ve parti cipati on of development partners, private sector organizati ons, and other stakeholders in the implementati on of this strategy.

June 2010 (Purushott am Ojha) Secretary

iii Table of Contents

Foreword iii Abbreviati ons and Acronyms ix EIF Nati onal Steering Committ ee xi Agencies and Individuals Consulted xi Contributors xii

Chapter 1 Trading Environment, Export Potenti als, and Att racti ve Markets 1 Chapter 2 Nineteen Export Potenti als: Detailed Sector Analyses 21 Chapter 3 Access to the Indian Market 127 Chapter 4 Access to the Chinese Market 137 Chapter 5 Investment Environment 147 Chapter 6 Trade Facilitati on 161 Chapter 7 Technical Standards 169 Chapter 8 Sanitary and Phytosanitary Standards 187 Chapter 9 Intellectual Property Protecti on 207 Chapter 10 Barriers to Service Trade 215 Chapter 11 Trade Support Insti tuti ons: Business Development Services for Trade Supply Capacity 227 Chapter 12 Managing Aid for Trade and TRTA to Implement NTIS 2010 239

Bibliography 253

Acti on Matrix Part I 257 Acti on Matrix Part II 267

Appendix 1 Methodology for Export Potenti al Assessment and Selecti on of 19 Sectors 293 Appendix 2 Market Att racti veness Index 297 Appendix 3 Updated Legislati ve Acti on Plan for SPS, January 2010 301 Appendix 4 Good Agricultural Practi ces, Food Safety and Quality Management Systems in the Context of Third Party Certi fi cati on of Nepalese Food Exports 302 Appendix 5 Malaysia GAP (Skim Amalam Ladang Baik Malaysia): A Possible Opti on for Nepal? 307 Appendix 6 GAP Requirements for Smallholder Farmers Organized in Producer Groups 308 Appendix 7 Good Agricultural Practi ces As Promoters of Yield and Sustainability 311

Appendix 8 NTIS Technical Committ ees 312 iv List of Tables

Table 1.1 Balance of Payments, Current Accounts, 2002/03-2008/09, in US$ millions 5 Table 1.2 Main Nepalese Goods Exports, 2004-08, in US$1,000 by HS-2, HS-4 and HS-6 Codes 6 Table 1.3 Nepalese Goods Exports by Desti nati on, 2004 and 2008, in US$1,000 7 Table 1.4 Percentage of Nepali Households Receiving Remitt ances by Regions and Castes 8 Table 1.5 Number of HS-6 Products Exported and Average Number of Markets per Exported Products. Nepal Compared to Selected Countries, 2006 9 Table 1.6 19 Priority Export Potenti als 10 Table 1.7 Export Potenti al and Socio-Eeconomic Impact of 19 Products and Services 11 Table 1.8 Export Potenti al compared to Socio-Eeconomic Impact 19 Export Potenti al Goods and Services 12 Table 1.9 Impact of 19 Export Potenti als on Water and Electricity Resources 13 Table 1.10 Geographical Distributi on of Top 10 Att racti ve Markets and Tariff Advantage or Disadvantage in Att racti ve Markets for 12 Goods and 3 Service Export Potenti als 15 Table 1.11 10 Most Att racti ve Markets for 12 Goods and 4 Service Export Potenti als 16 Table 2.1 Export Value of Cardamom, 2005-2009 (US$1,000) 21 Table 2.2 Large Cardamom: Acreage, Producti on and Yield 24 Table 2.3 Att racti ve Markets for Cardamom 27 Table 2.4 Export Value of Ginger, 2005-2009 (US$1,000) 28 Table 2.5 Total World Export Value of Ginger, 2005-2009 (US$1,000) 29 Table 2.6 Ginger: Acreage, Producti on, and Yield 30 Table 2.7 Att racti ve Markets for Ginger 33 Table 2.8 Export Value of Honey, 2005-2009 (US$1,000) 34 Table 2.9 Total World Export Value of Honey 2005-2009 (US$1,000) 35 Table 2.10 Honey Producti on in Nepal 36 Table 2.11 Att racti ve Markets for Honey 39 Table 2.12 Export Value of Lenti ls, 2004-2008 (US$1,000) 40 Table 2.13 Total World Export Value of Lenti ls, 2005-2009 (US$1,000) 41 Table 2.14 Att racti ve Markets for Lenti ls 44 Table 2.15 Export Value of Tea, 2004-2008 (US$1,000) 45 ` Table 2.16 Total World Export Value of Tea, 2004-2008 (US$1,000) 47

v Table 2.17 Acreage and Producti on of Tea 48 Table 2.18 Att racti ve Markets for Tea 50 Table 2.19 Export Value of Instant Noodles, 2004-2008 (US$1,000) 51 Table 2.20 Total World Consumpti on of Instant Noodles, 2004-2008 (in million packs) 52 Table 2.21 Nepal’s Preferenti al Tariff s for Instant Noodles 53 Table 2.22 Att racti ve Markets for Instant Noodles 55 Table 2.23 Export Value of Medicinal Herbs and Essenti al Oils, 2005-2009 (US$1,000) 56 Table 2.24 Total World Export Value of Medicinal Herbs and Essenti al Oils, 2005-09 (US$1,000) 57 Table 2.25 Att racti ve Markets for Medicinal Herbs 60 Table 2.26 Att racti ve Markets for Essenti al Oils 61 Table 2.27 List of Commercially Available Medicinal and Aromati c Plants (MAPs) and Essenti al Oils in Nepal 61 Table 2.28 Export Value of Handmade Paper, 2005-2009 (US$1,000) 64 Table 2.29 Total World Export Value of Handmade Paper, 2005-2009 (US$1,000) 65 Table 2.30 Att racti ve Markets for Handmade Paper 68 Table 2.31 Export Value of Silver Jewelry, 2005-09 (US$1,000) 69 Table 2.32 Total World Export Value of Silver Jewelry 2005-09 (US$1,000) 70 Table 2.33 Att racti ve Markets for Silver Jewelry 72 Table 2.34 Export Value of Iron and Steel Products, 2004-2008 (US$1,000) 73 Table 2.35 Total World Export Value of Iron and Steel Products (HS chapters 72+73) 74 Table 2.36 Att racti ve Markets for Iron and Steel Products 78 Table 2.37 Profi le of Major Steel and Metal Plants Engaged in Exports 79 Table 2.38 Export Value of Pashmina Products, 2005-2009 (US$1,000) 80 Table 2.39 Total World Export Value of Pashmina Products, 2005-09 (US$1,000) 81 Table 2.40 Att racti ve Markets for Pashmina Products 83 Table 2.41 Export Value of Wool Products, 2005-2009 (US$1,000) 84 Table 2.42 Total World Export Value of Wool Products, 2005-2009 (US$1,000) 85 Table 2.43 Att racti ve Markets for Wool Products 88 Table 2.44 Export Value of Tourism, 2004-2008 (US$1,000) 89 Table 2.45 Total World Export Value of Tourism, 2004-2008 (US$1,000) 91 Table 2.46 Att racti ve Markets for Tourism 94 Table 2.47 Remitt ances 2005-09 (US$1,000) 95 Table 2.48 Temporary Nepali Migrant Workers 95 Table 2.49 Global Remitt ances Infl ows 2005-09 (US$ billion) 97 Table 2.50 Att racti ve Markets for Temporary Labour Services 99 Table 2.51 Att racti ve Markets for Educati on 113 Table 2.52 Att racti ve Markets for Engineering 117 Table 2.53 Potenti al Annual Tax Revenues from Hydropower for Diff erent Producti on Levels and Royalty Rates 119 Table 3.1 Trade in Goods Nepal-India 2004-09 (in millions of Nepali Rupees) 128 vi Table 4.1 Chinese Imports from LDCs in US$ Million in 2005 139 Table 5.1 Change in FDI Stock in Nepal, 2003-08 148 Table 5.2 Ease of Doing Business in Nepal, 2009 and 2010 152 Table 5.3 Employing Workers Indicators: Nepal, South Asia, OECD Average, 2010 153 Table 5.4 Eff ecti veness of Investment Promoti on Intermediaries: Nepal compared to South Asia average and best in the world 155 Table 6.1 Trading Across Borders from Nepal, 2010 162 Table 6.2 Enabling Trade Facilitati on Environment in Nepal, 2007 162 Table 6.3 Decrease in the Number of Days Required for Exports and Imports, 2005, 2007, 2009 163 Table 7.1 Nepal Standards Adopted by the Nepal Standard Council (NSC) 172 Table 7.2 Technical Regulati ons for Food Products in Nepal (2) 173 Table 7.3 Acti viti es of Current Donor-funded Projects 176 Table 7.4 General Status of Government Laboratories and Upgrading Process 177 Table 7.5 Current Status of Accreditati on of Major Government and Private Laboratories 179 Table 7.6 System Certi fi ed Nepalese Organizati ons in 2006 (16) 179 Table 7.7 Packaging Materials Used for Export Products from Nepal 181 Table 7.8 Existi ng Nepal Standards for Packaging 182 Table 7.9 Standards Issues for Ten Export Potenti als 184 Table 8.1 Exports of Sanitary and Phytosanitary (SPS)-sensiti ve Foods from Nepal, 2007/08 and 2008/09 (in US$1,000) 187 Table 8.2 Patt ern of Trade of Nepalese Exports to Main Regions of the World in 2007/08 188 Table 8.3 Selected Recent SPS-related Bans on Agricultural Exports from Nepal 189 Table 8.4 Summary of Export Environment for Selected SPS Sensiti ve Export Potenti als from Nepal 206 Table 9.1 Possible IP Vehicles for 19 Export Potenti als 212 Table 10.1 Nepal’s Trade in Services Balance, 2000/01-2007/08 (in Rs. Million) 215 Table 10.2 Nepal GATS Commitments in Computer and Related Services 219 Table 12.1 Implementati on of the Five Paris Principles on Aid Eff ecti veness in Nepal, 2007 241 Table 12.2 Capacity Needs of the NIU and Network of Focal Points (‘Extended’ NIU) 247

Appendix Tables

Table A1.1 2008 Export Values of the 19 Export Potenti als 296 Table A2.1 Overview Table Att racti ve Markets 298 Table A2.2 HS-6 for Individual Goods Export Potenti als 300 Table A3.1 Updated Legislati ve Acti on Plan for SPS, January 2010 301 Table A4.1 Prioriti zati on of Food Hazard Compliance for Trade Facilitati on in Nepal 303

vii List of Boxes

Box 2.1 A Nepalese IT success story 100 Box 2.2 Medical Colleges in Nepal: Who trades what with whom? 112 Box 2.3 ADF and WELINK: Two examples of engineering services exporters 114 Box 2.4 Hydropower in Bhutan and Switzerland 121

Appendix Box

Box A1.1 Composite Indicators 294

List of Figures

Figure 2.1 Producti on and Offi cial Exports of Lenti ls 1990-2008 42 Figure 2.2 Tea Producti on, Imports and Exports 1973-2008 46 Figure 2.3 Tea Prices on World Markets 47

Figure 2.4 Tourist Arrivals 1980-2009 90 Figure 2.5 Monthly Remitt ances for Nepal 96 Figure 2.6 Current and Projected GDP Growth Rates for Major Host Countries 97 Figure 2.7 Exports from India and China to Each Other’s Country 122 Figure 2.8 India-China Land Corridor 123 Figure 7.1 Future Organogram for Accreditati on and Standards and Metrology 170 Figure 8.1 Structure of SPS Enquiry Points in Nepal 189 Figure 12.1 Possible Linkages between NTIS Technical Committ ees and NBF Working Group 249 Figure 12.2 Cambodia NIAs 250 Figure 12.3 Lao PDR NIAs 251 Figure 12.4 Tanzania NIAs 251

viii Abbreviati ons and Acronyms

AAS Atomic Absorpti on Spectrometer FNCSI Federati on of Nepal Cott age And Small AEC Agro Enterprise Centre Industries AfT Aid for Trade FOS Food Safety ANROPI Associati on of Nepalese Rice, Oil and FSC Forest Stewardship Certi fi cate Pulses Industries FTE full-ti me equivalent APLAC Asia Pacifi c Laboratory Accreditati on GAP Good Agricultural Practi ce Cooperati on GC/MS Gas Chromatography and Mass BIMSTEC Bay of Bengal Initi ati ve for Multi - Spectrometry Sectoral Technical and Economic GDP Gross Domesti c Product Cooperati on GI Galvanised Iron BoI Board of Investment GIs Geographical Indicati ons BOPP Bio- Oriented Poly-Propylene GMPs Good Manufacturing Practi ces BPO Business Process Outsourcing GoN Government of Nepal CB Certi fi cati on Body GTZ Gesellschaft für Technische CFB Corrugated Fiber Board Zusammeenarbeit (German Aid) CIS Commonwealth of Independent States HACCP Hazard Analysis and Criti cal Control CITES Internati onal Conventi on on Trade in Point Endangered Species HDPE High Density Polyethylene CMMI Capability Maturity Model Integrati on HIMCOOP Himalayan Tea Producers Co-operati ve CoC Code of Conduct Ltd. CODEX Usual designati on given to the food HMF hydroxy methyl furfural standards setti ng body run jointly by the HOTPA Himalayan Orthodox Tea Producers’ FAO and WHO Associati on Nepal CoP Code of Practi ce HPLC High Pressure Liquid Chromatography CTC Crush Tear Curl HS Harmonized System DADO District Agriculture Development Offi ce IEC Internati onal Electric Commission DDA Department of Drug Administrati on IEE Initi al Environmental Evaluati on DFID Department For Internati onal IFC Internati onal Finance Corporati on Development IFEAT Internati onal Federati on of Essenti al Oils DFTQC Department of Food Technology and and Aroma Trade Quality Control IFOAM Internati onal Federati on of Organic DoA Department of Agriculture Agriculture Movements DoB Department of Botany ILO Internati onal Labour Organizati on DoLS Department of Livestock Services IP Intellectual Property IPM Integrated Pest Management EC European Commission IPPC Internati onal Plant Protecti on EIA Environmental Impact Assessment Conventi on EIF Enhanced Integrated Framework IPR intellectual property rights EMS Environmental Management System ISEAL Internati onal Social and Environmental ENTReC Enhancing Nepal’s Trade-related Accreditati on and Labeling Capacity ISI Indian Standards Insti tute ESCAP Economic and Social Council of Asia and ISO Internati onal Standards Organizati on Pacifi c IT Informati on Technology EU European Union ITC Internati onal Trade Centre FAO Food and Agriculture Organizati on JABAN Jadi Buti Entrepreneurs Associati on FDI Foreign Direct Investment of Nepal FEC Forward exchange contract JICA Japan Internati onal Cooperati on Agency FHAN Federati on of Handicraft Associati on LCEAN Large Cardamom Entrepreneurs of Nepal Associati on FNCCI Federati on of Nepalese Chamber of LDCs Least Developing Countries Commerce and Industry LDPE Low Density Polyethylene

ix LoD Limit of Detecti on PTB Physikalisch-Technische Bundesanstalt M&E Monitoring and Evaluati on (the Nati onal Metrology Insti tute of MFA Multi -Fibre Agreement Germany) MFSC Ministry of Forests and Soil PVA Polyvinyl acetate Conservati on PVC Polyvinyl chloride MoAC Ministry of Agriculture and Cooperati ves PVS Performance of Veterinary Services MoCS Ministry of Commerce and Supplies QI Quality Infrastructure MoEST Ministry of Environment, Science and QMS Quality Management System Technology R&D Research and Development MoFSC Ministry of Forests and Soil Conservati on RoOs Rules of Origin MoFSC-ED Ministry of Forests and Soil RTA Regional Trade Agreement Conservati on, Environment Division SAARC South Asian Associati on for Regional MoH Ministry of Health Cooperati on MoHFP Ministry of Health and Family Planning SAFTA South Asian Free Trade Area MoI Ministry of Industry SEZ Special Economic Zone MoICS Ministry of Industry, Commerce and SMTQ Standards, Metrology, Testi ng and Supplies Quality MRLs Maximum Residue Levels SNV Netherlands Development Organizati on NARC Nepal Agricultural Research Council SPS Sanitary and Phytosanitary Standards NASSA Nati onal Associati on for Sustainable TAHC Terrestrial Animal health Code Agriculture, Australia TBT Technical Barriers to Trade NBF Nepal Business Forum EP Enquiry Point NBSM Nepal Bureau of Standards and TEPC Trade and Export Promoti on Centre Metrology TIA Tribhuvan Internati onal Airport NDF Nepal Development Forum TPC Third Party Certi fi cati on NDP Nepal Development Plan TRIPS Trade-Related Intellectual Property NEPLAS Nepal Laboratory Accreditati on Scheme Rights NGO Non-Governmental Organizati on TRTA Trade-Related Technical Assistance NIAs Nati onal Implementati on Arrangements TSIs Trade Support Insti tuti ons NIU Nati onal Implementati on Unit TSN Trade Support Network NR Nepalese Rupee UAE United Arab Emirates NS Nepal Standard UK United Kingdom NSC Nati onal Steering Committ ee UN/ESCAP United Nati ons/Economic and Social NSC Nepal Standards Council Commission for Asia and Pacifi c NTBs Non-Tariff Barriers UNDP United Nati ons Development NTCDB Nati onal Tea and Coff ee Development Programme Board UNIDO United Nati ons Industrial Development NTDA Nati onal Tea Development Alliance Organizati on NTFP Non Timber Forest Products US$ United States Dollar NTIS Nepal Trade Integrati on Strategy USA United States of America NTPA Nepal Tea Planters Associati on USAID United States Agency for Internati onal ODA Overseas Development Assistance Development OECD Organizati on of Economic Cooperati on WAHID World Animal Health Informati on and Development Database OIE Offi ce Internati onal des Epizooti es WB World Bank (World Organizati on for Animal Health) WHO World Health Organizati on PACT Project for Agriculture WTO World Trade Organizati on Commercializati on and Trade PCE Phytosanitary Capacity Evaluati on PCR Polymerase Chain Reacti on PE Polyethylene PET Polyethylene tetraphthalate PFA Preventi on of Food Adulterati on POPs Persistent Organic Pollutants PP Poly propylene PPD Plant Protecti on Directorate PRA pest risk assessment PRP Pre Requisite Programs x EIF Nati onal Steering Committ ee Chief Secretary, Government of Nepal Chairperson Secretary, Ministry of Commerce and Supplies (MoCS) Member Secretary, Ministry of Industry Member Secretary, Ministry of Foreign Aff airs Member Secretary, Ministry of Finance Member Secretary, Ministry of Agriculture and Cooperati ves Member Secretary, Ministry of Law and Justi ce Member Member Secretary, Secretariat of the Nati onal Planning Commission Member Deputy Governor, Nepal Rastra Bank Member President, Federati on of Nepalese Chambers of Commerce and Industries Member President, Confederati on of Nepalese Industries Member President, Nepal Chamber of Commerce Member Joint Secretary, Planning & Internati onal Trade Cooperati on Division, MoCS Member Secretary Representati ve, UNDP Nepal-EIF Donor Facilitator for Nepal Invitee Member

Agencies and Individuals Consulted Nati onal Planning Commission, Ministry of Finance, Ministry of Agriculture and Cooperati ves, Ministry of Industry, Ministry of Tourism and Civil Aviati on, Ministry of Labour and Transport Management, Ministry of Informati on and Communicati on, Ministry of Law and Justi ce, Ministry of Educati on, Ministry of Health and Populati on, Ministry of Forest and Soil Conservati on, Ministry of Federal Aff airs, Consti tuent Assembly, Parliamentary Aff airs and Culture, Ministry of Energy, Nepal Rastra Bank, Offi ce of Att orney General, Nepal Bureau of Standards and Metrology, Department of Industry, Department of Food Technology and Quality Control, Department of Commerce, Department of Customs, Federati on of Nepalese Chambers of Commerce and Industries, Confederati on of Nepalese Industries, Nepal Chamber of Commerce.

Representati ves of various bilateral chambers, commoditi es associati ons, academic insti tuti ons, professional organizati ons and media also parti cipated in consultati ve workshops held in the course of preparati on of the report.

Similarly, Dr. Yuba Raj Khati wada (then Vice Chairperson of the NPC), Prof. Dr. Pushkar Bajracharya (Member, NPC), Prof. Dr. R.D. Singh (Member, NPC), Prof. Dr. Parthibeswor Timilsina, Prof. Dr. Sri Ram Paudyal, Prof. Dr. Bishwambher Pyakurel, Dr. Posh Raj Pandey, Dr. Dilli Raj Khanal, Dr. Bimal Koirala, Mr. Kush Kumar Joshi, Mr. Pradeep Jung Pandey, Mr. Narendra Basnyat, Mr. Rajesh Kaji Shrestha, Mr. Surendra Bir Malakar, Mr. Mohan Dev Pant, Mr. Bodh Raj Niraula, Mr. Binod K.C., Mr. Shyam Dahal, Mr. Anup Malla and Mr. Dilip K. Adhikary also provided their invaluable inputs.

xi Contributors (In alphabeti cal order) Andreas Lendle, ITC, Market Analysis Secti on, Geneva Andrew Masters, DFID, London Bharat B. Thapa, Kathmandu Binod Karmacharya, Kathmandu Dermot Cassidy, Pretoria Deva Bhakta Shakya, Kathmandu Dilli Ghimire, Kathmandu Govind Venuprasad, Geneva Kerfala Conte, ITC, Geneva Murari P. Gautam, Kathmandu Pancha Ratna Shakya, General Secretary, Nepal-China Chambers of Commerce and Industry, Kathmandu Paolo R. Vergano, Frati niVergano – European Lawyers, Brussels Rajendra Shrestha, Kathmandu Ramesh B. Munankarmi, Kathmandu Ramesh C. Chitrakar, Kathmandu Rishikesh R. Bhandary, Kathmandu Sajjan Bar Singh Thapa, Legal Research Associates, Kathmandu Sven Callebaut, Phnom Penh Thierry Paulmier, ITC, Market Analysis Secti on, Geneva Wim Douw, Investment Climate Advisory Services, World Bank Group and Thierry Noyelle, UNDP and MoCS Consultant and Team Leader

Special thanks to Purushott am Ojha, Secretary, Ministry of Commerce and Supplies, Anne Isabelle Degryse-Blateau, Country Director, UNDP Nepal, Mr. Navin Dahal, DFID Nepal, Dr. Petri Hautaniemi and Mr. Matti Vaananen, Government of Finland, Ms. Irina Niederberger, Internati onal Finance Corporati on Nepal, Mr. Chandra K. Ghimire, Joint Secretary, MoCS, Dr. Badri Pokhrel, Joint Secretary, Nati onal Planning Commission, Mr. Jib Raj Koirala, Under Secretary, MoCS, Mr. Shiv Raj Bhatt , Nati onal Programme Manager, ENTReC Project, MoCS-UNDP, and Mr. Deepak Shrestha, Programme Analyst, UNDP, for their unwavering support to the work of the team.

xii ), C ve ng ti ti on, will ti

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rganiza evelopment ti ti elated Technical evelopment ons were quite di D O ti ances represen ances R tt D ve export sector in Nepal will require addressing four major challenges at ve export sector in Nepal will require addressing four on for the country to an extent no one could have predicted. ti ti

ti entre (IT mid and late decade. The 2004 study was prepared at a ons for the ons ouncil of Ministers), the Strategy will serve as a single, shared strategy to guide ouncil of Ministers), the Strategy will serve as a single, shared strategy to guide ti ti C C (NTBs) and related regulatory and business environment issues that may barriers ff cal building block in the nhanced Integrated Framework. Trading Trading ti E on oN ( support ins c ti ti short- to medium-term priori onal condi onal , with remi G not relevant for fast growing service exports; s shrink for goods and are on Strategy 2010 (NTIS 2010) on Strategy ti ff ti to include not only export of goods and services, as tradi on of exports, nited Na ti apacity oN, the Nepalese private sector, development partners ( U is a cri G GDP ni C ort led by the Ministry of ort led by the Ministry fi onal Trade Trade onal ff ti ac fy priority on remains the greatest challenge for na on remains the ti ti epartment for Interna D is a follow-up to the earlier ect Nepalese exports in impor and selected nsuring proper market access. Increasingly, this will require Nepalese nego ff NTIS 2010 c and interna decline as tari related to non-tari a Nepalese exporters address the challenges of NTBs; E ti orts of the ff Building domes Building

ons ti 2 1 sing a broad de ingdom’s for inclusive growth. Nepal Trade Integra country’s export sector over the next three to country’s export sector over the next development of its export sector over the next development of its export sector over product of an e the mechanisms of the of ‘inclusive growth’ in Nepal. ‘Building a New Nepal’ will require genera of ‘inclusive growth’ in Nepal. ‘Building but export of labour services (captured under ‘remi but export of labour services (captured to 45 per cent of disenfranchised popula all, and most importantly among the most U Ac support from the to coordinate and manage Trade- below). This number points to the very high degree of trade integra below). This number points to the very trade integra forward, it also points to the fact that future ‘inclusive growth’ is itself a prerequisite to consolida ‘inclusive growth’ is sought to iden domes Finally, period of profound transforma yet a member of the World Trade ‘inclusive growth’, which is predicated in part on improvements in poli which is predicated in part on improvements ‘inclusive growth’, and the Interna NTIS 2010 be closely aligned with those iden once: once adopted by the the e 1.2 Four Building a successful, compe With more than 30 per cent of Nepal’s popula With more than 30 per 1.1 Introduc poverty reduc K develop an ‘inclusive’ trade sector for the future. NTIS 2010 years: sec These four 4 3 2 1 4 3 ti Objec Objec Objec Objec Mobilizing Takingstepstostrengthenthesupplycapacityofexporters,especiallyinsectorswheretheycanenjoy on. N T I S 2 iden des Nepalese policymakersmightwanttopriori (TRTA) andAidforTrade(AfT)toimplementNTIS. covered bythestudyincludeinvestmentenvironment,tradefacilita a suppor poten priority exportpoten a compe 3 willrequireresourcesfromboththe NTIS andensurethosesectorsbene and phytosanitarystandards,intellectualpropertyrights,domes meet theNTBmarketentryrequirementsofimpor services fromNepalisbecomingincreasinglydependentupontheabilityofcountry’sproducersto environment suppor export poten A suggests thatthe are likelytoberequiredinquiteafewcases,thoughnego need totargetareasoftradenego rela are alsolikelytoplayanimportantrole.Somestrengtheningofpolicyresearchcapacityespeciallyin are mostimmediatelyper and managementisbeingshi A and managingT that willassistinformula not beunderes large amountofcapacity-buildinginthenewimplementa coordina C E ( directly orindirectlyinvolvedintradedevelopment. LDC nhanced IntegratedFramework’sTier1fundingtosupport theestablishmentofsucharrangements. oordina id fT aswell.Mo iden ti ti E

na 2010 ti on totradenego s) suggeststhattheshi O

ff fi ec ti ti ti ti ti bjec ed aspoten ve4:StrengthenGoN’scapacitytocoordinateandmanageTrade-RelatedTechnicalAssistance ve 3:Strengthentheexportcapacityof‘inclusive’poten ve 2:Strengthenthetechnicalcapacityofdomes ve 1:Strengthentradenego als. Nepalesetradenego ti on markets. ti ti ti ti ti NEPAL TRADE I BACKGROU ti

ng andmanagingwith andamong ve domes venessandthe2008 on andmanagementofaidinthetradesectorarequitecomplexastheyinvolvenotsimply ti fi ti ve advantage,beitintermsofproduc es fourobjec O ves areeachsupportedbyasetof verseas ti als prevailintheirrespec ti C mated. R S, onbehalfofthe T G ti N A alexportsectorsandensuretheirsuccessincurrentorpoten ti overnment’s andprivatesector’sini c supportinfrastructureinanumberoftrade-relatedareas.Speci D D resources,andinmonitoringresults.Mo ti ti ve ins al sectors—goodsandservices—andprioritya D ti evelopment R a NT oing somayrequiredeepeningtheindividualsectoranalysespresentedin EPOR ti ti EGRA ons mayberequired. ves torespondthesecapacitydevelopmentchallengesforthecoming ti ti nent tosuppor ng projectsinsupportoftheNTIS’objec ti ft T ft tu tothenewparadigmofaid coordina ed tothe governmentsofbene TI O ti A ti ons. ators needtoensurethatpropermarketaccesscondi N ccra ti S a A G fi T ssistance ( t frompropersector-speci ti oN, needstoputinplaceasetof‘implementa RA ti ons, trade-relatedpolicyreform,orNTB ins Buildingacompe a A G genda for T ti oN and ti ons (especiallybilateral). EGY 2010 ve a ve ti ng thoseexportpoten ti ze theira DP tt ODA rac DP s butalsoamongvariouslineMinistriesandagencies C ti apacity A on costs,qualityofproducts,and/orproduc s. ti ) toassistindevelopingper ve markets.Bilateralmarketaccessnego c ti ti ng countries. U on,muchoftheleadershipforaidcoordina E xperience fromotherleastdevelopedcountries nder thetermsof2005 tt ti

ti en

c non-tari ti ti P ti al focusunder ve, exportablesupplycapacity ofgoodsand D on arrangementsandthatthisneedshould rogressing onStrategic ti evelopment a ti on the19goodsand servicessectors fi ti ciary countries.ThisappliestoT ons withandwithinregionalgroupings fi c suppor C ti als. S hassecuredresourcesfromthe ff Thestudyiden D barrier(NTB)andotherbusiness ti ti ti on, technicalstandards,sanitary tt on andmanagementrequiresa oing sorequirespu c serviceregula rac ti ves, insecuring,coordina A ti c ti O ve measures.This,inturn, ve marketsforsuchexport ti ons discussedin the next bjec ti al goodsandservices. ti nent capacity. ti ves 1and2willalso ti tu P O ti aris on arrangements’ bjec ti ti on-building that

ti fi ons. es 19possible D ti ti fi ti ves 1,2,and tti eclara ons forsuch csuchareas ala nginplace tt R rac ti ti ti T a vity; on on A ti ti ons and ti ng, ti on ve

A es cal ti arty ti zed. zed.

N T I S P ti ng up 3 tti al goods al ti al sectors al

2010 ti on markets ons or areas ve analy ve ti ons (possibly ons al sectors. ti ti ti ti ons, weighing ons, ti a M) and Quality na ti ti T P ally on se ti ast countries should E Is) for some of those EPOR R G ves are consolidated in ti ve des EGY 2010 D ti T N nd the risk is that confusion ct, on amending the current RA hapter 12 and reproduced in hapter 12 and reproduced A ons ( rac ze some key ac T ti A ti tt C on and trade support services S ti N ve export supply for the future ve export supply for the ti er on

O ft ls, cardamom, and ginger. Such ti ti ti ty of supply and lower the current TI ti ulf and Middle BACKGROU ons and mission and its restructuring ti est Management (I G al export sectors promoted under the es to be accompanied by Third export poten ons in the ti P ti ti rotec EGRA P roposed NT P ) func ules should also be accelerated; R lant P EPC –are limited, and their use must be priori eographical Indica nancial) -intensive. Furthermore, the resources on for exports. NTIS 2010 proposes four sectors fi ti G cides ti ODA hina, selected ca al export sectors. There should be some alignment fi ), Integrated ti C orts on the proposed list of 19 export poten

es ff ti P als in the NTIS and ensure favourable market access als in the NTIS and ensure favourable entre’s (T NEPAL TRADE I on of ti ti GAP C ons and ons ti S) cer es c on P ti ti ce ( ct and A ort; ti c or from athmandu valley, trade informa ff A ti K countries, rac ons under the new P romo ti riori P cides P AARC I aimed at poten ti D es P xport Trade Support Network (TSN) should be organized and developed with an ve export supply capacity in agro-food could focus ini ve export supply capacity in agro-food could focus ti E A

hytosanitary (S ti P al targets for such programmes: tea, len to begin. ons may lead to confusion as to where art II) presented in this study immediately a art II) presented in ti gricultural ti ators should take deeper knowledge of the a ators should take deeper knowledge P ti A evelopment evelopment on Matrix, the business of developing a compe on Matrix, the business ) programmes to enhance the quality and quan ti nd, yet, policymakers are under pressure to respond to short-term needs of income nd, yet, policymakers are under pressure n appropriate agenda for such would need to be developed, with suppor n appropriate agenda for such would need D ood rogress on regula c A A P PC G A me and can be resource (human and art I and ti I, including the F P D on. es. ti ti on of a Board of Investment should be accelerated. Nepal is missing out on opportuni on of Trade and on (T ti ti ti development objec team to support the four capacity ed by the NTIS ct, on reviewing the fi ed for each of the 19 export poten include enhanced bilateral nego ons in those markets. In most cases, this would

on. ni fi A ti ca ti ti fi

ract F ract fi ti

tt apacity as well. ve Summary ti on building the capacity of product associa al strong focus ti ti orts could be supported by the introduc orts to build a compe C plicity of required ac er ff ff xcept for the businesses located in ti ( on Matrix iden and services--and among those, possibly even more so, on the groups of agro-food exports and service and services--and among those, possibly exports; commodi e should be accelerated as part of this e Management System (QMS) in selected agricultural commodi C burden of Sanitary and that could become ini a number of re-de be priority targets; regional also). work as required. India, other S E that should be targeted. ini NTIS; export poten trickle down rather poorly to businesses in most regions, including those in the to a between targeted sectors for investment campaigns and poten E condi Food ti ons, as follows: c xecu ti A E 1. to medium-term e Nepal should focus its short- 2. nego Nepalese trade 3. 5. 4. The crea 4. The ons iden ons through a rather rich agenda of ac mately, it is for Nepalese policymakers to chart a course ti ti l s suggested by the c of ac U in some of those factors and others as well. Nevertheless, the background studies prepared under the NTIS in some of those factors and others as strategic course that would priori do suggest a possible short- to medium-term The mul may lead to inac and job crea needed to develop capacity–be they domes can be wide-ranging and demanding. Many areas of capacity development are needed. But capacity can be wide-ranging and demanding. development takes A the the A 1.3 Short- to Medium-term Short- to Medium-term 1 The decadejustendinghasbeenwitnesstoaprofoundtransforma Background.The2000s: 1.3 Ini concerned aboutthegrowingtradede in end oftheMul Successive roundsoftradeliberaliza Nepalese societyduringthemid-2000s. partly fromextensivechangesinthetermsofglobaltradeandpoli growing remi perspec G of discovered newopportuni force, steadysupplyofenergy,andreliabletransport. and (‘remi In termsofexports,table1.1showsthegrowingimportance oftradi Tables 1.1and1.2capturesomeofthemajorshi civil unrest,troubledlabourrela processed orgoodsdependentontari challenges haveputextremepressureonanumberoftradi la de The formerrepresentsalesofaservice byaresident(inthiscase,ofNepal)tonon-residentandfalls, of Nepal,itcansafely beassumedthatalargeshareofremi the lackofrobuststa C ulf markets,oreventhemostrecentopeningof entral Banksta YELLO ti A tt al ac fi er (inthiscaseaNepaliwhoislegal residentofanothercountry)isnotanexportandshouldindeedbecounted asatrans . Tofurtherbuildupexportpoten 6. . NepalBusinessForumshouldbeestablishedassoonpossible anditsproposedTradeSectorWorking 7. . Mechanismsforstrengthenedcoordina 8. ni sia asadrivingforceinworldtrade–bothexporterandimporter,theopeningofMiddle- A N T I S ti frican marketsarecrea 4 tt on ofanexportregardlesswhethertheproduc ances’)inNepal’sexportbasket. labour impor gains fromexportoftemporarylabourservices,includingthroughstrengthenedagreementswith services, engineeringeduca supply capacityintheareasofinforma G export champion’,currentlysorelylacking,shouldalsobeconsidered; Y number oftherecommenda should bedeployedinaddi the implementa in placethe strategy tobeusedasabasisforfuturetechnicalassistancesupport. Ministers. NTISshouldberecognizedbythe Nepal for trade. ti ear ofTourismcampaign--acri ti W intheac roup usedasanaccountabilitymechanismforthe ve, however,Nepalhasroughlybeeninbalancerecentyearsdue nosmallparttothefast- ons thatcouldbepriori 2010 tt D ti ances oftemporaryNepalese migrantworkers. s ti evelopment ti -Fibre cians view‘remi NEPAL TRADE I BACKGROU ti s C ti cal surveyinstrumentstodis ti ommitment ofthe ti on matrix. ng countries,aswellcapturingopportuni A G ti on oftheNTISande greement (MF oN toensuremoree N ti es forexportofbothgoodsandservices,possiblysomethatareless a P D tt lan (N ances’ as‘transfers’,notexports orimports.Therealissueinclassifyingremi ti R NT ng newtradingopportuni EPOR EGRA ti ons, orenergyshortages. ti zed tosupportthisshort-medium-termstrategic coursearehighlighted ti DP on tothee ti T ti ons suggestedintheindividualpro on undertheaegisofWorldTrade TI ) andNepal A O 1 ti fi G ), extensivebilateralandregionaltradeliberaliza Intermsofimports,Nepalesepolicymakershavebecome increasingly N cal componentofNepal’sexportbase. cit ingoods.FromaBalanceof ti al inthe servicessectors,e oN totheNTISobjec ti S nguish remi T ti ti RA on andsaleofthatservicetakeplaceinNepalorabroad. Saleofaservicebythe onandhealthservices.Thiscouldbedonebyimplemen tt ff T ti ances isofthe ec ti on and managementcapacityof ff EGY 2010 on technology(IT)andbusinessprocessoutsourcing(B orts currentlyunderwayintourism,includingNepal’s2011 ff A ec D ti ve mobiliza ve ft tt

evelopment Forum(N ff ances oftemporarymigrantworkers fromremi s thathavebeenunderwayduringtheclosingdecade. D preferences,requiring accesstoanorganizedlabour ti G veness ofitsresults; oN, theNepalesebusinesssectorand ecade of C A ti onfedera es everyday. nd yet,despiteitall,Nepaleseentrepreneurshave fi rst kind. G ti onal Nepaleseexports,especiallythoseofsemi- oN andtheNepalesebusinesssectortomonitor ti ti on andmanagementofthe ves shouldbere ti es tomoveupthevaluechainbyexpanding ti on ofIndependentStates( ti on inNepal’stradesector,oneresul C ff orts couldfocusonconsolida hange fi A les forthosesectors.Thesee ti D onal servicesandlabour t thesame P F) andendorsedbythe O ayment’s (Bo rganiza A E fl ti fT andT ected intheforthcoming cal crisisthata stablishment ofa‘service ti on (WT ti me, domes strictosensu tt tt ances properlystemsfrom ances offoreignresidents. ti P on, theemergence ) currentaccounts R T O DP A ODA ), includingthe shouldbeput C s asashared , withinthe IS) countries fer. Inthecase ti ff resources c poli ected the ff C ected by ouncil of E ti ng the ng ast and ti ff nga orts ti ti PO cal ng ) N T I S onal ti 2010 5 ee-tea-spices, ff 2002-08 T % change arpets, a tradi C EPOR R cles, co cles, ti EGY 2010 D arment exports, which in nd yet new goods export T N G A ons. ti c ar c RA ti T S N ons. O ti TI BACKGROU EGRA NT NEPAL TRADE I Table 1.1 ected by the changing condi ff nly a few HS-6 items have survived or even prospered in that sector nly a few HS-6 items have survived or O 1,813 2,152 2,448 2,831 3,289 4,193 4,472 146.6 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 1,697 2,015 1,381 2,578 2,759 3,816 4,340 155.8 Total Total Balance of Payments, Current Accounts, 2002/03-2008/09, in US$ millions Current Accounts, 2002/03-2008/09, in US$ Balance of Payments, , wool products) in view of sharp changes in market access condi , wool products) in view of sharp changes Source: Nepal Rastra Bank, Annual Reports Other net transfers (small) not shown Goods exports, fobService exportsNet remittances 655Goods imports, cif 342 751 699Service imports 467 106 1,562 797 1,808 362 854 251 913 2,057 368 1,357 876 343 2,383 1,427 457 958 390 2,713 2,205 653 913 3,369 448 2,738 3,645 690 39.3 576 291.4 133.4 101.6 824 826 229.0 ll represented 26 per cent of all goods exports (though already in sharp decline from earlier years), per cent of all goods exports (though already in sharp decline from earlier ll represented 26 ti pashmina were down to 11.5 per cent by 2008. were down to 11.5 per cent by 2008. 2004 s (e.g. Nepalese export, also have been sharply a Nepalese export, also have been sharply including iron and steel products, plas sectors have emerged during the period, and vegetables. Table 1.2 shows changes that have occurred in the basket of exported goods. Table 1.2 shows changes that have occurred hw ee 5475 8080 84 10.8% 52.6% 88.4% 850,860 15.5% 564,755 149,430 27,581 72,73 Wool products 105,645 Pashmina Garments 61, Carpets 57 Iron andsteelproducts Shown here 116,776 178,408 62 2.5% 110,162 12.1% -11.4% 11.4% ntn ode 10 ,5 1,9 11 36.9% 11.3% 1.1% 7.7% 1.1% 10,390 34.9% 1.1% 10,309 2,955 1.3% 40.2% 10,252 25.2% 49 6,709 12,199 25.4% 31.6% 0.1% 7,619 1.5% 1902 lentils are‘mirrordata’(Nepal’sexport data).FormoredetailedHS-6Codedata,seethefullreport. 3,681 1.4% 1,001 1.5% Yellow highlightsshowpotentialexport productsincludedintheexportpotentialassessmentatHS-6level.Alldata othertha 14,624 Source: ITC,TradeMap2004,2008 85 Honey 0409 30.5% 13,783 -16.8% 21.3% 14,672 exports; seetext) 259 71 5,961 Handmade paper(showndatadonotcoverall other tables) 32 2.8% 5,576 1.6% 4,896 14 2.8% Medicinal herbs(combinedwithessentialoilsin 23.7% 16.2% 24.6% 26,783 15,623 Pearls, preciousstones,metals,coins,etc 27,248 330129 Electrical, electronicequipment 76 3.0% Instant noodles 2.2% 5.0% Notavailable 9,227 32,670 23 fabric 38 12,605 15.6% Notavailable Vegetable textile 29,073 21,329 47,718 Animal feedpreparations,nes -26.9% Residues, wasteoffoodindustry,animalfodder 6.9% etc. 12,426 07 11,699 19,797 Wadding, felt,nonwovens,yarns,twine,cordage, 33 22 74 0.0% Aluminium andarticlesthereof 66,057 Miscellaneous chemicalproducts Essential oils,nes Essential oils,perfumes,cosmetics,toiletries 37,039 090830 63 products, etc. 09 Animal, vegetablefatsandoils,cleavage 22,884 Arti Beverages, spiritsandvinegar 2,518 4,896 Copper andarticlesthereof 39 Textile articles,sets,wornclothing,etc. Lentils 071340 Vegetables Ginger 091010 Tea 0902 Large cardamom Coffee, tea,spices Arti 22,258 Plastics andarticlesthereof 8,130 16,805 -0.7% 34.0% 2.3% 0.8% 36.1% 1.7% fi fi cial staple cial N T I S 6 fi lmns 4962 563 .%27.6% 2.7% 25,643 9,682 54 laments Other exportpotentialgoods 2010 Allgoodsexports fi be 5 518 247 .%20.2% 5.5% 52,457 25,118 55 bres fi bres, nes,paperyarn,woven Main NepaleseGoodsExports,2004-08,inUS$1,000byHS-2,HS-4andHS-6Codes NEPAL TRADE I BACKGROU Pout HS-codes Product N D R NT EPOR EGRA T TI O N 611011, 611012, 621410, 621420, 611691,611710, 621490, 630120 S T RA 820715101 -5.8% 711561 16.9% 0.1% 1,6042,991 0.3% 481210 121190 650590 31,6 18412 -6.5% 15,56311,894 1.2% 8.9% 10,08814,165 1.5% 53 1.7% 56 21,40322,899 2.4% 15 T 681,380 9.0% 962,459 100.0% EGY 2010 Table1.2 Exported value 2004 8612,7 .%4.2% 18,691 22,074 2.3%

,1 64017 15.0% 9,411 16,450 1.7%

Exported value 2008 Share 2008 n thosefor Growth 2004- % Annual 08 N T I S 2010 7 on markets. on markets. ti c rise in the ti na T ti % Annual Growth 2004-08 EPOR R EGY 2010 D T N RA T 2008 % S N share of total O TI BACKGROU shows that growth in manufacturing 2 EGRA es to promote ‘inclusive growth’. ti Nepal NT ulf regions. 2008 Goods Imports from rowth G erhaps even more importantly, a switch from G P on of Nepal’s current export basket, can have on of Nepal’s current export basket, can have S especially—and the growing importance of new S especially—and the ti U veness Study veness ti ,

ti ast and E EU of total NEPAL TRADE I 2004 % share Table 1.3 on is more evenly distributed, except in far-western areas, ti ng markets of Nepalese goods. Besides the drama ng markets of ti ers considerable opportuni ff from Nepal Nepal Trade Compe ects on the urban poor. sian and the Middle sian and the Middle ff 2004 Goods Import A ve e ti xpansion and ‘Inclusive’ Nepalese Goods Exports by Destination, 2004 and 2008, in US$1,000 Nepalese Goods Exports by Destination, ed later in this study) could have a major impact on the poor. These crops are produced fi E onal ‘Northern’ export markets—

ti ti ommerce and Supplies, 2004 C cant, posi fi xport Total 684,209 953,637 12 India3 EU4 USA5 Canada6 Turkey7 Japan8 Switzerland9 China UAE 342,883 128,260 156,140 11,328 50.1 4,532 7,768 18.7 7,570 22.8 632,095 1.7 8,231 127,349 0.7 92,302 1.1 66.3 434 14,559 1.1 13.4 14,412 1.2 9.7 6,767 11,229 1.5 15.5 0.1 1.5 5,983 -0.2 0.7 1.2 -12.3 5,011 6.5 0.6 33.5 -3.4 10.4 0.5 -7.7 84.3 1011 Egypt12 Australia13 Philippines14 Sri Lanka15 Hong Kong16 Sudan17 Singapore18 Bhutan19 Malaysia20 Pakistan 1,706 Mexico 0 15 1,238 78 0.2 2,558 0.0 0.0 8 0.2 0.0 4,204 282 0 3,710 4,782 3,647 0.4 3,426 3,566 0.0 986 0.4 0.0 0.5 3,264 0.0 0.4 0.5 0.4 3,350 0.4 very large 0.1 25.3 1,975 2,975 0.3 1,450 294.9 0.4 29.0 160.0 1,419 0.2 0.3 0.2 6.3 352.4 0.1 very large 62.7 -20.9 9.5 on exercise carried out in No. Importing Country E ti Source: ITC Trade Map Blue: 30% or more increase; Yellow: decline ally signi ti onal subsistence agriculture to high value tradable crops (such as spices, herbs, tea, fruits, and regions; spice such as ginger produc erent ti ff n expansion of Nepal’s export base o simula hanges in the Nepalese goods export basket have been accompanied by a change in des goods export basket have been accompanied hanges in the Nepalese Ministry of Industry, markets, especially those of the markets, especially importance of the Indian market for Nepalese exports, the table shows the declining (or slow growing) the table shows the declining (or slow Indian market for Nepalese exports, importance of the importance of tradi Table 1.3 shows the 20 largest impor Table 1.3 shows the 2 A and export sectors, which account for a reasonable por 1.4 poten A in di C vegetables, as iden tradi suggest thatpoorjobopportuni abroad. peoples). while theincidenceofexternalremi the Hinducastehierarchy)havehighestprobabilityofreceivingmoneyfromoutsideNepal(25percent), L than doubledin‘otherurbanareas’ofNepal. fourfold increaseinthenumberofhouseholdsreceivingmoneyfromabroad.Thatsamepropor between themid1990sand2000s,ruraleasternhills--thepoorestregioninNepal--registereda households receivingremi hills, followedbyruralwesternTerai,easternandmountain/hills.Theshareof than urbanNepal. R poverty thanincreasesininternalremi geographic regionsandcastesofNepal(Table1.4).Theincidenceremi 3 increased remi that one-thirdtoone-halfofoverallreduc R in Nepal.Theincidenceofremi A fruit andvegetablesproduc while cardamomismainlyproducedintheeasternhills;teaalsoareas;and evidence fromtheNepal period and103percentduring the2001-08period. to

C ooking atthepropor emi emi ccordingly, growthofthesecropscanhavevarying,posi BS 2006 GDP tt tt N T I S ances fromexportoflabourarequiteinclusiveandcanhavestrongpoten ances fromlabourexportservicesabroadalsohavecontributed toadeclineinpoverty.Itises 8 growthincreasedfrom79per centduringthe1991-95periodto86per the1996-2000

A 2010 t thesame ea 321. . . 6822.1 34.5 30.0 16.8 27.0 30.3 7.8 19.2 24.7 35.7 24.4 15.4 3.6 15.1 18.3 24.5 32.7 9.4 14.3 9.8 31.8 19.9 13.5 11.4 14.6 25.7 13.2 12.0 31.3 12.1 22.6 11.1 26.2 17.9 9.8 18.1 40.4 13.1 15.8 19.2 19.2 5.7 13.1 11.0 Source: Lokshinetal(2007) 30.2 13.4 14.3 10.6 Total 9.3 14.6 3.6 Muslim/Otherminorities 29.4 12.6 6.0 Teari-hillJanjatis 14.7 2.0 7.8 Newar 19.6 12.0 Dalit 17.1 16.9 Brahmin/Chhetri 14.3 11.1 Caste 13.1 11.1 RuralEasternTerai 10.6 RuralWesternTerai RuralEasternmountain/hills RuralWestmountain/hills Otherurbanareas Kathmandu Regions Percentage ofNepaliHouseholdsReceivingRemittancesbyRegionsandCastes tt ances--increases inremi NEPAL TRADE I BACKGROU A mong ruralareas,theincidenceofremi ti on ofhouseholdsreceivingremi ti me, only10percentof L tt N iving StandardSurveypoints to thepovertyreducinge ances fromabroadalsohasincreaseduniformlyacrossthecountry.Forexample, ti D on isspreadthroughout,thoughitconcentratedintheruralhillsandTerai. R NT EPOR ti EGRA tt es athomeprompt ances fromlabourexportservicesabroadiswidelydistributedacrossthe T tt TI ances ismuchloweramongNewarandTerai-hillJanja tt ances 959 030 959 030 959 2003/04 1995/96 2003/04 1995/96 2003/04 1995/96 eev eitneRciermtac Receive Receiveremittance Receive remittance O N tt ances comingfromoutsideNepalhaveamuchstrongerimpact on S rmNplfo bodanyremittance fromabroad from Nepal ti 231. 061. 3031.6 23.0 17.7 10.6 13.9 12.3 on inheadcountpovertyratebetween 1996and2004wasdueto T RA 3 . Thisisnotsurprisinggiventhatthecontribu T Table 1.4 EGY 2010 D alit householdsreceiveremi C onsump D alit householdstoconcentratetheirjobsearche tt ances bycaste, ti ve regionale ti on, inturn,isdriven byremi tt ances isthehighestinruralwestmountain/ ff ects. D tt ances in2003/04ishigherrural alit (theso-calledlowestcastesin tt ances fromNepal.Thismight ff ect ofremi ti al toreducepoverty ti onofconsump tt ances. tt ances. ti s (indigenous s A ti on more on ddi ti mated ti ff onal orts ti on N T I S (4,871 9 on and ti sia region

2010 PRC A als ve impact on ti ti hina C T s in the oten EPOR S. The list of 19 export LDC R P C EGY 2010 D T N RA T S N xport O Average number of E markets per product TI BACKGROU EGRA NT ng Nepal’s need for poverty reduc ng Nepal’s need for poverty ti ons ti on, and value chain improvements. ti exported na ti ca fi ng markets for such products. With a total of 861 HS-6 NEPAL TRADE I ti Table 1.5 xport Base: 19 xport Base: 19 cials, including those from the Mo Number of HS-6 products ffi ASEAN Countries SAARC Countries (4,931 products to 46 markets on average), E A S U , or even India or Singapore. The need for service exports is not all UK sectors ve of expanding an inclusive export base, 19 goods and services ti on, market diversi ti al assessment of export performance and some extensive discussions with al assessment ti ca fi Exported Products. Nepal Compared to Selected Countries, 2006 Exported Products. Nepal Compared to Selected 123 USA China United Kingdom 4,819 4,931 4,871 38.5 46.0 52.1 121924 Japan Taipei (SARC)11 Korea, Rep.6065 India83 Pakistan99 Sri Lanka Bangladesh Nepal 4,26113 4,539 4,2082527 Singapore29 Malaysia43 Thailand 2,252 4,58259 Indonesia 2,037 1,215 20.4 Viet Nam Philippines 22.2 18.7 821 4,392 25.8 8.7 5.1 4,177 5.9 3,993 3,855 3,072 2,301 2.8 16.1 12.7 16.9 11.7 8.1 7.9 176200 Bhutan Maldives110117 Myanmar135 Cambodia 104 Lao PDR 24 1.1 5.0 686 628 359 3.7 4.4 3.0 oned objec oned Rank Country ti Number of HS-6 Products Exported and Average Number of Markets per Number of HS-6 Products Exported and Average Source: ITC, 2006 export data (direct and mirror) ed based on an ini fi

xpanding an ‘Inclusive’ xpanding an ti E iversify and expand the basket of goods and services that are exported the basket of goods and services that iversify and expand the number of export des iversify and expand nsure that the goods and services export sectors that are expanding have a robust, posi nsure that the goods and services export erent: product diversi inclusive growth D D E ff

Move up the value chain Nepalese business community and government o Some of these challenges are well illustrated in table 1.5, showing the number of HS-6 products exported Some of these challenges are well illustrated in table 1.5, showing the number by Nepal in 2006 and the average number of impor products exported to an average of 2.8 markets each, Nepal compares to most other products exported to an average of 2.8 markets each, Nepal compares to most but falls short of more developed countries: products to 52 markets on average), the were iden inclusive growth, the challenges are fourfold: inclusive growth, the that di To meet the aforemen To foster the growth of an export base that can help in mee of an export base that can help in To foster the growth 1.5 Four indexesweredevelopedtofurtherassessexportdevelopment opportuni selec poten poten and theirpoten dynamic (orpoten term ofmerchandiseexports,theassessmentisthatmanyselectedsectorsrepresentsomemost exports andthevastmajorityofservice(broadlyde of eachthe19sectors.Together,exportpoten ti Index3measuresdomes Index2measurescurrentdemandcondi Index1measurescurrentexportperformanceofNepalinthegivengoods orservicessectorbasedon N T I S on ofthe19exportpoten 10 ti ti als fromthe als isshownintable1.6.Thealsolistsanother a compositeindicatorof2008exportvalueandrecentgrowth rate; cost compe individual sectorsbyateam ofconsultantsfocusingonqualityproductsorservices, produc and poten demand; exporters. Forservices,theindexisbasedonmorelimited datameasuringsizeandgrowthofworld of impor 2010 ti ti NEPAL TRADE I BACKGROU al posi ng markets,growth ratesofthosemarketsandtari ti al supplycapacitybasedonextensive deskresearchandasurveyofproducersinthe ti ti ally dynamic)goodsexportsovertheshortandmediumterm.

ti fi veness ande eldworkconductedbytheconsultantsforvariouschaptersof ti ve impactonsocio-economicdevelopment: N D R NT EPOR ti ti al sectorsisdiscussedin EGRA c supplycapacity.Theindexrepresentsaqualita ffi ciency of suppor T TI O N N.Agro-food No. 4Transformers Dairyproducts 24 Cement 23 Sugar 22 Transittradeservices 21 20 Hydro-electricity Engineering 19 Education 18 Healthservices 17 ITandBPOservices 16 Labourservices 15 Tourism 14 13 2Woolproducts Pashmina 12 Ironandsteel 11 10 19PriorityExportPotentials Silverjewelry Handmadepaper 9 8 Medicinalherbs/essentialoils Noodles 7 Tea 6 Lentils 5 Honey 4 Ginger 3 Cardamom 2 1

S T RA Other PotentialExportSectors T Craft andIndustrialGoods EGY 2010 ti onsforthegivengoodsusingacompositeindicatorofsize Table 1.6 ti ng sectors; Services ti Appendix 1 al sectors coverabout30percentofcurrentgoods fi ned toincludeexportsoflabourservices).In fi ve sectorsthatemergedaspossibleexport . ff advantage/disadvantageforNepalese C hapter 2presentsadetaileddiscussion ti es foreachproductandservice ti ve assessmentofcurrent NTIS 2010 . The ti vity, N T I S .

2010 11 Appendix 1 T EPOR R Socio-economic impact EGY 2010 D T N RA T S N O potential TI BACKGROU Overall export on of women in the sector, impact on on of ti be looked at al index’, which in turn can EGRA ti NT cipa ti supply Index 3: Domestic conditions NEPAL TRADE I World market Index 2: conditions Table 1.7 ) employment, par E Export al socio-economic impact of the sector on Nepal. It is a composite impact of the sector on Nepal. It al socio-economic Index 1: ti fuller discussion of the four indexes is presented also in fuller discussion of A performance n/a low medium medium medium low 4,000 low low high low high 22,074 medium medium10,000 high medium medium10,000 medium medium medium medium low medium low medium low low 21,329 high low11,000 high low medium high high medium medium high 149,394 high high high high medium Nepali me equivalent (FT me equivalent ti (US$ 1,000) exports, 2008 Export Potential and Socio-Eeconomic Impact of 19 Products and Services Export Potential and Socio-Eeconomic Impact poor regions and impact on skill development. poor regions and impact indicator of full- Services IT & BPO services Engineering services Pashmina products Education services Iron and steel products Agro-food Large cardamom Medicinal herbs/ essentail oils Craft and Industrial Goods Handmade paper Index 4 measures the poten of this analysis are summarized in tables 1.7 and 1.8. ndings fi 9 Silver jewelry 9,519 low high medium medium medium 1 8 23 Ginger4 Honey5 Lentils6 Tea Instant noodles7 8,130 10,390 medium 500 22,258 medium high 16,805 low low high high medium medium medium high medium low high medium medium medium high high medium medium medium medium low high 12 Wool products 16,450 medium high medium medium high 11 10 No. Sector 19Source: Chapter 2 Hydro-electricity 0 low high medium medium medium 18 1314 Tourism services Labour 15 2,448,000 352,000 high high high high medium high high high high high 16services Health 17 n/a low medium low low low against the socio-economic index. against the socio-economic Indexes 1, 2, and 3 are further combined into a single ‘export poten are further combined into a single ‘export Indexes 1, 2, and 3 The Table 1.8suggeststhat,withtheexcep educa medium orhighexportpoten condi can haveahighemploymentandincomee C tend tofavourshort-termratherthanlong-termprospectsfromthepointofviewNepaleseexporters. To makesurethatthepoten term. bo water isnotnecessarilyanega impact onthosetworesources,rangingfrommediumto mostly low.Thedependencyofhydro-electricityon With theexcep survey ofwaterandelectricitydependencythe19sectors. Seetable1.9. C purposes. Tea dcto evcs Ironandsteelproducts Instantnoodles Largecardamom Labourservices Engineering services Silverjewelry Source: Chapter2 Pashminaproducts Education services Health services Tourism Medicinalherbs Hydro-electricity Woolproducts Ginger Handmade paper ertainly, educa learly, lackofwaterisnotanissueinNepal.The proper distribu tt lenecks, theteamworking ontheassessmentofthoseexportpoten

ti N T I S 12 ti ons donotexistasofyetinNepaltoturnthosetwosectorsintostrongexportpoten on servicesranklowerintheanalysisdoesnotnecessarilymeantheylackpoten 2010 o eimHigh Medium Low ti on ofiron andsteelproductshydro-electricity,the17otherexportpoten NEPAL TRADE I BACKGROU ti on andevenmoresohealthservicesarefast-growingexportbusinesses worldwideand Export PotentialcomparedtoSocio-EeconomicImpact N oe Lentils IT andBPOservices Honey D 19 ExportPotentialGoodsandServices ti alormediumhighsocio-economicimpactboth.Thefactthatthehealthand R NT ti al exportsectorsiden EPOR ti EGRA ve developmentaswaterreservoirscanalsohelpaddress irriga T TI O ti N on ofhealth oreduca Export Potential S Table 1.8 T RA ff ect ontheexpor T EGY 2010 ti

fi ed arenotconstrained bycurrentcri ti ti on services, the17othersectorshaveeither ng country.So,the ti ti al sectors alsocarriedoutaquick on forconsump fi nding simplysaysthat ti al. Thefourindexes ti on andirriga ti ti als have limited als intheshort

ti

cal resources cal

Medium High Low ti

on needs. on ti Impact Socio-Eeconomic on N T I S

2010 13 intensity T Overall resource EPOR R EGY 2010 D T N RA T S N O TI low low BACKGROU EGRA NT NEPAL TRADE I Table 1.9 low Impact of 19 Export Potentials on Water and Electricity Resources Impact of 19 Export Potentials Services Agro-food oils Craft and Industrial Goods 12 Large cardamom3 Ginger4 Honey5 Lentils6 Tea7 Instant noodles Medicinal herbs/essential low low low medium medium medium low low medium low low medium-low low medium medium-low low low low 89 Handmade paper Silver jewelry low low medium low medium-low low 1011 products Iron and steel 12 Pashmina products Wool products high medium medium medium medium medium medium-high medium medium 1314 Tourism15 Labour services16 IT and BPO services17 Health services18 Education services 19 Engineering services Hydro-electricity medium none medium low low none low low medium none medium low none medium-low high medium none medium-low none low medium No. Sectors Electricity intensity Water intensity

composite index,including(inthebestcase): The mosta pro reviewed intable1.11.Moredetaileddataforeachsectorispresented Table 1.11iden NTBs. on theirsupplycapacity(costs,produc markets, especiallyfromtheMiddle 1--‘top 10a poten The The detailedanalysespresentedin 1.6 direct compe per cent)ofcases,Nepalesegoodsexportersdonotbene des (three- A composite index,including: for the19exportpoten nego from similartari markets). sian regions,intermsofagro-foodpoten fi ti le. na fi ti Somemeasureofmarketopennesswheneveravailable Therateofgrowththeindividualmarkets Thesizeoftheimpor The tari Therateofimportgrowthinindividualmarkets Thesizeoftheimpor ndings ofthisanalysisforthetwelvegoodsexportpoten N T I S a 14 ti als aresummarizedintable1.10(seeaddi fi those markets. A ti ti

ons formanyofthecra ons. Thiscon ft d valoremtari A hs ofthemosta P

tt 2010 tt tt art 2--‘tari rac rac rac ti tors. Thisissoeitherbecausetheyarecompe ff ti advantageordisadvantagebetweenNepaleseexporters andtheirtop NEPAL TRADE I BACKGROU

ff ti ti fi advantagesorsimplybecausetari ve marketsbyregion’(top20forlabourservices)—showsthegrowingimportanceof‘new’ ve marketsforservicesexportsareiden es thetoptenpoten ti ve MarketsandMarket fi ff ff rms thatthecompe advantage’–appliestogoodsexportonlyandshowsthat,inthegreatmajority(87.5 s imposedonNepaleseexportersinindividualmarkets ti als.Themosta tt N rac D ti ti ng market ng marketforeachgoodorservice R NT ti EPOR ve markets).Tradi ft EGRA andindustrialgoodsexportpoten T E C TI ast and ti hapter 2includeaniden ti O vity, andquality)theirabilitytomeetstandardsaddressother ally mosta N tt S ti rac al exports(halfofthe mosta ti T

RA ti ve advantageofNepaleseexportersmustincreasinglybebased G ti T vemarketsforgoodsexportsareiden ulf regionsaswelltheSouth EGY 2010 ti ti tt onal detailin onal ‘northerndevelopedmarkets’remainprimary export rac ff s areverylowasaresultofroundsmul ti ve marketsfortheNepaleseexportpoten fi A t fromasigni ti

ti fi ccess ng withexportersfromother ed onthebasisofmorelimiteddatawitha ti

fi Appendix 2 ti ca als andfourofthesevenservicesexport ti ti al (three-quartersofthemosta on ofthetenmosta tt rac fi cant tari cant ti ). Thetableisintwoparts. ve markets)andservice exports A C sian andSouth- hapter 2undereachsector ff advantageagainsttheir ti

fi ed onthebasisofa fi ve compe ve tt LDC rac ti s thatbene E lateral trade ti ast and ve markets ve ti al sectors tt ti rac tors in tors E P ti ve ast art fi t

Source: Chapter 2 Chapter Source:

l evcs73843 4 8 3 7 services All

N T I S 20 30 niern 2 2 1 1 4 Engineering

15

2010 1 1 2 4 2 Education

ors 5 1 2 1 1 Tourism

(top 20) (top T

3 12 332 services Labour

EPOR industrial goods goods industrial R

EGY 2010 D

T 2511 1 5 42 / craft All 33 640 4 46 37 13 N

RA

T olpout 2 8 9 1 products Wool S

N ahia 81 10 8 2 Pashmina O

TI

Iron/steel 1 1 1 1 6 9 1 1 9 6 1 1 1 1 Iron/steel BACKGROU ivrjwly 1 91 10 9 1 jewelry Silver

EGRA

paper NT

1 1 1 9 5 1 31 Handmade

l gofo 1 3 6 8 8 15 agro-food All 04 81 0 12 68 40 40

seta is 12 1 691 1 9 6 1 2 1 oils Essential eiia eb 0 10 6 1 3 herbs Medicinal

NEPAL TRADE I

ode 11 882 2 8 8 1 1 Noodles

Tea 3 1 2 4 10 10 4 2 1 3 Tea

Lentils 6 2 2 10 10 2 2 6 Lentils

oe 2 6 4 7 2 1 Honey

igr132 482 2 8 4 2 3 1 Ginger

admm411 1 9 3 1 1 1 4 Cardamom

countries (>+5%) (<-5%)

& Gulf & and CIS and (<+/-5%)

SAARC SE & E Asia E & SE SAARC tesSubtotal Others developed developed advantage advantage disadvantage disadvantage

Middle East East Middle Eastern Europe Europe Eastern No tariff advantage advantage tariff No

‘Northern’ ‘Northern’ Tariff Tariff Tariff Tariff

10 Markets 10

Top 10 Attractive Markets by Export Potential Goods and Services by Region by Services and Goods Potential Export by Markets Attractive 10 Top

Tariff Advantage for Export Potential Goods in Top Top in Goods Potential Export for Advantage Tariff

for 12 Goods and 4 Service Export Potentials Potentials Export Service 4 and Goods 12 for

Geographical Distribution of Top 10 Attractive Markets and Tariff Advantage or Disadvantage in Attractive Markets Markets Attractive in Disadvantage or Advantage Tariff and Markets Attractive 10 Top of Distribution Geographical Table 1.10 Table N T I S 16 Table 1.11 2010 10 Most Attractive Markets for 12 Goods and 4 Service Export Potentials NEPAL TRADE I BACKGROU #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 Agro-food Cardamom Pakistan Saudi Arabia UAE UK USA Malaysia Japan South Africa Kuwait Oman

N Ginger India Pakistan Bangladesh USA Netherlands UK Malaysia Germany Yemen Vietnam D

R Honey UK France Japan USA Germany Belgium Poland Australia Saudi Arabia Slovakia NT EPOR

EGRA Lentils Turkey UAE Sri Lanka Algeria Iran Egypt Saudi Arabia Spain UK Pakistan

T Tea Egypt UAE Russia USA UK Iran Pakistan Germany Kazakhstan Australia TI

O Instant Noodles China Indonesia Japan USA Vietnam South Korea Philippines Thailand Russia India N S Medicinal herbs USA France Germany Vietnam Singapore Japan Italy Russia Belgium South Korea T RA Essential oils Singapore Switzerland India France Germany USA UK Japan China Mexico T EGY 2010 Craft and Industrial Goods Handmade Denmark Canada Netherlands Saudi Arabia Nigeria India Quatar Egypt Japan Malta Paper Silver Jewelry Hong Kong USA Germany UK France Denmark Australia Spain Netherlands Canada Iron/steel Germany Belgium Poland India UAE UK Thailand France Italy Sweden Pashmina UK Germany Spain France Hong Kong USA Italy Japan China Switzerland Wool Products Germany France UK Italy Spain Japan Canada Belgium USA Hong Kong Services Labour services USA Russia Switzerland Saudi Arabia Spain Germany Italy Luxemburg Netherlands Malaysia (1-10) Labour services China UK France Oman Japan Norway Kazakhstan Kuwait South KoreaBelgium (11-20) Tourism Germany Saudi Arabia USA UK France Iran China Russia Italy Ukraine Education China India South Korea Uzbekistan Germany Bolivia Vietnam Nepal Lao PDR Belarus Engineering UAE China India Brazil Quatar USA Nigeria UK Turkey Saudi Arabia Source: Chapter 2 al ve ve ti on ti ti ti on), ed a ed rate N T I S ti lizing tt ff ta ti ti quotas. quotas. 17 2010 ff on (transit on ti ) instead of cantly higher fi RP ts from regional ts from T on to the quality fi ti es and quan ti rst, in 2002 and, most EPOR fi able retail price, stands ti R 20 ve lists (to be within ti EGY 2010 D T N of safeguard measures, on ti al access to Indian markets al access RA ti T S ) to make the prices of Nepalese N D O al access for Indian manufacturing es agree. In contrast, preferen V ti , being the nego ti TI C BACKGROU RP ), whose members have commi A to cover services. lize the preferences fully. es ( es EGRA ti ti FT er among them with respect to product A ff ng NTBs. The net bene A NT ti FT iven that it already has signi free market access to Indian market as well A ff G me-bound as it depends on the validity of the ti ng country based on the assessment of their ng country based on the ti er to provide similar access for exports from all ce because M ti tt dvantages members for loss of customs duty (to be in place members for loss of customs duty (to A me-bound implementa me-bound ti ) with India that was renewed, ) with India that was

LDC A ff al schemes, it has been restricted from fully u greement (S T ti er customs procedure and harmonizing standards). The tt P A NEPAL TRADE I cularly important for Nepal would be whether and how ti Moreover, Nepal’s preferen ) allowing Nepal to import Indian goods in Indian currency ) allowing Nepal to import Indian goods 4 from import du on of primary products R ti ve and ve F ti ve items; and (iii) preferen D ti ec ff . The impact on tari vity, and extending S A ti greement ( A FT systems from the Quad countries. systems from the Quad A P S sian Free Trade more stringent rules of origin, tari ons. The 2002 treaty introduced in export expansion. cal element ti al market access to India is ti A G ti es with India, par ti on mechanism for the al scheme, and some key export items to India are subject to tari al scheme, ti ti meframe has been set for elimina ti al Trading al xporters have complained about such prac ti agreement does not incorporate trade in services, cross-border investment or agreement does not incorporate trade E A on in the nature of schemes. For instance, Nepalese apparels are excluded from on in the nature of schemes. ve restric ve for Nepal depends on scale economies gained from access to a larger market for Nepal depends on scale economies ti of 4 per cent to readymade garments exports from Nepal over the maximum retail price (M and rules of origin (at least 40 per cent value addi lines of member countries) ti ff FT A D A V is imposed over it, the actual tax burden for the readymade garment exporters comes in a range of 8 to 10 per is imposed over it, the actual tax burden for the readymade garment exporters comes in a range of 8 ta C FT ti D referen V A S preferen which include safeguard measures--sensi ve from January 2006, P ons, except for some sensi C ti ti U will also depend on the e A ec ff FT e ctober 2009. It allows for (i) exemp ctober 2009. It allows A some outstanding issues to phase-out beginning in 2006. Members reached an agreement on A ts from the unilateral ff O fi on in NTBs would be crucial. However, as trade gains might be limited by similar produc eclining Importance of Tari eclining Importance es, which can be revised periodically, provided that both par es, which can be revised periodically, ti ti FT ts due to varia fi ve restric ve D A ti with India is integrated into S on under S ti largely without basis; (ii) duty-free access for some Nepalese manufactures to India ons on a reciprocal A ti ta ts of S ng any trade diversion and loss of customs revenue. ng any T cates issued by the competent authority of the expor cates issued by the competent authority ti fi tti fi P s to its market. While retaining the stringent provisions of the 2002 agreement, the renewed treaty of s to its market. While retaining the stringent

er infrastructure and regional connec ti tt se lthough Nepal has access to a number of preferen ff India has recently imposed quotas, and safeguard clauses. India also imposes countervailing du quotas, and safeguard clauses. India also exports more comparable to Indian counterparts. market access schemes to Quad countries are not binding and di the bene the facility of the Similarly, a weak understanding of the requirements to comply with stringent rules of origin and administra Similarly, a weak understanding of the requirements to comply with stringent procedures by Nepalese exporters has restrained their capacity to u integra the o for four years). The S movement of labour and no as well as a revenue compensa exports without quan trade trea coverage and rules of origin. A interregional trade by virtue of per cent of the total tari 10-year tari render S cent (www.myrepublica.com). three-fold increase when In terms of predictability, preferen capability, (iii) scrap duty refundable process ( capability, (iii) scrap duty refundable process without paying excise duty to India. Nepal is also a party to the South restric quan usual invoice value of their exports. as a reduc structure and factor endowment, appropriate focus would be required on improving trade facilita structure and factor endowment, appropriate focus would be required on improving agreements, lowering trade-related costs through be be 4 has eroded due to the recent policy announcement of the la has eroded due to the recent policy announcement cer Market access environment is a cri Market access environment LDC of trade routes from 22 to 27, (ii) grant recogni 2009 has agreed to: (i) expand the number 1.7 Nepal bene Nepal is a party to a Nepal is a party to a recently, in bene 1990s, increasinglyitisthenewanddynamicmarketsofSouth countries wherenewopportuni Where growthindemandfromdevelopedeconomiesusedtobethemaindriverof expand exportsofservices,includinglabourservices. upgrading ofexis the rangeofmarketsintowhichexis for furtherexpandingNepal’sexportgrowthmightbemoreaboutdiversifyingitsexportsby(i) decreasing valueofpreferencesasaninstrumentcompe access isshrinkingandithigh In sum,whilepreferen reducing tari also bemadetoreducetransac R migra to focusonsuppor the world-- D 1.8 producers, havebeeneroding,assuggestedintable1.10.Ifanything,theongoingWT countries, especiallythosecountrieswhoseexportersaremostlikelytocompetedirectlywithNepalese More importantlyperhaps,thevalueofpreferenceshasbeenreducedasmarginsbetweenpreferen with theNepaleseprivatesectortofurtherdevelopsystems formoree and improvingaccessto place, bothunilaterallyandmul the tari system. Mechanismsneedtobedevisedimprovetheu of remi the areasofNTBs.Thereisaneedtobuildupdomes The providing improvedmarketintelligencetothemandmee Nepal shouldalsonego to putalargeshareoftheremi may includestrengtheningrelatedinfrastructureandcrea through policysupport.Investmentsineduca economic growth. R building upagricultureextensionservices,withaviewtomee unskilled work,whichforms themajorcategoryoflabourserviceexportfrom country, Nepalshould developing countries.Since thepresentmovementofnaturalpersonsisbiasedagainst semi-skilledand sectors andmodesofsupply interesttothecountry,inpar streamlined proceduresathomeandac to raiseearningsofNepalesemigrantsbeinducingdemand inhigherskilljobs. epublic of emi uring theyear2000s,Nepalhasachievedalreadysomedegreeofproduct-mixdiversi ff D s andtheMostFavouredNa G tt oha N T I S ti ances bythe Nepaleseworkforceemployedoverseaswillremainanimportantsourceofincomeand 18 overnment shouldundertakemeasurestoimproveaccessibilityofNepalesegoodsexportmarketsin on. Whileaformalmemorandumofunderstanding hasbeensignedwithMalaysia,Hong tt ances through formalchannelsthatbothreducerisksformigrantsandhelpdeepenthe R D ecommenda

evelopment 2010 C K hina andIndia--o ff orea, Nepalneedstoextendemployment-seekingtalkswith othercountriesaswell. s ongoodsotherthanagriculturalcommodi NEPAL TRADE I BACKGROU ti ng products,includingagriculturalexports;and(iii)takingadvantageofopportuni ti ng exporters’e C onsiderable untappedpoten ti R al marketaccessmayremainimportanttoNepal’sexportersinafewsectors,such ti ate toobtaincommitmentonmarketaccessand na fi ound, popularlyknownastheNon- nance fromtheformal N D ff R NT ers opportuni EPOR ti tt ti ances touseforinvestment andemploymentcrea ti EGRA ons ti laterally. oncostsformigrantsbymoree es lay.Nepal’sproximitytolargeandmostrapidlygrowingeconomiesin ti ons (MFN)tari ti ff me forNepalesepolicymakersandexporterstorecognizetherapidly T orts toenternewdes TI ti O ng productsaresold(geographicaldiversi N S ti ve searchfordes T RA ti es for expandingNepal’sexporttrade.The ti T on, complementedbybe EGY 2010 fi nancial system.Thecentralbankshouldcon ff s, whichapplytoallotherpartnersinpreferencegiving ti al remainstoincreaseandbe ti c capacitythatcanhelpexportersmeetNTBs.This ti ti ti liza ti ng NTBs. ng awarenessofNTBsamongexporters,including es willfurtheracceleratethetrend. ti na A ti gricultural Market cular labourexportservicestodevelopedand ti ti ti ti

ng S on ofskillsacquiredbyreturningmigrantsand ti na ti on marketsforgoodsandservices,including veness, asfurthertradeliberaliza ff ti ons abroadcouldfacilitatelargelabour ec P C S requirements. entral ti veregula tt er voca ffi cient collec cient A merican, ti G onal treatmentinallservice A ti overnment supportthrough onsofmanpoweragencies ccess (N ti onal training,couldserve ti on in Nepal itself. fi tt ca fi er harnessremi LDC ca A ti O sian, ti on); (ii)valuechain on and repatria ti A nego on. Thechallenges exportsduringthe G M overnment needs A G ), andaimedat ulf and ti ti a nue towork E ti ff ons under orts could ti K on takes on fi ong and nancial A ti tt es to es frican ance ti on ti al N T I S ng new ng ti 2010 19 onal assistance ti T overnment needs G EPOR R EGY 2010 D T N RA T S N O TI BACKGROU EGRA for its products. onal market NT lateral) capacity of the ti ti to to enable weaker countries like Nepal vely ti ec ff NEPAL TRADE I onalized e onalized ti and mul on (bilateral, regional, ti a ti fT should be opera A as ve such ti a ti ate for the inclusion of these categories of workers in such commitments. Interna of workers in such commitments. ate for the inclusion of these categories ti jobs and new income to various socio-economic groups and across geographic regions. jobs and new income to various socio-economic to be strengthened. to be strengthened. inclusive growth in terms of genera favour export development that promotes Finally, Nepal should More broadly, the trade nego More broadly, the trade improve supply capacity and strengthen market access to interna and strengthen market access to improve supply capacity nego through ini

on N T I S ti 21

2010 ach export E T (Strength, O onal produc T ti , 2007a) and an extensive hapter 1. EPOR C C R ed in the course of the ed in the course erent species within the fi EGY 2010 ff D

T ti N osc.) and small cardamom RA R ed in ed T fi nalyses

ti S A on Matrix. on N ti O c hapter 2 hapter A TI cinale BACKGROU ffi C EGRA NT al that were iden ti iden al sectors ti ssessment undertaken in 2007 (IT Zingiber o A al ti oten arge cardamom is mainly grown in three countries, viz. arge cardamom is mainly grown in three etailed Sector etailed Table 2.1 P L nalyses NEPAL TRADE I D A xport E on was started in Ilam only in 1953. The establishment of ti cular small cardamom, produced in Burma, Thailand, Vietnam, ti als: va ti ti ) in 1975 paved the way for the development of this crop. Today, ) in 1975 paved the way for the development to which ginger ( oxb.) is one of the oldest spices indigenous to the eastern Himalayas. to the eastern Himalayas. oxb.) is one of the oldest spices indigenous R anchthar, Ilam and Sankhuwasabha) in eastern Nepal. It is one of the anchthar, Ilam and Sankhuwasabha) in studies, the uatemala, Honduras, and South India are of di CDC P 10,67012,326 1,587 11,114 7,106 13,190 21,329 14,966 n/a n/a C G oten Export Value of Cardamom, 2005-2009 (US$1,000) P onal sectors with export poten entre ( ti C 2005 2006 2007 2008 2009 thiopia, Zingiberaceae ardamom, in par E etailed Sector C , 2007c). C D xport Export Value (mirror data) Export Value (Nepalese data) Note: Nepalese data refers to 2004/05 –2007/08. on ve addi ti fi erformance E ons recommended for each of the 19 sectors are summarized in the SW ons recommended for each of the 19 sectors are summarized P ti on is spread over 37 districts, but more than 84 per cent of total na on is spread over on from two previous IT ti ti Amomum subulatom evelopment

D 1 va ti pportunity and Threat) analyses presented in the NTIS 2010 pportunity and Threat) analyses presented xport aos, Indonesia, O L E the previous for the four ranking indexes used in along the dimensions that are the basis al is examined Nineteen Nineteen ti ardamom ndings and ac aria cardamomum Maton) also belong to. It originated in Sikkim, located between Nepal and Bhutan. Nepal and Bhutan. Maton) also belong to. It originated in Sikkim, located between aria cardamomum fi C tt le ambodia, ey arge cardamom ( arge cardamom was introduced into Ilam (Nepal) in 1865, by Nepalese labourers who went to Sikkim for arge cardamom was introduced into Ilam Some data and informa E are also presented at the end of the chapter. eldwork K fi poten chapter. Short analyses of the Weakness, study on the cardamom sector (IT 2.1 Introduc 1 Index 1: 1) Cardamom Background L It comes under the family 2.2 Nineteen This chapter presents detailed analyses of the 19 export poten This chapter presents ( L cul seasonal work. However, commercial the comes from four districts (Taplejung, major sources of cash income for the farmers there. major sources of cash income for the farmers Nepal, India, and Bhutan. C same genera or of another genera. Nepal is by far the world’s largest exporter of large cardamom and has also same genera or of another genera. Nepal is by far the world’s largest exporter become the largest producer in recent years. cardamom cul E been around be reducedifsomeoftheseac interna to thirdcountries,andIndiacountries.Nepal’s exports toIndiaaccountforup90percentof 2 Total WorldExportValue: Index 2:WorldMarket Export Prospect: Trade Balance: Nepal’s WorldMarketShare: Poten Current ExportDes Types ofExportedProducts: 2007c). in produc in India,whichwillremainthemainmarketforeseeable future,too.Indiahasshownadecliningtrend great poten is preferredovertheIndianlargecardamomin signi Indian tradersfrom quan India andoverseasmarketshasbeenveryencouraging.Intermsofquan consump D per cent. alone aremuchhigherthanIndia’sexports. by size,cleaning,anddispatchingtomarketslike C large cardamomoverthepastthreeyears. to informa Nepal’s exports). cul Chibesai, Dambersai,Sawney, last P such asgradingbysize,inNepal. P di o export fromNepal.Someexportstothesemarketsarealreadyoccurring,andinaddi In 2008,Indiaimported10,391MToflarge cardamomfromNepal.India’sexportsin2007/08were1,325MT. xport Valuefor2008ises akistan, Saudi rices can ft ardamom ismainlyexportedtothatmarket,wheretradersdovalueaddingac ynamism of ff en re-exportedtothesemarkets.(Moreonthisbelow.) erence betweenmirrordata(mainlybasedonIndiandata)andNepalesedata. ti va fi fi ve years(basedonNepalesedata). ti cantly morefromNepalthan itexportstothirdcountries).ItisalsoreportedthatNepalilargecardamom N T I S ty oflargecardamomfromNepaltoIndiaisre-exported 22 ti ti al ExportDes ti on andexport.Mostofthelargecardamomisexportedwithoutundertakingvalueaddingac onal tradeinlargecardamom, dependingonthedataused.India’sexportsoflargecardamomhave 2 ti ti on andtheremaining90percentisforexport.TheexporttrendofNepalese largecardamomto on duetodiseases,whichisanopportunityforNepalincreaseitsproduc fl ti 2010 uctuate signi onobtainedfromtraders, ti al forNepaltoincreasedirect exportstothosemarkets.However,mostcardamomisconsumed U E S$4-6 millioninrecentyears, signi xports: Itises Nepal isanetexporteroflargecardamom.Veryfewimportsarerecorded. A NEPAL TRADE I BACKGROU rabia, Nepal’sexportoflargecardamomisverydependentontheSiligurimarketinIndia. P akistan, Singapore,andthe ti D na ti elhi andMumbai,althoughthiscannotbecon na UAE ti ons: fi ti cantly andhaveshown nocleartrendinrecentyears(IT ons: N ti mated tobearound D ,

Theworldmarketconsistsmainlyofthreetrade There areafewvarie UK IndiaisthemajorexportmarketforNepaleselargecardamom(90percentof R NT ti Nepal istheworld’slargestexporteroflargecardamomanditsexportstoIndia C ti mated thatlessthan10percentofthetotalproduc and BasedonIndianexportsta EPOR vi , andthe ondi EGRA ti es couldbedonewithinNepal.Tradersreportthatalmostalltheexported Kan T TI ti ons O ti A daar N fghanistan alsohasbeenemergingasanimportantbuyerofNepali U S S T E A RA U xport valuesalsoshowanupwardtrend,butwithasigni . . Thesemarketsappeartohavethehighestpoten sing datafor2008,Nepal’sshareofworldexportsisaround90 A T P UAE EGY 2010 mong these, akistan andothermarketsduetoitsquality.Thus,thereisa U ti esoflargecardamomcul fi D cantly lessthanNepal’sexports toIndia.TheTotalWorld S$20-30 million. elhi andMumbai.Thedependencyonthatmarketcould aretheothermainexportmarketsforNepal. ti s ti Ramsai, Golsai, cs, themainimportersoflargecardamomare fi rmed withtradesta P akistan, ti ty ithasmorethandoubledinthe ti vatedinNepallike and ti vi UAE fl ows: Nepal to India,Nepal Chibesai ti C es liketailcu , 2007c). , andothercountriesby ti on exportstoNepalare ti on goesfordomes ti on andexports(IT ti s are widespreadin ti cs (Indiaimports Ramsai, Golsai, tti ti ng, grading al fordirect A ccording ti vi fi cant ti es, ti C c , al ti on sia. ti

N T I S A al for ti cates of fi 23 cardamom

2010 ti le imports le , and other (mainly by tt A ), Japan, and S UAE U EU T n the other hand, O

5 nion ( rabia, EPOR on in Nepal replacing U ti A R ng with Nepali large cardamom. ti cs, the main excep ti EGY 2010 D T N s tutability of large and small ti ti uatemala, could be seen as RA G T on areas to terminal markets ti S urope, and the uropean N E E ng products because the market ng products because O ti , mated that more than 25,000 farm TI onal produc A ti ti oxb) in the world market. However, BACKGROU on might be even higher. In 2008, India reported ast, onally grown crop in more than 37 S ti on for Nepal’s exports and the main on for Nepal’s exports and the akistan, Saudi ti R E ti on was 13,784 hectares (ha) and the

xporters need to submit cer U P ti E erent, although not mutually exclusive. EGRA sia. The key market for large cardamom sia. The key market for large cardamom ff na va ti A uatemala is the main exporter, but exports small ti NT G cially produces. This could partly be explained by the fact ffi akistan, Nepal does not enjoy any preferen P So far Nepal has not come across any market So far Nepal has not

), mainly exported by onal markets to the extent of compe es would be required to increase awareness of this es would be required to increase awareness ti ti vi ti anchthar, and Taplejung districts alone, and as many as NEPAL TRADE I P Amomum sublatum on has increased in recent years and there is poten ti emand for large cardamom is regionally limited to South emand for large cardamom is regionally ng to India. S$100-300 million a year. D ti large cardamom in the three producing countries, Nepal, on of U ng large cardamom from produc ti ti roduc ons P ti (2007c) for an extensive discussion on the (non-) subs es cannot be considered compe es cannot be considered cantly more than what Nepal o ti fi C on in Ilam, India is both the main des ti aria cardamomum tt on and imports are exported to on and imports are , 2007c). ti ondi C vely stable in recent years with addi vely stable in recent Ele ti C s and non-tarrif barriers): s and non-tarrif ff 6 ng large cardamom to overseas markets. ng large cardamom to overseas markets. ti on of large cardamom occurs in the Middle ti arge cardamom in Nepal is a high-value tradi India produces large cardamom and imports mainly from Nepal (with li cardamom and imports mainly from India produces large 3 ons (Tari L gures. However, import data from India suggests that the produc ti

fi akistan. c Supply c ast countries. In most markets, including ast countries. In most markets, including on in India (IT Nepal. ne. There is no import duty on large cardamom entering India from ti P ti E ti cs. ti 4 tor for Nepali large cardamom ( s ti ti rospect: The overall produc tors in World Market: P sia is ti A omes large number of farmers are involved in this sector. It is es sing world trade data would be misleading because it includes small cardamom, which is a very small cardamom, which is a very would be misleading because it includes sing world trade data A U on is made between large and small cardamom in most trade sta on is made between large and D

ti cial Nepalese cial ffi sian ethnic groups), market development ac sian ethnic groups), market development on Capacity: on was 7,087 metric tons (MT). tor in the world market. Bhutan is the only other producer of large cardamom. nc ti ti ti ti A barriers are generally low or nonexistent for cardamom in the barriers are generally low or nonexistent ff erent product. erent nnual world exports of all cardamom (small and large) is ff A Myanmar produces some large cardamom but does not enter the interna These are o India breaks down 0908.30 in several products, one of which being large cardamom. Most other countries put both small and large India breaks down 0908.30 in several products, one of which being large cardamom. Most other countries variety before any large-scale demand could occur outside South variety before any large-scale demand within South South Though some consump some of the produc Tari like Birtamod and Biratnagar and while expor like Birtamod and Biratnagar and while Nepal charges an export fee of 0.5 per cent at the customs. Traders complain they have to pay a kind of octroi Nepal charges an export fee of 0.5 per at many places inside Nepal while transpor access compared to India, which is the only other exporter to those markets. access compared to India, which is the India, and Bhutan, has been rela being India’s sta it is widely believed that the two varie origin and a quaran most of the Middle compe of cardamom are very di segments and demand for these two types traders, and transporters are 67,000 households in all Nepal. Besides, a large number of private proprietors, involved in the value chain. further increase (see below). World Market cardamom. Nepal is second, followed by India. See IT cardamom. 5 6 the small and green cardamom ( the main compe hill and mountain districts. In 2007/08, the total area under cul produc 3 4 Producers: Produc Index 3: di from Bhutan). Some of the produc from Bhutan). Some countries. access problem in expor Major Compe households are involved in its produc Market Access Condi No dis that stocks might be carried over to the next year. together. imports of 10,391 MT of cardamom from Nepal, signi to itsquality.Itcouldbefurtherenhancedbyundertakingvalueaddingac 7 E Cost andQualityofInfrastructure: Level ofProcessingTechnology: Labour CostandOverallProduc Availability andQualityofLabourForce: Produc Quality ofProduct: produc to lackofformaltraining. compared tothecompe costly. Firewoodiss There aretwosystemsoflargecardamomprocessinginNepal:dryingtradi adding ac skilled farmlabourisavailableandinabundance.Thereashortageofthatcoulddothevalue and size, andcleaning,whichatpresentaremostlydoneintheSiligurimarket.NepaleseexportersBirtamod generated duringburningofwetwood. Ittakesabout30-50hourstodrythecardamom. and thesewetlogsarethenburntinside thebha Fresh cardamomcapsulesarespreadin a10-12inchthickbedonthemeshstructureplacedstonewalls.Nearby treesare cardamom andtakeittothemarketsellorcollectors ormiddlemenatthefarma But forwardorbackwardlinkagesinthesupplychainare non-existent.Farmersthemselvesdrytheirlarge adequate shading,andmanuringprac could easilybeincreasedtoabout600kg/haandgoashigh800throughpropermanagement, were installedinIlamtodryonlyabout50MToflargecardamom. to introduceimprovedbha price aswell.Butlessthan10percentoftotalproduc technology thatisused. improved of inputsupplierisminimizedasmosttheinputsused arefarm-basedandveryfewfarmersusechemical The tradi ffi ciency ofDomes

D N T I S haran havestartedundertakingsuchvalueaddingac 24 ti ti on costadvantageexistsintheuseofwaterandpackagingmaterials. ti vity: onal bha ti vi bha 2010 ti Whiletheaverageproduc es. Tradershavetodepend onSiliguriforthesupplyofsuchlabour. tti

tti hasatwo feetthickstonewallstructureonthreesidesandawideopeninginthefront forburninglargewoodlogs. NEPAL TRADE I BACKGROU . 7 Thee

A ti ti c Suppor ccording totraders,NepalilargecardamomispreferredoverIndiandue ll usedtodrylargecardamom.Thequalityofproductdependsonthetype ti ffi tors, especiallyfuel( ciency ofthetradi L arge cardamomdriedintheimproved N tti D , butitis s R NT ti EPOR ng Industries: ti EGRA on Cost: 070 3747070.51 0.51 0.58 0.54 7,087 0.53 6,792 0.53 6,647 0.57 6,086 5,983 5,880 13,784 6,179 13,237 Source: StatisticalinformationonNepaleseagriculture,HMG/MoAC 13,193 2007/08 11,347 2006/07 11,220 2005/06 11,095 2004/05 10,840 2003/04 2002/03 2001/02

D

T rying oflargecardamomisthemajorac tti Large Cardamom:Acreage,ProductionandYield TI structure belowthecardamombed.Thus,bedisexposedtothicksmoke A Ya Ae h)Pouto M)Yield(MT/ha) Production(MT) Area(ha) Year ti ccording toindustrysources,infrastructurecostsareconsidered high ces. O ti N ll notwidelyadopted.Inaperiodoftwoyears,43improved ti Tradersthinkthatlabourproduc vity oflargecardamomforNepalis540kg/ha,produc S

L T abour costishighercomparedtothecostsofotherinputs. RA ti Theoveralle onal dryingtechnologyisverylow.Bothsystemsare fi T rewood) andtransporta EGY 2010 ti Table 2.2 on isdriedinimproved ti ffi vi ciency of suppor ti es inthelastfewyears. bha tti

isofbe ti on. ti ti vity isverylow. vi ti ti vity initsproduc ti ng services isconsideredhigh. tt es liketailcu er qualityandfetcheshigher bha ti onal L ack ofskillsismainlydue tti

. E bha ft ff er drying.Therole orts areunderway tti E tti

ng, grading by xperienced and anddryingin ti on process. on cut intologs ti vity level vity A bha bha small tti tti

) A on on o ti ti

N T I S D onery va ti ti

2010 25 on, planning, ti griculture ( T A va ons and training. ti ti ons. It contains 2 ons. It contains ti carries out research on could be adopted on. There are some ti EPOR ti ces, especially by using R ng cropped area. ti ti CDC ca on and for export. Some EGY 2010 D fi ti T N c supply of large cardamom ng/picking and drying could ti RA ti T c to the cardamom sector are fi S epartment of N taxes, etc are on, local ‘informal’ D ti O ), tobacco mixtures, confec TI on. The industrial sector uses the on. The industrial sector uses the BACKGROU c consump c ti ti roduct diversi es; and maintains records related to es; and maintains records related to ti P EGRA vi ‘masala’ ti NT ve measures against diseases, insects, and ti s) under the es. In India (very similar to Nepal), household ti ons. Such non-uniform quality is based on the ons. Such c consump ti ower of large cardamom, which is locally known ower of large cardamom, ti capsules for processing/drying. The ng the green fl ti oN has recognized large cardamom as one of the oN has recognized large cardamom as al for expanding domes DADO ti to farmers. The on services G ti ve steps for its development. It has established the NEPAL TRADE I ti ven improvements in harves The There has not been much improvement in onal method. ces ( E

ti ffi ciently explored. explored. ciently ffi al oils, paper like tablemats and others, and incense making. al oils, paper like tablemats and others, and incense making. O ti erent condi ff ed drying system, which has not been yet been extended to on. on. fi ti on’ from the on’ from ti ers consulta ers ff There is poten TZ) that support farmers and traders to expand their market access G es, control and preven ) near Fikkel in Ilam, which provides training in improved cul ) near Fikkel in Ilam, which provides training ti ons: ti evelopment CDC D ons are essen orps, ti C lizer applica lizer ti ca fi entre ( C conven vated under the roblems related to transport infrastructure, corrup roblems related to transport infrastructure, ti that are very speci ves of the sector, but no problems P griculture ti

al oils and possesses medicinal proper A ti arge cardamom is used as a spice and in several ayurvedic prepara arge cardamom is used as a spice and c Supply Condi L ces and fer ti ves and Donor Involvement:

mated at 47 per cent of total domes ti on avenues have not been su ti mule-owners and truckers--is The role of transporters--porters, cides or other such inputs. ti ti ti al sector is ‘colour extrac al sector ces, improved varie a ti ti ti istrict ca fi D 13 per cent of the area under this crop has not reached the produc mated that more than evelopment ti D on technology. Thus, supply could be increased by changing the farm prac eren . This item is usually thrown away while collec ti ff on is es ti c Demand: c on, number of households involved, and total area under cardamom produc on, number of households involved, and total area under ti ti programmes (SNV, Mercy supplies quality seedlings, and o ces, ti lizer and insec er cultural prac ti ‘thunga’ in drying. erences in size, colour, moisture content, broken grain, and non-uniformity tt GO ff nother di ardamom roduct diversi ower part produces a dark pink brown colour, which can be used as a dye. fl as other possible product diversi A stage. To that extent, annual supply increase could be expected even within the exis stage. To that extent, annual supply increase could be expected even within P to cater for and expand the needs of the spice industries both for domes help increase the supply as well as the quality. Second, supply could be increased by improving the yield rate. by improving the yield rate. help increase the supply as well as the quality. Second, supply could be increased Third, it is es It has undertaken experiments to use a gasi It has undertaken experiments to use remaining 53 per cent. The industrial uses are for blended spice ( remaining 53 per cent. The industrial uses items like bread, cakes, and others. pests. It also transfers appropriate technologies and skills to farmers through demonstra pests. It also transfers appropriate technologies farmers. The and improve the drying method. be on cultural prac IN high-value export crops and has taken some posi high-value export crops and has taken C the produc consump very important as the product has to be transported from the farm to the road-head markets and then to the the farm to the road-head markets and product has to be transported from very important as the Biratnagar, the regional markets like Birtamod and like Ilam and Fikkel and further to district-level markets countries. is exported to India and overseas from where large cardamom it is collected quality of dried large cardamom as in the value chain is the non-uniform The major problem who dry them in di from many small farmers di prac produc Prospect for Domes to 3 per cent of essen Business Environment: reported by representa reported. Government Ini in Nepal. It is mostly cul Domes fer provides awareness training and counseling to large cardamom farmers on improved cul provides awareness training and counseling development ac follow-up, and monitoring of large cardamom deforesta for drying1metrictonoflargecardamominthetradi drying generatesnega cardamom isexportedtoIndiaandthenpossiblyre-exported. per centoftherequiredwood. ( labour invalueaddingac in improvedfarmculturalprac for farmerstocardamomresearchfarmsandfarmers’ government programmesforimprovementsinfarmprac forest adapted tofarmingonslopinglandsandforestrysystems andtheplantsmaintainpermanentgreencoveron of largecardamomtothird countries wereusedtoiden Because HS0908.30coversboth largeandsmallcardamom,themethodologyhasbeenadjusted. Indianexports exist comparedwithexports from Indiatothosemarkets. are Saudi is iden With aslightlymodi Market Environmental Impact: Energy andWaterConstraints: Impact onDevelopmentofDisadvantagedRegions: Contribu Gender Impact: Current EmploymentandJob-Crea Index 4:Socio-economicImpact million labourdaysintotal/year).Thees households inallNepal.Thesectorgeneratesemploymentforaminimumof80-100daysperha(aboutone are involvedincardamomfarmingIlam, requiring farmerstomaintainagoodforestcover(forshading) ofnitrogen- also investinfarmimprovements.Itises is averyhigh-value,low-volumecashcropthathelpsmeettherequirementsofpoorhouseholdsand is posi packaging, etc.Withthepromo their involvementinvalueaddingac crea even smallfarmerscaninvestinitscul slopes and,therefore,doesnotcompetewithotherfoodcropsforland.Theproduc excluded farmerswithli cash incomeofafarmhouseholdcomesfromlargecardamomalone.Itprovidestosmalland a signi even largeremploymentopportuni fi rewood). rewood). ti

ng andhouseholddecision-making.Women’sinvolvementisequaltomeninmostfarmac N T I S 26 ti fl fi ti ve. Itbringsdryingunits(improvedbha oor. Butitisahigh cant number ofpeople

fi ed asthemosta ti ti on toSkillDevelopment: A A on inlargecardamom-growingareas.Introduc 2010 rabia, tt A rac lthough farmingoflargecardamomensuresecologicalstability,the NEPAL TRADE I BACKGROU This sectorcreatesaverageimpactonwomenintermsofpar UAE ti veness Index fi ed methodologytodis , ti ve impact intermsoflarge UK Farmingofcardamomensuresecologicalstabilitytofragile mountainslopesby tt ti le andlessfer vi , and N tt fi rac D rewood-consuming sector. ti es. R NT EPOR ti ti U ve market.Nepalalreadyexportssmallamountstothatmarket,but most ces. Sometradersandexportersareprovidingon-the-jobtrainingtotheir This sectorisahighconsumerofwater(freeandperennial EGRA ti fi on ofvalueaddingac S nd employment alongthevaluechain,suchasintranspor A ti There isli T . Fast-growingmarketsare es. ti ti on Prospect: on TI vi ti O va ti es (cleaning,grading,tailcu N ti mated full- ti S le land. land. le ti on. ti T ti mated that,inTaplejungdistrict,asmuch70percentofthe P nguish betweenlargeandsmallcardamom(seebelow), RA tt anchthar, andTaplejungdistrictsalone,asmany67,000 leskilldevelopmentinthissector.Thisisduetotheinadequate T EGY 2010 tti ) intoruralareas,genera fi Itises rewood consump L The impactonpooranddisadvantagedgroupsorregions ti arge cardamomiscul me employmentequivalent(FT ti onal bha ti fi vi ti elds. SomeIN ces. Some ti ti fy a fy ti ti on ofimprovedbha es withinthecountry,thissectorcouldgenerate mated thatmorethan25,000farmhouseholds O tt ther majormarketsforpoten tti rac K isaround2metrictons.Thiscouldincrease uwait, ti ve markets.Indiaisthemajorexporter tti DADO ng) isabove50percent. ti on. Thees GO U S fi xing trees.Ithasbeenecologically ti A s sporadicallyorganizestudytours s areinvolvedintrainingfarmers vated inmarginalanddegraded ti , and ng incomeandemployment.It ti tti cipa couldhelpsaveatleast28 ti UAE mated fuel-woodrequired fi rewood requiredforits ti EE on:bothemployment- ti . Notari on costissmall,thus, ) is5,500.Inaddi ti fl al directexports ow) andenergy ti ff ng, cleaning, ng, preferences ti vi ti P es. But akistan ti on, N T I S ates ti 27

2010 eren ons during ff ti S$8.2 million. S$8.2 million. U tudes as high as T inger is exported ti G EPOR these markets R Main competitors India is the main competitor in all EGY 2010 D me of harvest. Frost and T ti N RA T S Tariff N O advantage TI BACKGROU advantage is the one compared with advantage is the one compared ff EGRA (US$ 1,000 in 2008) Nepal NT Tariff for top10 current exports from Nepal Growth rate (2004-2008) top10 NEPAL TRADE I OPENESS es. The intercropping of ginger with other crops, including ti Table 2.3 line level. The tari ff . It is one of the main sources of cash income for farmers. It cally, ginger thrives well in warm and humid condi ti s it is being produced in the whole of the mid-hill areas, this crop share A top10 World market lima “sutho”

GROWTH C Attractive Markets for Cardamom Attractive Markets for Top 10 - Weighted Market Attractiveness Index Attractive markets for Cardamom (HS 0908.30) Attractive markets for Cardamom Attractive markets for Cardamom (HS 0908.30) Top 10 by size, growth, openess and current exports (2008) Exports Nepal er is called tt c suitability. ti 12 Pakistan3 Saudi Arabia4 USA Kuwait UAE5 UK6 USA7 Malaysia UAE8 Japan9 Pakistan South Africa South Africa Malaysia n/a n/a UK Kuwait Oman Pakistan India Saudi Arabia n/a n/a n/a n/a n/a n/a 20,520 n/a 809 10 Oman Japan n/a Rank top10 SIZE 23 Saudi Arabia4 UAE5 UK6 USA7 Malaysia 08 Japan9 South Africa 11.1% Kuwait 0 0 0 -5.6% 0 0 5.2% 0 3.5% 0% 2.8% 3.2% 0 26.7% 1.1% 2.5% 0% 1.7% 13.6% 32.0% 0% 1.1% 8.8% -17.8% 0% 0% 0% 136.0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1 Pakistan 809 65.9% 24.8% 5% 0% 10 Oman 0 0.9% 3.8% 0% 0% Rank Country in al stage of growth, but it needs dry atmosphere and mild temperatures on by providing income and new opportuni ti ti method. ee and orange, is a recent ff inger is Nepal’s most important exported spice, besides cardamom, with exports in 2008 of inger is Nepal’s most important exported spice, besides cardamom, with exports co heavy dew are not favourable for growth. the ini counterforce to rural-urban is very important for the development of this region. It serves as an important migra 1,500m due to i ts clima 1,500m due to i either fresh or dried; the la and in al is grown across the whole east-west length along the Siwalik and mid hill ranges, Nepal is the fourth largest producer and sixth largest exporter of ginger in the world. Nepal is the fourth largest producer and sixth largest exporter of ginger in G 2) Ginger Background of large cardamom (some of it being re-exports of Nepalese cardamom) and its export data di cardamom) and its export data (some of it being re-exports of Nepalese of large cardamom between large and small cardamom on the tari between large and markets). advantage exists in any of the major Indian exports (no such rela Dynamism ofExports: Trade Balance: Poten Current ExportDes Types ofExportedProducts: Export Value: Index 1: believed tobesigni world exportsisonly2.4percent.Thissharedoesnotaccount forinformalbordertradewithIndia,whichis Nepal’s WorldMarketShare:Nepaliscurrentlythesixth largestexporterofginger,althoughitssharein amounts ofginger,especiallyfrom poten though someofitsexportstoIndiaareprobablyre-exported. also exportslargeamountstoBangladeshandSaudi and cent ofthedomes domes Indian marketsof also exported:sun-driedfrom signi (especially driedginger)isre-exportedto con industry sources,Nepalexportsverysmallamountsofgingerto export in2007/08,accordingtotheTradeand export. use theo means thatannualexportscouldbeashigh export toIndia. markets. Nepalislosingsome shareinsouthernIndia,butthisrepresentslessthan5per centofNepal’stotal Nepal wherealargequan not losingmarketsharebecause theIndianmarketisexpanding.Therearealsomanysmall marketsbordering markets ofnorthernIndia.However, duetoitsproximity,Nepals fi ti rmed witho vely similar. vely fi G

cant informalborder trade. N T I S 28 ti ti andaki zones(westernregionofNepal). al fordirectexportstosomeofthose marketsfordriedginger.(Moreonthisbelow.) ti al ExportDes c sourcesinIndia, par O ffi cial numbersforthecalcula ther exportedproductsaregingeroilandoleoresin,butinnegligiblevolumes.

E 2010 xport

A NEPAL TRADE I BACKGROU ll recordedexportsofgingergotoIndia.NepaleseexportdataandIndianimportare Total tradebalanceofgingerisconsistentlyhighlyposi ffi cial tradedata.Itshould,nevertheless,beaddedthatmuchofwhatisexportedtoIndia ti E c produc G xport volumesareapproximately30,000to40,000MT/year.Itisbelievedthatthere fi oa xotVle ,5 ,0 ,1 ,3 n/a 8,130 9,417 All 6,006 (Nepalese data) Dried ginger (Nepalese data) Fresh ginger (Nepalese data) Total exportvalue 3,855 Total ExportValue ti cant. Theworldmarketishighlydominatedby P na orakhpur, Varanasi, ti na fi erformance gures areinUS$1,000.Nepalesedatarefers to2004/05–2007/08. IndiaisalargeandfairlydynamicmarketforNepaleseginger. Supplyofgingerfrom ti ons: ti ons: 20 0620 082009 2008 2007 2006 2005 N ti ty of Nepaligingerisexportedto.Thus,withinIndia,Nepal hasaccesstomany D ti

on isexported,whicharoundthree G

R NT ti A cularly ThemajorimportersofgingerareJapan, R inger isexportedmainlyinfreshform.Twotypesofdriedginger( EPOR lmost allexports(bothfreshanddried)aretoIndia,par ap EGRA World ValueofGinger,2005-2009(US$1,000) ti zone(inthemid-western region)and ,3 5 7 3 n/a 739 n/a n/a 679 7,441 8,180 7,415 957 8,094 4,234 5,191 1,232 2,477 3,709 C T A hina. Suchimportsamountedtolessthan17percentof its totalo TI ccording toes C O ti on ofindicators. ochin andBangalore,ispenetra N L S P ucknow, akistan. T RA T E U EGY 2010 xport D S$25 million.However,this ried gingercons Table 2.4 K ti mates obtainedfromindustrysources,around75per anpur, A P rabia. Nepaldoesnotexportdirecttothosemarkets, romo P ti on atna, Jaipur,and A ccording toindustrysources,therecouldbea P C akistan andBangladesh,butthiscannotbe entre (T ti ti tutes 10-30percentofthetotalginger ti mes higherthantheo llenjoyscompara C hina (62percent). ti U ng intotheestablishedNepaliginger S ti A EPC fi ve. Nepalimportsonlynominal re orsmoked-driedfrom , EU fi gure isnotreliableandwewill ) data. , D P elhi. Besides,accordingto akistan, andMalaysia.India ti veadvantagesandis ti cularlytonorthern ffi cial exports. This “sutho” L umbini ffi cial ) are ng ti

N T I S cant fi ty, more 29 2010 ti erent fees ff es in Nepal ti on, and lack of ti T ed by the Indian tt inger oleoresin has akistan applies a 15 P G EPOR R range of di cant preference in India, A EGY 2010 D fi T N hina. C RA me the truck has to wait at ti T inger oleoresin is preferred in S G N ll these obstacles add costs to the O A TI BACKGROU ve years. In terms of quan ve years. In terms of measures. fi ff al for producing ginger oil is limited, al for producing ginger oil is limited, avour and concentra ti fl S measures. While authori s 170/MT, approximately 1 per cent of P EGRA R cate, all ginger entering India from Nepal tor, in any of the other major impor member. There is, however, no signi fi ed to enter India, which means that the NT ti

tt A ti FT ve to quality of inputs. ti A s, Nepal enjoys a signi ff ve, with demand exceeding supply. Nepal is unable to ve, with demand exceeding supply. NEPAL TRADE I Table 2.5 ti al products include ginger oil and oleoresin, ginger powder al products include ginger oil and oleoresin, ti state capital that has been allo en in each ft In terms of tari ct). India also applies S A hina, the main compe C ons, o ti ons ti ty and cater for the expected fresh ginger market expansions of India. of India. the expected fresh ginger market expansions ty and cater for on ginger imports, including imports from ti ff c loca s and NTBs): orakhpur in India. Nepalese exporters can only sell their produce to licensed orakhpur in India. Nepalese exporters can only sell their produce to licensed ondi fi cide residue test at border crossings. The samples are not tested at border ff ti G C lso, Nepalese trucks are not permi Total World Export Value of Ginger 2005-2009 (US$1,000): Total World Export Value of Ginger 2005-2009 both for ground ginger (around 0.5 per cent), and a zero rate for others. Japan grants duty-free access to ff A dried ginger al for diversifying Nepali ginger exports into processed products. Since brous and farming methods are inadequate to avoid an ‘earthy aroma’ in ginger brous and farming methods are inadequate to avoid an ‘earthy ti ons are also very discernible during the last ons are also very discernible fi ti 2005 2006 2007 2008 2009 2009 avouring agent in foods, beverages, and medicines. avouring agent in 321,704 247,995 264,599 339,275 n/a n/a on under the Indian fl ons (Tari ons ti on. ti ti Source: FAO Statistics. Nepal is the fourth largest producer after India, China, and Indonesia Source: FAO Statistics. Nepal is the fourth largest xport prospect seems very posi xport prospect seems E uctua and Malaysia apply a zero MFN rate. fl

EU , with a 9 per cent reduced rate for Nepal as a S vely high prices in Indian markets. Traders believe that Nepal should export more dried than high prices in Indian markets. Traders believe that Nepal should export more vely on of oleoresin, on the other hand, is less sensi ff ti ti variety is too 8 applies a very low MFN tari A roduc S P advantage for Nepal compared to U ‘nase’ ff N (traders’ registra The hina and Nepal. The government. It takes about three days for the result to return, during which government. It takes about three days for the result to return, during which the Indian custom point. consignment has to be re-loaded onto Indian trucks at customs crossings. crossings, but are sent to speci these industries over the natural ginger due to the advantages that oleoresins hold over the spices themselves. due to the advantages that oleoresins hold over the spices themselves. these industries over the natural ginger in use, more uniform These advantages include increased economy have to undergo a further pes widespread uses as a microbial contamina require consignments of ginger to be issued a phytosanitary cer the oil. Indian traders. This limits Nepalese exporters in their choice of traders, as many Indian traders do not have Indian traders. This limits Nepalese exporters in their choice of traders, as many PA fresh ginger. Besides dried ginger, other poten fresh ginger. Besides dried ginger, other etc. In Nepal, the poten and mixed spices, ginger candy and slices, the cost of ginger exported to Niche markets for Nepali dried ginger in India are also expanding. Niche markets for Nepali There is a very high poten fetches rela are levied on Nepali ginger. The total cost of these amounts to N Nepal enjoys free access to India’s markets but faces various non-tari Market Access Condi supply the required demanded quan supply the required Index 2: World Market Export Prospect: The value of ginger export has been increasing over the years and has even doubled during the last 15 years. last 15 years. and has even doubled during the export has been increasing over the years The value of ginger However, annual which applies a 30 per cent MFN tari per cent tari than 75 per cent of the total ginger produced in Nepal is exported. than 75 per cent of tari markets. 8 C main compe (2.4 percent).Nepalhasarounda50centshareintheIndianmarket,with 62 percentin2008.ItisfollowedbyThailand(8cent),Nigeria(3IndiaandNepal of theexportersarealsowholesalers.Thereafewcoopera A Produc Producers: Index 3: World MarketProspect: Major Compe arrangements formoneytransfer,almostallexporttransac fee; NepalitradersaredemandingreciprocityfromIndia. exporters. NepalpermitsallIndiantruckstotravelanywhereintoNepal’sterritoryfor72hoursanominal NTBs mightincreaseagain. with pricesbeingratherhighandexportsmovingsmoothly.However,oncearelowagain,theuseof would besuitableformajorimportmarketssuchasJapan. exports tothirdcountriesandaddmorevaluetheproducedginger,orproducealevelofqualitythat the largestandfastestgrowingimportmarketsisIndia.ThemajorchallengeforNepaltoincreaseitsdirect exports almosttripledinvaluetermsanddoubledvolumebetween20012008. domes easily accessiblebyroadtransport. Syangja, consump for traders ginger cul the lastdecade:14,000hain2007/08,upfrom5,3001994/95.S with asmallincreaseinyield.Thetotalacreageoflandundergingercul processors alongthesupplyhainaresmallfamilybusinesses. largenumberofprivatetraders,assemblers,middlemen,wholesalers–areinvolvedinthebusiness.Most N T I S 30 ti ti c marke on Capacity: K ti ti on. ItisgrowninalldistrictsofNepal(exceptthehighhilldistricts),butSalyan, aski, Nawalparasi,Bhojpur,andIlamarethemajorgingerproducingdistrictsthatrela va MostsmallholderfarmsinNepalareinvolvedgingerproduc D

A 2010 ti ccording totraders,thesenon-tari omes tors (besidescompe ti ti on. tors intheWorld Market: NEPAL TRADE I BACKGROU ti ng. Thosecoopera ti c Supply Both areaandproduc Theworldmarketforgingerhasbeenhighlydynamicoverthelasteightyears.World N D R NT EPOR EGRA C ti

ondi ti T 070 407111111.51 12.19 11.87 161,171 12.80 160,576 14,007 12.73 154,197 9.57 13,170 12.20 152,704 9.42 12,994 2007/08 150,593 11,930 2006/07 140,056 87,909 11,830 2005/06 84,366 11,480 2004/05 9,189 2003/04 8,956 2002/03 2001/02 2000/01 on fromdomes D ti Ginger: Acreage,Production,andYield TI ves ares erAe h)Po.(T YieldMT/ha Prod.(MT) Area (ha) Year ried gingerisproducedonlyinthewesternregionofcountry. O N ti

S C ons hina dominatestheworldmarket,withashareofexports T ti RA on ofgingerhaveincreasedsigni ti T ff ll notinvolvedinexportbusiness. barriers(NTBs)arelessprevalentatthemoment(late2009), EGY 2010 Table 2.6 ti c produc ti A ons takeplaceincash.Thiscreatesanextrarisk t thesame ti on). ti vesatfarmlevelthatarealsoundertaking ti ti ll moreacreagecanbebroughtunder va ti me, intheabsenceofins ti ti on hasmorethandoubledduring on, buto fi cantly overtherecentyears, C hina andNigeriabeingthe P rac ft en onlyforhousehold ti cally, allfarmersand P alpa, Tanahu, ti tu O ti ti ne of onal vely ng on on ti ti ti onal N T I S onal ti ti ec ff esearch on and ti R Kapurkot 31

2010 epartment ), Na es of other on could be D ti ti romo inger ARC P rhizome, which G T cant advantage or fi on services are well ti EPOR “Bose” irectorate, R D ouncil (N EGY 2010 D ve, the quality of Nepali ti C T N ll at an experimental level. ll at an experimental level. gribusiness ti ne RA A ti T , S on, crime, and complex border ti bres and bres N variety. fi variety is preferred by the spice variety is preferred EPC O erent districts, ranging from about esearch TI ff R rogramme, and the BACKGROU c strategy or policy for the sector. c strategy or policy for the sector. Nase P fi Nase c industries is low because the product esearch Farm and by using more of the EGRA ti lant Quaran R P es are implemented under the general NT ti s, on market perspec on that Nepal has a signi vi ti ti ti griculture inger A G le processing is done. tt DADO erent levels of the value chain have gained long erent levels of the value chain have gained evelopment ff D on ac the product mix for fresh consump al in improving ti ti onal ti NEPAL TRADE I F), the There is no speci ces to improve the yield rate. ti rhizome containing more rhizome containing vity is assessed ‘above average’. on of ginger oil and oleoresin is s overnment ), Na ADR ti ti Supply of farm inputs and transporta G ve and judicial services, corrup onal Spice onal DD ti ti ochin and Bangalore in India, Jamaica and elite varie ochin and Bangalore There is no indica “nase” M Stakeholders of the value chain claim that total produc C roduc Industry sources report a lack of skills due to a lack of formal training. Industry sources report a lack of skills due P AP inger being a bulk item, the weak road infrastructure is a factor a inger being a bulk item, the weak road ons: ti bre content and dirty look. The bre content and G fi

ontrol, Na on Cost: abour produc ti C The technology used in this sector is minimal. The drying technology that is The technology used in this sector is minimal. L ng Industries: esearch Fund (N ti brer. From the fresh consump brer. ) as most of the produce at present is of ) as most of the produce at present is of R fi es of ginger: ti irectorate ( on could be further increased by changing the crop variety (like the on could be further increased cient administra cient ti D ffi nase Industry sources were mainly referring to general problems in the business Industry sources were mainly referring to general problems in the on costs compared to India. ti vity of Nepali ginger is comparable with India, but lower than other interna vity of Nepali ginger is comparable with India, emand for ginger--fresh or dried--from domes c Suppor ti c Supply Condi ti D ves and Donor Involvement: ves and ti ti The quality of exported ginger is considered average, but the exporters see good prospects. exporters see good prospects. ginger is considered average, but the The quality of exported on expansion and export promo li le improvement in recent years. Very ti tt a ti roduc P evelopment and

evelopment D D on has not been successful. ti variety, which was released by the vity: c Demand: c on of other products like candy, spices, ayurvedic medicines and other ready-to-eat food prepared in the yield in di tors. More importantly, there is a large variance ca ti ng ti ti ti fi ti ) and industrial use ( 2007a). breless or with negligible breless C fi ciency of Domes griculture rogramme. roduc ffi bose breless variety of seed) and improving farm prac A fi of Food Technology and Quality P Marke countries because of Nepal’s high countries because easily doubled within two crop cycles with market assurance to the farmers under the prevailing produc easily doubled within two crop cycles with market assurance to the farmers compe disadvantage in produc the sector. procedures. development programmes of the government by agencies such as the T technology. Total produc Aduwa 1 ginger is considered lower than those of ginger is considered to other countries) to less than 10 MT/ha in Nawalparasi district 20 MT/ha in Tanahu (which is comparable (IT industry for making ginger powder, preparing mixed spices and for medicinal purposes. The Nase variety has and for medicinal purposes. The Nase ginger powder, preparing mixed spices industry for making Therefore, there is good poten an established market. ( organized. diversi P from ginger is very small. However, produc Prospect for Domes Business Environment: Government Ini Domes environment, such as insu Level of Processing Technology: Cost and Quality of Infrastructure: E However, the farm labour and the labour involved at di However, the farm labour and the labour Labour Cost and Overall Produc used has shown li Produc Availability and Quality of Labour Force: Quality of Product: two varie Nepal is producing is experience in their professions.

c ti are on N T I S ti

2010 33 cultural and cultural A. cerana, A. ti ce in Nepal. ce in ti A. mellifera T which is an exo and erent parts of the erent ff ed hor ed fi EPOR R Main competitors EGY 2010 D T N RA A. cerana T A. mellifera, S N ora, diversi ora, fl O TI Tariff BACKGROU ng in the open. However, commercial advantage ti EGRA (US$ 1,000 in 2008) ) is a long-established prac NT Nepal top10 current exports from Nepal Tariff for ve popular species of honeybee: fi has only been of recent origin. Honey produc A. dorsata top10 NEPAL TRADE I ons and biodiversity are very conducive for good quality OPENESS agencies and the donor community on from government ti ti on ( Table 2.7 Growth rate (2004-2008) ti A. cerana en tt and c condi c ti top10 Attractive Markets for Ginger Attractive Markets for share GROWTH Attractive markets for Ginger (HS 0910.10) Attractive markets for Ginger World market Attractive markets for Ginger (HS 0910.10) which are are indigenous to Nepal, and Top 10 - Weighted Market Attractiveness Index Top 10 - Weighted Market

Top 10 by size, growth, openess and current exports A. mellifera orea, (2007a). fl C (2008) A. Exports Nepal on. Nepal enjoys the occurrence of racted considerable a ti tt and 12 Japan3 USA4 Pakistan5 Viet Nam UK6 Bangladesh Netherlands Yemen7 India Malaysia Germany Japan8 India9 India Russia Kazakhstan Pakistan Bangladesh India Germany USA Switzerland Belgium Malaysia Belarus Netherlands USA New Zealand 8,123 7 10 Saudi Arabia Russia on from IT ti Rank top10 SIZE 9 12 India3 Pakistan4 Bangladesh5 USA6 Netherlands7 UK 8,1238 Malaysia9 0 0 Germany Yemen 4.1% 0 7.8% 3.9% 0 27.4% 5.1% 0 14.4% 42.9% 0 11.4% 0 0% 0 5.3% 4.1% 9% 9% 5.5% 5.3% 3.5% 30% China, Nigeria, Ethiopia 1.0% 10.5% 0% 5% 0% 0% China, Thailand, Myanmar 15.0% China, Indonesia, India 4.8% 65.2% 0% 0% China, Thailand, Brazil 0% 0% 0% China, Thailand, Brazil 5% 0% China, Indonesia, Thailand 0% 0% China, Thailand, Netherlands China, India, Netherlands 0% China, Ethiopia, India on of honey by raising 10 Viet Nam 0 0.9% 175.4% 20% -5% China, Nigeria, India ti Rank Country onally, bees are generally kept in log hives and wall hives and are found in di ti Some data and informa country. Honey can be and is produced all over Nepal. Its abundant forest 9 specialty honey produc dorsata, A. laboriosa 3) Honey Background The honey sector has a Tradi in recent years. Beekeeping and honey produc crop producing farming system, geo-clima species. These species are highly concentrated in the Terai and Inner Terai areas. two handy hive bees that are kept in hives. The other three are wild nes produc

A on ed ti ves tt N T I S ti on for na ti ti irec c: some 35 ti D nly India’s

2010 ll be small es needed es and Japan. iastase unit ti O ti

D ti EU EU S measures in onally Nepal’s P ti T vity, olio of des ti tf cient condi ffi EPOR member countries. R EGY 2010 D advantage for its honey EU ff in both na) T es apply against exporters N ti ti RA countries (and also Norway) T S rgen EU to on from India and, according ti ered from the S N A ff O cant tari cult for Nepal to overcome export suppliers, and Nepal has duty-free TI . However, it has not yet submi fi ffi es and towns, tradi will remain small on, honey exports ti ti onal residue plans, guaranteeing the BACKGROU world tutes less than 0.05 per cent of ti ti EU EU -dumping du -dumping EGRA ti hina and n ven Nepal’s diverse por NT C ng honey to the c consump c A E ti ti on were exported, exports would s ti hina, while Nepal would enjoy duty-free access. C ed by the cular fi ti

anada. ti C rabia, but these imports remain very small. rabia, but these imports as authorized country for import, under A on of honey cons ti NEPAL TRADE I meet on. However, Nepalese standards for honey do not ti EU Table 2.9 roline. This makes it di na. But such preferences are not a su ti P cant increase in produc odex parameters such as electrical conduc fi (in par tors C ti Nepal would enjoy a signi S$70,000 per year). rgen government has responded by ons in a number of markets. The U ti ) and A S barriers. Nepal has already su c supply of honey in India. Honey is now imported from countries ti P ons orea. ti hina, and Saudi and 25.5 per cent to Since Nepal’s honey has free access to the Indian market and as trading ons for Nepal’s honey export to overseas markets are erra ons for Nepal’s honey export K ff ti C , ons are recorded every year. ti A hina and onal residue plans. India, on the other hand, has been a steady market. na s and NTBs): S ti ti C ontent in its export to Norway. Nepal, to be eligible to export honey to any ontent in its export to Norway. Nepal, to be eligible to export honey to any ff ondi na U C ti and imports mainly from C Nepal’s annual produc ff on, without a signi Total World Export Value of Honey 2005-2009 (US$1,000) Total World Export Value of Honey 2005-2009 ti Siegenthaler unit esidue The des 2005 2006 2007 2008 2009 2009 ons (Tari ons R ti 752,599 818,485 918,015 1,226,758 n/a n/a ven if all of Nepal’s current honey produc ecember 1992. For that purpose, it has to submit na is 17.3 per cent, which also applies to most non- is 17.3 per cent, which also applies to most Source: TradeMap (import data). E ff D Nepal faces export restric cide has a low tari ti Nepal imports small amounts of honey for domes Nepal imports small A ons. In addi tors in World Market: on comes from the domes ti ti ti S es ), Invertsae (

on applies to export to ti P U ti of 17 EEC ons drop and new des including a number of onal standards, share in world exports is negligible. on, and the ti ti ’s MFN tari ti onal residue plans, and, therefore, is banned from expor onal residue plans, and, therefore, is banned from ti EU na S$2 million at current wholesale prices). S$2 million at current wholesale prices). ti member country, will have to be listed in the U ccess to Nepal is free and only subject to small nominal fees and a large share of the trade probably occurs ccess to Nepal is free and only subject to small nominal fees and a large share Schade Scale countries has dwindled. Nepalese honey has been banned from entering the countries has dwindled. Nepalese honey due to the non-submission of na in these markets and to overcome the S EU 92/118/ Japan applies a 30 per cent MFN tari The access. The commercial quan any exports and the main challenge for Nepal will remain to be able to export the form of des monitoring of the groups of residues and substances iden from some countries, including interna ( exports compared to some of the main compe produc industry sources, also from the industry sources, also Major Compe prescribing mandatory standards for honey produc prescribing mandatory standards for honey market restric in absolute terms. (< takes place in an informal manner, mainly through bordering Indian ci Market Access Condi Index 2: World Market trade data shows exports to Nepal (around trade data shows exports main compe Export Prospect: Trade Balance: Dynamism of Exports: Nepal’s World Market Share: Nepal’s World Market its na similar situa A informally anyway. however, isduetooverhea parameters ofNepalesehoneyarewithintheacceptable level ofquality/standard.ThehighcontentHMF, for HydroxyMethylFurfural(HMF)content,whichhasbeen foundtobeslightlyonthehigherside,allother the prominentareasfor G district, 2 percentfrom almost 60percentofthetotalhoneyproducedcomesfrom C Quality ofProduct: Produc Producers: Index 3: World MarketProspect: par like Availability andQualityofLabour Force: Produc beekeeping andprocessingof honeybygovernmentanddonorprojects. R been increasingoverthelastyears.ThemajorhoneyproducingdistrictsofNepalare increased compe major producingdistrictsareorganizingthemselvesinassocia ‘buyers’ market’withli in func Mexico. and 40-60kg.perhiverespec Nepal iscurrentlynotusing,willpar with theproduc hina isbyfarthelargesthoneyproducingna upandehi, hachowk areaalone. K ti athmandu valley.Fewtradersareinvolvedinexport.Thedomes cularly thecaseasproduc C ti

ons oftheprocessors-wholesalers-exportersareintegratedintoafamilybusiness,mostthemlocated N T I S hina and 36 ti ti on Capacity: vity: L O umle ofSunsaridistrict,andSumsher ther notableproducersareBrazil,

D 2010 Honey isproducedbyalargenumberofbeekeepers/farmerssca K apilbastu, omes Theaverageannualproduc A NEPAL TRADE I BACKGROU ti vity of majorhoney-producingcountries. ustralia, whicharebecomingaseriousthreattoexportofNepalihoneyIndia.Thisis A. cerana ti

ti on from

ti Nepalese honeyhasaunique c Supply Nepalproducedabout1,000MTofhoneyintheyear2007/08.Thetotalproduc D tt le bargainingpowerwiththeproducers.Inresponse,beekeepers/producersin A. laboriosa ang, Sarlahi,Sunsari,Mahotari,Makwanpur,Banke,Bardia,and 070 A100NA NA NA 1,000 650 650 NA NA NA 2007/08 2006/07 2005/06 600 2004/05 130,000 4.62 577 2003/04 130,000 4.44 530 4.16 2002./03 127,501 529 2001/02 126,884 4.17 Thoughtherehasbeenanupwardtrendinworldimportsofhoney,is N . ti D Year ng andlongstoringdura C D ti R NT vely. Theproduc hina, whichisnowevenenteringtheIndianmarket. i ff EPOR erent testsundertakeninNepaland EGRA C ti on technologyandpackagingofhoneyinthesecountriesaresuperior. ondi T ti Bee Hives(No.) ally erodeinthefuture. or TI Distribution of Honey ProductioninNepal O Bhir Mauri N ti ti

S L ons vity of abour isabundantlyavailable. Manyfarmershavebeentrainedin T RA C anada, ti Table 2.10 T on intheworld,followedby ti EGY 2010 vity of Bhir A. cerana fl produc rdcin(T YieldKg./Hive Production (MT) avour andisproducedalloverNepal.Ites of ti A on. ustralia, France,Spain,andHungary. A.melifera L ti amjung district.Therearemorethan150bhirsin on are and A. mellifera, ti on orcoopera A. melifera G seems tobeonthelowerside ascompared hachowk, D enmark havecon ti c marketcanbecharacterizedasa 38 percentfrom is es tt ered alloverNepal.Marke ti G ves formarke handruk, and ti mated tobe about8-20kg. U S A P referen , A C K rgen hitwan, Nawalparasi, anchanpur. Similarly, fi A. dorsata rmed that,except ti ti ti L na, Turkey,and al tari ng theirhoney. andruk of ti mated that ff s, which and only ti on has K aski ti ng ), s, c ti pi- ng ti A GO onal

N T I S ARC , ti ve in ti ve, but OD ti 2010 37 mates the IM S. Besides, ti s and IN al at 10,000 C U ti ouncil (N F/ ) has installed a GO C C A T TZ, I abur Nepal, while TZ (2008), overall on es G ti D G I, es. The government ti ons are: Beekeeping EPOR ti on costs are high and ti R CC vi ll rather primi on (NB on ti ti ssocia ti esearch belt. Honey is squeezed belt. Honey is squeezed belt, the beekeepers use EGY 2010 D /Nepal, S onor-funded programmes R A T N /FN D racted towards beekeeping tt RA ng beekeeping programmes ti T ssocia mates the poten CARE AEC S ccording to ti A N cient road infrastructures in the A ffi O A. cerana TI TZ es TZ 2008). ng donor ac BACKGROU A. mellifera gricultural ti onal, ti G G A s, SNV, oncern has imported a honey processing oncern has imported a honey processing EGRA on as a food item. It is used in tradi C GO ti NT on. ti are also suppor as 50 per cent of the total marke ng as much s, Nepal ocal N ti CA L ons provide hives with colony and equipment at ti tu ti on of Nepal Beekeepers andaki Bee ti ng honey from the farm to the processing unit or the farm to the processing unit or ng honey from ti DADO G ves, ti checking, and controlling of onally, quality monitoring, ti ), I, and JI cularly the localized beehive manufacturer or suppliers. cularly the localized beehive manufacturer or suppliers. NEPAL TRADE I ti pstream enterprises supplying inputs like beehives are pstream enterprises supplying inputs A s more and more farmers are a hina and India. o U hitwan, Nepal Beekeepers’ ddi A CEC C

D C A

/ ered in urban centres throughout Nepal. oopera tt C Transpor ng exports, but mainly in helping small farmers to produce and AC , Nepal), Winrock Interna ti onal standard and coordina The Federa ons in both private and public sectors, including N G athmandu, ti ti onal, ti K yurvedic medicines. There is one large buyer, viz. yurvedic medicines. There is one large ons/ ti lan adopted by the government has given high priority to honey as a A /HM ons: P ti rocessing technology used in the country is s rocessing technology nder Mo DP P Though some infrastructures like roads and electricity are developed in Though some infrastructures like roads on Cost:

U ve N ti ti ssocia ng Industries: U ther smaller enterprises have also developed simple processing units and ther smaller enterprises have also developed ti A ( for each item, cons ng cost O ti es. Most of these organiza ti erspec vi , Heifer Interna ti EDEP P odavari ( DA G c Suppor c Supply Condi NI ti ti The major use of honey in Nepal is its consump The major use of honey in Nepal is its ves and Donor Involvement: on, ti DA ti on of 20,000 MT of honey per year, and a study by ces, M ffi erent ac ti a ff ti O griculture on and export by the government authority is lacking in Nepal. ti A mated to be above 300 MT, and is increasing over the years. ti onal buyers are very small and sca ti uropean standard. ons like ons E ti c Demand: c ciency is high, but improvements in beehives are needed. The main downstream industry buying ciency is high, but improvements in beehives are needed. The main downstream honey are high compared to on costs of ffi ti ti al produc ti ng smaller lots to meet their sales. ti and small in size, par ered and large in number tt ciency of Domes evelopment Sec istrict Forest yurvedic and Homeopathic medicines and treatments. The total annual demand for honey in the domes yurvedic and Homeopathic medicines ffi sell for the local market, which seems to make sense, given the probably high costs to establish or revive sell for the local market, which seems to make sense, given the probably exports to third countries and the small value of overall produc volumes currently too low to compete successfully in the world market ( are currently not targeted at directly promo MT, but we are not able to verify whether these numbers make sense from a commercial point of view. MT, but we are not able to verify whether these numbers make sense from a produc cost. The high transport cost is related to the small size of consignments. cost is related to the small size cost. The high transport has been providing a 25 per cent cost subsidy on beehives and 50 per cent on other tools, equipment and has been providing a 25 per cent cost subsidy on beehives and 50 per cent services. The high value crop to be promoted in Nepal. However, donors admit that honey produc high value crop to be promoted in Nepal. However, donors admit that honey A market is es subsidized rate and provide training to farmers. The government’s role in the sector has been in the form of subsidized rate and provide training to farmers. The government’s role in the subsidizing hives and tools, developing a na poten honey as input is the manufacturers of honey as input is the manufacturers of Prospect for Domes Their e trea sca Government Ini Domes the beekeeping areas, they are not adequate. The sector is hindered by insu the beekeeping areas, they are not adequate. for ‘grazing’ to the hill forest. This has limited exporters’ capability to interior hill areas to transfer beehives product. export even if honey remains a viable honey produc E purposes. It makes an important ingredient and an addi ways in medicine as well as for religious D Cost and Quality of Infrastructure: wholesaler is the major marke wholesaler is the major Technology: Level of Processing Labour Cost and Overall Produc Labour Cost and Overall are involved in providing training as well as extension services. The major organiza are involved in providing training as well as extension services. The major by organizing di organiza Net, Nepal, Nepal Beekeepers’ changes are taking place. There is almost no processing of honey in the place. There is almost no processing changes are taking strained with a cloth. In the out of the cut comb by pressing and then plant of other tradi and its development, a number of organiza D honey extractors and honey straining devices. In honey extractors and honey straining devices. In medium-sized honey processing plant. preferences inthesemarkets. the tari Nepal withtherateofmaincompe manpower. However,skilledlabourandimprovedtoolsareinsu keeping, honeyprocessingandhive-makingprojects,whichhavegeneratedrequiredskilledtechnical 13 12 Several Market Environmental Impact: Energy andWaterConstraints: Impact onDevelopmentofDisadvantagedRegions: Contribu Gender Impact: Current EmploymentandJob-Crea Index 4:Socio-economicImpact The opportuni small impactduetotheexpandinguseofwoodinmanufacturing beehives(verylowquality rapeseed, orange,etc.Nonega pollina but mostofthehoneyextractorsares processing. Womenarealsonotmuchinvolvedinhoney or of 1,000MTshouldrequirearound50,000hives,andtherequiredlabourforonehivebasedonavailable farm economicsisconstrainedbylandresourcesandtheycangetsomecashincomefromhoneyproduc are involvedinhoneyproduc exported onlytoIndia,witho and pes and ensureitsqualityforexportintospecialmarketslikeJapan.Second,opportunityliesinproducingorganic add peopleworkingalongthevaluechain.Weuse2,000forcalcula of 600MT.Itappearshigh,giventhattheannualvalue-addedislessthan of self-pollina of thisregion. A by IT about 130,000hivesdistributedbythegovernmentandvariousdevelopmentprogrammes. from forestandbydefaultitisorganic. be number offarmersinvolvedinproduc s itisbeingproducedinthewholeofTeraiandhillareas,honeyveryimportantfordevelopment E The tableshowsdi s tt UK ti er es mates wereusedforexports,seeabove.Thetableshows o C

ff N T I S dataisonly5-30hours,whichsuggeststhatFT 38 advantageislowerthaninamarket suchasthe (2007a)of13,000wascalculatedbyusinganes ti ng. Ithasbeenreportedthatbeekeepinghelpsincreasetheyieldof allagriculturalcropslikemustard ti EU cide-free honey.Sometradersclaimtheirhoneyasorganicandpes ti ti mates. Butitshouldbenotedthatforalmostallfarmershoneyisnotafull- on toSkillDevelopment: A

markets,the 2010 tt rac ti ti ng type. A es forproductdiversi ff NEPAL TRADE I BACKGROU erent tari

lso, beekeepingcomplementstheproduc E mployment crea ti veness Index ff advantagesacross The greatestenvironmentalimpactofbeekeepingisitscontribu U N D S ti A ti on. Thecommercialproduc R ffi 12 NT tors intheindividualmarket.IfFrance,forexample,imports honeymainlyfromSpain(duty-free),then cial trade , andJapanarethemosta Thesectorisnotenergy-orwater-intensive.Someenergyusedinprocessing, EPOR However,honeyissubjecttostringentsanitarystandards. ti EGRA veenvironmentalimpacthasbeenreportedbybeekeeping, exceptforthe ti ti on forwomenisverysmallduetothehazardousnatureofproduc on Prospect: T

fi TI A ca ti ti numberoftraininghasbeenimplementedbygovernmentandbee- O on ismuchhigher. ll hand-operated. EU N ti on areattwofronts.First,toproducespecialtyforage-basedhoney marketsbecausethetari fi S gures beingnegligible. UK T RA , wherehoneyismainlyimportedfrom countriessubjecttohigherMFNrates. T EGY 2010 ffi cial importdatafrom India.

A ccording topreviouses Mostofthebeekeepingfarmersaresmallwhose EE ti mate oftherequiredlabourdaysforproduc inNepaliswellbelow13.000. ti on from ti on ofothercrops,especiallythosewhicharenot tt rac ff advantageiscalculatedbycomparing therateapplicableto ti ffi ve markets.Nepalenjoyssigni 13 cient forprocessing of honey. A. mellifera ti on ofourindictorsintheabsence U ti mates, morethan53,000farmers S$2 million. ti cide-free becauseitiscollected is es ti mated tobecomingfrom ti me occupa A currentproduc O C ne wouldhaveto urrently, honeyis ti A mber used). previousFT ti o towards on fi ti cn tari cant on, sothe ti ti ti ti on. on on on U EE ff S

N T I S onal on is ti ti

2010 39 c market and ti T pproximately 15 per A EPOR R Main competitors ls has been in the range ti EGY 2010 D le priority has been given T N tt RA T S N O on of len ti for the sustainability of the lity and TI ti BACKGROU Tariff advantage ls represent 60 per cent of the na (US$ 1,000 in 2008) EGRA ti NT en onal crop of secondary importance, and less L ti top10 current exports from Nepal Nepal onal produc onal ti Tariff for onal average and India’s yield rate. But the small ti ons and consequently li ti top10 NEPAL TRADE I OPENESS Table 2.11 Growth rate (2004-2008) of Terai, where approximately on is concentrated in 10 districts ti l is considered a tradi ti Attractive Markets for Honey Attractive Markets for top10 these ten on is harvested annually. There are about 670,000 farms in en farm produc erns provide the bulk of supply, and commercial ti share tt GROWTH L Attractive markets for Honey (HS 0409.00) Attractive markets for Honey Attractive markets for Honey (HS 0409.00) Top 10 - Weighted Market Attractiveness Index Top 10 - Weighted Market World market l produc l

ti ern is either ‘relayed’ into paddy or ‘follow’ paddy harvest. The majority of Top 10 by size, growth, openess and current exports on while in the Terai region it is mainly grown for the domes tt ti l supply. l ti onal produc onal (2008) ti Exports Nepal 12 Germany3 USA4 Poland UK5 France6 Japan Australia Norway7 Italy Belgium8 Slovakia Belgium India9 France Saudi Arabia India Japan Bulgaria UK Switzerland USA Saudi Arabia Germany Turkey Belgium UK Poland Czech Republic 14 10 Netherlands Japan Switzerland l for consump Rank top10 SIZE ti on and 90 per cent of pulses exports. The na ti verage yield in this region is higher than the na ls A ti 12 UK3 France4 Japan5 USA6 Germany7 Belgium8 Poland9 Australia 0 0 Saudi Arabia 0 0 0 7.7% 8.6% 0 6.9% 20.1% 0 18.9% 0 15.4% 0 11.7% 3.5% 7.1% 11.8% 2.3% 1.2% 0% 0% 2.6% 1.5% 19.1% 9% 0% 11% 0% 32.3% 5% 13.1% New Zealand, Argentina, Germany 26.8% Spain, Hungary, Argentina 0% 26% China, Argentina, Canada 14% 1% 0% Argentina, Mexico, Uruguay 5% Canada, Viet Nam, Brazil 0% 14% China, Germany, Mexico 10% -1% China, Ukraine, Czech Republic 0% Mexico, Yemen, Germany New Zealand, Canada, Argentina on is paid by the farmers to improve cultural opera 10 Slovakia 0 0.8% 65.1% 0% 2% Hungary, Czech Republic, Ukraine ti crop. It plays a very important role in improving soil fer l is a legume Rank Country ti en tt en of 140,000 to 160,000 MT per year since 2000. It was 161,147 MT in the year 2007/08. of 140,000 to 160,000 MT per year since 2000. It was 161,147 MT in the year cent of it (at 70 per cent milling recovery rate) is exported. pulses produc districts. 80 per cent of the total na for export. Nepal’s exportable len producers with low input cropping pa to research, extension, policy, and infrastructure development. only a marginal source of len a farming system. The cropping pa farmers grow len 4) Len Background L Nepal’s WorldMarketShare: Poten Current ExportDes Types ofExportedProducts: imports reportedfromTurkeymightnotbeaccurate.Thefactthatdomes was usedtocalculateindicatorsasthemirrordataappearsbelessreliableinthiscase.Inpar Nepalese exportdatadi Index 1: L past twodecades,ithasrankedasnumbereightbothaproducer andasanexporteroflen that anumberofMiddle major des bhusi in 2009. e data showssubstan since 2003/04isalsoagoodindicatorthatexportsmayhavebeenratherstableaswell,butevenNepalese tas are saidtobepreferredinIndia.IncomparisonwithIndian len The Trade Balance:Nepalalsoimports len in impor U are verysimilar,butiftradewith thirdcountriesisincluded,Nepalanetexporter. according toimportdatafromTurkey.However,thiscould notbecon en ff S$100,000 and ect ontheaccuracyoftradedatabecausetheygiveanaddi ti ti er. In 2008,Nepal’sworldmarketsharewas2.2percentandit wasthesixthlargestexporter. U ls aresubjecttooccasionalexportbans. The

) areexportedtoIndiaasanimalfeed. N T I S S 40 ti al Export Des A , ti ng Nepal’slen UAE ti na

E 2010 xport , andSingaporeareotherexportdes ti on, butBangladeshandSri NEPAL TRADE I BACKGROU U * S$10 millioninrecentyears. xot vres000022,509 0 27,665 5,156 2008 2,267 2,267 0 2007 5,225 5,225 2006 8,144 0 4,312 22,258 8,144 2005 10,426 4,204 7,829 17,946 7,829 0 6,222 30,905 2004 9,895 18,891 21,010 Total exports 10,263 Exports toIndia 8,628 22,884 Exports overseas 8,909 Mirror data 13,975 Total exports* Exports toIndia Exports overseas Directdata(Nepal)

ti ti E P na al ti xchange ratesused:1 na erformance ff ti fl ti ers substan uctua ons: l. Turkeyalsoseemstobeana ti E ons: ast countries(Iraq,Saudi N D Wholeandsplitpinklen R NT Nepalisrecognizedasasigni Nepal iscurrentlyexpor ti EPOR A ons. ons. EGRA n empiricalreviewandanalysisofnon-tradi Export ValueofLentils,2004-2008(US$1,000) 20/420/520/620/72007/08 2006/07 2005/06 2004/05 2003/04 T ti TI ally fromforeign(mirror)data. U P S$ =N O olicy interven ti N ls fromIndia.Suchimportsarevola S L anka havecomeupasotherexportmarketo R T s 65un RA T EGY 2010 A ti ti Table 2.12 l 2005/06,then1 ccording toNepalesedata,exports andimportswithIndia G na A oN bannedtheexportoflen ti ti rabia, l (mostly)in50kgjutebagswithlining.Seedcoat( ons, suchasexportbans,couldalsohaveasigni ti ons. Turkeyhasappearedasa majorimporterin2008, ti ng len ng tt rac K fi cant playerintheworld’slen uwait, andQatar)couldpoten ti ve market. ti ti onal incen ls toonlyafewcountries.Indiaremainsthe U S$ =N ti ls,theyaresmallerinsizebutconsidered U R nlike forotherproducts,Nepalesedata s 73. fi rmed byNepalesesources. ti ti ve touseinformalchannels. c produc ti onal poten ti le andhavebeenbetween ti ls formorethansixmonths ti on wasrela ff ering muchpoten ti al markets indicates ti l market. ti ti ally beinterested l. Nepaleselen ti vely stable ti cular, the O ver the fi chuni cant ti al. ti ls

A ple N T I S ti xports tor for ons. ons. E ti ti 41

2010 0-5 es are ti u D ons of 40 per uctua ti fl ustralia. A T l processing mills. ti ons. on plays a marginal ti ti EPOR ers instability. instability. ers

R ff 15 EGY 2010 D early varia on and a compe on. Thus, small producers T ti ti N Y RA na T ti be arranged cate, which could fi S

ti N on in 10 districts of central and on in 10 districts of central and harvest le due to ti ti O TI BACKGROU cantly in recent years, but are very cantly in recent fi cant increase in imports from Turkey, cant increase in onal produc onal fi ti EGRA l produc NT ield and harvested area have remained stable as well. ti ommercial farm produc es. Y ti C or abundance situa l scarcity (50 per ons being Turkey (19.4 per cent) and Syria ti ti in recent years. vely stable ered all over the country. They do custom milling as ti tt NEPAL TRADE I xports will remain vola E tors. Table 2.13 ti c market. The major exporters are 15 len len on and ti ti ve. ve. There is free access to the Indian market. The exporters or the There is free access to the Indian market. ti . ons AC ti rela on has been and a phytosanitary cer cate of origin India is both an important export des ti (pulses) mills sca ons fi

ti ti oN, Mo ondi G and su export performance is somewhat irregular l ti ‘dal’ C s and NTBs): ondi ff l milling and export. ls in the domes ti ti C al markets, with main excep c produc c ti ti Total World Export Value of Lentils, 2005-2009 (US$1,000) Total World Export Value of Lentils, 2005-2009 erns provide the bulk of the supply. tt griculture, food situa c general A ti World imports and prices have grown signi . 2005 2006 2007 2008 2009 2009 Nepal’s len ons (Tari ons ti 611,810 653,940 897,361 1,255,867 n/a n/a c Supply c cantly from one year to the next in both volume and value. to the next in both volume and value. cantly from one year on on on ti fi ti xport prospect is very posi xport prospect is very UAE E

es besides len ti tors in World Market: ti vi on was between 148,000 and 166,000 MT between 2001 and 2008. omes ti ti ng signi D More than 670,000 farm families are involved in len ti cal informa cal ti s ti anada and Turkey are other main compe ect on investment in the sector and other measures should be considered to reduce the impact of ect on investment in the sector and other C ff le as they depend on harvests in some of the key producing markets such as India and uctua ti anka, and the fl L nnual produc A ll of them are sizeable companies (each with 2-4 MT/hour processing capacity), and generally have mul ll of them are sizeable companies (each with 2-4 MT/hour processing capacity), cent). per cent in most of the poten A role. There are a large number of small are suddenly, or export revenues can double or triple decrease or increase are common, and cent or 50 per cent domes vice versa. However, Sri economic ac Nepal. at nominal cost. But both Nepalese and Indian governments can restrict the export or import unilaterally, at nominal cost. But both Nepalese and depending on the domes well as processing and sell len 15 vola western regions alone, supplying more than 80 per cent of the total na with low input cropping pa Index 3: Producers: Indian importers have to submit a cer Major Compe World Market Prospect: Market Access Condi World imports have doubled over recent years, mainly due to a signi World imports have doubled over recent Index 2: World Market Export Prospect: Dynamism of Exports: major threat is the government policy on exports and the occasional export bans. These could have a long- occasional export bans. These could government policy on exports and the major threat is the term e export opportuni price surges on the poor, without jeopardizing Source: Sta costs arecomparabletothecompe E Cost andQualityofInfrastructure: Level ofProcessingTechnology: Labour CostandOverallProduc Produc Quality ofProduct: Produc since 2000.Itwas161,141MTfrom189,498haofcul is unreliableandmillshaveto installtheirowngenerators. C O millers. L pests arethemajorcausesofreduc 30 percentinferiortoothermajorlen Nepali len A rela can procurerawmaterialsfrom concentratedlen A weak infrastructure. market. NepalBureauofStandardsandMetrologyhas abour produc ffi hina. Thetechnologyiscomparabletotheonesusedbytheir foreigncompe smallproduc vailability andQualityof verall produc ciency ofDomes ti vely stable. N T I S 42 ti ti vity: on Capacity: Source: FAOSTAT.Theexportdatathatisshownheredoesnotseemtore ti 100,000 120,000 140,000 160,000 180,000

l issmall,butithasareputa 2010 20,000 40,000 60,000 80,000

A ti ti ti verage na on costadvantagecompared toothersuppliersintheuseofwater,packaging,andequipment. vity isalsolow.Skilledlabour ismostlyandeasilyprocuredfromborderingIndiantownsby - on costisexpectedtoremainhigh inthefuture. NEPAL TRADE I BACKGROU L arge increasestothecurrentleveloccurredduring1990s. 1990 ti The productqualityisconsideredhighwithfutureprospect.grainsizeofthe c Suppor Na O ther suppor 1991 ti ti Figure 2.1ProductionandOf onal produc onal yieldsarecloseto0.9MT/ha,whichisaboveIndia’syields,but20percent N L abour Force: 1992 D R NT ti EPOR ng Industries: 1993 ti EGRA on Costs:

Themillers/exportersareusingmoderntechnologyavailable inIndiaand ti ti Thecostsofelectricityandtransporta ng industries arenegligible. ti tors. Thecondi T 1994 on inyieldandsome E TI pr uniy (tonnes) Quantity xport ti O ti on oflen l expor 1995 N L S ow toaveragelabouravailabilityatbothfarmandprocessinglevel. ti

on ofbeing‘small,verypinky,andtas T L 1996 RA abour costisrela

T E ti EGY 2010 ng countries suchasSyria, ffi 1997 ciency of suppor ti l hasbeenintherangeof140,000to165,000MTperyear ti l produc ti fi on ofroadsisbadand isdeteriora 1998 cial Exports of Lentils1990-2008 fi ti xed thestandard ofsplitlen vated areain2007/08.Thus,produc 1999 ti mes causecompletecropfailure. fl P ti ect actual on areasbutatcompara roduction (tonnes) 2000 ti vely highcomparedtootherproduc 2001 ti ng industriesisaverage to high.Themills fl ows. Exportdatafor2008isnotavailable. 2002 2003 ti on arehigh. C anada, andTurkey. 2004 ti tors. 2005 ti er’ len er’ ti l. ti 2006 vely highcostsdueto ti ng. O ther infrastructural 2007 ti l ininterna E lectricity supply 2008 ti on hasbeen D isease and ti on costs. ti onal l ti ls oN ti ve ti G onal

N T I S xport istrict ti E D lso, the ng len ng A 43 ti mated at ), Na F), ti

2010 roject with P DD ADR M vated. This is on ti ti T ons for investors, AP ti c market for len ca ti fi EPOR R on, increasing business increasing on, orts to extend area and ti EGY 2010 D ff vate this crop. iversi olkata for expor ti T N K D to the mill and ng channels ti for exports is es sharply increased in ls have RA ti irectorate ( T D EE esearch Fund (N rop S R C N es in es ti c market had decreased and the c market had decreased and the O ti epartment of Food Technology and TI ven more labour days are involved in D BACKGROU E 16 and enhance the quality of exported on ti on in the country. EGRA erent marke erent ti ff on increases can be expected in the future evelopment NT ti However, c strategy or policy for the sector. fi D irectorate, ng ti evelopment and D prices of len c retail ti D very large and expanding domes very large and expanding ne A ti l farming alone. c industries. There are a few ready-to-eat-food and There are a few ready-to-eat-food c industries. ti ti s/kg in 2007/08. es are implemented under the general development es are implemented ti R on of produc NEPAL TRADE I ti on being exported, the FT vi ti ti There is no speci griculture nua A ti on and Marke ti on lant Quaran on ac rospect: The number of people currently employed and future C ti

P ng the general food situa ti P onal ti me jobs in len ), romo ti P n 2008. n ec ti ff ons: on ti ti ), Na it through di on and transferring DADO ti rea ARC C on Bulle on ti B) loan. and Metrology and onal Bureau for Standards l on the ground that its supply in the domes l on the ground that its supply ti ces ( ces of seed could help expand the produc es ti ffi ccordingly, export was banned for more than six months during 2009. The ccordingly, export was banned for more ti gribusiness s/kg in 1998/99 to 64.4 N s/kg in 1998/99 to 64.4 AD on and employing in average about 70 labour days per ha cul A O A R government’s e c demand and price and export demand, ti ti ), The overall business environment is considered as average. But the administra environment is considered as average. The overall business ), Na ouncil (N C ng Informa ng ti C c Supply Condi ered produc ered EPC ti Very small demand from domes Very small demand tt ves and Donor Involvement: ti FTQ mate of 15 per cent of produc ti D a l produc ti ti from occasional export bans. The domes ng evelopment esearch ti entre (T R D C mployment and Job- ontrol ( E gricultural Marke C c Demand: on expansion and export promo on expansion and A evelopment Bank ( on ti ti ti D of improved varie on on in the country. on in ti ti the food and thus it carries the risk of being a restricted item for export, depending upon l is a food item ls. ti ti Source: griculture griculture sian urrent romo en 4,500. price had increased, thus, adversely a restricted the export of len are considered bad. L situa P of traders and middlemen the total value chain, which is characterized by the presence of a very large number to assemble the sca for export. Similarly, approximately 50,000 truckloads--truckers and labour--are employed to transfer raw for export. Similarly, approximately 50,000 truckloads--truckers and labour--are materials from the farm to the mill to the export points. With a rough es A approximately equivalent to 30,200 full- programmes of the government. Some such government agencies/programmes are: the Trade and programmes of the government. Some len a good capital market and a lenient tax system are in place. The port facili a good capital market and a lenient tax A due to increasing domes recent years, from 38.3 N recent years, from 38.3 MT per ha), and farmers’ willingness to cul increase yield (from 0.72 MT to 0.90 adop insecurity and crimes in the country, and high informal costs, especially for import/export procedures. The insecurity and crimes in the country, and is also considered bad, but there are no legal restric overall macro-economic environment 16 C Index 4: Socio-economic Impact to 700,000 farms in the Terai employment prospects in this sector are very high. There are about 600,000 involved in len Prospect for Domes snacks industries, but their requirements are negligible. snacks industries, but Government Ini produc Business Environment: Domes itself is resul and judicial services are considered weak to very weak due to a high level of corrup are considered weak to very weak due and judicial services Quality A rela pollu enriching thesoil.Thus,itisconsideredveryenvironment-friendly.Theprocessingdoesnotemitsigni cent, Nepal0percent). are the Turkey beingthemajordes U Market Environmental Impact: Energy andWaterConstraints: Impact onDevelopmentofDisadvantagedRegions: Contribu Gender Impact: in thetransporta farmers tosupplementtheirlowproteindietsandearnextraincomebysellingsurplus. crea transporta is reportedtobeveryhigh.Mostofthefarmworkersandmanualinmarke training totheirworkers. appropriate inputsarecontribu harves and workstress.Theirinvolvementismainlyconcentratedonlesshazardousac very highgrowthratesinrecentyears,butappliesatari mostly rain-fedandveryli nlike mostotheragriculturalproducts,Nepaleselen ti akCountry Rank ti vely smallmarkets,IndiaistheonlymarketwhereNepalhasasigni ng employmentopportuni ti N T I S on. 0Pksa .%3.%0 %Canada,USA,Ethiopia 0% 0% 31.9% 2.7% 0 Pakistan 10 44 K13 .%3.%0 %Canada,Turkey,Australia 0% USA,Canada,Portugal 0% UAE,Canada,Turkey 0% 0% Canada,USA,Turkey Canada,Syria,Australia 0% 0% 0% 5% Canada,China,USA 0% 34.0% 26.6% 5% 0% ? Canada,Australia,Turkey Australia,Canada,Turkey 5% 2.9% 0% 0% 3.8% 49.6% 11.6% Canada,Iraq,Australia 38.1% 0% 5% 1337 11% 2.9% 0 2.4% 5.2% 4.1% 19% 101.5% 40.7% 0 0 2597 213.1% 6.5% 8.6% 0 UK 19.4% Spain 3790 9 3192 SaudiArabia 8 Egypt 8,963 7 Iran 6 Algeria 5 SriLanka 4 UAE 3 Turkey 2 1 ti ng andcleaningoflen UAE ti on toSkillDevelopment: A ti 2010 onaresuppliedbydisadvantagedgroups.Someofthe15largemillslocatedinruralareas, tt , Sri rac NEPAL TRADE I BACKGROU

L This sectorcreatesanaverageimpactonwomen,intermsofbothemploymentcrea ti on ofrawmaterialsand anka, and ti veness Index Exports Nepal

L en tt (2008) N le waterisusedinitsprocessing. D ti A ti na l isaleguminouscropwhichcharacterizedby‘nitrogen R lgeria. Tari NT ti ls inthemill. EPOR ti This sectorisenergy–intensive,usingelectricityinprocessingandpetroleum EGRA ti on, followedbyIndia.Turkeyistheworld’smajorimporteroflen ti ng towards farmers’skilldevelopment.Similarly,themillsareproviding es forthepooranddisadvantagedpeople.

World market T Top 10-WeightedMarketAttractivenessIndex TI

Attractive marketsforLentils(HS0713.40) O share G N ff overnment’s e Attractive MarketsforLentils advantagesplaynoroleinthese‘“a S fi T nal products.Buttheu RA T EGY 2010 (2004-2008) Growth rate Table 2.14 Theimpactonthedisadvantagedgroupsofthissector ti ls arealreadyexportedtoavarietyofmarkets,with ff orts toimprovethelen Tariff for Nepal ff of19.4percent. ti liza advantage Tariff ti on ofwaterisverylow;thecrop fi cant tari tt rac L ti vi en ti ff ti ti ti l farmingsystemusing O advantage(MFN10per ve markets’. es inthevaluechain,i.e. l produc l Main competitors ther a tt ti rac ng channeland fi xn’ elements xing’ ti on alsohelps ti ve markets ve A part from ti ls, with ls, fi cant ti on ng N T I S ti cance fi 45 2010 ue to the D erent agro- erent evelopment ff D T evelopment Board D cantly di cantly EPOR fi olicy was introduced in R ee P ff EGY 2010 D o T N C on with some exported to l 1982 that its signi ti ti RA that the private on policy so ti T S za N cant export earner. cant export earner. ti fi O onal Tea onal ti TI (Jhapa, Ilam, on of eastern districts ti BACKGROU on is exported, mainly to India. Na ti c consump A ti (US$ 1,000 in 2008) EGRA NT top10 current exports from Nepal top10 current exports from Nepal Tea and ng ti top10 NEPAL TRADE I OPENESS Table 2.15 xport values to overseas countries are similar, but evelopment Board. the last decade (2.2) and, today, tea is one of the cantly over was built in Ilam in 1878. Nepal Tea rst factory E fi fi D on, tea is grown in two areas, under signi ti ee ff o top10 C round two-thirds of the produc GROWTH A Attractive markets for Lentils (HS 0713.40) Attractive markets for Lentils Export Value of Tea, 2004-2008 (US$1,000)* Top 10 by size, growth, openess and current exports Top 10 by size, growth, openess ed by the government with the designa fi

hankuta) a ‘Tea Zone’. From then onwards, the government has been assis hankuta) a ‘Tea Zone’. From then onwards, ti D tea is produced, mostly used for domes C T on in the rural and hill areas and become a signi on ti C ons and soil composi erformance ti imited data from Nepal is available. P 12 Turkey3 Sri Lanka4 UAE Turkey5 UAE Egypt6 Algeria7 Spain Norway Iran8 Saudi Arabia Russia Iran Sri Lanka9 Kyrgyzstan UK Morocco Turkey Colombia Belarus India Sri Lanka India Algeria Syria Kazakhstan Kuwait Egypt UK Japan UAE 3,790 Tajikistan Switzerland 3,192 8,963 Canada USA Australia 5,156 2,597 1,337 389 395 523 L ng up the Tea and 10 Pakistan UK USA Singapore 336

Mirror dataExports to India Exports overseasTotal exports 3,679 2004 1,217 4,896 5,891 2005 1,550 5,103 7,441 2006 2,279 12,739 7,382 1,087 2007 16,158 13,826 2008 635 16,805 ) was established by the government in 1966. It was not un ) was established by the government tti * export data to India seems unreliable. the government promulga cant sector with Rank top10 SIZE fi DC xport on and exports increased very signi on in Nepal began in 1863 and the ti E ti on (NT ally signi ally ti va ti ti c regions, in the Terai and the hills. In the hills, orthodox/green (leaf) tea is produced for export while ti ct in 1993 and se orpora anchthar, Terhathum, and India. Tea produc largest agricultural exports of Nepal. in the Terai region the clima A for the industry, envisaging that tea would be one of the major sector would become the engine of growth crops for poverty reduc varied weather condi 2000 to support the growth of the sector. The government adopted a priva 2000 to support the growth of the sector. C P The industry began to be more organized and recognized as tea growers and processors for its development. a poten Index 1: 5) Tea Background Tea cul as an export earner was iden

A T le, ti

N T I S AP

2010 47 and grants ff on prospect as ti T ng markets for direct EPOR ti R EGY 2010 D T cant fall during the global tors in Nepal’s current or N fi ti RA T S N O TI BACKGROU EGRA so there is no advantage for Nepal. This so there is no advantage for Nepal. This 18 NT ve. World market prices for tea are vola ti ussia applies a 20 per cent tari R akistan, for example, imports 63 per cent of its akistan, for example, imports 63 per cent . P UAE enya are the main compe K NEPAL TRADE I Table 2.16 verall, Nepal has favourable market access to most markets verall, Nepal has favourable market access per cent MFN on being the Indian market. India applies a 100 O ti man, and xport prospect is basically in line with produc xport prospect is basically O E hina and India. anka and , L C A S ve. ti U ons Sri , ti Figure 2.3 Tea Prices on World Markets EU ve trend in prices in the long-term, partly due to increasing demand from ti s and NTBs): ff ondi C Total World Export Value of Tea, 2004-2008 (US$1,000) Total World Export Value of Tea, 2004-2008 verall, world market prospect is posi O Source: World Bank, Global Economic Prospects 2009 (Commodity markets briefs) ons, followed by

ti 2005 2006 2007 2008 2009 2009 ons (Tari ons ti na 3,335,023 3,616,503 3,889,756 4,248,759 5,408,830 n/a ti ccording to industry sources, the prospect of further increases in both exports and sources, the prospect of further ccording to industry on is exported. ti A

tors in World Market: ti advantages, with the main excep ff enya alone. akistan, one of the largest importers in the world, grants a 10,000 MT duty-free quota for S akistan, one of the largest importers in K P on is widely seen as very posi ti al export des ti s refer to black tea only. ff on tea. Many major importers have zero MFN rates for tea, s (of which only Nepal and Bangladesh export tea). s (of which only Nepal and Bangladesh ff Tari economic crisis in 2008/09. By the end of 2009 prices have reached their highest level since the mid 1980s. level since the mid 1980s. economic crisis in 2008/09. By the end of 2009 prices have reached their highest The World Bank forecasts a posi India. tea from most of the produc 18 World Market Prospect: Major Compe Market Access Condi includes major importers such as does Japan. These could, therefore, be interes duty-free access to Nepal, and similarly exports. signi but have shown an upward trend in recent years, except for a temporary but World tea exports have grown annually by 12 per cent in recent years, with a slight nominal upward trend in World tea exports have grown annually average unit values. Index 2: World Market Index 2: World but few tari Export Prospect: produc tari poten LDC orthodox type. increased produc farmers, coopera 274 kg/hafororthodoxtype.Theproduc P expected ittoimprovefurtherinfuture,butpes seen atremendousgrowthintheNepaleseteaindustrywithplanta 19 Level ofProcessingTechnology: Labour CostandOverallProduc Availability andQualityofLabourForce: Quality ofProduct: Produc Producers: Index 3: farmers’ planta rated overalllabourcostsas‘high’. industry sourcescomplainedabout,intheirview,excessive wagedemandsfromunionsandhavetherefore partly duetoalackofformaltrainingins of orthodox teayieldinNepalisabout25percentlessthanIndiaand30Sri output oftea:2,900MTin1996/97to16,1002007/08. 1996/97 to16,594hain2007/08.Thisincreaseplanta sized gardens(57are standard. Thepaste total of12,200smallholderfarmersare ac tea factoriesaresuppliedbyover12,200producerfarmers. 2007, butdependontheamountplucked(IT are comparabletothecompe and importersinthecountry. sizes. Thereare28unitshavingbothteaestatesandprocessingabout20packers,exporters, roduc NT C CD T

C N T I S B indicatesatotalof7,791smallholder farmers.However,datacollectedfromassocia 48 theyieldislessthanthatof ti ti vity: In2007/08,theoverallaverageyieldof on Capacity: Therearereportedlyatotalof12,200smallholderplots,

D 2010 omes ti P NEPAL TRADE I BACKGROU ons, andfactories. roduc ti ti on ofgreenleaf. ves, andteaestates.Buttheprocessingcapacityhasnotdeveloped tocopewiththe

ti A c Supply Thesectorisconcentratedin C ll thestakeholdersofteavaluechainreportedthatqualityNepalwashighand ff T orts ofallstakeholdershavehelpedincreasetheproduc ti on isconcentratedinanumberoffragmentedareassuchasprivategardens,small C teaestates),and38largeplanta N D 070 65416 972 924 855 793 1.61 776 1.52 1.37 16,594 1.26 16,420 1.17 16,012 2007/08 15,900 2006/07 15,012 2005/06 2004/05 2003/04 erArea(ha) Year R NT ti tors. EPOR ti ve. EGRA ti on Cost: C Thetechnologiesusedinteaproduc Acreage andProductionofTea K ondi T C enya. TI L onsequently, marke abour costswerereportedtobearound O N ti ti tu S ti There isscarcityofskilledpersonnelandexper ons

vity perunitoflandareaissteadilyincreasingovertheyears. The T P ti RA C roduc Table 2.17 ons. , 2007d).However,thesecostsapparentlyhavesincerisen and T EGY 2010 ti cide residueshasbeenaprobleminrecentyears. ti on costs--leafproduc (Million kg). Production fi vedistrictsineasternNepal.Thelastdecadeorsohas C T C ti ti ng e ons. Thereare40teaprocessingunitsofdi ti teaplanta on areahasbeenmatchedbyanincreaseinthe O ff f this,85percentwas orts arealsodisjointed.Forinstance,Nepal’s (kg./ha) Yield 19 31coopera ti ti ons was972kg/ha,whileitonly ons/chambers/and IN ti on areaexpandingfrom3,502hain ti ti on andprocessing--ontheaverage on andprocessingareofaverage U S$1.50-2 forteapluckersin ti ti ve socie on ofgreenleafsmall C T C GO ti se intheteasector, and15percentwas /N ti L es, 134medium- GO anka. Inthecase ’s suggeststhata ff erent ne ng on on ng, ti ti ti ves ves O ti ti ti vely

N T I S ti on and on ti es. es. 49 2010 ti amechhap, ca es, private fi ti R

ti onal standards. onal standards. ti T vated area, but erent small-scale erent ti orts are made to ff ff on system for tea, E ti olakha, ces. ti is also implemen mates suggest that it EPOR D ti rganic cer R PA O EGY 2010 D T on and poverty reduc of tea leaf far exceeds on T ti erent districts from Jhapa N onal. ti ff O ti on has increased very fast RA ti T S N on; priority lending; low interest ti O roduc ve tea farming; capital grants for ve tea farming; capital ti Interna P TI va BACKGROU ti of 75 per cent of land registra on ti private sector; incen on with the ti al to expand the cul ti EGRA ROCK NT on impact of this sector is very high compared ti TZ and WIN vity support. vity G on has been extended to di ti ti NEPAL TRADE I va There are several government-backed authori There are several government-backed ti , 2007a). ll required inputs are easily and abundantly available. Many easily and abundantly available. Many ll required inputs are aski in western Nepal. on ac on C A K ti that ll young and yet to start yielding harvest, which suggests ti

of land ceiling; exemp on ti tea sector. The government grants a number of incen ng the ng factors. ng ti ti a rospect: The job crea ti P High costs of electricity and fuel are major problems, as are the and fuel are major problems, High costs of electricity ng in a very high demand for processed tea. ons: Tea cul ons are s hankuta, Terhathum, Sankhuwasabha, Bhojpur, ti ti ng factories, and farmers are selling their leaf to Indian factories across ng factories, and farmers are selling ti on ti eren D ti ff H onal market as ‘Quality from the Himalayas’. ti ver 30,000 people are directly involved in the industry, with a large percentage ver 30,000 people are directly involved in the industry, with a large percentage ondi rea ng Industries: ng O ti C C es will be required to help increase Nepal’s tea export. from di onal buyers to source tea direct from one source. Tea es, resul es, ti ti ti on of environmentally friendly and socially accountable prac ti assis onal donors on; free technical service to small and coopera on; free technical service ti ti anchthar, vi The overall business environment is considered as average. But export is made costly The overall business environment is considered ti test reports on the products from accredited laboratories or authori on and P ti c Suppor c c Supply c unit are bad, which are nega carrying tea leaf from farm to processing es used for ti ti ti ves and Donor Involvement: ca No industrial uses of tea were reported. However, there are a number of tea blenders who No industrial uses of tea were reported. ti fi

ti a ti omes D on with several donor agencies, a code that will bring the sector up to interna on facili on ti ti has been formed to provide a one-stop agency for tea sales. It is funded by SNV and its marke has been formed to provide a one-stop mployment and Job- is high for this sector. E interna ons, and c Demand: c on is set to increase even further. There is a large poten ti ti ti EE of research and training centres in collabora on; establishment of product. ng the quality ti onal processing facili ti ti COOP ec ciency of Domes urrent rospect for ffi ff in the Terai to Ilam, P brand Nepalese tea in the interna in coopera This includes the introduc Solukhumbu, Sindhupalchowk, Nuwakot, and strategy has been structured with the assistance of strategy has been structured with the HIM to ancillary industries, and some export promo to ancillary industries, and some export high quality teas are the further di addi producers could be graded, increasing the transparency for buyers who prefer to source from one place only producers could be graded, increasing producers. rather than from a variety of small-scale which would allow interna the border. irriga to other sectors. This sector seems to be a strong engine for farmers’ income genera issue that has been raised in the past about the Nepalese sector is the lack of an auc issue that has been raised in the past the processing capacity of the exis the processing capacity land for up to 50 years for tea cul fee and land revenue; leasing of public also likely to have a high impact as orthodox tea gives higher returns compared to other crops. This sector is as es on total employment compared to other sectors, especially female employment, rates for land consolida already accounts for around 100,000 people (IT The FT being rural women. a produc and assistance to the tea industry like exemp associa Index 4: Socio-economic Impact C due to lack of cer Government Ini Domes are diversifying their ac Business Environment: transporta E Cost and Quality of Infrastructure: Cost and Quality people are even complaining of indiscriminate and overuse of inputs. The produc of indiscriminate and overuse people are even complaining and more promising as most planta LDC in majormarketsotherthanIndia,but R and highuseofpes due tothehardyanddeeprootsofbushes,ablebindsoilstoperosion.However,indiscriminate A Market Environmental Impact: Energy andWaterConstraints: Stakeholders agreethatteaproduc Impact on Contribu Gender Impact: product tocontainmorethanthemaximumlevelofresiduespermi where theinsectandpestpresenceisveryhighduetodampnessinatmosphere,havecaused tea estates.TheestablishmentofatechnicalschoolinNepaliss mainly inlow-skillwork,suchasleafpicking.Theiroverallshareises periods. and theseasonalmonsoonrainsproviderequiredamountssu ussia, lmost allofNepal’steaisexportedtoIndia. s. akCountry Rank N T I S 0Asrla013 38 %0 India,Indonesia,SriLanka 0% 0% 33.8% 1.3% 0 Australia 10 50 aahtn028 91 %0 Kenya,India,SriLanka 0% India,SriLanka,Indonesia SriLanka,India,Kenya 0% Kenya,India,Bangladesh Kenya,India,Tanzania 0% 0% 0% 0% Argentina,Germany,China 0% 0% 30% 10% 0% SriLanka,India,Kenya SriLanka,India,Kenya 0% 0% 19.1% 8.5% 0% 20.9% Kenya,India,Indonesia 3.5% 5.4% -2% 0% 0% 2.8% 6.3% 11.2% 4.0% 8.4% 2% 11.8% 19.9% 24.7% 0 6.2% 0 239 200.3% 31 0 11.7% 7.0% 11 7.3% 0 Kazakhstan 0 Germany 9 0 Pakistan 8 Iran 7 UK 6 USA 5 Russia 4 UAE 3 Egypt 2 1 U ti S on toSkillDevelopment: A A 2010 , and tt rac D evelopment of NEPAL TRADE I BACKGROU Women cons UK ti veness Index ti . Thesemarketsarerela cides andinsec Exports Nepal Thelanduseisbe (2008) N D R NT ti tute alargepercentageoftotallabourinvolvedinthissector,althoughis EPOR

E EGRA nergy andwaterusesareaverage.Teabushesdonotrequirehighirriga

ti D Mostoftheworkersaretrainedand/orhavegainedexperienceinIndian World market T ti on hasaposi Top 10-WeightedMarketAttractivenessIndex cides andincorrectapplica TI isadvantaged share O Attractive marketsforTea(HS0902.40) N P S akistan isgran tt Attractive MarketsforTea er forteaastheundula T ti RA vely largeandfast-growing.Nosigni T A EGY 2010 (2004-2008) Growth rate tt rac Table 2.18 ti ve e ti ve marketsfordirectexportappeartobe ff R ect ondisadvantagedregions. ti ng aduty-freequotaof10,000MT/yeartoS egions Tariff for Nepal ti on cycles,mainlyintheorthodoxteaareas, ffi cient fortheseasonunlessinveryadverse ti tt ng terrainandbarrenareascanbeused ed. ti advantage ti ll underconsidera mated at60percent(Thapa,2005). Tariff fi cant tari Main competitors ti on. ff advantagesexist E gypt, AP UAE ti fi on, nal T A ,

on N T I S ti andaki G 2010 51 on is intense. on is intense. ti

ti T 20 EPOR R EGY 2010 D T N mated value of produc ti RA T S ght and compe N ti O TI BACKGROU (US$ 1,000 in 2008) was a growing demand me when there EGRA ti NT over Nepal, with an installed annual ered all top10 current exports from Nepal top10 current exports from tt top10 NEPAL TRADE I OPENESS Table 2.19 hetan with ‘Mayos’). Today, the es K on of instant noodles in Nepal began in the early 1980s. ti ara’ brand. This came at a top10 R S$10 million. The internal market is GROWTH Attractive markets for Tea (HS 0902.40) Attractive markets for Tea U 2004/05 2005/06 2006/07 2007/08 2008/09 Top 10 by size, growth, openess and current exports Top 10 by size, growth, openess s 73. R Export Value of Instant Noodles, 2004-2008 (US$1,000) S$=N erformance U P 12 UK3 Russia4 Pakistan5 Egypt Australia6 Egypt UAE UAE7 Iran8 Kyrgyzstan Iran USA India9 Japan Russia Japan239 Germany Germany Kazakhstan USA Tajikistan Austria Japan Germany Saudi Arabia India59 France Pakistan USA Canada Poland 15,116 17 27 31 13 11 10 10 Kazakhstan UK Denmark 6 Direct data (Nepal) Exports overseasExports to IndiaTotal exports 1,196Mirror data 5,682Exports overseas 1,574 6,878Exports to India 6,380Total exports 1,783 7,954 2004 19 3,252 2,434 4,171 5,035 2,453 7,300 2005 1,927 999 3,410 11,471 9,516 4,409 11,443 2006 274 881 1,155 2007 2,699 423 3,122 2008 9,150 1,240 10,390 Rank top10 SIZE largest consumer of instant noodles in the world. xport th haudhary with ‘Wai Wai’ and E C ll 2005/06, then on ti t present, there are more than 14 noodles factories sca t present, there are more than 14 noodles of more than 48,890 MT. The sector is driven by large companies with well-established on capacity s65 ti A R S$28 million, with exports above S$=N U found a ready market in India (and also er the Nepal-India treaty of 1996, Nepal-made instant noodles have U ft A well-established. Bhutan), where Nepalese brands are now Nepal is the 17 for instant noodles, which were imported mainly from Thailand. Several other companies followed over the for instant noodles, which were imported years. 20 Index 1: 6) Instant Noodles Background Invented in Japan in the late 1950s, produc Noodles started with the now famous ‘ Noodles started with the now famous produc brands (e.g. is assume thatitisnotadirectlycompe 21 instant noodles,es the worldtradeindicatorsarenotmeaningfulforinstantnoodlessector.Inabsenceofdataon D heading, 1902.11/19(uncookedpasta),whichalsoincludescompletelydi used forthecalcula most recentperiod.However,whatisclearthat80-90percentofexportsgotoIndiaalone.Mirrordatawas factories. Butsomewheat with someexportsof1902.11(‘uncookedpasta,notstu codes, mostexportedpastaproductsare1902.19(‘uncookedpasta,notstu units arecomingupwithnewbrandsofnoodlesforexportmarkets. Indian data,andalsobybothvaluevolume. Instant noodlesdonothaveaspeci Index 2:WorldMarket Trade Balance: Nepal’s WorldMarketShare: Poten Current ExportDes Types ofExportedProducts: A shown. Thereisnocomparabledataonvalues,butwitha roughassump types ofpasta.Wheat value hasbeenbelow code, noexactcalcula Indonesia, Japan, exports toQatar. to Malaysia, cent, Brown typeofnoodlescomesinthreedi pack, theworldinstantnoodlesproduc has almosta100percentshareoftheIndianimportmarket. the Middle s withmostproducts,thereisasigni The actualshareforthemainexported product(1902.19)is80-90percent,butmostoftheremaindercomesfrom Italy,forwhi ynamism of N T I S C 52 ti al ExportDes hina (includingHong 2010 E ast haveverylargegrowthinconsump K E uwait, xports: NepalimportsnoodlesfromanumberofcountrieslikeItaly,Turkey,andIndia,buttheimport NEPAL TRADE I BACKGROU U ti S ti mates forconsump ti Source: on ofindicators. na A UAE ti na , Vietnam, U ti E on ofthesizeworldmarketorNepal’sshareinitispossible.However,Nepal fl xports haveincreasedsubstan S$0.5 millioninrecentyearsandsomeimports,suchasthosefromItaly,aredi our, themajorinputfornoodlefactories,ismostlysuppliedbydomes ti 9908,0 2009,2 93,600 98,420 92,080 86,000 79,980 Total WorldConsumptionofInstantNoodles,2004-2008 ons: 0420 0620 2008 2007 2006 2005 2004 ti , h ons: N tt EU p://instantnoodles.org/noodles/expanding-market.html fl D ti our isimportedfrom Indiaduetopricedi ng typeofpasta. K , and R Brownandwhitenoodles,withalargenumberofbrandsineachcategory. NT

ong) 14percent,andBhutan2cent.Verysmallamountswereexported C

A EPOR Thelargestmarketsforinstantnoodlesintermsofconsump G ondi ccording toNepalesedata,in2008/09,exportsIndiacons EGRA iven thediversityofproductsgroupedtogetherunderapplicabletari K orea, A T fi ustralia. Mirrordatashows88percentexportstoIndiaand7 TI c tari c fi ti cant di ons O ti on wouldbeworthmorethan ff N P ti erent ways:straightoutofpack,cooked,orasasoup.IntermsHS on providedbytheWorldInstantNoodles S hilippines, Thailand, (in millionpacks) T ff codeinmostcountries.TheywouldusuallyfallundertheHS RA ff Table 2.20 erence betweenNepalesedataandmirrordata,exceptforthe T EGY 2010 A ccording tointerviewedcompanies,manynewproduc ti on. ti ally overrecentyears, bothaccordingtoNepaleseand ff ed orotherwiseprepared,containingeggs’). 21 R ussia, andIndia.Indiasomecountriesin ff erences andqualityconsidera U ti ff on ofatypicalcost S$9 billion. erent typesofnoodles.Thatmeans ff ed orotherwiseprepared,nes’, A ssocia ti on (WIN on ti ti ti on are on U c wheat tuted 83per S$10 cts.per ch onecan ti ons. ff C A erent hina, fl ) are our ti on ff

ff ulf G

N T I S S$10 U akistan, P 53 on in 2010 S$7 million ti U T S$28 million/year. onsump U C EPOR ows, Thailand appears R fl EGY 2010 D ng from a high MFN tari T mated turnover of N tti ti

fi RA T S s in the world’s largest markets ff N O al than distant markets. See also ti TI BACKGROU ll have acquired the applicable Nepalese EGRA le from other countries. S$2-3 million/year), but Indian producers S$2-3 million/year), but Indian producers A tt U NT on has been growing by 4 per cent per year ti exports apply the following MFN al for future ti on of the industry was 25,747 MT in the year ti Preferential rate erent sizes in the country, but only three of them on with foreign companies like the Singapore-based ff applicable to Nepal ed. ti fi

ther countries with even higher exports (Italy, Turkey) ther countries with even higher exports ti barriers in many of the regional markets ( barriers in many of O ff NEPAL TRADE I mated for India with 38 per cent. mated ne of the companies has an es ti 5% no preference O on for further details on tari ti World consump Table 2.21: cs, the produc ti s I) sec ti ons A ti 9001:2000 cer O Though there is no detailed data on world trade Though there is no detailed data on world B) sta ll stringent hygienic standards. fi R ondi C resident Foods. akistan have very good prospect for further export growth. P Importer MFN tariff P on capacity of 20,000 MT/year. They all are private companies. Nepal’s Preferential Tariffs for Instant Noodles Nepal’s Preferential Tariffs ti mated that the size of the instant noodles sector is around PakistanBangladeshBhutanChinaJapanKorea 20% 25%EUUSA 30%Qatar and UAE no preference 15% 20-30%Russia 8% 12% 27-35% no preference 0-6% 28.5% no preference Free 15% Free no preference Free ti Nepal has free access to the Indian market and is bene Nepal has free access ll faces considerable tari ti veness Index (M ti It is es ons: astra Bank (N mated to have been increasing at the rate of 15-20 per cent per year. ti c Supply c tors in the Indian market. India imports very li ti rac R ti ti tt The products ful A ther markets for which there might be a poten ther markets for which O ne has established its own two manufacturing units in India with an investment of ne has established its own two manufacturing units in India with an investment tors in World Market: roup or the Thai ti O omes G D There are at least 14 noodles factories of di few were established under technical collabora on ti on Capacity: on A ti ccording to Nepal innova and a combined total produc million/year. 2004/05, which is es

countries, to which Nepal also exports, has grown annually by 8 per cent. Industry sources in Nepal also claim countries, to which Nepal also exports, has grown annually by 8 per cent. Industry that Bangladesh, Bhutan, and below the Market for instant noodles. Quality of Product: since 2004, with the highest growth rate being es Produc A standards and most of the units are IS Index 3: Producers: World Market Prospects and Export Prospect: export. Major Compe C Market Access Condi Bangladesh, Bhutan), which probably have a much higher export poten Bangladesh, Bhutan), which probably This shows that Nepal s rates and preferences for Nepal: rates and preferences to be by far the largest exporter of instant noodles. to be by far the largest exporter of instant is not a large exporter ( export other types of pasta products. India are the main compe of 30 per cent. domes materials likechemicals,seasoning,palmoil,andpreserva export item.Nodonoragencieshavebeeninvolvedinthesector.Itisen for thesector,exceptduringbilateraltradetalksandagreementswherethisproductisincludedasamajor fl but some imported fromIndiaduetopriceandqualitydi problems relatedtotheavailabilityofworkersorlabourproduc 22 Current EmploymentandJob-Crea Index 4:Socio-economicImpact Prospect forDomes Government Ini Business Environment: E Cost andQualityofInfrastructure: Level ofProcessingTechnology: Labour CostandOverallProduc Availability andQualityofLabourForce: Produc expected toincreaseovertheyears.Nownoodlesmarket hasbecomesosophis years. Besides,theindustrywasrunningatlessthan60per centproduc watchers saythatthenoodlesindustryhasbeengrowing atasteadyrateof15to20percentinrecent services, judicialservicesorthetaxsystem. noodles factories. most cu the-art Japanesemachinerywithveryhighe backed bymanageriale providing technicalknow-howtosomeunits.Mostcompaniesareequippedwithamarketresearchteam constraints likepowercuts,labourstrikes,andshortsupplyofwaterareconstrainingproduc workers. Industry sourcesdidnotstatepar materials, inpar on averagesidecomparedtothecompe suppliers. are bringinginnewproductstarge fl kids. our fromothercountries,which ismoredi our mills,producingaround130,000 MTofwheat ffi Source: IndustrialSta ciency ofDomes N T I S 54 ti ti c supportindustriesishighandtheprospectalsohigh. vity: tti ng edge produc 22 ti mes Indiarestrictstheexportofwheat 2010 Thecompanieshaveinstalledmoderntechnologywithhighproduc NEPAL TRADE I BACKGROU ti a ti cular wheat cular ti s ti A ti ves andDonorInvolvement: cs 2006/07. lso, oneofthenoodlescompanieshasitsownwheat ti ti c SupplyCondi c Suppor c Theoverallbusinessenvironmentofthissectorisconsideredgoodtoverygood. ffi ciency topromotetheirproductsinthemarket. ti N on technologiesinNepal. D R NT fl EPOR our. Nepalis awheatsurpluscountry.Therearemorethan15big ti EGRA ng Industries: ng

A Infrastructureisrankedlowbyinterviewedcompanies,whereascostsare ti ll unitsareusingmoderntechnologyandsomeofthemstate-of- ti o Cost: on ti T cular problemswiththemacro-economicenvironment,administra ng specialsegmentsofthemarketlikenoodlessolelytarge ti TI on Prospect: on ti ons: O N ti tors. S T

Thereisgoodprospectforincreasingtheproduc ffi RA A ffi cult andcostly.Theindustrydependsonimports ofsomeraw Thereissomelabourcostadvantagecomparedtoother ciency. Moreover,somecompaniesareemployingoneofthe ccording tointerviewedcompanies,therearenosigni T

EGY 2010 ff erences. ImportsfromIndiaareduty-freeandeasyas well, Thegovernmentdoesnothaveanyspeci A fl our. Thenoodlesfactoriesthenhavetoimportthewheat largenumberofdomes TotalFT fl our peryear.Thesemillsalsosupply wheat ti EE ves. ves. fortheyear2006/07ises ti O vity. vity. verall, thepresentlevelofe ti on capacityduring2004/05, whichis ti rely drivenbytheprivatesector. E fl our mill.Butsomewheat xperienced foreigninvestorsare ti c industriesaresupplyingraw ti cated that manufacturers ti vity. Butinfrastructural fi c strategyorpolicy ti mated at4,800 ti vity. ti on. Industry on. ffi ti ciency of ciency ng school ng fl our to our fl our is fi cant ti ve on on ti ti

N T I S ll the lot of erent A ff A on and ti 55 c. c.

2010 ti rely di ti T Tariff EPOR R advantage en problema en ft EGY 2010 D T N es for women employment. es for women employment. ti RA ut of the 10 largest markets, T O Nepal S Tariff for N O ects of this sector. TI ff prepared’. ed or otherwise BACKGROU ff data. ff sia. Therefore, trade data could not be sia. Therefore, trade data could not be cular impact on disadvantaged regions, EGRA ti A NT Growth rate (2004-2008) share ve environmental e There is no par barriers in many of them. ti World market NEPAL TRADE I ff

Table 2.22 ncooked pasta, not stu U (2008) cular nega cular ti Exports Nepal Attractive Markets for Instant Noodles Top 10 - Market Attractiveness Index by market size Attractive markets for Instant noodles (HS 1902.11/19) The energy intensity of this sector is considered average. The produc The energy intensity of this sector is There are no par of the total workers indicates that only 25 per cent cial employment data for 2006/07 ffi veness Index veness 12 China, Hong Kong 3 Indonesia -4 Japan -5 USA6 14.6% Vietnam - -7 5.4% Republic of Korea 8 Philippines - 3.3%9 4.2% 48.3% Thailand - -2.0% Russia - 2.7% 20-30% 5% 12.1% - 3.7% 2.3% 20-30% 2.1% - 0% 50% 0.0% 15% 3.6% 5.1% 7.1% 15% 0% 4.6% 0% 30% -2.2% 15% 0% 3.3% 0% 8% 0% 0-6% 0% 0-6% ti 109,150 India 1.7% 38.0% 30% 30% Rank Country The respondents stated that the industry provides high opportuni The respondents stated fy promising markets. The table shows the 10 largest markets in terms of consump fy promising markets. The table shows rac ti tt A on growth (for which data is available), together with tari ti factories have their own sources of back-up supplies of water and electricity, which increases their produc factories have their own sources of back-up costs. requires electricity and water, and industry sources stated that the supply of both is o requires electricity and water, and industry The share of women in visited companies is well above 50 per cent, but mostly for low-skill jobs, such as 50 per cent, but mostly for low-skill in visited companies is well above The share of women o packing. However, backward linkages to the wheat sector. except for possible Market ‘ Instant noodles mainly fall under HS 1902.19, Energy and Water Constraints: Environmental Impact: employed were women. of Disadvantaged Regions: Impact on Development Gender Impact: other pasta products fall under this category, such as ‘ravioli’ or other products which are en other pasta products fall under this category, from the type of instant noodles that are popular in most parts of from the type of instant noodles that used to iden consump Nepal currently exports only to India. It can be assumed that instant noodles are mainly produced locally in Nepal currently exports only to India. very high tari these markets. Nepal would also face of tradi is exportedtoIndiainrawform. are currentlyinuseforproduc 26 25 24 23 Index 1: and manyisolatedtopographicalloca in Nepal’smountainousareasformanycenturies.biodiversityexistsduetoitsclima The Himalayanmedicinalandaroma Background 7) MedicinalHerbsandEssen cosme A manufacturing ofcosme The sectorhasthepoten very limited. for naturalfoodandhealthcareherbalproducts. areas wheretheharvesttakesplace.Thereisasurgingglobalmarketandgrowingconsumers’preferences t present,theprocessingofM

K No 1,May2009. an eleva D Baral, S. D . epartment of epartment of P .

A N T I S 56 charya, ti cs, aroma ti R onal ti on gradient’(…),BankoJanakari, . and

E 2010 R xport . K P P P A hurmi Source: MacMapandWINA.Worldmarketshareismeasuredbyconsump US$ 1,000.GCC(GulfCoopera lant lant . seta is(31 7 9 8 6 n/a 963 586 n/a 2,991* 491 1,802* 379 1,314* 2,143* Note: *Exportvaluesabovearebasedonof Essential oils(3301) Medicinal herbs(1211.90)* C yurvedic medicines. NEPAL TRADE I BACKGROU aktop10SIZE Rank haudhary and ti 0IdaRsi tl IndiaRussia Italy 10 R R oe Suh abda S 9,150 9 Canada 145 RussiaNepal USA Portugal 13 India 15 ThailandGCC* 9 Cambodia PhilippinesMalaysia New 8 Canada Korea(South) 7 Vietnam Belgium Zealand Qatar India 6 Switzerland USACosta 5 JapanNigeria 4 Norway IndonesiaMyanmar India 3 Japan China(incl.HK) 2 UK Rica 1 Australia c foods,andperfumes. esources, MFS esources, MFS P Export ValueofMedicinalHerbsandEssentialOils,2005-2009 (US$1,000) . P P ., erformance A

C ti 20 0620 082009 2008 2007 2006 2005 ompendium ofMedicinal ti cs, perfumes,andpharmaceu al tocontributemorepovertyallevia N O D . R R NT C O . Vetaas[notconsistentwithnamestyle infn24],‘Medicinal / EPOR / G ti G Attractive marketsforInstantnoodles(HS1902.11/19) EGRA AP on of on oN, Bulle Top 10bysize,growth,openessandcurrentexports oN, Flowering A A islimitedtodis smallerpartisprocessedintoessen ti JournalofForestryInforma on Council)countries T TI ti E c plants(M O ssen GROWTH A ti ti n No28,Medicinal ons hostsaround7,000speciesofplants. N top10 yurvedic, ti S A al Oils recentreportcounted701speciesofmedicinalplantsinNepal. T ti P al oilsare exportedtooverseasmarketsandthenusedinthe RA lants ofNepal( P lants ofNepal,2006. T EGY 2010 fi Table 2.23 cial importstatisticsfromthirdcountries. AP U ti OPENESS lling ofessen nani, andSiddhamedicines ) havedirectlycontributedtothelivelihoodsofpeople top10 P lants ofNepal( P ti ti on forNepal hanerogams), 2001. cals. cals. L top10 currentexportsfromNepal ocal produc ti ti al oils.Themajorpartofcollectedplants on percountry.Exportsarein ti D R on asitprovidesemploymentinremote epartment ofForestry evised) 2007. (US$ 1,000in2008) ti al oilsorusedinthemanufacturing P lants ofNepal: ti on ofsuchitemsforexportis 24 andalsoforessen 23 R

esearch andSurvey,Vol19, A D istribu bout 1,800species ti on pa ti c condi c tt ern along ti al oils, al ti ons, 25,26

nal fi lling cant

N T I S fi fi al oils. al ti 57

2010 on. ti ca al oils is a lack (71 per cent), fi lling standards lling ti

fi ti T EU S$1 million per year. S$1 million per year. EPOR products mber forest ti R mated export value of mated U for the on of indicators ti ti EGY 2010 D T cial exports). cial cant problems in ful N ffi fi al oils is growing fast, with ti RA T smaller part of the harvest is smaller part of the S A N S$35 million. O equirements are stricter for U dding an es R TI onal export of essen al oils are, for example, Singapore, ti BACKGROU ti A for the calcula enerally, prospect in the world markets G EGRA suggest that exports of medicinal herbs, suggest that exports NT al oils are around al oils ti EPC vely low for such products in major markets. cals) than for the raw materials which Nepal ti ti onal buyers for such products. ong (63 per cent of o ti K , and Vietnam. However, such analysis based on , and Vietnam. However, such analysis S measures. 28 P EU es in obtaining ‘organic product’ cer US$11 million al oils are mainly exported to the al oils are mainly , ti ti nnual growth of exports since 2004 has been 20 per nnual growth of exports since 2004 has ve. ti A A S NEPAL TRADE I s are rela U cul ff hina, and France are the major exporters of essen ssen ffi Table 2.24 C E

S$10 million per year. S$10 million per year. on is Hong ti Tari U na ti ng products due to the heterogeneity of the sector. ti (2007a). C (2007a) suggests that overall exports of non- (2007a) suggests that C on being di ons Indonesia, ti ti could be as high as al part in Nepal, ti study uses al oils, this arge and dynamic importers for essen s and NTBs): ti ff from interna cient demand L ondi ffi

C Nepal’s share in the world market is around 0.1 per cent and 0.2 per cent in the Nepal’s share in the world market is around Medicinal plants are exported in raw form. Medicinal plants are (10 per cent). Medicinal herbs are mainly exported to India, with signi (10 per cent). Medicinal herbs are mainly A S 2005 2006 2007 2008 2009 See for example IT c products, perfumes, pharmaceu ons: The world market for both medicinal herbs and essen ti ti U xports are highly dynamic. 28 ons (share of exports): ti E

in IT mate cited ons (Tari na ti al oils. al ti ti ti na ti ccording to industry sources, the main barrier to addi ccording to industry sources, the main A Total World Export Value Medicinal Herbs and Essential Oils, 2005-09 (US$1,000) Medicinal herbs (1211.90)*Essential oils (3301) 1,075,041 1,144,928 1,418,939 1,249,545 1,552,489 1,349,055 1,651,439 n/a 2,013,500 n/a in World Market: tors ti on markets. Industry sources suggest that there have not been signi on markets. Industry sources ti separate es on from industry sources and data provided by the T on from industry sources and data A ti al Export Des na be interpreted carefully because such products are very heterogeneous. ows should ti ti ), of which herbs are a substan ), of which herbs are fl 27 P S$1 million for exports of essen S$1 million for exports TradeMap, using mirror data. (NTF sector. India (11 per cent), and of supplies, whereas there is su However, these are not necessarily compe for such natural products is considered to be very posi Switzerland, and India and for medicinal herbs the Switzerland, and India and for medicinal trade U informal exports. The only other major des informal exports. The only other major exports requirements, with one excep 27 Major Compe World Market Prospect: annual growth rates of 13-18 per cent (2004-08) for major products. Market Access Condi cent. Index 2: World Market Dynamism of Exports: Export Prospect: processed into essen Nepal’s World Market Share: market for medicinal herbs. herbs and essen Trade Balance: Nepal’s imports of medicinal Current Export Des Poten Types of Exported Products: Types of Exported Informa which go mainly to India, could be as high as which go mainly to in terms of ful currently exports; so, adding further value to raw materials could be challenging in des However, numerous other barriers exist, such as the S products (such as cosme Bajhang, Bajura, O Swer R essen trading alone.NepalHerbsandHerbal 35 34 33 32 31 30 29 Level ofProcessingTechnology: Labour CostandOverallProduc Availability andQualityofLabourForce: Produc Quality ofProduct: Produc Producers: Index 3: P herbs. system. The is scopeforreducingwastageandimprovingqualitythroughpropertraininginforma medicinal herbscollec herbs collectorsareusingtradi list ofthe52mostimportantcommerciallyavailableherbsispresentedinTable2.27. surged toabout10,000MT.InformalandunrecordedexportsIndiafromporousbordersarealsohigh. (7 percent)arethecollec Nepal) bythe have labourcostadvantagesascomparedtoothersuppliersinIndiaandBhutan. herbs collec However, thesitua 29 millionwasrecordedasroyal O P Herbs oils. oils areproducedbasicallythroughadis in herbscollec per cent),Trishuliand cul million. systems. that couldbeintroducedforoilextrac lant roceeding ofNepal-JapanJointSymposium2000. khaldhunga, Bhojpur,Taplejung, egion (30percent),NepalgunjintheMid-Western D Figure es D Herbs Figures inparenthesesrepresenttheshareofregiontotalna D ut ofthis,currentlyonly20-30percentarebeingcollected,processed,andtraded.In2007/08,atotal P harmatma harmatma epartment ofForestry,MFS ti radip Maharjan,Herbs va ti a Chirayita,Tinosporasinensis R

esources, N T I S ti 58 34 al oilprocessing). E ti E ti ti on ofherbs. ntrepreneurs The vity: Capacity: on ntrepreneurs ti D mated byJ C ata fromNepalgunjcustomsin2008/09 ri

L L

D 2010 al Shrivastava,“ al Shrivastava,Bull O ti ti D R on jobswhenopportuni A cal pressurethroughcarbon dioxideandfrac omes Thereisalackofscien DPR ut ofabout300 ukum, Humla,Jumla, Scien epartment of ti D on asagainstanannualaverageof 8,400MTfortheprevious epartment ofForestryindicatethatannuallyabout50,000MTM NEPAL TRADE I BACKGROU alsoprovidesservicesfortes A A ti B ssocia

ti fi A c on isimprovingwithexportsof5,540MT40speciescrudeherbsvaluedat More than95percentofcommercializedherbsarewild,organic,andnatural.Ingeneral, ti P N, Nepalgunj. c Supply roduc

P A ti E ublica on in58districts ti K ssocia s C R on ofNepal(J ti , athmandu inthe esources ofNepaleseMedicinaland mates basedoncollec Hamro Ban ti ti D on and D N on andmarke ti olakha, Sindhupalchowk,Nuwakot, ept on, Bull D and P lant ti R NT R on ofNepal(J P ti fi olpa, EPOR Verginia ciliate onal knowledgeforpre-andpost-harves l. O rms, only28aredirectlyinvolvedinprocessing,whiletheothersfocuson EGRA P

ti ut of52districts30mainare: Sankhuwasabha, R ti rocessing on Cost: C es fromcollec R C es. No.31,p.130,2009.Sofarfourstandards havebeendevelopedfor , 2064/65(2007/08). D A rude herbsarebeingprocessedthroughrudimentarytechniques. esources ( K ept ondi B T alikot, ti

A TI fi ti N), Nepalgunj. c knowledgeandconsciousnessontheconserva es arise.However,theseworkersneedtraining. P ti O on. l. ti 35 lla N R C P ti D ti . Itisalsoes es. No.31,p.127,2009. S ng centresforherbsinNepal. o. ons archula, Baitadi,Jajarkot, roducts . C Mostofthecollec ti L T It ises on process.Thereisaneedtointroduce moremodernprocessing entral td. (H RA DPR A T B EGY 2010 PPCL ti ti A ti ng and cer and ng on of3,381MT. ) hasalsostarteddevelopingqualitystandardsformedicinal on permitsissuedin58districts(outofthe75 N) has225members(ofwhichonlythreeareinvolvedin ti 33 R A mated thatasmany300,000familiesareengagedin ), indicatesthatthetotalexportofcountrycouldhave egion (9percent),andBasantpurinthe ti ssocia A onal collec C ti roma R D mated thatanother100,000familiescaneasilyjointhe ommunity BasedNatural hading, egion (50percent),ButwalintheWestern ti c ti ti onal dis on (N on P lants: Statusand ti ti G fying thequalityandcomposi D on. ti orkha, on takesplaceinremotemountainareasthat ailekh, and E 30 HH ti

L lla amjung, A PA tt aria andTanakpurintheFar-Western ti A on arethemostmodern technologies ti 31 ) has33membersand achham. ng opera R Therehasbeenadras D esources Management,M P evelopment”, K anchathar, Terahthum,Solukhumbu, aski, Manang,Mustang,Myagdi, fi ve years(2002/03to2006/07). ti ons andprocessing.There AP D s couldbeharvested. epartment of ti Asparagus recimosus, on, propaga ti on management on ti on of essen of on E AP astern Jadi Bu inNepal, ti P c reduc lant R ti E D egion (4 on, and R ssen olpa, esources, R R ti egion

s 400 , the ti on ti ti al al R 32 29 A s

s TZ, ed on AP fi ti

G onal N T I S ti ti on of on ti mated esearch ti ST, R 59 ons, but olicy 2004 ti 2010 liza ti P ct 1993 and A RECA ts and capital. ts and capital. , fi s.200 per day. ear 3, No2, p. 29, to about 10,000 R T Y OD ces. Interna EE ffi IM rogramme and M C ee has not been very EPOR ng pro ng P tt ti R evelopment EGY 2010 D D c collectors, middlemen, ng are needed to achieve

ti T ti N P ommi on, Quarterly, on, RA ti also has two laboratories for T C FS) 1989, Forest S P epartment of Forestry N ssocia DPR on D O ti A al oils is increasing and out of these TI ti BACKGROU odavari, with more than 357 ha of land for the on and marke EGRA roducts , and seven district o ti G P ommunity Forestry oordina 37 C NT C

P on, research and development, conserva ti plants sector include I c ti arden of G on, 1,000 in intermediary trading, and 1,000 in on, 1,000 in intermediary trading, and 1,000 in on, cleaning, and grading of herbs. It is es ti mated that the sector gives FT ti ti NEPAL TRADE I epartment of Forestry, xpansion of the It is es D E such as for repatria ons for investors,

ll materials are supplied by domes ll materials are supplied ti onal Botanical onal ti on, improvements in the value chain and natural resources lan for the Forestry Sector (M A ”, Nepal Herbs and Herbal ti ti S$1,000 per full-employed person, who approximately earns P

onal skill is passing through the younger genera nly 20-30 per cent of the naturally available stocks of iden nly 20-30 per cent of the naturally available U ti O rakri

Xanthozylem armatum (Timur). P 38 I. ). and Tradi ons: ED High costs of electricity. But the costs of other infrastructures are But the costs of other infrastructures High costs of electricity. ti on Prospect: on PA ti ect the industry. ng Industries: ng on of herbs. The on under contract farming systems and through community forest users groups systems and through community under contract farming ff ti ti that are in demand. More than 90 per cent of the collected on of new species B, and I ti 36 A on of sustainable management and use of plant resources. Thirty plants have on of sustainable management and use of plant resources. ti ca fi NS

himire, Seabukthorn, “ ti are taking lead roles in policy formula onal mechanisms. The Herbs and NTF A Asparagus recimosus, Chammomile, Citronella, French Basil, Holy Basil, Lemongrass, Mentha arvensis, Asparagus recimosus, Chammomile, Citronella, French Basil, Holy Basil, Lemongrass, Mentha arvensis, ti G There are no legal restric , vated ti emand for more than 20 herbs being used for essen emand for more than tu c Supply Condi prices and training. in quality of raw herbs depend on the ciency and improvement c Suppor c DPR ti ti ffi ti D

ves and Donor Involvement: This includes 8,000 persons in collec ti ovinda on of herbal and other plants in Nepal. KCAP adequate regulatory vely implemented in absence of clear targets, strategic programmes, ct 1972 has complemented commercial prospect. Herbs and NTF ct 1972 has complemented commercial ti ti 39 G a A ti Mostly women are engaged in the collec rogrammes under the Master ec P ff vated include vated a Chirayita, Withania somanifera on ti ti ti priority research and sustainable farming in Nepal. The ed for fi on and growth.

ti ti on. on. on to Skill Development: ti ti okhrel and c Demand: c P on of full employment is based on the earning of ca ti ti rotec fi s). ve in the commercializa ve being cul P ti on and conserva ng species and iden ti ti AP UG alcula ubaraj F ec ciency of Domes There are 11 government botanical gardens, including the Na Y C M evelopment lant ff ffi C diversi crude herbs are exported to India without processing and some of the restricted species are smuggled. Further crude herbs are exported to India without investments in technology, training in product development, produc Magh 2063. conserva further training is needed for waste minimiza and traders. Their e people in Nepal. D SNV Nepal, WWF- exis Palmarosa, Swer collec 37 38 39 processing and trading houses (NHH that more than 50 per cent of workers are female. Contribu 36 Current Employment and Job-Crea Gender Impact: Index 4: Socio-economic Impact frameworks, and ins Prospect for Domes P is not being e in the herbs and aroma and bilateral donor agencies involved Business Environment: Government Ini considered reasonable. E Domes ( Cost and Quality of Infrastructure: Cost and Quality of 11 herbs are being cul 11 herbs are being However, high informal costs a There are medium and long-run prospect for further u herbs are collected, processed and traded. natural products, herbarium and plants, eleven botanical gardens natural products, herbarium and plants, e and Survey, and the and farming for the promo been iden of herbsaswellessen main typesofessen The M Market Environmental Impact: Energy andWaterConstraints: Impact onDevelopmentofDisadvantagedRegions: endangered species. 85 percentofthetotalcollec Mid-Western andFar-Western well ascul irriga demanded insomeofthesepoten can onlygivesome results suggestthatthe akCountry Rank ti 0Kra(ot)032 46 %0 China,USA,HongKongSARC 0% 8% 14.6% 3.2% 0 Korea(South) 10 N T I S egu .%1.%0 %Israel,France,Morocco 1% Germany,Egypt,Nigeria USA,France,Germany 3% 1% China,Thailand,India 0% 0% 0% 0% Indonesia,China,HongKongS. 0% 0% China,India,HongKongSARC 15.6% 0% 41.5% 13.1% Poland,Chile,Egypt Morocco,China,Italy 0% 0% India,China,Mexico 0% 8.2% 1% 2.8% 5% 1.8% 3.7% 0% 0% 20.0% 7.2% 0% 27.8% 0 0 0 10.5% 14.7% 4.0% 15.1% 3.7% 0 9.3% 5.2% 1 14.4% 0 Belgium 22 0 Russia 13 9 Italy 8 Japan 7 Singapore 6 VietNam 5 Germany 4 France 3 USA 2 1 on systems. 60 A I iscalculatedseparatelyfortwoproducts: ti A

vated herbs in Nepalhasadirectandposi 2010 tt rac NEPAL TRADE I BACKGROU aktop10SIZE Rank 0Cnd wteln zc eulcSizrad3 CanadaSwitzerland 10 Czech Switzerland Republic tl Iay tl zc eulc9 5 4 11 CzechRepublic 22 1,025 1,875 13 Australia Italy UAE Pakistan Sweden HongKong(S.) Italy Germany UK India China USA Korea(South) Korea(South) Belgium India HongKong (SARC) 9 Russia Belarus USA Italy 8 VietNam Russia VietNam 7 Singapore France 22 6 Belgium France USA 5 JapanSingapore 4 Germany Germany 3 USA 2 Kazakhstan 1 ti veness Index E ti fi al oilswhichNepalexports).Herbsare exportedmainlytoHong nergy consump rst guidance.WhetherthetypesofherbswhichNepalproducesareactuallyones C ul Incaseofwildherbs,environmentalimpactisminimal,exceptthepossibleharmto Exports Nepal U ti ti vated herbscontributeposi al oils. Bothproductsare,however,veryheterogeneous(Table2.27),sotheM S N (2008) A D andseveral ti R NT on ofherbsinNepal.

EPOR C R EGRA ollec egions ofNepal. ti

Attractive marketsformedicinalherbs(HS1211.90) al exportmarketscannotbeseenfromtheavailabledata. Top 10bysize,growth,openessandcurrentexports Attractive marketsformedicinalherbs(HS1211.90) T ti World market Top 10-WeightedMarketAttractivenessIndex Attractive MarketsforMedicinalHerbs on isminimal,exceptfortheproduc TI ti on ofwildherbsorcul O share N S GROWTH E uropean countriescouldbea T top10 RA T EGY 2010 (2004-2008) Growth rate Table 2.25

A medicinal herbs(1211.90)andessen t present,tworegionstogethercontributetomorethan Furtherdevelopmentandcommercializa ti ve economic impactonthelivelihoodsofpeoplein ti OPENESS vely totheenvironment. top10 ti Tariff for va Nepal ti on ofotherherbsdoesnotrequireintensive top10 currentexportsfromNepal advantage Tariff (US$ 1,000in2008) tt ti rac on ofessen ti ve marketsforfutureexports K Main competitors ti ong andIndia,butthe al oils. ti al oils(3301.29,the ti on ofwildas A I N T I S 61 2010 40 notes) Remarks (Ref Foot 43 T EPOR Main competitors R Collection in 2007/08 Qty. in MT 0.5 EGY 2010 D T N 42 RA T esources, Nepal. S R Annual in MT N Collection 10-20 EOA EPAP 5 – 20 19.3 GPFR O lant TI (US$ 1,000 in 2008) P BACKGROU Tariff ons. ti advantage r, fi EGRA top10 current exports from Nepal ma ti NT Names Atis root 2-5 4.8 GPFR Nepal Catechu 200 e¬partment of The Sweet Flag 20 16.0 EOA, GPFR Tariff for D Nepali / English top10 Himalyan Silver Talispatra, Gobresalla onsultant’s es C OPENESS on and on ti NEPAL TRADE I Table 2.27 Table 2.26 Growth rate (2004-2008) onserva C Species top10 GROWTH share Attractive Markets for Essential Oils Attractive Markets for Top 10 - Weighted Market Attractiveness Index Top 10 - Weighted Market World market Top 10 by size, growth, openess and current exports lants of Nepal 2007

P es. No. 31, p. 129, 2009 and R l. on, Hamro Ban, 2064/65. P ti 41 Attractive markets for essential oils (HS 3301.29 - Essential oils, nes) Attractive markets for essential oils (HS 3301.29 - Attractive markets for essential oils (HS 3301.29 - Essential oils, nes) Attractive markets for essential ept (2008) D onserva Exports Nepal C esources, Medicinal 3 Switzerland Singapore Korea (South)France1 2 USA3 Korea FranceBelarus4 Switzerland Singapore 5 Germany SwitzerlandLatvia6 125 UK Mexico USA Kazakhstan7 China India Singapore India8 India Japan Germany 9 Australia Mexico China France Russia Belgium44 Japan USA Germany UK UK 85 UK Portugal 94 214 Canada Taiwan (China) 193 12 74 11 10 IndiaRepublicSweden Japan Czech 6 R Rank top10 SIZE cials of the Ministry of Forestry and Soil ffi lant P al Shrivastava, Bull L List of Commercially Available Medicinal and Aromatic Plants (MAPs) and Essential Oils in Nepal List of Commercially Available Medicinal and Aromatic Plants (MAPs) and Essential Acacia Concinna and Catechu Wild Leguminosae Khyar, Abies Spectabilis D.Don Mirb. Pinaceae Aconitum heterophyllum Wall.Acorus calamus linn Ranunculaceae Atibikh, Acoraceae Bojho, Aconitum spicatum (Bruhl Stapf)Adhatoda vasica Nees. Justicia Adhatoda Acanthaceae Ranunculaceae Bikha Ashuro 12 Singapore3 Switzerland4 India5 France6 Germany7 USA 08 UK 29 Japan China 4.8% 94 125 9.1% 193 27.9% 15.9% 25.0% 2.8% 85 8.6% 74 0% 2 18.4% 36.6% 0% 18.6% 18.0% 0 7.6% 0% 0% 4.0% Indonesia, China, France 0% 0% 15.6% 0% France, Indonesia, Germany 2.8% 14.6% 18% 0% 13.2% 0% Indonesia, China, Singapore Indonesia, Switzerland, China 0% 39.7% France, Indonesia, China 0% 0% 1% 19% France, Indonesia, China 1% 1% France, USA, South Africa -2% France, UK, India USA, Myanmar, France 10 Mexico 0 3.0% 22.6% 6% -2% Indonesia, Switzerland, China 2 1 3 5 4 6 # Botanical Name Rank Country epartment of harmatma Interviews with o D D Ministry of Forestry and Soil 40 41 42 43 34 33 32 31 30 10 35 12 11 14 13 36 BotanicalName # 15 23 22 21 20 19 18 17 16 25 24 27 26 29 28 9 8 7 N T I S 62 reii ugrsLSp opsteTitepati/ Liliaceae Compositae Asparagus racimosuswild. Artemisia VulgarisL.Spp. el amls(in Cre Bel Correa Aegle marmelos(Linn) ai oyhlaS.LlaeeSatuwa Babari, Parmeliaceae Liliaceae Labiateae Parmelia nepalensisTal Paris polyphyllaSm. Ocimum basilicum Pennell, Hong Neopicrorhiz/Picrorhiza scrophulariifolia Nardostachys grandi Morchella esculenta,conicaPers. zdrct niaA us eica Neem, Meliaceae Azadirachta IndicaA.Juss. hlatu mlc in Euphorbiaceae Phyllanthus emblicaLinn. ebrsaitt CBreiaeeChutro PakhanVed, Berberidaceae Saxifragaceae Bergania ciliataHaw.Sternb. Berberis aristataDC Hand.-Mazz Cinnamomum glaucescens(Nees) Mazz. Cinnamomum glaucescens(Nees)Hand. ie ogmLn ieaeePipala, Piperaceae Piper longumLinn inmmmTml es&Eem Lauraceae Cinnamomum TamalaNees&Eberm. alhrafarnism al Ericaceae Vyakur, Dioscoreaceae Myrtaceae Gaultheria fragrantissimaWall Panchaunle, Eucalyptus camaldulensis/citriodora Graminae Orchidaceae. Dioscorea deltoideaWall. Graminae Dactylorhiza hatagirea(D.Don),Soo Cymbopogon winterianusJowitt Cymbopogon martinivar.motia Cymbopogon (Berk) Sacc. Cordyceps/ Ophiocordycepssinensis Communis Juniperus CommunisL./Recurva/J. Hippophae tibetanaschlecht Hippophae salicifoliaD.Donand yooimcaau in LcpdaeeNagbeli Lacopodiaceae Ricutita Rauschert. Matricaria chamomillaL.orChamamilla Lycopodium clavatumLinn etaavni .Labiateae Mentha arvensisL. 2010 NEPAL TRADE I BACKGROU fl eussSed Graminae Steud exuosus fl oaD aaas Valerianaceae ora DCJatamansi N D 41 R NT EPOR EGRA T TI O N cohlraeeKutaki, Scrophulariaceae Pezizaceae Morchellaceae, Lauraceae Gurjo/ Menispermaceae Clavicipitaceae ursaeeDhupi/ Cupressaceae Elaegnaceae seca Tareful, Asterceae S T Species RA T EGY 2010 asparagus Satawari /Kurilo Bhulte / Jatamasi /Balachad/ Linchen spp Jhyau, Budhani, Mushroom Himalayan Morel Gucthichyau / offcinalis Myrobolon Amala, Nepali Sassafras Sugandha Kokila, leaves andbarks Tejpat, Cinnamom eogasBC,EOA Lemongrass irnlaBC,EOA Fragrant Wintergreen Machhino, Dhasingre, eucalyptus Lemon-scented Citronella gingergrass Palmarosa/ Caterpillar Fungus Yarsagumba, Jiban buti, Seabuckthorn Tarbu, Amchi/ Dalechuk, Taru, aaeemn BC,EOA Japanese mint Nepali /English Ida ia GPFR IndianLilac iopr . EOA,GPFR 3.9 Tinospora uie er 0–5 59EOA 25.9 30–50 Juniper berry Emblica French basil Names irria2 04. EPN,GPFR 49.1 20–50 Picrorniza ogppe .5GPFR 0.05 Long pepper eti a GPFR Deltoid Yam hmml BC,EOA Chamomile Spikenard uwr . EOA 7.7 Mugwort ae BCE,GPFR Salep okfi 0-0 3. GPFR 338.7 300-400 Rock foil Chinese wild 0 4.2 400 0-10 109.8 500- 1000 53 52BC,GPFR 25.2 25-35 0-0 8. BCE,GPFR 184.7 200-300 0-0 4. GPFR 149.0 200-300 52 12.4 15-20 0-0 3. EOA, GPFR 434.6 100-500 52 73EOA,GPFR 17.3 15-20 Collection in MT Annual 42 2.1 GPFR 1.5 15.5 . GPFR 1.1 . EPAP 1.3 Qty. inMT in 2007/08 Collection 43 GPFR BC, EOA, GPFR EOA, EPAP, EPAP EOA, GPFR, BC,EOA BC, EOA (Ref Foot Remarks notes) N T I S gia

2010 63 notes) Remarks (Ref Foot EOA GPFR EPAP BC, EOA,GPFR BC, EOA,GPFR EPAP, GPFR, EOA GPFR EOA, EPAP 43 T EPOR R Collection in 2007/08 Qty. in MT 1.17 GPFR EGY 2010 D T N 42 RA T S Annual in MT N Collection 200300-500 36.4 373.3 150,000 BC,EOA 10-20350 9.5 200 1.1 100 1.5 1000300-500 703.4 72.2 GPFR BC,GPFR 10030 25.150-100 9.5 GPFR 64.0 EOA GPFR O TI BACKGROU EGRA NT Names Nepali / English Sugandhawal, Samayo Indian valerian Timmur / zanthosylum, Nepali piper, Sutho, Ginger (Fresh and Dried) Jangali Sayapatri, Tagetes Louthsalla/Himalayan Yew Barro, Belleric Myrobolon Harrro Chebulic Myrobolon Gujro / Tinospora, Cordifolia Indrayani, Indreni 0.35 BC, GPFR Laghupatra, May Apple Sarpagandha, Chandmaruwa Padamchal, Himalayan Rhubarb Sunpati / Dwarf Rhododendron, (Bhali sunpati) Majitho / Indian Madder NEPAL TRADE I Species Taxaceae Gentianaceae Chirayito / Chireta Ericaceae Rubiaceae 41 cinale, Rosc, Jingiberaceae fi a Serpentina (L) Benth ex Kurz Apocynaceae fi Zanthoxylum armatum DC Nepalense Rutaceae Zingiber Of Valeriana Jatamansi Jones Valriananceae Taxus baccata Linn. And Taxus Wallichiana Zucc. Terminallia bellirica Gaertner Roxburg. Combretaceae Terminallia chebula Ritzius.Tinospora sinensis (Labour.) Merr Trichosanthes Palmata Roxb Spp. Menispermaceae Combretaceae Cucurbitaceae Swerita Chirayita (Roxb.ex.Fleming) Karsten Tagetes glandulifera Schrank minuta L. Compositae Rauwol Rheum australe D.DonRhododendron Anthopogon D. Don , (Rhododendron Lepidotum) Rubia cordifolia Linn/Manjith Roxb.ex Fleming Sapindus Mukorossi Gaertn. Poylgonaceae Spindaceae Riththa, Soapnut Podophyllum hexandrum RoylePodophyllum hexandrum Berberidaceae # Name Botanical 51 52 50 45 46 47 48 49 43 44 38 39 40 41 42 37 Note: BC = Being Cultivated, GPFR= Government has Prioritized for Farming and Research, EOA = Essential Oils Available. EPAP Note: BC = Being Cultivated, GPFR= Government has Prioritized for Farming and Research, EOA = and Export (Juglans re = Export Permitted after Processing (Export permit is needed for raw Kutki), BCE = Banned for Collection Linn, walnut is also BCE) Source: Field Work rolls orsheets’),isusedforthecalcula 49 48 47 46 45 44 Types ofExportedProducts: There isnoreliabledataonexportof Index 1: Bholua Buch(Thymelaeaceaesp.) Nepali handmadepaperisauniqueproductmadefromtheinnerbarksof Background 8) HandmadePaperandProducts posi With es around 8,000workers. products isdonein from years, exportsofHS to wormsandinsects.Therawpaperisproducedinmorethan22districts. The tradi products madeofnormalpaperandthose curtains, wallpapers,tableandceilinglamps,wallpain packing boxes,sta exported (suchasnotebooks,lampshades,etc). parts ofNepalinthe7thcentury. of thetotalexportvalue es es paper anditsproducts. P 28, 2007,p.46and239. This isroughlyinlinewithanes Nepal Handmade These 22districtsare: Jesper Tier, Bibendra These plantsgrowwellateleva value-added oftheindustryisaround ti ti mates thataround55,000familiesearnalivelihoodwith mates thatannualexportsareworth anchathar, ti ve socioeconomicimpact,butitsoveralleconomicimportanceisrela

U N T I S 64 S$734,000 in2005to ti mated annualexportsofaround ti P onal Tibetanpaper-makingtechniquewastransferredanddevelopedinBaglungdistrictother rasad Singh,Nepali A E 2010 P n Introduc arbat, xport P NEPAL TRADE I BACKGROU aper R ti amechhap, onery sets,diariesandnotebooks,folders,photoalbums,wrappingpapers,frames, A ti achham, Baglung,Bajura,Bajhang,Bhojpur, P A C K on toHandmade ssocia athmandu valleyandJanakpur.Suchproductsincludegree ode 4802.10,whichaccountsonlyforraw erformance Export ValueofHandmadePaper,2005-2009(US$1,000) 0520 0720 2009 2008 2007 2006 2005 48 / / n/a n/a n/a P However,thisworkisusuallyonapart- ti ti ti aper Industry, ons rangingfrom 1,500to3,000m, N mate byBhishma on, R D olpa, U R NT Bothhandmadepaperand Loktapatra, fi S$531,000 in2008. U nished EPOR S$6 million,notallofwhichgoesintoexport. EGRA R ukum, Sankhuwasabha,Sindhupalchowk, Solukhumbu,Taplejung,andTerahthum. 45,46 P called aper inNepal, T fi L nished TI Thepaperisstronganddurablehasaninherentnaturalresistance okta: ti Vol3,Issue1,January2009. O on ofexportgrowthrates.Theseexportshavebeenslowlydeclining Lokta N P ‘Lokta’ . Subedietal(Handmade S U A U n Introduc T S$4 million,handmadepaperisanicheproduct.Itcertainlyhas S$4 million. RA Lokta productsvary.H Table 2.28 A T ncient EGY 2010 and alsofromamixtureof paperproductsbecausethereisnodis ti on, SM Lokta P aper ofNepal,NepalHandmade D ti D ngs, etc. H ailekh, epartment of 49 AR Intheabsenceofreliablees intradesta (estimate) I fi KA D nished productsmadeofhandmadepaperare Lokta 4,000 P olakha, aper Value- , H A A Lokta N N A P collec DPA lant DPA N G orkha, Ilam,Jajarkot,Myagdi, DPA ti me basis.TheFT SS, 2062,p.1. R paper(‘ ti s C esources, “Medicinal SS, thehandmadepaperassocia hain inNepal,2006).Theyes ti ti SS, theHandmade on andtheproduc cs ofimpor Daphne PapysaceaWall n/a 47 ti vely small. Theproduc ‘Lokta’ P P aper aper, handmade,uncoated,in A ti and ng cards,shoppingbags, ssocia ti ng countries. P EE lants ofNepal”,Bulle A ti ti ti ti on of on, SM mates overseveral rgeli plant’s nc ises O P ti khaldhunga, aper on ofhandmade ti on betweenthe ti mate thattotal AR fi ti nished paper mated tobe I KA A and ssocia , 2062,p.5. E s Daphne fi ti bres. mates ti n No ti ti on, on, 44

cs ng ti ti

N T I S s ti 65

2010 rabia, and A onal exports exports onal ti T ermany (6 per cent). ermany (6 per cent). EPOR G R ight now such products EGY 2010 D R al’ for addi ti T N RA on suggests that the export ti T on on world market prospect ti S similar product is produced in N products would certainly have to A , and Japan. O oned by interviewed companies. TI ti EU S$167 million in 2008. BACKGROU , U Lokta A anada, Netherlands, Saudi anada, Netherlands, S EGRA C U NT products. , there is a ‘huge poten le reliable informa enmark, tt 50 Lokta D TZ G NEPAL TRADE I s are generally low or zero in major markets for handmade ve or fair-trade shops. World import of handmade paper ff ti Table 2.29 Tari into Nepal. are the of exports in 2008) for handmade paper ons (with share ti na ti Lokta gypt (8 per cent), and France (8 per cent). However, trade sta ve markets are The major exporters of handmade paper are India (21 per cent), the ti ons cant source of export revenue, E fi ti advantage in most markets (except India) and even faces slightly higher ff rac tt A s and NTBs): ondi

ff xport des C E Nepal’s share in world exports of handmade paper (4802.10) is 0.4 per cent. Its Nepal’s share in world exports of handmade

2005 2006 2007 2008 2009 ons: products could be sold through mainstream channels. products could be sold through mainstream Being a niche product, there is li 64,887 126,441 102,127 139,653 n/a ti xports of handmade paper have declined slightly between 2005 and 2008. xports of handmade paper have declined ons: ti Total World Export Value of Handmade Paper, 2005-09 (US$1,000) Total World Export Value of Handmade Paper, E Note: Export values refer to exports of 4802.10 only. (11 per cent), na

ons (Tari ons ti ti aper in Nepal. Lokta na UK P ti tors in some markets (eg Japan). No NTBs were men ccording to a study undertaken by ti A

There are no imports of tors in World Market: ). ti ‘Saa’ market if handmade paper products is unknown. nished products. To become a signi fi EU al Export Des ti s than compe (32 per cent), France (26 per cent), Japan (8 per cent), Sweden (6 per cent), and (26 per cent), Japan (8 per cent), Sweden (32 per cent), France (17 per cent), ff Lokta to the are similar, i.e. exports go mainly erns for such products TZ (2007). Handmade A A tt orts to enter such markets. G S S ff e pa There is no detailed data for handmade paper products, but available informa data for handmade paper products, There is no detailed (such as fair trade shops), and it would require increased marke are mainly sold through specialty shops in the U for 50 Major Compe World Market Prospect: Market Access Condi U Index 2: World Market Export Prospect: Nepal’s World Market Share: Trade Balance: Dynamism of Exports: Poten share in Current Export Des Thailand ( are not detailed enough to fully capture the market of enter the mainstream markets outside of alterna (4802.10) has grown at 4 per cent in recent years, with total import of paper. However, Nepal has no tari Nigeria. These countries are major importers of handmade paper and have shown high growth rates in recent paper and have shown high growth rates are major importers of handmade Nigeria. These countries years. tari and morerecentlyby expor in opera acceptable. manufacturers forfurthervalueaddi extended technicalandtrainingsupporttopapermaking enterprisesinthepast.Thesectoralsoreceives products aretrainedbyentrepreneurs. 54 53 52 51 Government Ini Business Environment: Domes E Cost andQualityofInfrastructure: Level ofProcessingTechnology: Labour CostandOverallProduc Availability andQualityofLabourForce: Produc Quality ofProduct: Produc Producers: Index 3: is likelytoincreasebecausethe cost islow. produc workers totheindustry. available andpaperproductsworkersaretrainedon-the-job.Thereseemstobenoproblema not mechanized,andeachpapersheetisdriednaturallyinthesunwind. during theseason. produc than labourcostsforthemakingof unique--di C required speci a comparableproductinThailand. handmade paper,e.g.throughtheintroduc 15,000t. pipe systems.Suchanimprovedsystemcouldresultines around 30percent. ffi urrently, produc T Bibendra Nima Sherpa, T ciency ofDomes EPC EPC

, TradeNewsService, , TradeNewsService, N T I S ti 66 ng paperor ti ti ti ti ti on processarerequiredtoreducewastage.Qualityanddesignalsoneedbeimproved. on centresisverylow. c Demand: c vity: on Capacity: ti 54 P on. rasad Singh,Nepali ff

erent fromthoseproducedin D 2010 O A 51,52 omes Theproduc c ut ofabout300registeredco ti fi ng ca NEPAL TRADE I BACKGROU Thereare40manufacturersof ti P a ti ti resident ofH on ofhandmadepaperislocatedin22districtsandtheproduc ons andquan ti P fi The ves andDonorInvolvement: ti ti nished paperproducts.Manypaper-makingunitsarerunbyrurallocalentrepreneurs c Suppor aper productproducershavefoundtheirpapersuppliers e c Supply

Y Y A C A ear 3,No7,2065,p.5. ear 3,No7,2065,p.5. F bout 2.9millionhaofsuitablelandsareavailablefor

bout 90percentofthepaperoutputcountry isusedbypaperproduct A UG P aper Industry, ti ccording toentrepreneurs,thequalityofinfrastructureand creditfacili fi vity canbefurtherincreasedtoreducethe bre fromthehigh al N s andfarmers’coopera D A N R NT DPA ti EPOR ng Industries: L G EGRA ti ti on Cost: ocally availablefuel( SS. ty. C oN hasrecentlydecidedtouseNepalipaperforci Tradi ondi fi T nished paperproducts.Semi-skilledworkersrequiredfor L ti

TI on andexporttherea okta: P O apermaking ishighlywater–intensive,butthecostofwaterinrural A N ti onal technologyisaunique sellingpoint.Someimprovementsin ti ccording to A S ons Becauseofruralloca

n Introduc C tt P T age andsmall-scalepaperproductindustries,259are hina, India, apermaking isnotahighlyskilledjob.Semi-skilledworkersare RA ti on ofnewtools,suchasimprovedboilersandmodernwater

T P EGY 2010 ti fi apermaking unitsreceive tude plantmakestheNepali nished paperproductsandmorethan300 ti ti on, SM ves. The G fi rewood andbio-mass)isusedinboiling TZ (2007),produc P AR hilippines, andThailand.Theproduc D I ft epartment of KA er. ti , H mated reduc A C ti N ons, labourcostsinpapermakingarelower urrent domes DPA SS, 2062,p.2. Lokta ti on costsinNepalarelower thanfor C Lokta ti o on ofthe Lokta tt requirementforproduc age andSmallIndustrieshas ti c demandforpaperproducts ffi Lokta fromlocalfarmersor cient interms ofdeliveryin ti planta on volumeises ti zenship cer paperverysturdyand Lokta ti on in55districts. requirementsby fi rms involvedin ti fi onprocessis Lokta nished paper tt ti rac

ti fi es isquite cates. ti mated at ti andthe ng new ti C on of on F UG 53 s

SS on on es, ti ti N T I S ti Lokta roject s have DPA vi P ti on are rospect yuthan, ti N

P ons, but ons, ng. It is P 67 A ti ti UG 55 es similar es

collec F 2010 ti on, quality Handmade 56 C ti vi ti planta xpected project s.200 per day. Lokta erent ac Lokta ff E R T on and the use of ves towards ti ti mated that annual mated that annual ti Lokta es. The a ti EPOR ti R on of on ti EGY 2010 D Handmade Paper Value-Chain in T N on of SS. ti RA on of 15,000 MT. T roduc ti TZ (2007). on, wastewater management, P S ti G liza DPA onal since early 2009. N ti ti N O uropean countries, in coopera A E TI on is high if project ac ti BACKGROU es, see es, ti planta vi EGRA ti . Subedi et al (2006). SS) in s in product development, quality, design, s in product development, P NT E Lokta DPA N and other programme components. H A A mated that handmade paper and paper products mated that handmade ti nished paper product-making, and expor nished paper product-making, and s, and SM fi onal system are required for waste reduc ng partners, is opera , ti ti The paper is produced in 22 districts, many of which are ll stakeholders are aware of the possible environmental UG NEPAL TRADE I F A ects in some areas through reforesta on is high in view of the recent ini on is high in view of the recent on strategies and programme support. on strategies and programme It is es ff nhancement of Sustainable nhancement of Sustainable ssue cultured cultured ssue ti C ti ti ut of these, around 6,000 are working in ut of these, around 6,000 are working E Lokta alikot, and Surkhet. O K S$1,000 per full-employed person, who approximately earns

on of handmade paper, and another 1,000 in paper products on of handmade paper, and another 1,000 for U ti 57 A With suitable forest land available, it is es With suitable forest land available, it on by adults to the younger genera onal skills are passed plants. markets and strengthening of H markets and strengthening ti on through wastewater is not considered to be severe due to very project, ti me equivalent) is 28,000 (Bhishma SS as coopera ti EU ons: on. on. collectors, ti ti EU on Prospect: Lokta ollu ti Tradi n DPA ca P aper-making process is highly water- and fuel-intensive. However, paper fi A N P ng the sector in 2006-08 through a range of ac Lokta ti

A on, etc; (b) T ve socio-economic impact on rural popula ng of collectors and farmers are partly trained and are aware of the environmental collectors and farmers are partly trained and are aware of the environmental ti ti on. ti ti al for future job crea ti rewood. fi olpa, Humla, Jumla, D liza Lokta ti

TZ and H c Supply Condi G ti c harves fi

ti FIN. on from donors. on, cleaning, and grading of on, cleaning, and grading Women, either as workers or as entrepreneurs, play important roles in di Women, either as workers or as entrepreneurs, ti plant u ti RU SS were already suppor on can reach up to 110,000 MT, compared to a current produc ti – mates that employment (not full- ti en on, waste reduc P tt ti DPA S aski, Myagdi, Lokta N P rasad Singh, p. 2. to about 8,000 people in Nepal. K on to Skill Development: A ti P onal supply and posi liza ve fuel instead of on centres do not report any energy and water constraints. ti on of full employment is based on the earning of EE ti ti ti ti TZ/ (a) training for es include support are extended to other districts with added T support are extended to other districts ti cant a cant G fi vi the industry. mated that women provide more than 50 per cent of employment in EU TZ and H alcula ti ti le use of chemicals. Some entrepreneurs have installed wastewater treatment facili G Bibendra C aper in Nepal, with aper in Nepal, with tt nother study es amjung, and quality improvement; and (c) market promo and quality improvement; outcomes are an increase of export to outcomes are an increase input u farm development. improvement, and product diversi alterna further training and improvement in tools and opera further training and improvement in tools managed to reduce the adverse environmental e L li has registered ‘Nepalokta’ as a trademark (a property of H has registered ‘Nepalokta’ as a trademark for example Salyan, possible in forests of about 30 disadvantaged remote districts. Such districts are, to and processing, around 1,000 in the produc including collec es manufacturing. The poten with 55 56 57 ac located in disadvantaged/poor parts of Nepal. Further development and u impact of unscien impact of Energy and Water Constraints: Environmental Impact: Impact on Development of Disadvantaged Regions: produc Gender Impact: Contribu for addi Index 4: Socio-economic Impact Current Employment and Job-Crea Prospect for Domes give FT signi P paper produc A Nepal). advantages comparedtomaincompe products suchasenvelopes,nodis paper andnormalpaper,thoughtheresurelyexistsawidevarietyevenwithinhandmadepaper.Forother Handmade paper(4802.10)istheonlyproductforwhichtradedataallowsustodis Market a markets. Therefore,itisdi tt rac akCountry Rank

0Mla010 5.%0 %UK,Italy,Tunisia 0% 0% 153.8% 1.0% 0 Malta 10 N T I S ti aa 41.%19 %-%China,Taiwan(China),Thailand Indonesia,UAE,China -3% -1% India,Russia,USA 0% Indonesia,Sweden,Netherlands 3% 5% 10% India,Singapore,Taiwan(China) 10% 0% 1.9% 0% ? 100.7% 5% Egypt,Qatar,China Belgium,Germany,France USA,China,Japan -5% 0% 0% 45.9% 10.7% 2.3% Germany,India,Sweden 17.9% 0% 1.8% 5% 0% 0% 2.0% 44 0 5.4% 0% 136.8% 0 19.7% 59.9% 12 3.8% 151.3% 0 6.5% 5.1% 6.9% Japan 0 Egypt 9 17 9 Qatar 8 26 India 7 Nigeria 6 SaudiArabia 5 Netherlands 4 Canada 3 Denmark 2 1 68 ve marketsforhandmadepaper are

A 2010 tt rac NEPAL TRADE I BACKGROU aktop10SIZE Rank 0BlimIdnsa wteln 12 BelgiumIndonesia Switzerland 10 ti S r ak Ida12 17 13 26 India 181 Canada 143 35 Austria SriLanka Denmark Netherlands 32 India Malta France Sweden USA USA UAE 9 SaudiArabia 8 Qatar 44 Canada 7 DenmarkIndia NigeriaCanada 6 NetherlandsEgypt Germany 5 DenmarkSaudi 4 Japan 3 France 2 Arabia 1 Japan veness Index Exports Nepal N ffi (2008) cult to iden D R NT EPOR EGRA Attractive marketsforHandmadepaper(HS4802.10)

Attractive marketsforHandmadepaper(HS4802.10) Top 10bysize,growth,openessandcurrentexports T Attractive MarketsforHandmadePaper World market Top 10-WeightedMarketAttractivenessIndex TI ti tors existonlyinIndia. O share ti N ti fy a nc S GROWTH T top10 ti RA D on ispossibleandwe arenotabletodirectlyiden tt rac enmark, T EGY 2010 (2004-2008) Growth rate ti Table 2.30 ve marketssolelybasedontradedata.Thatsaid,themost OPENESS C anada, Netherlands,Saudi top10 Tariff for Nepal top10 currentexportsfromNepal advantage Tariff (US$ 1,000in2008) ti nguishbetweenhandmade A rabia, andNigeria.Tari Main competitors ti fy a tt rac ti ve ff

N T I S orea K ed as fi

ti 2010 69 gures from gures c work and fi ti on costs are smen of the ti ft s ti markets. There T cal instability and EU ti Import EPOR 58 R lso, produc EGY 2010 D T A N country. erent parts of the ff RA en religious or ethnic designs T ft S N nique pieces of ar mes, Nepalese cra mes, markets have been iden S$5 million. ected. ti O U ff in al for future export is seen U TI ti athmandu valley in the districts of EU BACKGROU K anada, and several C EGRA , A NT S U S$9.5 million in 2008). Industry sources put the S$9.5 million in 2008). Industry sources U , and several onal processes. onal A ti S fs. Since ancient fs. ti U NEPAL TRADE I una the sector largely gures were used for the calculation of gures were used fi ft cs, 2009 (provisional). ong, ti xport of silver jewelry has remained quite stable for the past xport of silver jewelry has remained quite K Table 2.31 s E ti es are mainly located in ti vi ti frica. Hong A ons (see below). ti cial exports mainly go to the cial exports ccording to producers and traders, poten ffi S$15 million. A

O U Nepal’s world market share is around 0.2 per cent.

Several types of silver jewelry having unique and o Several types of silver jewelry having unique Export Value of Silver Jewelry, 2005-2009 (US$1,000) Export Value of Silver Jewelry, 2005-2009 2005 2006 2007 2008 2009 8,312 8,588 9,774 9,519 n/a avre and in Janakpur. ons: ’s calcula ti K ons: entre, Nepal Foreign Trade Sta xport has been fairly stable in recent years. ti C C sources, import of le import of jewelry is recorded. However, according to industry indicators. Source: TradeMap (mirror data). Most exports Notes: Products covered are 7113.11/19 and 7117.19/90. are silver jewelry (7113.11). Above E tt

erformance na value. Nepal imported silver cular silver, accounts for roughly 50 per cent of the export on and trading ac ti ti na on P ti ti ti cial import of silver jewelry registered by India, but it can be assumed that export to India ffi rospect for future export is generally seen as very good. The recent poli P ussia, and South

romo R Very li P xport E xport hina, E ve and workers are readily available. cally no o C ti S$10.3 million in 2008, some of which will have been used in the jewelry industry. ti on countries suggest that exports are even higher (

ti ti al Export Des U ve markets by IT ti ti icts between employers and workers have le icts between employers and workers have na fl ti rac Trade and ommercial produc tt alitpur, Bhaktapur, and higher, at around gure even L an average annual export value of three years (2006/07 to 2008/09) with Shakya and Sunar families have produced pieces of gold and silver jewelry in di have produced pieces of gold Shakya and Sunar families C con compe design are based on cultural, ethnic, and religious mo design are based on fi exist and is done informally. 58 are exported. (South), Dynamism of Exports: Export Prospect: Poten Nepal’s World Market Share: Trade Balance: raw materials, in par Types of Exported Products: Current Export Des worth Index 1: Background is completely handmade using tradi Nepali silver jewelry 9) Silver Jewelry a are prac des trend forthemarketproduc cer containing cadmium,whichisexpectedtobeintroducedbythe entrepreneurs andoperateassmallscale/co 62 61 60 59 Produc Producers: Index 3: World MarketProspect: Major Compe Market AccessCondi P Index 2:WorldMarket Produc Quality ofProduct: U and by9percentvolume. grown by14percentannumbetween2004and2008value(partlyre No speci jewelry. Tari mechanized. materials, inpar involved inproduc cra individual cra U 50 percentoftheexportvalue. directly involvedinjewelryproduc exports. of silverwithcadmiumwasraisedandexportershavebecome cau rice S (free/5-13.5percent),Japan(free/6.2 S Nepal Nepal A A Federa E A nterprises ft ti n es n es fying ins sman annuallyproduces5kgofsilverjewelry. .

fl N T I S 70 ti ti uctua mate givenbyoneoftheleadingexportersjewelry toJapan,Mr.Suman mate givenbyoneoftheleadingexportersjewelry to G ti ti ti on ofHandicra on Capacity: on vity: old andSilver fi c NTBshavebeenreportedbytheinterviewedcompanies,expectforpossiblebanon silver

P

D 2010 A vt ff ti ti omes rates(forNepal/MFN)forsilverjewelry(7113.11)insomemarketsare: ccording totheFedera Jewelryisfullyhandmade. ons maymostlyre ft tu L smen indi ti td., tors inWorldMarket: NEPAL TRADE I BACKGROU ti ti cular silver,havetobeimported.Itises ons. K athmandu, Nepal.In2008,theaverage worldmarketpricefor1MTofsilverwasaround E ti Nepalisknownforthehighar ft ntrepreneurs on ofsilverjewelryandtheannualproduc s ti c Supply ti

A ons (Tari A ssocia Note: Datashownhereareonlyforsilverjewelry(7113.11). Total WorldExportValueofSilverJewelry,2005-09(US$1,000) t presentannualproduc Themarketforsilverjewelryproductsisgrowingrela ,0,0 ,0,0 ,4,0 ,6,0 n/a 4,367,000 3,941,000 3,309,000 2,805,000 ff erent villageswhohavein-houseworkshops. N 0520 0720 2009 2008 2007 2006 2005 ti D on ofNepal,Handicra R NT A C EPOR ssocia ti ondi ff EGRA on stepsundertakeninNepal. fl s andNTBs): ect changesinthepriceofsilveranddo,therefore,notnecessarilyshowa C ti ondi on andexportin2007/08 ti T on andotherindustrysources. ti onofHandicra TI ti ons O ThelargestexportersareThailand,Hong N P ti S ons roduc T RA tt ft Trade age producers.Firmsnormallyoutsourcejewelryproduc Mostmajormarketsgrantduty-freeaccesstoNepalesesilver T EGY 2010 Table 2.32 ti vity andqualitycan beimprovedifproduc ti ti EU on ofsilverjewelryis15to20MT. s D C ti markets,Mr.Swoyambhu irectory 2007/08,p.280. 61 c qualityofitsjewelry. ft anada (free/5-8.5percent),andIndia(free/10cent). s Itises A ssocia ti mated thatthevalueaddedinNepalisaround40- 59 ti mated thatthereare6,700cra . ti R onofNepal,527 A ti atna on capacityises ll ofthesecompaniesareownedbyprivate ti ous onpossibleadverseimpactfuture EU D hakhwa, andwhichwouldrequiretes R atna Tuladhar,Managing R P ecently, anissueofadultera fl roprietor, Valhalla ec ti vely fast.World exportshave ti ng higherpricesforsilver), fi rms andcompanieswere ti K mated at50MT. ong, U EU S$ 0.5million. 60 (free/2.5percent),

EU E O ti nterprises, D on werefurther , n averageeach irector, C ft hina, andthe smen (FT smen Y ak and ti L ng and ng alitpur, 62 ti on to

R ti Y on EE aw e ti

) ty, on ti ti ng,

N T I S tti al al ti on on on ti gures are gures fi 71 oten

2010 P ract many al quan al mated that mated tt quamarine, ti ti A ntrepreneurs spersons are on for export E ft ti xport E cial trade cial ssessment in Nepal, , T ffi A O O al ti anka, and distributed /WT EPOR L R on, it is es AD ti oten T P EGY 2010 D C T N N U RA xport T E , S athmandu and strengthening of to reduce wastage and enhance O N entre, smen in modern equipment and K C ft 64 country smen are available in the O ft ng, etc. ng, TI /WT ti BACKGROU akistan, and Sri AD P T on for silver jewelry development and ti C EGRA N olicy 2009 stresses (a) a separate strategy olicy 2009 stresses (a) a separate strategy U onal Trade onal P NT ti ng, calibra ng, ti There is no labour shortage and the industry There is no labour 63 entre, C of around 6,700. In addi mated that currently 10,000 cra ti and Thailand. Monthly ng countries, such as India ti EE aw materials are available without any restric aw materials are available R ommercial C NEPAL TRADE I onal Trade onal smen and exporters in ti It is es ft c (50 per cent) as well as foreign (50 per cent) markets. ti (b) mining of gemstones and gems processing on of jewelry, es of gems are available in Nepal. The most popular ones are The ti ti arnets. See also Interna lmost all silver and 95 per cent of gemstones and semiprecious lmost all silver and 95 per cent of gemstones G athmandu valley to more remote areas provided special ac A ecently labour cost has increased by about 20 per cent due to has increased by about 20 per cent due ecently labour cost

K athmandu valley. In the short-term, export of jewelry can be encouraged by R ng, drilling, policing, vibra K tti bout 50,000 gold and silver cra bout 50,000 gold and on, with an FT

ti A

S$100 in Nepal. ons: ti include cu onal technology is a unique selling point. The processes U ti on Prospect: Being a low bulky handmade item, jewelry does not a Being a low bulky handmade item, ng new workers. ti ng, policing, and studding of gemstones, as required. ng, policing, ti on, See also Interna eology, 200 varie es. There is no separate associa ffi ti ti c markets are usually exported later, either through resale to tourists or c markets G ti on Cost: ti vi Tradi rac ti tt ng costs by engaging in informal exports that help to reduce procedural costs. ssocia ti ng Industries: ng ons, (c) duty-free import of equipment and tools, (d) provision of training, ons, (c) duty-free import of equipment and tools, (d) provision of training, ng, soldering, cu ti ti ti es. A ti mated. ti on ac on ty. 66 ti ti The poor business environment has encouraged informal trade in substan The poor business environment has encouraged utput is supplied to domes c Supply Condi ti O c Suppor c es. uby and Sapphire, Tourmaline, and ti

ti ntrepreneurs ves and Donor Involvement: R ti E ng capabili ng ti a epartment of Mines and ti ng, embossing, bu ti D ng promo ng ti than in compe onary pressure, but is cheaper ti a fl old and Silver required for jewelry are imported from India, Brazil, Thailand, required for jewelry are imported from c Demand: yanite, Quarts, on. ti G K ti 65 ssessment in Nepal, 2007. ccording to the A 2007. Such tools and equipment are for cas A Jewelry exporters have reduced opera therefore expected to be underes Nepal Beryl, ciency of Domes ffi promo exporters’ marke can be outsourced from the districts outside and (e) marke programmes are implemented. Some of such measures are training of cra tools, establishment of linkages between rural cra available to work for silver jewelry produc and 40 per cent of them are in and around and 40 per cent of them 64 65 66 through informal exports. Current Employment and Job-Crea 63 Index 4: Socio-economic Impact However, products sold in domes Prospect for Domes jewelry produc extending support to introduce modern equipment and tools. In the long run, Business Environment: Government Ini is unlikely to face problems in a is unlikely to face problems product quality and quan E by local importers. Domes including income tax. which is also related to evasion of taxes, the promo for gems and semi-precious stones for through trade-friendly regula Level of Processing Technology: Cost and Quality of Infrastructure: Labour Cost and Overall Produc Labour Cost and Overall stones Availability and Quality of Labour Force: Availability and Quality overall in salaries for skilled workers are around salaries for skilled workers foreign exchange payment on import. have felt an urgency to introduce modern machinery, equipment and tools have felt an urgency to introduce modern infrastructural facili molding or cas 67 in themosta that isexportedunderpreferen a current exportmarketsalsorankhighintheoverallM whether thetypesofjewelryproducedinNepalmatchwithtrendsexportmarkets.Some Silver jewelryisaveryheterogeneousproduct,sowhetherNepalcansupplycertainmarketsalsodependson Market Environmental Impact: Energy andWaterConstraints: Impact onDevelopmentofDisadvantagedRegions: Contribu Gender Impact: valley. cra increasing theproduc another 1,300peopleareemployedintheindustry,pu good linkagesbetweenexportersandcra the collabora have tobeaddressedandconstraintsclearedout.Ini exportable silverjewelryfrommanyotherdistricts are developedfromon-the-jobtrainingtoappren dominate theindustry,about15-20percentoftotalcra systems arerequiredforwastereduc tt Some poten rac akCountry Rank ft 0Cnd 5 .%1.%0 %Thailand,USA,China 2% 0% 19.7% 2.2% 857 Canada 10 smen tosilverworkorbygivingon-the-jobtrainingincumbentsinvariousdistrictsoutside pi .%2.%0 %Italy,Denmark,HongKongSARC 1% Thailand,Denmark,HongKongS. 2% Thailand,USA,Italy 1% Thailand,Germany,Italy 0% 2% Thailand,Italy,China Italy,Thailand,Germany 2% 1% 0% 22.5% 0% 0% Thailand,China,Denmark 0% 39.5% China,Thailand,India 2% 0% 30.2% 4% 3.0% 47.2% 11.2% 2.2% 17.5% 0% 2.8% 0% 0 2.6% China,USA,Italy 0% 6.0% 4.2% 12.8% 298 11.8% 42 8 0% 57 8.1% 855 31.7% 20.7% 246 2708 Netherlands 9.3% Spain 9 Australia 8 Denmark 7 0 France 6 UK 5 Germany 4 USA 3 Hong Kong(SARC) 2 1 N T I S 72 ti ve market, butwithnoimportfromNepalrecordedin2008.Tari ti on toSkillDevelopment: A ti 2010 al districtsareTansen, tt tt rac ti rac ve e ve NEPAL TRADE I BACKGROU Bu ti ti ve markets,withoneexcep ffi veness Index ff ng, polishing and orts ofgovernment,non-governmentalins ti on by50percent.Increasedmarketdemandcanbemeteithera

A Exports Nepal dverse environmentalimpactisminimal. N D (2008) D R NT ang, Banke, EPOR ti Jewelry doesnotrelyheavilyonwaterandelectricity. EGRA al rates(ratherthanMFNrates)tothe Attractive MarketsforSilverJewelry(HS7113.11) Tradi T

Top 10-WeightedMarketAttractivenessIndex TI Attractive MarketsforSilverJewelry World market ti on, qualityimprovement,andproductdiversi O fi R nishing ac N upandehi, Sunsari, share ti S ft onal skillsarepassedonbyadultstotheyoungergenera smen, etc. T RA ti T on beingthe EGY 2010 Table 2.33 (2004-2008) Growth rate ti ti vi 67 ces. Formaltrainingwithimprovedtoolsandopera outside ti es aremostlydonebywomen. D Someoftheexporterscanimmediatelyoutsource A hankuta, and tti I (eg ng thetotalnumberat8,000.Thereisprospectof ft U K smen arees Tariff for U S athmandu valley.However,anumberofissues Nepal A S ti A ally, itisnecessarytoprovidetrainingunder . SilverjewelryisthemainNepaleseproduct ti , France).Hong C tu hainpur. ti ons andexportenterprises,establish advantage Tariff U ff advantagesplayonlyaminorrole ti S market. mated tobewomen. K ong appearstobeavery fi ca A Main competitors lthough maleworkers ti on. tt rac K ti athmandu ons. Skills ti ng gold ng ti onal c N T I S ti

2010 73 T EPOR R EGY 2010 D T N RA T S N O (US$ 1,000 in 2008) TI BACKGROU on with a total capacity of 2 million on with a total capacity ti top10 current exports from Nepal top10 current exports from EGRA ve terms, but very high in absolute terms ti NT S$100 million. Most of the plants serve domes S$100 million. Most of the plants serve on is based on imported steel coils, steel sheets, on is based on U ross export of steel products in 2008 was around ross export of steel products in 2008 ti top10 G OPENESS NEPAL TRADE I Table 2.34 55,161 48,967 36,453 81,338 149,430 Attractive Markets for Silver Jewelry (HS 7113.11) Attractive Markets for Silver Top 10 by size, growth, openess and current exports Top 10 by size, growth, openess round ten of the largest plants also sell their products to India and Bhutan. round ten of the largest plants also sell Export Value of Iron and Steel Products, 2004-2008 (US$1,000) A erformance but some export cally, all trade, both imports of raw materials and exports, is with India, ti P investment of more than mated total ti Mirror data 2004 2005 2006 2007 2008 rac P Exports overseasExports to IndiaTotal exports Source: TradeMap (mirror data). 251 54,910 48,694 273 36,110 343 80,507 831 147,983 1,447 12 USA3 Hong Kong (SARC)4 Netherlands Germany5 UK Spain6 Japan India7 Denmark Tajikistan France8 AustraliaItaly Spain9 Australia USA USA Denmark Canada Hong Kong (SARC) Japan France Kyrgyzstan Germany Denmark USA France UK Japan Switzerland Iceland Netherlands 491 2,708 857 Germany257 Canada Germany 855 298 368 Ukraine 246 61 10 Canada Thailand Italy UK 57 Rank top10 SIZE top10 GROWTH xport E S$150 million. U also goes to Bhutan. compared to most other sectors covered in this study. compared to most other sectors covered wires, etc. Thus, the added value of the industry is rather low in rela wires, etc. Thus, the added value of the There is no manufacturing of steel in Nepal. The produc There is no manufacturing of steel in market requirements. Index 1: 10) Iron and Steel Products Background plants based on imported raw materials began to be set up in Nepal Modern steel products manufacturing around 50 plants in opera since the early 1980s. There are currently tons and with an es is morerelevantforNepalthedemandsteelproducts fromitspoten directly a upcoming changeofthecontractsystemthatwasannouncedinMarch2010.Butthesedevelopmentsdonot between 2003and2008haveincreasedfurthersince. P Index 3: Market accesscondi World MarketProspect: Index 2:WorldMarket Dynamism ofExports: Poten Current ExportDes Types ofExportedProducts: growth ofconstruc India. India’sdemandforsteelproductshasbeenverydynamic inrecentyearsand,withaforecastedannual one reasonforthatiscertainlytheincreasingcostofrawmaterials. imports ofironandsteelproducts,butprovidesfreeaccess toNepal. to thetari re power andtelecomsectors;(g)bicyclerims. engineered buildings,transmissionandtelecomtowers,steelbridges,etc.;(f)telescopictubularpolesfor colour-coated steelsheets;(c)blackgalvanizedpipes;(d)wires;(e)structures:pre- Indian companies. of theproduc O made toothercountries,e.g.Tanzania. from exporters,BhutanisanimportantmarketforNepalesesteelproductsandsomeexporthasalsobeen goes toIndia,withnegligibleexportBhutan, other companiesexportsimilarsharesoftheirwireproduc companies exportsalmost75percentofthetotalsheetproduc are beingregularlyexportedandmainlytoneighbouringmarketsinIndiaBhutan. given anorderforelectricalpolestothetuneof15,000MT. roducers: Therearearound 50 plantsinopera n average10percentofthetotalproduc fl ects theincreasedpricesinrawmaterials. N T I S 74 ti al ExportDes ff ect theNepalesesteelindustrybecauseNepalisnot‘selling’but onlyprocessingsteel.What ff s facedbymajorcompe

D 2010 omes ti on is,however,forthedomes NEPAL TRADE I BACKGROU ti ti on inthenextfewyears,thiswillcertainly remainso. ti na ti c Supply ti 9,2,8 5,5,9 3,5,8 8,9,9 826,689,312 682,594,896 539,355,488 456,050,992 Source: TradeMap. 393,527,488 na ons: E ti xports havegrownfastinrecentyearsandalmosttripledsince2004.However, ons: ti Theworldmarketforironandsteelproductshasbeenverydynamic,butthisalso ons: N 0420 0620 2008 2007 2006 2005 2004 Nepalwouldenjoynopreferen D Total WorldExportValueofIronandSteelProducts

R Themainitemsofexportinclude(a)coldrolledsteelsheets;(b)galvanized NT A C EPOR R ccording too ondi EGRA espondents seesomepoten C ondi T ti tors.Theonlyexcep TI ti ons O N ti S ons ti T (HS chapters72+73) on ofhighervalueaddedproductslike RA ffi ti cialtradedatafromimpor c market.Someofthe T E EGY 2010 Table 2.35 A ti gypt, andJapan. on andaroundtenofthemarecurrentlyexpor verage unitvaluesforexportofironorehavequadrupled ti onisIndia.Indiaappliesa5-10percentduty ti al accessinalmostallmarketswhencompared ti ti A al in on. on. ddi ti ti A on toIndianandBhutanesemarkets onal increasescanbeexpected fromthe A R ccording toinforma frican markets. ecently, Bhutan fi rms operateunder jointventurewith ti ng countries,prac ti al exportmarkets,inpar G I andpre-coatedsheets P ower ti on directlyobtained O ne ofthesurveyed C ti cally allexport orpora ti ng. Most ti on has on ti cular

ti N T I S 9001 roduct O P 2010 75 ng any major ti a T ti ng the companies ti vity in recent years. vity in recent years. ti EPOR s6-7 per kWh). R R B) scheme. EGY 2010 D T on of discriminatory NTBs N ti DEP RA T er 145 grams of zinc-coated er 145 grams ff S I) have approved NS. on of products to suit customer N ti O osco, Nippon steel, and Tata steel. PGC P TI BACKGROU s20 instead of assbook ( es, imposi es, ti ve in earlier instances, as it has invited R P uence over the steel sector. This leads ti fl on of machines through diesel generators vity could also be increased further in vity could ti EGRA S dollar payments make Indian exporters S dollar payments make Indian exporters ti terms with vendors ate good commercial on U ti NT ti cal interference, and labour laws, seen as cal interference, and labour ti onal du onal al advantage. al ng cost ( ti ti ti on obtained from Nepalese producers, Nepal’s xemp ti on of India ( ect correctly or promptly in neighbouring Indian ti E fl tors in India: ti me and customiza ti uty cally, produc D ti is as follows: on capacity orpora ti NEPAL TRADE I C cant control and in fi S dollar allows Nepalese producers to source raw materials S dollar allows Nepalese producers to Nepalese steel products are considered to have high quality U rid ng for exports to India as well as preven ti G es through addi ti icts with workers, poli fl ccording to informa ower ty and delivery ti P A

ons between Nepal and India have improved. ti like general strikes, power on has been restricted by adverse external factors in case of vanaspa on with the Bureau of Indian Standards, a quota system ti onal standards. onal ti ti vity, etc. vity, ti onal steel markets does not re liza c rela c ti ti ti ng in Indian market has been counterproduc ti Nepal’s current annual produc Nepal’s current annual ng a long-term strategy for entering the export market. ti on of export-oriented companies in each product line currently varies from 50-100 per on of export-oriented companies in each product line ti onal standards. Several factories have undertaken various measures, including IS onal standards. Several factories have undertaken various measures, including ti liza ti demand for development c supplies in India and Bhutan have not adequately met the growing ti overnment of India and exibility in terms of quan to import against payments in es fl ve and NTBs from Indian authori lity in interna ti G ti ti veness of the Steel Sector: in produc on and training of workers. Such measures have resulted in an increase ti ue to the volume, the companies have been able to nego ue to the volume, the companies have omes nother reason for investment in Nepal had been the labour cost advantage compared to India. If nother reason for investment in Nepal had been the labour cost advantage ggressive marke old rolled galvanized sheets (340,000 MT) old rolled galvanized ti ack of reliable electricity supply is a major constraint. The opera

on Capacity: on ecently, capacity u ti ti ghee, etc. like mandatory registra from formula Nepal. However, increased con discriminatory by employers, have reversed this poten is possible, but it entails heavy investment and high opera at a slightly cheaper price (2-5 per cent) because receiving at a slightly cheaper price (2-5 per cent) designs and technical standards meet the Indian requirements. puni eligible for duty-free imports under the Indian eligible for duty-free imports under the market as the Indian government has signi to increased risk for long-term contrac L requirements. zinc and steel majors like like Hindustan Zinc of India for supply of A the industrial labour pool is trained systema A D products. For example, while most of the reputed Indian (NS) and ISI for making standard quality Nepalese companies o companies use 120 grams zinc in galvanizing, D C projects. sheets to meet interna R ca Vola

The Trade and diploma the companies are registered with Nepal Standard The product quality is well recognized as some of High Facili MT) Black galvanized steel pipes (220,000 etc (240,000 MT) Structures, poles, towers, bridges, MT) high tensile galvanized wires (84,000 Mild-low carbon-coated and and zinc 36 per cent) (4,000 MT) Brash sheets (copper 64 per cent Bicycle rims (1,000 MT) fi

ti thrust for export: outages, low labour produc The following impediments to expanding the export market prevent the company from ini The following impediments to expanding the export market prevent the company steel industry is based on certain advantages over compe steel industry is based on certain advantages cent. and meet interna cer Quality of Products and Processing Technology: The capacity u Compe Produc facili comparable orevenlowerthaninIndia. Duty drawbackprocedures: Business Environment: Cost andQualityofInfrastructure: Labour CostandOverallProduc abreast ofinterna Many companieshaveinvestedinthelatesttechnologymostofproductlinesonaregularbasistokeep C currently enableopera gasi all exportshavetoberevisitedinconsulta as frequentcon par well asensuringlong-termcompe manufacture pre-coatedsheets,whichsimultaneouslyaddressthefuture at regionalandgloballevel.Theupcomingmajorinvestmentincapacityisfornewcolourcoa from theindustry. improved toincreaseproduc two countries.Therefore,theprovisionofmandatoryvalueaddi make anysuchNTBsandithasgivenopenduty-freeaccesstooutputbasedoninputsoriginatedineitherof duty drawbackinNepal.ThismandatedrequirementhasnologicwhenNepal-IndiaTradeTreatydoesnot present, thereisarequirementofminimumvalueaddi zinc. Themajorsourcesofimportareinterna The mostimportantrawmaterialinputsarehot-rolledcoil,sheets,steelwires,MSbillets,spongeiron,and India hasthreetypesofdutyrefundschemesfordi C The rangeofdomes be refundedifusedforexports. Import tari generated). Therefore,thevalueaddedofindustryisroughlyaround20percenttotalcost. these inputscons (Japan), andT follows: should bepermi requires workingcapital.Therefore,respondentsarguedthat allrawmaterialsimportedforexportableoutput duty-free importofinputspriortoexportorpost-export of goods. example, asingle-windowsystemfortheexporteratpoint ofcustomsandtheop Industry respondentsarguedthatthedrawbackprocess shouldbestrengthened,whichcouldinclude,for per centtopossiblymorethan60cent. osts ofsuppor er i. ti ti fi clry a cularly

ca ti fi es. es. cate’ shouldbeintroduced,asinIndia. N T I S 76 D in therawmaterialsofexported products.Thiscer exported, the ti on plant,andthisisreplacingtheuseofabout2,500 lofdieselfuelperday.Self-genera uty A ff 2010 s ofthe lmost allhavedieselgeneratorsandsomealsointroducedbiomasspowerbyinstalling E ff xemp ected byunreliableelectricitysupply.Mostofthefactorieshaveinstalledself-genera A ti fl T NEPAL TRADE I BACKGROU ve orlogis tt icts withemployees andpoli A ed againstabankguarantee.Incasewheredutyisalreadypaid,‘ ti ti tute 75to83percentofthetotalcost. SteelandHindustanZinc onal development andhavebeenabletokeepitsopera ti on G ti c valueaddi DEEC oN onmajorrawmaterialsare5percent ti

on ofmostprocesses,butareaddingsigni E P n roducers interviewedpointtotheoverlycomplicateddutydrawbacksystemaswell ti N isissuedtotheexporter extentoftheamountdutycomponentinvolved ti tlement c industriesliketransporta D ti The exis vity. R NT EPOR EGRA ti ti on variesacrossproductsandindustriesbyawiderangefromaslow5 ti

o Cost: on ti Manufacturing ofsteelproductsishighlypower-intensiveand,therefore, T veness oftheproductline. C TI ti er ng processesforaddressingtheissueofprovidingdutyfreeinputs O ti N

fi L S cate ( abour costsarealsocompe T ti RA on withallstakeholdersinordertostreamlinethefacility.

ti L ti onal steelcompaniessuchas td (India). cal unrestsasconstraints. T A EGY 2010 DEEC ccording toindustrysources,overallproduc ): When ti ff ti on werealsoconsideredveryhighbytherespondents erent purposesanddi on of20percentimportedinputvaluestoen A A ccording toinforma ti nother majorinputiselectricity(fromgridorself-

fi cate isrestrictedtoduty-freeimport ofinputs fi nished products containingforeigninputsare ti C on fordutydrawbackshouldberemoved. fi cantly toproduc IF value,which,atleastinprinciple,would D eposit ofdu ti

ti ve, buttrainingofworkershas tobe ti P ng costs parameterscomparable EU osco (South environmentalregula ti ff on obtainedfromexporters, erent typesofindustriesas ti es, evenifrefunded later, D ti on costs. uty-free ti on forexporters K orea), NipponSteel R ti ti on costs are eplenishment on capaci ti ng linesto ti ons as ons ti ti ti tle on es A t

ff ce ti on, N T I S ti on of on ti 77 nal lot of fi on leaves on

2010 ti on industry. industry. on xed. It varies tlements are tlements ti fi ti onary powers onary es of inputs by ti ti T me the me ti gender ve impact on ected. ti ff EPOR R ons when the exchange EGY 2010 D ti ng give full employment ti T N rudent commercial prac RA P ed and discre be applied for valua es T fi ti on of rate for valua S ti cular posi cular on. The Indian market will likely N ti ti me. me. O ti TI BACKGROU on, the close link that has already been of import cargo is not on ti ti EGRA me to me ti NT cular through the booming construc ti nished products, the input import en fi I index , mainly because these markets are very large of exporter can import such inputs free tlement, the ti cials from cials A ffi The industry is mainly located in urban areas within the The industry is mainly located in urban NEPAL TRADE I mated to be less than 5 per cent. be simpli on process should Ten factories engaged in expor ti of payment of import du me ): It is value-based (value cap-based). There is no passbook. cap-based). There is no passbook. ): It is value-based (value ti ti RC B): This is similar to the process in Nepal, but there is no value the process in Nepal, but there is no value B): This is similar to F on being India. However, two caveats of the index have to be ti D mate businesses are invariably adversely a ti DEP

68 that the total steel subsector gives employment to more than mated ti cate ( cate on of customs o fi ti

on Prospect: ti ti er C on in the near future because of loca cial clear the cargo the next day. This has implica cial clear The industry is highly electricity-intensive. Water is necessary for cooling in The industry is highly electricity-intensive. Water is necessary for cooling in on and legi ti rank very high in the M ffi ti na industry. cular exporter ti UAE ti verall, the environmental impact can be considered low. There is no steel produc assbook Scheme ( tors, the main excep P on and discre O espondents from the industry considered customs procedures as very cumbersome espondents from the industry considered

ti ti R uropean markets.

cular impact on poor areas or disadvantaged regions. E ti on ti veness Index veness eplenishment ti learance procedures of imported cargoes are normally delayed by one day. If an enterprise learance procedures of imported cargoes of cargo or at the en the rate applied is changed during physical crossing R on growth rates for India are forecasted to be around 10 per cent in the next few years, but ft varie like a bond for duty-free imports of cate is transferable and can be sold C ti fi Most employees in the industry are men and there is no par Most employees in the industry are men

ti on steps, but water supply is not considered a problem. xemp rac ti E tt the exporter exports on requirement. When ti A 5,000 workers. It is es mated uty Free uty ti any industry. This cer duty. D credited in the passbook and to the extent of en credited in the passbook addi D required for the par applicable exchange rate for valua cials restricted. The rule of ffi and valua uctuates. Therefore, the clearing oned: First of all, many markets appear very dynamic, but this is very much related to the increase in oned: First of all, many markets appear very dynamic, but this is very much fl ti iii. ii. See factsheet for engineering services. nnual construc uropean markets and the A only 1-2 per cent for established, and the very dynamic demand in India, in par many doors open for manipula remain the main export des the world market prices for steel in recent years and not necessarily in a similarly large increase in demand the world market prices for steel in recent years and not necessarily in a similarly for steel processing. Second, transport costs have to be taken into considera 15,000 people in Nepal. the import cargo is crossed from the customs point. This ambiguity in applica the import cargo is crossed from the customs men equality. The share of women in the industry is es equality. The share of women in the industry to an es cargo, whereas o 68 advantage over compe Market E Impact on Development of Disadvantaged Regions: Impact on Development of Disadvantaged Terai and has no par Energy and Water Constraints: some produc Environmental Impact: Nepal would enjoy any tari and have been very dynamic in recent years. There are a few countries where Current Employment and Job-Crea Gender Impact: Index 4: Socio-economic Impact Customs procedures: for their sector. deposits duty today customs o rate which could cause a lot of emissions. demands that the exchange rate prevailing at the demands that the exchange rate prevailing with o according to interpreta N T I S 78 akCountry Rank 0See .%2.%0 %EU,China 0% 0% 24.3% 2.8% 0 Sweden 10 rne046 .%0 %EU,China 0% EU,China 0% Japan,Korea,China 0% India,China,Korea 0% 0% 0% 9% EU,China EU, 8.9% 5% 0% 0% EU,China China,Korea,Japan,EU 10.3% 0% 5-10% 31.8% EU,China 47.9% 0% 0% 0% 4.6% 0% 2.9% 0% 2.3% 4.2% 34.1% 0% 8.0% 50.4% 0 27.0% China 0 0 2.4% 19.4% 0 1.5% 2.7% 3.8% 7.2% 0 147,983 Italy0 0 France 9 Thailand 0 8 UK 7 UAE 6 India 5 Poland 4 Belgium 3 Germany 2 1 2010 NEPAL TRADE I BACKGROU aktop10SIZE Rank 0UEUrie Fnad21 UAEUkraine 10 Finland pi noei S 22 90 80 461 USA 147,983 33 Sudan Indonesia Chinese Netherlands Netherlands Malta 159 Egypt India 150 India Spain Taipei Australia Poland 9 Italy New 8 Sweden DenmarkIndia 7 Qatar 285 UKCanada 6 Bosnia BelgiumEgypt 5 Zealand FranceSaudi 4 Germany Japan 3 USA 2 1 Arabia Bhutan Tajikistan N Exports Nepal D (2008) R NT EPOR EGRA Attractive marketsforIronandSteelproducts(HS72+73) Attractive MarketsforIronandSteelProducts Attractive marketsforIronandSteelproducts(HS72+73) Top 10bysize,growth,openessandcurrentexports T Top 10-WeightedMarketAttractivenessIndex TI

O World market N S GROWTH share T top10 RA T EGY 2010 Table 2.36 (2004-2008) Growth rate OPENESS top10 Tariff for Nepal top10 currentexportsfromNepal advantage (US$ 1,000in2008) Tariff Main competitors N T I S

2010 79 Current Employment 300 300 205 1500 T ndary source. Exports in 2009 14,000 MT 450 75,000 MT 75,000 MT 3,600 MT 850 NA 300 4,500 MT 100 MT 7,500 MT 18,000 MT 1,000 MT EPOR R EGY 2010 D T N RA T S 80 per cent NA 250 Capacity Utilization 53 per cent 10 per cent 58 per cent 100 per cent 100 per cent 90 per cent 95 per cent 80 per cent 70 per cent 70 per cent 85 per cent 50 per cent 50 per cent 50 per cent 80 per cent 28 per cent 25 per cent 58 per cent 100 per cent 100 per cent 50 per cent 60 per cent 50 per cent NA 300 N O TI BACKGROU EGRA 9,000 MT 3,600 MT 36,000 MT 39,000 MT 36,000 MT 36,000 MT 81,000 MT 80,000 MT* 50,000 MT 360 MT 25,000 MT 75,360 MT NA NA NA NA Production Capacity 100,000 MT 100,000 MT 80,000 MT 50,000 MT 130,000MT 45,000 MT 360 MT 30,000 MT 75,360 MT 40,000 MT 3,000 MT 157,000 MT 200,000 MT 24,000 MT NT NEPAL TRADE I Table 2.37 24,000 MT 63 per cent MT 7,500

Copper-wire production and export to India (a) Black galvanized steel pipes/tubes (b) Bicycle rims (c ) Others TOTAL Exportable Iitems (a) Black galvanized wires (a) Black galvanized wires (b) Brass sheets TOTAL (a) Black galvanized wires (b)Electric galvanized wires (c) Electric and telephone cables TOTAL Galvanized colour-coated steel sheets TOTAL (a) Cold rolled steel sheets (b)Galvanized colour-coated steel sheets (c) Black galvanized steel pipes/tubes (d) Steel structures (f) Telescopic and tubular poles TOTAL (a) Cold rolled galvanized steel sheets (b) Black galvanized steel pipes/tubes TOTAL (a) Black galvanized steel pipes/tubes (b) Bicycle rims (c ) Electrical extension poles TOTAL (a) Black galvanized steel pipes/tubes (b) Steel structures (c) Others TOTAL (a) Black galvanized wires (b)Electric galvanized wires (c) Electric and telephone cables TOTAL Plants Engaged in Exports le of Major Steel and Metal fi Pro NA NA Date Established 1983 1997 2001 1981 1992 1991 1994 1997 Lumbini Cable Pvt Ltd, Butwal, Rupendehi District Hulas Wire Industries Ltd, Biratnagar Premier Wires Pvt Ltd, Biratnagar Aarti Strips (P) Ltd, Biratnagar Hulas Steel Industries Ltd, Simra, Bara Rajesh Metal Crafts Ltd, Birgunj Bhagawati Steel Ind. Pvt Ltd, Birgunj Jagdamba Steels Pvt Ltd. Jagdamba Wires Pvt Ltd, Birgunj Mainabati Steel Pvt Ltd, Biratnagar*** Pioneer Wires Pvt Ltd, Biratnagar*** 1 2 3 4 7 6 5 9 8 # Name of Steel Plant 10 Source: Field Work Notes: Production capacity of Hulas Steel Industries Ltd to increase by 80,000 MT in July 2010. (*) Figures estimated from seco Notes: Production capacity of Hulas Steel Industries Ltd to increase by 80,000 MT in July 2010. (*) Figures estimated

2,300 m. coat of and in such assilkanddyeingmaterials. promising newmarketsare relevant productcodescovernotonly is around3percent.However,theworldmarketshare isdi is some 70 69 Dynamism ofExports: Trade Balance: Nepal’s WorldMarketShare: Poten Current ExportDes Types ofExportedProducts: Index 1: Pashmina, Background 11) ChyangraPashminaProducts they arelowertodaythaninthelate1990s,whenwere reportedtobeabout exports. cent), decline isseeninincreasedcompe U shawls, stoles,blankets,sweaters,andotheraccessoriesboomedinthelate1990storecordhighlevelof usually producedusingablendof IT S$80 millionin2000/01,butthendeclinedagaintoaround C yarns. word “ IT “ Pashmina C publishedanextensivestudyonthesectorin2007. C hyangra P (2007b).

akistan arealsolargeproducersofcashmere,whichissimilar to N T I S 80 ti U al ExportDes P Capra Hircus, ti S ashmina” waso mes called‘ 69 A P nowcommonlyknowninNepalas The (12percent),India(9andJapan(7whichtogetheraccountfor90centof

E 2010 ashmina” issimilartoother C produc hyangra xport There arenegligiblerecordedimportsofsuchproducts. NEPAL TRADE I BACKGROU fi bre iswellknownforitsuniformqualityand C ti ti ft ashmere andSilk P na on, arearound en misrepresentedinthewestern marketsbyalow-valueshawlwovenoutofcheapmaterialslikeacrylic orviscose ti a mountaingoatcalled na D erformance 9011,3 5702,7 n/a 22,074 15,790 15,530 6301.20. Source: TradeMap(mirrordata).Datacoversproducts6214.10/20/90and 19,091 E iamond Fibre’or‘So ti xports havebeenrela ons(shareofexports): ti ons: N Export ValueofPashminaProducts,2005-2009(US$1,000) 0520 0720 2009 2008 2007 2006 2005 D R Themainproductsare ussia andSouth R NT Fast-growingmarketsare Nepal’sshareforthemajorproduct(6214.20,shawlsof EPOR EGRA fi ne animalhairslike “ P A roducts – nnual importsofsilkandproducts,atleastsomewhich willbeused ti Pashmina T

ti U TI onfromothercountries,whicho S$4-5 million. O Pashmina N S E xport T RA ft ‘Chyangra’

andthecheapersilkyarn. A ti vely stableoverthelastfouryears(seedataabove).However, T G frica. P Chyangra Pashmina, EGY 2010 erformance and old ofHigh Themainmarketsfor Table 2.38 C productsbutalsoother. ashmere”, “Merino”,“ Pashmina 70 in Nepal,whichinhabitstheHimalayasareasabove

C hina and P A oten U shawls,butalsootheritemssuchasblankets. sia’. ffi cult toassess using tradedatabecausethe S$22 millionin2008. fi ti al. IT neness. Itisso A UAE Pashmina lpaca”, and“Mohair”. is a C Chyangra , G ft . Pashmina en usecheaperimita eneva. R A fi ne hair ne aw materialshavetobeimported, E ccording toindustrysources,other xports of products,suchasshawls,are wool. ft shawlsarethe , warm,andverylight.It fi U bre fromtheinnerdown S$80 millionperyear. D Pashmina C uring theearly2000’s, A hina, Mongolia,India, majorreasonforthe fi ne animalhair), ti onmaterials. productslike EU (61per

ve fi

N T I S and 72 onary ti . Firms 74 ff hina and a ng 81 fl Pashmina ti C

2010 athmandu, K T vely opera and Japan apply zero EPOR ti cult to forecast. to cult 71 R ffi al, 2007, p. 23. ti ers as well as exporters. EGY 2010 D tt EU T N and silk yarns and dyeing oten RA P T 73 S le and di N ti O TI BACKGROU Pashmina on, 20,000 households in and around ti ng units, are ac on cost is high compared to tti ti EGRA products. erformance and on be expanded. ti hina and India. P NT C that include industries, kni A xport I E P urostat shows that 90-95 per cent of Nepalese exports enter the E Pashmina S market, which applies a 6.7 per cent tari S market, which applies a 6.7 per cent U tors are are tors on. ti ti ata from NEPAL TRADE I irectory, 2007-08. D s are low in most markets. The Table 2.39 D ff ng technologies. Normally, 70 per cent of pure tti hitwan districts. In addi Tari roducts from Nepal: abour cost has increased slightly due to the recent in C P Trade L ft

ons Semi-skilled workers are readily available. Workers are trained on- ti ons ti The main compe ). There are 160 members with N ondi A es with other trade barriers. I ti on Cost: on C P ti s and NTBs): ondi ff ashmere and Silk C C cul 1,138,040 1,059,315 1,222,434 1,701,445 n/a al access is granted in the ffi . on (N on ti 2005 2006 2007 2008 2009 ti P ccording to industry sources, the produc on of Nepal, Handicra S ti A G age and small industries, including 25 kni age and small industries, There has recently been a strong upward trend in world markets for such products. trend in world markets for such products. There has recently been a strong upward tt t present, almost all raw materials, including t present, almost all raw materials, including hyangra ssocia Total World Export Value of Pashmina Products, 2005-09 (US$1,000) Total World Export Value C Note: Data covers products 6214.10/20/90 and 6301.20 products are ‘fashion products’, demand is very vola products are ‘fashion products’, demand A A ons (Tari ons ssocia ntrepreneurs have gradually become more quality conscious and are interested in ntrepreneurs have gradually become more quality conscious and are interested avre, Makwanpur, and

ti c Supply c A E K ti

ft ccording to industry sources, prospect is very good for new designs and niche products sources, prospect is very good for new ccording to industry entre, A are 8-12 per cent for the relevant products.

C EU tors in World Market: ti bout 86 co omes Pashmina A ccording to producers, this capacity could easily be increased by 100 per cent within the next ccording to producers, this capacity could easily be increased by 100 per cent D

A abour supply is not a serious problem should the produc s in the L ff onal Trade onal on Capacity: ashmina Industries on of Handicra ti ti ti P market duty-free under the s to Nepal. No preferen ff MFN tari Nepal Federa Interna EU athmandu valley have one loom in each house and family members are capable of weaving shawls. athmandu valley have one loom in each house and family members are capable alitpur, Bhaktapur, India. 71 72 73 74 materials, are imported. The total capacity of the 86 industries is 2 million pieces of shawls and other items materials, are imported. The total capacity per year. 5,000 weavers in years. The factories in the organized sector have 2,000 looms and employ L the-job. Availability and Quality of Labour Force: Labour Cost and Overall Produc Quality of Service: modernizing weaving and in introducing new kni Index 3: Producers: Produc tari Major Compe World Market Prospect: However, as in the export of currently 327 entrepreneurs are involved yarn and 30 per cent silk yarn are used in shawl produc Market Access Condi Index 2: World Market Index 2: World Export Prospect: interviewed did not report di pressure in the country. K such as blankets. can becreatedforupto5,000people. facili Further dyeingfacili annually andimportedfrom produc environment prevails, raw materialsforexportgrowth. developing 76 75 Current EmploymentandJob-Crea Index 4:Socio-economicImpact Prospect forDomes Government Ini Business Environment: Domes E Cost andQualityofInfrastructure: Level ofProcessingTechnology: snow. Thiscondi per centofthecountry’stotallandsurfaceismountainousandabout50thiscoveredby produc and and transportarereportedtobeapar full employmentfromthe are beingraisedMustang,Manang,Humla,Jumla,Mugu,and the good. P looms. further pasturelanddevelopmentinmountainareasispossible. A markets. Industries to establishalong-termsourceofrawmaterials,se organiza the past, facili ffi ashmina yarns. bout 12percentoflandsurfacethecountryisalreadycoveredbygrasssuitableforpasture.Moreover, ciency ofDomes Thailand, Switzerland, Ministry of A P ashmina” hasbeenalreadyapprovedby the ccording toNepal G fi ti ti nishing dependingonthebuyers’speci es. Manysmalloperatorsaresellinggrey es, humanresourcedevelopmentforproduc

overnment’s recent N T I S 82 ti ti ti on caneasilybedoubledwithoutmuchinvestment ande on. c Demand: c ti 75 onal capacity. C A

hina (includingHong A A

sia InvestsupportedN 2010 O R Pashmina griculture and ssocia ussian Federa ther governmentpolicyini NEPAL TRADE I BACKGROU ti a P ti L on o ashmina Industries ti ooms rangefromverysmallhand-heldframestolargefree-standinghandloomsorpower ti on toarrangeregistra ves andDonorInvolvement: ti Thedomes ti ti c Suppor es wouldbeneededbysmallweaversandkni c SupplyCondi aswellsilkproduc C ff ti Chyangra ers uniqueprospectfordevelopingandcommercializing on, andNewZealandareunderseriousconsidera oopera The qualityofcommunica C K N ong andTaiwan),Israel,Singapore,Japan, ommercial D Pashmina ti C ves, Sta R NT ti hina andMongolia.However,thereareonlytwomodernyarndyeingplants. ng Industries: EPOR EGRA A Shawlsarewovenonhandloomsorpowerloomsusingablendofsilkand farmingisstartedandexternalmarketdemandrevived, thepresent ti ssocia c market for P Theoverallcostofinfrastructureislow.However,highcostselectricity I ti T A s ti U TI ti on Prospect: on inorganizingbuyer-sellermee ti businessinNepal. S ons: ti cal Informa ti on (N A P O cular burdenforproducers. ti , Japan, olicy 2009.The a N S ti ves include ti

P T on of‘ Chyangra ti I RA A on withinthecountrytoassureapermanentsourceofquality fi c requirements. ), asof A

A T ustralia, andNorway. ti on Nepalese bout 400MTof EGY 2010 Pashmina Pashmina P ashmina shawlsisabout10-20percentofthetotal O ti Itises C tti on andmarke ti ctober 2009,applica ng up of hyangra on andairfreightservicesareconsideredtobevery cansurviveatal Pashmina G overnment hasalreadysupportedNepal shawlstoexportersforfurtherdyeing,processing, A UAE isoneofthepriorityexportproductsiden ti mated thatcurrently5,000peoplearege A ccording toproducers,ifafavourablebusiness ti griculture 2004/05, P on. , and Pashmina ashmina’ withagraphictrademarkinmajor A P pplica ashmina and200MTofsilkyarnarerequired goatfarmdevelopmentinpoten 76 A ff Themaindistrictswhere mong the P orts and,thereby,addi ti ng ac akistan. ti ons forregistra tt ti ti ons submi ers whodonothavetheirowndyeing D ngs, trainingandstrengtheningofthe ti olpa. Thereislong-runprospectfor tudesabove2,500m.Morethan35 yarnandproducttes ti A vi sian countriesapplica ti D es anddesigndevelopment.In ec. 2005. tt ed to ti on ofcollec Chyangra C anada, Brazil,Mexico, ti ti ve trademark“ productsinNepal. onal employment ti ons aresubmi Chyangra ti ng laboratory ti al districts P ashmina EU ti C

tt fi , goats hyangra ed to ed in tti ng

N T I S nishing, fi 83 2010 Pashmina ng, tti ons, but further arnali, Mahakali, ti T K advantage which ff hina and India, Nepal EPOR Main competitors C R industry is considered EGY 2010 D T N cant tari cant RA fi T in the industry is occupied by in the industry is occupied S N EE Pashmina Tariff O TI tors such as advantage ti BACKGROU EGRA on. ti NT compe Nepal ca fi Tariff for EU products and also currently the main export products and also currently the main athmandu valley. However, development of athmandu valley. However, development t present, export earnings are already trickling down to t present, export earnings K A NEPAL TRADE I Growth rate (2004-2008) Pashmina Table 2.40 ompared to non- C ashmina factories have modern treatment systems to contain ashmina factories have modern treatment share P the younger genera onal skills are passing through washing and dyeing processes are highly water- and fuel-intensive. water- and fuel-intensive. washing and dyeing processes are highly ti World market

osi zones. on the development of remote regions of er impact tt Top 10 - Weighted Market Attractiveness Index K Tradi Attractive Markets for Pashmina Products ve markets for ne animal hair), the major export item used as a proxy for all Pashmina products. ti fi Attractive markets for Pashmina products (HS 6214.20) Pashmina

mated that more than 75 per cent of the FT mated that more than 75 per cent (2008) rac ti tt in and around ve districts fi Exports Nepal xcept for the possible chemical dyeing use, the xcept for the possible chemical dyeing E

advantage for this product. ff veness Index veness es. It is es ti ti , Sagarmatha, and Female workers and entrepreneurs have taken important roles in weaving, kni entrepreneurs have taken important Female workers and ti vi rowth rates have been high in these markets, and there is a signi rowth rates have been high in these markets, ti Country G rac tt A on to Skill Development: ti ons. ons. ti

12 UK3 Germany4 Spain5 France6 Hong Kong (SARC)7 USA8 Italy9 Japan 2213 2,338 19 China 3523 6.3% 0 6.2% 4.2% 1983 15.5% 7.4% 4.8% 17.8% 13.8% 1597 1109 16.5% 0% 8.3% 16.4% 51 0% 0% 5.3% 21.0% 3% 8.4% 0% 0% Italy, China, India 4% 2.0% 0% Italy, China, India UK, France, Italy 6.9% 1.6% 7% 2% 3% 51.3% Italy, UK, India India, Italy, UK 0% 0% 0% 14% China, Italy, UK 3% 2% UK, China, India China, Italy, UK 0% UK, Italy, France 10 Switzerland 404 3.1% 14.7% 0% 0% Italy, Germany, France on within the dyeing process. ti Rank Note: HS 6214.20 (shawls of wool or na ti markets are the most a andaki, Bagma women. is even higher than it appears in the table. is even higher than it appears in the table. has an 8 per cent tari EU Environmental Impact: environmentally friendly. Some of the Market Energy and Water Constraints: Contribu of Disadvantaged Regions: Impact on Development having good access to water and fuel. Most of the producers are located in areas des Gender Impact: training is required for quality improvement and product diversi for quality improvement and product training is required many families in the four to and packing ac pollu farming and sericulture will have be G U 81 80 79 78 77 Index 1: fi E Background 12) WoolProducts sheep woolof500to600MT wool processingtechnology. produc products ofNepalandtheexportvaluehasreached export offashionwearandaccessories. techniques toproduce Woolen kni ve years (2004/05–2008/09). xports ofwoolenkni S$11 millionfromNewZealand, hats, scarves,wristwarmers,andother accessories. suitable toprotectfromthecoldclimate inthemountains.Source: Ministry of Source: TradeMap. Felt makingoutof Trade and K 2004/05. ni tt ed productsincludesweaters,pullover,cardigans,mu N T I S 84 ti on ofkni E A xport

E 2010 tt griculture and ed productsarebeingexportedsincethe1960s.Sincemid-1990s,tradi xport P e xot ,1 ,8 0221,6 n/a n/a 12,368 16,491 10,242 13,656 9,686 12,915 9,219 12,292 Net exports Exports NEPAL TRADE I BACKGROU Y romo aktp0SZ top10GROWTH top10SIZE Rank tt ak wooloriginatedinthehillyandHimalayan regionsofNepal.Feltproductslike ed andfeltproducts theremainderforcarpetweaving. 0Kra(ot) rneRmna Nra 231 Norway Romania France Korea(South) 10 ogKn S)Rsi oadCnd 510 1,983 404 1,554 2,338 1109 Canada 2,213 Switzerland 3,523 USA India Japan Poland UK 1,597 USAUK Canada TanzaniaDenmark Turkey NewZealand HongKong(SARC) Germany Russia France Switzerland Kyrgyzstan HongKong(S.) 9 Spain Spain UAE 8 Italy 7 ChinaIndia UKGermany Italy 6 Germany 5 Netherlands FranceUK 4 USA 3 Japan 2 1 P ti on tt erformance ed andfeltproductsfromNepalgrewatanannualaveragerateof14percentduring C oopera C fl oor coverings oor entre, NepalForeignTrade N D 81 ti ves, R Export ValueofWoolProducts,2005-2009(US$1,000) NT isnotbeingu EPOR 77 EGRA Woolproductscontributed25percentinthetotalexportofhandmade A gri-business C T 0520 0720 2009 2008 2007 2006 2005 hina, and Attractive marketsforPashminaproducts(HS6214.20) TI Top 10bysize,growth,openessandcurrentexports O (Radi) N 79 S

A T ti P RA nnually, Nepalimportsabout4,000MTofwoolvaluedat lized insuchproductsduetolackofquality woolandappropriate romo D ffl ata -2008/09. ers, caps,gloves,mi and blankets T A EGY 2010 ustralia. ti on andSta Table 2.41 C atalogue of U S$11.7 millionin2008/09,basedonNepalesedata. 80 ti

s OPENESS A ti cs (Pakhi) bout 1,200to1,500MTofwoolisusedinthe top10 tt A D ens, socks,andbagsfeltproductsareshoes,bags,caps, ssocia ivision, ti were transferredtotheproduc on for Sta ti s top10 currentexportsfromNepal ti cal Informa C ra ft

(US$ 1,000in2008) fl P oor coverings,Bakkhu andblanketsare P roducers, 2008. aradoxically, locallyproduced ti on NepaleseAgriculture, ti onally usedfelt ti on and on 78

N T I S ong, K

2010 85 ata source for D T hina, Hong s in major markets C ff al access is granted ti S import of the main S$9.4 million. EPOR U U R EGY 2010 D market in in 2008 (47 per market in in 2008 (47 T N markets and Japan. Those EU RA cs, 2007/08. cs, . MFN tari T ti EU c sales to tourists. s A ti S ti S N U O TI BACKGROU No such preferen al rates. al 82 EGRA ti barriers for these products, but Nepal barriers for these ff mated that yearly import of wool for the mated that yearly import of wool for ti NT lled. fi al market access. ti Nepal Overseas Trade Sta entre, C NEPAL TRADE I , and more than 258 entrepreneurs are involved in the 83 on ti ve markets appear to be the ve markets appear to Table 2.42 ti of exports) is the on (with share There are high tari er preferen er The present capacity can be increased by 50 per cent within ti ff since 2004 when they were only cantly fi 85 romo Trade Directory, 2007-08. P rac ft na 84 tt ti ons S$4 million, around 25 per cent of the export value. S$4 million, around 25 per cent of the anada (14 per cent), and Japan (10 per cent). anada (14 per cent), ti ng units C tti U xport By far the largest exporters of such products are E ons ti anada, and Japan, although not in the Handicra C ). ondi , A I 13,448,478 14,673,757 15,920,594 n/a C s and NTBs): P ff EU ondi The most a C The main types of exported wool products are pullovers, hats, gloves, and exported wool products are pullovers, The main types of Nepal’s share in world exports is very low (0.1 per cent). Nepal’s share in world exports is very The main des on (N on ti on of Nepal, le import of such products, but it is es ti anada (16-18 per cent), and Japan (6-17 per cent), which means that Nepal has a anada (16-18 per cent), and Japan (6-17 per cent), which means that Nepal ons: tt ti 12,768,113 C 2005 2006 2007 2008 2009 xport has grown signi S (18 per cent), ons: ssocia ti E ons (Tari U A

Total World Export Value of Wool Products, 2005-2009 (US$1,000) Total World Export Value of Wool Products, na ssocia ti The total annual capacity of organized industries and household units is 4 to 5 million The total annual capacity of organized industries and household units is 4 to ti c Supply c A ti na

ti ft access in the al ti There is li tors in World Market: ti omes erent types of woolen products. ff D , but traded products are very heterogeneous. For example, unit values for urostat shows that 90-95 per cent of Nepalese exports enter under preferen (MFN 2-16 per cent). There are 25 organized kni E A al advantage if rules of origin requirements can be ful S EU on based on the actual exports of 3.7 million pieces to countries other than India and domes on Capacity: on ashmina Industries ti on of Handicra on and export of woolen products. on of these products is around ti (9-12 per cent), ti ti ti ti P U al Export Des ti EU ata from alcula exports to countries other than India: Trade and D Nepal Federa C cent), followed by the cent), followed by the by the pieces of di 82 83 84 85 Produc Index 3: Producers: The value added of those exports is approximately 75 per cent of the total exports, assuming the value of raw cent of the total exports, assuming the those exports is approximately 75 per The value added of (see below). around 25 per cent of the export value material imports is Market Access Condi Major Compe produc produc Dynamism of Exports: Index 2: World Market are: shawls. Poten Nepal’s World Market Share: Trade Balance: Types of Exported Products: Types of Exported Current Export Des substan markets have grown fast in recent years and o markets have grown fast in recent years woolen products that Nepal exports vary by factor 10, with Nepal being at the lower end of that range. woolen products that Nepal exports vary by factor 10, with Nepal being at the and the enjoys preferen woolen productsasrequiredbytheforeignmarkets. In addi felt product-makersin demand. realized thelimitedcapaci dyeing plantstodyeaccordingthebuyer’scolourcombina transport areconsideredhigh. molding andfel kni 86 Prospect forDomes Government Ini Business Environment: Domes E Cost andQualityofInfrastructure: Level ofProcessingTechnology: Labour CostandOverallProduc Availability andQualityofLabourForce: Produc Quality ofProduct: fi pressure. produc They alsocomplainedaboutalackofsophis there isalackoflaboratoryequipmenttocrosscheckthequalityandgradewoolsuppliedbyimporters. and (c)woolyarndyeingfacility. regions ofNepal)sheep.But thepopula especially byusingVyanglung(atypeofsheepcarryinghigh qualitywoolwhichcansurviveinthehighmountain products asiden to schoolsstudents,securityguards,police,andthearmy. mainly totwospinningmillsin wool andwoolenyarnsareimportedfrom and Tibetantypesofwoolwillbedeveloped. that afeasibilitystudywillbeundertakenforanintegrated programmeofwoolandwoolengoodsproduc D the promo development, andmarke some programmeslikesheepfarmingdevelopment,product designanddevelopment,humanresource government anddonors. ve years.The ffi evelopment ciency ofDomes Ministry of tti ng, (c)motorizedandcomputerizedmachine,(d)hand-foot-driven weavingloom,and(e)hand N T I S 86 ti ti ti ti on incaseforeignmarketdemandsurges.Workersaretrainedon-the-job. on, 15,000to20,000womeninthesedistrictsareskilledandcapableofproducinghand-kni c Demand: vity: O C ti 2010 on anddevelopmentofwoolenproductsinNepal.Boththeseassocia ommerce andSupplies, verall produc

P A roduc ti ssocia fi NEPAL TRADE I BACKGROU ng. Thetypesoftechniqueuseddependonthebuyer’srequirements. ti rms intheorganizedsectorhavemorethan2,000kni ti a

fi edinthe ti

Thequalityofwoolenproductsdependson(a)thewool,(b)kni A ti ves andDonorInvolvement: c Suppor ti ti pproximately 10-15percentofthetotaloutputissoldindomes vity ofthetrainedandskilledworkersisgood. ti c SupplyCondi on (W K Quality ofcommunica athmandu andthedistrictsof ti ti on costisaverage. N ng promo ng ti es ofexis D G PDA R NT Commercial Policy2065. ti ng Industries: overnment’s recent EPOR K ti EGRA on Cost: athmandu, whichsupplywhiteyarnstokni E Various typesofprocessinclude(a)hand-kni ) andFeltIndustries xporters havereportedthatthewoolqualityisnotalwayssu T

ti TI ti on aspriorityac O ti ng spinninganddyeingplants in O ons: verall costofinfrastructureislow;however,costselectricityand N Skilledandsemi-skilledworkersareavailableforfurtherincreasein

S ti L on ofVyanglung iscurrentlyonly4-5percentofthe8.2million A abour costhasincreasedslightlyduetorecentna T ti Increasingdomes RA ustralia, cated kni Itises ti R on andairfreightservicesisverygood. T ecently, twoseparatebusinessins EGY 2010 Woolproductsareincludedinthelistofpriorityexport C ti ommercial mated thatabout1,200to1,500MTofannuallyrequired C A hina, andNewZealand.Theimportedwoolissupplied tti L ti ng technologyandinadequatedyeingfacili ssocia vi alitpur, Bhaktapur, ti es andareexpec ti ti on requirements. on ofNepal(FI ti c produc c P olicy 2009. tti ng machines and3,000kni K ti athmandu tomeetforeignmarket on ofwoolhasahighpoten tt K 86 ers. avre, Makwanpur,and ti ng technicalsupportfromthe Thegovernmenthasindicated A tti ng, (b) hand-driven machine- N), havebeenestablishedfor E ti K tu xporters andkni ni ti ons havecontemplated tt ti ons, Woollen ers givetheseyarnsto ti cmarket,par ti onal in tti ffi ng technique, cient and that tt ti fl ers have tt es. a C P ers and ti roducts hitwan. cularly ti onary tt ti ti ed on al, N T I S The 89 asture P ailali, and K 2010 87

on of Nepal griculture, ti A 90 al. ssocia ti ons, but further T ti A ng, felt making, 91 tti ang, Bardiya, M, 2066 (Feb 2010) would be available would be available D me engagement are AG on. EPOR ti ti R aski, is not listed, mainly due K on, EGY 2010 D on on Nepalese ca ti ti A fi T on poten on N ti S RA U T Pashmina ssocia A S ec, 2005. N D ) and Felt Industries O cal Informa cal ti olpa. There is long-run prospect for olpa. There is long-run TI PDA on can easily be increased by 50 per s BACKGROU ti ti D EGRA on (W on ti NT ashmina Industry ivision, Sta bout 29 MT of P ssocia D A ve markets. The A ti griculture 2004/05,

A cs ti 87 s ti mated that currently 10,000 to 15,000 people are mated that currently 10,000 to 15,000 rac ti tt t present export earnings are trickling down mainly t present export earnings are trickling hading, Tanahu, Nawalparasi, Tansen, A D bout 50 per cent of mountain surface (35 per cent of bout 50 per cent of evelopment athmandu valley. There is prospect for expansion into athmandu valley. There is prospect for A NEPAL TRADE I D K

It is es me jobs can be created for 5,000 people. on and Sta 88 ti ti on on Nepalese ti nues, the present produc ti roducts romo P P onal skill is passing through the younger genera onal skill is passing through the younger ti mated that more than 75 per cent of full- ti of sheep farming. ers unique prospect for the development onal full- onal ff ti cal Informa cal ossibility in Nepal, Smarika, Nepal ti P on Prospect: on s Tradi on in Nepal. ti ti ti olakha, Sindhupalchowk, gri-business D on A ti products in Nepal. If a favourable business environment prevails ng and felt tti Wool spinning is electricity-intensive and washing and dyeing processes are Wool spinning is electricity-intensive ves, Sta ves, ti ti roduc es. It is es residents of Woollen P ti P hankuta, xcept for the possible chemical dyeing use, wool products are considered xcept for the possible chemical dyeing use, wool products are considered D E vi anada appear to be the most a ti

C oopera oopera al access. al ve districts in and around C C ti fi ashmina P hyangra popula veness Index veness ti C aw R Women workers and entrepreneurs have taken important roles in kni Women workers and entrepreneurs on, which produces about 590 MT of wool. on, which produces es are required for quality improvement, design and product diversi ti ti rac tt prety, griculture and griculture and vi A A U ti A on to Skill Development: ti hetraj N). C A r. from kni ng full employment markets, Japan, and tti 2004/05, p. 41. D Ministry of Some of such districts are Ilam, Based on the discussion with the Ministry of (FI Surkhet. nishing and packing ac occupied by women. cent to 6 to 7.5 million pieces and addi ge con and if growth in external market demand 88 89 90 91 87 EU to families in four or highly water-intensive. Environmental Impact: environmentally friendly. Market Impact on Development of Disadvantaged Regions: Impact on Development of Disadvantaged Energy and Water Constraints: most suitable districts are Mustang, Manang, Humla, Jumla, Mugu, and are Mustang, Manang, Humla, Jumla, most suitable districts growth source of quality raw materials for export the country to assure a permanent developing wool within 20 districts have produc In case of wool products, more than of woolen products. Gender Impact: fi Contribu training ac to the lack of preferen Index 4: Socio-economic Impact Current Employment and Job-Crea sheep popula from the current by snow, which o total land) is covered land of the country is 12 per cent of the total surface and further extension of pasture land is possible. is 12 per cent of the total surface and land of the country disadvantaged regions. 6505.90) and2008exportvaluesasweights. Note: Attractivemarketscalculatedusingdataforthe Rank N T I S 88 0Hn og(AC .%-.%0 %China,Italy,Japan 0% 0% -1.6% 7.9% 6 Hong Kong(SARC) 10 egu 423 27 %4 China,France,Italy 4% China,Italy,UK China,Italy Italy,China,France 6% 12% 4% 0% China 5% China,Italy 0% 5% 0% 0% 12.7% China,Italy 0% 5% China, 0% 12.3% 0% 0.0% 18.6% China,Italy 2.3% 5% 10.0% 0% 10% 2.5% 12.2% 2.7% 9.9% 64 0% 5.7% 14.3% -0.9% 7.1% 2158 0 1521 Italy 10.4% 6.1% 988 23.7% 1391 8.2% 682 USA2776 Belgium 9 Canada 2,106 8 Japan 7 Spain 6 Italy 5 UK 4 France 3 Germany 2 1 2010 aktp0SZ top10GROWTH top10SIZE Rank 0BlimBlimU wteln 236 Switzerland UK Belgium Belgium 10 rneIayJpnIay988 293 271 1,391 682 1,521 2,776 2,158 Italy Austria 2,106 India Australia Japan France Japan UK AustriaPoland Canada Kyrgyzstan USA NewZealand PolandNetherlands Kyrgyzstan Canada Italy Germany Canada Germany India Spain 9 Italy Iceland 8 Spain France 7 UK HongKong(SARC) 6 France USA 5 UKRussia 4 Japan 3 Germany 2 1 Country NEPAL TRADE I BACKGROU N Attractive marketsforWoolproducts(weightedindexof Exports Nepal D Attractive marketsforWoolproducts(weightedindexof R NT (2008) EPOR EGRA Top 10bysize,growth,openessandcurrentexports T Top 10-WeightedMarketAttractivenessIndex TI Attractive MarketsforWoolProducts

O World market N S share T RA T fi EGY 2010 ve majorNepaleseexportproducts(6110.11/12,6116.91,6117.10and Table 2.43 (2004-2008) Growth rate OPENESS top10 Tariff for Nepal top10 currentexportsfromNepal fi ve products) ve fi ve products) ve advantage (US$ 1,000in2008) Tariff Main competitors y tt ve on ti N T I S ti ng via ti N. A 89 part from CAA

2010 A ) and enters ccoun ivil A C on of the travel ti AOC es of es ves, and monitoring ti ti T vi ti cate ( cate fi

ti EPOR er and the R C , the numbers of arrivals 92 EGY 2010 D 94 es and incen T ti N c ti RA on deteriorated. perator ti T O S ir N A O cantly exceed the revenue of each fi TI agreements with 35 countries, but only 18 BACKGROU cal situa cal ti AOC carpets-- mes higher than revenue from EGRA ti onal campaigns. onal S$352 million in 2008 and 500,000 visitors, S$352 million in 2008 NT cal instability. Though tourist arrivals have ti on. Nepal Tourism Board (NTB) has been ti U ti on. It provides ti on department used to perform the ac ti on of star hotels, providing facili ti ng promo ng have since steadily increased to just on in Nepal. They oN has entered into ti ti G gure. This implies the need to introduce Tourism Satellite ) is the main tourism regulator cs on the average length of stay, which has been pre NEPAL TRADE I fi ti Table 2.44 on of hotels and restaurants rather than the total contribu ecember 1998 to address the pressing need of the tourism ecember 1998 to address the pressing ti s CA ti D ear, with the aim of increasing the number of arrivals to one ear, with the aim of increasing the number Y of mated revenue cal situa cal ti ti t present, the on in 1993, the civil avia ti A on (MoT ti cularly vulnerable to poli on since on on, licensing, categoriza ti ti ti via A infrastructure (road, air, and electricity). cient transport Export Value of Tourism, 2004-2008 (US$1,000) ffi also provides sta ivil 180,000 148,000 163,000 231,000 352,000 C rior to liberaliza P CA acts as the regulator in civil avia erent countries. erent ff 2004 2005 2006 2007 2008 image and suppor c brand 93 for any sector in Nepal--the icts between employers and workers--major problems fi fl ng Nepal Tourism ti ecember 1998 and acts as the regulator in civil avia N) D Source: MOTCA (2008). ng system captures only the contribu erformance ti CAA P ers from insu ights so far. ff fl onal tourism organiza ti xport E on. ti , as tourism regulator, deals with registra CA N came into existence in cal instability and con ti ng as the na ti adopted already by a large number of developed and developing countries. and tourism sector, which is expected to be much higher than this and evalua CAA The government’s accoun MoT into air service agreements with di airlines have schedule uthority of Nepal ( lthough the measurement of export revenue accruing from tourism is problema A In 2011, Nepal is celebra of the current number of arrivals. million, which would require doubling industry by designing speci poli tourism industry su The Ministry of Tourism and stable since 1980 (10-12 days per visitor, with a temporary decline to 8 days in 2002). Tourist arrivals grew stable since 1980 (10-12 days per visitor, with a temporary decline to 8 days dropped to almost half of its steadily from almost zero in the 1960s to 500,000 in the late 1990s, but then peak between 1999 and 2002 due to the poli above their pre-crisis level. 93 94 ac 92 A Index 1: can be used as a proxy. MoT Background revenues signi exchange earner for Nepal and its Tourism is a major foreign 13) Tourism tourism revenue is 37 per cent of all merchandise export and three 37 per cent of all merchandise export tourism revenue is makes tourism by far the largest export industry of Nepal, except for the major export product of Nepal. This the Nepalese migrant workers. Nepal has quite obviously a compara the even higher revenues generated by single merchandise export product. With es single merchandise certainly fall again if the poli recovered in recent years, numbers would advantage for certain tourism sectors due to its cultural and natural heritage. However, developments in 1999- advantage for certain tourism sectors due 2002 have shown that the sector is par future exportprospectisclearlythepoli more visitorsfromcountriessuchas 98 97 96 95 Export Prospect: Nepal’s WorldMarketShare: Current ExportDes Types ofExportedServices: has beenrela expected annualrealgrowthrateof3.9percentbetween2010and2019. Sri shown howvulnerablethesectoris. posi 365,000 interna However, Nepalcompareswellwithotherdes L trekking/mountaineering (20percent). region, whichclearlyshowsthatthiswasaperiodofmissed opportuni comparable tothenumbersinsomeofothercountriesregion. anka andIndia.Travelforbusinessorconferencescounts6percentofarrivals(MoT World Travel&Tourism Source: India (5.4million),Sri See L ti anka (38,000), ve. ForecastsforNepal’stourismsectorareprovidedbytheWorldTravelandTourism h N T I S 90 tt p://www. h tt p://www.china.org.cn/english/travel/240898.htm 2010 ti vely stablewith20-30percentsince1990. ft fi Source: MOTCA(2009).2009dataes nnews.com/content/view/8226/32/ gures. ti NEPAL TRADE I BACKGROU onal visitorsin2007. Withverypromisingworldmarketprospect(seebelow),theoutlookforNepalis L C anka (438,000), ti hina (36,000), na C ouncil (2009).Travel&Tourism 95 ti

ons: N D ThemajorityofforeigntouristsvisitNepalforsightseeing(30percent)and In2008,outof500,000visitors,themajoritywereresidentsIndia(84,000), R NT EPOR Nepal hasanegligibleshareinglobalrevenuefromtourism(0.04percent). P EGRA akistan (823,000),Bhutan(28,000).Source: UK T TI K Figure 2.4TouristArrivals1980-2009 (30,000), 97 A orea (South)and O

t thesame N A ti S calsitua round 10percentofvisitorscomeforpilgrimage,mainlyfromSri T RA E ti conomic Impact–Nepal. na T U EGY 2010 S ti ons intheregion.In2008,Nepalreceived500,000 visitors, A ti oninNepal.Thefalltouristarrivals1999-2002has ti ti (28,000),andJapan(22,000).TheshareofIndianarrivals me, touristarrivalshadgrowncon mated basedontrendsinairarrival C hina inrecentyears.However,themajorfactorfor U A NWT vailable at O ti 96 es forNepal. WorldTourismBarometer,September 2009 Tibet’sfast-growingmarketreceived www.w 98 Nepalhasa tt c.org. ti CA nuously withinthe tt racted moreand , 2008). C ouncil, withan N T I S 101 al threat al 91 ti 2010 F, 2009b), E onal visitor ti lot of visitors on.. ti A T on, but which has olicy changes that sian countries that ti P A cular the Himalayan ti EPOR R EGY 2010 D lobal interna T N Numerous barriers exist in G RA veness Index’ (W 99 ti T

ti S N ect the tourism industry. O on Status” policy, but Nepal has been an ff ti TI The same applies to Bhutan, which ompe BACKGROU na even faster growth of l 2020, and an ti C cant labour cost advantage compared 100 ti fi c, and with a similarly low rank across es fi D EGRA aci NT popula ects for the local P ff es for visitors, but are also a poten ti vity and labour unrests. pproved ti A ons can also be complementary. ve e ve ti ti tors seem to be other South ti na ti hinese “ sia and the C out of 133, but it seems to be based on wrong informa Table 2.45 A on for tourists in Nepal is trekking routes; however, some st NEPAL TRADE I ti onable or plainly wrong, but it is clear that overall Nepal ti rac tt onal constraints that also a ti er new opportuni cular foreign barriers in this sector. ff ti nnapurna Trekking, which used to take 20 days before, which has tu ti ons Industry sources see no signi A ti ons en do not have enough capacity. hina for visits to the Tibet region. Major direct compe ti ft C on countries in conomic Forum’s ‘Travel & Tourism n/a 680,000,000 745,000,000 857,000,000 944,000,000 ti ondi es (eg es E ti C on Cost: on ccording to industry sources, more careful planning and development of new ccording to industry sources, more careful planning and development of new na ondi ti vi ti ti A C anka. However, these des cularly popular a Total World Export Value of Tourism, 2004-2008 (US$1,000) Total World Export Value ti 2004 2005 2006 2007 2008 L There are no par on the regulatory framework, infrastructure, and human and natural resources. It ti Tourism is a fast-growing market around the world. Tourism is a fast-growing market around par A Source: UNWTO (2009b). forecasts a 4.1 per cent annual growth rate un forecasts a 4.1 per cent annual growth sia. ons: O A ti c Supply c ons applied by ti ti on that may be seen as a foreign barrier is the ti NWT on” since 2001. ti U in World Market: tors ights to Nepal. Few people currently combine it with Tibet, which is probably related to the Few people currently combine it with Tibet, which is probably related ights to Nepal. ti fl na cular a lack of transport infrastructure. ti omes ti ected trekking ac ff D ng countries, mainly because of low labour produc out of 24 ranked des ti cular excep cular vely expensive and complicated to get a permit for direct travelling from Nepal to Tibet. rd ti ti vely a vely ti nue. The ti ne indicator measures visa requirements, where Nepal ranks 131 ne par and ins ers from a lot of infrastructural ff It is rela O “approved des O er tourists a somewhat similar natural and cultural heritage, such as India (in par er tourists a somewhat similar natural and cultural ff for Nepal. arrivals have grown by 4.3 per cent per annum between 1995 and 2008 and this growth is expected to arrivals have grown by 4.3 per cent con 6.2 per cent in South which takes into considera ranks 23 su make visits to Tibet or Bhutan easier could o make visits to Tibet or Bhutan easier could 99 100 101 is pursuing a policy to limit the number of tourists and keeping revenue per visitor high. is pursuing a policy to limit the number all indicators. Some of the indicators appear ques Labour Cost and Overall Produc Tourism Infrastructure: Index 3: Nepal ranks very low in the World World Market Prospect: Nepal, in par o now been reduced to 9 days). trekking routes is necessary. Hotels o Market Access Condi Major Compe Index 2: World Market Index 2: World of them have been converted into roads, with obviously posi to compe nega regions), Bhutan, Tibet or Sri (31 per cent) or Thailand (14 per cent), which are also major transit combine a visit to Nepal with a visit to India countries for stringent visa regula o not unilaterallyliberalizeairaccessofforeignairlinesevenfurtherifcurrentregula market shareforincomingvisitorsofonly6percent(Mo Nepalese airlineprovidinginterna including QatarandSingapore. Similar airservicesagreementshaverecentlybeenconcludedorrenewedwithseveralothercountries, addi 104 103 102 Government Ini Business Environment: E o from O Transport Infrastructure: years. Toaddresstheseconstraints,a TI Interna for theaccessibilityofsomemaintourismareas. recently beeninvolvedinthissector. foreign investmentintravelagencyandtouroperatorserviceonlya grocery suppliersishighbutthesoleenergysupplier(N see thee Seventy- importance fortheindustryandisalsoapar produced NewTourism considered tobethemainobstaclea cent investmentinhotels,abovetheminimumWT remain, bothinNepaleselegisla Nepal andIndia,whichexplicitlyallowsforinterna P is alsounderconsidera into disuse. Similarly, alotofsmallerairportsandair foreign equity.Nepal’sForeignInvestmentandTechnology Transfer to 51percent.However,Foreign from Indiainpar would bothhelptoincreasevisitorarrivalstheseplaces(with 2011 asthetourismyear.Thedonorsinvolvedinsector include ffi okhara andsomeci ff ff n adi A ciency ofDomes ering airservicestoNepal. er perweekhasbeenincreasedfrom6,000to30,000. U airports. See h “ There are47domes A tt hasalimitedcapacityandiscurrentlyopenonlyun S$10 milliongrantand p://www.nepali ir Transport ti onal

P N T I S 92 okhara--in Indianairports.ThenumberofseatsthatNepaleseandairlinesareeachallowedto ti ff onal airtransportiscurrentlylimitedto erent ma erent fi ffi ve percentofinterna ciency ofhotelsashigh,airlinesaverageandtransportcompanies low.Forhotels,thee

fl 2010 ights between 102 h tt C p://nepali ThecapacityofTI apacity NEPAL TRADE I BACKGROU ti ti mes.com/issue/2009/10/30/Na ti a ti c airports,ofwhich32areinopera cular) andtoreducetransittra tt er, openingupaddi ti ti ves andDonorInvolvement: E c Suppor U ti nhancement es inIndia willstartsoon,alsobecauseofanewairservicesagreementsignedbetween ti S$70 millionloan. mes.com/issue/2009/11/1/Headline/16427c. TourismservicesinNepalareregulatedbyvariousactsandthecountryopenedup ti on. Thishasnotbeenachievedsofarandshouldbeapriorityforthe P olicy 2008,NepalTourismVision2020,anddeclarednew touristdes Infrastructure,inpar N K D athmandu andseveralIndianci R NT ti ng Industries: P EPOR ti ti roject”, see C onal visitorsarrivebyair(Mo EGRA on andinhighlandingfeesforsmallaircra A urrently, Nepal ti D willnotbesu onal irect Investment(F T TI U O tt ti fl N S$80 millionprojectby rac onal airports,inpar ights, withonlyoneortwoaeroplanesforinterna h ti fi S on/16446. tt elds acrossthecountryrequireupgrading.Somehaveevenfallen p://www.adb.org/ T ti cular areawherethe RA ti ti on. ng F Ine T EGY 2010 A A ffi ti tt cient fortheexpectedincreaseinairtra cular airandroadtransportinfrastructure, hasamajor ffi D empts havebeenmaderecently byNepaleseairlinestorevivesomeofthose irlines K ciency of domes ffi The c in c I. athmandu airport(TribhuvanInterna O ti onal commitments.Nevertheless,unstablegovernmentis D ti EC I) inhotelindustryhasbeenopenedupto80percent l 12.30am,mainlyduetoinfrastructuralconstraints. C G C P K 104 T rojects/project.asp?id=38349. orpora oN hastakentourismasaprioritysector.It athmandu airport.Itappearsthat ) low. A fl ti SeveralIndianairlinesarenowplanningtoo ights betweenregionalairports.Butproblems es. , 2008).Thereshould,therefore,benoreasonto ti C cular T AD A ti P on, thestate-owned G , 2008),anddomes okhara havingagreatpoten B isunderway. oN’s policiescanhaveasigni ti U c suppor P ft N okhara airport,forinterna er WT A DP ct (FITT , D ft --which wouldbeusedfor FI O ti ng industries,industrysources D membership,whichislimited andSNV-Nepal. A Theprojectwillbefundedbya 103 ), however,allows100per ti ons preventairlinesfrom ti c fl ag carrier,isthe only fl ights arealsocrucial ti onal ti onal ffi c overthenext fl ights between ights ti al forvisitors fi ti A cant impact. U na ti fl irport, TI onal tra onal ights anda N ffi ciency of G ti C ons and ons T oN asit AD fl ights has ff ffi er A c ). st ve on ti N T I S ti eld of fi S, 2008). S, 2008). 93 ssocia 2010 R A , 2008). This es for cross- ti C cularly nega cularly T ti on in the ve markets, based ti ti ) to Nepal EPOR A c about the future of c R rac ti tt EGY 2010 D TT T er visa facili N A tt mis RA ti T S N on (N on ti hina. India (not shown) ranks 21 O C TI BACKGROU es provide educa ti ermany ranks highest, but some other ssocia G EGRA A NT es take place in rural areas. However, large cademy of Tourism and Hotel Management cademy of Tourism and Hotel Management ti A vi mated that tourism in Nepal provides direct ti ti The sector does not have a par rabia, Iran, and S (2008). A er infrastructure and be R tt The sector contributes in terms of development of The sector contributes in terms of development liated campuses, also provide degree and non-degree ffi ons and universi ti NEPAL TRADE I various types es, such as opening of new trekking routes, ti tu ti als. Be ti onal School of Tourism and Hotel Management (Z onal School of Tourism ti Tours and Travel on of Industry sources are generally op Industry sources are ti rospect: It is es reported in Z P egion, receive very few visitors. ons related to travel and tourism services ranging from the Hotel tourism services ranging from the Hotel ons related to travel and A tuent and a ti ti R T S$9.6 billion and 20 per cent annual growth. ons: C ti U ssocia on Several ins ti A rea C ), etc. mates by Mo THM and the Interna N) to Nepal ARA ti A A share is low at managerial mate is available on the share of women in employment. Their c Supply Condi c Supply ti ti of a cs on tourism expenditure by country to calculate an index ti veness Index veness on (N on ti ti s ti No es rac cons es in Nepal, including ti tt ssocia A A mployment and Job- on to Skill Development: ti E Nepal (H on of ti has also been undertaken in 2008. are easily available and an exit survey cs on the sector ing ti ft a s THM) is only 15 per cent. ti R A ssocia urrent courses on tourism. The universi tourism, such as the N tourism services in Nepal. They see new opportuni tourism services in and jeep drive, canoeing, nature walks, and bird watching. Farm of adventure tourism, including cycling poten tourism and religious tourism are other A impact on the environment, but it can lead to problems in certain regions (garbage, high use of wood for impact on the environment, but it can lead to problems in certain regions energy). Sta is roughly in line with es disadvantaged areas and rural areas because a lot of the ac disadvantaged areas and rural areas because parts of Nepal, such as the Far Western on both absolute expenditure (in 2008) and growth in recent years. countries are emerging as major markets, such as Saudi Market We are using sta with a current expenditure volume of Energy and Water Constraints and Environmental Impact: Contribu Regions: Impact on Development of Disadvantaged border tourism from Tibet and India could add value to the current services. border tourism from Tibet and India could C and indirect employment to about 548,000 people (WTT employment to about 237,000 people Gender Impact: training in Nepal level, and the share of women receiving (N Index 4: Socio-economic Impact Prospect for Domes There are also about 24 private associa There are also about of billion. comparison, revenuesfromtourismare billion. ThismakeslabourservicesbyfarthelargestforeignexchangeearnerofNepaleseeconomy. 106 105 O Background 14) LabourServices A period. U Most Nepaleseworkingabroadarelow-skilledandthereforeearnrela but mostmigrantworkersares history ofwomenmigrantworkersstartedonlya migra Temporary migra P migrant workers.TransfersfromNepalesethatarepermanent overseasresidentsarenotexports.Balanceof around theworldontheirindividuale can beassumedthatagreatmajorityofBo ayments (Bo s notedinthepreviouschapter,fromanexportperspec S$200 amonth.Transac ver 1.5millionNepalesearecurrentlyworkingabroad,withremi started recrui The tradi Nepal ranks14 N T I S ti 94 on hasnowspreadto morethan100countries. R emi ti on ofNepaleseyouthgoingforforeignemploymentcan betracedbacktotheearly19thcentury,when 2010 ti tt ng Nepaleseyouthinthearmy.Sincethen, peoplehavecon ances are17percentof th P intheworldshareofremi ) datadonotdis NEPAL TRADE I BACKGROU ti on hasalonghistoryinNepal. Source: BasedonUNWTOWorldTourismBarometer,October2009. Rank 0Urie435% 4 Ukraine 10 ti hn 616% 43% 13% 16% 3% 36 9 8% 81% 9% 43 25 10% 80 69 6 91 Italy31 RussianFederation 9 China 8 Iran 7 France 6 5 USA 4UK SaudiArabia 3 Germany 2 1

N on costsarehighandcouldcost25percentofthesalaryearnedoveratwo-year D R NT EPOR ti ti EGRA ll men. nguish betweenthetwotypesoftransfer.However,incaseNepal,it Country T Top 10-Weightedindexforsizeandgrowth TI O GDP ff tt Attractive MarketsforTourism ances in ort. N U S Attractive marketsforTourism S$352 million,andallgoodsexportin2008wasonlyaround , oneofthehighestsharesinworld. P T RA transfersarefromtemporarymigrantworkers. U GDP T nlike thehistoryofNepalesemaleworkersgoingabroad, EGY 2010 Tourism expenditure 106 (US$ billion,2008) Table 2.46 ft (WorldBank,2007data). er thepromulga

P reviously limitedtotheBri A ti ddi ve, whatisrelevantareremi ti onally, peopleareat libertytogoanycountry growth (2000-2008) ti on oftheForeign Average annual ti nuously beenengagedinforeignemployment. tt ances in2009es ti vely lowsalaries,typicallylessthan ti sh armyandtheIndianarmy, 105

tt ancesfromtemporary E mployment ti mtd at mated E ast India C A ompany ct 1985, U S$2.7 U A S$1 s a . er cs. cs. ft N T I S ti s ti ances tt DOLEP sia. The 95 2010 A ’s sta ast ant 2006) due E P uwait, Bahrain, K T DOLEP , EPOR me-limited contracts, me-limited UAE ti oN has been successful R G EGY 2010 D T N RA rabia, cial permission from permission cial T ffi ast and South A E S N ast, a lot of them go unrecorded E O TI BACKGROU EGRA channels. The share was only 20 per cial ffi NT ons during that period were Qatar (35 per ti ant (2006, 2008), the na P ti every year with o (14 per cent), and Bahrain (3 per cent), together ft ast and three years in Malaysia (extendable up to 0.2% 1.9% 3.9% E UAE NEPAL TRADE I mated that 1.5 million Nepalese were working abroad in ti Table 2.48 Table 2.47 107 mployment started to have the breakdown of male/female only for the last three E it is es lso, workers going to India are not recorded in

182,000 205,000 249,000 220,000 ances going through o A tt (25 per cent, see ances from migrant workers in India Remittances 2005-09 (US$1,000): Remittances 2005-09 tt Temporary Nepali Migrant Workers Workers typically receive on and manufacturing. ances are mainly sent from the Middle ti ng workers. ng tt ti mated that around 70 per cent of the Nepalese going abroad are unskilled ti epartment of Foreign are as follows: It is es 913,000 1,357,000 1,427,000 2,205,000 2,738,000 D man, and Israel. By far the largest host country is India (77 per cent, 2001 data), man, and Israel. By far the largest host country is India (77 per cent, 2001 data), 2008/09 shows that the main des O Y Year 2005/06 2006/07 2007/08 2008/09 remi ows of 2005 2006 2007 2008 2009 fl for migrant workers are India, Malaysia, Qatar, Saudi

DOLEP erformance ong, P Number of departed workers Share of women n/a Source: Nepal Rastra Bank, Balance of Payments Source: Nepal Rastra Bank, Balance of Payments Source: Ministry of Labour and Transport Management, Foreign Employment Source: Ministry of Labour and Transport Management, Department, 2010 K ons ti na ti rabia (22 per cent), Malaysia (16 per cent), vely small small vely cs from from cs cial channels. cial ti ti xport ffi A abour and Transport, s E L ti ng for 90 per cent of depar orea, Hong ti large share works in construc K ances cannot be perfectly measured, but, according to A tt Ministry of years. host country and usually return to Nepal, and possibly leave again a er which they have to leave the ecent sta emi ft cent), Saudi South The remaining 75 per cent of remi latest data available for F The main des data has also only shown a temporary decline (see below). The percentage of women has slightly increased, data has also only shown a temporary decline (see below). The percentage of but because women are banned from seeking employment in the Middle through uno to the much lower salaries earned in India. but with rela Numbers decreased slightly in 2008/09, apparently due to the impact of the global economic recession. apparently due to the impact of the global economic recession. Numbers decreased slightly in 2008/09, a gradual improvement in more recent months, and the remi However, we were told that there has been the mid-2009 and since 2005 around 200,000 people have le the mid-2009 and since 2005 around 200,000 R a while. Typically, contracts last two years in the Middle four years). accoun 107 in its policy of increasing the share of remi cent in 2000/01, but 91 per cent in 2007/08. In terms of the number of migrant workers, Types of Exported Services: workers (engineers, nurses, workers, 27 per cent are semi-skilled (eg carpenters), and 3 per cent are skilled etc). a R Index 1: economic crisis. trend inrecentyears,butgrowthhasslowedsincethesecondhalfof2008,mostcertainlyduetoglobal Dynamism ofExports: Nepal’s WorldMarketShare: Salaries andTransac and inremi a month,pluspossiblyover However, theworkero foreign employmentcompanies(F countries withwhichlabouragreementsexist( costs. The cent ofthetotalsalaryoveratwo-yearcontract.Insomecases,employerwouldbearlargepart costs for In addi other countriesintheregion( Workers’ savingsarees the useofmiddlemenbyemployerswhomightcapturepartrentarisingfromworkpermits. Nepal. meet householdexpenses. Migra like agriculture,manufacturingandtrade(Shrestha,2008). people arguethatonlyasmallpropor remi through banks,moneytransfercompanies,andinformalbankingchannels tt

ances isusedtopaybacktheloansborrowedearliergoabroad,withremainderbeing usedto N T I S ti 96 on toIndiaisusuallyinformal,withmuchlowersalariesandrela ti on totheproblemsfacedinNepal,workersfacedes fl ight andvisa).Theoveralltransac 2010 G tt ances. Figure 2.5showsmonthlyremi oN hasregulatedthemaximumfeesthatF Source: WorldBank. NEPAL TRADE I BACKGROU ti on Costs: ti There hasbeenasigni ft mated ataround en hastobearaddi N D R ti R NT emi K me paymentsandtypicallyfoodaccommoda Nepal’s shareinworldremi EPOR hatri, 2009).Theinvolvementofmiddlemencanincurextracoststoworkers. EGRA Nepalese migrantworkersintheMiddle tt ances arealsofoundtobetypicallyusedbuylandandhousing.Some EC Figure 2.5MonthlyRemittancesforNepal T TI s). Thesecoststypicallyadduptoaround ti O on ofmigrantsusetheremi N S U T S$150 permonth,includingover RA ti ti on costsarerela fi T onal costsfor cant increasebothinthenumberofpeopleworkingabroad EGY 2010 U S$850-1,100, dependingonthedes tt ances in EC tt s areallowedtochargeforworkersgoingthose ances in fl ows forNepal.Therehasbeenastrongupward fl ights, visa,medicalcer ti vely highinthecaseofNepalcomparedto fl tt ows is0.6percent. ance directlyforproduc E ti vely smallamountssentbackto ast typicallyearnaround (hawala/hundi) ti me work. ti na ti on countries,againdueto U ti S$1,200, whichis25per on isprovidedaswell. ti na ti

R fi cates andafeeto emi ti on, andincluding . A tt ti ances aresent ve investment por ti on ofthe U S$200 ons

N T I S ti mated ti na ti 97 on is to a

2010 ti T s, including those onal services like ti EC ons. EPOR ti R ng in Nepal and usually ti EGY 2010 D T N RA T S s opera N O EC TI BACKGROU EGRA NT ue to the large number of F D and some other des ons for those countries on between them. ti ti

ti NEPAL TRADE I , and Qatar) and Malaysia. This means that at least in the , and Qatar) and Malaysia. This means ows 2005-09 (US$ billion): fl eaving aside India, the majority of current migra eaving aside India, the majority of current L

Table 2.49 and it is es ng to work abroad can use their services on country. UAE ti ti na a temporary downturn during the global recession ances, despite orea). There are around 600 F ti tt K ons rabia, ti growth projec A ons ti eople wan GDP nal des nal P ondi fi C ondi 275 317 385 444 n/a Global Remittances In C growth is a good indicator for future demand for migrant workers, then the growth is a good indicator for future ast (Saudi E on, etc. GDP ti 2005 2006 2007 2008 2009 c Supply c Source: World Bank. ti rganized? Nepal has entered into labour agreements with several main receiving countries rganized? Nepal has entered into labour agreements with several main receiving to return to their pre-crisis growth vely good because most of these countries are expected Figure 2.6 Current and Projected GDP Growth Rates for Major Host Countries Figure 2.6 Current and Projected GDP Growth O ti rabia, Malaysia, and South Source: IMF World Economic Outlook. Data for 2009 onwards are projec A omes D ng from abroad, there is a high level of compe ti rates. outlook looks rela opera of Nepalese workers. If that around 55 per cent do so. The remaining 45 per cent use informal channels, eg they would typically travel that around 55 per cent do so. The remaining 45 per cent use informal channels, to India and then from there to the training, medical prepara medium run the prospect for Nepalese to work abroad depends mainly on the demand for unskilled labour in medium run the prospect for Nepalese these economies. Figure 2.6 shows Index 3: How is the Sector (Qatar, Saudi in 2008/09. range of addi owned by Nepalese. Some provide only recruitment service and others a There is a clear upward trend in global remi There is a clear upward trend in global Market: Prospect for Nepal in the Global Labour Index 2: World Market Index 2: World few countries in the Middle from thepooresthouseholds,whomightnotevenbeableto by 11percentduetomigrantremi reduc (F Gender Impact: Current EmploymentandJob-Crea Migra Index 4:Socio-economicImpact Prospect forDomes Government Ini Business Environment: E Availability andQualityofLabourForce: alliance betweenandamonggovernment,F entered intolabourserviceagreementswithsixcountries. abroad havenotbeenabletoprovidequalityserviceduealackofresources.Thegovernmenthas,sofar, ‘sector’ isobviouslycrea Sending unskilledandsemi-skilledmanpowerratherthanatpresent,increasingtrainingfacili be takenbythegovernment. training, travelandhealthcheckupatcompanylevel.However,district-leveltrainingawarenessareto there isalackofalterna of formaltrainingandpartlyduetothelackfacili However, mostofthelabourforcegoingabroadisunskilledcategory.Thelackskillspartlydueto using informalchannels)arewomen.The in 2008/09werefemale,anditises and judicialservicesarereportedtobeproblema including languagesofthesourcecountries,andinterna Na foreign employment. husbands/parents toseekforeign employment,butthereremainhighsocialbarriers forwomentoseek The Foreign but itremainslow. through informalchannels.Thisexplainswhytheirshare is muchhigherthantheirshareinformalmigra facing harassmentandsexualabuse.Womenwhoseekemployment inthosecountries,therefore,havetogo Middle ins employment pendinginthe people workinginF The labourexportinNepalisgovernedbythe E ffi mployment CE ciency ofDomes ti ti ons tu s) andtrainingcentresislow. N T I S ti 98 ti ti on inNepalrecentyears. on andPovertyReduc onal casesarenotmorethan40. E D ast, mainlyduetonumerousreportsoffemaleworkers--who usuallyworkinprivatehouseholds-- evelopment 2010 R E mployment egula NEPAL TRADE I BACKGROU ti Migra a ti ves andDonorInvolvement: EC ti ti ons 2007,Immigra c Suppor c ti c SupplyCondi s inNepal. ti P on ispredominantlybymen. Thegeneralmacro-economicenvironment,government’sadministra ti rogramme ( ti ve opportuni ng alargenumberofjobs.Inaddi N A D D ct 2007hasremovedtheneed forwomentohavethepermissionoftheir R NT epartment of ti EPOR ti on: ng Industries: ng EGRA ti tt Thereisevidencethatremi A on Prospect: T ti ances. However,thereisalsosomeevidencethatmigrantsrarelycome U mated thatlessthan10 per centofallmigrantworkers(includingthose TI ccording to N ti O ti es inthecountry.Interna ons: DP N ti on S ) aresomeofthedonoragenciesinvolved.Nepaleseembassies Thereisalargeavailabilityofworkersforforeignemployment. T L EC RA G

abour andmorethan300casesintheSupreme A P oN hasputabanonmigra ct 1993and s, andN

T rospect ofintegra EGY 2010 L A The K abour Withanes ccording toindustrysources,thee hatri (2007),o ti c. Therearemorethan1,000casesrela O G GO nly 4percentofthosemigrantsusingformalchannels oN hasthepolicyofpromo A ti onal marke ct 1992,Foreign /IN R egula ti ti ti es mainlyatdistrictlevel. on, itises mated 1.5millionNepaleseworkingabroad,the GO fi R nd accesstosuch opportuni ecently, thegovernmentistryingtoforman s forthedevelopmentofthissector. ffi tt cial datasuggeststhatthepovertyratefell ti ances hadasigni ti ti ons 1995. onal ng employmentwithotherserviceslike ti ng couldhavevalueaddi ti L mated thattherearearound25,000 abour ti E on ofwomentocountriesinthe mployment O rganiza ti ng foreignemploymentas fi cant impactonpoverty ffi ciency oflocalagents A ti on (I ct2007 andForeign ti es (I C ourt. However, LO ti ti ng toforeign on. ti LO ) and v services ve , 2004). U nited ti ti on, es, ,

N T I S UAE ances tt ons for ti 2010 99 on to skills na ti ances. ti tt T EPOR R EGY 2010 D ons of Nepalese migrant ons of Nepalese T ti N RA T na ti S N cular whether countries provide O ti TI on countries for Nepalese migrant on ti BACKGROU lows by country. However, one caveat na tf ti EGRA ows fl NT al des ti ances ou ances of some training on to skill development because tt ti average for 2007 and 2008) onal countries could become future des ti Many of the migrant workers come from disadvantaged Many of the migrant NEPAL TRADE I Table 2.50 Remittances sent from country (US$ billion, remi development of these regions through vely to the Attractive markets for Labor Services ti Top 20 - ranked by remittances out There is some contribu ons. Whether addi ti Attractive Markets for Temporary Labour Services Attractive Markets for Temporary Labour na ti 12 United States3 Russian Federation4 Switzerland5 Saudi Arabia6 Spain7 Germany8 Italy9 Luxembourg 22.0 Netherlands 8.1 46.4 17.6 16.1 14.9 14.3 10.1 12.0 10 Malaysia11 China12 United Kingdom13 France14 Oman15 Japan16 Norway17 Kazakhstan18 Kuwait19 Korea, Rep.20 6.4 5.0 Belgium 5.1 4.5 4.4 4.4 3.9 4.2 3.8 3.8 3.4 Rank Country Source: World Bank, based on IMF Balance of Payments Statistics 2008. rabia and Malaysia, can be found on the list. No data is available for Qatar and rabia and Malaysia, can be found on the A would fall under this category. Some of the current des would fall under this category. Some ve markets for labour services (ie poten veness Index veness ti ti A S U appears limited. on (‘brain gain’) rac ti tt rac ‘permanent’ migrants. For example, most remi ances also include transfer payments by tt tt A on to Skill Development: ti n index of a migrant workers depends obviously on a large number of factors, in par migrant workers depends obviously on access to the market. provided to migrant workers. However, as most of them do low-skilled work abroad, the contribu workers. However, as most of them do provided to migrant through migra Market A Impact on Development of Disadvantaged Regions: Impact on Development and contribute posi rural areas in Nepal Contribu workers) was calculated using the World Bank data on remi workers) was calculated using the World is that remi two of the current major des workers, such as Saudi sent from the Box 2.1)hasanexportvalueofaround This es L larger numberofsmallcompaniesthato export valuewithacoupleofsurveyed our es value issigni million, indica of ITserviceswas measurement. small andmaynotberegistered.Theservicesareusuallyprovided‘cross-border’,withobviousproblemsin low-skilled services,suchasdataentryorcallcentrestohigh-skilledso technology (IT)andbusinessprocessoutsourcing(B Export Value: Index 1: Technological advancementsoverthelastyearshaveopenedupopportuni Background Outsourcing Services 15) Informa graphic designingormedicalprescrip be tradedinterna The entrepreneurs havestartedtoexportsuchservicesfromNepal. tremendous opportuni processing, callcentreopera business andforeignsubsidiariesintheITsectoroverpastfewyears,domainofworkbeingdata interna However, alackofrequiredinfrastructure,corporateprac labour costshavea availability ofquali this industrytostruggleinthecompe at universi and aninsu opportuni the skills. All workisdoneforforeignclients. earn US$600permonthonaverage,which isaveryhighsalarybyNepalesestandards,anditcanevenbesigni of thissector. Infact,oneoftheproblemsistoughcompetitionforskilledworkers,whichshowsthatsectorthri is providedbytheBelgiancounterpartandmostofclientsareinEurope. TheManagingDirectorisveryoptimisticaboutth Currently, itemploys100professionalstaff,aroundhalfofwhomworkasprogrammers andtheotherhalfasgraphicdesigners. The ITCteamvisitedIT/Gra Box 2.1.ANepaleseITsuccessstory evel

G N T I S C oN seesITandrelatedexportservicesasapriorityarea.Therehasbeenanincreaseinbothhomegrown 100 ti ti mate forthenumberofemployees intheITandB ommission forInforma ti mate islikelyintherightorderofmagnitude. onal standards/cer onal ti ti es. Furthermore,existenceofincoherentstandardseduca E ffi

es hasconstrainedgrowth.Buttheoveralloutlookforindustrylooksverypromising. 2010 cient supply ofquali fi xport cantly higherthanthat.Thereareatleast10largecompanieswith50ormoreemployees,plusa NoreliabledataisavailableabouttheexportvalueofITsector. ti ng theneedforanextensivesurveytoquan NEPAL TRADE I BACKGROU A ti n extensivestudyundertakenin2004cametotheconclusionthatannualexportvalue on TechnologyandBusinessProcess ti U onally viatelecommunica fi tt S$5.4 million(Mount ed graduateswith P racted manylocalaswellforeigninvestorsandhashelpedthissectortogrowfast. fi erformance Offshore Nepal,ajointventurebetweenNepaleseindividualsandBelgianITcompany,whichstartedin2002. ti es foralandlocked,low-wagecountrylikeNepal,andtherearepromising signsthat N D ti

fi ti R NT ti ca ons, medicalprescrip on Technology(H EPOR EGRA fi ti ed personnel, aswellalackofresearchanddevelopment( ons likeIS T TI ti on transcribing.Whatalltheseac O ti U N

E ft ti fi S$1 millionandseveralsuchcompanieswithasimilarsize exist. en consistof15-20 people.Fromdiscussionswithindustryexperts, nglish pro S ve market,butalsorestrictedNepalfrompar D rms hasshowna igit Technology[M T RA ti O on networksandthattheyarelabour-intensive.Thiscanopen 9001,andalowscaleoftransac T EGY 2010 LC IT) es fi PO ciency, expansionofcommunica ti on transcribing,mapdigi O ) services.Thisincludesawiderangeofservices,from ne ofthecompaniesvisitedduring ti mated thecurrentexportrevenueat PO ti ti ce, andqualitycontrolmeasures,includinglimited fy theactualexports.Weassumethatcurrent exportsectoris2,500. fi gure farlessthantheM D T], 2004).Thediscussionaboutanes ti ti on o vi ti es haveinmindisthattheycan ff ti ered bydi ti es fortradeininforma za ti A ons havenotonlyforced ti lotofcompaniesarevery on, anima on, A respondentattheHigh fi ti D cantly higher, dependingon on facili on T es ft ware development, ti ff cipa erent universi ti mate of mate R ving. Programmers & ti U fi on, etc.The ti eldwork (see ti ng inbigger D S$10 million. es, andlow e development ) assistance Marketing ti mated U S$5.4 ti ti on es

.T. EU PO A on, N T I S ti ware al for al shore ft ti ff veness ti O

services. services. cular ti

ti

2010 fi 101 PO ra G ons, so ons, ti T sector for India of PO EPOR R EGY 2010 D T N on between Nepalese and RA ti shore industry. shore T hina, Malaysia, Thailand, and ff C whereas only the IT work is ng, S o ti N O PO TI services, and the sector has grown BACKGROU PO EGRA insey, 2005), leaving a large poten K NT cal turmoil and partly because it is somehow al for collabora ti sian markets ( outsourcing, but because of that there could outsourcing, but because of that there ti S companies though. Industry sources say that S companies though. Industry sources A U PO al and promising development, Nepal is not yet ti veness, labour availability, and business environment. veness, labour availability, and business environment. ti to Nepal. Industry sources argue that ng such services ti NEPAL TRADE I S$24 billion, which is expected to grow at 20 per cent per than in er availability of skills, are currently rather lower India is the world’s leading exporter of such services. U tt rac uropean or ve advantage (which are not necessarily always low-wage ve advantage tt ti E shored’ so far (Mc on, expects a 10 per cent annual growth rate of the global mates export revenues from the IT and B ff ti ti espite its poten services are exported to a range of countries, in par services are exported veness: D ti

ti PO ve_summary.pdf. nancial a nancial ti fi ons rst, followed by other rst, followed ustralia and New Zealand. Some companies, such as IT/ ustralia and New Zealand. fi ti mated to be A ti ng for the be ng xecu ti E ondi S$300 billion, one half of which is IT services and the other half B S$300 billion, one half of which is IT services There could be a great poten C U IT and B require inputs gures on import of such services to Nepal. However, IT services

fi on of the sector and whether one looks at the overall market or only the part on of the sector and whether one looks There is a large variety of exported services, including web solu of exported services, including web There is a large variety ti because of poli shore centre, partly 108 ff ons: 2009, with 1.8 million employees and a share in export of 16 per cent. In addi ni ti mates regarding the size of the global market vary widely, also because it highly regarding the size of the global market vary widely, also because it highly mates ons having a compara ons having a fi Y ons: ti ti le IT service trade with India. World market prospect is very promising for this sector. The size of the global IT/B World market prospect is very promising ti tt al o al na ti c market is es onally. ti ti ti na ti which compares their compe ng company, provides a ranking of major markets ti es are zero for most IT products. -business, graphics, and call centres. However, services that require a constant and stable and call centres. However, services -business, graphics, There are no ti , and Japan, and also , and Japan, and also tors and Nepal’s Compe E ti A S mated at around markets. India is the world’s leading exporter of IT and B ti U S$47 billion in F shoring to loca shoring PO ff reliability and bandwidth. clients have been constrained by limited on to foreign U country for IT and B rms. India is the world’s leading ti fi al Export Des earney, 2009). India is ranked p://www.nasscom.in/upload/60452/ ti tt K oned by people from the industry. h ti .T. See nfortunately, Nepal has not been included in that or similar rankings, which also indicates that Nepal’s IT nfortunately, Nepal has not been included in that or similar rankings, which earney, a consul A However, only 10 per cent of that has been ‘o However, only 10 per cent of that has Indian India’s IT labour costs, when adjus Nepal, are joint ventures, with the foreign partner usually doing all the marke with the foreign partner usually Nepal, are joint ventures, to be done in Nepal. Most of the clients appear Nepal could have a cost advantage in certain areas. Nepal. But with increasing salaries in India, there is currently very li members, ( 108 Major Compe connec Index 2: World Market World Market Prospect: development, Trade Balance: sector is es future o Poten Current Export Des Types of Exported Services: Types of Exported be a demand from Indian companies for subcontrac be a demand from Indian companies for countries). However, es depends on the exact de K IT and B tremendously over the last years. Nasscom es around annum over the next years. the size of the domes overshadowed by its larger neighbour, India, the world’s leader in the IT/B such as IT infrastructure. Though some industry sources argued that taxes are high for those inputs, at least such as IT infrastructure. Though some the customs du that is traded interna Nasscom, the Indian service industry associa Indonesia). The main criteria used are U This is a problem that is also sector is not yet recognized globally as an important player in this sector. men widely seen as a poten not consideredtobelowerthan India.However,labourcostsinIndiaareincreasing fast, whichcouldo low-cost suppliersbecauseof lowlabourproduc 98 Labour CostandOverallProduc Availability andQualityofLabourForce: Produc Quality ofService: Produc Producers: Index 3: The World new opportuni countries intheregion.WhileNepalranks127 Though onemayques almost allindicators,suchas‘broadbandcost’,indicatorsonthelegalframeworkorgovernment’sITpolicies. companies interviewedduringthe of whichonly7percent(1,120persons)wereworkingin export-oriented companies(M that theyareabletoprovidethequalitydemandedininterna is notcomparabletotheoneofIndia,forinstance.However,someprovidersthatIT such asIndia.However,adetailedevalua and webapplica compe from 2004iden employing about100employeesandsmall interviews anddiscussionswiththeITcompaniesindicatedexistenceofabout10bigger es quality inIT-producingins Nepal producerequiredquan costs, thoughitisaroundinthesamerangebetweenNepalandIndia.Theuniversi the interviewedcompanieshaveclearlystatedthatlabourcostsinNepalareaboutone-thirdofoverseas ranked inthelowest5percentrecentedi are foundtoprovideserviceslikewebapplica compe The availabilityofskilledpersonnelisakeyfactorforall industrysourcesthatIT always available. the qualityofeduca force willnotbethemainconstrainingfactorforfuturegrowth. abroad a based engineeringdesigning,so are willingtomoveanothercompany.Thereisalsoa signi development, client-basedoutsourcing,imageprocessing,mapping,telemarke around 550. The callcentrehadthehighestnumberofemployees(175),andtotalemploymentineight ti th mate thataround2,500peopleare workingintheITandB . N T I S 102 ti ti ti ti

vity: on Capacity: ti ti ft veness oftheITsectoracrossmostcountries,includingNepal(W on betweenNepalesecompaniesforworkers, witho er theyhavereceivedtrainingatthecompany. Butoverall,industrysourcesbelievethatthelabour

D 2010 E Though thereisnotanyreadilyavailabledataregardingthe conomic Forumhaspublishedthe omes Thoughthelabourcostingeneralislower,produc ti ti es for Nepal. NEPAL TRADE I BACKGROU

ti fi on, graphics,customizedapplica ed 24export-orientedITcompanies.Theeightcompaniesinterviewedby Industry sourcesratetheoverallqualityofITservicesaslowerthanincompe ti c Supply The mainservicesareclient-basedoutsourcing,so ti on theaccuracyofsomeindicators,itisclearthatNepal islaggingbehindother ti on sectorasgood,thoughsomeexpressedconcernsthatrequiredskills arenot ti N tu D ti ti R NT ons. ty ofITprofessionals,butthecompaniesareconcernedaboutmaintaining EPOR ft EGRA ti ware development,programming,graphicsolu on Cost: C ondi fi T eld workemploy550persons.Basedonthisandotherinforma TI O N ti ti In2004,thetotalI S on ofthisindicatorisnotpossible.ItclearthatNepal’s ITindustry ons Thereisnosigni T RA ti ons (127 T th EGY 2010 G ti , on, webdesigning,desktopapplica ti C lobal Informa vity. Theoverall produc ti hina isranked42 on development,andbusinessintelligenceforretailing. fi rms employing15-20employeesonaverage. th of134in2008/09),andtherankingissimilaracross fi C cant labourcostadvantagecomparedtoother ti T workforceinNepalwases ft PO onal markets. en highincen fi ti cant braindrain,with workerso on Technology on exportsector. O verall, interviewedcompanieshaverated nd , India54 ft fi ware development,webdesigning rms providingexportservices,the E ti on costisgenerally low,butitis F, 2009a). ti ti vity isalsoo ves providedtoworkersifthey th , Sri R ti on, customizedapplica eport, whichcomparesthe C ti ng, customercare,etc. spoketo.Thereishigh L C anka 72 spoketoarecon ti ti O on, digi on, es andins n average,Nepalhas D T, 2004).Theeight ti ft mated at16,000, en low.Someof nd C , and ti forthisstudy ti za ng countries ft en leaving ti ti tu on, A P ti fi ti on, we akistan survey rms is rms ons in ons fi dent CAD ti ff on er -

B ll ti DP ve en on ti ti ft AD N mes onal

N T I S ti ti I. U ast E 110 T (Value CC lectronic omputer ering ve A ff fi E C anima

2010 on of the 103 ti er training, er IT, Na D on, and the tt ti dministra LC A a ST), on. Now the on. , 3- fl ti , be A , and FN T D ng capacity is s 111 & ti CAD R EPOR ark bre backbone, o fi R P hina has recently been hina has recently been on ti C T services in rural areas EGY 2010 D cal T C ti ort of acquiring bandwidth from N ff RA ng earnings. N), IT es for local and export-oriented IT and T ti ti S al infrastructure components. al infrastructure components. ware export). There is a PA cular due to poor infrastructure ti ft on. N ti ti O TI ue to the frequent strikes and blockade of road bre backbone has been laid across the BACKGROU ves include the formula fi ons. D ti ti a T for so cal ti na EGRA ti ti A NT n op re length. The country is now connected to India through A ti ons for repatria athmandu. ti on of Nepal (IS K ti hina through a 110 km long op cient to provide IT services that require constant ffi C rms. fi hina and India. The fragmented e rivate sector exporters are provided with V rivate sector exporters are provided with C lectricity generated by diesel is much more expensive, lectricity generated P ssocia E with IBM, which has already established a research centre in the IT overnment ini A U cademy of Science and Technology (N G NEPAL TRADE I IT. A LC bre backbone in the en rovider vity could improve value addi fi ti P cal ti There are prospect for adding new products like on route between (2010) currently completed the policy review of the sector. (2010) currently completed the policy IT signed an Mo ti LC AD T ons: services provided are o ng houses, and other IT companies, but the C The cost and quality of infrastructure is a major problem for the sector. for the sector. of infrastructure is a major problem The cost and quality ti ti N c demand for IT services comes from government, travel and tourism c demand for U c countries and Japan are the main export des ti I regime, with no legal restric fi ecently, H R D aci P ata bandwidth cost is very high, according to some industry sources, ata bandwidth cost is very high, according on, and oil/fuel (for backup power) are essen on, and oil/fuel (for backup on infrastructure, previously Nepal only had a satellite connec previously Nepal only had on infrastructure, ti olicy 2000 and its subsequent revision in 2004, the passing of the olicy 2000 and its subsequent revision sia entre of Nepal, Nepal D ti A P er internet connec C ng points and it is also now connected with , tt ti N), Internet Service shortage of fuel. cal due to occasional The general business environment is not good, in par The general business environment is not c cable routed through India and another one with Tibet/ through India and another one with c cable routed ti investments in the sector. However, on have also been stated as being hindrances to ti EU ti CA The domes S, S$25 million project that is primarily addressing access to I S$25 million project that is primarily c Supply Condi 109 ves and Donor Involvement: U ti evelopment. U on in the foreign currency earned (0 per cent V ti ti sectors such as banks, transport and telecommunica ware for new ons involved in the development of the IT sector in Nepal include the H D ft ti p://www.arthaexpress.com.np/news.php?ncat=9&nid=649. a tt ti h bre-op tu ll not fully occupied. fi ti erent connec erent ti on and be ff ct 2061 and the establishment of H cal situa cal ti ng a ti T for ti A C xpress, E on Technology on Technology on on of Nepal ( onal network service providers is also responsible for increased cost of bandwidth. c, it is s ti ti vity to the client. c Demand: ti ti ffi erent than the ones provided by export-oriented ti ti ti ff rtha A ark. ccording to the report, despite having lots of challenges and problems, Nepal has plenty of opportuni urrently, the only IT park of Nepal is located at Banepa, which is an outskirt of bre links via di P computer services. The West Highway of Nepal and so the country has an op and tra fi Nepal the leverage to establish a transit communica interna A C See dded Tax) exemp ssocia egarding telecommunica ompanies face load-shedding up to 18 hours per day. ompanies face load-shedding lectricity, telecommunica higher than in India. A connec seen as a constraint and some respondents said it was insu seen as a constraint and some respondents project on I Transac Informa country has a the country has a favourable F connected as well. Though there are plans to increase the bandwidth capacity, the exis connected as well. Though there are to some informal costs. support is not considered to be good due industry, banks, engineering consul very di reported also about a lack of venture capital. crimes, in (mainly electricity). Service providers unstable poli R C cri which is made more 110 111 109 Prospect for Domes Government Ini Business Environment: is implemen of Nepal. The major ins Domes E Cost and Quality of Infrastructure: Cost and Quality of Informa and developing so A quality educa power isalsoaboutfour of upto18hoursaday. supply ofelectricityisobviouslynecessary,whichamajorconstraintatthemoment,withloadshedding prospect forsuchservicestobelocatedinremoteruralareasisverylimited. true forotherservices,suchasgraphicdesigningorcallcentres. to othercountries,manyareaswithinITsuchasprogrammingaremale-dominated,butthisisnotnecessarily well above The averagesalarywases employees inexport-orientedcompanies. companies. workers existedinNepal2004,ofwhichonlyasmallsharearound1,100wereworkingexport-oriented Environmental Impact: Energy andWaterConstraints: Impact onDevelopmentofDisadvantagedRegions: Contribu Gender Impact: Current EmploymentandJob-Crea Index 4:Socio-economicImpact No M Market told IT workers arelocatedin as programming.Someofthecompaniesprovidein-housetrainingfornewsta provides verygoodrewardsforskilledITpersonnel;soitisamajorincen in theindustry,exceptfora2004surveybyM

A N T I S 104 C I couldbecalculatedforthissectorduetoalackofdata. thatcurrentlymostoftheexport-orientedITcompaniesarelocatedin ti on toSkillDevelopment: A 2010 U tt E S$500 amonth,withsalariesreaching rac s ti mate inthisstudy,basedoninterviewswithindustryexpertsandseveralcompanies, is2,500 NEPAL TRADE I BACKGROU In2004,only14percentoftheemployeesinsectorwerefemale(M ti veness Index K athmandu valleyand31percentinurbancentresoutsidethevalley.Industrysources none ti E ti mes asexpensiveelectricityfromthegrid. mated tobe N ven theavailabilityoffuelforbackuppowerhasbeenaproblemat D R NT EPOR ThecostofelectricityisnotamajorfactorforIT EGRA ti on Prospect: We rankthesectorasveryhighintermsofskilldevelopment.Theindustry T TI O U N S$400 permonthin2004(M S T RA T D EGY 2010 Therearenoreliablees T. U The2004M A S$2,000 insomecases. ccording tothatsurvey,around16,000professionalIT D T surveyes D T). ti mates forthenumberofemployees ti ve forpeopletoacquireskillssuch C urrently, programmerso ti mates that69 per centoftheIT ff . K athmandu. Inanycase,the fi rms, butaregular D T, 2004).Similar ti mes. Backup ft en earn en on on ti ti N T I S ft (2008)

2010 EE 105 yurvedic and on. WT ti es. However, A A ti B data seems to T vi ti on, Birat Nursing R ti ng large numbers of ti tu EPOR ti 2008). S R rac EGY 2010 D EE tt ents). T N ata for some of the leading ti eldwork from several other D cant advantages: a tradi RA fi fi WT T A S N our assessment cs and, therefore, O ti TI s ti BACKGROU EGRA

NT 112 and incorporates al for health service trade ents (all of them being from India and o ti ti ne study was undertaken in 2008 to assess the c supply of this service. fi O erent forms: erent ff on collected during the ti NEPAL TRADE I sector for Nepal remains a ques cant export fi ng low health services export (S ents travel to another country for treatment) ti , 2008). ti EE ered informa ered tt WT A ons that receive foreign pa ti mate of export value was only given for one ins ti developing and expanding ng, and expanding telemedicine, ti ) of Nepal recognizes the poten tu cs exist for the export value of health services. The N ti ti P I With ageing will gain importance in the future. onal trade in health services n es s ti Y ti on obtained on the ground. A ti on abroad (e.g. pa ti lan (T P onal Hospital. onal ti erformance P on regarding herbs and intellectual property, and enhancing research ac ti No reliable sta ve health service systems, providing computers and internet access to facilitate telemedicine, ti xport E ents. Whether this will become a signi ti S$22,000 annual income). Sca services is scarce. There are no reliable sta on on trade in health ti health costs, more and more people are seeking and steadily increasing health care ons in rich countries U ons suggests very low export values as well (see below for more details). ti al for health services export (S ng informa ng ti ti ti services) Mode 1: cross-border (e.g. telemedicine, laboratory Mode 2: consump opens a hospital), and Mode 3: commercial presence (e.g. foreign company travels abroad to treat pa Mode 4: presence of natural persons (e.g. doctor yurvedic medicine and a moderate climate. The climate makes it very suitable for Indian medical colleges yurvedic medicine and a moderate climate. tu ti A er aspect of health services export. For example Norvic Interna tt espite numerous problems in the healthcare sector, Nepal has at least two signi espite numerous problems in the healthcare s other services, trade in health services can occur in di s other services, trade in health services ins Home ( hospitals, which may also treat foreign tourists, are not available. with family links to Nepal). undertook a survey in several ins poten grossly undervalue even the assumingly exis no concrete strategies have been delineated for mode-speci relies mainly on the informa 112 A Index 1: Export Value: Most of these modes occur in Nepal, and some of them as both export and import. There is ‘consump Most of these modes occur in Nepal, Background interna There is no doubt that popula or India, are already a Several countries, for example Thailand care services abroad. 16) Health Services foreign pa abroad’ (mode 2) between Nepal and India, with Nepalese seeking treatment in India and vice versa. Many abroad’ (mode 2) between Nepal and though they usually do not travel to Nepal for that purpose. Some tourists are receiving treatment in Nepal, hospitals in Nepal (mode 3), with some Indian doctors and nurses Indian health providers have opened hospitals are usually linked to medical colleges. There are also a working in these hospitals (mode 4). These nurses who are working abroad. However, we will not focus on the large number of Nepalese doctors and la D Informa collec of to open branches in Nepal. The Three-year Interim strategies like establishing, promo other alterna 113 Medical ServicesinNepal: Index 3: Global TradeinHealthServices: Index 2:WorldMarket Export Prospect: Trade Balance: Current ExportDes out byN ‘consumed’ locally.Buttherehasbeenastrongupwardtrendininterna imports. Infact,allforeignpa community (calledhealthcoopera developed healthcaresectorthatcanprovideservicesaccordingtointerna medical services.Noreliabledataexistonthevalueof‘mode2’importsfromIndia.Nepalisalsoimpor The in afewins countries reportthesetrade players inglobalhealthtrade. available informa close totheborderando pa providing medicalservices.Sta health servicesthrough‘mode3’.Indianmedicalschoolsandteachinghospitalsa to properlyassessthepoten study byhealthsectorexports,possiblyalong including fromdevelopedcountriessuchasthe resul medical purposes. O carefully evaluated(seebelow). Bo exporters ofhealthcareservices,includingThailand,Singapore,India,andMalaysia,donot.Therefore,using were fromIndia. A treatment ingynaecology,obstetricsandeyehealthservicesfromothercountries,includingTibet( o assesses theTunisianpoten developed countries( then the2008sizeofglobalmarketwouldhavereached and annualgrowthrateof15percent.Ifweassumea10centforthefollowingyears, ffi fghanistan, theMaldives, ther foreignersreceivingtreatmentinNepalareusuallytouristsorexpatriateswhodonotcometofor R cialsta data). ti P ecorded trade ents areNepalese. sta U ti

ng inexportrevenueof N T I S S hasanes 106 ti s GO ti ti cswouldgiveusafairlyincompletepictureoftheglobalmarket. s

D 2010 ti s (i.e.Tilganga tu ti omes cs andes fl ows basedonBo ti ons. Theexis NEPAL TRADE I BACKGROU If oneincludesNepalesemedicalworkersabroad,thenNepalisprobablyanetexporterof ti ti mated marketshareof27percent,butsome developingcountriesareemergingasmajor on istooscarcetomakeanyde We ratetheprospectforhealthservicesexportasratherpoor.Nepaldoesnothavea A A ti ti ccording toindustrysourcesthatIT na yurvedic medicinecouldbeanicheinwhichNepalcanbecomemoresuccessful.Butthe c Supply EU ti ti mates, resul ons: , U HealthservicesinNepalarebeingprovidedbyfoursectors, namelythegovernment, N ft E en withpersonallinkstoNepalseektreatmentinNepalesehealthins S P D G ye Hospital)andprivatehealth sectors(hospitalsandnursinghomes). ti A sta al forhealthexports,providesanoverviewoftheglobalmarketbycombining ti ermany, andN MostofthetradeinhealthservicesoccurswithIndia,andasbothexport R ti NT al. Whethersuchexportsaredesirableisanotherques , Japan). C ti ng tradeismainlylocalacrosstheborder,whereIndianslivingrela U fl ents inseveralhealthcareins EPOR D ti ows intheirBo s ff ondi EGRA S$500 million.Indiareceived150,000medicaltouristsin 2005 (WH consistofbothNepaleseandIndiandoctorsnurses,butprac ata fromThailandshowthat1millionforeignpa ti C cs havegrownby10percentannuallybetween2003 and2007(Source:TradeMap,basedonIMF ti Health services,likemostotherares ves), N ondi T TI ti ti ng inanes ons O N ti S ons GO T RA R N. Theothermajorpartistreatmentoftourists,mainlyfrom s, andprivatesector. T L EGY 2010 U au P ti S sta mated sizeoftheglobaltrade ti A fi er’s 2008studyofTunisia,wouldhavetobeundertaken nitejudgmentontheexportpoten andthe ti s ti cs, butunfortunatelysomeofthenewemerging C spoketo,thereareoccasionallypa U UK ti tu S$19 billion. , apartfromcountriesaroundtheregion. ti ons iden ons E xport ofhealthservicesisbeingcarried 113 ti

ti fi ti onal tradeinhealthcare.Some

ed intheS onal standards,exceptmaybe L au ti ents weretreated in2004, ti ti er(2008),inapaperthat ll mainly‘produced’and U S$11.8 billionfor2003 ti ffi ti on thatneedstobe liated tothemare al. A WT A EE moredetailed ti study(2008) ents seeking ents A O ti ti yurvedic tu callyall , 2008), C hina), ti ti ons. vely ti ng er on on tt ti N T I S ti ve and ve ti ccording A 2010 2007/08). 107 Y . In some of A S vely, implying vely, ti U T ons and working S$30,000) and for ti is also involved in on is the regulator U ti O ons in this subsector, EPOR ti S$1,500 in F R cular in rural areas. No and the U EGY 2010 ti D opula T membership will result in N P UK O RA ents are foreigners. In B&B ves are provided to the eye T HIN), has about 40 registered HIN), has about 40 ti ti c limita c fi S veness, except an accredita yurveda Hospital, with services al of expanding preven AP ti ti N on of the private sector health on of the private

A ti ti O TI BACKGROU anka (6/17) or Thailand (4/28). There is anka (6/17) or Thailand (4/28). There EGRA L ng, e.g. to the ti NT er remunerated, but Nepal certainly has no er remunerated, but Nepal certainly tt mated to be 2-3 per cent ( ti ons of Nepal ( ti on and tax incen me. and its commitment to liberalize health trade is ti ti O tu ng could raise the working condi ows by 150 and 155 per cent respec ti ti fl The cost of providing an IVF ng corneas – eye bank. ti oN provides some tax holidays and customs reduc yurvedic medicine. G A S$60,000). NEPAL TRADE I U B (2005) projects that the WT R and ve. The Ministry of Health The ti mated at only 2 per cent of the total ( ti onal marke onal ustoms exemp ti C yurveda hospitals. The associa yurveda hospitals. Though there is some labour cost advantage, there is no advantage Though there is some labour cost advantage, There is a huge demand of health services within the country. Be A yurvedic health services provided is rated low, though expected to yurvedic health services provided is rated on and harves rivate Health Ins Nepal, as many other developing countries, has a shortage of medical Nepal, as many other developing countries, ti A P on in case of c and foreign supply. There is poten ti ti ons: is very low (2/5) cs, the number of doctors/nurses per 10,000 inhabitants ti ti ves have been taken to improve compe ti s athmandu reports that 20 per cent of its pa athmandu reports that 20 per cent of ti mated to be ac on of on a K on Cost: on ti ti ti ti sta athmandu 5 per cent ( is involved in the development of the eye care sector. WH O s 25,000 to 300,000. There is a state-owned s 25,000 to 300,000. There is a state-owned K c ini c fi D R ssocia I all graduated doctors migrate. This does not mean that there is no availability cally ti A A S The country’s accession to the WT U verall, the quality of medical services in Nepal is low, in par verall, the quality of medical services c Supply Condi O ti ves and Donor Involvement:

ti er equipment and interna tt a ti oned by one interviewee. working in onal Hospital in ti ff ti ccording to WH A sta athmandu), the foreigners’ share in treatment is es athmandu), the foreigners’ share in treatment ng health services, especially if such work were be K ti GO standards. The quality of onal ti ve health services with rehabilita /IN ti GO health sector as well. Nepal’s health sector. N cura Norvic Interna Hospital ( workshop men provided to foreigners by this hospital being es provided to foreigners by this hospital being service ranges between N environment, in terms of both domes in the health services of Nepal. in the health services laparoscopy (including IVF), cancer treatment, include gynaecological and obstetric The services provided and eye neurosurgery, general surgery/medicine; general surgery and urology; cardiac, surgery; orthopedics, health services, intra-ocular lens produc the medical schools, prac for expor compared to other countries in the region, such as India (6/13), Sri compared to other countries in the region, also anecdotal evidence that a lot of doctors and nurses are migra also anecdotal evidence that a lot of doctors abundance of doctors or other health workers. for 50 hospital beds and in the import of ambulance (1 per cent customs). This is limited to one ambulance two for 100 beds). No speci infrastructure, be members, with only about 27 es members, with only Prospect for Domes Government Ini Labour Cost and Overall Produc Business Environment: Availability and Quality of Labour Force: Availability and Quality of Labour Force: service providers, called service providers, called the high-quality segment of medical services in Nepal. reliable source has been found that assesses such as eye treatment service and gynaecological service, including to industry sources, certain treatments, the quality of orthopaedic surgery is considered to be in line with IVF, are rated to be very good. Similarly, interna personnel. and energy costs. in terms of overall costs, mainly because of high equipment (mainly imported) incorporated in Nepal with a except in market access in mode 3 where foreign service providers must be maximum foreign equity capital of 51 per cent. N Quality of Service: improve in the future. opening many doors for health service export. Nepal has not put major speci medical services are being provided by medical services are an increase in aggregate services-related credit and debit Nepal remaining a net importer of health services for some sectors, asthegovernmentprovidesuninterruptedelectricitysupplytohospitals. abroad. not necessarilytothebene areas thatarealreadybe Nepal. However,asoutlinedabove,thrivinghealthservicesexportscouldchannelscarceresourcestourban lead toimprovementsforhealthcarethedomes 114 No M Market Energy andWaterConstraints: Impact onDevelopmentofDisadvantagedRegions: Contribu Gender Impact: Current EmploymentandJob-Crea Overall ImpactofHealthServicesExports: Index 4:Socio-economicImpact women employmentintheins of exports,butitiscertainlynotasigni regional hospital,onedistrict Nepal, implyingsomeimpactondisadvantagedregions.Incaseof have aposi possibly reducethisou case throughmigra the caseofNepalandshouldbepromotedby debate). Thereis,therefore,noclear-cutanswerwhetherhealthservicesexportsareactuallydesirablein generate revenues,whichcouldhaveaposi country, oranevenstrongerconcentra desirable. The womenemploymentinNorvicisabout 70percent,inB&B80cent

A N T I S 108 I couldbecalculatedforthissectorduetoalackofdata. ti on toSkillDevelopment: A

E 2010 ti ve impactonlocalskills. tt xports ofhealthservicescouldleadtocrowdingoutpoorpeoplewithinthe rac Thesectorasawholeprovidesopportuni NEPAL TRADE I BACKGROU ti veness Index ti on ofdoctorsandnursesfromNepal. tf low becauseitwouldo tt er servedbymedicalservices. N fi D t ofhealthservicesforthelocalpopula R A NT ti EPOR yurvedic primaryhealthcareineachdistrict,andonedispensaryallV tu EGRA Theenergyshortagehasnota ti ons interviewedrangedbetween70and90percent. ti Beingaveryskill-intensivesector,heathservicesexportswouldcertainly T on Prospect: TI O ti on ofhealthservicesinurbanareas. N fi cant number,excludingthoseNepalesehealthworkerswhowork S T Itisnotclearwhetheranincreaseinhealthservicesexports RA ti ve e ve T ff EGY 2010 er be Nodataisavailableaboutemploymentprovidedasaresult G ff ect ontheoverallqualityofhealthsectorandalso ti oN ordonors.Butsigni c popula Theeyehealthservicesareavailablein11districtsof tt er-paid jobsforhealthcareworkersinthecountry,but ti es forwomeninthesensethatpercentageof A O thrivinghealthcareexportsectorinNepalcould m Hospital95percent. ti on (see ff ected thehealthsectorasmuchother ti on. A yurveda serviceaswell,thereisone L au ti er (2008)foranoverviewofthis fi O cant ‘exports’takeplaceinany n theotherhand,suchexports 114

DC s of on on on oN/ ti ti ti S$13

N T I S G ce: e U ffi mated ti O eldwork haran, fi 2008/09. 2008/09. gures are gures D

2010 fi Y 109 115 2008), and on services ti esharmahal). In IHs/ arjeeling and ector’s EE K R D PK / U WT T on, on in this regard. on in this regard. ti ti A duca en EPOR E tt R EGY 2010 D entre: 180, T T N C yprus appeared only in 2008. C RA B data on trade in educa (2008). T on ti R such educa al to replicate ti S al to become a well-recognized EE ti mated at 18,000 (Source: ela elds is probably rather low. The N ti fi cit with imports of around R oN/Ministry of on via mode 4 as well. fi O ti G WT 2008). However, these TI VT: 17 and Miscellaneous (B A BACKGROU E EE onal T ti C EGRA yprus and Japan. WT C A ng a poten , NT ti cant poten cant fi / Interna UK work as teachers on of Nepalese who might ti , U A S U niversity: 401, S$1,800 per year according to S U in Nepal based on the visas issued for F U

onast, etc): 30 (Source: on services, but rather as an importer: much more but rather as an importer: much more on services, R ti NEPAL TRADE I epartment). athmandu K D niversity, ons are as follows: T U ti . Numbers obtained from medical colleges during the and climate, ers a natural advantage in terms of its geography es” and others through distance learning. on ff ti tu ustralia, followed by ti ti A on export from Nepal. First of all, subsidiaries of Indian medical on export from Nepal. First of all, subsidiaries ti 116,117 S$4 million per year (see S duca ampus: 235, U E C onal ins onal can be derived from the number of foreign students (roughly es ti

on whether Nepal has a signi ti There is no reliable data on the export (or import) of educa There is no reliable data on the export zones of India, indica on service ti with India mated. India is the main source of foreign students, and transfers in the past. There is N mates have been made anguage) ti ti L for the years 2000-04. It shows a wide trade de for the years 2000-04. It shows a wide P ower living costs are also an advantage. onal ti L niversity, Mahendra Sanskrit U erformance onal educa onal P on and Technical ti ti liated to various educa ffi as “mode 2” trade: foreign students come to Nepal to receive on services mainly take place ti on Services on duca ti mates on the number of foreign students E ti xport ow of foreign students in Nepal seems to be increasing, though there is no system of properly ow of foreign students in Nepal seems to be increasing, though there is no system of properly mate of the export value E fl ti niversity, Bouddha U / Bishwobhasa (Interna on exporter” has already been raised in a study undertaken by S ti on through “mode 1” – cross-border supply, i.e. “distance learning” – is also possible, though there seem no such exports. Som an import. There is However, “mode 3” (commercial presence) also plays a major role, though as on. U ti ti en informal. en ft : Higher astern duca OE outward students, highest numbers are found to go to E 180, T Nepalese students are studying at foreign “open universi The foreign students a Shrestha (2004). E ehradun, the tradi ccordingly, the number of foreign students reached 1,043, up from 683 in 2001-03, but these numbers do ccordingly, the number of foreign students reached 1,043, up from 683 in 2001-03, rough es xports in educa abroad, but this will not be further evaluated here. Nepal “imports” educa abroad, but this will not be further evaluated not reliable and seem underes are o There are es A not necessarily include all Indian students of course also an export in “mode 4” through temporary migra of course also an export in “mode 4” through E educa services recorded in the Bo million per year and exports less than Nepalese students are studying abroad than foreigners studying in Nepal. However, exports in educa studying in Nepal. However, exports are studying abroad than foreigners Nepalese students at being around 1,500), their average spending per year ( services do take place and the ques services do take place “educa servicing zones in Nepal. A 116 117 in Nepal. However, several es 115 Index 1: Export Value and Trade Balance: schools have opened up in Nepal. They primarily cater to Indian students who seek to eventually get access schools have opened up in Nepal. They in India might be more expensive or impossible due to limited to the Indian medical system, but studying o seats for medical students. Second, Nepal Two main factors seem to support educa Background regarded as an exporter of educa Nepal is not widely 17) Educa M D medical degrees in Nepal, and only suggest that there are currently around 1,100 Indian students studying for 250 students from third countries. The number of foreign students in other The number of Nepalese studying abroad is much higher. It is currently es compared to many places in India, for instance. The hilly environment is similar to that of compared to many places in India, for trend of in recording the number of foreign students in Nepal, implying the need of government a recording the number of foreign students in Nepal, implying the need of government all revenuefromtui colleges). Therefore,theoverallimportanceofeduca India, withsharesof15percentand6respec very small.Sourcecountriesarebothdevelopedanddeveloping countries. a surveydonebyS abroad, whereasthenumberofforeignstudentsindeveloping countries,andinSouth 118 Global MarketforEduca Index 2:WorldMarket Export Prospect: Poten Current ExportDes Types ofExportedServices: the tui G students abroadof14,575( students arestudyingabroad.Nepal,incontrast,hasamuch highershareof5percentandatotalnumber language studies.Fortheremainder,poten other studentscomefromtherestofS enrolled inmedicalortechnicalstudies(62percentforTribhuvan export revenuethrough‘mode2’(commercialpresence)and4’(Indianteachingsta clear thattheycannotfullybecountedasNepaleseexportrevenue.Infact,maywellcountIndian With asigni survey wouldberequiredtogetamoreaccuratenumber. the absenceofdetaileddata,wees around developed countries( poten years. scholarships. School in per centannuallysince1995.Bo in India.IfNepalbecomescompe schools comparewiththoseinIndiatermsofaccess,costs,qualityandwhetherthedegreesarerecognized that itisavailable,appearsthein D countries. However, thereisarangeof di travel - regarding therecogni to moveNepal,whichistheninfactamixtureof‘mode3’importand2’export. ynamism of lobally, 2.7millionstudentsarestudyingabroad( Source: N T I S 110 ti ti al foreduca al ExportDes ti on fees.Buttui E U h duca tt S$4 million.Typicalfeesforothermedicaldegreesareusuallyaround p://www.educa P

okhara isaround 2010 fi cant shareofrevenuebeinggeneratedfromtui 118 E ti onal expenditures).Measuredbythis,global exportsofeduca xports: Thereisnodatatoallowforaproperanalysisoftrends,butfromtheanecdotalevidence Thenumberofforeignstudentsiscurrentlyaround320;sotheoveralltui NEPAL TRADE I BACKGROU Noquan A ti ti ti WT na on exportsinareasthat are linkedtoNepal’shistoryandculturesuchasreligiousor on feesas‘export’(seealsoBoxbelow). ti ti na EU ti on ofdegrees,thentherecouldbealargepoten onworldonline.net/index.php/page-ar ti EE ti ons: , on feesinpar ti ons: ti U (68percentfromIndia)andalsobytherespondentsinseveraluniversi N on Services: on ti S ta D U MostforeignstudentsinNepalvisituniversi A U N ThemajorityofforeignstudentsinNepalarefromIndia.Thisiscon R NT , C ti S$13,000 fornon-Nepalesestudents,butsomestudentsreceivepar ve assessmentscanbemadeaboutexportprospect.Nevertheless,thereis E EPOR The mainpoten A ffi ondi cul S EGRA P ustralia, andJapan).Thesecountrieshostthemajorityof studentsstudying CO sta ti ti T , 2009). mate thatthetotalexportsareabove ti

es inde ti TI ti s ti ve inalloftheseareas,whichiscurrentlynotassured,par ons O fl ti

ow offoreignstudentsintoNepalhasonlyslightlyincreasedinrecent ti cs showpartoftheexpendituretradeineduca N G cular varywidely.Forexample,theannualtui S lobally, exportersofhighereduca T AARC RA fi ningandmeasuringglobaltrade ineduca T ti EGY 2010 al ismostprobablywithintheregion,inpar regionorarenon-residentIndiansfromthe ti al dependsalotontheIndianmarketandhowNepalese U ti N cle-choice-more-id-2022 ti on servicesexportswouldbeoverstatedifoneclassi E ti S vely. However, only1percentofIndia’ster CO , datafrom2007),andthisnumberhasgrownby4 ti on feesinIndian-ownedmedicalcolleges,itis U niversity, seeS ti al forIndianstudents(andcolleges) ti es andoutofthosealargeshareis U ti S$10 million,butanappropriate ti on servicesarepredominantly on serviceswere C U hina isleading,followedby S$5,000-10,000 peryear.In A WT EE ti ti on feeforManipal A on; sothisnumber ti 2008). on (242- sia inpar ti on feescouldbe ti cular India. U U S ff inmedical S$40 billion. A ti andother ti es. Most ti fi ary-level ti al orfull rmedby P cular, is cular, ersonal ti cular fi es es. N T I S ti on in on to tuent egions ti ti ti ). R U yurveda. ther large on, but is A ti

2010 ok 111 O P cate level, 11 fi

ti tuents and 18 ti ve--will have a ti tuent and 2090 ti T vely. ti oga and Y evelopment ) has four cons D EPOR niversity ( E R U EGY 2010 D T N 120 cularly important role for cularly important es. ti ti database). astroenterology, cardiothoracic and RA T G on with Nepalese universi ti on, has 13 cons CO okhara S ti S P N round 8 per cent of the full fee E O A N tutes provide higher educa tutes provide higher TI ti ngineering (Io U BACKGROU E ), and EGRA PU ve of providing Buddhist educa NT ti tute of Medicine, 15 seats are reserved for ti anka are studying. . tute of tute L ff ti ampus is the central campus. It has four cer C Ins U Ins ng Indian students, but also provide educa U niversity ( ti tuent campuses and they are also eligible to apply tuent campuses and they are also eligible to apply ti U . The fee charged for foreign students is more than double under full h programmes include Surgical the overall development of es for ti C rac tt NEPAL TRADE I AARC es in the Mid-western and Far-western on in Nepal. The Nepalese exports depend mainly on Indian exports depend mainly on Indian on in Nepal. The Nepalese es that usually work in collabora ti ti ti urbanchal four sta cials and P niversity, established in 1959. The number of students studying in niversity, established in 1959. The number ffi U ), ons es and two university-level ins es and two university-level ti ti KU liated campuses. Maharajgunj campuses. liated ffi urrent number of students is 900 and new students enrolled in 2008/09 are 258. C ondi al of educa ract foreign students, T ) was established with the objec ti C tt U B ), established as the second university of the na ), established as the second university of L niversity ( on. They are mainly a U ti In the MBBS programmes of T Six universi U ously. What is clear is that the market is growing, in terms of both value and is clear is that the market is growing, ously. What ti 119 ed into three types: those who have passed from Nepalese campuses and higher secondary schools, students of fi as of 2007/08 stood at 171,000 and 119,000 respec liated campuses, c Supply c ffi ons have been set up in recent years, and they play a par ons have been set tuent campuses, 10 a ti ti ti niversity ( U a on areas that athmandu tu ti ti niversity (NS K U on in Nepal: ti omes liated campuses. The targeted admission for the year 2009 is 624 in the cons ffi D liated campuses under both regular and full fee programmes. liated campuses under both tuent and a es are es ect on the export poten liated campuses. liated ffi ti ti ff ffi countries and students coming from countries other than S M has seven cons O /I U AARC cons Foreign students are classi T fee programmes. S Bachelor level, and 26 post-graduate levels. The four newly started M vascular surgery, urology and neurosurgery. opening new facul liated campuses. The university is ll in the preliminary stage with only two o ut of the educa s it relates to Nepal, we do not think that world market trends--although they seem posi we do not think that world market s it relates to Nepal, U ffi umbini Bouddha ti students. There is also a growing trend in Indian students seeking degrees abroad; the number of outgoing seeking degrees abroad; the number also a growing trend in Indian students students. There is in 2007 ( increased from 113,000 in 2003 to 153,000 Indian students has universi a direct e Nepal. The oldest and biggest is Tribhuvan T the export of medical educa Nepalese students at lower or zero cost (see below for details). Nepalese students at lower or zero cost Nepal Sanskrit L s Nepal is also in the process of opening universi Nepal is also in the process of opening and also an open university and agriculture, forestry, and animal science universi and also an open university and agriculture, O programme is reserved for foreign students in the cons in the a and eight a in the a 119 120 foreign students, where students from India, Maldives, and Sri Index 3: Higher Educa volume (number of students abroad). But it is mainly developed countries that export such services. countries that export such services. students abroad). But it is mainly developed volume (number of A should be interpreted cau should be interpreted Several such ins There are several subsidiaries of Indian universi usually donotincludeanyNepaleseins educa Io medical educa countries andwedonota a majorobstacleforthesector.Morespeci students fromthe 124 123 122 121 Current EmploymentandJob-Crea Index 4:Socio-economicImpact Business Environment: Educa Quality ofEduca obtained fromrespondentsandresultsasurveybyS The naturalenvironmentisarguablyan addi Medical factor forIndianstudentstostudyinNepal.Tui survey, andcon 700 beds.Thecollegealsoprovides10 percentfreescholarshiptogovernment-nominatedmedicalstudentsfrom the Ministryof L respondents weresa superior educa Nepal becauseoflimitedavailabilityseatsintheirhomecountry(mainlyIndia),ratherthana di regula with thequalityofeduca several respondentsasanimpediment,butithasalready beenloweredfrom5percentto1cent. system andthepleasantclimate,with tuition feesofforeignstudentsand,accordingtorespondents,theyareinNepalformainlytworeasons:limitationstheIn Attached tothesecollegesareteachinghospitals,inwhichmainlyNepalesepatientsreceivetreatmentatlowcosts. students fromthirdcountries. students at14medicalcollegesforwhichnumberscouldbeobtainedisasfollows:1,004Nepalesestudents,1,074Indianstuden others--leave NepalsoonaftergraduationandseektogetrecognitionfortheirmedicaldegreesinIndiaelsewhere. The tot 40 percent,areNepalese,butalargeshareofthemreceivestuitionwaivers.Almostallgraduatesfromtheseschools--Nepale commercial presence(mode3),butmainlytoIndianstudentsinNepal.Someofthestudents,caseManipalCollegeP colleges, usuallyincollaborationwithNepaleseuniversities.Fromatradeperspective,IndiaexportseducationservicestoNe When welookattradeineducationservicesNepal,thenamajorpartofthatstoryisthemedicalcolleges Box 2.2.MedicalCollegesinNepal:Whotradeswhatwithwhom? Nepal. The MedicalCouncilofIndiaregulatesrecognitionmedicaldegreesinIndia.Thereisnoautomaticthedegree large effectsonthebusinessmodelofmedicalschoolsinNepal. in aprivateorpublicschoolIndiaitself.ThereisdebateonpossiblereformsofIndia’smedicaleducationsystem,whic depends onwhethertheystandachancetogettheirdegreesrecognizedinIndiaandhowmuchmoredif anguage ffi E See forexample See A Nepal Medical cult tocompareacross ins , isratedfourthin similartypeofmedicalschoolsexistsin several

h N T I S 123 112 ti ti tt ti on systemisnotthemain driverforthemajorityofforeignstudentstocomeNepal.Informa p://www.mciindia.org/ on Costs: ons forforeignstudentsaresimple.Theeduca AvailableseatsinIndianschoolsarewellbelowdemand,whichdrivesstudentstoforeigninstitutions,butthisbusinessmod C ollege and350intheIo C 2010 ampus to1,000inNepalgunjMedical C U ollege TeachingHospitalprovidesfree services,includingfood,medicine,opera ti h ti on--the twomainareasforforeignstudentsatthemoment--ashigh.T S fi on system.Most studentrespondentsintheS tt NEPAL TRADE I BACKGROU A rmed byrespondentsintheeduca p://knowledgecommission.gov.in/downloads/documents/wg_med.pdf

, whocangettheirdegreesrecognized inthe L ti iving costsarelowinNepalandlowerthanmanyplacesIndia. on: ti A Thequalityofaneduca s

sia, accordingtoanIo fi A K ed withinvestmentregula ti s inallsectors,theunstablepoli on thattheyreceiveinNepal. N tt N empt todothathere. O D W/rules/elig_cert.htm R NT ti tu EPOR EGRA fi ti rst onebeingthemainreason. ti onal advantage. ons andcountries. E ti , butwehavenoreliable T on Prospect: TI O C N aribbean islandna ti tu S T ti RA on. on. formorerecentinforma fi c abouttheeduca E T L respondent.However,itseemsclearthatthequalityof ocal studentsandpa EGY 2010 ti ti on feesareanothermainfactorofeduca on systemisdi A Theemploymentrangeisbetween30intheInterna 124 R ti largenumberofglobal‘universityrankings’exist,butthey U espondents inNepalrankthequalityofengineeringand on sector,lowerlivingcostsareone,thoughnotthemain C

S ollege. Itis351inMaharajgunj ti A ons forschoolswith foreign a ti , butwitheasieraccessiontoschoolsand lowertui ti ons, suchas on tax(appliedtoprivatecolleges)wasmen 122 ti

cal situa cal A WT fi A gures howmany ofthesejobsarerelatedto ti ents alsopro WT ti EE on recogni D ti ffi ominica and on sector,theS cult toassessorcomparewithother (2008)showthatmostforeignerschoose EE ti on wasraisedbyrespondentsasbeing surveyare,however,rela . fi ti t fromtheseins on andinves ti G on issues. renada. Theseschoolsmainlycaterfor fi cult itistoget a recognizeddegree A A WT ti ga ccording totheS U ffi C ti lia tu ti ’s engineeringschool, ampus, 500inNepal EE on for100bedsoutofits 121 ti ons. ti surveyfoundthat Thesecollegesrelyon ti on costs,butvery on andthatvisa ti aresetupbyIndian on andlivingcosts. dian medicalschool h couldalsohave ti vely sa se, Indian,and okhara around E s obtainedin al numberof duca pal through ts, and253 ti oned by A el highly ti on. ti WT ti s onal ti fi on ed EE

ve N T I S ti rac tt ll provide ll athmandu

2010 ti 113 K bviously, a lot O T EPOR niversity is located in R U EGY 2010 D T N RA T S N O TI who get ects on Nepalese students BACKGROU ff Growth rate (2003-2007) egions. Sanskrit EGRA R cular impact on disadvantaged regions. en at reduced costs (see Box 2.2). NT ti ft hina and India appear as the most a C (2007) on sector as very high in terms of this indicator. It on sector as very number of teachers are foreigners, especially from number of teachers ti al source countries of outgoing students), based on al source countries of outgoing students), on because some of these markets may s ti ti A evelopment Students abroad Some medical colleges are located outside Some medical colleges are located outside D NEPAL TRADE I Table 2.51 on services. services. on ti liated with. ffi Attractive Markets for Education Attractive markets for Education services Top 10 - Weighted index for size and growth We rank the educa egion. However, there is no par ve environmental impact. ow. ve markets (i.e. poten ti R L ti 12 China3 India4 Republic of Korea5 Uzbekistan6 Germany7 Bolivia8 Viet Nam 105,7389 Nepal 421,109 Lao PDR 153,311 4.2% 31,889 7.5% 77,546 8.0% 26.2% 27,866 8,161 4.8% 14,575 3,550 16.7% 23.8% 19.8% 22.3%

10 Belarus 14,802 18.2% Rank Country Source: Based on UNESCO statistics, with equal weighting of the number of students abroad and the growth rate. rac tt No nega veness Index veness ti The sector does not have any obvious gender bias. The sector does not rac tt al for Nepal as a supplier of educa ti A on to Skill Development: ti cs on the number of outgoing students by country. cs on the number of outgoing students ti s ti le poten le ang, again in the Mid-western tt li markets because of the high number of students they send abroad and the high growth rates. markets because of the high number of of other factors would have to be taken into considera of other factors would have to be taken sta Environmental Impact: Market We calculate an index of a Impact on Development of Disadvantaged Regions: Impact on Development of Disadvantaged Energy and Water Constraints: Gender Impact: Contribu also direct e whole sector is about, but there are is obviously what the foreign students. The medical schools that are mainly set up for foreign students also provide jobs, especially up for foreign students also provide jobs, medical schools that are mainly set foreign students. The that they are a in the training hospitals India. educated in schools that are mainly catering for foreigners, and o educated in schools that are mainly catering valley, including the Mid-western and Far-western valley, including the Mid-western and D ( main focusofNepaleseengineers services, aswellindividualNepaleseengineersworkingabroad.But,overall,themainpoten programs (seeBox2.3). examples ofNepalese very sca O has beenverysuccessfulinrecentyearsandwhichNepalisnowalsoemerging. of ITservices,some 129 128 127 126 125 Engineering ServicesExports: Index 1: also bethemostpromising ‘engineering servicesoutsourcing’( many Nepaleseengineershavebeendoing),andengineeringservicescouldalsobe‘o possibly subcontractpartsoftheworktolocalcompanies.Individualengineerscouldabroad(which Trade inengineeringservicescantakeplacedi E Background 18) EngineeringServices U services exportsprovidedthroughmodes1and3. engineering consultancyservicesinNepal.Nepal 1992 (asamendedin1997)regardingtheestablishmentofaforeigncompany,orinvestment, construc bookkeeping services,taxa projects (e.g.hydropower,roadconstruc A AD foreign marketsareAfghanistan,Kenya,andthePhilippines.Healsosees a potentialtoexpanditsexportservicesotherco clients. Mr.SarojBasnet,Directorofthecompany,saysthatitsexportcomponent isabout15-20percentofitstotalbusines service. Ofitsthreemainservices,two,namelyGISmappingandsoftware development,arebeingprovidedtobothNepaleseand WELINK Consultants has 20employees.Prof.MaheshShresthafromADFseesalotofpotential forNepalintheareaofbuildingandinteriordesign. in constructionworkabroad,theydobuildingdesignforforeignclients,mainly intheNetherlandsandUSA.Established ADF Box 2.3ADFandWELINK:Twoexamplesofengineeringservicesexporters ngineering servicesareoneoftheprofessionallikelegalservices,accoun rchitectural and nder mode1(cross-bordersupply),althoughNepaleseengineering verall, Nepalseemstoberatheranetimporterofengineeringservices,butinforma Foreign InvestmentandTechnologyTransfer professional socie Ministry on See See See forexampledocumentsat S CAE F) and 128 A h h

ugust 16,1995.The N T I S F wasformallyregisteredwiththe 114 : ADFprovidesarchitectureandengineeringservices,includingbuilding construction designs.Althoughtheyhavenotbeen tt tt p://www.welink.com.np/wa/ p://www.adf.com.np/index.html tt ti P ered andnoo on andengineeringservicesinanothercountry,usingbothexpatriate localsta hysical CAD

E 2010 xport , whichprovideengineeringdesignstoforeignpartners,andW P ti NEPAL TRADE I BACKGROU es forge lanning andWorksdesignatedtolook a 129 E : WELINKisanengineeringcompanyestablishedin1988,andemploys100 employees,thoughallarenotforexport ngineering Firms(S P P fi ublic Works rms havealreadystartedprovidingo erformance fi rms thathaveenteredinterna tti ng shortlisted forpar ffi cial sta h N tt p://www.scaef.org.np/ ti D fi on services,etc.InNepal,professionalservicesareprotectedunderFITT eld forNepal.ThisresemblessomewhattheITandB R NT Thereisonlyanecdotalevidence,butnoreadilyavailabledataonengineering D EPOR G irec EGRA ti overnment ofNepalinNovember20,1990. ThegovernmentrecognizedS 127 s ti E ti ves publishedinJanuary2002madeitmandatoryfor consul , seemstobe T A cs onexports orimportsofsuchservicesareavailable.Theresome S ct 1992ofNepal. TI O CAE O ). Thela N ti ti cipa S on, housing). F) arethemainna T RA ti on inproposalprepara ft er theinterestofconsul T tt EGY 2010 erisseenasaverypromisingexportsectorinIndiaandcould E ngineers tt ff er par erent forms. ti onal marketsandaresuccessfullyo ti cipa ff ti shore serviceslike A onal-level organiza ssocia ti on. ti ti ng industry. on inthedomes O nly sinceFebruary22,2005,thegovernment’s line ti A fi on (N rms arenotasdevelopedinthecase construc EA ) andtheSocietyof EL ti on companycouldprovide ti IN ti A ons inNepal. ng PO ti rchitectural K c large-scaleconstruc , whichexportsso fi ff rms toberegistered with industry,inwhichIndia shored’, whichiscalled ti CAE on thissectoris ff ti ering engineering n, audi ng, F asNa ti al, andalsothe D 126 2001,itcurrently esign Forum ff ti untries. s anditsthree andcould onal Body

C onsul ti n and ng involved ft foreign ware ti ti A on ng 125

on on ti ti

rms. rms.

N T I S ti fi on of ti uropean 2010 E 115 ons on this ti on spending, on ti lobaliza G T lobal spending on G EPOR to have reached a size R lled only if engineering fi rms is allowed with only O EGY 2010 D fi S$750 billion per year and T N U rms have started providing onally. fi ti RA on but also enginerring for on but c about the outlook for India ti ti T S llen Hamilton (‘ N A fghanistan, Tajikistan and several fghanistan, Tajikistan mis O ti A TI hina, do not report this data. al can be ful BACKGROU C ti egarding mode 4, there is a restric S$50 billion (which is equal to today’s R The industry is dominated by U EGRA mated to be in 2004. There are no restric 133 ti mated by the WT O NT ti shored (Nasscom, 2006). ff the country for foreign employment, though the ft on_e.htm on_e.htm ti ti on projects in Nepal usually involve foreign ti al for 2020 of ti NEPAL TRADE I on, Nasscom and Booz ti onal contractors. onal ti on services is es ti on, out of total migrants, the percentage of skilled labour is around 2.5 per cent, er joining the WT on_e/construc on_e/construc ti ft ti ti S$10-15 billion o ccording to respondents from the industry, the entry to India is from the industry, the entry to India ccording to respondents U A TS a ssocia rms incorporated in Nepal. A Most engineers going abroad are also known to work as engineers Most engineers going abroad are also fi on in countries such as Bhutan, ti S$13.7 billion. India is the second largest exporter and importer for GA 131 ). industrial engineering. eld of U ons fi Some Nepalese engineering on projects. ti O ti the brain drain of government engineers has reached more mated that ti arge-scale construc er for India’., Nasscom 2006) is very op L ti industry associa mployment ermany. But many countries, including ondi nder mode 3, however, physical presence of foreign nder mode 3, however, physical presence E www.nagariknews.com . PO G C U services), but it is expected that the poten It is es is es ve industry, telecom, aerospace), ti , but most of these services are not traded interna , but most of these services are not traded er hinese companies emerging as major players. None of the top 225 is from Nepal, hinese companies emerging as major players. None of the top 225 is from Nepal, 130 ft PO 132 C ered. tt ecember, 2009, global trade in engineering services, but there is a clear cs give an incomplete picture of the D ti xports of ‘architectural, engineering, and other technical consultancy services’ have doubled xports of ‘architectural, engineering, and other technical consultancy services’ s ti E sta S$1 trillion in 2020, but with only U OP rms, with a few fi p://www.wto.org/english/tratop_e/serv_e/construc p://www.wto.org/english/tratop_e/serv_e/construc tt tt S h h S$4.7 trillion in 2007 U publishes an annual list of the top 225 interna ccording to an interview with Foreign U R also because of the intensity of compe are very capable themselves and cult because Indian engineers cial B cial A See Nagarik daily, 31 See See which includes engineers and surveyors as well. ffi ffi nder mode 4 (presence of natural persons), individual consultants working abroad have already shown their working abroad have already of natural persons), individual consultants nder mode 4 (presence large number of individual engineers are known to have le large number of individual engineers are frican countries, which mainly means that they send some of their engineers to these countries without of their engineers to these countries mainly means that they send some frican countries, which study by the Indian IT and B N ngineering Services: The next fron upward trend. between 2003 and 2007 and reached this category of services, a E to reach O as an exporter of engineering services, with a poten export revenue in IT and B available data is sca in that market. A manufacturing (e.g. automo di engineering services related to construc engineering services A presence there. establishing a commercial E 130 131 132 133 and and only two are from India. But India is one of the fastest-growing markets in terms of construc and only two are from India. But India is one of the fastest-growing markets in Index 2: World Market construc The global market for engineering and Imports of Engineering Services: of not only engineering for construc engineering services alone, which includes with annual growth of 8 per cent (WT A than 300 hundred in the last two years. there. There is no evidence of exports in the U larger construc capability of handling service under modes 1 and 2. as in the case of all other services (horizontal commitments), i.e. the number of foreign employees in Nepal as in the case of all other services (horizontal of local employees. cannot exceed 15 per cent of the number up to 66 per cent foreign equity capital to up to 66 per cent foreign equity capital Nepal has made some commitments in Nepal has made some commitments in sector isinprogress. and highenergycost. Ini opportuni in projectswithtotalprojectcostof complicated technology,cannowbehandledbyNepaleseconsultants.S standards. agencies, andsomehavedevelopedacquiredtheneededprofessionalexperiencetomeetinterna know-how byworkingwithexpatriate sources, makesupfor90percentofthesectorinNepal.Nepaleseconsul this, 64professionalarchitecturalandengineering produc However, noneutralassessmentisavailableforthesector. Where doesNepal are expectedtocapturemostofthemarket. seen inlargedevelopingcountries,suchas 134 Government Ini Domes Labour CostandOverallProduc Availability andQualityofLabourForce: Quality ofService: The NepaleseEngineeringSector: Index 3: educa that theyaresuccessfulin‘expor industry asmedium.Brain-drainisaproblem,manyengineersareworkingabroad,thoughthisalsoshows have automobilemanufacturingcapabili G For example,evenifcertainengineeringservicesintheautomobileindustrycouldbeo par some poten This isdi Nepalese happened onalargescaleyet).ButforNepaltobecomean‘independent’exporterofengineeringservices, for Indian ermany, thenitishardtoimaginethattheseservicescouldbeo cent20prospectsper cent20andpercent20challengesper cent20 See ti a ti cular thatofT ti h N T I S ve 2006). 116 ti tt on isstrengthenedandengineeringservicesexportsalsorequireenhancedmanufacturingcapabili p://scaef.org.np/conference/conference/pdf/Session-4/8.per cent20 ti ti on costduetohighcostsofsome components likeequipmentandmachineries(mostlyimported) c Demand: ffi cult toimagine,giventhelackofadvanceddomes fi ti rms wouldhaveto fi es bythegovernmentanddonorstoactaslead

D 2010 rms, similartotheITandB ti A al inspecializedengineeringandconstruc omes ccording toindustrysources,construc NEPAL TRADE I BACKGROU ti a fi ti U

t inthatemergingmarket?Weexpectcouldhaveapoten ves andDonorInvolvement: Thereishighdemandfromgovernmentsectorforinfrastructure projects. A ti (Ins ccording toindustrysources,Nepalisableprovidehighqualityengineeringservices. c Supply ti tute of N D R NT fi EPOR nd nichemarketswhereengineeringcapabili EGRA ti E C ng’ theirskills.Thequalityofengineeringeduca ti Therearemorethan400consul ngineering). on Cost: on ondi T TI O U PO N ti fi S$464 millionandrecentlyNepaleseconsultantshavebeengiven es themselves.Themaincompe rms intheprojects ti S Industrysourcesranktheavailabilityandqualityofworkersin ons C industry(wherethiso T

hina, VietnamandNigeria,butforcomplextasks, RA L 134 T ower labourcostbutnotsigni EGY 2010 C PP onsul fi T.pdf rms aremembers ofS ti on projectsinmostareas,exceptthoserequiringvery ti on services,e.g.thoserelatedtohydropower. for adiscussiononcurrenttechnicaleduca ti ng Services fi E rms inassocia ngineeringper cent20 fi nanced bymul ti c manufacturingindustries. Theremightbe ff ff ered successfullybycountriesthatdonot ti shoring fromIndiatoNepalhasalsonot ng D evelopment fi rms o ti ti tors forengineeringo CAE on withexpatriate ti CAE ng E ti duca es cancompeteatgloballevel. ffi F, which,accordingtoindustry ti cially registeredinNepal. fi fi F member lateral andbilateralfunding cant advantageintermsof rms haveacquiredskillsand ti ti alasano onper cent20inpercent20Nepalper ti A on isconsideredgood,in ct jointlywiththeprivate ti on inNepal. ff ff shored from,say, fi shore des rms are involved are rms C fi rms (Business hina andIndia ff shoring are ti na ti onal ti ti es. on O f vely

N T I S ti hina, and

2010 C 117 , UAE T EPOR verall, R O EGY 2010 D mated to have given full- mated to have given T N ti The major and c projects. ti RA T S onal engineering know-how. tute only 15-20 per cent of sales, employs N ti ti O angdon, one of the leading global World L TI BACKGROU rms are es fi cular impact on disadvantaged regions avis ti EGRA Most open Overall index D NT F member table fi , for which exports cons Most exports of engineering services could posi vity, K ti pro IN CAE L There is no par NEPAL TRADE I Top 10 each. There is only anecdotal evidence about export- There is only anecdotal evidence each. ff Table 2.52 Fastest growing on industry provided by rospect: The S ti P cular through exposure with interna ti Attractive Markets for Engineering Attractive markets for Engineering services will rank highest in the category. cular market ti on Being a high-skilled ac ti The report is available at 135 rea C None. I for the construc A 12 UAE3 China PRC4 India5 Brazil6 Quatar7 USA 218 Nigeria 89 United Kingdom Turkey 5 4 7 3 0 15 0 1 2 3 4 1 2 12 0 0 2 2 32 0 35 0 0 4 5 1 9 7 5 0 4 5 4 1 10 Saudi Arabia 1 0 0 1 rms have more than 100 sta rms have more than 100 Rank Country Source: The table is taken from Davis Langdon and Seah International, Construction 2009. http://www.davislangdon.com/upload/StaticFiles/EMEper cent20Publications/Otherper cent20Researchper cent20Publications/10654_Constructionper cent20Trendsper cent207.pdf fi veness Index veness ti Women employment in the sector is low (15-20 per cent). Women employment in the sector is low ng ti rac tt which share of that a total of 300 engineers, but it is not known ve interviewed companies employs A fi Development: on to Skill mployment and Job- on a survey of industry experts. Numbers show the number on consultancies. The index is based ti ti E F, which mainly exports its services, employs only 20 people and W AD a total of 100 persons. urrent of them are working for domes jobs to 2,563 persons, but most me permanent leading consul can be considered export-related. oriented employment numbers and it seems to be very limited, apart from engineers working abroad. The apart from engineers working numbers and it seems to be very limited, oriented employment sample of ti contribute to skill development, in par of respondents that state that a par 135 construc We have taken an M Environmental Impact: Market India are ranked as highest. Gender Impact: Contribu Regions: Impact on Development of Disadvantaged C Index 4: Socio-economic Impact Index 4: Socio-economic through export of engineering services. through export of engineering services. A O genera could beevenhigherifpeakloadwouldpricedaccordingly, i.e.similartomarginalcostsofpeakload be belowthepricethatcanobtainedinIndianmarket. costs perkWh,includingallcapitalforthedamandtransmissionlinesmaintenancecosts,would hydropower project,butitisverylikelythateconomicrentswouldaccrueinmostprojects,i.e.theoverall would befewwelfaregainsforNepalfromsuchprojects,evenifelectricityexportsreachlevelsmany which wouldmeanthatanyrentisactuallycapturedbyIndia,ratherthanNepal.Thatthere does notbelievein‘avoidedcost’pricingbuthasbeeninsis large shareoftherentthatcanaccruefromhydropower.ItisarguedIndia,mainpoten to beused assuming thatforeigninvestorsare kWh. IfNepalwouldreceiveamodestroyaltyof A is happeninginBhutanwith fi higher thanexportsofothergoodsandservices. It ises exports andexportrevenuethatcouldbeearnedfromhydropower. 136 poten has beeniden There arecurrentlynoexportsofhydro-energyfromNepal.However,itisusefultoassessbrie P shedding of16hoursperdayiscommonatcertain are currentlyimportedfromIndiabecausethereisnotenoughelectricitygenera Nepal doesnotexportsigni Background the electricitysector. The structureofthissectorpro 19) Hydropower the poli industrial users,butcostsaremany prices inNepalarerela than 400MW. is fromhydropowerandtheremainderthermalpower.However,supplyduringdryseasonless were interviewedduringtheprepara supply inNepal,butexportofelectricitycouldbecomeamajorsourceearningsthelongrun. nancial viabilityofanyhydropowerproject.Itisimpossibletoassessthepoten nother op veryroughcalcula ne waytocapturethatrevenuewouldbetaxforeigninvestors accordingly,e.g.bysomeamountperkWh. oten study. goods exports.Whetherelectricityisa goodorservicecanhaveimportantlegalconsequences,butithardlyma We classifyexportsofhydropowerasa serviceexport,butitshouldbenotedthatelectricityexportscouldalso considered N T I S 118 ti al istapped,couldreachmanybillion ti ti mated thatNepalhasapoten on whichshouldbeaboveaverage costs. ti ti cal situa al forHydropower 2010 ti on wouldbe forthe fi ti nancetheini

fi NEPAL TRADE I BACKGROU D ed aseconomicallyviable.Totalrevenuefromhydropower,onceasigni ti omes on andlabourissues,powersupplyisseenasthemajorproblemformostcompaniesthat ti on showstheorderofmagnitudepoten 136 ti c demandises ti vely low. N D fi cant amountsofelectricityatthemoment.Infact,small fi ti nancing throughloansfromIndia. al construc R NT EPOR fi le isslightlydi EGRA G E oN orotherdomes fi xports T P nancing allprojects andarethentaxedbyapplyingroyal ti ti TI rices arearound9N on ofthisstudy.Therefore,themostpressingissueistoimprovepower mes higherforself-generatedelectricityduringblackouts. O ti ti al of83,000MWhydropowercapacity,outwhich43,000MT N mated ataround800MW,sothereisasigni ti S on costs.ThekeyissueiswhetherNepalwillbe able tocapturea T RA U ff T S dollarsperyear,ofwhichcourseasigni erent fromthoseofothersectorsduetothepar EGY 2010 U O S$1 ct/kWh,thenaninstalledcapacityof10,000MWcould ti bviously, royal mes. ti c en RP P ti ti ng ona‘costplus’approachforhydroelectricity, eak supplyisaround700MW,ofwhich650MW

( ti es toinvest inhydroprojectsthemselves,asit A U s Nepalcouldprovidepeakload,therevenue S$0.12) forprivateand7N ti al revenuethatcouldbeaccruedbyNepal ti es needtobemodestsoasassurethe ti al gainsforanindividual ti on inNepalandload- tt ers forthecontextofthis fi cant gap. fi fi cant shareofthe cant share needs RP ti es paymentper fl y thepoten ( ti U asfallingunder culari S$0.10) for A ti E part from albuyer, lectricity ti ti es of mes ti al N T I S lized. lized. Such ti 2010 141 119 on_in_the_ ti erformanceper al government P ti al were u T ti would generate ti oopera C EPOR R is at 3,460 MW, and cit fi EGY 2010 D T N c market. c RA ti T S and West Se mate for poten N ti 137 O TI BACKGROU verview_of_Bhutan-India_ am Manohar. Nepal’s rate is around 43 per cent O EGRA onal scenarios. R ti NT radesh alone, the de P p://www.cea.nic.in/hydro/Hydroper cent20 p://www.cea.nic.in/hydro/Hydroper es/Bhutan/ ar tt ti tt h cult to regulate, whereas hydropower has the advantage that it ffi cits within India are highest in northern India with vi fi U ti o/ac D NEPAL TRADE I ve cost of producing electricity in India or other importers, Table 2.53 ti 139 xports and Royalty Rates S dollars if most of Nepal’s hydropower poten S dollars if most of Nepal’s hydropower E lectricity de ons are for example made by U ti E -peak energy from India and sell it during peak demand. Royalty per kWh in US$ cents ff T) scheme which also serve the domes 140 OO Table 2.51 shows some addi Table 2.51 shows some India is currently a net importer of coal due on in India is from coal and ageFiles/What_We_ ti P onal revenue (see Box 2.4). 138 ti red power plants which are di fi 0.25 US$ cents 0.5 US$ cents 1 US$ cents 2 US$ cents 5 US$ cents

al to import o ne factor is the alterna al addi al ti ti Potential annual revenue from royalties for different scenarios (US$ million) Potential annual revenue from royalties for different on rate. Similar assump O ti B (2007). of 5,500 MW (15 per cent). In cit liza S$350 million per year. Shah (2008) has a similar es S$350 million per year. fi ti AD S$0.9 ct/kWh. U 1,000 MW5,000 MW 9 44 18 88 35 175 350 70 876 175 10,000 MW50,000 MW 88 438 175 876 350 1,752 3,504 701 8,760 1,752 U capacity Installed 100,000 MW 876 1,752 3,504 7,008 17,520 al export market is India. Potential Annual Tax Revenues from Hydropower for Different Production Levels Revenues from Hydropower for Different Potential Annual Tax ti Note: Assumes 40 per cent utilization rate. p://www.sari-energy.org/ tt h ). Nepal could try to enter similar arrangements with foreign investors who could build dams ti on, based on ti al Markets for Hydropower eviewper cent20per cent28Summaryper cent29per cent2007-08.pdf) ti R The bulk of electricity genera I (2009). al revenues for a wide range of royalty rates can be calculated. Which ones are actually achievable revenues for a wide range of royalty rates can be calculated. Which ones are al ti CE oN before electricity could be exported. However, both issues are not directly related. Some projected oN before electricity could be exported. However, both issues are not directly 142 G wn calcula ower_Sector.pdf India’s peak load is currently only around 100,000 MW, so there would not even be demand for such amounts of energy. India’s peak load is currently only around 100,000 MW, so there would not even be demand for such amounts Most of India’s electricity comes from coal- See for example We assume a 40 per cent u (see Shah, 2008). India had an average rate of 38 per cent in 2007/08. (see See O P cent20 can be regulated very quickly to meet demand. oten oten However, this is a very long-run scenario. which depends heavily on the future prices of coal and natural gas. But even with a modest royalty of 0.01$/ which depends heavily on the future prices kWh, the revenue could reach several billion depends on many factors. P revenues of around revenues of around Some respondents in Nepal have argued that improving the electricity supply in Nepal should be a key priority Some respondents in Nepal have argued for mainly built for export to India hydropower projects are located far from Nepal’s economic centres and are (e.g. West Se under a build-own-operate-transfer (B 139 140 141 142 137 138 P The major poten There could also be a poten revenue. Bhutan apparently receives revenue per MW in that magnitude receives revenue per MW in revenue. Bhutan apparently a current peak load de generate revenue of generate revenue of trade can generate substan 500 MW in Bihar, and 15,000 MW in the whole country, compared to a country-wide peak load of 104,000 500 MW in Bihar, and 15,000 MW in the whole country, compared to a country-wide MW. most casesbetheonlybuyerofelectricity(apartfromlocal sales)andwouldtherebyhavesomedegreeof 145 144 143 Why isNepalu C to constraintsindomes could beades not poseanyproblemtotransmission,howevertherequiredtransitthroughIndiacouldadddi depend oncommodityprices(exceptforini price increasesforcoalandgasarelikelytooccurinthefuture,whereascostofhydropowerdoesnot very likelythathydropowercouldbecost-e addi This mightbeaslightlybiasedviewcomingfrompoten condi The proposed investments. resell thelicencetoactualinvestors. a hydroprojectandarealsoissuedatverylowcost,whichis for hydropowerprojectsareissuedevenifthereisli The licensingprocessseemstobepar problem forinvestmentsinhydroprojectsthedomes up withthedomes There isalsoalargede coal-powered aswell.Itisdi li The roleofIndiaisalsocrucial: transmission inNepalandthereisnoautonomousregulator(seeShah2008).However,thela less transparent,andcouldleadtodelays.TheN Numerous governmentagenciesareinvolvedinthepowersector,whichmakesprocesscomplicatedand (vi) poli se are (i)lackoftransparencyandaccountabilityinthelicensingprocess,(ii)incompa A revenues havetobeaccruedoveralong A poli hydroelectricity wouldbefeasiblefrombothtechnicalandeconomicpointsofview?Firstall,thelack populated andtransmissiontourbancentresin in legalandregulatoryframeworks,(iii)di tt ccording to ny investmentinhydropowerwouldberiskybecausealargeini onstraints onHydropower le welfaregainsforNepal. is notenoughdemandinadjacentregions tojus C See forexample h tti ng forprojectsgreaterthan5MW,(v)inadequatetransmissionnetworkcapacitytoevacuatepower,and tt hina hasalreadyindicatedthatthereis li p://www.eia.doe.gov/cabs/India/ ti ti cal stabilityinrecent years likelyhasbeenamajordeterrentforanyforeigninvestorinhydropower. onal requirementsweresettoohigh,thenitwoulddeterinvestors;if low,thentherewouldbe

ti N T I S 120 ons thathydropowerdevelopershavetoful ti cal risk. 2010 AD ti E h na ti nergy tt B (2009),themajorreasonsprivateinvestmentshavesofarbeenlimitedtosmall-scaleprojects NEPAL TRADE I BACKGROU lizing onlyaround1percentofitshydropowercapacity,whichisnotevenenoughtokeep p://www.energybangla.com/index.php?mod=ar ti on aswell,butthepoten ti c demand,despitetheobviousfactthatproduc A ct isalsoseenasnota fi ti citandincreasingdemandinBangladesh, c supply. N D ffi cult tocomparethecostsofthesedi E R NT lectricity.html EPOR EGRA 143 tt A le interestinimpor ny poten Mostoftheaddi T E TI A ti ti xport O fy suchinvestments. cularly problema part fromcausingarevenueloss,thiscouldalsohinderordelayactual N ti S me horizon. ffi ff T cul ec ti ti RA al costsofconstruc al islikelytobelimitedbecauseborderareasNepalare hardly ti tt al investoralsofacestheaddi rac T ti ve comparedtocoal-orgas- ti EGY 2010 C es inraisingnon-recourse ti hina couldbeprohibi ng hydropowerfromNepalbecausetransmissioncosts aretoohighandthere ti EA ve topoten fi ti ll andveryhigh taxandroyaltyrates( hasamonopolyformostofelectricityproduc tt ti cle&cat= onal genera le evidencethatthelicenseeiscapableofdeveloping ti al investors.However,itisclearthatiftaxratesand ti ti c, asoutlinedindetailby c grid. P owerSector&ar ti tt al foreigninvestors asitlaysdownnumerous rac ti on materials). ti al investmentwouldhavetobemadeand 144 ti ff on capaci erent typesofenergygenera ti ng rent-seekerswhohopetoeventually andthedistancetoBangladeshshould ti vely expensive. ti ti on andexportoflargeamounts cle=2436 fi fi nance, (iv) discriminatory tari red plantsinIndia,alsobecause ti ti es inthefuturearelikelytobe onal riskthatIndiawouldin ti bility andinconsistencies A charya (2009). 145 A ffi cul tt charya, 2009). er ismainlya ti on, butitis ti es. ti L on and on icences C hina ff -

ti W), vely

N T I S ti when cular, ti cular the cular it on, but 55 million in n, electricity ti ti

2010 been US$1-2 121 S$33 million er which the U ft cant impact on fi T on. In par ti td, an Indian state- L ustralia and possibly ng. It is supposed to EPOR ti A ). ti R rid S$0.05/kWh and annual ooding in the monsoon G EGY 2010 D fl U T N , when completed, would ti ows which could nega ows which could RA fl T through Indian grants nanced ower fi S$4 ct/kWh for electricity from S$4 ct/kWh for electricity S hina and , of which around P N C U O 148 on in India but without a related ti TI cant number of jobs and could also BACKGROU fi cant net revenue for Bhutan. fi EGRA India’s policy towards Bhutan has been India’s policy towards irriga ood control or to improve ects on river NT 146 fl ff at rate of US$5 ct/kWh. at rate of US$5 fl S$182 million U for ve, e.g. ti NEPAL TRADE I S$0.01/kWh) over the 30-year licence period, a S$0.01/kWh) over the 30-year licence S$1.6 billion investment in western Nepal, is the one that is the S$1.6 billion investment in western Nepal, U U ts substantially from hydropower and hydro storage capacities. It has an installed ts substantially from hydropower and hydro fi B, 2007). There are e on of villages. For example, West Se on of villages. For example, West ti c skilled workers such as engineers. However, there are obviously AD ti into considera ows in India, which need to be taken fl le welfare gains to Nepal. tt ood control and/or improved irriga on in the dry season. p://www.cea.nic.in/hydro/bhutan.pdf fl ti tt al hydropower projects in Nepal could also have signi al hydropower projects cant compared to the GDP of US$1.4 billion. There are plans to upgrade the capacity to 10,000 cant compared to the GDP of US$1.4 billion. There are plans h ti fi for details on some of the proposed projects (not including West Se es based on capacity. With a proposed price of ti ects on ff es for domes ects on river ti ff B (2007). AD a 750 MW project with vity, although a dam could also help to reduce the risk of

ects, such as reloca ti ff possible is proposing a ‘cost plus’ approach for complexity to any such projects. India cant fi cant e cant fi ve side e B. Most of the power will be exported to India and sold to B. Most of the power will be exported ti ers for each project. See ff ve e roject, ti projects in Bhutan have been erent. Several large hydropower AD P ff lement of 13,000 people ( tt ons based on ti is another example of a country that bene , which, together with the grant element, provides for signi , which, together with on of hydro dams and transmission lines could create a signi of the hydropower project, then projects may not be realized even if there on by India to the cost ti ti on of 3.6 TWh, the annual gross revenue would be 147 ti could serve as an example for Nepal as regards export of hydropower. Since the completion of the Tala project in 2008 (1,000 M could serve as an example for Nepal as regards export p://www.cea.nic.in/hydro/nepal.pdf al nega tt ti could indeed be posi ows in India. This impact fl h wn calcula See The actual price di O ect agricultural ac oN would take ownership and receive the full revenue. oN would take ownership and receive espite these barriers, several large hydropower projects have been proposed in Nepal. The West Se espite these barriers, several large hydropower ff prices are high. Although the import and export volumes are similar, the generated annual revenue due to price differences has prices are high. Although the import and export volumes 2008 were US$6 ct/kWh, but export prices were US$10 ct/kWh. In compariso billion in recent years. Average prices for imports in is expected to be priced at a from West Seti” despite mainly supplied as peak load, hydropower capacity of 13,400 MW and imports cheap electricity from neighbouring countries when prices are low and then exports hydropower capacity of 13,400 MW and imports cheap generation capacity is now at 1,500 MW, most of which is exported to India. Gross revenue from electricity exports reached US$2 generation capacity is now at 1,500 MW, most of which 2008 (Source: TradeMap), which is very signi through grants and loans by the government of India. MW by 2020. So far, such projects have been funded Switzerland Bhutan Box 2.4 Hydropower in Bhutan and Switzerland river certainly adds signi require rese be constructed under a BooT scheme with private investment mainly from be constructed under a BooT scheme also from the projects in Nepal, which would give li projects in Nepal, which were net welfare gains from doing so. poten 146 147 148 owned company, which is the major grid owner in the country. Nepal will receive revenue through a 10 per owned company, which is the major grid cent share in sales value and royal genera construc provide ample opportuni Socio-economic Impact impact of hydropower in It is not possible to come to a general conclusion of the socioeconomic or ecological and in par Nepal. The overall impact has to be evaluated on a case-by-case basis. The maintenance remarkably di D Hydroelectric reports from early 2010 suggest that the future of the project is unsure most advanced. However, most recent and the company has apparently stopped opera as the licence has not been renewed per year would go to the government (around monopsony power. Several poten monopsony power. G contribu and loans, but are fully operated and owned by Bhutan. India pays around operated and owned by Bhutan. and loans, but are fully Bhutan a There can be signi if there are posi season and allow for increased irriga great poten gain fromlowertransportcostsduetobe look atthisissue. related serviceswasraisedseveral The prospectofNepaltobecomeatransithubandearnexportrevenuethroughthetransit- Transit TradeviaNepalandRelatedServices quality ofthematerialextractedinNepal.Thereseemstobeapoten special condi between Transit tradecouldplayarolefortheborderregionsof In addi 2.3 Five that areclosetoNepal. We donotprovideanM Market has grownbyaround46percentyearsince2001and reached possibly allowNepaltosourcecheaperimports,inpar of Nepalesegoodsto powder, thoughthemainpoten a the tradebetweenIndiaand this istwenty with, possibly,onlyasmallpoten contained inthissec frequently men ore, co tt rac

transformers. dairy products, cement, sugar, transit trade, N T I S ti 122 ve marketforenergyexports. tt ti on, andchemicals,whereas on tothe19sectorsthatwereiden C A

hina andIndia,whichwillcon 2010 ti tt alinthelongrun.Thereispoten rac ti ons ofthe ti mes higherthanthetotaltrade betweenNepalandIndia( ti NEPAL TRADE I BACKGROU A oned byseveralstakeholders.Thesesectorsareanalysedbrie ti ddi A veness Index part fromprovidingservicesfortransitbetween ti on mightbeusefulforanupcomingupdateofthisstudy.Thesectorsare: C hina, whichisuptonowverylow,couldalsoincrease,andsuchtransittradewould ti A A Figure 2.7ExportsfromIndiaandChinatoEachOther’sCountry onal I forhydropowertheobviousreasonthatexportscanonlytakeplacetocountries s outlinedabove,thisis EU N D market,butpreferencesareerodingsigni C R NT Source: TradeMap. hina isbysea.MostofIndia’sexportsto EPOR EGRA ti al will ini ti E al forfutureexport. ti mes duringtheprepara xport T C TI hina mainlyexportselectronicsandmachinery. O N ti tt S nue toberoutedbysea.Sugarexportshavebene er andmorefrequentconnec ti T ally bewithinNepal.TransformersareanicheproductforNepal RA P ti T oten

ti EGY 2010 fi alforcementexportto ed andevaluatedinthisstudy,afewothersectorswere fi rst ofallIndia,butBangladeshcouldinprinciplealsobean ti cular from ti al Sectors C hina andIndia,butlesssoforthebulkoftrade ti on ofthisstudy.We,therefore,takeaverybrief C hina. TotaltradebetweenIndiaand ti U C al fordairyproducts,in par S$47 billionin2008. hina andIndia,Nepalcouldindirectly fi C ti cantly, sotheremaynotbesucha ons to bothIndiaand C hina isincommodi U hina andIndia,owingtothegood S$2.3 billion). fl y here.Theinforma C urrently, mostof A ti es, suchasiron s acomparison, fi C ted from the hina. ti cular milk E C xport hina ti on N T I S ven if E mated ti hasa via L athmandu 2010 ll of those 123 K A es that make on of border ti ti T ca fi on from on ti lans exist for future lans exist for future P olkata to athmandu–Zhangmu athmandu–Zhangmu EPOR K K hina and India to help hina’s coast will in the R C a mountain pass), which a mountain pass), which C L EGY 2010 D T N RA T S N O TI BACKGROU ven a railway connec EGRA E hina’s industrial areas are located. NT C on. ti es. hasa–Shanghai is around 4,400km by train (see the hasa–Shanghai is around 4,400km by train ti L The total road distance from The total road distance 150 NEPAL TRADE I hasa. L hina. hina and India is very limited, and trade by land is es hina and India is very C cantly and border procedures were simple and reliable, the C fi There is a border in Sikkim (via the Nathu There is a border in 149 Figure 2.8 India-China Land Corridor athmandu to K possible transit route via Nepal would be via Terai– possible transit route A Note: Routes shown do not follow actual road/railway/shipping routes. Source for Map: CIA World Factbook. urope goes by sea, even though railway lines exist. But transit trade could play a urope goes by sea, even though railway a being the lowest at 4,300m) and only open for a few months in summer; so it at 4,300m) and only open for a few months a being the lowest E L t greatly from any upgrade in road and rail infrastructure and a simpli t greatly from any upgrade in road and rail infrastructure and a fi al that products currently shipped from coastal areas in India to al that S$100 million per year. ti U ons via Myanmar. ti more detailed study would be required to assess transport costs and feasible products that could more detailed study would be required A hina and Western hasa and then on by railway to coastal hasa and then on by L C p://www.chinadaily.com.cn/china/2006-07/06/content_634734.htm tt h xtension of the railwayline towards the Nepalese border is under considera See E athmandu to India–which so far is not much more than a vague idea–might not change much. Most trade athmandu to India–which so far is not 149 150 The possibility of direct land transports between The possibility of direct at only around passes in north-western India. and two other borders via mountain was re-opened in 2006, (Nathu passes are very high in the foreseeable future. they will become major transit routes is hard to imagine that transit connec (border)– is around 900km and 1,000km from map below). However, poten That is where most of future be transported overland is limited. signi the road/rail infrastructure were upgraded be supplied and demanded from the bordering states or ci be supplied and demanded from the bordering role for products produced closer to Nepal, such as Tibetan products and exports from Indian states bordering role for products produced closer to Nepal, extent, for example in garlic, footwear or temperate fruits like apple Nepal. Such trade already occurs to some and pears. up a large part of trade between the two countries (e.g. iron ore). up a large part of trade between the two K between Nepal would bene transport cost for most items would be higher than for transport by sea, especially for commodi transport cost for most items would be procedures. Therefore, the government should be open to any support from both procedures. Therefore, the government upgrading the transport infrastructure. the to amaximumof100€/t,whichmayhardlybeenoughcoveraddi run, thoughitwillbemuchlowerthanusedtobe.Someindustrysourceses the prices areveryhighandhavereachedthelevelof(reduced) dras €5 millionor10,000MT.However,itisques consump U 154 153 152 151 A included intheexportpoten Several par Cement being around150,000MT. Nepal producesaround110,000MTofrawsugarperyear,butisanetimporterwithconsump Sugar manufacturers couldaddvalueinNepalandthenexporttoIndia. preferen serve theothermarketandtakepro Not discussedhereisthepossibilityof liberaliza preferen between signi well abovetheworldmarketcanbeachieved. in recentyears,wherefreeaccessisprovidedfor sugar). Thereisthereforenopoten is impor makes itdoub depending ontheloca large depositsoflimestone,and,therefore,alsoforexport toborderareasinIndiaorpossiblyBangladesh, of demand,theremainderbeingimportedfromIndia. 684.000 MTat60 They arecurrentlyes than thatavailableinIndia. ccording totradesta S$14 /MT/1,000km,makingcementproducedin under the Informa “ See forexample This couldalsoworkintheotherdirec P EU EU . ti fi cally cu R cant exportsinthenearfuture.However,thereispoten N T I S 124 . wouldmakeli andimportsfromthirdcountriessuchasIndiaorThailandtocoverdomes P andey &N.Banskota, ti ti ti ti ng substan ng ti on obtainedfromIT ti K al accesstotheIndianmarket,butnot alaccesstoIndiawillremain,andsuchpreferenceserodeinanycasewiththeongoingtrade on. That,plustheaddi on tobeableexportmoreofitsownsugarthe A athmandu and

sia- 2010 ti cipantsofaworkshopheldinNovember2009 tti P ng downsugarpricesinitsheavilyregulatedmarket. tf aci h ul thatthiswilleverhappenonalargescaleinthe neartomediumterm. tt NEPAL TRADE I BACKGROU p://www.gorkhapatra.org.np/gopa.detail.php?ar fi c Trade U S$/MT. ti tt al amountsofcementfromIndia( le sense.Butapremiumoverworldmarketpriceswillprobablyremaininthemedium ti ti mated at60-70 ti on ofsuchproduc A s C P greement. ti rocess ofcementproduc consultantinNepal. L cs from cs N hasa. Incomparison,transportcostsonthe 152 P D ti rohibi al assessmentastherewereapoten MostsugarisimportedfromIndia(mostlyre A R NT ccording toastudyfrom2008,domes ti EPOR on, butNepalcurrentlyhasnopreferen EGRA ti ti ti onal coststhatwouldprobablyoccurcomparedtoproduc C al for‘normal’exports.However,Nepalhasexportedrawsugartothe ve roadtransportcostswith T hina andIndia,Nepaldoesnottradecementwith fi TI t fromeasieraccesstothatmarket. C O hinese orIndiancompaniesusingNepalasamanufacturingloca N U S S$/MT/1,000km inNepal, ti on. Inaddi T ti RA on inNepal,Bulle T ti onable whethertheseexportswillcon EGY 2010 L ike manyother LDC C hina muchmorecost-compe s throughthe‘everything-but-arms’ini ti C cle_id=28620&cat_id=27 . ti hina. Ifrulesoforiginallow,then on, Nepal’slimestonepresumablyisofhighergrade 153 U Therefore,theremaynotbegreatpoten ti n ofthe S$40-45 millionperyear).Importsin2008were ti ti al accessto al forincreased produc K EU C athmandu suggestedthatcementshouldbe LDC EU hina mightpreemptexportstothatcountry. D ti epartment of . al forexportto price;soatthemomentsuchexportsto ti A 154 s, Nepalimportsrawsugarfordomes A 151 onal transportcostsforbothexportsto t themoment(early2010),worldsugar ti nnual exportssince2003werearound c produc c G whichisapproximatelythedistance Butthereisnoguaranteethatthe C olmud- hina, whereasIndiaisgrantedsomepreferences C urrently, Nepalenjoyssigni G ti fi mate thepremiumtogodown ned sugar,butalsosomeraw eology (2008). L ti hasa railwayareonlyaround ti on coversonly35percent

ti ti c demand. ve, atleastin C hina. ti on because Nepalhas ti nue sincethe C hina currentlyand C hinese (orother) ti a ti ve andprices ti on in on L hasa. ti ti C al for al on to fi EU cant hina, ti on EU ti is c

N T I S is EEK al buyers ti 2010 ngineering 125 E on base to ti c market, but enya). Smaller ti /l from farmers. /l from farmers. K urrently, N T karat C ve. ve. PR E ti EPOR S$1-2 million per year R U EGY 2010 D which currently employs

T frica (e.g. N on transformers to Bhutan A 157 ti 158 ). The main problem is that, RA eldwork. It is fully Nepalese- fi T S UAE N S$200,000 in 2008. O lectric, on and supply of such items are U on transformers because they lack ti on involves certain steps which are ast and E ti TI ve feedback from poten ve feedback ti ti E BACKGROU al buyers, who prefer buying in bulk. in bulk. al buyers, who prefer buying ti a net ve. However, Nepal is currently S$200.000. ti

ti EGRA U roduc se and engineering produc P ti cally an export of assembly services, with NT ti avoured milk, yoghurt, and whitener. Milk is avoured milk, yoghurt, and whitener. fl xports were only erent types of transformers that are currently E ff in recent years being around on, with annual exports S$0.6 million in 2008. However, a more appropriate ti 155 . on transformers are inconsistent. onally compe onally advantage (as in the ). With currently 130 workers employed (down from a U ti ti ff Micro-transformers are, for example, on transformers. ti E NEPAL TRADE I na EU ti es needed by poten ti

ti on, are mainly manufactured for the domes onal tenders for distribu ti ti S$1,000 and some overhead costs. on Transformers on U ti al for export in the Middle on industry and their produc ti ti lectric (NB ve socio-economic impact as it provides cash income for a large ve socio-economic impact as it provides ti E okhara, was visited in the course of the okhara, was visited p://www.neek-transformer.com P cant drop to cant drop tt cs for distribu fi is working to supply 1,100 units of distribu h S$5-7 million in recent years. ti U ), s on=confronto_est ti ti EEK EEK several training measures. vity through ti Powder cally Milk td. (N ast and sees itself as being able to compete in terms of both price and quality, ast and sees itself as being able to compete fi L E 156 xport sta E www.nbe.com.np omponents of such parts are imported into Nepal, manually assembled and then re- omponents of such parts are imported urrently, N

C ), C ompany E 159 C ). cult to take part in interna ve and telecommunica 5 MT/day, which is below the capacity of the plant. The constraining on of milk powder is ffi ti ti mate based on an annual salary of ti ne could in fact speak of an export of assembly services, rather than an export of micro- ne could in fact speak of an export of assembly services, rather than an export EEK ccording to trade data, annual exports of such products have been A O es and costs are not seen as problems, according to a company representa ti lectric, (NB ngineering E E nd it di td, a milk powder factory in td, a milk powder factory fi td (N L L p://www.clal.it/en/index.php?sec tt h karat E aity D akistan and the Middle nnual imports of milk and milk powder were P cult to automate. Source: A Nepal Bayern This is a very rough es Nepal ffi S$200.000-300.000. ompany arge transformers, used for electricity distribu di exported. The leading company involved in this business is Nepal Bayern importer of dairy products. The sector appears to have a very posi seems interna number of subsistence farmers. It also Shipping facili companies the required experience. used in the automo U and they have stated that they see a poten even in markets where Nepal does not enjoy any tari even in markets where Nepal does not in the quan so far, the company is unable to supply the only exporter and Bhutan is the only export des manufacture and export electrical and electronic components. manufacture and export electrical and are two very di on a contract manufacturing basis. There distribu exported: micro-transformers and electrical This is similar to the current farm gate prices in the This is similar to the current farm gate The current produc is currently at 60,000 l/day. Milk is bought for 24 N factor is the lack of milk supply, which peak of 550), the annual value added should be somewhere around 155 156 157 158 159 transformers. Micro-Transformers and Distribu a technical exper Since the early 1990s Nepal has developed 130 workers. L is Nepal are currently also exported, mainly to Bhutan. The main company involved C The company has not yet exported milk powder, but has received posi The company has not yet exported milk Sujal Dairy Products, speci Dairy Products, supplied by and collected from 3,000 farmers in the region, most of them small-scale producers. The company most of them small-scale producers. from 3,000 farmers in the region, supplied by and collected produc assists farmers in raising inputs being imported by Nepal Bayern owned and produces mainly skimmed milk powder, and also mainly skimmed milk powder, and owned and produces between 2004 and 2007, with a signi export measure would be the value added as the export is prac are 200percenthigherthanpowerfromthegrid.Transporta The industryiselectricity-intensiveandfrequentinterrup A requires trans-shipmentthroughIndia,whichaddsaddi might havegreaterpoten advantages inthissector. will becomeamajorexportitem,giventhehightransportcostsandnoevidenceforpar future. Suchexportshavebeenerra It isasectorthathasprobablylessincommonwithdistribu where Nepal’scompe Vietnam or signi N T I S 126 fi cant increaseinexportsoftransformers,par 2010 C hina, especiallyoncepreferen NEPAL TRADE I BACKGROU ti

ti veness isproblema ti als. Theseexportsrelyonlowlabourcosts,butsu N L abour-intensive assemblyofmicro-transformersorsimilarelectroniccomponents D R NT EPOR EGRA T ti c inrecentyears,butitishardtoimaginethat distribu TI O N S ti T al accessisgone. ti RA c whencomparedtomoree T EGY 2010 ti cular distribu ti onal costsandpoten ti ons havecausedproblems.Self-genera ti on transformersthanwiththegarmentsector, ti on ofdistribu ti on transformers,maynotbeforthenear ffi cient low-costproducers suchas ff er fromlowlabourproduc ti al delays. ti on transformerstoBhutan ti cular compara ti on transformers ti on costs ti vity. ti ve

ff es N T I S ti ons and anchayat ons and ti ti 2010 P 127 c to the 19 on of three fi ca ti cal stability, cal fi ti (vegetable fat),

T ti rst given in 1971, rst given in fi when ll March 1989 es, poli es, ti ti EPOR es in their market. ti R EGY 2010 D vanaspa c recommenda T N fi issues speci fy 1990 onal monarchy. The ti ti greements RA oN in September 2001 of its T G tu es before Nepalese exporters A ti ti S N O hapter 3 hapter TI BACKGROU of non-tari rst on a detailed review fi ed the C ve-year Treaty of Trade was signed in fi fi

ti ally open border of 1,800 km facilitates EGRA ti on (material content) norm for such duty- cials, and other stakeholders in Nepal as cials, and other stakeholders in Nepal NT ti ffi able the enormous amount of informal trade fi onally considered as NTBs but are incidental onally considered as NTBs but are ons are followed by a short one that describes

ti ti ti oN o on collected through extensive discussions with ti G a.) The treaty was renewed s a result, a tt A facili on issues, infrastructural ti onal trade before the 1950s was mainly with these onal trade es for trade between Nepal and other countries were ti ti alcu ed in 1950 with the Treaty of Trade and Transit, which cles manufactured in Nepal, with the excep fi ti C NEPAL TRADE I oI), therefore, no G on such as acrylic yarn, zinc oxide, ccess to the Indian Market the Indian ccess to ti cs). The value addi A ti ons, traders, ti rst codi es key challenges and opportuni es key challenges fi fi ng strife was partly responsible for the downfall of the

ti ti nder the 1996 Trade Treaty, India agreed to provide access, free of U ons, to all ar ti hapter 2. These two sec and all but two trading points were closed for a year. This blockade on, respect to Nepalese export opportuni cials with ti on and/or distribu ffi C ti olkota (formerly K ons in the treaty before extending its validity. ti ca overnment of India ( ve restric ve fi ti le or no value addi G tt es on goods passing between Nepal and India. In successive modi es on goods passing between Nepal and India. In successive ti hina) in the north. Interna ta on markets in India and provides a number of speci on markets in ti ti C on ti na ti onship with India was ons, the chapter iden ti ti led to its expira ons ti egion of a R al sectors reviewed in ti s and tax du ti ff es and quan ti ve of this and the following chapter is to analyse some of the key constraints and opportuni to analyse some of the key constraints of this and the following chapter is ve ti overnment successfully reinstated the treaty. al to trade (i.e. transporta ti G on to seek some modi ti of parliamentary democracy with cons cal system and the establishment ti utonomous n the basis of sec ecember 1991. basis was uty-free (customs) access for Nepalese exports to India on a non-reciprocal hina, and provide advice on how to address some of the constraints, including capacity development through including capacity development on how to address some of the constraints, hina, and provide advice A conclusions. in entering key des inten O the views of Indian businesses and o well as in India. To the extent possible, this part of the analysis also seeks to iden well as in India. To the extent possible, relevant Nepalese businesses, trade associa rule of law, etc.). Much of this analysis is based on informa rule of law, etc.). Much of this analysis export poten and copper products. The free entry was removed in 1996. It was alleged that this had resulted in a surge of imports into India of some free entry was removed in 1996. It was alleged that this had resulted in a surge poli Interim barriers (NTBs) and, then, on impediments that are not tradi barriers (NTBs) and, then, on impediments or essen groups of items (alcohol, tobacco, and cosme related to market entry by Nepalese exporters in the country’s two giant neighbouring markets, India and two giant neighbouring markets, by Nepalese exporters in the country’s related to market entry C technical assistance. market. The chapter focuses This chapter looks at access to the Indian and smuggling. Nepal’s trading rela products from Nepal with li crippled the Nepalese economy. The resul D D 3.2 and Transit Background: Nepal-India Trade by India on three sides (east, west and south) and Tibet Nepal is a landlocked country, surrounded ( lowered tari The objec with India. The essen countries, with nearly 90 per cent conducted trade, but also makes it hard to control. It also makes unquan trade, but also makes it hard to control. but with 90 per cent Nepalese/Indian material content requirements. This was gradually reduced when the but with 90 per cent Nepalese/Indian material content requirements. This was cent of Nepalese/Indian material treaty was periodically renewed, and, in 1993, it was brought down to 50 per content and Nepalese labour content. customs du established in India at the port of 3.1 Introduc renewals of the treaty (notably in 1960), transit facili delayed nego validity un for A two crossingsalongtheNepal-Indiaborderaredesignatedforbilateraltrade. three monthsun The treatywasdueforrenewalin and circumven subsequently beenrenewedin1999andtherea Nepal andIndiaalsosignedaseparateTreatyofTransitin1991.Thistreatywasvalidforsevenyearshas in March2007,withoutanychangeormodi applicable toanumberofsensi countries withoutmanufacturingac and foreignexchange.Thisagreementprohibitsre-exporta to Nepalvia duty-free basis.Importantmodi C domes March 2002foraperiodof talks betweenSeptember2001andFebruary2002,theIndo-NepalTradeTreatywasrevisedrenewedin performance fortheperiod2004-09isshownintable3.1. However, thede In generalterms,thesetrea third countriestoIndiawithoutmanufacturingac on coopera fi ti ve yearsandwasextendedtogetherwiththeTreatyofTradein1996,2002,2007(thela nued accesstotheIndianmarketisprovidedforNepalesemanufacturedgoodsonanon-reciprocal N T I S 128 ti c industryandprovidinganimpetustotheindustrialgrowtheconomicdevelopmentofNepal. ti ti on agreementtocontrolunauthorizedtradewasalsosignedbetweenthetwocountriesin1991 l March2012). 2010 K olkota and 080 6444,8 03 6,3 5,0 68 9,8 110,023 103,820 197,589 56.85 74,143 162,671 64.15 66,428 135,312 150,103 49,759 59.51 264,033 113,546 142,376 60.32 61.65 90,768 221,938 115,872 59.33 40,080 65.05 194,695 107,143 66,444 38,556 70.27 173,780 88,676 59,267 41,729 67.59 149,474 59,383 40,715 66.29 2008-09 60,234 38,917 2007-08 58,706 2006-07 2005-06 2004-05 Year (July-July) ti on oflawseithercountryinregardstoma NEPAL TRADE I BACKGROU fi ti cit intradegoodsonNepal’ssidehasbeenexpandingdrama l March2002toprovidemore Trade inGoodsNepal-India2004-09(inmillionsofNepaliRupees) fi

ft N een transitroutesto U D fi oa oIda%TtlFo ni oa WithIndia Total % FromIndia Total % ToIndia Total ve years.TherevisedtreatystrikesabalancebetweensafeguardingtheIndian nder thisagreement,bothcountriesagreetocooperatepreventinfringement R NT ti es andagreementshavehelpedexpand tradebetweenNepalandIndia. EPOR xotfo ea mott ea De ImporttoNepal Export fromNepal ti EGRA ve items.TheNepal-IndiaTreatyofTradewasrenewedagainfor fi ca D T ti ecember 2001.Bothpar ti ons weremadewithrespecttotherulesoforigin andtari TI vity. Theagreementalsoprohibitsre-expor O N S T fi RA ca T ti ft EGY 2010 K on. er in2006forsevenyears.Thistreatyprovidestransitfacility ti olkota aredesignatedfromtheNepal-Indiaborder.Twenty- ti Table 3.1 me fornego vity. ti tt on ofgoodsimportedfromeitherpartytothird ers relatedtocustoms,narco ti es agreedtoextenditforaninterimperiodof ti a ti ons. Followingseveralroundsofbilateral ti cally everyyear.Thetrade ti ng goodsimportedfrom fi cit ti cs, foreigntrade, ff ratequotas fi ve years tt er with ve ti vely ons,

N T I S ti ugust ti A a ti merican uty-Free A greement D countries,

2010 on to this 129 A ti A n ti T a ves, business ti L cient working alled in alled AP ffi rea agreements ti es and charges, ti T A -Sectoral Technical -Sectoral l March 2012. ti ti c Trade , and rate quota system. system. rate quota fi ff nd a solu EPOR ode of manufactured ode of manufactured fi R C EC nauthorized Trade (also aci P U EGY 2010 D ons, import licensing, and T , Nepal is bound to reduce ve un ve N ti ti N) and some RA sia EC T A ec s a result of these nego ini nalized and ff , BIMST ve for Mul EA S fi A ontrol ti onally to each other treatment A S ti N tors. C a ti A ons, and conformity assessment ons, and conformity assessment O ti ti FT TI A ve restric ve BACKGROU ti ons ( ons ons in order to ta ti and BIMST ti ti EGRA A cipated in a ti on clauses. Four products (vegetable fat, on clauses. Four products ctober 2009. ti NT ti FT O A greement to ca fi A onal’ policies and closed bidding; sian Na ti al trading arrangements is that, compara al trading s, quan s, ti es enjoy duty-free access to Indian markets on A ff ti ) in 2004 and also joined the regional trading ) in 2004 and also joined the regional O preferences to S ff es to provide uncondi ti nauthorized Trade were ) and Bay of Bengal Ini ountries around the world with a commitment of giving ountries around the world with a commitment NEPAL TRADE I U A C they were Nepal-India Trade Treaty in 2002 and me in the ti FT on (WT ti A rst fi ons. ti on of Southeast ti rea (S eveloped ve-year period. It has already signed Free Trade ons such as ‘buy na rganiza A fi ti D O greement on ). Similarly, the country par cle IX of the 2007 treaty. The treaty is e ti A r ssocia EC

ft east A A L ve restric ve ti cials in both countries: ffi ta ti rates due to its bilateral agreements with some of the neighbouring countries rates due to its bilateral agreements with some of the neighbouring ff eru. India will also provide tari sian Free Trade on (BIMST on requirements and changes in the Harmonized System on requirements and changes P ti ti A onstraining Nepal-India Trade on tari ti C oopera urrently, Nepalese manufactured commodi C ons, and quan C ti overnment procurement restric ons, and government o to the products of other countries under the framework of on, India is bound to provide preference rate with member countries of these trading blocs according to the provision of the respec countries of these trading blocs according to the provision of the rate with member ti references Scheme for all procedures; customs barriers; G ti ff ) as an observer of this trading bloc. With the advent of S ) as an observer of this trading bloc. With P conomic new Treaty of Trade and dra measures, including standards, technical regula Standards-related Import policies such as import charges other than tari ft A E

ff T cles as the qualifying clauses for duty-free access to the Indian market. The list of insu access to the Indian market. The cles as the qualifying clauses for duty-free ti AP regional trading arrangements and bilateral free trade area agreements. The country is bound to reduce its regional trading arrangements and bilateral Most Favoured Na trading arrangements. Besides, India has introduced and as a member of the various regional In addi Tari 2009. The new Treaty of Trade (valid for seven years) and new countries like Brazil and ‘paradox’, although, technically speaking, the treaty was to expire only in 2012. not less than favourable than that accorded to any third country with respect to customs du not less than favourable than that accorded import regula duty-free access to them over the next with Singapore, Thailand, and the In view of the above facts, the two countries commenced nego a dra and 3.3 NTBs business execu The following categories of NTBs were analysed through discussions with included as a separate protocol to Nepal acceded to the World Trade associa The Nepal-India Trade Treaty was renewed in March 2007. It provides for rules of origin criteria with the It provides for rules of origin criteria Treaty was renewed in March 2007. The Nepal-India Trade addi inclusion of value ar has also been provided in the quali in manufacturing process valid for seven years) between the two countries were signed in speaking, India would have enjoyed a higher degree of preference for its exports to Nepal than what Nepalese speaking, India would have enjoyed a higher degree of preference for its exports products could enjoy on the Indian market vis-à-vis their non-Indian compe acrylic yarn, copper products, and zinc oxide) have been included again under a tari products, and zinc oxide) have been acrylic yarn, copper arrangements of South Safeguard provisions were introduced for the Safeguard provisions which of course will result in preference erosion for Nepalese exports to India. The paradox arising from which of course will result in preference regional preferen this complex web of India’s bilateral and ( its tari agreements. both par a non-reciprocal basis. Trade treaty obliges Import Generic Issues The a ff ec fi ndings discussedherearedividedinto‘ ti ThelackofclarityandtransparencybyIndianauthori Notall27recognizedbordercrossingsareauthorizedtoclearkindsofcargo.Indiancustomsappear Weakformalborderinfrastructureisanimpedimenttotrade. Nepalesemanufacturingproductsthatareaccompaniedbycer Trade restric Investmentbarrierssuchaslimita Barrierstotradeinservicessuchaslimitsontherangeof Weakintellectualpropertyprotec

ng someofthe N T I S 130 and BhutanviaIndiaisprovidedthroughlandroutes.Nepal’s long-standingrequestforaddi C cargo) areallowedbyrail; of Nepalesecargobyrailarecomplicated.Notalltypes of bilateralcargo(i.e.openandliquid O facili C trade performanceandaddscosttoNepaleseexports; to allowclearanceofspeci facili (27 inthenewagreement),onlythreehavequaran to paycustomsdu that Nepalesehandicra Nepalese productsotherthanmanufacturingandprimaryproducts.Forexample,itappears privileges (facilitatedcustomsclearance).Thecurrenttreatyisnotclearabouttheexportprocedurefor G displace exportsinthirdcountrymarkets; E rela to Nepaleseexportsandaddtheunpredictability,unreliability, andintrinsicinstabilityoftrade but ithasyettobeformalized; Nepal fromVishakhapatnam(alsointheeastand400km far from export performancerequirements;andrestric government-funded researchanddevelopmentconsor ins posi or purchasegoodsservicesintheforeigncountry’smarketssuchascartels,abuseofdominant royal and discriminatoryregula applicable rules,procedures, andcustomsdu imports offoreign three tosixmonthsforNepal togetclari xport subsidiessuchasexport ollec urrently, onlythe overnment-tolerated an nly oneofthe27crossingsisconnectedbyIndian P ti tu ti

ti 2010 olicies ons; ti ti ons, monopoliesofstateinterven ti es onIndia’swesterncoastforwest-boundcargoiss es ontheIndianside.Theyalsoappearnottobesu es; ti ti on ofavarietyallegedlyarbitraryaddi ons, regula NEPAL TRADE I BACKGROU ti ons a E xport ti ti fi K es toenterIndia; ff N on ofinterna lms, andbarrierstotheprovisionofservicesbyprofessionals; ec olkota D P R NT ti oten ft ng electroniccommerce, includingtari EPOR products(whichareneitherprimarynor manufacturedones)have EGRA ti ti ons andstandards,discriminatorytaxa -compe fi P cproductsonlythroughdesignatedbordercrossings.Thisprac ti ort isallowedfortransitofNepaleseproductstosea.Transit toBangladesh al Sectorsiden T TI O fi ti nancingonpreferen N onal data ti S on suchasinadequatepatent,copyright,andtrademarkregimes; ti

ti ti T ons onforeignequitypar ve conductofstate-ownedorprivate RA G ti eneric Issues’and‘Sector-speci T on agencies; fi EGY 2010 ca ti fl ti

ows, restric on when confusingnewrulesareno ti fi es o ed in ti ons onrepatria ti ft R onal du onal en hampersNepaleseexports. Ittakesonaverage ti ailways. Theproceduresagreedforthemovement C ne checkfacili hapter 2. ti al termsandagriculturalexportsubsidiesthat ti ti ti ons ontheuseofdataprocessing,quotas fi a; localcontent,technologytransfer,and es in theno ffi nancial serviceso ciently equipped; ti es byIndiancustomscancausedamage ti ll underconsidera ff and non-tari ti cipa ti K ti on ofearnings,capital,fees,and

ti olkata) wasagreedin fi es andonlytwohavefoodtes cates of origingetcustoms-free O ti fi ti ut of22o on; c Issues’focusingontheissues on andaccesstoforeign ti

fi ca fi rms thatrestrictsthesale ff ti ff ered byforeign on or interpreta measures, burdensome ffi cial border crossings ti ti on. on.

fi ed inIndia. P ort facilityto A ugust 2009, ti onal port ti ce limits fi nancial ti o of on ti ng on ti ves

ti

N T I S ti cials ffi on by on -illegal ti O es at all 2010 ti 131 ompe C ailways charge R on; T ti on facili mate preroga mate ti ve outcome, but it ti ti ects the weak state fl onist or WT ti EPOR ng high costs of truck- es and/or that Indian ti ti R es at the border or at ti EGY 2010 D T N on of government o ti RA T me consump me en S ti tt N This places export en required. ft on facili O on and inspec ti veness of Nepalese products and coopera ve and immediate ti ti ti

TI ti BACKGROU ca or geographical weaknesses and onal ca fi ec ti fi

ff

ti ti EGRA ne is o tu ti ti ailways’ monopoly. Indian NT R cally applied in a non-discriminatory fashion ti on/cer ti rivate Firms cult to see a truly protec ffi olkata than those charged by Indian truckers even es. es. P ti K ects the compe ff ciency that must be addressed by both countries, if ciency that must ve disadvantage; ve fi ti hapters 7 and 8 of this report. mes seven days, to clear agricultural produce through mes seven days, to clear agricultural produce through ti ect of Indian NEPAL TRADE I on of Nepalese exporters largely re C ff ti on at the Indian border, with resul ti es. To date, Nepal seems to lack a more formal system to es. To date, Nepal seems to lack a more formal system ti ca al exports, in order to create a precedent and act as a ‘pilot’ fi ti

ti es must be systema ti fying the weight, safety, and quality of products, stands out as a fying the weight, safety, and quality ti S cer P on at the border. ti ve days, some fi projects. programmes and dedicated capacity-building onal donors’ on might not be easy and might not guarantee a posi on with Indian authori ti ti ti ers for which Nepal should demand e tt S infrastructures in Nepal and the weak ‘culture’ of standards among producers S infrastructures in Nepal and the weak ‘culture’ of standards among producers P members. The frustra oN to address such issues bilaterally with Indian authori and customs rules and procedures es at all points of entry. The applicable import O G ti barrier; ff onduct of State-owned or manner. These are clear ed, interpreted, and applied in a consistent and transparent fi

C ti ng costs are much lower. This a ti border crossings and quaran es are missing at ected Nepalese products consider a legal recourse in front of the Indian ected Nepalese products on and resolu ti ti ff er course of ac ve tt system and the bilateral trea a ti ti

O ti well as the heat treatment to deal with possible pests in on of pallets and wood products, as es. For example, import du ti ti on at customs and storage. ti on is for the ti ng facili ng ti powerful non-tari the airport leading to issues in cer reten crops from Nepal, such as ginger, at a compara exported products, are trade impediments in terms of both costs and exported products, are trade impediments the same fees for containers transported by rail to customs and get the necessary S encourages widespread corrup though opera has undertaken to implement and comply with within the framework ons and commitments that India ti Nepalese exporters point to the deleterious e It takes an average of four o adequate quality, metrology, and inspec The lack of Tes Fumiga -compe lenecks’. With respect to such impediments, it is di lenecks’. With respect ti tt n uthority. This la by Indian customs authori must be published, no obliga of both the WT ensure they are duly brought to the a record such issues as they arise and to for prompt nego Some issues, however, are ma Indian authori border checkpoints and customs entry points is a de border checkpoints to interna necessary with recourse These issues may be unfortunate from the point of view of Nepalese exporters, but are legi These issues may be unfortunate from the point of view of Nepalese exporters, ‘bo of the current standard and S and exporters. This issue is addressed more fully in of India, as of all other WT importers of the a project. A might be considered in one of the high poten A Standards-related Measures Most issues reported above relate to infrastructural, regulatory, ins above relate to infrastructural, regulatory, Most issues reported ‘hidden agenda’ on India’s part. The lack of adequate control, cer India’s part. The lack of adequate ‘hidden agenda’ on The sugges nega stakeholders andinformedpar scope ofthisreport,itisclear thatsuchphenomenonmustbetakenintoaccountwhen correc or someofthe‘other’impedimentsdiscussedherein.While informaltradedoesnotfalldirectlywithinthe addressed forNepaleseexportstobecompe categories ofNTBs.Nevertheless,bothsetsissuesare cri A 3.4 With respecttotheexportpoten Sector-speci No signi G of necessaryforeigninvestment,andothers.Mostarediscussedingreaterdetail are beingconsideredandimplemented toreducetheimpactofNTBsandtradeimpediments. such alargevolumeofinformaltradedoesre trade betweenNepalandIndia,35to40percentofformal tradebysomees It mustbenotedagainthat,inaddi agricultural commodi P the applica C In regardstoselectedgarmentsandhandicra di and discriminatorydu Nepalese goods,o a resultofdomes A in greaterdetailbelowandmustalsobetheobjectofurgentwell-plannedac regulatory framework,lawandorder,poli tailor-made policies,weakinfrastructuralfacili trade impedimentsaretheresultofdomes With respecttothepoten not makearealdi achieved ontheexportperformancefront.Theresolu s indicatedabove,itappearsthatmanyimpediments that a numberofotherconstraintsa rotec ommerce, andInvestmentBarriers ffi overnment cult tocomplywith a wealthofimportregula ti

vely areeitherNepalesedomes N T I S 132 ti fi O cant issueswereiden on, BarrierstoTradeinServices,

ti 2010 ther ImpedimentstoNepal-IndiaTrade on ofandcompliancewithIndianstandardstechnicalregula NEPAL TRADE I BACKGROU fi ti P c Nepaleseshortcomingsandself-in c Issues ff ft erence withoute rocurement en e ti ti es orsemi-processedagro-foodproductsexportedfromNepalappeartoberelated es atIndiancentrallevelorstatelevel.Theseinstrumentsdoseemtoplace ff ec ti N al service exports reviewedin D ti vely, atacompe R NT ti EPOR ff es. EGRA ect nega ti

ti fi al productsandservicesreviewedin ti ed inthosesixareasbyNepaleseexportersthroughdiscussionswith R on toformaltrade, thereisalargevolumeofinformaland‘unauthorized’ T ff estric TI ec O ti N c innatureorIndianissuesthatdonot ti ve andlong-las ti S ti vely Nepal’sexportperformanceinthosekeysectors,butlargelyas cal stability,investment-friendlypolicies,etc.Thesearereviewed T ti ti c shortcomingsontheNepalesesideinsuchareasaslackof RA ft ons, ti fl s, thekeytradeobstacleappearstobeapplica

ti ect a ti ti

T ve. Theseareaddressedbelow. es, poli ti ve disadvantagevis-à-viscompe EGY 2010 ti on permitsandlicences. tt empts by traderstobypassconstraintsarisingfromNTBs E R xport Subsidies,Intellectual fl icted de ti estric ti cal stability conducivetodevelopmentanda on ofIndia’sNTBs andtradeimpedimentsalonewill ti ng improvementsonthedomes C hapter 2,itwouldseemthatthegreatmajorityof ti fi ons ti ciencies, whetherinrela cal toNepal’s abilitytotradeandmustbe ff ect Nepal’sexportperformancetoIndia A ff ec C hapter 2,thecri ti ng ti ti ons. Inaddi mates. ti ti ng Indianproducts. E ons ifrealprogressistobe lectronic fi C t withinthetradi hapter 10. O ti ne ofthereasonsfor on toinfrastructure, ti ti P ti cal NTBsa c front. on, traders roperty ti ti ve measures on oferra tt rac ff ec fi ti nd it onal ti ti on ng ti c c ti ve on ve. ve. ti ti elhi, ti

es;

N T I S ti ti ti D veness ti

on. The ally very ti ti 2010 ti 133 efrigerated awlessness, R L c produc c es like ti ti ances than in tt T of unreliable ects ff preferences, have ff c consump EPOR ti cularly on the Indian cularly on es, needs to improve es, needs ti ti R with India on and trade ng quality. ti ti EGY 2010 D for domes cient stocks T ng in export trade (and in ffi N ti this export mes, however, not compe cient and ti ffi ec ff RA T S N O TI on for domes BACKGROU ti EGRA Nepal, duty-free access to India, ered by ff NT on of technical assistance from development ti on), improvements in India’s compe ti to show the deleterious e en cial advantage given by tari fi ft ng for purposes of foreign investment;

ti ti cal vision, and medium- to long-term development ti oriculture products. This is a key and poten oriculture ls in 2009) on grounds of insu fl cal situa cal ti ti NEPAL TRADE I hinese and Indian producers, par C cult for small Indian buyers to get import permits in India. in India. cult for small Indian buyers to get import permits ffi es; ti oN and mobiliza ve industrial policy, impairing the development of its exports. of its exports. ve industrial policy, impairing the development ti G c issue. So is the very rigid Nepalese labour law. ti ec onal phenomena that make Nepal not e ff ti ty in Nepal, only four buyers imported the whole quota in India. This ti is cited o on and export on, especially agricultural produce and commodi on, especially ti es and cold transport equipment are lacking, a ti ti ects traders, damages Nepal’s export image, and creates confusion among ff climate in Nepal (strikes, blockades, racketeering by gangs, on in the investment ti raw materials and skilled labour. In recent vely cheap c produc ti ti on), but mostly in import trade. The money is there. It is easier and safer to import cultural products from Nepal; c Issues c ti ti mately a mately ti ti ons and trading houses in Nepal seem no longer to be inves ti S infrastructure within Nepal is a serious constraint that can be addressed only through more S infrastructure within Nepal is a serious constraint that can be addressed only through ally to cater to demand in the border areas but expanded later to large ci border areas but expanded later to ally to cater to demand in the P ti on ul on ti ll lacks a long-term and e ti c produc c ti the full development ve sector. The lack of investment in such infrastructure appears to prevent ti cal instability is a major domes ti ects the fact that it is too costly and di fl oN’s periodical ban of certain export (e.g. len oN’s periodical ban of certain export (e.g. overnment’s unstable policy vis-à-vis export crops is also hampering proper development of such. export crops is also hampering proper development of such. overnment’s unstable policy vis-à-vis dequate cold storage facili oli arge corpora resulted in the demise of this Nepalese industry. This also appears to be the case with a number of resulted in the demise of this Nepalese other sectors; in neighbouring border areas, and the loss of the ar in neighbouring border areas, and the farmers; of exports of hor progressive deteriora poli absence of law and order, and uncertain consump achieving an increase in systems of transport, storage and handling at airport must be improved for trade in high value perishable goods such as They also make Nepal not appealing and not interes lucra has basically died out. There remains some but limited produc has basically died out. There remains market; policies for strategic sectors; too risky; partners; strikes, transport stoppages are na mainly because of favourable investment packages being o mainly because of favourable investment G for Nepalese producers to compete with domes domes producing something in Nepal for export. Too many law and order issues make motorbikes or TVs to sell to Nepalese families that have money to spend from remi motorbikes or TVs to sell to Nepalese families that have money to spend started ini and access to rela sustainable, and credible government policies and business Investment cannot occur without stable, poli climate. There is an urgent need for stability, in India. For example, 60,000 tonnes of ginger were allocated to Nepal in 2008. While 300 sellers were in India. For example, 60,000 tonnes of ginger were allocated to Nepal in 2008. necessary to assemble this quan re thorough commitment on the part of P materials or most agricultural commodi A L G trade and development policies on Nepal’s export development. Soap produc policies on Nepal’s export development. trade and development This Indian NTB, coupled with the absence of scale on the Nepalese side, limits export opportuni This Indian NTB, coupled with the absence of scale on the Nepalese side, limits The weak S

can also be a problem, making Nepalese products non-compe The lack of scale on the Nepalese side especially for the low value products such as raw Transport costs are a serious and constant problem, Quality of domes Nepal s Nepal The example of soap produc Nepalese stakeholders point to a number of issues: Nepalese stakeholders Nepalese Domes Some issuesdosuggestconductbyna G a numberofinterna The followingsec SelectedViewsfromIndiaonNepal-IndiaTrade 3.5 including, ifneedbe,bymeansofWT consulta nega Nepalese exporterspointtothefollowingissuesonIndiansidethat,theyclaim,appearbehavinga Indian Domes can address,beitwiththeirownresourcesorsupportfromdevelopmentpartners. These andothershortcomingscreateimpedimentsthatonlyNepalesepolicy-makersgovernmento from thatcountry. discussions withanumberofgovernmento oN o ti IndiaisprovidingassistancetoNepal to developintegratedborderposts.Thise Speci NepalesegarmentexportstoIndiaaresubject torecurrentcountervailingduty( SeveralIndianstatesapplydi IndianstatesborderingornearbyNepal(Bihar, Tamperingwiththesealsofcontainers(i.e.stealinggoodsandre-sealing)appearstobeextensive; Nepaleseexporttaxesonmostagriculturalproducts(leviedasoflastyear),pluslocaldevelopment

ve e N T I S 134 ffi Nepalese laboratoriesandcapacity tocer the retailprice.Thisappearstobe,ifanything,WT by eitherthe by India,onbothIndianand Nepalesesidesoftheborder.Inabsenceanyformal complaints not takenupIndiaonthiso for agro-foodtrade.Indiahasbeeno truth, thisisli addi incen Sikkim) arelessdevelopedthanotherIndianstatesandbene C taxes, areburdeningNepaleseagriculturalproductsandmakingthemlesscompe an addi Na producers. commitments andna manufacturers havebegunshi Nepalese products(especiallyagriculturalones)canonlygothroughbyfacingother‘discre costs ofdoingbusiness,iso cials needtoputinplaceasystemrecordandaddresssuchissueswiththeirIndiancounterparts. orrupt prac ti ons withIndia,eitherwithintheframeworkofbilateraltrea ti ff onal Treatmentviola

ect onNepal’sexportperformanceandtradeopportuni 2010 ti onal technicalbarrierstotradeand/orstandardsonNepaleseexportsincontradic fi ti c provisionsinthecurrentTreatyofTradeareaimedattacklingissuestandards,especially ves, includingtoindustriesthatcompetedirectlywithNepaleseproducts.Some ti onal NEPAL TRADE I BACKGROU ti on re A ti ti c Issues llegedly, Indiangarmentproducersareusuallywaivedthislevy,withaconsequent ces attheborder,especiallywherenoS tt C G le morethananexcisedutythatismeanttomirrortheleviedondomes ti V oN orNepalesetradersabout borderoradministra oa obliga onal D fl ects someviewsonNepal-IndiatradefromanIndianperspec of4percent(foratotal8cent)andchargingitnotontheF N D ti onal treatmentobliga R NT EPOR ti EGRA on, ifcon ff ft ti er thusfar; en referredtoasanimpediment; ons andcommitments.Nepalshouldaddresstheseissuesthrough T TI ft O ing investmenttothoseloca ff O erent, non-transparentanddiscriminatoryrules,addi disputese N ti onal orsub-federalIndianauthori S fi rmed. T RA ffi cials, diplomats, trade associa trade diplomats, cials, ff ering T EGY 2010 ti fy products forthelastthreeyears. tt O lement. ti ons andNepal-Indiatreatyobliga n topoftheregular fi nancial, technical,andscien U O tt ar illegal. P P S laboratoryisavailableforcer radesh, Himachal ti ti ons; es: C V fi ti

ti es orwithintheWT D ti ve delaysduring2008and 2009, ng froma , Indianowappearstobelevying ti ti es thatmightbeillegalunder ons, andindividualbusinesses ti P

fi radesh, c assistancetoimprove ti tt ti ff ve basedonin-depth ons; rac ort isen A ti

pparently, ti ve; C ti ve development ve V U O D tt B pricebuton ) byIndia.In aranchal and aranchal O ti ti ti

ti framework, rely funded oa taxes, onal fi on ofWT ca G ti on and on ti onary’ oN has ffi cials ti c O

es N T I S ti l some l cularly ng one ng ti ti ti onist or ti onal and onal ti 2010 oriculture 135 fl ract foreign foreign ract tt on, however, ti als. India has ti ects of strikes) ects of strikes) ff T ciencies in policy, ciencies fi EPOR le to investment. No ti R c de es and exported to third ti EGY 2010 D es Shaping es ti ts; lm industry. Sports and lm industry. T fi fi ti N RA c al oils, tourism, hydropower, culture products, culture ng. ti T ti ti ti S goods; ne for perishable ti N for more seat capacity on the es ti O ve sectors in which to concentrate ti cal bene cal TI ti cult to see a truly protec BACKGROU ffi ons in Nepal; ti es and quali ti rms many of the export opportuni

fi ti pportuni EGRA c and export needs. Hydropower is also a ti O al lucra al NT on in the number and e on in the number ti ti oriculture, bilateral trade could be developed so fl oriculture. fl ons. ti elated health services could be provided from Nepal to elated health services could be provided R s indicated, it is di cal stability and law and order to encourage foreign cal stability and law and order to NEPAL TRADE I on, the right policies must be in place to a on, the right policies ti ti A weak at all levels and the exis es. Infrastructure is ls, medicinal herbs and essen ti ti entry points is an es at all border checkpoints and customs al oils. In ti ti vi ti on and a trading partner. The current percep ti culture and culture ti hallenges and na ciency that must be addressed by both countries, if necessary with ti fi services, at least in so far as Nepal-India trade is concerned. It also C lenecks. ve advantage in medical plants and herbs. Herbs for tradi tt on facili on ti ti

PO ti als to further develop export of apples, hor I des ti D ract investment. tt sia; ons: A ti mulate economic ac ti on and inspec ng. Nepal’s labour law also appears to be too rigid and hos ng. Nepal’s labour law also appears ti ect the fact that there is genuine and considerable interest from India’s business ect the fact that there ti on, or IT and B orts and a fl ti ff aw and order (including a serious reduc aw and order (including on should be given to the re-development of a domes ti L ca fi

owers be gathered into economically viable quan fl ti eld work carried out in support of this chapter con fi ons re ti onal and infrastructural de onal weaknesses and bo hapter 2, including in ginger, tea, len ti ti C illegal ‘hidden agenda’ on the part of India in these trade impediments. The lack of adequate illegal ‘hidden agenda’ on the part of India in these trade impediments. The ecommenda tu tu O ti ti R ement may be a sector to further develop for both domes ement may be a sector to further develop recourse to development partners’ programmes and dedicated capacity-building projects; recourse to development partners’ programmes and dedicated capacity-building of these issues are tackled; ins is fast deteriora 2008 and no new investment is likely to take place un Indian investment has taken place since products, and medicinal herbs and essen that Nepali stand out as poten religious medicines and herbal teas also markets via India; development e control, cer WT India-Nepal air route. Nepal could also become once again a place where Indian movies are shot India-Nepal air route. Nepal could also and considera most countries in South investments and s others) could be further developed and promoted, par entertainment services (i.e. golf, cricket, economic and geo-poli key sector that could give Nepal important because of the very good year-round climate and outdoor condi because of the very good year-round climate ins investment. C India’s view is that there are no current issues with respect to quaran there are no current issues with respect India’s view is that and guaranteed. In addi must be improved opening up opportuni recently liberalized the air transport services ed in ed fi

Most issues pertaining to the category of import policies appear to relate to infrastructural, regulatory, branding and marke Nepalese producers and exporters need to develop Nepal has a recognized compe has poten India believes Nepal gambling and adventure tourism, retains huge poten Tourism, especially religious, to address the issues of poli Nepal needs some of eld work also points to a number of challenges, many of which are examined in more detail in ti fi is that Nepal is at present a risky place to do business, largely because of domes is that Nepal is at present a risky place to do business, largely because of infrastructure, regulatory environment, and labour rela Nepal-India Trade health services, educa suggests other possible areas, including hor The the remaining chapters of this study: iden 3.6 In general, the community for Nepal as both an F These observa need for In addi response mechanisms,includingthroughnego develop suppor levelsmul The Nepalesebusinesssectorremainsill-informedabouttheinterna legal community,amongacademicsandconsultantsthathaveakeyroletoplayinshapingformula business andgovernment.Butaddi of thecapacityneededandamoreregularformalchannelforexchangetradeissuesbetween and regional( Nepal BusinessForum,includingitsTechnical policies andsolu

Withrespecttotradefacilita Intheareaoftradeinservices,italsoappearsthatgreatmajoritychallengesrest Withrespecttostandardsandtechnicalregula Someimportpolicyissuesdorequiremoredirectnego N T I S 136 hands ofNepalesepolicy-makersandgovernmento facili suppor includes buildingupdomes may requiremoree and compe producers andexporters; other areas,strengtheningcapacityatbordercrossings,anddevelopinga‘culture’ofstandardsamong systema and thebilateraltrea India hasundertakentoimplementandcomplywithwithintheframeworksofbothWT and appliedinaconsistenttransparentmanner.Theseareclearobliga entry. Theapplicableimportandcustomsrulesproceduresmustbepublished,no nego manner. However,toresponde o ti on totheissuestakenupingreaterdetailfollowingchapters,thisreview alsopointstothe ffi cials thetoolstomonitorandincorporatethoseissuesinnego ti G lateral, regionaland bilateral–andtoequipitselfwithmoreformaltoolsdevelopsuchagenda,

oN todevelopitscapacityformulateamorecomprehensivetradenego 2010 ti ti es andnego a R ti ti ve ofthedevelopmentthosesectors; T ons agendaandputinplaceaformalstructuretoallowtraderslodgecomplaintsgive ti ti cally appliedinanon-discriminatory fashionbyIndiancustomsauthori NEPAL TRADE I BACKGROU A ngpolicies,monitorexportbusinessperformance,issuesandcomplaints,develop ti ons totradeissues. s)–and agreatdealofeduca ti

ti veness lossesresul ti a N ff D ti ec ons oftradefacilita ti es. ThesameappliestoNTBswhenevertheyareappliedinadiscriminatory R NT EPOR ti ve coopera ve EGRA ti T c capacityinareasofstandards,cer ti ti onal capacityislikelytoberequiredalsowithin thegovernment,in on, improvementsmustbefoundinbothfurtherinvestmentborder TI O ti ff N ng frombordercontrolsandclearance,includingofS ec S T ti ti RA vely tothosechallenges, on byIndianauthori C ti on anddissemina ommi ti T a EGY 2010 ti ti ons withtradingpartners,etc. on instrumentsthatcanimprovecurrentdelays,costs tt eeonTrade,islikely tobeausefulplacedevelopsome ti ons, themainchallengeisonNepaleseside.It ffi cials todeveloppoliciesandins ti on seemsneededatthatlevel.Theplanned ti ti es. Forexample,importdu a ti onal tradingsystem–mul ti ons betweenthetwocountriesand G oN needstodevelopamuchclearer ti a ti

ti fi ons. ca ti on, controls,metrologyand ti ons andcommitmentsthat ti a ti ti es atallpointsof ons agendaatall ti

ti fi tu ed, interpreted P ti lateral (WT S controls; ti ti ons thatare es mustbe O system ti ng O ) on ti ons ons, N T I S ti ti cials ffi al and al hina of ti C hapter 2. hapter 2. countries C

2010 on and/or 137 ti AARC countries grew les. In general, T ti s. 21.52 billion in R hinese market. The hinese market. The c recommenda es before Nepalese fi AARC ti fy the actual volume onal barter trade by C EPOR ti ti ers huge poten R ff hina. EGY 2010 D C hina has a wide range of T s, food items, agricultural N ft C on, the range of Nepalese on, the ti RA s. 736.405 million in 2007/08 cles of tex ti T R hinese businesses and o S C hina increased from 8.5 per cent N al sectors reviewed in C O ti hapter 4 hapter TI BACKGROU C al to trade (i.e. transporta hina. To the extent possible, this part hina. To the extent possible, this part ti C EGRA hinese Market hinese cit with cit NT fi C hinese imports from S C s. 6.95 billion in 2003/04 to R greement of 1981 allows tradi cit, the de fi A es key challenges and opportuni fi NEPAL TRADE I

ti hina and provides a number of speci s. 2.348 billion in 2003/04 to C c to the 19 export poten R fi cal stability, rule of law, etc.). Much of this analysis is based ti hina decreased from 4.4per cent in 2003/04 to 1.2 per cent in hina decreased from 4.4per cent in 2003/04 ayment ected a surge in goods imports from ccess to the ccess to C fl P es in their market. A ti hina are cereals, vegetable fats, oil, metal-based items, jewelry, C es, poli es, that of NTBs and, then, on impediments barriers, a detailed review hinese market is quite limited, whereas ti ff C hina increased from C on markets in fy issues speci ti ti na ti hina decreased from ons, the chapter iden ti C that there is sizeable informal and unrecorded border trade ons, it must be noted ti S$21.53 billion. ered to the ff U on on, it seems that there is some amount of informal exports from Nepal to on, it seems that there is some amount ti hina are of low value-added as compared to the products from other S ti C hina is not as important as with India. However, it is a trade that o hina is not as important as with India. However, C cials, and other stakeholders in Nepal as well as in cials, and other stakeholders in Nepal ons are followed by a short one that describes the views of ons are followed by a short one that ffi ti to industrial products of high value-added nature). er (from consumer items onally considered as NTBs but are incidental or essen onally considered as NTBs but are incidental ff ti countries. In contrast, between 2004 and 2008, akistan, and Bangladesh. Indeed, the trend in Nepal’s recent exports is in contrast with that of akistan, and Bangladesh. Indeed, the trend in Nepal’s recent exports is in contrast trade associa on collected through extensive discussions with relevant Nepalese businesses, s a share of Nepal’s total trade in goods de ti hina and Nepal. The Trade and P A oN o C s, wooden products, hides and skin, carpets, wool, apparel, and ar ft G on issues, infrastructural facili cit in trade in goods with cit in trade in goods ti AARC fi S$8.36 billion to gate these observa ti U n the basis of these sec and conclusions. exporters in entering key des products of third country origin. between 2007/08. produce, etc. In addi on informa traders, of the analysis also seeks to iden These two sec with respect to Nepalese export opportuni O In general, there is lack of consistency and growth in nearly all exported Nepalese products, with the excep In general, there is lack of consistency and growth in nearly all exported Nepalese of this informal border trade. The products involved in border trade are handicra (as a share of total goods export, exports to (as a share of total goods export, exports 2007/08). The de products to o To mi looks posed for great expansion in the years to come, even though the current picture is not very promising. years to come, even though the current picture is not very promising. looks posed for great expansion in the Nepalese goods exports to addi of cereals, metal-based products, wooden items, edibles, and carpets. In products that can be o Nepalese exports to from like India, other S residents of the two countries within 30 km of the border. There is no study to quan residents of the two countries within 30 km of the border. There is no study distribu of total to 11.91 per cent in 2007/08. This re 4.2 Background Nepal’s trade with This chapter follows the structure of the previous chapter and looks at access to the the structure of the previous chapter This chapter follows chapter focuses on a discussion of tari chapter focuses on 4.1 Introduc handicra The main Nepalese goods exports to are not tradi trade treatybetweenNepalandIndia,thereisaperceivedneedtobringchangestheNepal- conserva of archaeologicalandreligiousimportance,explosivematerials,goodsrela ten yearsandissubjecttorenewal.Theapplicabletradepolicystatesthatallproducts,exceptforthegoods Nepalese exportsto 4.3 Tari 2002 Two tradetrea The Tradeand P Two crossingswereaddedinthe2002 K of In 2005,the tourism, health,IT,oreduca too. Forinstance,thereisaneedfordedicatedprovisionsregardingtradeinservices(incoresectorssuchas on the There aredi for export. trading prac The 2002 traders. The also providesaforumforaddressingissuesthatmayarise fromtheimplementa resolving problemsthatmayarise,andmakingpolicyrecommenda responsibility forfacilita C provisions of strengthening bilateraltradeandeconomiccoopera countries. Itmeetsatleastonceayearalternatelyin A of ayment odari, ommi lso, the fi U ve years, withautoma nderstanding (Mo The preferen TheaverageappliedMFNtari The 2002 The1981Tradeand

A N T I S 138 9.5 percent,dependingonthe originofgoods. A to 9.1percent. for agriculturalproductsis15.3 percentand8.8fornon-agriculturalproducts. greement betweenNepaland tt C ee (I ee Y s of2007, hinese side. ti ari, and C A on, andothergoodsprohibitedbyvariousinterna A hinese governmentisdeveloping greement andthe2002 2010 greement dealsmainlywiththemovementofresidentsborderdistrictstourismand ff ti erences inbordercrossingsthe ces. ces. G G C A ti T ff hinese governmentisconstruc oN andthe r P es governtradebetweenNepaland NEPAL TRADE I BACKGROU ti Barriers CC ayment cle 8oftheTradeand A R greement onTradeand C ). TheI asuwagadi ontheNepalesesideandNyalan, R hina unilaterallyappliedpreferen ti C al tari esidents ofborderdistrictsareallowedtocarryontradi R hina aresubjecttotari asuwagadi (Timure)tradi U ti ng trade,investment,andma A ) ontheforma N greement laststhreeyearswithautoma ti G ff P c extensionofanother D G rate appliedunderthebilateralfreetradeagreementranged from3.5percent ti T ayment on). overnment ofthe R NT CC EPOR EGRA includesseniorgovernmento A T greement ontrade-relatedma ff A TI rateforallgoodsis 9.7 percent.TheaverageappliedMFNtari C greement betweenNepaland O A hina N greement. Theyare P ti S on andopera ayment O T PRC ther RA K ff andnon-tari erung townasatradecentre25kmfromtheborder. ti T ng a17kmroadbetweenSyafrubesiand EGY 2010 ontrade-relatedma ti A P R onally isamuchusedentrypointforNepaleseandTibetan greements of1981and2002.The eople’s elated Ma A greement of1981.Followingtheintroduc fi C ve years ifnopartydecidestoterminateit.TheMo ti K ti al tari hina, includingtheTibet on. TheMo athmandu and tt C ers of mutual interest,forfacilita ti hina’s preferen on ofanInter- R ff epublic of regimes. ff tt ti ratesto37 O ers betweenNepalandT onal trea langchung ffi cials andborderauthori K ti tt yerong, and crenewalattheendofperiod.The ers betweenNepalandTibet. U ti tt C ons totherespec ers betweenNepalandT L issettoremaininforceforaperiod hina C hasa. TheI A ti es andconven hina ( s of2007,tari ti al rulesoforiginfor LDC G G PRC ola ontheNepalesesideand overnmental Trade ti ng toenvironmentandwildlife s thatrangedfrom9percent to GPRC A ; and ti utonomous P onal tradeonbarterunder urang onthe ti G onofthe1981Tradeand T ) signedaMemorandum CC A ff greement of1981lists ratesareasfollows: AR ti hastheauthorityand ons, shallbeopened ti ve governmentsfor ti . ng transporta ti R es fromthetwo R asuwagadi road. egion (T LDC C ti AR C hina trea on ofanew C hinese side. s statethat oopera isvalidfor AR ff rate ): ti R ti ti on, es, on ino U

ff is on ff ti

N T I S ered ff on or culty ffi ti cult to 2010 ffi 139 ng parts used in hina has o ti T C hina. Besides tari c region and for the fi C erns. erns. EPOR tt on. So, it is di R ti aci ugust 2009. The actual aos (330), and Myanmar P EGY 2010 D B value of the product. B value of the product. L A T N O sia RA T A S N informa ff O rate would apply. However, there ff ons may be imposed. For example, TI ti BACKGROU hina. s in the C EGRA hina’s NTBs, applied standards, technical hina’s NTBs, applied standards, technical ambodia (418), LDC C C NT import tari en complain that the actual ft s is as follows: hina. between June and C AR LDC rate on 497 products. So far, of a zero per cent rate of duty alone al treatment ff ons or prohibi ti ti on 16 and 17 (machinery and transport equipment). equipment). on 16 and 17 (machinery and transport ti NEPAL TRADE I al tari ti rohibited products may include some products of animal rohibited products may include some es do not share the tari ti Table 4.1 P es concerned and also never known to the exporters. These hina on grounds of public interest, environmental protec hina on grounds of public interest, environmental ti C hina to exports of al treatment because of rules of origin. Nepal’s limited produc rate on most of the exportable products of Nepal ranges from 10 exportable products of Nepal ranges rate on most of the ti C ff and the di ng factor and so are the infrastructural weaknesses ti er a preferen ff hinese authori C products from entering T ft fghanistan (286), Bangladesh (87), Chinese Imports from LDCs in US$ Million in 2005 hina o A hinese tari cles falling under HS sec ti C C onal commitments. ti en imposed by ft and cost of goods to be expected in tari on on 278 products, for which a zero per cent ff ti on requirements, and other trade impediments. For instance, Nepal cannot truly on requirements, ti Sector Total Dutiable Duty Free Percentage ca cient for Nepalese products to gain and maintain market access in cient for Nepalese products to gain and maintain market access fi ffi

reduc ti ff current preferen ts from ons are o treatment accorded by fi TotalAgriculturalNon-agriculturalRaw MaterialsMinerals/Petroleum 15,267.1 903.1 672.7 13,675.3 15.9 1,138.8 450.3 672.5 0 15.9 92.5 50.0 0.0 100.0 0.0 ti ff hina granted duty-free market access to the following hina granted duty-free market access to C trade pa en hurt trade and undermine stable, predictable, and sustainable ft mate the tari al tari al ti ti hina’s foreign trade law, temporary import restric hina’s foreign trade law, temporary import ng the quality, safety, and technical requirements imposed by es products must be wholly produced in the country of origin or the value of non-origina produced in the country of origin products must be wholly and not known in advance the manufacture of goods may be up to a maximum to 60 per cent of the F goods may be up to a maximum to 60 the manufacture of per cent to 35 per cent. However, Nepalese exporters o per cent to 35 per ons, cer ti C ti oN has proposed that ces o ces average The current G ti nder s of 2006, hina restricted some handicra reason was never disclosed by the authori prac The U C would not be su preferen this preferen is no formal agreement as of yet. However, origin, opium, mineral products, chemicals, rawhide, waste skin and leathers, used clothes, ash of precious origin, opium, mineral products, chemicals, metals, bare metals, used ar in accordance with interna in mee A enjoy the bene capacity in many product areas is a limi Import prohibi (220). The tari following product categories: advantages, Nepal needs to build up infrastructure for addressing advantages, Nepal needs to build up infrastructure regula Nepal otherthaninrela were analysedthroughdiscussionswithbusinessexecu The approachfollowedhereissimilartothatusedinthepreviouschapter.followingcategoriesofNTBs 4.4 NTBs and essen The tari the lowestappliedratewas3percent,oncardamom,andhighest,35imita With respecttoNepal,therelevanttari materials, minerals,andpetroleumproductsenjoy100percentduty–freeaccess.Thedu Fi cent tari poten in bothcountries: LDC tari Woolen productsenjoyedratesrangingfrom14to20.7percent,whilefashionitemswerechargedfairlyhigh sectors thathaveemerged,duringthefact- export performanceandtradedevelopment. made tothemwhendealingwiththeperceivedNTBsandothertradeimpedimentsthatappearlimitNepal’s sectors forwhichitappearsNepalenjoysagreatexportpoten The sectorsbelowhavebeeniden appe ft y percentofnon-agriculturalproductsimportedfrom ff s accountforonly7.5percentoftotalgoodsimportsfrom s. ti Trade restric Investmentbarrierssuchaslimita Barrierstotradeinservicessuchaslimitsontherangeof Weakintellectualpropertyprotec Standards-relatedmeasures,includingstandards,technicalregula Importpoliciessuchasimportcharges otherthantari N T I S te. 140 ti al (ifanything,intheeyesofinterviewedNepalesecounterparts). G displace exportsinthirdcountrymarkets; E G export performancerequirements;andrestric government-funded researchanddevelopmentconsor ins procedures; customs barriers; posi or purchaseofgoodsservices intheforeigncountry’smarketssuchascartels,abuse ofdominant royal and discriminatoryregula imports offoreign P ff xport subsidiessuchasexport ratesonuncookedpastaandtea,ginger,honeywere15percent.Themedicinalherbs overnment-tolerated an overnment procurementrestric ff ashmina products,whichareoneoftheprominentNepaleseexportsto rates.Thisisclearlynotalandscapeofmeaningfulduty-freeandpreferen ti ti tu al oilsrangedfrom5.8to20percent.

ti 2010 ons, monopolies ofstateinterven ti es; ti ons, regula NEPAL TRADE I BACKGROU C ti onstraining Nepal- ons a ti on tothebasiccommodi ti fi ff N on ofinterna lms, andbarrierstotheprovisionofservicesbyprofessionals; ec D R NT ti ng electroniccommerce,includingtari EPOR EGRA ti ti ons and standards,anddiscriminatorytaxa -compe ti

T fi ed bythe TI O ff fi ratesappliedby ti nancingonpreferen N ti onal data ti ons suchas‘buyna S on suchasinadequatepatent,copyright andtrademarkregimes; ti

fi ti ti T nding missioninNepal,asholdingacomparabledegreeofexport ons onforeignequitypar ve conductofstate-ownedorprivate RA ti O T on agencies; EGY 2010 EPA ccasionally, referencewillbemadealsotootherproductsor C G fl ows, restric teamoftheIT ti hina Trade ems andjewelleryenjoyed17to20percenttari es andrawmaterialsforwhich ti onsontherepatria ti ves, business associa C hina toNepaleseproductsin2008wereasfollows: LDC ff s, quan ti ti onal’ policiesandclosedbidding; al termsandagriculturalexportsubsidiesthat s bene LDC ti ti al. Totheextent relevant,referencewillbe ti ons ontheuseofdataprocessing,quotas fi a; localcontent,technologytransfer,and nancial serviceso C s (i.e. asthe ti ta ff fi andnon-tari t fromduty-freeaccess,whereasraw ti ti ve restric cipa U S$1,138.8 million). ti ti ons, andconformityassessment onofearnings,capital,fees,and fi nal listofproductsandservices ti ti on; ti on andaccesstoforeign ons, andgovernmento C fi ti hina, enjoyed14to16per rms thatrestrictsthesale ons, importlicensing,and ff ff ered byforeign measures,burdensome C hina hasaninsa ti al marketaccessfor ti able importsfrom ti onjewellery. fi nancial ff rates. ffi cials ti able s ff ng ng on ed, ed, ti ti ti fi fi ons,

N T I S ti ti ti es: ec ec ti ff ff ons and ons 2010 ti 141 on of tari ti S regula P T hinese customs at C ng trade increasingly EPOR ti hina have undermined R ons, that are a ti C on from the competent on from the competent EGY 2010 D ti T N oN needs to put in place a on and applica c Issues’ focusing on issues RA ti es. G on requirements; on fi T ti ti S ca N fi s and manufactured products.

ft O ti hina isrestric TI ve resolu C ti es with respect to S BACKGROU ti ec ff EGRA s at the border are recurrent issues; ected recently by a ban on metal-based ected recently by a ban on metal-based ustoms valua ff ff NT C onary rules. These are clear obliga ti cularly the case with respect to agricultural cularly the case ti S rules or cer hina; our. hapter 2. our and rice because of their higher quality than P fl C fl C and the bilateral trea on of tari hinese authori ti O C ed in ed fi NEPAL TRADE I

ti on from from on ti hina’s trading regime is the single most serious issue a hina’s trading regime is the single most eneric Issues’ and ‘Sector-speci C G hinese market. However, es. hina’s latest travel policies on Tibet, including unexpected travel C ti C on with Tibet; vely, as noted in the previous chapter, vely, as noted in the previous chapter, ti ti na al Sectors iden ghtening NTBs such as S ec ti ti ti ff S requirements and high taxes being imposed by S requirements and high taxes being es must be applied in a non-discriminatory fashion by es must be applied P ers for which Nepal can demand e ti on and incorrect applica tt ti ons, procedures, and technical requirements must be published, no ons, procedures, and technical requirements oten ti P s, with no clear explana ft xport E S regula P hina within the framework of the WT C es and agro-food products, but it also applies to handicra (metal and wood) exports to Tibet have been a (metal and wood) exports to Tibet have es. Import du ti ti ft system and the bilateral trea O olicies P rbitrary customs valua religious handicra by levying higher taxes and bans for foreign tourists, internal visa requirements, transport link cancella A the ones that can be obtained on the Nepalese exports; procedures, and technical requirements. This is par commodi Nepal’s ability to link its des Nepalese exports of vegetable ghee, rice, and wheat Nepalese exports of vegetable ghee, rice, the ng some of ndings discussed here are divided into ‘ ndings discussed here are divided Tour operators are concerned about There is a lack of transparency on the part of of The lack of transparency on all aspects and S New high customs for Nepalese wheat There is strong demand in Tibet Handicra ti fi ec gain, applicable S ll these issues are clearly ma hinese authori ff formal system to record, monitor, and respond to the issues and complaints raised by Nepalese exporters and formal system to record, monitor, and respond to the issues and complaints raised traders. commitments by To address issues such as these e A a interpreted, and applied in a consistent and transparent manner. Transparency is crucial and is an obliga interpreted, and applied in a consistent and transparent manner. Transparency under the WT at the border must occur on the basis of correct and non-discre at the border must occur on the basis Barriers to Trade in Services and informed par The following issues emerged from discussions with relevant Nepalese stakeholders Standards-related Measures all border crossings. The applicable import and customs rules and procedures must be published, no all border crossings. The applicable import Import The Generic Issues interpreted, and applied in a consistent and transparent manner. interpreted, and applied in a consistent C A In rela market. respect torequirements,thelegalbasesforthose,andproceduresbefollowedinaccessing is beingsought.However,thereis,alsoanissuearisingfromalackoftransparencyonthepart help exporterscomplywiththeS clearly amajorimpedimenttoNepaleseexports. With respecttotradeintheagro-foodsectorsiden Sector-speci relevant stakeholdersandinformedpar No suchimpedimentsorrelatedrestric G exports to discriminatory du While suchissuesdonotappeartobeviola P introduc P bilateral trea environment withinwhichNepalcandevelopsustainableexports. grounds. Thecombina compe Traders also are compe applicable) thato to beNepalesedomes With respecttothepoten rotec rivate Firms, overnment

Similarly,abusservicebetween N T I S 142 ti ti had tobestoppedabruptlybecauseof to theoutsideworld,includingTibetantourists. abrupt changesin on toselectedhandicra

ti ti ti ve disadvantagevis-à-vissimilar on oftraderestric on, InvestmentBarriers, ti C 2010

ti hinese tourists. ve andsoughta ti fi es, unpredictableandunannouncedmeasuresby nd itverydi NEPAL TRADE I BACKGROU fi P ft ti c Issues en discourageoractuallypreventtradeeveninthosefewinstanceswhereNepalesegoods es, togetherwiththearbitraryapplica R rocurement estric ti cinnature,though,asindicatedabove,thereare ti on oftheseinstrumentsappearstoo C ti N al serviceexports iden hinese policyundermineindirectlythereliabilityofNepalesetourismindustry ti D ti ffi ons ons andimportbansjus cult tocomplywithawealthofimportregula ft R NT er by EPOR EGRA ft P s, thekeytradeobstacleappearstobeapplica A S standardsnotonlyin R T C ff estric TI ec hinese (mainlyTibetan)importersandconsumers. O L ti ti N ve policieswerereportedduringthediscussionsheldinNepalwith es. hasa and ti S C ng A T hinese products. ti ti RA n ons of ons, ti C T -compe E EGY 2010 hina’s restric lectronic ti K C

fi athmandu, recentlyini learly, alotofcapacity-buildingisneededwithinNepalto ed in E C ti ti xport Subsidies,Intellectual hina’s commitmentsandobliga

fi fi ed onthebasisofunknownor(presumably)religious ed in ed ti ti C C

on ofcustomsvalua hapter 2,mostimpedimentstotradewouldseem ti hina butanywhereelsewhereexportsexpansion ve C ti ve visapoliciesandlackoftransparency.Such C ommerce hapter 2,NTBs,especiallyS C C ft en e en hina donotcontributetocrea onducts ofState-ownedor ff ec ti ated forTibetantouriststoNepal, ti C vely placeNepalesegoodsata hinese issuesa ti on permitsandlicences(as ti on rulesandtheoccasional ti ons undertheWT ti P on oferra ff roperty P ec S standardsare ti ngNepalese ti ng astable C hina with ti C c and c hina’s O or al, N T I S ti ware ft ect on ect cularly ff 2010 ti 143 hina. There ve e ve ti C es, and trade on, transport on, ti ti T Zs) are required to E s in Nepal and then ft EPOR R EGY 2010 D T N hina; C RA ed in the case of Nepal-India fi on and those that are subject T

ti ti S hina’s markets with its products, ce to retain or improve market cal shortcoming; cal ffi hinese standards; N C ti hinese (Tibetan) is the high value C O C TI conomic Zones (S BACKGROU E hina. It is a market with huge poten C EGRA veness of Nepalese products is a factor, ti

NT hina, the key problems are a serious lack of ti C es is another cri ti hina Trade

ti Zs would probably focus on electronics and so Zs would probably focus on electronics hasa and Beijing; C L E ost-compe C NEPAL TRADE I ng ‘formal’ trade in these products. This leaves exports hinese side that appear to be having a nega ract such investments. ti hinese traders that purchase handicra tt C C ec ure focus on price will not su s between Nepal and ff ft es: P ti ve advantage of Nepal over ti hinese investments. Special facili onal border crossing with appropriate customs C ti ons; ons; ti hinese rules and procedures. C ract tt ciencies, cost of transport, customs compliance, and standards compliance. compliance. ciencies, cost of transport, customs compliance, and standards fi hinese investments in S hinese policies a C C labour laws, cal stability and law and order, together with investment-friendly ti cal factors in order to a hina (as in India). However, work must be done to improve produc hina (as in India). However, work must oli ti ve. ve. ve C ti ti P es, and the regulatory framework to comply with c Issues c ti ti c Issues c es and border infrastructure need to be greatly updated and upgraded to take full es and border infrastructure need to be greatly ons are underway for duty-free access to ti ti ti a ti hina, all the way to the specialty stores of Beijing and mainland hina; ashmina is a good example of a sector that must create a recognizable brand, focus on quality, ashmina is a good example of a sector that C C P ort should be made to a ther Impediments to Nepal- ther Impediments ff that are dependent on rapid transporta cularly agricultural products ti O n e t present, there is only one opera ustoms facili resale in mostly in the hands of a plethora of mainly transparency of the applicable advantage of improved transport links between is very congested and limited; and storage facili occurs par but it must be formalized to expand to a much larger scale. Informal trade currently to standards and technical regula especially organic products. There appears to be a market for sector of highland/high hills products, these products in because of restric design ventures. are some of the cri and respond to consumer preferences. and respond to consumer preferences. C design. A par A is probably a fair amount of informal trade. is probably a fair amount of informal address this objec including infrastructural de Nepal’s inability to guarantee reliable supply quan Nepal’s inability to guarantee reliable supply share in There is huge ‘informal’ trade in handicra nego While

on the basis of quality, branding, and In the area of manufactured products, Nepal needs to compete In the agro-food sector, one compara Infrastructural improvements are crucial for Nepal to access mainland agricultural commodity is currently exported through formal channels to No Nepalese their export performance and trade opportuni Nepalese exporters point to several issues on the Chinese Domes 4.5 Nepalese Domes Many of those impediments internal to Nepal are not unlike those already iden trade and are addressed in greater detail in other chapters of this report. that poli to turnopportuni These observa The followingsec Selected Viewsfrom 4.6 Some oftheissueslistedabovere of discre discussions withanumberof sub-federal levelthatmightbeillegalunderWT within theframeworkofbilateraltrea violate WT O disputese Tradeinservices betweenthetwocountriesisatanearlystageofdevelopment,par Trade facilita Nepalhasnopar WithrespecttoNepal’srequestmadeforduty-freeaccess457 products, N T I S 144 Nepal shouldfocusonservicesindustriesandtransit forthegrowing C D in rela be developmentofjointstandards(mutualrecogni the C C A to and produceforre-exportto improve. Inaddi other infrastructuralprojectsarebeinglaunched. pro so A services, tourismservices(wherethereisagreatpoten that, evenwithzeropercentduty,manyNepaleseproductswills planned foralaterstage; Nepalese productss o C C ffi hina believesthatNepalisakeytransitloca hina alsopointstothelowqualityofNepalesegoodsasanaddi hinese market; hina andIndiaaremuchmoree ti s inthecaseoftradewithIndia,Nepalhasdi lso, hydropowerisasectorwithmedium-tolong-termhuge poten iscussions arebeingheldforcoopera ti hina’s WT cial bordercrossingbetween cal stabilityandimproved labour rela ft onary, non-transparentanddiscriminatoryrulesoraddi C ware sectorin fi C hinese investment;

ciency and/orso 2010 hinese market.Nepaleseproducersalsohavedi ti on toanumberoftradedproducts. ti ons dore tt NEPAL TRADE I BACKGROU lement. ti es intoreality. ti O o re on ti commitments.Nepalneedstoaddresstheseissuesinconsulta on infrastructureremainsabigimpedimenttotrade.Thereisonlyoneopera ti ti fl cular compe cular on, fl ect N ects someviewsonNepal- C ti D ll haveawaytogobeprice-andquality-compe hina couldbene ft ware skills, whicharerela R C NT C C EPOR hinese governmento hina isassis hinese interestinseeingtradewithNepalexpand.Theyalso re EGRA fl ect speci ect T C TI hina. ti O

ti N ffi ve advantageindevelopingmanufacturingindustries,whereboth cient neighbours; C S ti hina andNepal. C es orwithintheWT A T ti RA ng Nepalwithroadconstruc t themoment,however,Nepal’spoli hina onNepal- fi fi t fromcertainNepaliskillssuchasNepal’s c conductsby ti ti T on inS ons aresomeoftheprerequisite tonewinvestmentsrequired O EGY 2010 obliga C ffi hina iswillingtoassistNepalinthisrespect; cials anddiplomats. ti on. Insteadoffocusingonlocalprocessingindustries, E ti ti Zs. C ons andcommitments.Forinstance,theapplica ffi vely weakin culty in mee in culty A hina tradefroma ti secondI on) andjointcustomsproceduresguidelines C ffi C culty in mee hina currentlyisbuildinganI C hinese companiescouldcometoS hinese authori O ti framework,includedifneededbymeansof al), andIT-relatedservicesindustries. ti CD onal taxesonNepalesegoodsmaywell C C isplanned;so,tradefacilita hina Trade ti ti hina; onal impedimenttogreateraccess ng thequan ti ti ng standards. al forNepal.TheITandcomputer ti on andmaintenance,butthisis ti ll notbecompe ti C es orbyauthori ti hinese perspec

ti ve with ti cal instabilityisadeterrent C C ti hina appearstobelieve

hina-India trade. ti ti on with on es demandedbythe A C wayforwardcould hinese products; ti CD cularly forhealth E nglish language fortrucksand ti ti

ti ve basedon fl ti es at es C ect theview ve in ve E hina, either Zs inNepal ti on should C C hina’s ti onal hina. ti on al ti als ti hina, onal s on N T I S al in ti with ti ft C hinese ft ces for C ti ddi

2010 A 145 oriculture, fl ons agenda ons ons. ti ti a al. a ti ti ti erns that result T tt ally large partner on is underway in ti ti es Shaping also points eldwork fi ti nego EPOR ff R EGY 2010 D cant market poten T fi N y-in with large aircra RA fl T S es point to many of the same ti N hinese explora tude holding pa O ti pportuni C TI al oils. However, Nepal needs to ti BACKGROU O urrently, it is exported mainly to Japan urrently, it is exported mainly to Japan racted to state-of-the-art medical and es. But there is clearly a lot of poten C rms the validity of many of the export rms tt ti EGRA fi

ti NT hinese tourists in 1997-99. Three al. al. ti C hina are concerned. The hina are concerned. C S compliance and good agricultural prac P cal and economic stability; ti on for ti NEPAL TRADE I na culture, including strawberries, apple, and orange. The ti vely small quan s are the key products currently being exported to oN to develop a comprehensive trade nego ti ti ft G ons for Nepalese exports. The main exports and greatest ti on. Jewelry also appears to have good poten hina in mineral resources. ti ons. However, these services depend on the existence of the urope than Nepal; C ti hallenges and hallenges and on of this chapter con E ons, and poli na ti ti ti C ll in rela ti tu ti tourism sector. It is currently nue to impair the development of the hina trade challenges and opportuni y to y ti ons with trading partners, especially with a poten ons with trading partners, especially with fl ti C a S requirements; ti P hinese middle class seems interested in Nepalese wooden handicra hinese middle class seems interested C products. Nepal could invest s, handmade jewelry, and selected agro-food ons: our, and handicra ft fl ti on, high airline fuel charges, and the inability to ti c and export needs, it is a long-term project; ti cant interest from rice, ginger, and medicinal herbs and essen rice, ginger, and medicinal herbs and fi ti ong are major des hapter 2 as far as Nepalese exports to hapter 2 as far as Nepalese growing cular interest in copper, gold, and zinc. K hina (as well as India and other countries); al high value export is hor C ti ti A onal airport with a single runway, large and high al C ti hinese tourists to c infrastructure, ins es in good climate condi C ti ti l, Basma ti ciency and returns, con al are in handicra ffi ti ulf countries via air freight, s hina Trade G ecommenda and Hong C hina. The chapter also points to the need to push forward on incomplete tari R nother poten hina; AR C on, investment environment are addressed in other chapters. agro-food and improving standards compliance, design, branding and merchandising, and packaging agro-food and improving standards compliance, for processed goods; for trade with increase volume and quality, including improving S increase volume and quality, including red len focus could be placed on export of tea, high value fruits such as apple and orange, tomato, focus could be placed on export of tea, to develop products that appeal to consumers in these target markets; to develop products that appeal to consumers poten biggest hurdle for those is S cheaper for airlines serve Nepal. However, the technical shortcomings of Nepal’s infrastructure, including a airlines serve Nepal. However, the technical shortcomings of Nepal’s infrastructure, single interna in higher fuel consump high e religious ground or for interior decora right domes sectors for development. For example, Tibetans could be a health facili to meet both domes Nepal, with par A and C mainly Tibet. ti als reviewed in ti ndings of this review of Nepal- eldwork associated with the prepara eldwork promising sector of energy-related services, while hydropower has great poten With respect to the There is also signi clearly stand out as the two key With respect to services, the tourism and health services sectors Nepal was designated as an approved des and instant noodles appear to have a signi High mountain mineral water T which is a high value export, has high poten Floriculture, Medicinal herbs, wheat fi fi such as and formal mechanisms to monitor complaints from the business community and develop responses through and formal mechanisms to monitor complaints from the business community more consistent and focused nego Nepal- However, this chapter also points to the need for The poten in greater depth in other chapters of the report. to challenges, many of which are reviewed standards compliance, trade issues as those raised in the previous chapters. The issues of supply capacity, facilita 4.7 The

I D es on ti ti onal N T I S I was ti D es and on has on as it fi ti esearch tu ows are ti

ti eveloped fl R on plans ti onal and ti ti I 2010 D c 147 fi D tu aci ti I posi P D east L T S$1.00 per capita sia- A

U on of more liberal commitments, the ti I) stood at a meagre O cularly strong when on; ti EPOR D ti R 2009. EGY 2010 D T ve investment promo AD N olicy, including the Foreign ti andlocked T P L C S$3.00 to RA T N ec on issues at ins U on. It does so by focusing on ti ff U ti

S N cally, this chapter iden cally, this chapter O fi cular, investment can bring access ti hapter 5 hapter on in 2007, and it has been unable TI ti BACKGROU nvironment This is an important observa on strategies is that new investment on strategies C 1 ti espite the introduc E ng Nepalese companies in global value ti D EGRA on. This link is par NT ng analyses, documents, and ac ti ti S$3.0 per capita (compared to an average of U on and Development, ti sia region. The overall legal and policy framework sia region. The overall legal and policy framework S$1.0 million and a net disinvestment in F new technologies and management vity through ti A vity and Exports and Business Percep U ti ng those policies, thus delaying growth opportuni ti xed capital forma fi NEPAL TRADE I I per capita for the period 2000-08, Nepal’s F Investment Investment on of Nepal. To comply with its WT on of Nepal. To comply D ti s as a group more than tripled their average per capita F ve. In fact, the 1992 Industrial ve investment climate and e ti ti on in this chapter. Speci on ti s in the same period. Furthermore, Nepal’s F ow in Nepal went down from of fl LLDC rac tt 2 I in ons, Agricultural Produc erformance LLDC ti vice versa, earlier studies indicate that the tute for investment and D S$1.00 F ve terms compared to the previous decade (1990-99) when the ti ti P ct 1992 and the ‘single window policy’, gave priority to investment ct 1992 and the ‘single window policy’, U ng the trade agenda. ti A ow in Nepal stood at fl ng an a on in Nepal: Impact on Produc rm trade at local level, thus inser ti ti fi I in aper Series, No. 52, February 2008. onal Corpora onal s). Whereas In par c—and trade are closely correlated. P D ti ti S$28 for all U LLDC ons to enhance Nepal’s investment and trade posi ow in Nepal stood at approximately ti fl on onship between trade and investment promo onship ti ti I in D in 2008 and 0.2 per cent of gross s). With an average of GDP t the moment, these policies are being updated to further enhance the policy and ins t the moment, these policies are being A LLDC ecent Investment ven though trade can be a subs R E on as a means to accelerate industrializa on as a means to accelerate on to trade and investment is not restric ti ti foreign investment may give rise to ng foreign investments in export-oriented industries. Furthermore, ti I levels in Nepal are among the lowest in the region and among the lowest of all I levels in Nepal are among the lowest in the region and among the lowest of all ow between 2000 and 2008, average F fl S$8.00 per capita for all overnment further liberalized the investment regime and opened up service sectors to foreign investors in overnment further liberalized the investment ecember 2005. However, it has been slow in implemen ecember 2005. However, it has been slow ountries ( D Trade and Investment Linkages and Coordina World Investment Report 2009: Transna

sequence of causality in Nepal seems to run from investment to trade. sequence of causality in Nepal seems to chains. local sourcing and increased inter- targe projects may give rise to increased exports from the host loca projects may give rise to increased exports framework for investors in Nepal. prepared in recent year and focusing on these topics. prepared in recent year and focusing on The most obvious rela in this area. policy level. The chapter draws, in part, on the wealth of exis policy level. The chapter draws, in part, Investment and Technology Transfer promo G D key macro-level investment climate constraints as well as investment promo key macro-level investment climate constraints in rela Nepal is among the more liberalized economies in the South Nepal is among the more liberalized economies recommends concrete ac and Training Network on Trade, Working regime in Nepal as a means for suppor skills, and provide the much-needed capital to implement investment projects. This explains the focus investment projects. This explains the much-needed capital to implement skills, and provide and investment promo on investment climate 5.1 Introduc underlines the importance of crea 1 2 F 5.2 the trade and investment In spite of the visible and important steps taken in the last two decades to improve policy framework, Nepal’s investment performance has been poor. to foreign markets and global value chains, improve produc to foreign markets and to serve as a catalyst for economic growth. Investment—foreign or domes Investment—foreign investment and trade policies in the country, the stock of foreign direct investment (F investment and trade policies in the country, the stock of foreign direct investment 1.0 per cent of C in well below the average of deteriorated in both absolute and rela average per capita F in the same period! In 2008, F U recorded in the years 2000, 2002, 2004, and 2006. recorded intheyears2000,2002,2004,and2006. in thesameperiod!In2008,F to implementnecessaryreforms. as provenbyitslandlockedcounterparts,Nepals direct jobshavebeenapproved,butmaylostasaresultofinvestmentclimateobstacles.Second, overcome. Basedonthedatapresentedintable5.1,atotalof 3 prerequisite foreconomicdevelopment. infrastructure arekeyfactors. Infrastructuredevelopmentisakeybusinessenabler and evenconsidereda D L Infrastructure Macro-level ConstraintstoInvestmentsin Nepal C 5.3 a signi O in furthering F highlight themainreformsrequiredtos DoingBusinessNepal2010,WorldBank Group,2009,andNepalMini-Diagnos C constraints toeconomicgrowthingeneralandincreasedinvestmentspar U

Country Diagnos imited availabilityandlowqualityofexis rea ri eclining ratesofinfrastructurespendingbythe S$28 percapitaF n amoreposi fl ow between2000and2008,averageF ti cal ti

ng ana N T I S 148 fi cant interestofforeigninvestorsforNepalthatcouldmaterializeifinvestors’concernsbe D K evelopment

ey Investment 2010 D D tc U$mlin 2 2 2 2 2 2 127 127 126 120 127 125 363 41,432 807 8305 125 77 10677 150 7389 140 212 7358 25,400 46 5559 188 5,356 2144 9,811 37 116 3,226 Source: IndustrialStatistics,DepartmentofIndustries2009;UNCTADWorldInvestmentReport. 2,606 63 23 1,636 FDI stock(US$million) 2,765 78 40 Actual FDIin FDI approved-numberofjobs FDI approved-approx.value(US$million) FDI approved-value(NRsmillion) FDI approved-numberofprojects tt I growth. ti c Studies,Cri rac ti NEPAL TRADE I BACKGROU ve note,changesinthevalueofapprovedprojects(comparedtoactualinvestment)suggest ti ve investmentclimateisaprerequisitefors D I fl C ow averagefor fl os(S ilo)1 76117 1 6 -7 2 0 15 ows (US$million) onstraints inNepalandotherrecentpublica ti cal DevelopmentConstraintsinNepal,ADB,DFID,ILO, 2009.Seealso N D R NT EPOR D EGRA I in 3 Thissec C fl T Change inFDIStockNepal,2003-08 ow inNepalstoodat limate TI LLDC O N ti A mulate investmentacrossallsectors oftheeconomy. D S lso, alackof I in ti s beforeitslandlockedstatuswillbecomeagenuineconstrainton T on drawsthosereportstosummarizethe keyconstraintsand ti RA ng infrastructureareconstraining Nepal’sinvestmentclimate. fl ow inNepalwentdownfromof T EGY 2010 C 0320 0520 0720 SUM 2008 2007 2006 2005 2004 2003 onstraints inNepal ti Table 5.1 ll hasmuchscopetomoveclosertowardstheaverageof G overnment andlowlevelsofprivateinvestmentsin ff ordableandreliableelectricitysupplyinsu ti U c oftheInvestmentClimate, S$1.0 millionandanetdisinvestmentinF U ti mula S$363 millioninF ti ons; soarethespeci ti ng tradeandinvestmentinNepal. The ti cular arewelldocumented in U S$3.00 to FI D A I andpossiblyover41,000 S, WorldBank fi U c ac S$1.00 percapita G ti roup, 2007. ons required ffi D cient I was ons

N T I S ti on of of on ti growth ow water ng roads ti 2010 L 149 ven though lthough less GDP E A al increase in ti on of farmer- ti on. on. ti T growth in 2007/08) in certain on capacity evidence suggests cal EPOR on and installa ti ti ti R ehabilita GDP s ti to sustain a EGY 2010 D R T N RA GDP T on to on in 2007/08; ti S s (MW); s tt N ve impact on per capita income. income. ve impact on per capita ti cient. O ffi GDP TI on in power genera BACKGROU ti ve in the region. on and/or face substan ti ti

ti on infrastructure in order to maintain ti EGRA that upgrading and expanding the mates ti NT ciencies in the power sector and vast but ffi le again in the future. ti S$360 million in investment. U in Nepal. ow of goods and people s compe s fl ff es for hydropower are enormous. es ti NEPAL TRADE I es and inputs; mated at 80,000 mega wa ti ti iven the unpredictability of annual rainfall and the sizeable on is required to accelerate construc ti G ons become vola ti al es al ti al to again become a major constraint to investment and trade, ti al commodi al ti on costs. on ti rate in the region, due to ine mes, are forced to downsize produc growth (approximately 2.0 per cent contribu ff ti varia vely half of a year) due to seasonal on and output. ti ti GDP S$3.3 billion, or roughly one-third of Nepal’s irrigate the remaining irrigable on infrastructure have been slow. Total cost to ti U ec on infrastructure is poorly maintained and ine on infrastructure ff ti alls in essen tf on schemes urgently requires another and frequent occurrence of strikes, landslides, and other possible disrup ve routes ti ti on infrastructure: on ti mated at mated ti ng irriga ti mes shor mes ng studies point to the need for expanding the irriga ti power outages (reportedly up to 20 hours a day during dry alls in electricity supply and frequent ti tf an investment of at least 2.5 per cent of ng road network requires ti on of this sector to cular constraint can be overcome as opportuni cular nderdeveloped road network, characterized by a low density and poor quality of exis nderdeveloped road network, characterized ti urrently, the highest tari ti ack of alterna supply in winter and lack of water storage capacity reduce Nepal’s power genera supply in winter and lack of water storage seasons. land is es managed irriga largely untapped hydropower poten rate of 6.0 per cent; months, which is e (only 38 per cent of roads blacktopped). The World Bank es (only 38 per cent of roads blacktopped). exis to loss in trade and make transport of goods and people unreliable and unpredictable, leading some L U C of an issue today, it has the poten should the oil market and supply condi Investments in irriga exis The In 2007/08, fuel shortages also greatly impacted the

Shor tari capacity to make Nepal’s power onal hydropower cient Irriga cient ti ffi s a consequence, industries, at this is a major constraint to increased trade and investment growth. addi energy-related and overall produc contribu some capacity increases are planned, further ac some capacity increases A and grow agriculture produc that removing the electricity supply constraint would have the biggest posi supply constraint would have that removing the electricity This par Insu Various exis Inadequate, Unreliable, and Expensive Transport Networks: Inadequate, Unreliable, and Expensive Inadequate, Unreliable, and Expensive Electricity Supply: Inadequate, Unreliable, and Expensive transport network are considered serious infrastructure constraints by investors. Sta considered serious infrastructure constraints transport network are would renderthelawmorea opera The currentdra the country. Some countrieshavesuccessfullyusedS in isola The Industrial ParksandSEZInfrastructure dra about increasedlabour related investmentclimatebarriers.However,discussionsareunderwaybetweenthe discussions, theshort-terma The dra bringing newtechnologies,andlinkingthecountrytoglobalmarkets. addressing economy-wideinfrastructureorregulatoryconstraintsandcanbecataly in However, thesedesiredimpactswilllargelydependonthepoli indirect. sites, allinexpecta P steps towardsthatend. a instability, arigidlabourregime,andlackofindustrialsecurityisunderminingtheshort-termpoten linkages betweenNepaleseandforeign the amountofnewinvestmentsbroughttocountry,increaseinexportsfromtrade fi rst phaseofthezoneisalmostcomplete. tt arliament forthenextlegisla fl rac

1. uence poten ft billshouldbemodi G N T I S oN isimplemen ti ti 150 ng signi ng inthezoneandsectorsallowedtooperate inthezone. inputs soldwithinthedomes best succeediftheS pro rataincen R major investmentclimateconstraint toallcompaniesinNepal,itwouldbegoodo throughout Nepalasmostof theindustrialdistrictshavenospaceinthem.Sinceinfrastructure isa D quan and taxholidayscouldbeprovidedtoonlythosecompanies thatexport,orsolelyonthebasisof and mostcountries,including current 75percentexportrequirementistoostringent. Itwillresultinsitua recently seenthee come tothezoneandareableexportnow,butmaynot beabletoexportinthefuture.Wehave The lawshouldstate,however,thatalldu export requirementatall.‘ ti ft on ofthesemajorissues. eplace thecurrentrigid75percentexportrequirementby 0percententryexportrequirementand S omes

E 2010 Z BillinNepaldoesnotintendexplicitlytopilotanyreformsrela ti ty ofexports.Thecurrentproposed‘ C ti c companies(exportersandnon-exporters)are alsoinurgentneedofservicedindustrialland fi hina, Jordan,andothershaveshownthatS cant ti ft NEPAL TRADE I BACKGROU al investors’decisionstolocateinthezones.IncaseofNepal,combina S ti E on ofthelawbeingadopted.TheimpacttheseS Z Billhastwomaincri fl ti ti ows offoreigninvestmenttotheplannedS ng anambi ves ( fi fl A ed asfollows: exibility inreturnforincreasedsocialprotec dra ff N ects oftheglobaleconomiccrisis. A D E r tt Z infrastructurecanbeusedbyexportersandnon-exporters alike.Incen ti R tt NT rac ft cle 11(1)and(2),12(2)c) ti rac S EPOR ve session. EGRA E ti ti ous S Z Billisbefore veness ofthezonestoforeigninvestorsremainsindoubt. ti L ve forpoten et theindividualcompaniesdecidehowmuchtheycanor want toexport.’ T ti c territory ofNepal. TI C O hina, nolongeruseit.Interna fi E N rms, andthenumberofnewjobscreatedasaresult,bothdirect Z programmetoboosttradeandinvestmentshastakenconcrete E S Zs asapilotandtes ti T cal weaknessesinrela C P RA onstruc reliminary groundworkhasstartedinBirgunjandvariousother T EGY 2010 ti P ti al developers,usersofS es, tari arliament andisexpectedtobeonthetopofagenda E ti on workhasstartedalreadyatBhairahawa,wherethe xport ff s, andtaxesmustbepaid onthevalueofimported E P Zs cano rocessing Zonemodel’isconsideredoutdated, P A ti rivate developersfeltthatthereshouldbeno ng groundforbroadereconomicreformsin r ti ti E cal, legal,and regulatoryframeworksthat cle 34).Nepal’sS Zs. ti on toexportrequirementsforthe ff er ashort-tomedium-termsolu ti onal S D E ti evelopment ofzonescannotbedone on. on. Zs shouldul A E ddressing thesetwoshortcomings Zs, andthe E P ti Z developersalsofeelthatthe on tothe most cri ending theoutcomeofthese E ti ti c ina Z programmeislikelyto mately bemeasuredby ti G onswherecompanies G oN andlabourunions oN. Speci tt ff rac er suchadvanced ti ti on ofpoli ng investors, ti cal labour- fi cally,the ti ti on in alof fi ti rms ti ves cal s A ve ng ti ti rms onal N T I S fi ti ng and ti mula t of both ti fi

2010 Zs (such as 151 E ed to include fi rms, will be key rms, T Z Bill needs to be fi E c cantly reducing the nues to be a major ti fi ti part from its nega EPOR A R EGY 2010 D T ve list’ approach does not N ti on a very serious or major terms of s cial in rms. Sub-contrac ti fi fi uthority to determine which cal constraint to increasing RA ti T A ons. The S ti c S in Nepal. Strikes, on and trade ti Z ti N E O law should be modi ft TI BACKGROU on, and kidnapping all contribute to a cal instability con ti ti EGRA Z laws around the world. E NT en proven bene ft rms in global value chains and interna rms in global fi vity of domes rmed the huge constraint this imposes on ti fi rms consider corrup fi tops the rank of concern to cal stability, this issue cular from foreign to domes ti ti Z programme. There are too many possible industries Z programme. There are too many possible are among the most cri E al new foreign investors. ti cant growth in produc fi NEPAL TRADE I ons onstraints in Nepal’ concludes that the level of governance onstraints in Nepal’ concludes that the ti ve list (Sec. 5 (1) – (3)). The ‘posi ti C cal constraint to investment and trade. ti on. on. on, coins, etc.—things that are clearly not in public interest or on, coins, etc.—things ti ti ve list’ that states which industries cannot locate in S ti per cent, which represents a huge and mostly mated at around 95 ti ows in the past few years, the amount of approved but unrealized ows in the past few years, the amount of approved fl cular the lack of ‘industrial security’ was frequently cited as a major ti is a cri I in D evelopment oI is es D on will help insert Nepalese D ti ve list by a nega ve lists are featured in almost all S ti ti cal on are simply strangling the Nepalese economy and signi on are simply strangling the Nepalese economy and ti in separate regula ed simply by addressing them ti cal constraint to investment and growth in the country. fi and in par ti ri

ti has o c companies in the same zone C cal stability cal ti va ti ti on ti growth and other economic indicators, poli growth and other economic indicators, seems to have weakened and is a constraint to investment and growth. The 2008 seems to have weakened and is a constraint to investment and growth. nterprise Survey. E ons and rigid labour regula ti GDP on report ‘ ti ng any serious foreign investor to Nepal. ti D I 2008 ve list’, rather than a ‘posi FI lack of poli ti CC D rac c and foreign investors alike. Without addressing this issue adequately to the bene - tt ti Interviews with companies in November 2009 con corrup 4 LO nued eplace the current posi ti B-I provide the transparency needed for a well-run S provide the transparency needed for a manufacturing of weapons, ammuni would be unsafe). Nega out there to be included in the list. It should not be the role of the S out there to be included in the list. It industries will fail and which ones will succeed in the zone. The dra industries will fail and which ones will succeed a ‘nega markets; other forms of collabora R local supply linkages. Technology transfer, in par local supply linkages. and improving produc to acquiring new technologies infrastructure to Nepalese businesses as well to facilitate their growth. Furthermore, proximity of their growth. Furthermore, proximity businesses as well to facilitate infrastructure to Nepalese foreign and domes B, and FN law and order situa AD AD , 2. overnance LO ontrol of I amended. These issues cannot be rec constraint. lockouts, and lack of mo chances of a enterprise survey found that 44 per cent of the responding employers and employees, there is no chance of signi both domes C investment and trade in Nepal. Together with overall poli foregone opportunity in capital and job crea Poor industrial rela 4 G The factor in deterring the much-needed foreign investment in virtually all sectors, including hydropower. factor in deterring the much-needed impact on overall indicated earlier, based on actual F foreign investment proposals at in Nepal, even to such a point that it jeopardizes commercial viability of investment projects and discourages in Nepal, even to such a point that it jeopardizes commercial viability of investment further expansion of projects. The constraint and issue on the minds of investors. Violent crime, extor climate that discourages further investments or poten has deteriorated and is a cri The con The followingconclusionscanbedrawnfromthedata: The WorldBank’s ‘ G have allcontributedtoNepal’spoorperformanceininvestmentandtradeshouldbeaddressedbythe L regula design regula highlight Nepal’sposi Table 5.2showsNepal’sperformanceinthe against abuse. predictability ofeconomicinterac that establishandclarifypropertyrightsreducethecostsofresolvingdisputes,rulesincrease trade requiregoodrulesandana around theworld. closing abusiness,astheyapplytodomes property, ge D ack ofup-to-datepolicies,ins oN goingforward. 1. . Nepalrankspar 2. oing Business’inNepal N T I S 152 ti ons inNepalforstar Nepal, hasremainedprac O needs toundertakereforms more ac paying taxes(rank124);andenforcing contracts(rank122).Inaddi across borders(rank161);employing workers(rank148);securingconstruc indicators isslipping. verall 2010 lsn uies15150 0 -13 -2 -3 -4 105 122 111 +3 -1 159 70 109 -12 0 29 105 147 122 -1 124 75 161 123 113 73 130 26 148 Source: WorldBankDoingBusinessNepal2010. 87 123 Closing aBusiness Enforcing Contracts 131 Trading AcrossBorders Paying Taxes Protecting Investors Getting Credit Registering Property Employing Workers Dealing withConstructionPermits Starting aBusiness Doing Business tti ng credit, protec credit, ng ti ons thataree D NEPAL TRADE I BACKGROU oing Businessrank,whichcanbeconsideredaproxyindicator ofcondi D oing Business2010indicatorsforNepalprovideaquan A aeo..DigBsns 00rn on uies20 akChangeinrank DoingBusiness2009rank DoingBusiness 2010rank Ease of... fundamentalpremiseofthe ti on rela on ti cularly weakinanumberofareasdirectlyrelevant toinvestmentandtrade:trading N D ti ng abusiness,dealingwithconstruc ffi cient, accessibletoall companies,andsimpleintheirimplementa R NT ti EPOR ve toothercountriesand,wherenecessary,encouragethegovernment ti Ease ofDoingBusinessinNepal,2009and2010 ti EGRA ng investors,payingtaxes,tradingacrossborders,enforcingcontractsand tu ti cally unchanged(Nepalranked123rdworldwidein2010and 2009).Nepal tt ti rac ti ons, andrulesthatprovidecontractualpartnerswithcoreprotec T onal weaknesses,and many ine TI O ti ve macro-levellegalandregulatoryframework. These includerules N S ti T c enterprisesandrankedagainstperformanceof183economies ti RA vely or facefurtherdeteriora Doing Business T EGY 2010 Table 5.2 Doing Business surveysof2009and2010.Theobjec ti on permits,employingworkers,registering relatedresearchisthatinvestmentand ff ec ti ve sectorcommi ti ti on, performanceinsomeofthese on of its posi ti ta ti ve measuretoevaluatethe ti on permits(rank131); ti ti onsforinvestorsin on; tt ees andboards ti on. ti ve is to is ve ti ons ng on ti ti

N T I S onal ti ort to ort ff tu ti mploying

2010 E 153 ons (India and ve ins ve ti ti T mployment Index na E ec ti ff on when considering EPOR ti ng investment climate R ti EGY 2010 D en tt T N ng investment and trade, ti igidity of ng labour regime as a major RA ti R T S N ach index assigns values between O E TI dedicated investment promo ons and labour unrest are strangling ti and e ve policies BACKGROU A ti investment. ng trade and ti climate. Without on on the investment EGRA ed the exis ng market failures, including marke ti fi rac ti

tt ti NT ng and facilita ti average. ons. The overall ring regula ring ti fi cal role as a key interlocutor between the private al investors as it would like. In fact, most foreign ti ti OECD ng a climate conducive to investment, the ‘ ng a climate conducive to investment, ti es in Nepal unless Nepal embarks on a serious e ng an investment-friendly climate is discussed in more ti NEPAL TRADE I ti ring workers are shown in Table 5.3. The table highlights fi Table 5.3 cular, hiring and ti Nepal 2010. ng more rigid regula ti ng business-friendly policies. on of as many poten ti ti en and ve to its neighbours tt ti underpinned by a es in the country ti Doing Business Indicator Nepal South Asia OECD Average of adequate informa es and the provision ti ract the a tt ons can play an important role in promo ti Employing Workers Indicators: Nepal, South Asia, OECD Average, 2010 Employing Workers Indicators: Nepal, South ng and implemen tu ti ti I) or Board of Investment (BoI) can play a cri culty of hiring index (0-100)culty of hiring index (0-100)culty of redundancy 67 70 27.8 41.3 26.5 22.6 P fi fi who iden rms the feedback received from investors des on, a small country like Nepal, located between two major investment fi ti Dif Rigidity of hours index (0-100)Dif Rigidity of employment index (0-100)Redundancy costs (weeks of salary)Source: World Bank NA 46 90 10.0 26.3 75.8 30.1 26.4 26.6 es that employers face in hiring and ti hapter 6. in Nepal onal and Policy-level Constraints on Investments ti C cal constraint to investment. In par cul ti ffi tu ti ve promo ve ti overnment ins lthough all of the indicators are important for crea lthough all of the indicators hina), is unlikely to a rms will not be aware of the investment opportuni arrangements. promote investment opportuni C fi ac of investment opportuni and public sectors by providing one-stop service to investors, by signaling and advoca and public sectors by providing one-stop service to investors, by signaling and intermediary (I improvement based on investor feedback, and by addressing exis is an average of these indices. including promo 0 and 100, with higher values represen Nepal’s poor global ranking in these two areas and their role in promo ranking in these two areas and their role Nepal’s poor global private sector growth across all sectors and are key factors undermining Nepal’s short-term prospects for private sector growth across all sectors and are key factors undermining Nepal’s economic growth. and cri detail in G This other key area of reform that is key to promo Ins Trading Across Borders The table con the results for Nepal in 2010 rela The di Employing Workers Employing Workers A Workers’ and ‘Trading across Borders’ indicators seem those needing most urgent a across Borders’ indicators seem those Workers’ and ‘Trading Successful investmentpromo disinvestment takingplaceamongforeigncompanies. there isli has beenhamperedbythedi C A ins A important ac The lackofaformalapproach toinvestmentpromo and applica ad hocbasis,includingprovidingassistancetoinvestorsin theprocessingofinvestmentapproval,registra promo demonstrate capabili survey conductedbytheWorld Bank There arealsoafewprivatesector a facilita in theshortterm.Theseare: e C to complementsomeofthedes the ForeignInvestmentSec are inregularcontactwiththegovernmentonpolicyissues. 2009. responsible foradministra the NepalTourismBoardandTrade The investment inallcategoriesofindustries’ismen an administra promo private sectorassocia ff urrently, Nepalhasneitherana urrently, aformalapproachtomostoftheelementslisted aboveismissinginNepal,thoughsomelimited part fromthecri

orts existintheareaofinvestorfacilita 2. Investment 1. Image-building: crea . Theabsenceofanins 1. 5. 4. Investor 3. Investor Facilita . Thelackofana 2. . Theverylimitedcapacityinthe 3. D ti tu edicated Ins D N T I S 154 ti epartment ofIndustries( ti ti P leads andproposals; private sectoronthatma its newopera onal barrierstoe on ofNepalasades on ac olicy ti on andrecommendatoryroleasthe tt le evidenceofnewforeigninvestmentsinthecountry andanecdotalinforma 2010 ti on forworkpermits,visas andthereimbursementofimport/exportdu ti ti vity isvisibleinNepal’slatestscore onthebi-annualglobalinvestmentpromo A ti vi ve nature.Nopro-ac dvocacy: improvingthequalityofinvestmentclimate andiden A NEPAL TRADE I BACKGROU ti es withrespecttotheirmembersseekinginvestmentandtradeopportuni ft ercare: managing rela G ti enera ti ti cal macro-levelinvestmentclimateconstraintsmen tu ti ons, andmaintainingitingoodstanding; ti es andprofessionalservicesinthefollowingareas: ons and ti ti onal strategicplanforinvestmentpromo on andServicing:assis ti ff on forInvestment ec ti N ti on: targe ti on oftheForeign Investment andTechnologyTransfer ti ti D on andtheIndustrial Facilita ng theimageofacountryasan na ti ti tu ve promo R ffi NT ti cul on programmesandins EPOR C ti ti EGRA on forinvestment.Thereisnoins ti tt hambers of on withamandatetopromoteNepalforinvestment; na er. ti D onal I ti oI) isthecurrentfocalpointforforeigninvestmentandsoleagency fi es inNepal’sinvestmentclimateandtheirlimitedcapacity. T rms thato ti ti ti on promo ng speci TI ve imagebuildingorinvestor targe G O G roup, the ti N P overnment toconductinvestmentpromo on ofinvestmentandtradeinNepalthatwillneedtobeaddressed ti onships withexis I noranydepartmentwithinthe S ti T on andpolicyadvocacy.Intheareaofadvocacy, RA E C fi fi xport ommerce, including ti csectorsandcompanieswithaviewtocrea nal approvalauthorityforalloftheselieswithotherministries. T ng aninvestorinpreparinginvestmentdecision,star ff ti er someelementsofinvestorservices. EGY 2010 on orproductpromo ti oned asafunc G P lobal Investment P ti romo romo on andabsenceof a singleins ti ti tu on Sec ti ti on ti ti ng investors; ons inothercountriesaroundtheworldo on O tt n theinvestmentfacilita rac C entre. ti ti ti on of on ofthe on; and ti C ti tu ve siteforinterna NI andFN P ti ti on undertakinginvestmentpromo romo on e D ti oI, but,inreality,itsac ng isundertakenbythe G D ti ff overnment engagedintheac ti onBenchmarking orts undertakenrespec oI doful oned earlier,therearethree CC I, engageinsomeinvestment ti on. ti es. Butthisisessen ti A tu ti fi fying the viewsofthe ll somefunc ti ct. ‘ ti onal investment; on andservicingside, ti ti on dedicatedtothis on actually suggests ti ngnewinvestment ti P on benchmarking ti romo es, butthiswork C (GIPB) Survey NI andFN ti vi A ti ng foreign ng ti s itstands, D ons onan ti es areof oI. ti vely by ti ng up A ti ally ft ti ti ti pex on on en CC ve I I in

N T I S P 2010 155 overnment I in handling G P ty should have ti T veness of the I veness of the ti to measurements of EPOR ft R ec onal capability. Beyond ff ti EGY 2010 D Best in World T N and retain the private ract Is in 185 countries. The Is in 185 countries. ventually, it could develop tt P of the I veness E RA on body that is independent ti ti T on that it makes in its annual ti S ec ff on agency should be evaluated N ti O es; the e lso, to a ti ons, customer support, etc. ), the TI ti A sia regional average, as well as the sia regional average, BACKGROU as benchmarks: on-related elements onal promo onal ti (SA) ti A to shi on ought al mandate should be in the areas of al mandate should ti ti EGRA ce. ce. ffi Regional Average NT on arrangements in Nepal, the O ti on across ministries, the en ti ons, but should require and approve budgets ons, but should ti ng, public rela ti form of The scores are presented in the ware sector. uthority, its ini ft ves of relevant ministries and the private sector. The ves onal advice. Because the investment climate in Nepal onal advice. Because the ti A ti NEPAL TRADE I lls the commitments to ac fi Z E rime Minister’s improve, evalua ons Table 5.4 P ti ng investment opportuni ng investment ti ve comparison between countries. For every benchmark, at ve comparison ves ally, but it would need to be resourced adequately to do a ti ng, marke ti ti ti Investment Division Zs and to start building up a na Is include: E P average and best in the world

ff Department of Industries - Foreign on with the S ti B Survey 2009 measures the performance of I B Survey 2009 measures P e foreign investor in manufacturing; the al new I ti G Global Investment Promotion Benchmarking, 2009. I website in promo I in the world, using three investment promo I in the world, using ng the new S P P ti cs of successful I ti I need not be large ini ows. ows. in the so al new foreign investor fl ti roup’s and labour rela cal stability P ti G and clear objec ned mandate fi onal I and sta ed management Effectiveness of Investment Promotion Intermediaries: Nepal compared to South Asia Effectiveness of Investment Promotion Intermediaries: Component & Weightings ti fi I gained a score of 100 per cent, the highest possible score. Nepal’s overall score of 26 per cent I gained a score of 100 per cent, the highest Overall 26% 36% 89% 36% Website (50%) Manufacturing Inquiry (25%) Software Inquiry (25%) Overall 26% Source: World Bank, 23% 37% 7% 26% 54% 8% 86% 93% 83% P sustainable budget cient and veness of the I veness of the ffi on should be freed of pay constraints and job security rules imposed in the civil service. To draw on should be freed of pay constraints and job security rules imposed in the ti ti artnership with other public bodies ater, as poli ng the zones in collabora ng the zones P ti L ec ff Su Quali Strong links and credibility with the private sector Well-de Strong support within government ally on its inputs rather than on the amount of investment coming to the country. In other words, its ti investor servicing and dialogue with investors to support the reform agenda. investor servicing and dialogue with investors to support the reform agenda. marke professional job of marke The new na actual investment in performance should be judged as adequate if it ful plan. ini is a ‘hard sell’ at the moment, the performance of the investment promo and working plans and provide strategic and opera governing board should not be involved in day-to-day opera a governing board comprising high-level representa Some key characteris least one I represents a weak performance. a percentage index in order to facilitate rela a percentage index in order to facilitate organiza on the skills of the private sector and to encourage coordina inquiries by a poten handling inquiries by a poten handling inquiries by of any single ministry and reports directly to the sector skills it will need (e.g. investor targe data presented in table 5.4 shows Nepal’s performance, the South table 5.4 shows Nepal’s performance, data presented in best I performance of the the e In view of the poor performance of the current investment promo should consider establishing a dedicated and comprehensive investment promo The World Bank recommended thatlessresourcebeallocatedtomarke strategy orplanforinvestmentpromo C A capabili investments arethehighest. strategy todirectthelimited resourcesavailablewheretheyaremostusefulandthe chancesofwinning gaps inNepal.However,nodetailsareavailableasofyettothemandate,organiza un plan, thereisadangerthatpar A reasons, itmightbemorerealis O for newinvestmentinsupportofe for investmentinNepal,including mostofthoseincludedintheexportpoten more resource-intensive. C structure ofsuchins dissipa A strategy isdeveloped,itcouldbemovedtobecomeafullyindependentI P A proposi foreign investment.Inpar aware ofthebene sectors andindustries,targe U BoI shouldoverseetheformula clear strategyforpromo the zonesauthorityandI part oftheinvestmentpromo weights tothe resource alloca A should bepursued. genera of investmentopportuni promo Ini these ac investors andthosealreadyinthecountry–‘investora romo onsistent withthelackofins hapter 2. s oflate2009,the lthough intheoryaseparatebodyfromtheS t thelevelofplannedS s men pon theBoI’sestablishment,andassumingitwillbemandatedwithaninvestmentpromo ne op Na ti ti ally, the newlycreatedBoIshouldfocuson‘investorfacilita l thesecondi N T I S 156 ti ti ti ti ti onal Strategic ti on on shouldbeavoided; rather,ajointstrategyandapproachfor ng theimpactoftheirac ti ti on, facilita ti oned, successfulinvestmentgenera on inrela on wouldbetoestablishtheI es inall ti vi 2010 ti D es. es. epartment, tofocusonmarke ti NEPAL TRADE I BACKGROU on. on. ti fi G fi ons changefavourablyorperhapsonlywhen ve coreinvestmentpromo ve oftheI ti iven thepoli ti on tothezonesandaconcretemarke fi on andservicing,a G ts o ts ti tu overnment wasconsideringse A largepartofbuildinganinvestmentpromo ti ti ff on. ti es.MostprofessionalI ered bytheNepalS ng andretaininginvestmentsisimportantfore E N P Zs, thereisaneedtodevelopclearpromo A D ti lan forInvestment s oflate2009,thereappeared tobebroadconsensusaboutthetargetsectors cular, fora P A R NT I func ti P ti moregeneralmarke EPOR tu ti ti c toplaceitini ti I (tobeestablished)inrela on strategymen on ofafocusedandrealis EGRA cal instability,industrialinsecurity, andrigidlabourmarketcondi ti ti cipa vi ti ti ng foreigninvestorsinkeysourcemarketsforF onal arrangements,Nepalalsohasnooverallprivatesectordevelopment ff orts toa ti ti T ons listedearlier. es, andperhapsevencontradic TI ti ti ng stakeholdersandins on atcountrylevelortheofS O ft ercare, andpolicyadvocacy. N P tt rac S I asanindependentbodyfromtheverybeginning.Forprac T ti RA on requiresaclearstrategicsectorfocusande tt ti ti ng thezones. ract newtourists. ng newexport-orientedindustriestoNepal,auniqueselling ti ti E ally alongsidethenewS T E o ac on Z P EGY 2010 Z programme.BuildingS Is havemovedtowardsasector-basedinvestmentgenera A ti oned earlier. uthority, theI tti ti ng upaBoardofInvestmenttoaddresstheins ng and‘shotgunapproach’tendsto belesse P ti vi romo ft A ercare’, and‘policyadvocacy’onlearningfrom ti n addi ti es listedearlier,i.e.imagebuilding,investment ng andinvestmentgenera ti ti ng ac c investmentpromo ti on toinvestmentpromo ti O on ti ti ti nce awiderna onal taskcouldbethepromo tu ed directtotheplannedS ti P on planshouldbedevelopedasanintegral I wouldworkverycloselywiththezones. O ti ons willpullindi bviously, duplica ti ti ti on and servicing’,–bothprospec ng anddilu on strategyforNepalmeansassigning E Z ti on strategyaswell,priori P A ff E I withinthegovernmentstructure. ec uthority, perhapsasanInvestment Zs willnotnecessarilyguarantee E Zs. Withoutacoherentstrategic ti ve investmentpromo ti ti ti onal investmentpromo al assessmentpresentedin on planforNepal.Havinga ti tt ng eachothers’e rac D ti ti on ofe ti ff on e on I thatshouldbemade ng overseasinvestors erent direc erent ti on ac on ti on, andgovernance ff E ff ti ec orts ini orts on task,thenew Zs. ti ff ti vi ti orts between orts on oftourism ve promo ti es andS ff ec ti ons, thus ons, ti ff ti ti ons, itis ti orts. zing key zing ally and ally tu ti ti on and ve and ti onal ti ti ti ti ti cal on on on ve E Z at ve ve fi N T I S ti PPD

2010 ve 157 ti on and the ti cal issue. It ti ict countries, ec fl ff on programmes T ti iven the important G on, poor monitoring ti EPOR R on between the private EGY 2010 D ti on skills; and, T N ti lize public private dialogue to develop the skills and overnment and the private ti al. ff ti RA I in developing and delivering G T P S ves. In post-con I sta ti N P O TI on in the business environment and BACKGROU ti needed. will be ff EGRA NT training, systems development, and hands-on the investment climate and es to directly impact ff ti c of successful investment promo ti on for the adopted target sectors, as well as being an on for the adopted on ti on, including investor facilita ti NEPAL TRADE I ti ng investors a strong tool to provide feedback to the ti on. on. ti ves; ti and managers. This would develop a broader understanding a ff ti romo Zs. E P er exis c informa ff onaliza fi es are to be developed and expanded involving a new Nepal es are to be developed and expanded ti ti veness due to weak sustainability, fragmenta ti on ini on tu ti ti ec ne key characteris vity. vity. ff ti O will maximize opportuni al to o is the process through which investment climate obstacles and issues are ti capacity- on and others, these departments should be included in the wider ti PPD PPD oN and the private sector counterparts are keen to u on capabili ows. cient ins cient ti G fl ffi

on website. The website would present a wider range of investor-focused on website. The website ti arises from the need to address the deteriora capacity development programme will be required to address this cri capacity development programme will on of on A ti on Sec on ng window for the S ti c issues, through structured and result-oriented roundtables and working groups. through structured and result-oriented roundtables and working groups. c issues, ti PPD fi dvocacy in Nepal romo resources towards those will need to be made to allocate scarce ve basis. Hence, choices P on. on. A ti ti arry out Investment arry out Investment onaliza on, including sector-speci ti C ti short term, based on robust research. highest opportunity and impact in the er the ff tu ve marke ve ti ti olicy cally raised and addressed by public and private sector representa ec P ti ff overnment’s commitment to investment climate improvement and the presence of e overnment’s commitment to investment climate improvement and the presence of foreign investment and investment promo of foreign investment and investment e Industry Facilita building programme involving both sta informa Investment role to be played by certain government departments, such as the Foreign Investment Sec role to be played by certain government a strategy. It should provide management and sta a strategy. It should provide management coaching on investment genera competencies, systems, tools, and procedures necessary to support the I competencies, systems, tools, and procedures G ve ins ve promo Third, online Second, capacity building among other relevant government sta for the new I First, a capacity-building programme will be needed ti ) mechanism in the form of a Nepal Business Forum. The NBF is to address investment climate issues, ) mechanism in the form of a Nepal Business Forum. The NBF is to address ec in more than three to is not recommended to target investments ll, experience elsewhere suggests it apacity to mulate business and economic ac overnment, and to help it unlock the country’s full investment and trade poten ff ti ti PPD G sector. The NBF has the poten The Nepal Business Forum has now been proposed and endorsed by both the The Nepal Business Forum has now been proposed and endorsed by both the the need for a vibrant s macro or meso/sector level. systema thus investment and trade is the E of tangible results, and insu ( sector and the government lacked e should focus on the following three areas: should focus on the following three areas: 5.4 On the policy advocacy side, including sector-speci The NBF approach is a promising departure from past experience where coopera There is very limited capacity and experience available in Nepal in the area of professional and pro-ac There is very limited capacity and experience C S sectors that o sectors on a pro-ac investment promo A 5.6 A 5.5. be consideredoncethenewagencyforinvestmentpromo di too high. strong ins private sectorsta C small isbeau also and solvingasymmetricinforma highlights theimportanceof investment andtradepromo departments withintheorganiza common thattheyrequireprivatesectorskillstoimplemente of conservingscarcepublicresourcesthroughoverheadcostsavings.Furthermore,bothfunc this chapterpointstothefollowingareasforac The currentTradeand implementa FI recent WorldBankpublica private sectorandques are essen In thecaseofNepal,itisrecommendedthattwofunc e November 2009(basedonnewsurvey datacovering103developinganddevelopedcountries). 5

E ff ombining investmentpromo c n intriguingins A ff ec xport promo 6. 1. 5. 4. Formulateandadoptan 3. 2. ti erences. Finally,thereisaques onable recommenda S and fi ti nds strongdiminishingreturns,sugges

ve andsemi-independentinvestmentpromo N T I S 158 investors; E A S D export requirementandshi E local linkagedevelopmentandtechnologytransfer; L prospect forsuccessoftheBillislikelytobeconsiderably lessthanexpected; onger term,considersupplierdevelopmentschemeslinked toforeigninvestorsintheS E stablish aprofessional,one-stopinvestorfacilita stablish aBoardofInvestmentwithappropriate mend andenactthedra evelop athoroughcapacitydevelopmentprogrammefor the newBoIanditssta O C U Z Billasperthekeyrecommenda ti ti ally basedonpromo A S tu

ombining Investmentand 2010 ti verall A on agenciesrevisited; lso, ifthetwofunc ti ti on ofoneorbothfunc I ful. ti D onal base,therewould beli suggestthattheexperienceofsuchcombinedagenciesismixedandcanbenega ti NEPAL TRADE I BACKGROU tu ff A and ti 2002FI onal ques R ecommenda ti E ti with ons existaboutitsvalueaddedandalignmentwiththeprivatesectorneeds. ons arelistedinthereport’s xport N A ti D on ti S surveyshowsthataroundone-thirdofallI P astrongmanagementandgovernancearrangementinplace.Withoutsuch E on func R NT olicy ti ti xport ontobeconsideredinthe mid-longterminNepalisthepossibilityofcombining EPOR on andexportpromo ti ti 5 A ons areplacedwithinthesamebody,itwillbecri on, theyarealsosubstan P EGRA ontheimpactoftoday’sexportpromo ti ft ct establishingaBoardofInvestment; on problemsassociatedwithexportsofheterogeneousgoods.Thestudy romo ti S R ft on andtoputinplacesuitablyopera ti esearch workingpaper;No.W froma‘posi on of ti T E ons isweakenedasaresultofconsolida P TI Z Bill.Someimportantamendmentsshouldbeintroduced inthedra ti romo ons inasingleorganiza O ti on N S ti ming andsequencingcombiningthetwofunc T ti ti ti C tt RA on ons madeinthischapter,includingremoval ofthe75percent ons le valueinconsideringcombiningthetwoandriskswouldbe entre isnotconsideredastrongande ti ng thatasfarexportpromo T ti EGY 2010 ti on: A ve’ toa‘nega gency ( ti on ins on E ti on inthesameorganiza xport A fi c EPA nancial andsta ti ti ti ti on serviceandwebsitetoassistnew exis P vely di on Matrix.Inthebroad,theanalysispresentedin ti ons willonlybeconsideredforconsolida S 5125;by on isstronglyestablishedandperformingwell. ti tu ) servicesforovercomingforeigntradebarriers ff ti ec ti on. ti ve’ list.Withoutsigni on isestablished, P ti ff vely. However,complementarystudiesby erent innature. romo L ederman, PA ff ti resources; ti ng arrangementstore on agenciesandtheirstrategies ti s worldwidecarrybothmandates. D on Func ti aniel; on. ti on agenciesareconcerned, ti on wouldhavethebene O A larreaga, Marcelo; with lthough thetwofunc ti cal tokeeptwodis fi cant amendments,the ff ec theabilitytoa ff ; ti ti ve agencybythe ons? ti ons shouldonly E ti ti Z topromote ve whenthe ons havein P ayton, fl ect these ect ti on ifan L tt ucy, ti ract ti ons nct ti ng fi ft t A

Zs;

N T I S E 2010 159 ons; ti on and trade/ ti T ng loca ng ti EPOR R EGY 2010 D T N RA T S N O TI on with compe ti BACKGROU ng investment promo ti EGRA NT ve posi ve ti

ti plan should be based on rigorous on plan for Nepal. The ti NEPAL TRADE I S in key target sectors and linked to the on campaign ti on ac on ti agency; ons in a single ti promo ve investment ti on func on ti onger term, carefully review opportunity and merit of consolida onger term, carefully export promo L sector benchmarking studies comparing Nepal’s compe sector benchmarking 10. Business Forum. Formally establish the Nepal 9. 8. a pro-ac Implement 7. promo Formulate a strategic investment

on ect ti N T I S ff lateral ti

2010 c business 161 fi mate the mate ng an 8-foot ti cularly a cularly ti ti es T eight days, on of ti of Nepalese veness on and increase tax ti ti me it took its goods

ti on in export costs, Nepal ti EPOR ti R on, 2009” on, on ti ti EGY 2010 D T For example, on reform. N ti ng and expor RA ti reform is generally on the on T ti S on to ensure it addresses other, onal trade procedures and the ti N ti nvironment O ve goods in Nepal’s export basket. ve goods in Nepal’s export basket. E ti hapter 6 hapter TI compe ng the ti BACKGROU mean), i.e. a reduc C

A 2 ec ff EGRA on FT ti on and handling, but charges for customs A NT ti is delayed prior to being onal day a product on to the transit of goods through India. ti ti Trade Facilita Trade me-insensi on of interna ti sia-S ti A on Costs and Aid for Trade Facilita me variability in shipping goods par ti on reforms do not require regional or mul on is approximated to be a 20% reduc ti ti on of trade facilita ti ti sia region. A ni revenue collec ciency of customs s a landlocked country, it must compete with its coastal s a landlocked country, it must compete fi ffi n this basis, if Nepal reduced the n this basis, if Nepal on can help reduce the cost of traded goods and can on can help reduce the cost of traded goods and can ti A NEPAL TRADE I O ts by carrying out trade facilita

cularly in rela fi 1 ti World Bank 2008. breaks down the costs of impor S$1,764 and takes 41 days on average to export a container from Nepal are directly a on in ti ccordingly, the focus of trade facilita s, trade facilita U on and harmoniza ff ti A ca fi “Trading on Time”, ected in the predominance of fl on issues in Nepal also provide insights. ti agencies. This chapter focuses on of the processes of customs and other border ong S., ti C Nepal. on is a requisite for ti on ham, on regimes can improve the e ti P ti on average, each addi mates suggest that, But unlike tari ows. ve cost (50 per cent) is for inland transporta ti fl ti “Assessing the Doha Round: Market Access, Transac 2010 Doing Business Survey . and Time delays and ract new investment. C tt on to other countries and guidance as to where priority should be given. Speci ti cuts, improvements in trade facilita ff on refers to the simpli ti with them. ows associated lobal es s shown in Table 6.1, it costs fl G A ve goods. This is re ti ve indicators of the costs of trading across countries provide some guidance as to the severity of ve indicators of the costs of trading across countries provide some guidance on and moderniza ti ti on ti city of trading to trading costs to be around 0.5. So if an 8 day reduc ti jankov, S., Freund, could expect exports to increase by around 10%. elas D ddressing trade facilita ompara me-sensi Nicita and Hoekman in shipped reduces a country’s trade by 1 per cent. shipped reduces a country’s in part on customs reform. It also adopts a broader de in part on customs reform. It also adopts clearance and technical control are high for the South exporters. coordina chain, par and important, elements of the supply Nepal. The substan container. In order for Nepal to move into new product areas it will need to make progress on lowering trade facilita In order for Nepal to move into new product costs. Similar to tari informa 6.1 Introduc The World Bank’s 1 2 6.2 Nepal’s Trade Facilita Benchmarking C the issue in rela The high costs associated with trade facilita The high costs associated A neighbours and a help increase trade revenue. Trade facilita surveys covering trade facilita this would equate to increasing Nepal’s exports by around 8 per cent. this would equate to increasing Nepal’s exports to reach a ship from 41 days to 33 days (the South from 41 days to 33 days (the South exports to reach a ship ti agreements, and countries can derive large bene agreements, and countries can derive countries with lower trade costs are consistently associated with higher foreign investment. Furthermore, countries with lower trade costs are consistently improved trade facilita 3 The and 105thoutof121respec badly ontheeaseanda of availabilityandqualitytransportservicesinthe well astheextentofservicesprovidedbycustomsandborderagencies.Nepalalsorankspoorlyinterms in termsofe control agencies. P logis World erformance Index2007providesaddi E ti cs competenceandthee

nabling TradeIndexdevelopedbytheWorld N T I S 162 E conomic Forum, Note: blt n aeo rcig9 23 2[.]8 25 1[.]72[2.6] 71[2.6] 81[2.5] 81[2.9] 61[2.7] 66[2.7] 42 [3.0] 100[2.7] 77[2.5] 92[2.3] 101[2.3] 53[3.3] 92[2.3] 89[2.5] 46[3.5] 31[3.3] 98[2.8] 39[3.1] Source: WorldEconomicForum,The Global EnablingTradeReport2009 105[2.1] 112[2.1] Timeliness ofshipmentsreachingdestination Ability andeaseoftracking Competence ofthelogisticsindustry Ease andaffordabilityofshipment Nature ofExportProcedures Trading AcrossBorders-DoingBusiness2010 ot n emnlhnln 7 7 420 5 290 175 14 3 350 8 275 Nature ofImportProcedures 4 Totales 289 handling Inland transportationand 14 Ports andterminalhandling technical control Customs clearanceand Documents preparation ot n emnlhnln 7 0 585 4 455 200 20 6 390 8 275 Source: 4 Totales 300 handling Inland transportationand 14 Ports andterminalhandling technical control Customs clearanceand Documents preparation viaiiyadqaiyo rnpr evcsNplIdaBnlds r ak Pakistan SriLanka Bangladesh India Nepal Availability andqualityoftransportservices 2010 R ffi ciency ofcustomsadministra ank out121countriesscoresinparentheses 1low,5high NEPAL TRADE I BACKGROU World Bank,DoingBusiness2010 The GlobalEnablingTradeReport2009. ff ordability ofshipmentandthecompetencelogis N Enabling TradeFacilitationEnvironmentinNepal,2007 D ti R NT vely), farbehindIndia,whichisagoodperformerintheregion.The ff EPOR ec EGRA ti Trading AcrossBordersfromNepal,2010 veness ande Duration Duration T (days) (days) TI O ti onal indicatorsforthelogis N ea ot saIdaBangladesh India SouthAsia Nepal 9904303140 3 970 25 300 4 945 17 1364 32.4 1764 900 41 19 2903202200 2 1375 29 250 3 960 21 1509 32.2 1825 35 950 12 S 0 2 120 3 120 2 300 4 0 2 135 3 120 4 300 5 T ti RA on. Theindexmeasurestheburdenofcustomsprocedures,as Cost Cost US$ US$ T EGY 2010 Table 6.2 ffi ciency oftheclearanceprocessbycustomsandborder Table 6.1 E conomic Forum Duration Duration E (days) (days) nabling TradeIndex.Thecountryperformspar Cost Cost US$ US$ 3 ti Duration Duration for2009ranksNepal119th(outof121) cs sector.Nepalscoreslowintermsof (days) (days) Cost Cost US$ US$ ti csindustry(ranked112th Duration Duration (days) (days) Cost Cost US$ US$ ti L cularly ogis ti c

ff me has oing N T I S ti C D me so me o ustoms veness ti ti D on Plan C

ti ti on issues nue to be 2010 ti 163 ti orts. What ff on and release ti T cally at the fi Moderniza on of goods and tari EPOR epartment of ti R D EGY 2010 D T on system to have a clear N ti ered by improved customs ff RA T ed in the ed S fi

2003 Trade and Compe N ti O cantly worse than other countries TI fi BACKGROU the most on and release of goods as ti me delays and costs associated with ti on regime. Importantly, the on regime. Importantly, ti regime. The on EGRA ti ons iden ve orts are sustained over a period of ti NT ti ff on. ti Nepal. The need to improve on issues to address in ti eform R veness Study veness ti

ti NEPAL TRADE I trade facilita ve ti me and cost savings that are o cient trade facilita ti Table 6.3 ffi on plan. The ac ec ti ff on to the substan ciency and extent of customs services should con ciency and extent of customs services ffi ti on within the department to oversee the reform e ti No. of Days Required cant ons as part of a management informa fi ti sector considers inspec on here; while the private on and on ti Imports, 2005, 2007, 2009 ti mates suggest Nepal is not signi the private sector ranked inspec the private sector ranked ti 4 on sec on ti 2003 Trade and Compe mes. on plan be implemented and e ti ti customs (4 days) in Nepal is close to the me it takes to clear goods through Exports Imports ti on to a more e ti 44 43 41 38 35 35 this strategy found the average clearance me release study conducted for al contradic al ti ti goes on to rank customs valua ng trade. The private sector 2005 2007 2009 2005 2007 2009 ti - ff on Survey, on Decrease in the Number of Days Required for Exports and ti on Survey on Source: World Bank, Doing Business, 2006, 2008 and 2010 ti one o A on and handling and document prepara on and release ommerce and Supplies, ti ti C for Nepal to develop a more e es ti ustoms Moderniza c area in conduc ti important trade facilita on as the next two most C ti build on many of the reforms started under the previous 2006-09 plan. The 2009-13 plan is a good build on many of the reforms started The number of days required to export and import has fallen by 3 days since 2005 (Table 6.3. There The number of days required to export 2005 Trade Facilita Birgunj to be three hours and 41 minutes, with 18 per cent being cleared in less than two hours. So, Birgunj to be three hours and 41 minutes,

5 ca fi ) has recently prepared a new moderniza CD C o uthor? A D Ministry of Industry, in Nepal. They also suggest that, whilst the e in Nepal. They also suggest that, whilst Taken together, these indicators suggest that priority should be given to addressing trade facilita Taken together, these indicators suggest addressed, the biggest gains could be in rela addressed, the biggest gains could be inland transporta picture on inspec of goods to be the weakest area, es control. There is an obvious need to collect and report on the in the region in this dimension of customs sta performance indicators of the customs that Nepal takes full advantage of the signi procedures. is important is that the moderniza there appears to be a poten technical and sanitary requirements is also cited by exporters. However, if we look speci requirements is also cited by exporters. technical and sanitary for I 2009-13 roadmap for making the transi established a reform and moderniza classi see that the Business survey we regional average. ( problema Study. 4 5 are opportuni 6.3 its customs regime since the Nepal has made good progress in modernizing In the 2005 Trade Facilita Nepal’s tradefacilita Facilita partners suchastheWorldBank,includingonassistancethatcouldbeaccessedfromBankTrade methodology, area star 6 customs func A 6.5 not yetful controls. Members oftheWT 6.4 WT Technical assistanceiscurrentlybeingsoughtbythe progress onreducingthe subcommi A (Freedom ofTransit), To date,membershavesubmi modern riskmanagement-basedcustomsprocedures. Facilita engage theprivatesector. the dra reform andamechanismtoseektechnicalassistanceforcapacity-building.Manyoftheproposalsunder to implementthetradefacilita to seekenhanceddeliveryoftechnicalassistancestrengthenthecapacitydevelopingcountrymembers for thecompila at the Nepal carriedoutaself-assessmentagainstthecurrentprovisionsofagreementin compliance duringthisperiod. To date,theimpactonreducing documenta customs sta Nepal hasmadeprogressonimplemen which needstobeestablished. will comeinforceremainsuncertain.Buttheprocesso to theprogressof as ameanstocon customs procedureshasfailed toreduceclearance accoun

A utomated systemsforhandlingcustomsdatacanreduce clearance r uthor? ti cle X( N T I S 164 ti me thatstakeholdersshouldcon ti ti ti ft Trade Facilita on Facility. on ng modules havebeenintroduced.Thepercep agreementoverlapwiththe2009-13moderniza A ti ng 2010.The P tt A fi ublica

utomated 2010 ees foreachcustomssta lling theirfullpoten C ti t na ons, whichmeansthate ommi ti O ons, andincreasethecompliancewithtraderegula PCA ti NEPAL TRADE I BACKGROU ti on ofperformance indicatorsformonitoringcustomso ti Nego onal level,aNa on and ti on Survey2005. manual,andtraining. tt ti ee, ifthisisconsideredappropriate,withadedicatedsecretariat. nue toimprovecoopera ti O on e on A D con r oha D ti cle VIII(FeesandFormali A o ti N ti ff dministra C a me ittakestoprocessdocumenta C ortsunderitsstrategy. D ti C nue to nego hasexpresseditsinterestiniden onsidera R R NT ustoms ManagementSystems ound moregenerally.Thus,thedateatwhichprovisionscurrentlytabled ti EPOR tt ons onTradeFacilita ti EGRA ed anumberofproposalsaimedatimprovingthe exis on proposals.The ti al toserveasfocalpointsforagencycoordina ti onal TradeFacilita T ti TI on ofTrade ti ti ff on couldbegiventore-establishingtheNa on. Thesemechanismsarefocusedoncustomsproceduresand ec O N ti nue tomeetatregularintervals.NepalshouldusetheWT ti ti S ti vely nearlyallformaltrade(95percent)is coveredbythesystem. ng D ate a trade facilita T iscussions havebeentakingplacewith RA ti ti A on betweencustomsandotheragenciesrelevanttoborder on andclearance T EGY 2010 S YCUDA R ti egula mes. ti D D es ti o ming oftheWT iscussions shouldcommencewiththeotherpoten ti on C A (theautomatedsystemforcustomsdata)innine forthedevelopmentofapost-clearanceaudit( C ff ti ti utomated collec 6 ers Nepalanexternalimpetustotradefacilita on of theprivatesectoristhatautoma ti ons). Thenego onnected withImporta

on planandNepalshouldcon C ommi ti ti fying aleaddonortosupportandcoordinate on agreement aspartofthe ti on, anditalsoallowsforthetransi ti ti mes hasbeenminimalasonlythebasic tt on ee exists,mirroredbytrade facilita ti ons. ons. O ti tradefacilita mes, increasethetransparencyof ti ti on ofcustomsdatawillalsoallow ffi a ces clearanceandrelease A ti on groupalsohasthemandate utoma ti ti on andasmechanismsto ti on and on onal TransportandTrade U ti on iscri S ti A on agreementis A I D pril 2009.Itwasfelt ti ti nue toincreaseits forsupportinthis ng E xporta ti GA cal tomaking D TT oha ti O on), and on), A process r R ti ti ti on to on on of on ound. cle V cle ti PCA me, ti ti ti on on ed ti al ) ct ng on on A ti ti ti ons

N T I S ti cularly ciently ti ffi on form on 2010 ti ustoms 165 C cials should ffi T system, adop on is phased out. on is phased out. manual. ti the on is hindering ti on declara on ti nder the mes, o vity module to allow ca EPOR ti ti fi PCA U R YCUDA EGY 2010 s an interim measure the D S ng and the current norm T ti A N A is being tested vity module on has installed the broker on has installed selec ti RA ti ves under Strategy 7, which ves under Strategy ti T provision on rules and makes c. c. ti fi al automa al S ti es remain in the determina N) in the major customs sta N) in the major customs ti N A ng the ng O on of the value. Nepal needs to ti well as on and clearance delays as ti YCUDA ti TI s the database is not yet su S should commence discussions with cul BACKGROU ffi A C A ecruitment and training of auditors is o R by local on database and ensure access D EGRA . ti onal valua onal ti ces. There remains a need to develop a C ffi NT o ces. The selec ffi D irport customs sta ve method to clear goods without examina ons, as 100 per cent veri ti A ti rea Network (W A nce importers submit the valua on database. ti O . ons based on a risk assessment. ti on plan contains six objec on plan contains six on to risk management approaches to customs control NEPAL TRADE I ti to be on. Funding for this technical assistance will have ti ti ng a selec ti al tax viola YCUDA ti S A roll-out, in order to adopt new modules and to undertake the roll-out, in order to adopt new modules ct 2007 adopts interna on. A ti YCUDA S udit c to Nepal should be established, together with a on of customs processes. The on of customs processes. fi A ti ustoms A C ling, together with a risk-based sample of companies for post-clearance ling, together started in 2007 with the aim of consolida on en a dispute in respect of the determina fi reforms, but di ee. These are important ti reduce inspec vely value traded goods can ft tt ti on of imported goods. ti ec ff es the value against the valua fi ommi on. The ti C the Wide vity modules, and installing However, the system is not yet opera on of only documents. ti ti learance on N is scheduled to be installed in November 2009. This par N is scheduled to be ti a central valua on capacity. It needs to maintain c, there is o vity and pro A C ti fi ti eview methodology speci ce completed around 36 audits in 2009. The 2009-13 plan sets a target of 200 audits a year. ce completed around 36 audits in 2009. The 2009-13 plan sets a target of 200 audits a year. R ffi on value based on the invoice provided. ve documentary and physical examina ti ti o to be more product-speci ons. The database must be developed ti PCA on on of process. The 2009-13 moderniza on of process. The

isk Management ost- ti ti A PCA R P about a further phase of

C this further phase of automa ed for on database should be interfaced with o fi AD ti

T ti D C N prerequisite for risk management approaches is the roll-out of the t present the majority of audits are carried out by the district o ost-clearance audits are an important instrument to deal with revenue evasions. They are par ost-clearance audits are an important instrument to deal with revenue evasions. for import selec audit. There is also the need to develop a risk management plan, addressing many aspects of establishing audit. There is also the need to develop a risk management plan, addressing a risk management manual; risk management, including establishing risk management units; developing aims to maximize the computeriza A at the airport. W U iden associated redesign of procedures and documenta associated redesign of procedures and moderniza remains full physical inspec customs sta valua the broker and selec of customs data. The Tribhuvan to allow for the exchange o to be rolled out to other customs module, which is scheduled for imports, customs veri or through examina detailed or speci develop its valua The enhance revenue collec for a Valua as they provide a mechanism to address poten 2007 Nepal has the necessary provisions for adop of the transac Modern approaches to customs procedures imply that, in order to reduce clearance Modern approaches to customs procedures imply that, in order to reduce 6.8 6.7 P 6.6 Valua The ability of customs to e important for countries wishing to make the transi conduct selec The latest phase of implementa required. A dedicated, centralized post-clearance audit capability with the must besubjecttolicensing, then theapplica requirements forimpor between theimporterorexporterandgovernmentalauthori prepare documentsand/orelectronicsubmissionsonbehalf oftheclientandfacilitatecommunica C 6.10 C A Transitand Transporta 6.9 otherwise customso interac and trainingforcustomso produce isthedevelopmentofcoldstoragefacili A linked byrailtoIndia. Transport andWarehouseManagement Mechi bordercrossingsta market isine compares unfavourablywith 1,000clearancesperagentyearinBangladeshandsuggests thatthebroker There arebetween500and 600 agentsinNepal,eachhandlingonaverage350clearances peryear.This brokers isnotmandatory. harmoniza seek acomputerizedtransitsystemtoreplacetheexis Nepal shouldestablishacoordina R at Birgunjaswell A procedures rela access toanalterna to doublethatof cost. Itmaybemoree processed. A reloca India. There aretwootherI accordingly. ustoms brokerscarryouttheac onsiderable ail Service round 70percentofthirdcountrytradeisclearedthroughBirgunjI nother areathatmayrequirea t present,Birgunjisnotopera t present,Nepalhasaccessto N T I S 166 ti C on ofshippingagentsatBirgunjwouldfacilitatethebookingandimporta ti on withthe hanges tothe C ti

ustoms Brokers 2010 on oftradefacilita A G ffi greement. However, cient. Theneedtolicensecustomsbrokersshouldbereviewed inthe oods shippedvia ti me andcostsavingscouldbeachievedinrela ti NEPAL TRADE I BACKGROU ng tothecross-bordermovementofrailwagonsat K ti ffi veseaportshouldcon DR olkata, itavoidsconges CD cials willreverttofullinspec R ffi K ail Service cient toshipgoodsviaVisakhapatnam,India.Whilethedistanceportisnear ti I willberequiredinorderthatitison-boardwiththenewapproachtoclearance; s, inBhairahawaandBiratnagar,buttheirfacili olkata. Inaddi ng goodscanavoidcostlydelaysforimporters,butitisimportantthattheuseof ti N ffi on. Thecurrentfacilitycanhandle cials todevelopandmaintainriskindicators.Forthisapproachbesustained, D R NT ti ti EPOR on systemsbetweenNepalandIndiacouldreducetransit K ng asadryportinanyrealsense.Nepalese tradersarerequiredtocleargoods EGRA K olkata requiretranshipmentateither tt en ti olkata portass A vi ti K on commi on greement arerequiredtoallowfortheshipmentofgoods T olkata isheavilycongestedandgoodsspendaroundsixdayswai ti ti TI es requiredtocleargoodsthroughcustomsonbehalfoftraders.They on inviewoftheexpandingopportuni O ti N on, goodsarealsoinspectedduringtransitatthe C S o T L RA ti ti ti td, agovernment-ownedenterprise. on andtranshipmentdelays. ti nueandrevisionstothenecessarylegisla on oflicensingrules mustbecomemoretransparentinorderto tt on T ee withIndiatodiscussharmoniza EGY 2010 ti pulated intheNepal-Indiabilateraltransitagreementand ti es. ti on. ti A ng manualsystem.Thereshouldbeareviewonthe t present,thereisacoldstoragefacilityonlyatthe ti ti on tothistransitroutethroughIndia. fi es. Havingagentsthatarefamiliarwiththe ve tonsofgoodsandhasbeendevelopedby R axual. C ti es aremorelimited andtheyarenot olombo orSingapore,incurringextra CD D ti andtransitedthrough iscussions withIndiaonsecuring es forexportoffreshfruitsand ti on ofsystems.Itshould fi C rst instance.Ifbrokers IF Birgunjbasis. ti onshouldbemade ti mes considerably. R axaul railportin C IF Birgunj.The ti ng tobe K olkata. C loser ti on

)

N T I S PCA es on ti YCUDA ) of the on and S ti vi A axaul and ti udit (

2010 R 167 CEO A ves to clear ti T cer ( cer ffi lause 51 to the extent lause 51 to the extent EPOR ve o ve C R ti EGY 2010 D ost-clearance greement; T N P A RA T S N ; O ff manual; needs to introduce new TI C BACKGROU o ail Service PCA D R on database and determine how it can ti EGRA NT ct 2007 (2064) under ct 2007 (2064) under ee with India to discuss harmoniza ee with A tt develop and maintain risk indicators; cials to ffi ustoms ct. C A NEPAL TRADE I on commi ti ng and training audit sta on matrix. They are as follows: on technology: The on technology: ti ti ti needs to develop a risk management plan, addressing many needs to develop a risk management ng to the cross-border movement of rail wagons at ti C o the ed in fi together with a c to Nepal, D olkata in the context of the fi K system; vity module and make progress on redesigning procedures; ti YCUDA ons , including recrui S ces. The ti C ti A o D needs to improve the quality of the valua ons are listed in the ac C on and use of informa ti ti udit: there is a need to develop a dedicated centralized udit: there is a need to develop a dedicated o A D methodology speci on of customs systems; ti PCA nly 10 to15 per cent of forwarders have broker licences at present. of forwarders have broker licences at nly 10 to15 per cent O on: The on: ti ecommenda the past ten years. The renewal process broker licences have been issued during ciency. Few new ffi R oN should seek to establish a co-ordina eview with India the procedures rela and allow for new eview the licensing arrangements for customs brokers to increase transparency isk management prac ustoms automa ost-clearance stablish a access to Indian ports other than entrants. modules, including the selec G computeriza R R C P E R including establishing risk management units; developing a aspects of establishing risk management, for customs o risk management manual; and training capability within the be interfaced with the

Valua onable recommenda onable ti c the goods other than those currently speci There is no mandatory use of customs brokers in the There is no mandatory traders’ behalf. through proprietor, partner, or chief execu that trader can deal directly with customs so that a trader can appoint other company representa company. However, this could be revised A 6.11 improve e forwarding are inhibited. Importantly, freight New entrants to the broker sector must become transparent. ac prevented from carrying out broker to obtain broker licensing and are companies are unable

aw on cts. ti L A N T I S onal ti ca ll such ll fi fi ict, the

fl ti ct are as nnex 3 of

A greement, on of the on A

2010 er 169 ti on as on A C ti merican Free A of its technical ng standards is ng cal con ti ti T bill on ‘Na O l January 1, 2007 ft ti ugust 2003. S and Nepal Bureau A C mendment), to bring on Board s. In fact, it is seen as EPOR ti ed itself to complying A hytosanitary Measures tt R ), North P EGY 2010 D LDC /16, 28 T EU N PL on of Standard ( ti fy the WT RA ng unnecessary obstacles to rms in mee ti /N ti fi T ccredita ons, standards and conformity S A ti ACC nion ( N oN commi ons 1982 ( ng ti U pplica O ti ssembly for promulga ct and a new dra G hapter 7 hapter A A TI A , WT/ BACKGROU S) was divided into two Ministries , it O C C onal experts. The structural provisions egula ti cularly important as it would separate EGRA ti R ect of, crea ff tuent NT ti uropean ons, the ons, on and on ct and new ti ti E ons and conformity assessment procedures ons and conformity assessment procedures bill were forwarded to the Ministry of A ti ing was done by the MoI ft ft a on Mark) on greement on Sanitary– ons ti ti

ributed to the prolonged poli C A 1 dop tt . ct is par ons and standards might be burdensome to the ons and standards might A ca ti Technical Standards Technical A fi on Mark) on ons, and conformity assessment has become a conformity assessment has become ons, and

ti ti ti er on, ons geared at assis ons ca ti ti fi C

on Mark) ti NEPAL TRADE I ti tu ingdom of Nepal to the WT The dra ce. ti er ti K greement on Technical Barriers to Trade; s) such as the ca C fi A A greement on Technical Barriers to Trade, including compliance greement on Technical Barriers to Trade,

on Mark) repara

ti ti T A of infrastructure to ful ng markets because of the lack P O ti R er onal period from the date of its accession un ca ti C fi greement and the

greement and to allow it to secure technical assistance in order to ti ommerce and Supplies (MoI on, as per the mandatory requirement under the TBT on, as per the mandatory requirement A on of trade and investment and the widespread adop on ti A ti C onal prac onal greement. The promised deadline passed three years ago and some er ti mendment and the dra A C ccession of the A uring the accession nego ng the requirements of technical regula A ti

on Board’ from those of the current one to make the new Board fully on Board’ from those of the current one to make the new cials, and ins D ti ft TBT ffi ce for the eform ti O R ecember 31, 2006. ce’, the standards body of Nepal needs to no ce’, the standards body of Nepal needs to rac ti D P arty on the rac ccredita P ons of the P in 2004. ti A ood egal ), etc., mee O onal trade, slow legal reforms, or lack of awareness among entrepreneurs. G A ti L onal trade. While technical regula onal trade. While technical on ti ti ood s such as Nepal in terms of cost and capacity, they are unavoidable. The challenge for of cost and capacity, they are unavoidable. s such as Nepal in terms FT that technical regula ed itself to ensuring G A tt on of the WT ti LDC ng fully the provisions of the mendment to the Nepal Standards ( ode of and many other ces has become one of the major tasks for Nepal ti greement) by ti ll remain outstanding. The delay can be a A C ti A ct 1980 and the Nepal Standards (

ft A ode of C eport of the Working R on Board’. Both the dra es of the new ‘ ti ti ce for formal processing before taking them to the ompliance with these two agreements is mandatory ompliance with these two agreements onal trade. onal greement (N ti ti vi the TBT with the those into full compliance with the WT Mark) ons and legal provisions. In addi C ti ti A oN has commi Implemen including the Nepal Standards ( Making necessary amendments to Nepal’s standards regime, and other regional trade agreements ( and other regional trade agreements , 2003: G O O S). P nder the ‘ ccredita s noted above, Nepal was granted a transi a dra nalized WT of Standards & Metrology (NBSM), internally with inputs from interna in the proposed revised Nepal Standards ( the ac independent, as required by the interna commitments s The revision of the Nepal Standards ( subsequent peace process, and frequent changes in the government of Nepal. for full implementa fully implement the obliga and Jus A interna A the are not prepared, adopted or applied with a view to, or with the e U regula entrepreneurs of outlined in Figure 1. 1 fi 7.2 Status of 7.2 Status Before the former Ministry of Industry, Quality measured through standards, technical regula Quality measured prerequisite of interna The TBT-related commitments include: Nepalese exporters, government o Nepalese exporters, assessment prac one of the major challenges. Nepal acceded to the WT with the Technical Barriers to Trade (TBT) (S 7.1 Introduc to keep pace with the requirements of impor to keep pace with the requirements of interna WT Trade In view of the ever-increasing globaliza Barriers toTrade(TBT)Issuesfor 3 2 The NBSM, with theTBTandS 7.3 Na However, theprocessofpromulga work programmetotheIS the na revision oftheNepalStandards( func BS (1980)andtheStandardWeightsMeasures authority. Thecurrentfunc compa has yettobeapprovedbythe for forwardingtothe NBSM o member countriestocommentbeforeenactment. steps toreviseorformulateregula even thoughthedeadlineforfullimplementa In addi C NBSM,2010:homepage WT ode of O ti , 2000:WT/ ons suchasintroduc N T I S 170 ti ti ti onal WT onal on, theNBSM,asna bility withtherequirementsofWT ffi G cials considerthatitwilltakemore ood

3 2010 currentlyundertheMinistryofIndustry(MoI),isna ti ACC P onal rac NEPAL TRADE I BACKGROU /N O of Standards& Nepal Bureau /TBT enquirypointandhasafacilita PL ti Metrology ce forthe h /5 Working tt p://www.nbsm.gov.np C O Future OrganogramforAccreditationandStandardsMetrology ons C onsidera rganiza N O ti Ministry of on ofNepalstandardsproductsandprocesses,cer ti D ti /I Industry tuent ons ofthe NBSMareguidedbytwo P EC R NT P P arty onthe C EPOR repara ti S ommi Informa EGRA C ti onal standardsbody,hasyettono on in er A ti ti A ng the ons onlya ti T

ssembly. However,thenewbillfor‘Na greements TI fi ti A tt ca ti ee. Inaddi on, ons O A ccessions12 andpersonnelinterviewsinforma ccession ofNepal, N ti ti on on Mark) S A T A RA dop ct C ti ti on oftheTBTregula D enter Standards Council of T ft me forthebillstobepassed.Theywillstarttakingnecessary Na A er promulga EGY 2010 O A ti A irectly mendment andthenew on and C pril 2000 System and ti /TBT andthedra ccredita onal er Board for Figure 7.1 ti P on, thereisaneedforwiderconsulta A A Nepal ti . roduct

2 fi ct hasbeenapprovedinprinciplebythe‘Bill ct 2025BS(1968). ca A ccession ofthe ti ti ti on on roleinTBTno on A pplica C ti on ofnew oncerned Board ofNepal Training Firms Accredita A ti C P on ofStandards andprovideperiodicallyits ccredita A onsultancy, ersonnel & Board for Na K ft cts, namelytheNepalStandards ti ti ingdom ofNepal, Nepal billsshouldbeno on wasJanuary1,2007. fy itso ti ti ti on collec onal standardsbody inNepal.Itisalso onal ti ti U on on A A nder those cts. Thus,moredelayisexpected, ffi ct remainsincomplete.Thedra ti ti cial acceptanceoftheWT

on fi ca ti A C ons byNepal’sno C ccredita ti hecklist ofIllustra Tes Board for alibra onal Nepal L ti abs ng & A cts, theNBSMhaskey ti ti on ti

A on fi ti ed totheWT ccredita on toexaminethe ti ve Technical C ti on Board’ on ommi A ti ti

fi fi ct 2037 ca ca O O /TBT tt ti ti ee’ for on on ft

in ee ee. ee. C tt tt N T I S onal odex, ti C , ouncil of S enquiry ommi C and personal ommi EC 2010 P 171 C C /I /S O O cal standards) cal ti onal ti T is also preparing ng the MoFS qc.gov.np ti ft on of standards of dvisory ti A ons related to these DPR ti EPOR the NBSM onal trade, ti R limentarius ng services, laboratory ng services, laboratory rug as the WT A EGY 2010 D ti T C D N ves is to facilitate na ves is to facilitate ), the p://www.d tt ti RA C h T FTQ odex S C D on N ti ons O ti TI ons are involved in the TBT-related ons are involved BACKGROU ti ) in website: on (MoFS on cal products manufactured in Nepal. It C ti ti odex building has been constructed and odex building has been constructed and tu on collec on al oils. It is also assis EGRA ti ti ti C cal products. cal ouncil and the ti FTQ ne of its objec NT ) is the government agency responsible for ) is the government D C egula cal products O ti C onal standards published by IS on, etc. on, ti R ti onal ve ti onserva ti FTQ ons and codes have been implemented by the ons and ontrol ( C ca ti fi C D

ti ves) for related products, as per their mandates: S is presented in the next chapter. ti P s) and essen oN has designated the on services), laboratory tes on services), laboratory P onsulta ti G C NEPAL TRADE I ct 2033 (1976) as well as the regula ct 2033 (1976) as well ng pharmaceu ng ontrol ( on of pharmaceu ti ti A C ) for pharmaceu rug ves/guidelines. ca ti fi D

ti ons. Since the major trading partners of Nepal are India and DDA ti on 2040 2040 on also acts as the focal point for the ti C cer P B) for plant health on ( on and personnel interviews and informa ti D M FTQ egula G , the following government ins D - R C on of the on of onal standards with interna O ti ti on 2038 and 2040 on tu ti FTQ ti on 2043 on ti ng organiza ti onal standards have been developed and approved by the Na odex standards is also ongoing. D tti ti dministra C A of harmoniza ee are being pursued from there. The process ons tt epartment of Food Technology and Quality egula C mber forest products (NTF cates for plant products. D ee has been formed, a separate Na on. ct 2023 (1966), the Feed ct 2023 (1966), the egula ti ti fi R tt

A R rug ti ivestock Services for animal health ng the WH ti D L sets and implements the mandatory standards (both horizontal and ver the mandatory standards (both horizontal sets and implements product and system cer on work on p://www.nbsm.gov.np ns of ns on ti tt ti C ti p://www.dda.gov.np h tt on on the regulatory structure for S ct 1978, the following rules and regula ommi h ti rug Manufacturing onal medicine laboratory for tes A on collec on C ti ti on and Inspec D FTQ epartment of Botany ( ti D D on on the on on onal Standards and Technical iven the importance of standards in the global economy and in interna / standards, issuing guidelines and direc ng ti egistra ti tti rugs G C nnual bulle R odex onal trade in food and agriculture. The ve January 1, 2004. The Srelated cer ti A

D ti C The ng the Food 6 E

ti . es of the commi on, facilita on, 4 ti ti is also facilita IT . rugs Standards epartment of epartment of rug egula odes on ec on to the NBSM and on to the NBSM ff C ecember 2009, 858 na ti 2037 C D D D R D vi ti , 2009: epartment of Food Technology and Quality epartment of Food cts D onal and other standards-se onal informa onal :

Interroga MoFS issues Ministry of Science and Technology for environmental C ti ti 5 A D , 2009: Home page DDA O erent food products with FTQ ff nder the ddi s of Na DDA D NBSM, 2010: home page A issuing With the given mandate of the Ministry of Forests and Soil some standards for non- has a separate na WH gives emphasis to harmonizing na The The accredita two implemen measures (se interviews and informa 4 5 6 7.4 Na Standards A U and interna point, e DDA Standards mark licence, metrology (legal metrological/calibra mark licence, metrology related to food/feed products and issues direc related to food/feed the ac di In addi A are technicalregula 7 mandatory O Technical Regula O U nine addi C EU len food andagriculturalproducts suchaslargecardamom,ginger,honey,tea,co shown inTable7.1. of productstandardsandprocess/systemsetadoptedbytheNepalStandard these majortradingpartners.TheNBSMtypicallyfollowstheIS standards andclassi NBSM,2010:homepage hapter 2. nder themandatoryfoodlawandregula f allstandardssetbytheNS f the420productstandardsadoptedbyNS countries,specialpriorityisgiventoharmonizingna ti l, etc.

N T I S 172 C D D G G O ode of ry eformed SteelBarandWiresfor alvanised alvanised rdinary ti onal technicalregula . C 2010 rcs tnad 0 408 7 90 30 15 24 106 408 90 30 18 90 49 21 18 49 21 Source: NBSM(asofDec.2009) 7 Vocabulary Process Standards 90 Others 15 106 24 Electrical Construction Packaging Non-agricultural products other agriculturalproducts Agri-inputs Processed Food Food primary 7 ell andBa Incommonparlance,mandatorystandardsarecalledtechnical regula P NEPAL TRADE I BACKGROU P rac ortland C C raPoutSadrsPoesSadrsVcblr emnlg Total Standards Vocabularyterminology Process Standards ProductStandards Area ti ti oated MildSteelWire(NS:163) orrugated Sheet(NS:141) h ce for ons rela fi tt es them accordingtotheInterna p://www.nbsm.gov.np tt ery (NS:280) ti ons Nepal StandardsAdoptedbytheStandardCouncil(NSC) C N ement (NS:49) LPG D ti R NT ng toproductsandoneacodeof prac C EPOR cylinder(NS:376) ti sofar,onlysixarerelatedtosafetyforexporttradeandhavebeenmade ons areinthepipeline.Thesecovermajorfood items,includingexporttrade EGRA T TI O andpersonnelinterviewsinforma N l oa tnad 858 All totalstandards C S ti oncrete on, 101 technicalregula T RA T EGY 2010 Table 7.1 R C einforcement (NS:191) , only24applytotheexportpoten ti ti onal onal standardswithIS C lassi O /I ti EC fi ti ons have beenprepared(Table7.2)and ca on collec procedureswhendevelopingna ti ti ce. Theyare: on ofStandards(I ti on O ff andthestandardsusedby ee, pasta/instantnoodles, ti ons. O C ti ut ofthesix, as iden als S). Thenumber C ouncil (NS ti

fi e in ed ti onal C fi ve ) is . N T I S O on Mark) on ti

2010 heavy ves, 173 ti ca fi

ti , a few proposed T O er C EPOR our). on 2027 (1970), the fl R ti S, under the Ministry of EGY 2010 D P T akes, preserva akes, N fl ves/guidelines to the WT ti RA egula T R * S N ce ti O ed are awarded licences to use the TI fi

BACKGROU ti EGRA ons and direc and personal interviews NT ti ons and the rest were related to guidelines/ on authority for S ti ti before joining the WT ons set ti ca fi ed in the Food

fi ti qc.gov.np ft . C epartment of Food Technology and Quality NEPAL TRADE I D Table 7.2 onal no clove powder, corn age cheese], ti FTQ p://www.d tt tt D h ns of ns on scheme. This is a voluntary scheme that assures quality of ti ti [co ons and Codes of Prac ed 18 technical regula ca ti fi fi on.

ti onal Authority onal ti ti ti nnual bulle paneer A on c types of packaging containers are spelt out explicitly in some of the ) in website: Category Number of Technical Regulations ), no fi onal standards such as: C ti ti on collec on ti AC FTQ D , 2009: Technical Regulations for Food Products in Nepal Technical Regulations ca the technical regula ons include on mark under the provision made by the Nepal Standards ( ti C fi ti (Table 7.1). These include some of the most important management system (Table 7.1). These include some of the

C ti FTQ ca ecember 2009, the na D fi ontrol ( Fats and OilsFruits and Vegetable ProdiuctsSpices and CondimentsTea, Coffee and their productsSaltCereals, Pulses and their ItemsProcesses Drinking WaterSweetening Agent 17 Sweets and Confectioneries 3 20 16 19 1 3 3 2

ves (Mo ves D ti * C and informa er ti ng a product cer milk, edible vegetable oils, and processed ce for biscuits, instant noodles, pasteurized ti ti C adopted as na ons by SPS Na ons were directly related to product regula ti ti O oopera ons such as for infant milk foods, infant foods, skim milk powder, chewing gums or instant 9001:2000) 14001:2004) ti C ca fi O ca

O 17025:2005 ti fi

EC ti roduct odes of prac /I 22000:2005 C P O O product regula ons on MS (IS ti E ves. QMS (IS QMS IS IS ti ca fi

ti nly three no griculture and lthough the general labelling requirements are speci ltogether 408 process standards (guidelines, methods of analysis/tests/sampling/measurements, etc.) have ltogether 408 process standards (guidelines, mandatory product standards (maize, (wheat metals, fennels, green tea, luncheon meat, and rice) and a voluntary standard direc No O A Nepal Standards (NS) cer goods from Nepalese industries. Manufacturers whose products are cer 7.5 The NBSM is implemen A requirements of labelling and speci Food Related Technical Regula WTO No Between July 2005 and Process Standards A been introduced by the NS standards of the IS technical regula noodles. drinking water have also been prepared by the noodles, vegetable The NBSMhasbeensuccessfulinissuinglicencestoonlyafewproductsofexportinterest,includinginstant fi steel bars,insulatedcables/wires,andothers. 9 Weaknesses Strengths Strengths andWeaknessesof 7.6 A NBSM,2010:home page rms havereceivedtheNSmarksfortenfoodproducts. ct 1980.Sofar,130 Therearetwocri Inrecentyears,theNBSMand TheNBSMand TheNBSMoperatesaproductcer FrequentchangesintheparentMinistry’sstructureandleadership anddi Severalprojects(SMTQIandSMTQII TheroleofgovernmentagencieslikeNBSMand Noneofthegovernmentlaboratorieshavebeeninterna N T I S 174 their services.TheNBSMisnotproac compliance withtechnicalregula tes and apparentlowpriorityoftheseagenciesinimplemen capacity totapthoseprojectsappearsbeverylowbecause oftheslowdecision-makingprocesses formula be ambiguousandcon D at averyearlystage. and process/systemstandards(bothvoluntarytechnicalregula development andawarenesscrea technical assistancetoenhancetheircapaci A building; trained, professionalsta 2005 and2009forenhancingthecapacityofNBSM direc assessment reportsorproductcer conformity assessment,quality,andmetrologyhasyettobedeveloped; direc capacity atbothNBSMand interna schemes, tomonitorandenforceimplementa accepted byothercountries, includingIndia,withwhichNepalhasasizabletrade. S and manyothercountries. prevails withthe assessments; P gencies liketheNBSM, FTQ S enquirypoints.Signi ti

ng laboratoriesforse 2010 ti ti C ves orthelackofsta ves andguidelines,toserveasaregulatoryauthorityintroduceproductorsystemcer andNBSMhavebeensetupprimarilyasregulatoryagencies;so,theirfacilita ti ti onal accredita onal on norservicedeliverythat canfacilitateexports.Thismaybeduetothelackofclearpolicy NEPAL TRADE I BACKGROU ghee, h tt p://www.nbsm.gov.np fi rms havebeenawardedlicencesforatotalof55productcategories. D FTQ D ti cal dimensionsinintroducingacultureofstandardsandquality:infrastructure FTQ biscuit, beer,ironproducts(rods/ N D C A R NT bothhavesizablenumberofwell-trainedpersonnelandfairlywell-equipped C ti fullydevelopedqualityinfrastructure(QI)intheareasoftechnicalregula fl on oflaboratories,productandsystemcer icts ofinterestprevail. EPOR ff wheretheirconformityassessment reportsareyettoberecognizedinIndia intherelatedjobsareissuesthathaveanega EGRA D fi tti cant e cant ng standards,forperformingconformityassessments,andmonitoring FTQ ff mo D T FTQ TI C O andpersonnelinterviews andinforma ti , and va ti D N C ff ons; ti orts areunderwaytoupgradefacili ti S FTQ . on. ti

fi ti T fi ca on; ca RA DDA C ti ve instandards-relatedservicestermsofneitherstandards ti T ti havebene O on haveyettogainrecogni on markscheme.TheNepaleseproductcer EGY 2010 n bothfronts,mostoftheNepaleseregulatoryagenciesare aremandatedby EU ti on oftechnicalregula -WT ti es forstandarddevelopmentandharmoniza A R ccordingly, thebusinesscommunitytendstoavoid D O fi egulatory ted fromanumberofbilateralandmul FTQ

P G roject, JI I sheets,etc.),paints,cement, C ti ti ng theseprojects; infacilita onallyaccredited.Hence,theirconformity D ti A on collec FTQ cts andregula CA C ) havebeenimplementedbetween intradefacilita ti ti A on ininterna ng tradehasyettobeclari ti ti ti on

ons, andtoperformconformity fi ti gencies ca ti ve impactonrequiredcapacity es andbuildhumanresource ti on, andopera ffi cul ti ons toprepareproduct ti es inretaining well ti onal markets; ti on. However, the A 9 ti ti

similarsitua ons) andissue ve roletends to O G ti

ut ofthese,35 fi I/H ca ti on ofTBT/ DPE ti on isnot ti

ti fi lateral ca pipes, ti ons, ti fi ti ti on, ed. on on on S is ti C N T I S onal ti als for als onformity ti athmandu, C urrently, on from K ti C

2010 175 urbar, D on, laboratory ) have provided ti olicy, introduced T ssessment, A P 11, 12, 13, 14 AO ca . fi

C id for Trade ,18 September, as per decision of Technical ti EPOR A C t present, the Mo R on and documenta onal enquiry point. This ti A FTQ ti EGY 2010 D FTQ D T

onformity , and F D on authority has taken no lthough the TBT has taken N ti C ons: 10 ti A . RA ommerce EU T ca C fi S

ti N O ons. ons. ti on in regional and interna mended based on stakeholder comments and ti rivate Sector and TI onal A ti P ng Minute, June 18, 2009 BACKGROU ti on in Nepal, conformity assessment on in Nepal, ti ommerce and Supplies, Singha onal no onal cipa EGRA C ti ti ng products that are export poten ti NT ee Mee ee ve Timeline by NBSM/ egional Workshop on tt ti R

ec ff O ons. ommi ti C ng, 30 July 2009 ( S established in June 2003 an enquiry point under S established in June 2003 an enquiry ti lling these func Member must set up a na Member must set up kraine rojects ca fi C fi U O on, management system cer on, management

on to exporters and manufacturers on the subjects on to exporters and P ons like the NBSM and the ti ti ti ti evisit of Indica iev, R K ca onstraints” Workshop on NEPAL TRADE I tu fi ee Mee ee C ti

tt ti ugust 2009) A on channel. In the Na ti ommi rogram: rogram Technical C P P products or groups of products; c Nepalese fi on, each WT overnment of Nepal, Ministry of ti , the then MoI ons and standards a G ti O oints ssistance lateral standards-related agreements, regional standardizing bodies, regional standardizing bodies, lateral standards-related agreements, Members can request for and obtain informa Members can request P ti ssistance A ssistance A O A

ve Timeline (20 ti O O the ons and standards of the products of their trade interest. However, ti vercoming Supply Side na ons in the past, apparently the ti O on obliga on impending or adopted, as well standards and test procedures, whether ons, ti ublished by ti s on on standards and technical regula on on standards P rogramme Steering E ed itself to strengthening the TBT enquiry point ed itself to ti ng to product cer ng to product on of the NBSM responsible for the following func ca P tt IS es in support of conformity assessment, ti ti fi ti ca

fi ti

-Nepal WT vi -Nepal WT nquiry ti ti lateral donor agencies (from India, Norway, Japan, ti EC EC E no ac ed to ed nnex II. - Indica tt O A olicy 2065 DO P evelopment and Trade ,12–13 June 2008, NI D U ngs; ti ng, standards developed by the NBSM and other agencies. ng ti /TBT ti to the WT ng accession on in bilateral or mul nswer enquiries about speci and par nswer enquiries concerning membership rovide informa tti ti ng – Submi oN has commi roject, 2009a: roject, 2009b: nancial support in the past to key ins ti O ugust 2009) tes A A P mee procedure rela fi ommerce P P

G ., 2008 :

A ., 2007: Session 3: “SM C L O O O LA urrent Technical cipa ti NI C A on of the importance of this informa on of the importance ee Mee ee lake, ti tt ti S, 2009: greement requirements. A -Nepal WT -Nepal WT OC oona ssessment Suppor ommi adickakudi, on on any of them. So far, there are no Nepalese no S ti A P EC EC G 2009 C 2007, M discussion, 20 s a complement to the no s a complement to ven before ge P

M in 2009, the The linkages between the TBT enquiry point and industry are not well established. However, there is growing The linkages between the TBT enquiry recogni

The TBT enquiry point is expected to provide informa The TBT enquiry point is expected to related to foreign technical regula far short of ful current capacity of the enquiry point falls Nepal. E the Technical Service/TBT sec ac the lead to prepare WT other Members’ enquiry points on regula and conformity assessment systems. Such enquiry point is also important in acquiring informa systems. Such enquiry point and conformity assessment technical and 14 acts as a focal point where other WT acts as a focal point 10 11 12 13 7.8 Various bilateral and mul several projects are underway focusing on legal reforms and capacity enhancement to comply with the TBT/ several projects are underway focusing on legal reforms and capacity enhancement S A 7.7 WT on a Member’s technical regula on a Member’s technical as on par responsible for the TBT enquiry point. The keyac The currentprojectsinclude:

S N T I S 176 P EC P ARRC roject for hysikalisch-Technische Bundesanstalt[ -Nepal WT

ti 2010 vi

ti R es underthoseprojectsarehighlightedinTable7.3. partner: MOAC) (Implementing (PACT); 2009-15 and Trade Commercialisation Agriculture Project for World Bank (PART B) 2008-10 DFTQC) ESCAP, NBSMand partners: UNIDO, (Implementing programme Assistance EC-Nepal-WTO 2008-11 (PartA) Germany/NBSM) partners: PTB (Implementing programme Assistance EC-Nepal-WTO and GoN) partners: UNIDO (Implementing Norway: 2007-10 Phase II SMTQ Project SAARC Regional egional SMTQ NEPAL TRADE I BACKGROU A griculture oo Activities Donor O

A ssistance N D R NT C P EPOR ommercializa roject quality standards 2.Technical assistanceandcapacity-buildingmeasurestomeetfoodsafety and laboratory facilitiesandcerti 1.Food qualityandsafetyenhancingactivities,includingSPS,throughimproving Support forSPSFacilitiesandFoodQualityStandards Component 2;Implementingagency:DFTQC 7. OperationalTBTEnquiryPoint certi 6. NBSM/DFTQC/FNCCIdevelopedasISO9000,14000,HACCPandSA8000 5. Establishingaccreditationcapacity 4. Accreditedlaboratoriesfortextile/apparel,leather,andagro/foodexports 3. NBSMmetrologycapacityandtraceabilityimprovedaccredited DTFQC formandatoryfoodstandardsdevelopmentandharmonization 2. StrengtheningNBSMtobecomeeffectivestandardsbodyandstrengthen creation aboutTBT/SPS,andstrategyformulation 1. Identi scope oftheproject 2. Anationalsystemforinter-comparisonmeasurementsshallbesetupwithinthe recognition the aimofimprovingitstechnicalcompetenceandnationalinternational 1. ThemetrologicalbasicstructureoftheNBSMshallbestrengthened,with Ø ManagementSystemCerti Ø AuditorstrainedinISO22000FoodSafetyManagementSystem Ø FoodlaboratoryoftheDFTQCstrengthenedandaccredited Ø TextileLaboratoryofNBSMaccredited accredited Ø Productcerti Metrology, TestingandQuality(SMTQ)PhaseII Strengthening InstitutionalandNationalCapacitiesRelatedtoStandards, Market AccessandTradeFacilitationSupportforSouthAsianLDCsthrough Conformity) RegionalProgramme:Bangladesh,Bhutan,Maldives,Nepal Phase II26/1/2010UNIDOTCBProgrammes(TAcombiningSupply-sideand EGRA Activities ofCurrentDonor-fundedProjects fi er T P TI rogramme ( P O fi hase II(Norway-funded;implementedby cation ofproductsfacingTBT/SPSconformity problems,awareness N S T fi cation systemofNBSMcomplieswithISOGuide 65andis RA ti on andTrade, T P EGY 2010 TB] EU Table 7.3 G -funded; implementedby fi ermany) --2008-11 cation capabilities cation fi cation Bodyaccredited PAC T (WorldBank-funded)--2009-15 U G NI oN, DO and U NI DO G oN) --2007-10 , E S CAP , and

N T I S O es a total 2010 fi 177 es are yet to ti vi ti T aboratories L or a few, most of the part from compliance on is able to provide EPOR tf ti ng of products under A R ti EGY 2010 D T N xcep E erent purposes from water RA ff T S N ng. ng. ti O TI BACKGROU IS on bodies use criteria given in the ti EGRA on. These projects are complementary. are complementary. on. These projects rivate Sector ti NT cation and determination in herbs and fi P es available for tes ti on results. on ti ccredita ) guideline is used. This guideline speci A cal product tes E ti NEPAL TRADE I Table 7.4 on assesses the technical competence of the infrastructure on assesses the technical competence of the infrastructure ti : 17025-2005( es, as the cost of establishing laboratories are very high and the cient manner. manner. cient ti on EC ffi ti nal stage of implementa /I ng to pharmaceu fi ti O overnment and ons have laboratory facili G ti le facili le fi herbal products (some upgrading is taking place with its own internal resources) Ten major laboratories for different product testing and legal metrology. Four Ten major laboratories for different product testing microbiological, and textile laboratories are being upgraded (metrology, chemical, laboratories) laboratories are being New laboratory complex built. Chemical and microbiological upgraded National Medicine Laboratory (upgrading status unknown) Essential oils, some natural ingredient identi ccredita onally accepted system that recognizes that an organiza ti A General Status of Government Laboratories and Upgrading Process General Status of Government Laboratories ons. The general status of the laboratories and their upgrading is summarized in Table ons. The general status of the laboratories ti Organisation Laboratories Department of Food Technology and Quality Control (DFTQC), Ministry of Agriculture and Cooperatives Department of Drug Administration (DDA)/ Ministry of Health and Population Department of Botany , Ministry of Forests and Soil Conservation Nepal Bureau of Standards and Metrology (NBSM), Ministry of Industry reas of TBT on’ is an interna aboratory A ti L ve jurisdic ti rst two projects are already in the rst two projects are already fi ccredita uidelines. In case of laboratories, the IS A private laboratories remain low pro expected returns from the current level of services are very low. analysis to soil analysis and from food tes There are around nine specialized private sector laboratories established for di There are around nine specialized private sector laboratories established for 7.4. of 24 requirements (14 management requirements and ten technical requirements). of 24 requirements (14 management requirements and ten technical requirements). and human resources and the reliability of the test and calibra in the respec its services in a professional, reliable, and e be pursued and are unlikely to be completed within the year 2010. unlikely to be completed within the year be pursued and are with the management requirements, accredita 7.10 ‘ However, the progress made under those has been very slow and many of the programme ac made under those has been very slow However, the progress G The following government organiza The of 7.9 Infrastructure For establishingacrediblecalibra documenta The NBSMasasecretariatoftheNepal laboratories willhavetobeaccreditedbysomeinterna accredita if theirconformityassessmentreportandtestresultsaretoberecognizedinterna by metrology laboratorywithsupportfromtheSMTQ accredita N to developaNepal chemical andmicrobiologicallaboratories.Theprocurementofaddi they wanttheirconformitycer standards andguidelines,includingIS process ofaccredita glassware hasbeenini experts underthe and instrumentslikeH star P interna process adoptedbytheNBSMremainsmeaninglessasitsownlaboratoriesareyettobeaccreditedfromany body withinterna A under theschemeofN (N launched andtheNBSMisaimingatgreaterpar reputed interna JI bodies. The currentprojectsliketheS schemes suchasN serving asacontrolandveri The currentstatusofaccredita by someinterna C 7.5. rogramme areassis urrently, theNBSMisupgradingandrefurbishingitschemical andmicrobiologicallaboratoriesforaccredita CA s apartofcomplyingwiththeWT EPLA EPLA P ti hasbeensuppor TB ng theprocessofaccredita N T I S 178 S isbasedonSIN ti S) andafewmoreareinthepipeline.Noneofgovernmentlaboratorieshavebeenaccreditedeven G onally recognizedaccredita ermany. ti ti on boardisformedandunlessthecapacityofnewinterna on direc on 2010 ti on andsta ti NEPAL TRADE I BACKGROU ti onal accredita onally reputedaccredita ti onal recogni L EU A ti L aboratory upgradingandsta ves andcriteriaagainstwhichlaboratoriesareaccreditedinlinewiththeinterna ti T aboratory on ofthelaboratoryforcalibra ti A /Nepal WT ng boththeNBSMand ti ngtheconstruc PLC GLA , T EPLA ti ff ated. Itisexpectedthat,bytheend of2010,alltherequirementsequipment, willhavebeenmetandtheaccredita ELRAC , N S (Singapore/IS GC fi D S. TheNBSMiscollabora ca R NT /MS, and ti A ti EPOR ti ti

ti , H on. on ofmajorgovernmentandprivatelaboratoriesNepalisshowninTable on centre.Sofar,sevenlaboratorieshavebeenaccreditedunderthisscheme fi ccredita on boardwillalsobecompletedwithin 2010. EGRA ti O AARC ca ti on forcertaintes on systemwithinterna

OKLA A ti O T ti ssistance projecttomeettheaccredita A on toberecognizedoutsideNepal.Thecurrentlaboratory accredita on body. TI /TBT agreement,Nepalneedstoformaseparatena C ll governmentandprivatesectorlaboratoriesneedtogoforaccredita regionalSMTQ ouncil forStandardsundertheexis O ti O S, and onofanewlaboratorycomplexforthe AA ti N on Scheme(N /I S O ti EC on body,asinthecaseof S havebeensecured.Furthermore,gapanalysishasdoneby T

G RA 17025andIS uide 25).Inthisconnec APLAC T EGY 2010 ff trainingarenearlycompleted.Theexpecta D ti cipa ti FTQ ng andanalysesbyinterna ti P , inpro on parameters,par ti hase IIprojectandthe ng withvariousinterna C ti EPLA P ti on ofprivatelaboratories.TheNBSMlaboratoryis onal accredita inrefurbishingandupgradingtheirlaboratories ti hase IIprojectandthe onal traceability,theNBSMisstrengtheningitslegal O fi S) foraccredi ciency tes /I ti EC on processwillbegin.

G uideline 43.Thisprogrammehasbeen ti on, theNBSMhasdevelopedlaboratory ti ti ng programmes. on bodiesbasedinothercountriesif ti ng ti ti ti D cularly massandtemperature,bya ng laboratoriesopera onal equipment/instrumentsand FTQ ti on requirementsofthe A ct hasbeengivenresponsibili EU ti ti C onal laboratoryaccredita onally recognizedaccredi ti . -WT onally recognized,Nepalese D EU FTQ O -Nepal WT ti onally. onally. project,implemented C andnewequipment ti onal accredita ti on isthatthe U ti O ng inNepal. nless anew

A ssistance D FTQ ti onal ti ti ti ti ti ti ti on on on on on ng C es ’s cal ti

N T I S onal ri ti C nancial 2010 fi 179 on of selected on ti veness through Quality ti T

ti nalysis and A EPOR ompe C R EGY 2010 D T N RA T athmandu Nepal, July 2006 p166-182. S nal stage, particularly for mass and K fi N ned scope is represented by the fi O TI BACKGROU ciency testing within Nepal. ciency testing on 2006” Improving fi ti EGRA lling activities as per ISO 17025 are underway). lling activities as fi NT lumni Society, sements but never on products. onven ti A C cide/veterinary drug residues, mycotoxins in ti al to take steps for accredita al TS ti 14001:2004), and Hazard AO ssessment showed that there were about 194 management O 15 A ciency testing within Nepal. ciency testing on status for the de fi ti egional Quality MS (IS Table 7.5 NEPAL TRADE I R ca E fi

ti ed 8 roducers to Implement fi lling activities as per ISO 17025 are ongoing). lling activities cance (like pes er fi fi P on body on adver ed 1 Table 7.6 ublished by Nepal C fi ti P onformity ed 181 fi C Organizations in 2006 (16) ed Nepalese fi ed 2 9001:2000), fi ons reported in 2006 ti O some laboratories for selected test parameters related on programmes of ed 2 ti fi Management System No. of Industries esource Materials R on ti Ten major laboratories for different product testing and legal metrology. Four laboratories are being different product testing and legal metrology. Four Ten major laboratories for microbiological, and textile laboratories) upgraded (metrology, chemical, pro 2. Participating in inter-laboratory and intra-laboratory 1. Preparation for accreditation of legal metrology laboratory is in 1. Preparation for accreditation 3. Participating in inter-laboratory pro textile testing laboratory under the SMTQ Phase 4. Making necessary arrangements for strengthening accreditation by international body. II programme and will also be considering later for the process of accreditation by internationally 1. Chemical and microbiological laboratories are in test parameters related to fats and oil and reputed accreditation bodies, particularly for some microbiological safety (gap NEPLAS scheme and a few more are in the Seven laboratories have been accredited under the to get accredited by internationally recognized pipeline. But these laboratories need further efforts accreditation bodies. temperature (under EC-Nepal WTO assistance implemented by PTB, Germany and will be applying temperature (under EC-Nepal WTO assistance implemented accreditation body. for accreditation by an internationally reputed laboratory microbiological laboratories by some 2. Preparatory work for accreditation of chemical and internationally reputed accreditation is initiated (gap System Certi ons in Nepal (Table 7.6). HACCP certi ISO 9001:2000 certi ISO 14000 certi ISO 9001 and ISO 14000 certi ISO 9001 and HACCP certi ti ed organiza ed on Status in Nepal “a paper in Fourth ti fi on body and accredita

onven ) are popular in Nepal. ti ti C ca fi

Current Status of Accreditation of Major Government and Private Laboratories of Major Government and Private Current Status of Accreditation ti ca fi er

ti ACCP C egime” R ed organiza ed fi Organisation Laboratories

ssistance to Nepalese ., 2006: ‘ ti products and parameters provided they also receive technical support and on in specialized P . oints (H ti A Government laboratories NBSM DFTQC Private laboratories K P lobalised on to the planned accredita ti G ves for laboratory upgrading. ti rocess Standards’ and in the status of system cer ontrol Sapkota, P 15 to products such as fats, oils, and processed food, it is essen to products such as fats, oils, and processed signi laboratories for test parameters of export in silver jewelry). food products, and cadmium/nickel contents that a few private laboratories could be ready for interna The private sector has aired the view accredita A Management systems like QMS (IS 7.11 ‘ system cer In addi incen use of logo of cer C 17 16 department stores,andproductexports.Butitiss The Nepalesepackagingsectorisgrowingslowlyalongwiththeconsumermarket,supermarketsand 7.12 Many moreorganiza and rigidplas This numbermighthaveincreasedbynowasthereisnointerna Since thereisnocentralsystemtoregisterthecer p166-182. machineries andnewtechnologieshasincreasedthequalityofpackagingmaterialsallowedproduc Nevertheless, produc emphasis remainsonsimple,cheap,andlow-qualitymaterials. the maintypesofpackagingmaterialsandcontainers.Notmuchinnova from Indiaand,apparently,onlythreeofthese P number oftheorganiza A par form orother.SomeindustrieshavealsoreceivedIS The growthofpackagingenterprisesislimitedbylowdemandinthedomes from Indiaand pressure sensi canisters, asep others. is truepar for exportcanrarelybemetbythelocalindustry,mostqualitypackagingmaterialhavetoimported.This a fewnewformsofpackaging.Sincethedemandforqualitypackagingmaterialsbothdomes system theyhadadoptedearlier. indicate thatmanyofthecer boxes andpolyethylenebags.Thecu The numberofpackaging and bene of scaleinproduc These industrieshaveli Standards exis Some ofthepackagingmaterialstypicallyusedfordi packaging industry. on qualityinordertosupplyatlowprices.Theabsenceof standardsisalsoa IT Sapkota, Qualityinthe rominent s of2006,therewereapproximately17di C ti ti cularly fororthodoxtea. : 1999:The ng Nepalstandards arelistedinTable7.8.Noneofthepackaging N T I S 180 K P P fi . P ts ofpackagingispartlyresponsiblefortheslowgrowthindustry. ackaging materialslikemetalcans,mul ti C cularly forfoodindustries,suchasinstantnoodles,tea,co ., 2006:‘ erformances ofthe

C 2010 er G Bs wereI P ti lobalised ti ackaging Industryin Nepal, c, paper, cardboard,corrugatedboard,tex ti

ve taps,reinforcementstraps,pilfer-prooforleak-proofbo ti A fi c packagingdrums,tetrapack/combbloccartons,laminatedplas NEPAL TRADE I BACKGROU ca S C ti EA on. Thelackofawarenessamongboththepublicanddecision-makers astotheimportance er ti on Mark. ti

N countries. R ti fi ti CL ons arebelievedtohaveappliedandreceivedmanagementsystemcer ca egime” on volumehasde ti , I ti on StatusinNepal“apaperFourth tt ons receivingthecer le buttoimportcertainfood-gradepackaging materiallikeB C fi N rms hasgrown,nevertheless,toproduce simplecardboard/corrugatedcardboard S, C D onven UR R NT ti EPOR

S, fi EGRA cate recipientshavenotrenewedandabandonedthemanagement ti on D E NV, T xport T tt R hroat compe TI esource Materials O fi P N nitely increased.Inaddi U ackaging NoteNo.45, March1999 S V, BSI,S P T RA ackaging Sector ff ti erent cer erent T

C EGY 2010 fi cates ofdi Bs havecontacto G ti ti

P layer papersacks,teachests,metalbarrels,aluminium S ti ti ublished byNepal on thathasresultedledtoatendencycompromise ll astradi R LR O egional Quality ff erentexportproductsarelistedinTable7.7andthe 22000FoodSafetyManagementSystemcer Q ti A ti

le, jute,metalcontainers,andglasscontainersare fi , ca ti

ff R fi erent systems,neworrenewals.Someexperts ca IN ti on bodies( ti onal todayasitwasadecadeago. A ti on andcer , and ti ti C on, upgradingofsomecompanieswithnew onally recognizedNepalese AO ffi onven ces in Nepal. TS ff ee, honey,biscuits,andconfec K A fi ti VQ rms sofarhaveappliedfortheNepal lumni Society, on 2006”Improving ti on canbeseeninthesector.The A tt C le capsalsoaremostlyimported . Mostofthese ti ti ff Bs) issuingsystemcer c market,henceloweconomies

ec fi ers,itisdi ti ng thegrowthofadomes K athmandu Nepal,July2006 ti c C fi ompe lm andpaperrolls, ffi OPP culttohaveexact C Bs areopera ti ti

,

ti fi veness through C ca PP Bs opera , ti ti on inone 17 c useand ti PE

Flexible fi ti cates.

ti Ts, and fi onery. cates, ti on of ti ti ng. ng ti c 16

ve N T I S ti 2010 181 T EPOR R EGY 2010 D T N al oils imported from India, RA ti T S c products c player paper sacks, styrofoam ti ti N O TI BACKGROU EGRA NT c pun nets, mul ti lling/cushion materials in some cases and tin tapes are lling/cushion materials fi NEPAL TRADE I Table 7.7 ects the quality of domes ff lms, transport packs for fruits and vegetables, pressure-sensi fi c packaging materials. However, no standards for such packaging c packaging materials. However, ti c ti exible pouches/plas fl lled in aluminium containers (25 kg capacity), tightly sealed and wrapped in lled in aluminium materials of BOPP exible packaging wrapped in wax paper and aluminium foil and packed in tea chest wrapped in wax paper and valve- foil lined, 4 or 5 ply Kraft paper sacks mainly of the multi-wall inner aluminium to 25 kg) mouthed type and pallet able (average weight of 20 industry is still in its polyethylene/polypropylene (PE/PP) bags. The tea-bagging machinery nascent stage with hardly any packers having modern or edible grade PET bottles of unit package of honey is done either in glass bottles different sizes 300 kg) kept inside metal drums export bulk pack in food grade plastic barrels (capacity fi in galvanized iron drums, as polyethylene bags to avoid leakages and then put shipping container fl then put in wooden or tin boxes. wrapped in handmade papers/polyethylene bags and Cotton/foams are used as used for sealing the wooden or tin boxes and plastic materials required are mostly corrugated paper boxes wrappers for unit items ng packaging material quality and strength ti Packaging Materials Used for Export Products from Nepal Packaging Materials ons for packaging among small users N countries ti EA S A es for tes ti Product Packaging Materials onal and/or company standards on relevant packaging products and sizes ti anka, and L Tea Tea Orthodox (Leaf Tea)/Green Top Grade Leaf Tea Medium and Small Leaf TeaCTC Tea paper sacks of valve mouthed type LentilHoney Essential Oil Fresh GingerInstant Noodles/Pasta sacks jute bags of 80 to 100 kg, palletable multilayer Kraft paper Silver Jewelry Pashmina and Woollen Products gunny bags isposal of used packaging materials a problem ack of standards to guide manufacturers a ack of standards to guide manufacturers ack of na ack of facili ack of standards to enforce transport packaging imited range of op Sri L L L L L D boxes, aluminium-coated plas tapes/reinforcement traps, asep types. Increasing use of laminated Inconsistent supply of quality materials for conversion into packaging No access to advanced technology items and essen Most of the packaging materials used for export of food Issues and Problems in the Packaging Sector Issues and Problems in the Packaging C 7.13 The keyissueswithrespecttotheTBTrequirementsareasfollows: summarized inTable7.9. by producersandexportersinthecourseof The exporttrendofS hapter 2hasiden 1. Insu 2. Wide consulta . NoneoftheNepalstandardshavebeen no 4. 3.

Handicra NTF N T I S 182 noodles, A to ensureTBTcommitments are met; silver jewelry,fabricatedmetal export productsorpoten regula Mark) sector, hasbeenaskingforna standards toexportsisminimal.Thereaneedfocus onstandardsformula O NBSM/ technical regula A griculture products: ccredita nly afewproductsofexportinteresthavena P er P

ffi 2010 cientsupportfromtheNBSMduetodelaysinamendmentofNepalStandards( Width, HeatSealingStrength, Note: *WhereverrelevantandcoveringimportantparameterssuchasThickness, P s: Herbsandaroma lies, ti A ons associatedwiththese D ti ct, thepromulga nent Issuesand FTQ NEPAL TRADE I BACKGROU ft D ti s andSmallMedium-sized on Board; esign ofBoxes. Tin-coatedcontainersofdifferentcapacity • • Corrugated • Jute bags • Aluminium caps HDPEwovenbags • • PE bags Plasticcontainersupto5litrecapacity • • Tea Chests • PE Containers • Paper boards • LDPE • HDPE ti

C Packaging containers Packaging material/containers fi ed 19exportpoten . Theydonotappearinthedra P ti on processseemsmissing,par S-sensi urn eaeeSadrsNeedforNewStandards* Current NepaleseStandards ti ons ofTBTconcern havebeenintroducedbygovernmentagenciesother thanthe N D fi ti R bre boardboxes NT C ve agricultural productsisexaminedmorecarefullyin EPOR ardamom, ginger,honey,len ti EGRA ti c plantsandtheiressen on ofanew G T rammage, Burs ti TI Existing NepalStandardsforPackaging onal gradestandardsforlargecardamom; O N ti ti A als. Forinstance, al sectorsforprioritya S C cts; T RA oncerns for A T ti EGY 2010 ng Strength, ct onNa fi eldwork associatedwiththeprepara ti E

fi nterprises (SM Table 7.8 ed totheWT ft ti WT cularly inthecaseofdra ti onalstandards.Whentheydo,therelevanceof ti ti al oils,handmadepaperandproducts onal C O ompression Strength,Ven no LCEA MultilayerKraftpapersacks • Wovenplasticbags • • EPS trays Wovennetbags:HDPE/PA • Plasticpunnets-PET • • Pillow pouches-PP/LDPE • Plastic bottles • Corrugated Reinforcementstraps:BOPP/PVC • Pressuresensitivetaps:PP • • Flexible packaging ti ls, tea(greenandblack),uncookedpasta/ ti A

Packaging containers Packaging materials E fi ccredita tt ca O en N, theassocia xport E , asrequiredundertheTBTregime. Many ) products: ti ons. TheMo ti on. Theseinclude: ti fi bre boardboxes:telescopic on Boardandtheissuanceofnew D P imensions, BondStrength,Seal oten fi ti lm-laminated la P ti on forthelargecardamom ashmina, woollenproducts, ti on Holes,Numberof C ft

S needstotakemeasures ti A C al ct forthenewNa ti hapter 8.Issuesraised on ofthischapter are ti P on forsigni roducts C er ti

fi ca ti fi onal cant ti on al ve ti N T I S ti uideline ons may ons G ti 2010 183 O tu ti ve in issuing ti T EPOR R EGY 2010 D T ng precious metal jewelry N ti RA T S N O TI BACKGROU ons; ti in the past, especially those that are in specialized government agencies. ff , and other government ins ff for management system on programme EGRA scheme to comply with IS on ti C ti NT me and the reliability of test results from me and the reliability ca ca ti fi on bodies; bodies; on fi FTQ

ti

ti ti D ng laboratory for tes ca ti fi

ti approaches may be essen ng the current project services in those areas; ) basis; ti ng/visual inspec ng/visual ve tes ve ti GO ti NEPAL TRADE I PPP on bodies at government or private sector level, as well on bodies at government or private sector evisi ti cult to retain sta ffi R ca fi

fying bodies from outside Nepal have been ac fying bodies from outside ti ti onal cer ti S-Q services by the NBSM, cates to various enterprises in Nepal. There is a need for developing cates to onal principles of conformity assessment principles and have a nega onal principles of conformity assessment principles A fi ti

ti point to a strong need for quality ons of imported raw materials as well. Businessmen ti ca fi N on a public-private partnership ( ict with interna fl A on of imported materials through tes onally recognized na ti ti ca fi as a need for an agency to register and monitor cer as a need for an agency to register and interna management system cer at the FH quality speci government agencies; veri be in con impact on development of private sector or N impact on development of private sector 65 so that it can gain acceptance from other countries; 65 so that it can gain acceptance from implemented under the current projects. implemented under for gaining greater private sector involvement; for gaining greater recipients of in-service capacity-building training programmes. There is a need for introducing recipients of in-service capacity-building professional sta mechanisms to retain well-trained, dedicated 12. recent years a large number of cer In 11. for establishing a non-destruc There is a need 9. There is a growing concern about the conformity of Many raw materials are imported into Nepal. 10. The provision of some of M 8. The private sector complains about the slow response 6. though its role is important; of the TBT enquiry point is weak even The capacity 7. There is an urgent need to improve Nepal’s product cer 13. The Nepalese government has found it di 5. of the private sector in the cer There is a lack of interest Table 7.9 N T I S

184 Standards Issues for Ten Export Potentials Existence of National Commodity Technical Regulations Testing Facilities Process Certifi cation 2010 Standards Expected Role of Govt. Agency Area Faced in Importing Markets for Parameters Optional Mandatory Voluntary NEPAL TRADE I BACKGROU 1. National grading standards to facilitate standardized trade Cardamom Yes Yes No - - 2.Currently, LCEAN has adopted three grade standards

N So far export is confi ned to India, some SPS-related D Ginger Yes Yes No - - issues prevalent R NT EPOR

EGRA 1. Pesticide residues/ 1. HACCP certifi cate 1. Facilitate establishment of independent test antibiotics Pesticide residue monitoring laboratory for pesticide residue testing T Honey Yes Yes 2. Importing party is TI plan approval required by EU 2. Organic certifi cate 2. National standards have no relevance in their trade

O taking care of testing facilitated trade N requirements S

T Importing party is taking RA 1. HACCP care of testing and the 1. Facilitate establishment of independent test T 2. Code of Conduct EGY 2010 purchase decision is laboratory for pesticide residue testing Tea Yes Yes No (CoC) made depending on 2. National standards have no relevance in their trade 3. Organic certifi cate the batch sample tests, 4. ISO 20000 mostly ‘cup tests’ 4 Standards have been prepared for adoption by 1. Ban and restriction on 8. Community forests MoFSC (for Chiraita, Asparagus, Jatamansi and Herbs/ produce under CITES and wintergreen oil Timur) for two more herbs standards are under aromatic No No 2.Restriction on trade in from Dolakha have preparation plants NTFPs without value addition received FSC Certifi cation of non-CITES products N T I S 2010 185 T EPOR R EGY 2010 D T N RA T S N O TI

BACKGROU

paper received FSC received

e e Yes Yes EGRA

Handmade Handmade Handmade paper paper Handmade

NT

dence fi con

stated purposes stated

wool required for self- for required wool carpet

bre diameter and softness of wool for for wool of softness and diameter bre fi the examine

quality of raw material material raw of quality other than than other

Nepalese product or establish one testing facility to to facility testing one establish or product Nepalese No No Azo dye-free dye-free Azo No No

Conformity test of the the of test Conformity products products

importing raw material wool, if Nepal wants to promote promote to wants Nepal if wool, material raw importing

26 micron 26 Woollen Woollen

cate requirement while while requirement cate fi certi quality introduce To Wool diameter of around around of diameter Wool

NEPAL TRADE I

under PPP sought PPP under

dence fi con 2. Raw material standard requested and test facilities facilities test and requested standard material Raw 2.

wool required for self- for required wool with its own brand identity identity brand own its with

quality of raw material material raw of quality

collective trademark promotion of Nepal Pashmina, Pashmina, Nepal of promotion trademark collective

No No No Pashmina

Conformity test of the the of test Conformity associations concerned as they are planning for for planning are they as concerned associations

nished products) sought by the the by sought products) nished fi or (raw bre fi wool below 16.5 micron 16.5 below

at FHAN or independently for qualitative testing of of testing qualitative for independently or FHAN at Test for fur diameter diameter fur for Test

1.Government’s support to establish a testing facility facility testing a establish to support 1.Government’s

way is sought on PPP basis basis PPP on sought is way

nished products in a non-destructive non-destructive a in products nished fi the in cadmium jewelry required by EU EU by required nickel, etc nickel,

No No No No

at FHAN for qualitative and quantitative testing of of testing quantitative and qualitative for FHAN at Silver Silver Cadmium-free silver jewelry jewelry silver Cadmium-free Content of cadmium, cadmium, of Content

Government’s support to establish a testing facility facility testing a establish to support Government’s

determination determination

3. Essential oil content content oil Essential 3.

cations on residual oil content oil residual on cations fi speci MoFSC DPR/ 2. cation fi certi 2.Organic

batch sample tests, tests, sample batch

oil extraction extraction oil facilitated export facilitated Oils

made depending on the the on depending made No No No for non-CITES items only only items non-CITES for No No No

some of the herbs and aromatic plants after essential essential after plants aromatic and herbs the of some cation (FSC) (FSC) cation fi certi Essential Essential

2. Purchase decision is is decision Purchase 2.

1. Range setting for residual essential oil content in in content oil essential residual for setting Range 1. 1. Forest stewardship stewardship Forest 1.

taking care of testing testing of care taking

1.Importing party is is party 1.Importing

adtr Voluntary Mandatory

Area Faced in Importing Markets Importing in Faced for Parameters for Optional

Expected Role of Govt. Agency Agency Govt. of Role Expected

Standards Commodity Commodity Technical Regulations Technical Testing Facilities Testing Process Certi Process cation fi Existence of National National of Existence ti assessment inglobaltrade. Nepalese industrydoesnotfullyunderstandtheroleofproductstandards,technicalregula is desirable. standard se There isaneedtodevelopcoordina government agenciesandtheiraimtobecomecer P 7.14 carefully possiblecon Nepal hasyettoful and theprivatesectorshouldalsobegivensomeopportuni dra cer The stakeholdersinvolvedintheinterna E assessment servicesinNepaleseproductsofexportinterest. accelerate accredita standards fortheproductsofexportinteresthasbeenstressed.Furthere Some gapsincurrenttechnicalassistanceprogrammes/projectshavebeeniden na their accredita involved ininterna There isaneedtolookintotheestablishmentofsector-speci dedicated sta The currente the mean recognized cer mes faceborderrejec stablishment ofapackagingmaterialtes riority ti ti onal enquirypointfortheTBT.The ft fying bodiestocatertheneeds of thetradingcommuni ing laws,increa N T I S 186 A P c ti me, theprivatesectorshouldalsobegivensomeopportuni ti riority

ons proposedundertheNITS2009aresummarizedin 2010 tti ng andintheimplementa ff ff orts tocreatetheNBSMand , tothisnewfacility. ti ti on process. fying bodiestocatertheneedsoftradingcommuni NEPAL TRADE I BACKGROU ti fi onal trade,aswellextendingsometechnicalsupporttoprivatesectorlaboratoriesfor l itsWT ti ti on ofafewmajorlaboratoriesfortestparameterssothattheycanprovideconformity ng ins A fl icts ofinterestbetweentheregulatoryfunc ti c ons. Thecurrente ti N ons and E D O ti tu xports fromNepalfacestrictimportrequirementsinexportmarketsandmanya commitmentsintheareaofTBTs.Thecountryislaggingbehindupda R NT EPOR ti EGRA ons, andinmakinglawsins T TI O ti ti ti on mechanismsamongvariousgovernmentagenciesinvolvedin N on oftechnicalregula onal tradeneedamore e C S ti ng laboratoryshouldalsobeconsidered. G T onclusions ff D RA oN needstocommitgreaterresources,includingtrainedand orts tocreatena FTQ T EGY 2010 C ti asna

fi ca ti on bodies. ti onal cer ti es toestablishafewinterna ti ti ti onal cer es. ons. fi c ti tu ff ti ec

PPP fi ca ti ons opera A ti ti ve, transparent,useful, andspecialized A ons oftheNBSM, testlaboratoriestoservethesectors ti separateTBTcoordina on bodieshave beenencouraging.In ti c ti

es toestablishafewinterna ti fi on Matrix. ca ti es. Thereisalsoaneedtoreview ti on bodyhavetobesteppedup ff orts arealsotobemade ti onal. ti

fi ed.Theneedforna ti onsandconformity ti D onally recognized FTQ ti on commi C , andother ti ng and ti onally ti onal tt ee fy N T I S ti espite % India 2010 D 187 hytosanitary S compliance P P T on market for these ti EPOR R na hapter 2; and, India total ti EGY 2010 D C T N RA T cant amount of informal trade S fi ed in ed ons: mong those, cardamom, ginger, fi ti N

A ti India) World O hapter 8 hapter (excluding TI BACKGROU C % EGRA India NT ve Exports ve S issues that may have led to market entry S issues that may have led to market ti P nue to dominate as a des ti to assist and cer ve framework in Nepal intended ti hytosanitary Standards hytosanitary NEPAL TRADE I P F.Y 2007/08 F. Y. 2008/9 India total Table 8.1 ons. ti ve exports and S ti al markets; al ti India) World export market by value. ve exports, India is Nepal’s primary ti (excluding for the priority sectors iden c issues 2007/08 and 2008/09 (in US$1,000) fi S-sensi P S$ 0.01391 S$ 0.01501 S-sensi xports U U P TOTALS 16,699 43,149 59,849 72 142,504 142,504 142,504 100 Sanitary and Sanitary E data le nature of some of the data suggests that the quality of Nepalese trade ng structures and legisla System 121190 2,230 2,479 4,709 53 8,070 2,477 10,548 23 ti ti (HS) code Harmonized upee - upee - R R ve ti on ti ed a number of priority export sectors for support. ed a fi Exports of Sanitary and Phytosanitary (SPS)-sensitive Foods from Nepal,

ti ve exports, exports, ve ti es for such goods in poten ti S-sensi Medicinal Plants / Essential oils pasta are subject to the S ls, tea (green and black), and, to a limited extent, uncooked P ti cul S-sensi ng countries. countries. ng ffi ti P c growth in exports to other markets, India will con S di ti 12 Cardamom3 Ginger4 Honey5 090830 Lentils6 Green Tea7 866 091010 Black Tea8 040900 Uncooked pasta 15,532 090210 071340 5 16,398 190219 2.5 090230 95 4,725 222 810 7,998 19,663 648 0 458 4,663 24,389 815 0 18,230 12,662 0 81 2.5 99 18,689 222 37 77,189 0 648 98 1.3 2,005 0 1,551 0 20 5,610 9,613 78,741 284 11,619 5,612 2 685 13 68 83 100 16,221 33 16,907 353 96 41 19 Number Groups xchange rates 2008/09 Nepali xchange rates 2007/08 Nepali S) compliance services for exporters. The chapter is organized in four sec for exporters. The chapter is organized S) compliance services E E (4) future ac conclusions and recommended (3) an analysis of commodity-speci (2) a review of the suppor (1) of Nepalese S a brief review P hapter 2 has iden agro-food products. The vola of the border with India allows a signi is imperfect at best. The porous nature is not captured. between the two countries, which simply drama Table 8.1 shows exports for those sectors for the last two years. The data in the table is highly aggregated by Table 8.1 shows exports for those sectors country, but it is clear that, for S 8.1 Introduc 8.2 S (SPS)sensi Nepal’s Sanitary and Phytosanitary C honey, len of impor This chapter reviews Nepal’s progress towards establishing an infrastructure of Sanitary and Nepal’s progress towards establishing This chapter reviews (S Table 8.1,oraround Bank toequateaneconomiclossequivalentathirdof theapproximatevalueofexportslostdescribedin appear tohavelargelyexitedfromtradewith the groupofpoten of is thedominanttradingpartnerandtherecompara the followingresultsarereturnedforyear2007/08(Table8.2): 1 A by Nepaleseexporters.ThosemayalsoexplainNepal’sinability topar trading partners,suchasIndia.Whilethosearefactors, they cannotaccountforalldi Nepalese o These incidentsaresu exceeds that havehadasizeableimpactonformaltrade(theapproximatevalueoflostexportsdescribedinTable8.3 Table 8.3showsthat,inrecentyears,therehavebeenseveralS Economic ImpactofSPSandFoodQualityStandardsonNepal’sExports A A L may wellbethecasewithtea,forexample.Thatbeingsaid,allsectors,excep It isnotclearwhatamountofre-exportsNepaleseexportsbyIndianimportersmaybetakingplace.This not speci has otherstructuralimpedimentstotrade—suchastradefacilita trade pa value ofexportsduringthe2007/09period. This sec ooking atallexportsectorsthatareS merican markets(Table8.2). sian marketsintermsof s seeninTable8.2,despitethefactthat the WorldBankreportwereindependently veri K orea, andJapan.Thereasonsforthiscouldbepar N T I S 188 ti on isderivedinpartfrom tt U fi ernsarea c toS S$24 million).Thecalculatednega 2010 ffi cials tendtoblameabrupt changesinthepolicies,regula P NEPAL TRADE I BACKGROU S-sensi * vrg 1.3 1.1 1.8 1.0 Average Relatively insensitive Fairly sensitive Highly sensitive ti Pattern ofTradeNepaleseExportstoMainRegionstheWorldin2007/08* al agro-foodexportsiden A tool todeterminetheeconomiccaseforS well asthedi ff n IndexofS U ected byS ffi ciently frequenttopointalackofcapacitywithintheNepalese S S$l0 millionoverthe ti SPS-sensitivity vity. GDP N D A nnex 11:Safeguard P ffi R NT culty ofcompliancehasbeencompiledbytheauthorandisusedasapreliminary , theyarecurrentlyinsigni S-sensi EPOR EGRA P S compliancebeforelookingathowtheseconstraintsmaybeaddressed. ti T vity basedonthevariousS TI fi P ed and/orupdated. O S-sensi N S T fi P ve-year periodused. RA European Union/ olicy IssuesofWorldBankSource ti A ti ti

ve e ve tovaryingdegreesandaggrega fi n analysisisnecessarytodeterminehowmuchNepal’sexport A T EU ed in EGY 2010 merica and Europe / E ff Table 8.2 P ects fromallthebanshavebeenassumedbyWorld uropean and S interven C ti ti hapter 2issimilar,andifso,indicatesthatNepalwould vely li ally S fi P cant intermsofNepaleseexports.Thesitua S subcategories(I ti E ons. P tt urope. le inthewayofexportsto S related,butitisimportanttonotethatNepal P North andSouth S-related tradeincidentsforNepaleseexports ti A on, costoftransport,andothers--thatare America merican marketsareeachlargerthanthe . 97.4 96.0 98.4 97.8 1.2 2.1 0.5 1.1 E ven withinthe R PPC ti ti eport 48346.However,manyoftheasser ons, andenforcementlevelofmajor cipate inthelucra , O I E , CODE ti ng greentea,showincreased ti ng thedatabytradingbloc, X, andT Asia A sian tradingblocIndia ffi cul P PC S supportstructure. C ) as ti hina, the ve ti es encountered E uropean and 1 R ti epublic on for ti ons in N T I S onal fying ti

ti E I 2010 O 189 and jointly AO refers to the onal standards in ti PPC T 7.2 million exports lost on between the DR ti EPOR focal point Biodiversity Ministry of R Biosafety and Biosafety and Approximate value of Conservation NRs 76 million (approximately NRs 9.4 million for eight years) NRs 100 million EGY 2010 D Forests and Soil ng trade standards in animals T tti N RA T S$9.29 million equivalent) to ommission hosted by F S U C N S enquiry points and in no O P 2 TI is the commonly used acronym for the World BACKGROU E I on contact point on the Interna on ti O EGRA limentarius 6.3 million ( A NT DR X T) May 05,2009. ng up its S tti PAC IPPC CODE (DoA) Agriculture Disruption occurred in 2004 NRs 1.6 billion Banned since 2002/03, though partially circumvented by one producer/exporter For approximately one year in 2003/04 ons, border crossings, and so on. Websites have Contact Point ti Department of S website for Nepal is slightly out of date and needs S website for Nepal is slightly out of date ome headquarters and is responsible for interna greement that is responsible for se P R A S Table 8.3 P NEPAL TRADE I S at its O Figure 8.1 on and Trade ( ti AO on, regula on, ti cular to residues in meat and some meat-borne zoonoses. The I ti requirements in se OIE O (DLS) ommercializa oints in Nepal Services C Ministry of Contact point roject appraisal document on a proposed credit in the amount of S roject appraisal document on a proposed credit in the P Cooperatives P Agriculture and

Structure of SPS Enquiry Points in Nepal P Department of Livestock Department of Livestock ) website. The main S ost-mortem animal products are a grey area and there is some collabora P griculture X is the commonly used acronym for the on, which is hosted by F PPC ti A aris-based body under the WT P CODE nquiry X sets minimum standards for foods and food safety. The S enquiry points, and addresses/contact details for these were more or less up to S enquiry points, and addresses/contact onven on (I on Selected Recent SPS-related Bans on Agricultural Exports from Nepal* Bans on Agricultural Exports from Selected Recent SPS-related P E ti C roject for India banned imports from Nepal due to plant India banned imports from due to trade policy quarantine issues and later EU and Norway banned imports from Nepal due to lack of monitoring programmes for pesticides and other residues India banned imports from Nepal due to quality tests and fumigation requirements CODE S on of the details for the Nepalese plant protec on P on eport No: 48346-N ti ti . R P O WTO - SPS, Biosafety and Biodiversity Inquiry / Contact / Focal Points in Nepal - January 2010 WTO - SPS, Biosafety and Biodiversity Inquiry / Contact onven CODEX structures of relevant legisla WTO/ SPS rotec S C O Contact Point Contact Point P nimal Health, a Control (DFTQC) S$10.71 million equivalent) and a proposed grant in the amount of S S$10.71 million equivalent) and a proposed grant in O A Department of Food Product Type of ban Period Ginger Honey Lentils U on Technology and Quality and WH Nepal for a ( * Source; lant ti P ects plant health. AO ff X on standards in fresh meat products, in par on for on ti onal ti rotec ng. P ti CODE rganiza cronyms refer to the following: trade that a A Interna and O run by the F and to some extent in animal products. lant

2 8.3 WT Nepal has largely complied with the WT the relevant WT been set up for all the S date, with the excep P revisi of theacronymsandfunc The planthealth(I O jointly bytheFoodand enquiry pointsaremaintainedbythe (Mo main lobbyingorganiza Nepalese departments respec been formedheadedbytheSecretary,Mo informa the 4 3 The WTO SPSEnquiryPoint:DFTQC,LegalStatusandOrganiza Nepal’s generalandspecialistS General literature. Thereareinterac training sessions,andotherlargermee headquarters buildingisinadequateforthepurposeandnewonewillhavefacili The S the headquartersbuilding.Newlaboratoryandheado a na Physikalisch-Technische Bundesanstalt EU from theJapanInterna discussion andconsulta and awiderangeofsuppor these arenotfunc Mo established theNa of thesemee In addi funding underthisprogrammeislimited. mee

Indica P A h np/ rganisa rogramme Steering tt nonymous (2009), andimplementa p://www.spsenquiry.gov.np/ C A ) websitesdealingwithS AC ti D ti S, andtheFN onalfoodsafetypolicy,whichbecameavailableattheendof2006andprobablyneedsfurtherpublic ngs. ngs.

nimal and N T I S P ti FTQ 190 ve Timeline(20 ti ), andcoopera S enquirypointatthe on, thedepartmenthasbeengivenconsiderableassistancetoa ti on aboutS ti on Interna on C C 2010 isthedesignatedWT hambers of A s partofgeneralawareness-raisingwithinNepal,the ti ngs tointerestedpar NEPAL TRADE I BACKGROU P R lant Quaran C evisit ofIndica PPC ti ommi CC ti A onal. onal S ugust 2009). ti P ti on bythe ti I. Thereareplanstosetup17subcommi S ma vely dealingwithfoodtechnology( onal pourles ) contactpointismaintainedbythe ti P tt ves ( ves ti ee Mee C ti S issues. on behalfofbusiness. ti on. TheWH onal ommerce andIndustry(FN . Thissitehaslinkstoboththeplant( ti A tt P ons ofthecorrespondingWT N ers ingeneral.ThishaslinkstotheotherspecializedS griculture S D D ti ti ve TimelinebyNBSM/ C ti ti ng ac ng ti R NT epartment of ne o ons withWH ng, 30July2009( D ommi C EPOR U FTQ oopera EGRA P O nited Na S enquirypointsaremaintainedwithintheMo S ffi ti ces withintheMo C T ti E tt vi es sothattheycana P O TI ispartofacomplexthatincludesfoodtes ee withrepresenta pizoo O S enquirypointforNepal. F O ti ti D rganiza es areunderwayatthe on ti ( N O ngs, aswellbe FTQ P S S programmecoversthefoodsafetydimensionofpublichealth,but ti TB, thena ons Industrial ti T A es ( es A O RA AC C mended basedonstakeholdercomments anddiscussion,20 C gency (JI FoodSafety(F oopera . D T ti , withrepresenta FTQ on (F on EGY 2010 O CODE I C E A asperdecisionoftheTechnical ) animalhealthcontactpointismaintainedbythe CC websitehasbeenlaunchedbythe ti ti AO ves, onal metrologyins h X istheinterna CA I) alsoworkwithgovernmentandfunc tt AC p://www.ppdnepal.gov.np/ ffi O ce buildingsareunderconstruc ) andtheWorldHealth ). Theupgradeoflaboratoryequipment,training, ti D organiza D on from arangeofmembers,includingtheMoH . TheprivatesectormembersoftheFedera tt o D end them,iftheysodesire.The evelopment tt D er libraryfacili A o O FTQ . ThisisshowninFigure8.1. C S) programmethatsupportedthedra ). ThegeneralS tt ti ees fordi D C A on fromMo ), animalhealth( ti FTQ n S ons isgivenintheendnotetoFigure8.1. D FTQ ti P onal foodstandards-se C S centralcoordina O andtheNBSMwithfundingby tt C end regionalandinterna rganiza ti hasbeencircula tt of tute ti C ff es for es erent commodi erent ommi ) andanimalhealth( C S, MoFS P ti tt on ( ee Mee ti ti S and P AC O ng laboratoriesaswell ti on es forholdingworkshops, S enquirypoints. CODE G rganiza . TheMinistryhasfour D ermany). U o D NI ti L ng –Submi C CODE FTQ S), cropproduc X andotherrelated ti ti , MoH on withassistance DO on commi A A ti ugust 2009) ti on (WH on briefexplana h ng theschedule C ti tt ), es, but,asyet, D p://www.dls.gov. todisseminate 4 X tti Thecurrent FTQ U ng body run body ng P A N tt , aswell ed to limentarius E ti C on asthe ti S onal S 3 alsohas O CAP A

tt ft ee has nnex II.- ). The ti ing of ing on of D and o ti ti on on L P P S. S ,

6 S X ct ). P AC es on on on A ti ti ti ti

N T I S is on ti ca CODE es and and es ACCP fi ti

ti iven that

2010 G 191 es that are es that are ti

ti es do exist, for oints (H er informa led water have Food ng the S enquiry point ti tt tt ti ve process. ve es with support

P T P ti ti ti onally acceptable ti vi ti on between between on T project has an S ces, proper document ti ti More er of concern. EPOR tt R ng in place the necessary ontrol tti nc PAC X ac ti EGY 2010 C D fying en fying T N ti ng country authori ti RA intends to set up guidelines/ on cal T to access be ng Nepalese standards. The CODE ti ti C ti C S ri N C nder this scheme, imported food assistance from en with technical O FTQ ve. The intent is that cer ed for the legisla tt U c regulatory environment in Nepal FTQ ti tt TI ti onal D ti D BACKGROU as well as interna ec 5 ces, good hygiene prac ff ti s) EGRA oN-approved commercial en NT by factory/premises inspec on followed PRP G through improving of laboratory facili es ti ti nalysis and onal standards in the foreseeable future. In A ti vi ti . However, given the limited resources, it is not . However, given the ves related to food safety. These include: ti of the Mo ons reside within other departments C ti T will also provide technical assistance to industries a ct has been rewri ti es. This has blurred the dis ti A onal standards for iodized salt and bo FTQ PAC ti D on is the apex of a process that involves se S func NEPAL TRADE I ti rogrammes ( P P ons and legal status overlap with the S ons and legal status overlap with ca ti fi

ti ng infrastructure. ti on will not be the domes c issue is that regionally-based cer ces, good manufacturing prac ti fi ti cer ng in regional and interna ti ca accession has enabled the fi nuous improvement. ti

ng to ensure compliance with exis O ti equisite is the governmental agency charged with implemen is the governmental agency charged with ACCP ti onally accredited and cost-e speci ces, and facili ti R C ffi cipa A ti ed. ng country. Na ated a series of ini re ti tt ti FTQ P oints. H D P on will be carried out by the on will be on 2027 (1970). This ll under review and has yet to be submi ti involves an applica on process ti ti ti that onal dimension is onally. onally. ca ti ti fi ontrol

exporters and importers of food products. The scheme is voluntary on scheme for ti C ons, including those for Hazard ti egula ti X contact point’s func R cal has been par The ons. technical assistance and capacity-building measures to meet food safety es as well as ti ca ed and gaze ti n addi ti fi C ft ri

A C onal strengthening inputs described above, the World Bank ti ti ng is being developed to meet interna ons in some areas within the ons in some areas within ti ti CODE to ensure that basic food handling rules are used and applied. The current inten to ensure that basic food handling rules ng the scheme. WT FTQ ti C tu ti D X free of charge. Nepal as one way on (see the following point) may be extended to all food manufacturers in FTQ S func rogrammes include good agricultural prac ti N agencies and has ini nalysis and P D P that the main driver for cer U A on capabili on market-driven is to require full traceability by all enterprises at some point. It may be that on on of a registra C CODE ti ti ca ti fi

a ti ti ca fi FTQ

ti already been dra but the end user and/or impor will be compulsory for all food exporters at some point in the future. However, it is recognized by the will be compulsory for all food exporters at some point in the future. However, D for exporters but compulsory for importers. So far, no locally-based exporters have registered under for exporters but compulsory for importers. the scheme. The registra example in India, that are interna inten cer of implemen from standards for the necessary also recognized interna by the to phase in this process as a legal (i.e. compulsory) requirement. to phase in this process as a legal (i.e. products undergo compulsory tes food safety cer The intent is that cer : Hazard of public health in Nepal related to water and food-borne illnesses is poor. cally, the level rerequisite fi on to the ins P ti s (see previous endnote) as well as a culture of con in 2004, but the new act is s ACCP 2. the In terms of future compliance with the food safety standards, 1. Ini management, traceability systems, and any necessary suppor PRP apacity for food tes AO The H and cer and quality standards. component focusing on food quality and safety enhancing ac C addi from various private sector importers. is a ma The general environment under which Nepalese food manufacturers operate speci 5 6 CODEX Contact Point: DFTQC, Legal Status and Organiza Point: DFTQC, Legal Status CODEX Contact To some extent the and general S 2023 (1966) and the Food F Nevertheless, the to help them meet hygiene requirements so as to more easily comply with impor described above, including personnel, o described above, including necessarily an issue. The fact that other specialist S necessarily an issue. may rebalance any distor pest status,distribu includes mostfunc A R 7 approved in1974underthe Ministers; soatpresentplantprotec A in itspredecessorbyaligningNepal’slegisla form ofanew of the Nepal becameamemberoftheI (DoA/PPD), LegalStatus,andOrganiza IPPC ContactPoint:DepartmentofAgriculture,PlantProtec clear hindrancetoexporters. (notably accesstocleanwaterandproperwastedisposal),thepoorpublichealthenvironmentwillactasa environment inaddi a crucialpartofthe that the a and otherdirectlyconcerneden condi are basicpestiden completed 28pestlistsforspeci one atTribhuvanInterna The food andwater-bornediseases(thismaybethecase,butdataisnottohand). water, propertreatmentofwastewaterandmonitoringprogressthroughthena Support forspeci taxonomic backstopping. out bythe In this respect,India,themaincustomer,hasnoproblemwithuseofmethylbromide despitetheMontreal esponsibility forapplyingthe deple speci greement. However,thenecessaryregula P . Bananasandcitrus: 5. Woodproducts,includingpackagingand curios:Heattreatmentorfumiga 4. 3. . Freshginger:Tryingtogetmarketaccessinto 1. 2. lant PPD ti

ti N T I S 192 ng chemicals.Somemarketsthataremoresensi ons forimportedplants. A fi the C P country; there arenophytosanitaryproblemsforfreshgingerexports toIndiaorfordriedproductseither c andemergingissueisthatoffruit P sia ulses: ardamom/medicinal herbs/tea: PPD operatesat15borderposts,includingthreecrossingsinto rotec PPD

A 2010 P gricultural iss aci P ti R on toascertainwhattheissuesareandseeifthesecanbemi fi lant unning fumiga NEPAL TRADE I BACKGROU c ti ll opera fi c commodi P ti ti A ons requiredofanI

lant ti P fi ct in1972.TheoriginalacthasbeenrevisedwithtechnicalassistancefromF ti on, surveillance,andtaxonomicservices. ca rotec on tothegeneralenvironmentofafoodhandlingen PRP R ti P on facili esearch Services ti rotec ti necessarytogainH ng underthe1974 onal N ti on C D urrently, thesefruitcannotbeexportedtoIndiaanda P ti R NT lant A A es includes: ti ti A on facili EPOR on basicrequirementinthisareawouldbetheimplementa ct lieswiththe A EGRA ct, whichwasenactedin2007.Thenewacthascorrectedseveralde fi PPC ti c commodi irport. Itmaintainsthepestlist/phytosanitarydatabaseforNepalandhas ti es atthebordercrossings,buttaxonomicbackstoppingisprimarilycarried

P ti C es ofexis rotec T ti onSeptember13,2007.However,beforethisdateNepalwasamember ommission. WhilenotamemberoftheI TI on inNepalisenforcedundertheprevious O PPC ti N es usingmethylbromide ti C on S D urrently, nophytosanitaryissues fl member,but,crucially,duetoatechnicalissuerela T irectorate withinthe ti ti ies forwhichthe ve inthisregardrequiretheuseoffumiga RA ons underthenewacthaveyettobeapprovedby ti ti P A es, includingseveninrespectofimportedcommodi ve frameworkmorecorrectly withtheI P ti lant ng cleanwaterstandardsthroughproperprovisionof T ct of1972. ACCP lant EGY 2010 P P rotec accredita rotec C ti on hina throughthecompila ti ti on on PPD R D ti on relatestoworkerhealthandtheirhome egula irectorate ( D istryingtodevelopcapacityfordetermining 7 o A ti . Thereisnoprovisionforinterna ons, its C hina, elevencrossingsintoIndiaand ti gated PPD ti ty anditsrawmaterialsuppliers ti on byaluminumphosphideinstead. ti PPC ll doesnotfullycontrolimport ) atthe ti P on ofapestlist. atthe ti lant on tt empts areinprogressby P D rotocol inrespectofozone P ti PPC o on Directorate on rotec ti on bymunicipali A ti me, Nepalenacted . Thisresponsibility andtheWT ti onal recordingof ti on ti ng tothefact R ti es. There egula C C AO fi urrently, ouncil of ciencies inthe O ti onal ti S ons ti es P S c s). fi es ve on ti ti on. on. ti on ti N T I S ti on of on cides. cides. POP ti ti na

ti 8 M, which istribu on status P D er Nepal’s Nepal’s er 2010 ti 193 ft X maximum on in these ti on hasing out of ti P and the threats ollutants ( T CODE P Is are empowered P PPD ve. ti on and Management onduct on the EPOR ti C R S issue for Nepal’s food rganic P EGY 2010 D cide applica O ti T N ed residue limit, then the tt on of improper pes ode of ti RA C egistra in 2003-04 soon a T R ed level or registra S cant S cant tt fi AO N onal ti ct were approved in January 1993 cides in Nepal is one of the lowest O ti on is required for each formula A ersistent ti cide Is), who represent the enforcement TI ti P lan (1997-2017) also emphasizes the BACKGROU P P es P EGRA ve recognized the need for I cially egistra ti ffi NT ct regulates the import, manufacture, sales, ct regulates the import, manufacture, sales, on on on R ti A of des en at the port of entry/country lan o cides have been banned or phased out for use ft ng that incorrect pes ti ve of the permi P ti erspec ti P ules under this onven the cant number of changes in M a widely accepted alterna R C fi se of chemical pes P ) was carried out by F ) was carried out by ), Nepal’s trading partners require batch/consignment ), Nepal’s trading partners require batch/consignment U ( cide Inspectors al residues are a signi ti ti use and disposal as well as cide sales, storage, quality, egional Workshop on Interna on agency. ti R PC ti NEPAL TRADE I cide es PCE cides, such as microbial and botanical, as an alterna ti ti P ng country do not list a permi ) irrespec ti cides. es D ti griculture P o on ( on A on (T on ti L ti bservance, Bangkok, Thailand, 26-28 July 2005. cide residues – o on can be taken to prevent distribu ca O ti ti fi ee composed of members from various interest groups has also ee composed

on ( ti tt valua onal in mid-1994. The ti ti on, control and management was established that requires import on, control E ti ces of pes ti cides is much more intensive in commercial crops such as vegetables, cides is much more intensive etec ti ommi D on, use, and poten C ng country. It cannot be too strongly emphasized that ti ti apacity M). Nepal’s Tenth Five-year ct in 1991. The cides requires rigorous approval of the newer, safer, and biologically-speci ti cide Management in Nepal, C P A ti ct also manages the es A cide P on, Monitoring and ti cides within the country. It established a imit of ti ti L of agrochemicals are collected cides throughout Nepal. In theory, random samples es cide ti on on tea from mid-2005. ti P ti on. There are many reports indica

tt ersistent and hazardous chemical pes alikhe, es A P P . Since then there have been a signi . Since then there have ules became opera onal standards of an impor P system for regula . ti R O . R A A hytosanitary The cide. rst overnment has already conducted and is regularly launching training programmes to educate overnment has already conducted and is regularly launching training programmes cides to control crop pests, making I o ti fi P nce registered for sale, the product is subject to monitoring for quality. nce registered for sale, the product is ti G D O ng a project to implement the Stockholm ti onal pest control strategy. The ti X or na cides: Implementa cides: ti M. es ue to the lack of third party cer P P cides used in Nepal are imported from India. ct and the D ti on, and use of pes is responsible for general pest management as well as new programmes such as the introduc is responsible for general pest management ct to monitor pes A ti CODE A on. se of ti licences issued by the registra cates and reseller U fi PPD cides, including their registra

for pes ng of agricultural/food exports ti ti ti ivision in the benchmarking and es Based in part on; Bhakta D Nepal is execu been established. cer in agriculture and public health from mid-2001. Quinalphos, ethion, monocrotophos, and phorate have been in agriculture and public health from mid-2001. Quinalphos, ethion, monocrotophos, phased out from applica crops is widespread. and the distribu in the region. However, use of pes fruits, tea, rice, and co from dealers’ shops and any necessary ac from dealers’ shops and any necessary Most pes default limit is set at the of the agrochemical in the expor Therefore, it is important to review the regulatory environment for agrochemicals and their use in Nepal. Therefore, it is important to review the Nepal passed its The by the need for I environmentally-unfriendly pes molecules. The the personnel concerned. Where advising the farmers on safe use prac arm of the government in 75 districts to monitor pes arm of the government in 75 districts integrated pest management (I is now the na to chemical pes accession to the WT for ac and brand of pes More emphasis is now being given to organic pes 8 exports. tes P Management of Agrochemicals in Nepal: Legal Status and Organiza of Agrochemicals in Nepal: Management A it faces such that it would be appropriate to repeat this exercise so as to determine the medium-term priori so as to determine the medium-term be appropriate to repeat this exercise it faces such that it would above. accession tothe internal resources.Therehasbeennorequestfromthe (MoFS U A 10 9 Nepal signedthe Biosafety Na Nepal joinedthe Status andOrganiza World Organiza residue limits(M together withtraininginitsuseandlaboratorycer legisla 17025 standardaswelltestmethodcer aspects ofimplementa 2057 (2001)waspassedthefollowingyear.Therealsoapre-exis Nepal Veterinary In 2005,the D animal feedstu which setsguidelinesandprovisionsforstandardsenforceslocallyproducedtraded A for instance)settheirM repor A Environment Division(MoFSC/ED),LegalStatus andOrganiza approximately 26,000backyardfowl.However,non- Jhapa, inMechidistrictonthesouthernborderwithIndiaearly2009),whichwasresolvedbyculling most diseasessuchasH5N1Highly R from Japan. (musk deerparts, this missionares and address thisissue. the evalua

P Na epor E nimal Healthand ct No.7oftheyear2055(1998) n areaofconcernisthatthe o nder thisprotocolthefocalpointforBiosafetyinNepalhas beenrunbytheMoFS olymerase nvironment L ti S, whichisalsothe D onal BiosafetyFrameworkNepal,2007, L ivestock Services(shortenedtothe ti o N T I S 194 ti ng. ti C ti ng byNepaltotheWorld 10 L on, thoughthe on arethesubjectofrequests tovariousdonors. / S laggedbehindtheworldstandards. TheMoFS ED C

hain 2010 ). WithinNepal,elevenpoliciesand16 P rogramme andthe O I R ff E s. eac NEPAL TRADE I BACKGROU C carriedouta RL O artagena ti C ti C ll con ll ti I ti ger bonesandskins,rhinohorn, redsandalwood). on ( A artagena E s) areo ouncil L onal FocalPoint:MinistryofForestsandSoilConserva C in1996andhasbeenanac lthough notspeci ivestock / ED ti PCR ti O on forAnimalHealth(OIE)ContactPoint:DoLS,Legal O on oftheInterna fi I isalsoinvolvedinotherissuessuchassustainableforestry cer RL I den E ) equipmentisusedforiden E N R doesprovidethisservice.However,manyofthede ft contactpointforNepal. P G s muchlower--generallyatthe en onlythebasestandardandthatindividualcountriestradingblocs(the D ules, 2057(2000).Subsequently,theSlaughterhouseandMeatInspec rotocol. Thisincludesallthe lobal ti P on A R NT ti rotocol onBiosafetyandthe al, butitisunderstoodthatits ct 1998andtheNepalVeterinary P EPOR O EGRA erformance ofVeterinaryServices( E A A I nvironment Facility. E nimal HealthInforma n G -listed diseasesofhoneybeearenotincludedinthe P overnment T A athogenic TI ct Madeto fi O ed inanyofthelegisla N ti A S onal ti

nimal Healthand T fi ca RA A pproved: March2007. ti T ti

C P A on. Thisisbeingprovidedbythe fi ti EGY 2010 ca ve membersincethen.Immediatelyfollowing ar onven vian In P rovide Necessary ti ti ti on ofdiseasesatmolecularlevel. ally asaresultofthismission,the

fi O ca A I E cts aredeemedtobespeci ti fl on Tradein ti G ti -listed diseasesofzoono uenza (therewasanoutbreakinNagaarNagarpalika on totheInterna A on U oN forassistancefromthe cts administeredbytheS pgrading includestheprovisionofa L C D o L onven atabase (W D ivestock ti on, theseareallde fi . Therefore,Nepalmustmoveproac P ndings werethatalmostallthefunc repared bytheMoFS C ouncil ti A on Biological P rrangement[s] VS) evalua A ti E ng act,the ct 1998)waspassed,followedbythe ndangered Species( A R ti HI onal Standards ules ( D ) hasbeendiligentinrespectof fi ciencies iden ti C ti c poten R on inNepal.Theresultsof withthehelpof O egula P I fi facto E cally a cally S focalpointsasdescribed O A R with C nimal Feed ela I ti D E , on toupgradeveterinary iversity inearly2001. ti D E ons) 2000,usingits ti administeredbythe ti D nvironment ng to o ti al arenotreported.

fi o L fi ff nancial assistance O ca S isreviewingthe ected byNepal’s L C S surveillanceor rganiza ti IT

ti PCR fi on, aswell A ed inthe E O nimal Health U S) inanimals A I nited Na E ct of1976, 9 accession machine, ti on (IS ti ti D ti vely to vely on ons of ons ivision ti on, ti ons P A EU VS O ct )

ng ti sian

N T I S A onally als ti , as well ti nder this U

2010 EU 195 c standard fi onal Biosafety onal on of exis ng. ng. ti ti and oten ti A T P S U EPOR ee (Figure 8.1) as well R tt es to both intensify and ti EGY 2010 D on of a Na T ti N xport RA E ommi T has been heavily promoted, it C S

xporters, by and large, need to tti S N E P has drawn up standards for the O ve O TI ti bha BACKGROU system of curing in which cardamom

akistan, and Bangladesh and in a small tti P EGRA en, it is simply mixed into conven ft bha NT O vate crops in forest lands in 1992. There is sia have not examined large cardamom for ti ng materials, extension training in pest and ti A S-Sensi ons for large cardamom. No speci P ti er quality produce. le oil minimum 1%, total ash maximum 8% and acid insoluble ash tt ong. The enforcement of food safety laws in ti which retains the original pink colour, is becoming which retains the original pink colour, ca K X, though the IS fi , es are opening up. tti ti on, processing, and handling. The ti NEPAL TRADE I bha CODE va on. This proposal is under discussion and has yet to be on. This proposal is under discussion where the capsules are dried by direct hea where the capsules are dried by direct ti ti ’ tti ‘bha item in the market. nct ons mainly in north India, ti ti dministra curing to make be A for S c Issues

fi tti al premium price. ti rug on in India will increase soon. ne such method is the improved Bha D ti O a dis ll not ti ll the domain of small family-owned small businesses with limited forward ll the domain ti Framework policy document is the crea onal Biosafety onally. Both Sikkim and Bhutan have disease problems, which have reduced onally. Both ti ti anada, Singapore, and Hong C , ng. Improved smokefree ons, are yet to prescribe speci A ti ti S members of the S ee with membership of all current tt U on, in Bhutan, farmers lost their right to cul c research, development of improved plan ti , fi on. There is very limited support in the form of assistance in rejuvena

epartment of ti ti D UK years due to inadequate supplies on areas. The price for cardamom has been good in recent , ca ), which prescribes moisture at 12% maximum 12%, vola ommi ti l recently, but other export opportuni fi E ti C on and thus loses its poten and UAE ti ommodity-Speci

on tti ti C 11 on. In addi on and trading is s on and trading DPR ti ti ons, scien ti bha cardamom is cured in a onally, large ti 10622 1997 ( er quality and appearance. S Issues O tt P maximum 2% for capsules and seeds. oordina roduc IS arge cardamom is used in food prepara arge cardamom is an important cash crop of eastern Nepal, and there are opportuni arge cardamom is an important cash crop disease control, and in improved planta improve their performance in the areas of grading, quality assurance, further quality improvement, and improve their performance in the areas of grading, quality assurance, further market diversi or backward linkages in the supply chain. India has been the primary export market for Nepalese large or backward linkages in the supply chain. cardamom un dried P is important to note that it is s more known, though it needs to be further improved. While smoke-free more known, though it needs to be further is dried by indirect hea system, cardamom comes in direct contact with smoke, which turns the capsules to a darker browner black system, cardamom comes in direct contact techniques are available by which cardamom is processed to give colour with a smoky smell. Improved curing be Tradi no reason to believe that produc produc C as the taken further. 11 expand produc of large cardamom interna S L way in the Cardamom Introduc L 8.4 The main proposal of the Na The main proposal of countries is not strict and the hygienic quality of large cardamom has never been an issue in those countries. an issue in those countries. countries is not strict and the hygienic quality of large cardamom has never been This may be partly due to the reason that many countries in contaminants that could be introduced during cul prescribed for large cardamom has been set by product. as other developed na farmers inthoseregionsfailedtoplantvarie inadequate rainindrymonths,andabsenceofgoodagriculturalprac crop losstoNepal’sshort-termadvantage.Thesediseaseshavespreadduechangesintheecosystem, plant material.Theintroduc market-driven. Thatbeingsaid,thereisaroleforthegovernmentin,example,providingvirusindexed ginger cul or backwardlinkagesinthesupplychain.Nevertheless, there areareasoflandthatcouldbebroughtinto P ginger andtotheelitevarie remainder dried. 1994 to2003,almostallofitexportedIndia. A Introduc Ginger the largecardamomgrowingtractsofSikkimand The viraldiseases market-driven. crop. Thereisafurtherpoten cul plant material,par requires vigorousac ac high quality. trading centreforlargecardamomlocatedineasternIndia,fullyrecognizeNepal’scurrentreputa cardamom, viaagrowers/exportersexportcouncil,isrecommendedasbuyersinSiliguri,theworld’slargest be aseriouscompe but itshouldbenotedthat the mosta [ Quality managementthrough within Nepalneedstobebackedupbycontrolsoninterna the controlofplantmovementacrossinterna use ofmanagementtechniquestoreducediseasetransmission. G for exportersbecauseofhigh transportcosts. on thenew should havefullauthorityandcontroloverimportofplantmaterial--currentlynotthecaseasregula cardamom isurgentlyrequired.WhileIndiaandotherimpor The developmentof problems whichhavecausedgreatconcerninthenearbyproduc cardamom among par and traceabilitythroughcapacitybuildingintheindustry,i.e.developingaproac scheme. Theprivatesector(marketersandgrowers),withhelpfromN organic cer G roduc s notedin overnment plantprotec ti M ti vi vars, introduc P

ti N T I S s]), andtraceabilityareessen 196 es. ti on andtradingarehandledbysmallfamily-ownedbusinesseswithlimitedtonon-existent forward ti tt va ti ti 2010 bha ti rac

cipants tocon on P fi C ca lant ti D hapter 2,gingerisacropwithreasonablepoten on, which,togetherwithimprovedproduc tti eveloping newproducts,markettes ti

E NEPAL TRADE I BACKGROU ve marketsforNepalese gingerare ti on. (smokefreeorotherwise),Nepalshouldbedeeplyconcernedaboutthevirusandvector ncouragement throughnon-governmentorganiza ti P ti on of chirke cularly froma rotec C ti tor inthesemarkets.Moredistantmarketssuchasthe ti onsumers offreshgingerregardNepaleseasinferior toIndianandJamaican on thepartof GAP ti and GAP on s andpestmanagementguidelinesbasedonafullriskassessment( ti N on specialistscanhelpdeviseandimplementacer C ti D nuous improvement,includingdeveloping hina, whicha ti ti A s, includingtheuseofindexedplantmaterial,destruc es ofothercountriesbecauseitshigh on ofgradingstandardsshouldbeencouraged,butagaintheseareessen R NT furkey ct havenotbeenapproved—andanya ti EPOR GAP al todiversifyNepal’sgingerproduc EGRA ff ected countries,theintroduc s andimprovedpost-harvesttechniques(goodmanufacturingprac T poseathreattolargecardamomproduc TI ti ally thedomainofmarke O N S tt ained threequartersofthetotalworldmarketin2005,islikely to G T ti RA overnment, requiringacombina es suitabletotheiral ti onal borders. T EGY 2010 A D ti P bout 75percentofproduc ng, andimplemen arjeeling inIndiawheretheyhavecausedconsiderable akistan, Netherlands,Malaysia, the ti ti onal movementofcardamomgermplasm. on techniques,couldincreaseprospectforthis ti ng countrieshave noplanthealthissueswith ti ti A on ofvirus-freeplan al forNepal. crucialpartofthismanagementstrategyis ti ti ti onareasinSikkimandBhutan.The tude. Thethreatposedbythesediseases ons (N ti ces ( ti on intoprocessedproducts. ti tt n organiza ng empt tomanagecardamomdiseases ti GO ng qualitytes fi bre contentanddirtyappearance. GAP GAP GO s, canhelpwithqualityupgrading U ti on ofthecontrolimports s) todevelopaNepalibrandfor s, traceabilityand,ifjus s) byfarmers.Manycardamom S ti A on andareseenthroughout ti ti E

on istradedfreshwiththe maynotberealis fi xport valuesdoubledfrom ed nurseryandreplan ti on ofinfectedplants,and ti ti ons andshouldremain ve a ve ti ng materialofsuitable ti ng arealsonecessary U tti tude and culture and tude S A , andSingapore, ti ons based ti c op P PRA robably, ti on for on ti

ti ti ti fi ) for ons D ally ces ti ed, ng o A

D ng HI ti has was cide A inger inger

N T I S C ti G G Varroa oN has orward, G FTQ tf

2010 D 197 ccess to the Beekeeping on of ginger A ti , the S in the W ca T fi L

overnment o ti empts to improve Apis mellifera, AC tt xports hizome ginger from G D has set up a R E EPOR on of this crop is the on of this A ti ng and soil issues have R o ti on contributes towards on contributes Apis cerana. ons exist concerning the EGY 2010 ti D D ti T N va cate and must be free from inger RA ti fi uropean Foul Brood,

T E ti G S ve--and to overcome supposed N s provide farmer support. ti O uropean bees were imported into S reasons. Several types of movable TI GO E P BACKGROU uropean honeybee, sian honeybee, E EGRA A nd ‘evidence’ of soil even in well washed fi NT on do present some problems. equired for ti extracts (oleoresin) and es: processing ginger ti olonies of R for phytosanitary export cer C mes as produc ti ons. The lack of farmer and marketer knowledge number of N ) ons in this sector, including a A ti ti A o vars. D PC ti free from soil and are subject on from Nepal must be ti n paper these requirements are fairly straigh n paper these requirements are fairly nvironmentally, ginger cul nvironmentally, ginger O E NEPAL TRADE I able, none have been posted by the able, none have been posted on [T on fi sian honeybee. The

ti ons will generally ti ti A sian honeybee. No government regula al new opportuni ca no ti A fi and well established in Nepal. It must xed comb hives is common fi E er quality cul

I tt ti O vity--possibly four ti er C are present in Nepal. hizomes for propaga R ng capacity within the athmandu Valley in 1998. cant government interven ti fi arty K cer on must be accompanied by a phytosanitary P ti and post-harvest handling, as well as in ginger processing on, grading, packaging, rogramme for technical support and also (through another programme) provides rogramme for technical support and also (through another programme) provides ti bre content of the Bose variety in all environments. Furthermore, the bre P xed comb hives is illegal in many countries for S fi fi ne of two or three months. ti ally signi ally ti c species. c on services to producers and traders. marke requires a strongly structured sector with larger commercial processing and on ti ti ti import requirements for ginger. on market, India, has the following on of greater produc However, all ginger entering India from Nepal has to undergo a further pes cant issues. c consump c ti fi ti ti ca Tropilaelaps clareae fi

na ti ti yielding and be on of higher revious surveys indicate that, at the least, Thai sacbrood virus, ti evelopment on P ti and D sian honeybee using a variety of A on of exo ti ne weed seeds and soil. in place for the crop as it is deemed a high value crop. Within the Mo ve policies oleoresin produc ons for developing organic ginger and ti ng informa ng ti ti ti S Support and Third S Support and Third ected trade in Nepalese ginger in past years (Table 8.3). espite these constraints, ginger is Nepal’s most important spice export and produc ginger is Nepal’s most important espite these constraints, P esearch Farm that has released a new and improved variety suitable for the Nepalese soil and climate that esearch Farm that has released a new ff crossing. The residue tes me the consignment has to wait at the Nepal-India border could maintain the low R and techniques in produc technology, is a severe and ongoing constraint. There are some poten companies working with well organized smallholder associa companies working with well organized necessary cer a Sugges to a post-entry quaran inspec though there is anecdotal evidence that consignments. In terms of exis there are no signi require about three days for the results to return, during which residue test at border points. The samples ti quaran Though a number of bee diseases are database. jacobsoni, Nepal for domes importa the technical capacity to provide technical support on ginger processing and the the technical capacity to provide technical support on ginger processing and with the be noted that the use of beekeeping management techniques with the problems with Thai sacbrood disease in the Honey Introduc humid, subtropical Terai region Honeybees are present both in the temperate mountain region and in the hot, of Nepal. There are four indigenous honeybee species, including the suppor frame hives have been introduced, supplemented by training and extension services, in a frame hives have been introduced, supplemented by training and extension The main des S D main cash crop for the small farmers of mid-hills. main cash crop for . There are two poten reducing soil erosion the introduc and Spice recently introduced mainly in Nepal in expecta marke legisla how toprogressallbeeandhoneyissueswithinNepal. are knowledgeableenoughaboutapiculturetoful honey andsoiscoveredina separate sec standard. BasicresearchonthehoneybeesandhoneyofNepalissparse.Thistypepar in forceadequateandupdatedlawsregula responsibility ofthe 13 12 la poor post-harvestmanagement.The Nepalese honeyhasbeenfoundtohaveexcesslevelsofhydroxymethylfurfural(HMF),mostprobablydue S U third countrywithouthavingany perspec A laboratory accreditedtosa the traceability system.Thisisalsonecessaryforthecontrol ofbeepestsanddiseasesisacornerstone sector standardsintheformofT (arbu C with aviewtomarketaccessandnotjusttheminimalstandard setby There mustbeanagreementonna tes EU surveillance planwasinplace(toexporthoneytoany to sa and contaminants.Thelaboratory(notnecessarilyana show thatadministra E important, giventhewiderangeof standards forhoneyandtheformula C submi problems forhoneyexportsfromNepal,a e plan shouldbeviaa Nepal mustprepare which, inrecentyears,hascrossedthespeciesconstraintfrom health isan C interest tomarketsthanH the Norway isnotamemberofthe uropean honeybeeintothecountryandpoten ff er urrently, itappearsthattheprimaryinterestinmarketisfororganiccer urrently, theprimaryresponsibilityforhoneylieswith part fromthe P ganda whendevisingitsini tt ec G er partof2002,Norway

ti S issues reiling, J.,(2008),Facilita ti D ng ofallconsignments. O

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vely ledbytheprivate sector,thoughinbothcountriestherelevantgovernmentdepartmentsremain N T I S sfy the sfy 198 n glucoside),whichcomesfromrhododendronnectar–concerntomarketssuchas tt E ti ed bythe on incloseconsulta -recognized competentauthority. T ti ti ve, marketaccessisprimarilydeterminedbytheT ti on A ve 92/118/ ve

H 2010 C O L . A EU aboratory’ inNepalorfullaccesstooneanothercountry isessen I E ff EU NEPAL TRADE I BACKGROU func ec accredita D requirementforana FTQ D ti and implement EEC PPP ng TradeinHoney ti ti o ti ve andworkingproceduresareinplacefortheanalysisofhoneyvariousresidues ng on under theTerrestrial L C S intermsofthe wasnotaccepted,butsomeexportsdocon of EU . Forexample,inbothZambiaand EU N ACCP ti Third on requirements.Failuretocomplywiththeses 12 ti D ti , butitgenerallyapplies sfythe D ti on withtheprivatesectorcouldbebestroute.Thegovernmentmustput bannedNepalesehoneyfromenteringitsterritorybecausenona al surveillanceandmonitoringprogramme. R NT ecember 17,1992[Third A EPOR furtherissueisthepoten . C EGRA ountry lis EU PC A T acredibleresiduecontrolplanforresubmissiontothe ti EU approvedhoney-tes pis speciespresentinNepal,therecentuncontrolledintroduc onal standardsonhoney andhoneymanagement.Thesemustbeset TI areanincreasingrequirementformarketaccessandvalueaddi EU ti on ofan O requirementsis ti N ti usedtobethelargestbuyerofNepalesehoneyun ng for onal surveillanceandmonitoringprogramme fromaprivatesector ti S 13 P on altogether. ff S agreement.However,fewveterinariansandevenentomologists T Monitoringandsurveillance,aswellT ec RA E ti EU T thiopian Honey. ng asigni EGY 2010 ti EU ons andstrictlyimplementtheseinmaintainingquality foodstandards. A fi nimal Health ll thisfunc acceptablesurveillanceandmonitoringplan.Honeybee ti al forspeciescrossingdiseases(e.g. EU C D not fi ountry ti ti cant numberoffarmers.Theplanforsurveillance evelopment ofapolicyframeworkandappropriate ng facili onal one)usedindetermining theseresidueshas A membercountryitisnecessarytobelistedunder ti al forNepalesehoneytocontaingrayanotoxins t thispoint,itissu aprerequisitefor D PC ti FTQ on. Therefore,somethoughtneedstobegiven E . Thisissueiscrosscu thiopia, honeymonitoringandsurveillanceis Apis cerana C L C ode (T ist]). TobeonthelistNepalisrequiredto ti . However,theissuesgobeyondtechnical es atalland ti nue toHollandonthebasisoffull CODE A H to C X. ) and,therefore,technicallythe ffi ti Apis mellifera cient tonotethattraceability pula EU A ti

E fullyaccredited‘Tes fi ca thiopia usedalaboratoryin access).Zambiaisalisted ti ti ti ons hasalreadycreated al (notethata on, apparentlyof more tti ng andnotspeci PC ti , requiresagood l 2001/02.Inthe ). EU Nosema cerana, K orea. . Thisresidue ti onal residue ti on of the na ti ti ng and cularly P rivate ti fi onal ti c to c on.

on on. on. on. on. ti ti N T I S ti ca ca fi fi

s). Three provides ti ti C 2010 ommercial 199 oopera RL C astern) Banque C E cer ng the crop. ng the crop. cer ti FTQ have unknown PC D ng for presence va T cant commercial commercial cant ti ti fi cide M cide ACCP ti egional R EPOR orea, Bulgaria, and the on from the recipient R ti K er, the er, , tt urope and elsewhere by EGY 2010 D entral), Sunsari ( ons on imports based on and tes A T ti E C ca N fi S es and is likely to require

ti PC ti RA iquat), and a foliar fungicide U on for on Apis mellifera, T ti verage yield in these districts D ), Bangladesh-India-Myanmar- arsa ( major reason for this has been S P A A A N

FT O 14 A TI ssocia on of on l crops is almost negligible in Nepal. l crops is almost negligible in Nepal. ti sian markets to increase their own BACKGROU ti A on crop for rice in the Terai. A on. ti ti favourable. The ‘top ten’ ons are most ti EGRA rea (S sian A NT on. A ti ons or with cer ti been encouraged by a number of on has also ti tu on and 90 per cent of pulse exports. The crop ti ti ed as being in demand by markets. To date the as being in demand by markets. To ed ls fi S reasons and the lack of product T ailali (Far West), Bardiya, countries such as the ti

K P ti onal produc is likely to be an issue in the future. ti ls in Nepal. Based on the la en ally regain lost markets in ally ti PC ti on and as a rota X, i.e. limits on heavy metals and pes L l produc l ti ), the South OECD ti onal produc onal NEPAL TRADE I eltamethrin), a herbicide ( al for the South ti entral), ti sian Free Trade C D EC va ti A CODE ons, such as the introduc ed Indian ins S requirement for other commodi ti fi

P cide ( ti autahat ( ti ls in the future. Independently from regional trade agreements, cally, exporters will have to obtain T ti R ti onal pulse produc ti on of small commercial surpluses in each household. astern). on (BIMST on ti on has been iden ti E ti ealis xpansion of len R E ca on requirements. on ls to a number of fi ti ti

ls have become important in Nepal’s diet in the past two decades with ls ti ti ca fi o-opera

on in grass pea cul on to whoever wishes to submit samples. ti s are an insec ti C ti ang, (Mid-western), xed standards for split len RL fi l prices. D ca on of compliance through T ti fi ti

ti X standards, as well as poten sia and len S constraints. entral), sia at large may begin to impose unilateral measures of restric conomic A P C E A CODE ls relies on the collec ti l exporters must expect the poten in Nepal,, but the most signi on occurs in all but two trans-Himalayan districts ti ti on S requirements are less stringent and currently there seem to be no major obstacles for exports. for exports. S requirements are less stringent and currently there seem to be no major obstacles ti P entral), Bara ( C on accounts for only a marginal share of na in the Terai where climate and soil condi on is concentrated ), S ti ti onstraints and Quality Standards in onstraints and Quality Standards ls C ti since the 1960s. nuous growth in the area planted to the crop occurring anka-Thailand l produc l ls represent 60 per cent of the na l producing districts account for 79 per cent of na ti ti ti L S ti . Nepal has lost its market share in these markets for S . Nepal has lost its market share in these S criteria (which would be most likely those of (Mid-Western), Banque (Mid-Western), Saptari ( yraclostrobin). In fact, it appears that the use of agrochemicals in len AARC P P Sarlahi ( en en P countries. The NBSM has of agrochemicals and heavy metals via cer key products at stake in M consequences for the ecology of Nepal. consequences for the quality and/or grade cer ( compliance with overcoming these S produc The sale of len Value adding such as organic cer Value adding such unregulated, and ac industry has been largely (S countries in South S However, India has begun to apply strict S some form of compliance for Nepalese len Nevertheless, demonstra Nepalese len 14 L produc districts alone have about 670,000 farmers cul is close to 1 tonne/ha (948 kg/ha). These other factors, including reduc S In the past, Nepal has exported len originated in West len UK as Spain and France are, at present, not accessible due to the prevailing Similarly, other important markets such food safety standards and cer For developing countries such as India, the South Introduc L and technical compliance will need to be demonstrated by the producers through H will need to be demonstrated and technical compliance Len Sri con the steady increase in len together withtheforma directly involvedintheindustry,includingalargepercentageofruralwomen.Thepoten this, alargenumberofpeople,includingsmallholders,areengagedingrowingteawithover30,000people interests andalackofreadinesstoworktogether,thesectorremainsweakerthanitcouldbe. export earningsofNepalesein2007/08. exports inquan the growthofsector.The 15 correctly applied.Itisfrequentlyassertedthatincorrectand highapplica of agrochemicals,which,inturn,requiresexporterstodemonstrate tobuyersthatthesechemicalshavebeen Tea inNepalisa S type oftea. organiza of ruralwomenandpovertyallevia assistance tothesectorfromgovernment.TheNepalTeaand of Jhapa,Ilam, as anexportearnerwasiden A Introduc Tea fumigated withmethylbromideorequivalentanyothertreatmentapprovedbythe Indian phytosanitarystandardsrequirethatNepalcanonlyexportlen associa CODE D bushes, whichareverysimilartothoseoftheIndianSiliguriregion,andproducingcrush-tear-curl( to India.ThereisnootherS accompanying theshipment. to the cer Future government/privatesectorinterac largely onIndianstandards,whichpresumablyarethemselvesbased least thepossibilityofMontreal sector. Forwardplanningshouldincludeareviewoffumiga increasingly stringent Thefactthattheholeinozonelayer (causedbychloro- Therefore, itisprudenttoassumethat alterna fumiga lthough teagrowinghasbeenestablishedforabout150yearsinNepal,itwasnotun P arjeeling tea. S IssuesintheTeaSector ti

fi

ca N T I S X standardsforagrochemicalM 200 ti G on) haslargelyrecoveredbutnotledtoanyeasing oftheprovisionsMontreal ti on willbenecessary.Thisassocia ti overnment ofIndiaandthatthefumiga ti on, whichmust,inthe ons andN

ti 2010 on O rthodox teagrowninthehillregionsmainlyfromseedling varie ti P tt NEPAL TRADE I BACKGROU ty andvalueofteahaveoccurred,thoughthecropcons acked byarangeofarthropodpests anddiseases.Thesepestsinmanycasesrequiretheuse anchthar, Terhathum,and GO CODE s inNepal.TheteaproducedtheTerairegionoriginatespredominantlyfromclone ti on oftheTeaBoard. N D P X-based requirementsbeingrequiredbytheIndiangovernmentandprivate S supportforlen ti R NT C

G fi EPOR urrently, the ed bythegovernment,togetherwithdesigna overnment alsopriva EGRA fi nal analysis,bemarket-driven. P rotocol (whichmaystoptheuseofmethylbromideforfumiga ti T on hasensuredthatteabeenthefocusofa ti ve fumiga TI RL O N s. S ti T ons rest onthecon G D RA ti D overnment supporttoaproducer/marketer-ledlen ti on chemicalswillberequiredatsomepointinthefuture. ti on and/oritscons o fl l exportfromNepal, thoughagrochemicalregistra hankuta asteazones.Fromthenon,therehasbeenformal uoro carbonsand morecontroversiallybybrominecompoundsusedin T A A EGY 2010 providesforthefumiga Na ti on treatmentisendorsedthephytosanitarycer ti onal Tea ti zed theirholdingsatthat D ue toasigni ti on andagrochemicalregistra C P o ti olicy wasintroducedinyear2000tosupport nuing marketaccesswiththelikelihoodof ff ee ti tuent memberscan‘worktowards’T ti D ls thatarefreefrom soilandhavebeen fi evelopment Board cant numberofindividualorseparate ti ti CODE ti tuted only0.25percenttothetotal on andcer on ofagrochemicals hasledtohigh P rotocol, especiallyintermsofT ti X standards. es isverysimilartotheIndian ti me. Signi ti on oftheeasterndistricts ti l1982thatitssigni ti

tt P fi en ca lant ti ti ti on of interna on oflen al foremployment A P fi ct passedin1993, cant increasesof rotec ti on basedat ti ti ti on isbased lexporters on ti PC ti on l exports . D A fi ti 15 cance

espite dviser ti fi ) and onal cate C T CP C )

s on on RL nce ti ti

N T I S O cates lliance fi onally lanters

ti A ti P tutes in tutes cipa ti ti es, M es, ti on would s) in place. s) in place. 2010 ti 201 s should be on areas of onal. onal. esidues in ti ti R ca subs standards for fi ng is a crucial PRP ng factors are ng factors

ti ti PRP ti onal Social and PC ti T EU cide ti on the necessary es on of tea exports ti P 3720 interna in Nepal, buyers are AO rst step to obtaining urope. Strengthening EPOR fi O be so for es it may not the frequency of food E ca ti R PC cide tes fi ti

on on of manuals based , the Nepal Tea EGY 2010 ti D ertain ti T C N rops with the par C RA T to improve tea produc ) drawn up by the Tea reduces X/The Interna COOP S C es new tea produc fi o N

ccountability Interna ti C O systems (including A COOP TI CODE ssessment of BACKGROU A M/ to test tea for various proper actually t for the purpose, the ACCP fi ng country standards that have been set C EGRA ti arai tt ces as a necessary onduct ( OA ti s. Thus, while pes lliance for Tea NT C A FTQ ACCP on costs of up to 20% is being considered as RL ti and HIM D urope are determined by the prac on company in the country, samples are sent to . PA ca ti E umar Bha on of an agency to assess and issue cer P fi ti T K

ode of ti PC M O ca C fi lliance and Social cide M G

ue to the lack of acceptable T am ti ti tt A D such as H U ces put in place by the seller. Such cer ces put in place by the programme. NEPAL TRADE I es are available for the blend mix to be achieved under evelopment ti cer of standards in the prepara ng ti PC s. and tti D adherence to meconsuming exercise. Within this context, ama, ti CP ) and L RL ACCP B, SNV, H GAP overnment tea standard complies with IS overnment tea standard EAL cate on a consignment/batch basis. This exercise takes about cate on a consignment/batch basis. This exercise takes about rava lobal assistance with technical guidance from F assistance with technical guidance from fi G P

CD G ti Nepal Vol. 4, September, 2008, pp 31-33 DO Nepal tea standard has been set. The overall limi Nepal tea standard B has conducted a study that iden ze the se onally accepted and impor ti ti A NI cer ng for M , NT fy that facili ti CD ti U While this may be true for other commodi ects. RL ng of each and every shipment of tea shipped to ff lliance and its components such as HIM ti ahal, Jiwan A AEC abeling (IS , which, in turn, is based on a systems approach taken by the supplier to D therefore, need to be carefully ons proposed for government in this arena, ngs. L ti ti I, aj PC cularly in terms of pes R to priori ti s, which together with the C CC is based on standards outlined by IF cide M P ti ons in premises that have acceptable H C ti M on to achieve the goal of full T o ti FTQ G on and on C X standards set for tea as yet, although some preliminary work has been conducted. work has been conducted. tea as yet, although some preliminary X standards set for ons. Financial assistance for cer ti D ti on of T S with proper environmental safeguards and correct use of agricultural inputs, notably S with proper environmental safeguards and correct use of agricultural inputs, ti evelopment oirala, Nawa ca D K fi

was developed by the s and CODE ng of tea is underway. This will enable the GAP ti ti C o ccredita ng necessity for tes on. Some factories in the hill areas have already been successful or are in the process of on. Some factories in the hill areas have already been successful C ti ti GAP ramod , Winrock, FN A P on of the D ti I ca Journal of Food Science and Technology fi A

in making original lis in making original ti S onal Tea s include ti O U on, so that members can cer is implemented, the next step would be the crea is implemented, the next step would s and heavy metals. The usual way in which compliance is enforced by the buyer is through insistence s and heavy metals. The usual way in which ti for growing, handling, and traceability prac for growing, handling, and traceability cer C by their trading ed/tolerated residues and microbiology. Importers usually require proof of compliance PRP tt X/IS RL o There are no TZ, PC s as well as environmental side e s as well as environmental C s, including 16 ng of the end product, par G ti RL ACCP ssocia t the outset, it is crucial to understand that the T Nepalese Tea, nvironmental See, for example Indian or other foreign laboratories, a costly and Indian or other foreign laboratories, a three weeks, and is expensive. Since there are no suitable laboratories in Nepal equipped to carry out all the three weeks, and is expensive. Since there T required tests nor is there a suitably accredited PRP include an in-house programme of tes increasingly asking for a pes a package by some donor agencies. of hygienically accepted condi equipment and tes and, if required, microbiology. The NT extended there as well, as part of the overall H primarily rests on market demands. The requirements in The basic premise that needs to be understood at the outset is that the cer The basic premise that needs to be understood at the outset is that the The tea grower agrochemicals. To ensure that factories and packaging plants are for M permi partners by the produc on T ensure compliance. The interven thought out. standards in Nepal. The H part for the exis A service for exporters, the total need for it by any individual enterprise is lessened when the T service for exporters, the total need for it by any individual enterprise is lessened of the Na virgin land for growing of organic tea. A 16 are steps in the right direc These M It is the inten tea. CODE standard. The Nepal stricter than the Indian for made tea. accepted parameters Buyers expect exporters to meet interna E the independently on the product conforming to independently on the product conforming tes obtaining these cer 17 In respectoftheproductgroupsexportedbyNepal(Table 8.4)tocurrentandpoten Strengths/Weaknesses ofRegulatoryAgencies January 2010. The statusofS Status ofLegalReform generated onthepoten The recommenda 8.5 Such cer L trade arecomplete.However,thefollowinglegisla Bee as ama Strengths: the followingbasicstrengthsandweaknessesapply: technical advice,appropriateinputs,fairandtransparentmarke instance, haveli limited toensuringthattheenablingenvironmentforT to demonstratelegalcompliance,i.e.‘duediligence’inthetradedgood. Service provisions,suchasaccreditedfoodtes The ac this isanareawheregovernmentcanintervenetohelp. dynamic, pro-ac use theseservicese ess urgentrequirementsthatareindirectlyS Thereisnoopportunityinthecontext ofthisreporttoreviewtheissuesintermsT the exportsectorsreviewedinthisreport. Theexis and phytosanitarystandards(SPS) theinterna requirements ofgovernments aswellinterna to understandthat T 3. Both the 1. 1. The . In2004,F 2. P

olicy andthedra N T I S 202 ti onsoutlinedinthisreport,therefore,focusnotonT to memberswhorequestit. approached directlyforassistanceastheyhavethecapacityandprogrammejustthissortofinput urgent review.Thisiscurrentlybeingdoneinternallyat R issue crediblephytosanitarycer since the2004Technical amended four aspects ofimplementa a posi with interpreta However, thislawiss tt egula er ofpriority: ti C

fi ca

onclusions and 2010 D ti o ti ve development; ti on isacomplexprocesswhich A ons underthenew P For themostpart,necessaryreviewsandupdatedlegisla hasthepersonnelandfacili NEPAL TRADE I BACKGROU ti S-related legisla tt A ve en CP le controlovertheirenvironmentandhavepoororuncertainaccesstocleanwater,good AO nimal Healthand ti ons inthischapterarebothasynthesisofwiderangeliteraturethathasbeen isinmanyrespects amarket-ledtool,which,initssafety aspects, isaprivatesectorresponseto legislatedfoodsafety ff assistedintheprepara ec ti ti ft mes since1966andthereare105regula ti on andenforcement. ing ofaNa

ti ti ti vely. TheseareexplainedinmoredetailbelowandsummarizedTable8.4. al oftheseexportsforNepal,combinedwiththespeci es suchascoopera N D ti R NT ll beingreviewedbythe ti EPOR on. Thedra A EGRA ti on inNepalissummarized ssistance missionmayneedtobeconsidered; P ti onal HoneyBee lant R T L TI ti ivestock onal tradeagreements. ecommenda O ti ti

onal agri-foodtrade: ti N fi P ng literatureisreviewedin cates; rotec S T ti RA ves, growersassocia ti ti ft es tocomplywithfumiga P on of on needsurgenta A A T ti ti S relatedarethenecessarydevelopmentofaNa on ng laboratories,areonlyusefulinthecontextofmarket-led, EGY 2010 ct 1998andNepalVeterinary secondmissionfromF tt ained atenterpriselevelandwhichallowstradingen A ti ve issuesares A ct of13September2007havejustbeenadopted.Thisis D ct. ra fi D nal report.RAISE SPSGLOBALANALYTICALREPORT#9. ft CP PC

FTQ ti ons L

exists.Sinceindividualsmall-scalefarmers,for per aw/ The rela C inlightofcertainissuesrela

D Appendix 3:RevisedLegisla ti se ti tt A ons a ng channels, e en o ti mendment tothecurrentFood PC butonthepolicyandenablingenvironment. ons, andcommercialprocessorswhichcan L ti S. Itisstronglysuggestedthatthe . Su ti ll outstandingandneedtobeaddressed ti onship ofthirdpartycer on asthecurrentFood ffi tt ce ittosaythatthis is acommonthemeinall ached toit,whichleadsdi AO ti on requirementsforlen A toreviewissuesthathavearisen s suchtheroleofgovernmentis ti ve programme forS C ff fi ouncil ec c issuesthatrelatetoT ti ve marke ti al des ti A

fi ca ct 2055(2000)need ti on (TPC)tosanitary ti ti na ti ve Ac ng totechnical ti ng, andsoon, A ti ti on markets, ct hasbeen onal Honey ti P It iscrucial ti A ls andto on Plan, S-related ffi ct 1966. cul O ti I PC E

ti ti be es es . 17

se ti

N T I S ons, ng is ti ti cides. cides. ti on that on ti ciaries of ciaries

2010 fi 203 ng in food on Scheme ti ti overnment in ng (discussed and the NBSM ti G C s, which have in T ng for pes ti RL s, by extension this FTQ ccredita ng websites/contact ng D ti RL EPOR A R EGY 2010 D to test for agrochemical to test for agrochemical T N C RA T ve ingredients, formula orts are underway to upgrade ti FTQ ff S ng these systems in place in a ng these systems in place D N . The type of training/exper aboratory tti L O reside in the se generally does not CP onally recognized tes ti TI ti BACKGROU cant e cant fi ) agrochemical M X enquiry points are the bene EGRA ons which ‘cascade’ down to the harsh ti EU in the past, most especially those who are NT ff s for traded plants and plant products; s for traded plants and eld of T on, i.e. pu on, fi ti CODE PRA S/ P cide approvals, ac ti on infrastructure at present is the lack of acceptable ti utside of the laboratories at the X (or even O ca similar, though more modest, programme is underway similar, though more fi

A NEPAL TRADE I ti onal in Nepal, signi ti CODE of plant exports, including those listed in on) for the range ti Indian ng is requested and carried out by the cult to retain sta ti ffi ca capacity-building programme may well be similarly lured away capacity-building programme may well out se to carry urrently, the S fi ti of no value for trade onally recognized and, therefore, currently

C ti ti DO rst step the pes fi er this programme. ft NI export Nepalese exporters to produce with their on being available to . Following this is the need for the long-term goal of developing a ‘due ti U exper on. Therefore, the necessary ti EU ca fi

cials at the border posts of compulsory consignment tes ti ffi -led infrastructural and capacity-building exercise and it is important that its -led infrastructural and capacity-building S support for exports is in the P DO -funded opera ed laboratory in the fi

D NI ti es once the programme comes to a conclusion; EU o ti U L eld is gained primarily via implementa eld is gained primarily based food exports from Nepal. ects all exports of plant fi ff Health, Food Safety ng Infrastructure in Plant Health, Animal ti ves to accredited laboratories). cer ng (and therefore ti ti on, which is not interna on. ti ti nanced/ S laboratories. This type of tes S laboratories. This fi ect, this lack of capacity has a number of implica ect, this lack of L S enquiry points were reviewed in detail earlier in this chapter. These have been set up and S enquiry points were reviewed in detail - ff has the personnel and exper has the personnel and o P cant weakness in Nepalese export cer A fi D er opportuni er S EU o ciaries of the tt es and build human resource capacity at the NBSM and the human resource capacity at the NBSM es and build fi ti to importers of foods into India, including Nepal. O D on and food safety. The need for accredited laboratories for animal and plant health tes degree of professionalism is necessary, including upda onal. However, a higher ti ti on rates, and withholding periods need to be reviewed in light of the changing M S) accredita ti facili residues and food-borne human pathogens. residues and food-borne at the public sector; these are weak and below standard. the absence of credible cer the absence of credible documenta required in this working (private sector) situa the recipients of in-service capacity-building training programmes. There is a danger that the current the recipients of in-service capacity-building bene by be ed using alterna cide residue tes fi ti EPLA 2. The 3. While there is no cer 3. (such as laboratories) because of a percep The private sector is reluctant to use public services 1. The Nepalese government has found it di 2. need for S The primary s discussed in more detail earlier, as a urrently, there are no laboratories in Nepal that carry out interna below). This absence a regime being imposed by Indian o Since India has ratcheted up its compliance with must apply A applica many cases moved to the diligence’ approach by Nepalese exporters which would reduce the required intensity of tes diligence’ approach by Nepalese exporters which would reduce the required Table 8.4. In e not so pressing (animals and animal products are not really traded and plant pest/disease taxonomy can be not so pressing (animals and animal products are not really traded and plant veri pes composi Capacity of Exis The most signi Infrastructure of Government and Private Sector Laboratories Infrastructure of Government C Nepal’s WT are func WTO Sanitary and Phytosanitary (SPS) Enquiry Points WTO Sanitary and Phytosanitary details and dealing promptly with queries. there are a handful of private sector laboratories that only have Nepal an extensive momentum be maintained during and a momentum be maintained during and (N purposes. Weaknesses: personnel viatheH inten at the C Assistance toNepaleseProducersImplement ‘Process’ Standards In S Traceability Capability This topicise Accredita Simpler requirementssuchasthenecessityforfumiga quite vagueandlargelyignoresthenecessityforappropriate 92/118/ system--with nega bromide fumiga though itwouldbeprudenttoensurethatanynecessaryresearchandprotocolsonalterna to theexamplesof has beendonesuccessfullybycountrieswithlimitedresources(seefootnote15, through withthepublic,privateandN PRP sec farmers. D include suppliertraceabilitywithaccompanying exporters tohaveeveryconsignmenttestedforpes In termsofteaexports,thecurrentlackdemonstrabletraceabilityin unrealis of strongcoopera examples ofhowtraceability,generallyviaT na The impedimentstodevelopingtraceabilityinNepaleseexportsarelargelyafunc which, asdiscussed,hadledtocompulsoryconsignmenttes exports areevenweaker,traceabilitysystemswouldappeartoremainanaspira discussions atthe urrently, thisremainsafutureac FTQ . Bringinginappropriateexper 2. 1. Star 3. ti onal agricultureandlandholdingsystemarebeyondtheremitofthisreport.However,there ti P s, includingacomplementaryinfrastructureand on). Thecer S terms,Nepalhascarriedoutonlyoneexerciseinproducinganinterna ti

C N T I S on isto setNepalesestandardsfortheT 204 withsuccessfulcer D R a na for theirini laboratory capacity. ti EEC ealizing attheoutsetthatanaccreditedna FTQ caspira

ti 2010 ti ng theprocessasafullpartnershipofbothpublicandprivatesectors; standard.Whiletheproduc onal monitoring andsurveillanceplan( C ti ff andNBSM.TheplanistobringinsuitableT on ofNepal-basedLaboratoryFacili ec NEPAL TRADE I BACKGROU ti on beputinplaceasacon ti ti ti

on. vely coveredin ti ti D fi ti ves andmarke ve results.Thiswasthe ca al tes al E FTQ ACCP thiopia andZambia).Thecasestudiesindicatethenecessityof: ti on ofabusinessisaninterac A C t best,theexercisewillbuild awarenessandsomecapacitywithinthe seemtoindicatethatthisissue isunderstoodtosomeextentinthattheirul audi ti ng) andthatimplementa N ti D

fi ca R NT ti EPOR ng/cer ti EGRA on of thepar ti vityinthe C ti hapter 7. ng associa ng T ti TI se earlyon; ti GO O

fi N ca ti S sectorsthatareinvolvedinins onofsuchaplanisanexpensiveanddi T ti D ti on ofpar EU RA PC ngency (Indianimportprotocolsallowforsubs FTQ T ti CP , canbeachievedinothercountriesthroughthedevelopment -funded ti ons. Therefore,theS EGY 2010 cipa C GAP . planforhoneymonitoringandsurveillanceto ti ti ti ti cide residues.Forginger,len ti ve processinvolvingtwotypesofinput:pu on oftheplandoesnotneedtofollowbuilding onal tes onal ng companies seems,fromthisperspec s, thepossibilityoffullH E ti separate cipa thiopia usedan U ti NI on oflen DO ti ti ng privatesectorcompanies.Thisaspira PC ng forpes ti programmeforupgradingandcapacitybuilding PRP ng laboratoryis agenciestogivehands-ontraining cer ti es s, includingtraceability(seethepreceding ti ti

l exportsarecurrentlywelladdressed, fi ca P ti S exportcer cide residuesbyIndia. EU ti on audit.Sincethenecessary ti tu -accredited laboratoryin ti on-building amongsmallholder ti ti onally acceptabletraceability on fortheforeseeablefuture, ACCP not aprerequisite G ti on ofthestructure ti GAP ffi reiling, J.,2008inrela ls, andcardamomwhere cult exercise,itcanand ti auditortrainingforthe

fi ca cer ti on needstowork ti

ti fi tutes). ca ti ves tomethyl ti ve, to bean ti tti D on requires on EU ng in place FTQ to running

D U irec C D ti ti ganda mate . The on is on FTQ PRP ti ti on ve C s

S P ng N T I S ti oint at ed S ed P fi

2010 ti 205 VS audit to ng. P tti ontact proposal made C ules 2050 (1994) T R S concern, it must AO ves and marke and ves P ti es it is important to es it is important ti EPOR R are market-driven and S (a second cides EGY 2010 D ti L on of common standards T CP ) followed by a biosecurity N ti o ng the F es ti D RA P is discussed in greater detail T PCE to help review animal health s are truly crosscu S CP E I N ct comply with the most stringent O O of these issues ve manner. Many A ti al for dispersed and uncoordinated GAP , and the Biosafety TI ti BACKGROU LA o roblems include access to clean air and EGRA D (a second must be based on a clear ng laboratories) P on of on , ti ti must be sustainable, i.e. there must be a NT cant handicap imposed on businesses and fi PPD ng of export commodi CP ti PPD on. , ti it is in the interests ng in Nepal and, therefore, ti C on and processing. S issues. There are overlapping interests between S issues. There are overlapping interests ti en ng of progress at the ti tt ve, thought must be given to policy and possible ve, thought must be given to P ti FTQ D possible approach to T overnment. A NEPAL TRADE I G ct of 1991, together with the A on and marke ti nent, is the signi ti on and marke ti S needs to engage with the es examined with the poten in this area. The development of coopera on ti L greement is the worldwide dissemina ti ons of the ti o A cides ti D es within within es S ti orts to address S es P ff S-related trade measures imposed by Nepal’s trading partners are imposed by Nepal’s trading S-related trade measures S goals such as the introduc Quality Management Systems in the Context of ces, Food Safety and P ti (notably food tes ng services vi P P . ti ti PC oN e in place under this on remedies already ti G are fair and, of the available evidence, these measures ve exports. In terms ti gency. Therefore, a revisi A on of the produc ng ti eviews. ti ve exports (Table 8.4). R oN. There is, thus, a strong case to be made for revisi oN. There is, thus, a strong case to be ti G S support ac S-sensi ve P P ti ng the relevant por ti on of Nepalese Food Exports. ti S-sensi P ng S ng orts to achieve consolida ti ff ca egisla fi L

ti lthough not urgent from a trade perspec A Indeed, some S t neatly. fi into a Biosecurity C evelop a clear policy on T evelop an enabling environment for food produc onsolida S contact points for all the commodi D C D other development goals into which addressing the iden ons take in hand a large number of P ti on. on on bees as this will have to be addressed at some point in the future. ti ti s of Nepal’s trading partners. The in Nepalese Exports for Addressing SPS Issues ons ti Appendix 4: Good Agricultural Prac RL orts on the part of the oN must, in turn, support needs of exporters. Support for T ff e to Nepal for consolida business plan and needs; otherwise, they risk becoming white elephants. The issue is crucial in terms of long- business plan and needs; otherwise, they risk becoming white elephants. The term support for S all the S Nepal’s exporters must, in essence, fall in line with the requirements of their customers. By extension the Nepal’s exporters must, in essence, fall in line with the requirements of their G market-led demand for it, and suppor Issue 3: for T In a sense the technical issues in this instance are clear. The requirements seriously consider consolida M legisla legisla Together with the consolida to ensure that all the crop protec Issue 1: constraints of public health. Furthermore, and more per what in many other countries smallholders that have to develop in-house systems and infrastructure to provide is a public good. There is an urgent need to revisit the Third Party Cer in arise out of the nature of agricultural produc arise out of the nature of all to support e associa directly an S potable water and treatment/disposal of water and solid waste. While not Ac that the S There is ample evidence of S hampering exports in a pro-ac response is to address them, if possible, therefore, the correct be noted that one of the aims of the S the MoFS exercise) and measure progress since the earlier benchmarking review is strongly recommended. Issue 2: Finalize Issue 4: The current public health environment in Nepal needs a Table 8.4 N T I S

206 Summary of Export Environment for Selected SPS Sensitive Export Potentials from Nepal Technical Primary SPS HS Technical standards in Nepal or Where Who done Other SPS Number Groups regulations Parameters of current importance requirements for future 2010 code elsewhere done by requirements in place development NEPAL TRADE I BACKGROU No Nepalese standard. Indian 1 Cardamom 090830 An ISO standard exists but has None Agrochemical MRLs India TPC MRLs authorities no importance for trade purposes

Government of India Phytosanitary Indian 2 Ginger 091010 No Nepalese standard. None Regulations and standards for India TPC MRLs authorities

N agrochemical MRLs D EU accepted monitoring R NT European- TPC, OIE

EPOR EU Directive 92/118/EEC of 17 Europe and surveillance

EGRA 3 Honey 040900 None None based WAHID December 1992 (Third Country List). (Holland) plan drawn up and laboratories reporting implemented by DFTQC T

TI Government of India Phytosanitary

O Yes - set by Nepal Bureau of Requlations which require

N 4 Lentils 071340 Standard and Metrology with None Nepal DoA Phytosanitary MRLs pre-shipment fumigation and S testing by DFTQC agrochemical MRLs T RA GoN tea standard complies with Recipient Recipient T 5 Green Tea 090210 Agrochemical MRLs TPC MRLs EGY 2010 ISO 3720 country country

GoN tea standard complies with No Recipient Recipient 6 Black Tea 090230 Agrochemical MRLs TPC MRLs ISO 3720 information country country

Uncooked No Recipient Recipient 7 190219 No information HACCP, Agrochemical MRLs TPC MRLs pasta information country country

Medicinal No Not 8 Plants / 121190 No information Not known Not known ? ? information known Essential oils ct is on on on A ng, ti ti ti ons ti ti

N T I S PO elated R on, and on, ti eclara 2010 esign and 207 D D copyright. ct. The 1936 T atent A P niversal c works, sculp ti on, a Trade- U ti EPOR s ti R ers within the scope of ng copyright. WI cts here. on ti tt ti A EGY 2010 D sts fall under T ti N on of registered patents in ti greements that created the RA Trademark, design, patent, T A S N ct prescribes separate provisions rotec O on of a person’s knowledge and on of A ti P hapter 9 hapter ound TI ons. In addi ti BACKGROU R C ct introduced legal rights to foreigners, which focuses on protec on of 1883, EGRA 27 of the 1948 cle ti A ti c discoveries, trademarks, service marks, discoveries, trademarks, service marks, c r fi ons made by ar NT

ti A ti ruguay mes. The nes the following ma U ti fi onven roperty roperty ons. C ti P ) de aris er’s approval. Because of modern, legal protec PO tt P NEPAL TRADE I c works, scien c fi

on (WI on ti ti onversely, any third party cannot use, sell or store the crea onversely, any third party cannot use, sell on of these two conven on of 1886, which focuses on protec on of 1886, which focuses on ti industrial property and copyright. C ti onal knowledge, and integrated circuits fall under industrial onal knowledge, and integrated ti ct (with amendment) follows an earlier 1936 ons are the ti A on of copyright. We shall discuss the two ti rganiza Intellectual Intellectual onven O C greement is part of the . ware, designs, and presenta onals only, whereas the 1965 egal Framework A ti ft O ons that contribute to the economic, technological, and cultural progress c, and scien ti ti L S) s ti P I roperty R onal conven onal P ti on to acquire right to a patent, requirements and procedures for registra ti ve advantages. advantages. ve ti urrent on

ights (T ti person vested with an intellectual property right can enjoy it without any encumbrance, person vested with an intellectual property pril 26, 1965, has been amended three ti C R A A on, trade secret, tradi esign and Trademark ti ey interna e. D tt K ct 2059 provides protec on to Nepalese na on. on. ti ti A aze roperty ct 2022 (with amendment) prescribes legal provisions for patent, design and trademark. The ct 2022 (with amendment) prescribes G iterary works, stories, poems, drama, novel, music, musical works, ar iterary works, stories, poems, drama, P A atent, ights. L P R intellectual property rights are also prescribed in onally, onal ti opyright ti ons under which a patent cannot be registered. It also prescribes publica ct prescribes registra C ti rst enacted on . Nepal is a member of the WT ng, photography, computer so fi ti A O atent ct, t present, two laws protect and promote intellectual property in Nepal. The 1965 t present, two laws protect and promote pain property. geographical indica Intellectual property typically is divided into Intellectual property typically is divided and prosperity of society and countries are introduced every day. The challenge for Nepalese entrepreneurs, and prosperity of society and countries how to capitalize on intellectual property, including their own, to producers, and exporters today is to learn create business compe the Na symbols and commercial names, and industrial design inven symbols and commercial names, and industrial exclusive rights provided by the State to a person in lieu of his/her Intellectual property rights refer to the intellectual crea and can sell, distribute and publish the same. and can sell, distribute and publish the made by the person who holds the rights without the la made by the person who holds the rights for intellectual property, new inven condi skills. The World Intellectual skills. The World Intellectual intellectual property: literary, ar intellectual property: P The allowing them to register their industrial property in Nepal and to enjoy the rights prescribed by the law. This allowing them to register their industrial property in Nepal and to enjoy the rights A Industrial Property in Nepal The 1965 9.2 Nepal’s A for patent, design, and trademark. Intellectual property is a form of property created through the applica is a form of property created through Intellectual property WT provided protec Interna 2002 Trademark Intellectual 9.1 Introduc of Human of industrial property, and the Bonn responsible for the management and regula awareness amongNepaleseindustrialists thatdesigncanplayanimportantroleinenhancing thepres A period of valid foraperiodof including themapandfourcopiesofdesign. 13 ofthe de To acquirerightoveradesign,itismandatorytoregisterit. Sec D To registerapatent,personmustsubmitanapplica submit thefollowinginforma A formula.’ name oftheownerandcontribute tocrea a homeregistra registers thepatent.Whenaforeignpatentneedstoberegistered, a commi and claimbeforethe further inves Sec Sec or proceduresforopera follows: ‘ The prac of sevenyearseach only once.InNepal,theperiodofvalidityissevenyearsandpatentmayberenewedtwicefora Sec submi registered todayinNepal,andthatthereisalackofskilledmanpowertoexamineinves pplica personwishingtoregisterhis/herpatentneedsfurnishevidencepursuantSec esign . Iftheapplicantisnotinventorofpatent,ale 2. Name,address,andprofessionoftheinventor. 1. . Ifthepatentisbasedonanypar 4. 3. . Thepatentisadverse tothehealthofpublic,e 3. Theapplicanthasnotinventedthepatentandreceivedrightover 2. Thepatentisalreadyregisteredinanotherperson’sname. 1. . Thepatentiscontrarytoanyprevalentlaws of Nepal. 4. fi nes theterm‘design’as: ‘designmeansthefeatureorshapeofama ti ti ti on 21(c)ofthe1965 on 6ofthesaid on 2ofthe1965 N T I S 208 tt ed forregistra P from theinventor. stated intheapplica from theinventor. interest. ti ons forlegalprotec rocedures ofdesigning,opera tt ti P ee ofexpertsknowledgeable abouttheinven ce ofregisteringpatentinNepalisverylow. A fi atent meansanyusefulinven ve years.

ct, toregisteradesign,personmustfurnishanapplica 2010 ti ga ti NEPAL TRADE I BACKGROU on cer ti on. Thetypicalperiodofvalidityapatentintheworldis10yearsanditmayberenewed ti A me. fi D ti ve years. ct laysdownsthegroundsforrejec on. epartment ofIndustries( ti P ti

atent, on ordissemina fi cate. Intheeventahomeregistra N P ti D on. atent, ti ti R on ofone’srighttoanewdesignare veryfewinNepal.Thereisli NT on alongwithanapplica EPOR D EGRA A esign andTrademark ft D er T esign andTrademark TI ti O ng, orenjoyingthepatent. fi ve years therighttodesignmayberenewedtwiceforanother ti N ons madefromanymaterialorgroupofmaterials,newmeasures ti ti S cular principleorformula,thentheformulashallbe on oranyotherusefulinven ti ng acompe T RA T EGY 2010 D oI). P ursuant toSec U ti ti pon submissionoftheapplica ti on intheprescribedformatbefore on alongwithafulldescrip A

ti R ti on and,therecommenda ct (withamendment)de ve advantage. ecords ofthe ti ng arequesttoregisterapatentasfollows: A ct, mayregisterthepatentwithoutcarryingany tt ti er cer on cer ti ti que on 2(b)of ti ti on 14 (a),designsthatareregistered on alongwithadescrip ti tt fying howhe/shehasacquiredtheright ti e, ormoralityadversetona

fi cate isfurnished,the ti D ons madefromanynewprincipleor A tt oI indicatethatonly59patentsare er prepared.’ ct requirestheapplicanttosubmit P atent fi D nes theterm‘patent’as ti esign andTrademark ti on ofhis/herinven on, the ti on ofthecommi ti on 4ofthe P ursuant toSec ti on ofthedesign, D D oI, pursuantto ti oI cons D gate patents gate oI: ti A ge and ti ct and tutes ti onal tt ti ti ee, tt A on on le ct on on. on. ti ons ti N T I S ti oning ti ca fi of on 18 bjec ti onven

2010 O 209 C eographical lassi G C ers or service tt aris on. To register on. ti P ti T ct, may cancel the ca onal on 2 (c) of the said fi ti A ti gates possible claim ti EPOR R epartment registers the ed the ed lassi on every month in the on every fi ti EGY 2010 on of other trademarks, on of other trademarks, D C

D ti ti T N ate their goods or services ti on is cancelled pursuant to ti RA greement, and 1979 Madrid oI, pursuant to Sec ct inves ny trademark or service mark T A D A onal A S ti ed for registra N ons. If a trademark is not used ons. If a trademark eren tt epartment entertains preliminary ti ff O D TI on. on. ti BACKGROU on to trademark. Industrial property on to trademark. Industrial property on 18 (c) of the ti ti ca fi ed for registra nguish between trademarks and service EGRA tt ti ve Marks, Trade Secrets, and NT ti oI under the ‘word, mark, picture, or a nes trademark as: fi D ty. Marks or trademarks are used to protect ti ollec C on de on onal classi onal ti ti on, the 1891 Madrid on, or person to di ti ed. Subsequently, the ng the trademark. Nepal ra ti on system, also known as Interna ti tt ti NEPAL TRADE I ca fi on of trademarks submi ti onven C ee of experts, decides whether or not a design should be ee of experts, decides whether oned Sec oned tt ti lassi C onal interest, or hampers the reputa onal interest, or hampers ct of Nepal does not dis ti aris rm, corpora rm, A P fi on and inquiry. The epartment, pursuant to Sec ti D ons that need to be introduced in Nepalese law. onal laws regula ct does not provide term limita ti ti A be submi on must ti ng to patents, designs, and trademarks, and is responsible for sanc trademark cannot be used as a registered trademark unless it is registered trademark cannot be used as a registered ti A on, the on of a commi ti ti epartment publishes trademarks submi on. If such a trademark is already registered, registra D ti n with 90 days for submission of claims or objec n with 90 days epartment. If the submission is deemed appropriate, the epartment. If the submission is deemed egistered trademark can be renewed repeatedly for a period of every seven years. repeatedly for a period of every seven years. egistered trademark can be renewed ti D R roperty has no provision to register P ers to which service is provided. For example, hotels, banks, airlines, and insurance ers to which service is provided. For example, tt

e, morals and contrary to na tt iden erent from one another and has a separate ff roperty Bulle epartment. P gated by the D on over the trademark through publica ti que ti on system in Nepal follows the Nice on of the trademark. ti ti ti The aforemen nes the term trademark. ons. These are missing protec fi oI, on the recommenda ti oI is responsible for registering patents, designs, and trademarks. The ct, conducts the necessary examina D ons regarding disputes rela D on 18 (c). A ti ti

ti epartment of Industries nlike with patent and design, the trademark extends to consumers a guarantee of quality and trust in goods or services. Therefore, trademark trademark extends to consumers a guarantee of quality and trust in goods or ct de rotocol are deemed to be the interna ursuant to the law, the ike patent and design, a trademark must be registered to confer someone a right. Sec ike patent and design, a trademark must A is always di original goods from fake ones. The 1883 Sec on July 24, 2000, which is applied as Nepal law. by service providing companies Marks used in services are known as service marks. Service marks are used and are used in ma Indica from those provided by others.’ To register a trademark, an applica registra mark, is similar to a mark publicly known, is adverse to public health, that is similar to an earlier registered public e cannot qualify for registra P Marks are registered in Nepal as Trademarks and Service Marks under Interna Marks are registered in Nepal as Trademarks must submit a sample of the mark along with the ma a trademark or a service mark, an applicant specify the interna to which the mark is applied and shall companies use service marks. The current D The marks. Service marks, therefore, simply fall under trademarks. The current Industrial A a mixture of these three that is applied by the are inves registra with the U The Trademark L registered. pe or objec trademark. P within one year of its registra Industrial s is providedtothecreatorsundercopyrightlaw. P science, andotherareasaswellwheresoundisrecorded,presented,transmi neighbouring rights.Wherecrea The otherdimensionofintellectualpropertyrightsiscopyrightandrela C Copyright inNepal manpower toconductinquiriesregardingapplica issues asawholeandindustrialpropertyinpar breaches oflaw.TheNepalesebusinesscommunitylacksknowledgeandawarenessintellectualproperty inven his/her workorpresen literary, ar A The followingrightsareprotectedbythe work. C property inNepalisfortrademarks.Indeed,thedemandregisteringtrademarksincreasing. and enforcementofIndustrial they startunderstandingindustrialpropertyissues.Thisisakeyproblemholdingbackproperdevelopment to conduct preliminaryhearingstoreviewproposedpatents,designsandtrademarks,etc. D The publicly, topreventsuchactsasundermininghis/herreputa with therightofhavinghisnamemen exhibi the work,reviseoramendmakearrangementsandothertransforma U presenta programming. mandatory. The ti rovisions rela urrently, theworkofIndustrial ct 2059.The2002 oI. Theworkisspecializedandtechnicalinnature,includinglearninghowtoassembleapanelofexperts, nder theeconomicrights, mulate newcrea opyright (a) c Ifpublishedbyanorganiza (c) Inthecaseofjointcomposers, 50 yearsfromthedateofdeathlastcomposer; (b) (g) Fi (f) Fi (e) Twenty- (d) Twenty- G A overnment personnelpolicies,thesta ti

ct alsoprotectspicturesandsculptures,maps,pictorialcomposi N T I S 210 ti ons andpatentsisverylow. on andcommunicatetheworktogeneralpublic. death; P commencement oftransmission; rotec ft ft ti y years fromthecommencementofrelatedrightstransmission ins y yearsfromtheyearofpresenta on ortransmissiontoobtaincopyright. ti

s 2010 ti c andresearchcomposi A ti on ofeconomicandmoralrightsacomposerthroughlife50years followinghis/her ti fi fi ct ng toliteratureandar ve yearsfromtheyearofsoundrecordingand publica ve yearsfromthedateofproduc NEPAL TRADE I BACKGROU U A ct provides nder thenew ti ons intheareasofarts,culture,andscience. C opyright ti ng itinadistor N D fi R NT nancial andmoral rightstothecomposerofanycomposi P A EPOR A roperty EGRA ct 2059followstheinterna ct prescribesexclusiverightstotheauthororownerofcopyrightreproduce A ti P on, 50yearsfromthedateofsuch publica ti ct, itisnotnecessarytoregisteranycomposi roperty registra on isoriginalanddoneintellectuallyinareassuchasliterature,arts, T TI R ti ons, dramaandcelluloidpictures, andotheraudiovisualcomposi ti egistra ti O oned inthecopiesofhis/herworkorwhereitisused s ti R ng mannerandtomakenecessaryamendmentorrevisioninhis/her N ti ights inNepal. S C c propertycommencedwiththeenactmentof 2002 ff opyright ofthesec T ti RA on or incorpora ti on ofdesignisalsoverylow.Mostregistra T EGY 2010 ti cular. Inaddi ti ti on of prac on forpatentregistra P ti rior totheenactmentofpresent A on andenforcementisdonebyonesec P ct: rotec ti on istransferredeverytwoorthreeyears,justwhen ti ti on oftherightscomposersandcreatorshelps L onal standardswithrespecttotheprotec ti ti on orgoodwillearnedbyhim/hermu ti ikewise, undermoralrights,theauthorisvested on with thesound; cal art andpicture; ti on, thereisalackofskilledandcompetent ti ons, andac ti on; ti on. ti on; A s aresult,registra ti on inthework,holdpublic ti ti ng tocopyrightknownas vi ti ti on orsoundrecorded es rela tt ed, anexclusiveright U ti ti on. A tu nfortunately, owing ct, registra ti ti on forindustrial ti on orfromthe ng tocomputer ti on underthe ti on ofnew C ti opyright on was ti ti la on of ti ons. ti ng on on ti ti ons ti N T I S of ts fi

2010 egula 211 oopera R C roperty in the ence, Sec ence, on along with ff ti P T atent cts and roperty on consistent with P on of copyright and ti ct requires that only A ti P es, Nepalese patents oN under the Ministry EPOR A ti cient. There is a need R ffi G EGY 2010 D onal T ti N RA onal principles and standards T ll insu ll ti ti S opyright ve marks, which nowadays are onal trea ti C N ti s noted earlier, patent and design ng to protec O A ti cer of at least the rank of police cer of ffi TI BACKGROU ce set up by the EGRA ffi es and agreements under the oversight of O NT ti on responsible for Industrial ursuant to the gravity of the o ursuant to the gravity ti ons or collec P ti ts of doing so. , it is necessary for Nepalese fi and requires an applica on is simple on 5 of the 2002 ti O ti egistrar’s onal trea onal ti R ce space. ce ffi NEPAL TRADE I egistra ct prescribes a police o ct prescribes a police R on. For instance, a Nepalese businessman cannot single- on. For instance, a Nepalese businessman S, including securing tenures of protec A onal level, Nepal should become a member of the Madrid ti ti P ct needs to be amended. Nepal needs to enact intellectual ct needs to be amended. Nepal needs I s 100. opyright ct need to be aligned with interna A R R egistrar monitors all acts rela C A R ce checks on the validity of the submission, which usually takes ce checks on the validity ffi O s 5,000 to 50,000 against someone who infringes the right of another someone who infringes the right s 5,000 to 50,000 against R nowledge, such as that embedded in goods produced through various nowledge, such as that embedded in goods on lacks o ce also ti K ffi opyright O C onal recogni on. The on 37 of the on fee is N ti ti ti ti ons: Nepal’s Needs in Intellectual ti onal ce egistrar’s duca via ti ffi greement on T R A E ons against breach of copyright. A ti O ivil ers from the same problem as the sec ct and the C ff A esign and Trademark D . Since Nepal is a member of the WT turnover. The the district court. and to register such cases before gate such cases ff ti ce su ce ffi PO O roperty egistrar’s atent, l and unless Nepal becomes a member of these two interna ble with the P ti R ti rotocol. P n P on ecommenda ct prescribes a penalty of N ct prescribes a penalty on U ti wareness and A ti and WI R ikewise, there is no provision for geographical indica A ng to sta on is scarce. There is some public awareness of trademark, but this is s onal standards. onal ti L ti O ti on not only among business people, entrepreneurs and creators but also among consumers. ti ct also prescribes sanc egistrar’s R A ulture, Tourism and C rotec opyright ublic oI rela opyright is managed and enforced by Nepal opyright is managed and enforced by Nepal rotocol. handedly register his/her brand in a foreign country. This is possible only once Nepal becomes a member of handedly register his/her brand in a foreign country. This is possible only once the Madrid D P and trademarks will lack interna seven or eight days. The registra The Treaty and, to introduce trademark at interna two copies of the work. The the WT interna To introduce Nepalese patents, Nepal should become a member of the interna works on increasing public awareness of copyright. Sec works on increasing public awareness registered. However, owing to incidents of copyright infringement, a limited number of works need not be works. many authors have been registering their author or copyright owner. Sec author or copyright inspector to inves P for a large-scale public awareness campaign to explain the nature of intellectual property and the bene for a large-scale public awareness campaign to explain the nature of intellectual key elements of industrial property. The Industrial in the area of intellectual property enshrined in interna of to be compa 29 of the registra protec P stakeholders are uninformed Very few people are knowledgeable about industrial property rights and most about how to register and protect such rights and the bene 9.3 Legisla The current property rights covering Tradi herbs. C C The U should beincludedinthecurriculumofschoolsandcollegesdevelopedasaseparatefaculty. Intellectual the manyopportuni NTIS. se ofIntellectual N T I S 212 4Lbu evcsSriemr Servicemarkandtrademark Servicemark IT&BPOS 15 LabourServices Tourism 14 13 8EgneigSriemr rtaeak Servicemarkortrademark Service markandtrademark Hydro-electricity Service markandtrademark Engineering 19 Education 18 Healthcare 17 16 adaePprCletv ak Gems&Jewelry Collectivemark 9 HandmadePaper 8 Cardamom 1 0Io n te WoolProducts 11 IronandSteel 10 Ginger 2 Honey 3 2Pashmina 12 nokdPsaTaeak GeographicalIndication Trademark Trademark UncookedPasta 7 Tea 6 Lentil 5 4 ..Ar-odPsil PVhceCmet ActionrequiredbyGovernment Comments Possible IPVehicle Agro-Food S.N. 2010 P Services Goods Craft andIndustrial Essential oils Medicinal Plantsand roperty istechnicalinnatureandskilledprofessionalsareneeded.Intellectual NEPAL TRADE I BACKGROU P ti roperty toolsshouldalsobeencouragedwithinthebusinesscommunity.Table9.1lists es forincreaseduseofI ERVICES N D R NT

Patent Trademark orservicemark; design Traditional knowledgeor Indication (GI) Trademark orGeographical mark ortrademark Collective mark,certi Indication (GI) Trademark orGeographical Indication (GI) Trademark orGeographical Knowledge (TK) Patent orTraditional certi Collective markand EPOR EGRA fi cation mark cation Possible IPVehiclesfor19ExportPotentials T TI O N S T RA PR fi cation T EGY 2010 protec Table 9.1

speci GI ifithasspecial/ Certi speci GI ifithasspecial/ pure ornochildlabor be necessarytocertify speci GI ifithasspecial/ otherwise TK If invention,patent; certify Certi ti ons amongthe19exportpoten fi fi fi fi fi cation markmay cation markto c quality c c quality c c quality c include provisionforCollectivemark Amend IndustrialPropertylawto be legislated Traditional Knowledgelawneedsto be legislated Geographical Indicationlawneedsto be legislated Geographical Indicationlawneedsto mark include provisionforCerti Amend IndustrialPropertylawto be legislated Geographical Indicationlawneedsto be legislated Geographical Indicationlawneedsto be legislated Traditional Knowledgelawneedsto include provisionforCollectivemark Amend IndustrialPropertylawto ti als iden P roperty educa fi cation cation ti

fi ed inthe ti on N T I S on of ti ce is an ffi 2010 ublic data 213 O P T ons for industrial ata system should ti n appropriate legal D A egistrar’s EPOR R roperty experts as and of this in the on, some R P ti EGY 2010 D T N l this issue is addressed, it l this issue is addressed, ti RA overnment should create an T G S opyright N C O TI BACKGROU EGRA nless and un U NT oI nor the ng and enforcing protec ti D on in Nepal. ti on of industrial property. ti . ff overnment rule about frequent transfer of public overnment rule about frequent transfer G on in the should on and new knowledge about new developments ti ti NEPAL TRADE I roperty needs to be accessible easily to business people, roperty needs to be accessible easily to roperty issues. P P es for implemen ti overnment could formulate policies encouraging protec overnment could formulate G roperty Sec P onal Infrastructure onal ti tu ti expenses could also be provided to Nepalese businesses to encourage such be provided to Nepalese businesses expenses could also D to industrial property in the countries in which they intend to exports. The ng ti & group of civil servants who ce results in a lack of a well-trained and experienced me. There is a need for a separate training centre to provide regular training to ti R ti ons in the current civil servant personnel policies, the ons in the current civil servant personnel policies, the ti ons, and some through training of sta on rela on ti ti trademarks in export or to support the costs of registering ng branded goods or services ti me to me ti on desk on industrial property could be established in Nepalese embassies to assist businesses on desk on industrial property could ti ng regula ng ti deepen the use of industrial property protec cult to ffi on to awareness campaigns, the on to ti overnment should look into the ways it could assist Nepalese businesses in registering trademarks in foreign overnment should look into the ways it n informa hysical infrastructure plays an important role in the protec hysical infrastructure plays an important researchers, legal professionals, business people, public servants, and others, as needed. researchers, legal professionals, business people, public servants, and others, be provided from when necessary. infrastructure could be developed to procure opinions from independent Intellectual infrastructure could be developed to procure opinions from independent Intellectual property and copyright. agency. Skilled employees should be allowed to develop their career path within the will be di The enforcement capacity is weak. Some of this needs to be addressed in the legisla The enforcement capacity is weak. Some Industrial property being technical in nature, informa implemen servants. The current prac are deeply knowledgeable about the Intellectual are deeply knowledgeable about the Intellectual semi-autonomous body, and both fall under the general semi-autonomous body, and both fall autonomous agency combining all responsibili G countries. investment. A in gathering informa markets. Tax holidays for markets. Tax holidays industrial property, including export of branded goods and services. For instance, tax credits could be provided services. For instance, tax credits could including export of branded goods and industrial property, to businesses expor base of patent, technology and other Intellectual base of patent, technology and other civil servants, and university students. Such infrastructure is entrepreneurs, legal professionals, specialized lacking at the moment. there is a weak skilled technical human infrastructure. This is Together with weak physical infrastructure, the case because neither the Industrial be properly maintained and, for this, good computers and computer programs are required. be properly maintained and, for this, A Single IPR Agency To address the limita P Physical, Human and Ins In addi

oI N T I S D es. ti vi ti nder this onal, but ti 2010 U 215

1 ng and business ti T cult than that of ffi on techniques. on ) 1993. ti A erwards. The current EPOR on of trade in services ft R ti ma ti EGY 2010 D T N onal trade, the exports of ti ng (SN RA ti trade in services ances, then T tt S on, real estate, ren ti N O ccoun TI A BACKGROU ne. Similarly, unlike trade in goods, ne. Similarly, hapter 10 hapter cit in the second half of the decade. decade. cit in the second half of the fi fi C cit or to a trade surplus, depending on cit or to a EGRA on deteriorated a fi ti onal ti NT ary sector and so does not include trade in in 2007/08. The share of service sector in in 2007/08. The share of service sector ti hapter 1, the contribu C nancial intermedia nancial fi GDP cult to de sheries, and mining and quarrying; the secondary sector includes ffi ng and record-keeping systems, from individuals systems, from individuals ng and record-keeping fi ti ons, ons, ti surveys, and es ve sources, ti ary sector includes the nine services sectors , namely wholesale ti NEPAL TRADE I Barriers to Service Trade to Service Barriers Fiscal Year Table 10.1 54 per cent. In interna racted on of Mode 4 services. If one uses the conven on of Mode 4 services. tt nd, of all sectors open to foreign investment (1,743) by nd, of all sectors open to foreign investment ons of service output with data providers and depend on output with data providers and depend ons of service ti ng to the trade de ti ti A ni fi on, health and social work; and other community, social and personal ac ti on; and the ter ti 2003/04, though the situa on. on. ti Y Various Years ca l F l fi ti ed under 15 sectors. In turn, the 15 sectors are organized into three broad groupings: primary, on of trade in services and including remi fi ti ni fi 9,302.3 3,938.4 7,049.7 9,074.9 -2,034.2 -6,818.3 -8,377.3 -11,393.4 oN, however, includes only the ter 56,518.4 51,474.7 61,253.0 67,662.5 63,507.0 90,870.2 91,767.5 131,289.3 TS classi G Annual Report, es are classi ti GA ng system is based on the System of Na ng system is based on the System of ti vi on ti Nepal’s Trade in Services Balance, 2000/01-2007/08 (in Rs. Million) Nepal’s Trade in Services Balance, 2000/01-2007/08 ti on and social security, educa ti on of service credits and debits (excludes Mode 4), Nepal experienced a service trade on of service credits and debits (excludes Mode as they are exported. code to track and measure services onally recognized ti ti ni fi rst half of the 2000s, followed by a service trade de rst half of the 2000s, followed 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 can be seen either as contribu fi ary. The primary sector includes agriculture and forestry, ti P de P onal accoun ti 1993, economic ac on that may be obtained from business accoun on that may A ti on of services by the ti Debits TransportationTravelOther ServicesSource: Nepal Rastra Bank, -9,308.7 -8,854.4 -5,690.3 -8,618.4 -9,382.1 -4,984.3 -5,520.4 -10,602.2 -4,679.3 -5,731.1 -12,592.3 -5,837.4 -6,171.5 -14,557.4 -10,021.5 -7,742.0 -22,969.2 -9,691.9 -8,734.9 -11,960.8 -10,113.8 -15,785.0 -9,798.3 -20,862.0 Credits Travel 11,717.0Government Services 8654.3Other Services 11,747.7 18,147.4 7,614.2 10,463.8 8,894.5 9,555.8 10,490.5 6,624.0 10,125.3 5,959.4 18,653.1 7,143.9 8,147.2 6,804.9 9,024.6 7,441.5 8,733.2 12,336.4 13,301.8 9,472.4 9,617.2 10,281.2 Service CreditsService DebitsNet RemittancesNet Service Trade Balance, excluding Remittances 29,821.7Net Service Trade Balance 23,508.2 -20,519.4including Remittances 26,518.9 47,216.1 -19,569.8 -19,469.2 34,315.9 47,536.3 -25,241.0 26,001.9 54,203.3 -28,036.1 26,469.7 58,587.6 -33,288.0 65,541.2 32,078.9 -40,456.2 97,688.5 -53,629.5 42,236.1 100,144.8 142,682.7 es, public administra ti ni fi vi nder SN ti nlike products, which are tangible, services are more di nlike products, which U

Nepal’s na to Nepal’s Bo 1 narrow, Bo and from a variety of data sources, including administra and from a variety of over 51 per cent of system, the service sector contributed 2007. total employment was 21.4 per cent in 10.2 in Services Trade and as discussed in Notwithstanding the measurement issues, U whether one excludes or includes the contribu whether one excludes or includes the Modes 3 and 4 under the secondary, and ter 10.1 Introduc manufacturing, electricity, gas, and water, and construc goods. They assume reaching common de goods. They assume informa tourism, a as of March 2009, services, including surplus in the and retail trade; hotels and restaurants, transport, storage and communica In general, the measurement of both output and trade in services is inherently more di of both output and trade In general, the measurement there is no interna services were higher than imports un ac de However, using an expanded de showed a growing surplus throughout the years 2000s, as shown in Table 10.1. showed a growing surplus throughout to the1993liberaliza G A 2 Tourism Tourism andtravel-relatedservicesinNepalareregulatedbyvariousacts:theIndustrial R to N (2008), travelandtourismwasexpectedtogenerateN to 237,000andindirectemployment548,000persons(WTT average stayof13days,andanspendingabout plains. InF incomparable culturalheritageaswellarichenvironmentrangingfromthehighestmountainstoTerai Nepal isendowedwithrichanddiversenaturalresourcesculturala Tourism andTravelRelatedServices There areopportuni 10.3 hotels andrestaurants,whichwas2.6percentof obstacles torealizingsuchopportuni regulator foravia R The evalua in Nepalanddealswithregistra per centforeignequityisallowedinhotel,lodgingservices, andgradedrestaurants.FITT The TourismIndustry 100 percentinvestment,indica analyses barrierstoexportofsixservices,betheydomes foreign investmentintravelagencyandtouroperatorservices followingtheWT agencies, trekkingwaterra The ForeignInvestmentandTechnologyTransfer (1985), andtheMountaineering to 51percent.F WTT ules 2038(1981),theTravelandTrekking ir oN hasenteredintoagreements with35countries,butonly18airlineshavescheduled egulatory Framework O R C C perator Health Services Web-basedServices(ITandB TourismandTravel-relatedServices

(2008) N T I S s 52.1billion,or 216 ivil ti E L E on. abour ngineering Services duca E A A ct 2035(1978)(amendedin2053[1997]),theHotel, xport

Travel &TourismSatelliteAccoun 2010 via Y C ti 2006/07,516,000touristsvisitedNepal,withforeignexchangeearningof on Services ti er E on xports NEPAL TRADE I BACKGROU ti D

ti fi I ispermi on. cates ( A P uthority ofNepal( ti ti es forNepaltoincreaseand/ordevelopexportsofselectedservices.Butthereare D on in the sector, U oten ivision (TI CAA S$552.1 millionin2018. AOC N tt N alsoperformsthreefunc D edinhotel industrywith R NT ti ) andentersintoairserviceagreements withdi al ofNepaleseServiceSectors EPOR ti ti EGRA ng thatitisaheadoftheWT on, licensing, starrankingofhotels,industryincen R D ules 2036(1979). ) ofMinistryTourismand T ti PO ng Research,Travel&Tourism:TheWindsofChange. TI ft ti es, manyofwhicharedomes ing, ponytrekking,horseriding,andtouristlodging.Nepalopenedup O Services) N CAA S T D RA N), whichcameintoexistencein A epartment of gency T EGY 2010 2 The A GDP ct (FITT R G ules 2037(1980),theTrekkingand G in2008/09. R oN’s approval. ti ons: regula oN’s economicsurveycoversonlythecontribu s 16.6billion,or ti U c orforeign: A S$60 aday.Thesectorprovidesdirectemployment C ) 1992doesnotallowforeigninvestmentintravel ivil O C C commitment. A ivil 2008).Furthermore,accordingtotheWTT via L odges, ti A ti on, growth,andmonitoring. Itprovides ti on used toperformthesefunc c innature.Thischapter examinesand via A s pertheWT ti U on (MoT R S$257.3 million,in2008,increasing estaurants, BarandTourist ff erent countries. tt rac D O ecember 1998,actsasthe CA membership,butlimitedit ti ons. Thecountryhasan ti O ves, andmonitoring ) isthetourismregulator commitments,upto80 fl ights thusfar. U A R E nterprise , however,allows a S$205 million,an ft ing A t present,the R ules 2044 ti ons. A ti ct, the G on of P uide rior C

c fi ng N T I S ti c; 2010 ffi 217 S$50,000) is hina provide U C on. However, ve for speci for ve ti ti T na on requirements, ti ti me air tra ti EPOR verest, ( ng as the coordina ce owing to the lack of R ti E ti EGY 2010 D hinese tourists; T on abroad requires large on abroad requires N ti needs to be addressed by C A RA S is ac cult possibly due to the lack T ffi C es for climbing other Nepalese S ti N O ow of ow fl TI es at TI BACKGROU ti lso, if one goal is to diversify and lower pressure on day ng EGRA A tti on laws, documenta ti NT force large airlines to refuel outside Nepal; oN for climbing Mt A G ivision of the Mo vely for lack of necessary human resources, ti D

on in 2001, only three agencies in O ti ec ff na hinese side. ti C NEPAL TRADE I commitments; oning e O ti onal airport cannot materialize without support from donor ti which are made di onal linkages, ti ng of Nepalese tourism. bility is a constraint. Tourism promo bility is a constraint. ti ti ommitments. This has yet to be put in prac ommitments. This has yet to be put in lso, Nepalese traveling abroad are allowed to exit the country with lso, Nepalese traveling abroad are allowed overnment needs to lower the royal C A G ct 2038 (1981), formulated 30 years ago, remains in place and needs ct 2038 (1981), formulated 30 years ago, verest from the A ct does not include provisions for opening hours of bars, dance clubs, and ct does not include provisions for opening E A bility. bility. ti onal airport, closes at 12.30pm, pu ti oint established under the WT Schedule of verest, the P E O hinese wishing to visit Nepal, hindering the free hinese wishing to visit Nepal, hindering on to abide by the WT ti estaurants C R services. the barriers to export of tourism on below describes cient airport infrastructure and associated facili cient airport infrastructure and associated ti ffi nquiry es to climb Mt ti es is a problem; E ti hina approved Nepal as a tourist des c regula c ti C S$2000; U , Nepal’s only interna A okhara, the second city for foreign visitors, is to be strengthened as a tourism des okhara, the second city for foreign visitors, is to be strengthened as a tourism onal Market Access Barriers: ons. The sec c Barriers to Market Development ti ti onal Barrier: onal ti work as a disincen lack of transparency, and policies that on on currency movement, agencies; the development of a regional interna of capital account conver only peaks; a domes travel services to pushing par equipment, and proper mandate and work plan; expenditures and people with interna diaspora for more aggressive marke P involving the private sector; of the facili revisions. For instance, the the pressure on Mt equity under its WT or agencies at present. body of the services sector in Nepal, which is being represented by 17 ministries However, the enquiry point is not func restaurants; ti ti The Service The far, to mobilize and involve foreign missions, Nepaliesenon-residents and Nepal has failed, thus The lack of su for such a small country, quality of many Though Nepal has 54 local airports, which is a good number royalty charged by the The very high mountaineering The high ground handling charges and high fuel cost at TI Though The Hotels and TI cent foreign travel agency and tour operator services for foreign investment up to 51 per Nepal opened The lack of capital account conver na tu ti ti onstraints in the tourism sector exist in the form of immigra sector exist in the form of onstraints in the tourism restric des Interna Domes Ins Regulatory Barriers: C Services Barriers to Tourism IT The Telecommunica R that sharesborderswithtwoI The importanceandpoten IT andBPOServices Human ResourceBarriers: C D mobile serviceproviders,internetandemailprovidersforinstance. P The liberaliza created thefounda Nepal ranks132ndoutof133na highways ofNepal,licencefee-freeWi-Ficonnec to establishatransitcommunica B The class ITservicesprovider. readiness index.ThisshowstheprogressNepalhasyettomakeifitisachieveitsgoalofbecomingaworld GA olicy of1999havefacilitatedentrynewbusinessesintothetelecomsector,increasingnumber ommission ofInforma PO evelopments inthissectorincludetheop egulatory Framework P TS, asshowninTable10.2. olicy of2000(revised2004),the G areamongthefewavenueswhereNepalcanproveitscompetence.

Thoughtherearevariousins N T I S oN hasshownitscommitmentforthegrowthofthissectoralsobytakingonliberalcommitmentsunder 218 L sector s drain ofquali abour rela 2010 ti on measurestakenbytheNepalTelecom ti llshowsashortageofquali NEPAL TRADE I BACKGROU ti ons inthesectorareanissuefrom ti ons forthegrowthofthissector. fi ti ed manpower.However,moretrainingins on ti on Technology(H A N ct 1997,whichledtothecrea ti D alofITandB R NT C EPOR T giants.Technologytransfer,innova EGRA ti ti onroutebetween ons surveyedbytheWorld ti T tu TI E O ti lectronic Transac ons andtrainingcentres producingtourismmanpowerinNepal,the N S PO LC T fi RA ed professionals. servicesisunderstoodinNepalbynow,especiallyacountry IT), andtheliberaliza ti cal T EGY 2010 ti vity, andtheabilitytoleverageitsop fi bre backbonethathasbeenlaidacrossthe C ti hina andIndia. me to A ti ti on oftheNepalTelecommunica on uthority in1998andtheenactmentofTelecom A ti ct 2006,theestablishmentofHigh E me P conomic Forumin2009foritstechnological ti art oftheproblemhastodowithbrain tu ti on ofthetelecommunica ti ti ons areneededtomeetthisgap; on/incuba A nd yet,despitethesedevelopments, ti on, o ff ti shore des cal ti on fi ber connec ti on sectorhave A uthority, the ti na E ast-West ti on for L ti vity evel I PK on es, ti ti ned

N T I S fi on of

2010 ti 219 on laws; on ti onal licences to ti T it. This is a major ves/promoters to ti tf EPOR ons on visas and work ti R EGY 2010 D provided under horizontal section T N RA T ce there is no clearly de S$2,000, but this is too low for (1) None (2) None (3) None (4) Unbound, except as ti S U N on of the Ministry of Informa ti on, Nepal restricts foreign equity O ware. In case of warranty-related ti ft ract the market of data conversion TI mes for the same item; se in regulatory mechanism; tt ti ti BACKGROU EGRA ve market. This is due to legal ambigui NT ti

ve jurisdic ve ti ti dence of onshore clients by opening a foreign dence fi through incorporation in Nepal and with maximum foreign equity capital of 80 per cent. as indicated in the horizontal section uropean countries, due to weak data protec NEPAL TRADE I on was established in 2007, the implementa on was established in 2007, E ti (1) None (2) None (3) None, except only except (4) Unbound, Table 10.2 ca fi

ti T sectors are largely concentrated on Modes 1 and 3. Mode 4 is T sectors are largely concentrated on Modes ll lacks a true compe ti C ce fi Services me import tax is applied, but in prac ti cularly from cularly ti PO IT/Ministry of Science and Technology. This discourages investment; LC ; c market of Nepal Telecom was terminated by providing addi O ti on, par on, ti cally, one- ti Nepal GATS Commitments in Computer and Related Services Nepal GATS Commitments on and H in foreign soil, on purpose. In principle, a Nepalese company can open a subsidiary ti ti ce of controller of cer ffi on is usually not restricted (except by a few countries), the dollar exchange policy applied TS commitments in the I ti service exports are considered as just another form of export with a 20 per cent export tax service exports are considered as just another form of export with a 20 per cent Sector and subsector Limitation on market access Limitation on national treatment entral Bank remains a constraint. The exchange limit is set at GA ons, theore PO ti C ommunica - Data preparation services (8491) machinery and equipment, including computers (CPC 845) services (CPC 8499) installation of computer hardware (CPC 841) 842) C lthough the short-term movement of natural persons as business representa lthough the monopolis - Other computer (f) Other Other computer services - (a) Consultation services related to the (b) Software implementation services (CPC (c) Data processing services (CPC 843) (d) Database services (CPC 844) (e) Maintenance and repair service of of court cases, frequent changes of government, and a lack of exper process and businesses are forced to pay import taxes numerous subsidiary. barrier for IT companies that may need to gain con and infrastructure has yet to take place. Nepal has not been able to a business promo ou but again there is no provision for foreign currency exchange to establish such private sectors, the telecom sector s another na by the permits for people coming to stay and work as employees. In addi these services as per its capital up to 80 per cent for companies incorporated in Nepal, to provide commitments in the WT and medical transcrip A Regulatory Barriers one of the most restricted categories within the service sector, including restric A imposed. So far, no tax measure has been reported on import of so transac Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons supply (2) Consumption abroad (3) Commercial Modes of supply: (1) Cross-border Computer and related services of Nepal Source: WTO Report of the Working Party on the Accession IT and B boundaries in the respec In many cases, there are no clear the o Though Nepal’s Barriers to Trade in IT and B 5 4 3 The 2008S P Background on Educa E Nepal idealforexpor major partoftheequa Shrestha (2004)Shrestha. S R educa AR Trade conomic andInfrastructuralBarriers oten A aychaudhuri and WT TNeT Short-term

IndiaisNepal’smajoreduca Inastudyofeduca The Theprivateeduca In2001,governmentins The Schoolsare sca Nepalesecompanieshavenotbeenabletoe Thesectorlacksseniorpersonnelwithexperienceinspacealloca The Thecostofbandwidthis TheonlyITparkinNepalislocatedoutsidethe N T I S 220 EE ti R on_and_training_info/nepal.r educa public ins P A etc.; process (standardopera of qualityanddeliverycapacity. of suchelectricity; I A at about4percentof university-level medicalins the interna is insu students wenttoIndiaforhigherstudies,crea educa K have elated C ti (2008) roviders ofeduca athmandu valley; s of2005,therewere35,540publicschoolsand4,480privateinNepal,sixuniversi t ti al for T providersequippedwithgeneratorsduetoregularscarcityoffuelforandthehighcost on Services ti mes, thesectorhasexperienced16hoursofload-sheddingeveryday.Thisisaproblemevenfor AA

G 2010 G C fi C apability MaturityModelIntegra oN allocatesanaverageof16percenttheannualbudgettoeduca oN permi nancial andadministra ti ti ffi apacity, MinistryofIndustry, Nepal’s ExportPoten on asagainstanou onal ins cient foradecentITandB T EE D NEPAL TRADE I BACKGROU R ti e (2006) E tu esearch study‘Nepal’s ti duca onal arena. ti E ons accountedformorethan90percentofthesupplyeduca ti R duca ng educa ti tt tt ti ameshwar. 2004. tu ed privateuniversi ered acrosscountry,butthehighereduca on. Nepalisa geographicallydiversecountryendowedwithnaturalbeautyandquiet P A roject. ssessing BarrierstoTradein ti ti ti onal ins onal ti N ons, byallowingthemtobeestablishedunderNepal ti on tradeduring2001–03,683foreignstudents cametoNepalinpursuitofhigher on servicescanbebroadlycategorizedasprivateandpublic. D ti on ServicesinNepal GDP tf R ti NT . al inServices EPOR ti ti fi EGRA ng procedures),projectmanagementtools/techniques,securitymeasures, onal services. ve E E tf ti . Thisisthehighestalloca low of2,087studentstocountriesotherthanIndia. tu xport ti ti xport tu tu ti C on tradingpartner,followedbythe T E ti ommerce andSupplies/ ti ti duca mes higherthanthatofIndia; TI ve independence; onalized theincreaseinprivateinvestmentsschoolsandother ti ti ons aresupervisedbythe ons, and621a O O P N ti (Health, Educa on Nepal. oten PO S nly onecompanyinNepalmeetsthe ti es tocomeintoopera T RA serviceprovider; ti ti E on ( al inServices’suggeststhattherearemanyfactorsmake T duca EGY 2010 A APAR mong thesefactorsnaturalenvironmentandreligionare a ti C on Servicesin ff ti ec MMI) appraisalistheinterna on andHigh-EndRetailServices),report ti N ffi ng anetou liated campusesunder theseuniversi U K E ti N T onlinepublica athmandu valleywithacapacityof300persons.This vely markettheirso DP . ti on inSouth D eveloping G ti tf ti on star onal ins low 2,205studentsduringtheperiod; oN intermsofacademiccontent,butthey ti on availableat:h ti E on, produc S U CAP A S ti sia; ng in1991; ti A

tu C ft , the ountries: ware productsandcapabilityin 3 ti ons aremostlylocatedinthe C C MMI standardsofar; tt UK ompany p://www.aparnet.org/documents/ ti onal benchmarkstandard ti submi vity-based perks, de A , ti on sector,whichstands n ti C on servicesinNepal; A E hina, and totalof801Nepalese mpirical tt ed to A ct; D ti E es; uring 2005–07, E nhancing Nepal’s xercise. WT A ustralia. ti es, two O fi ned / 4 5

ve ve ti ti

N T I S onal ti ons and ons arjeeling ti ons, and ons, ti 2010 D 221 onal services ti ow is through fl T 8 lthough the eighth A EPOR

9 nglish at all educa R on exports. The quality E ti equoted from EGY 2010 D ons, creates a nega R T cit. To turn this around, ti N fi (2008). RA elds, quotas established by elds, quotas c missions do not even have tu fi ti EE T ti S WT N urope (8.09); A on trade. E O ti lled to capacity. In short, it is clear bservatory, fi TI O lso, clear investment regula lso, clear investment BACKGROU export. onal service ti A le towards informing foreign students nity, clear investment regula onal index produced by the World Bank tt EGRA ffi ti (2008). cant trade de fi EE NT on services are as follows: ti equoted from S The low cost of living is also a major posi The low cost of living WT 6 ingdom: The R A K .: The World Bank. C . D nited cularly in public ins U ti ublishing, P sia (2.1) and Western NEPAL TRADE I A equoted from S R Washington, In the medical and technical 7 ons of GATS. on. ti ti for educa ve environment c missions contribute li ti elhi: Manjusri ti D on services with a signi mes. ti ti intake) are h of the total student ft pulates that teaching should be conducted in New

ti on service hubs of India. fi ti on. ows of religious learners and devotees from India and Tibet to study ows of religious learners and devotees from India and Tibet ti fl cal interference, par ti and students and makes on service export. This discourages many investors al in ng used to promote and create awareness for Nepal’s educa ti (2001) s on in Nepal. Kathmandu. xport ti ti ti es, except for language courses, this provision is only followed nominally; ti on is one of the major impediments to enhancing educa E EA ti on Services: The Implica (2008) shows that around 70 per cent of the foreign student in cally, one- cally, ti fi on is below world standards. In an educa onal educa onal ti ti EE on services available in Nepal. Many of these diploma ti on ti on less marketable; WT ti A of religious studies and medical and technical studies. Nepal al of export is in the sectors ti on counselling sec ti duca South Asia Growth and Regional Integra E onal and Infrastructural Barriers ti New Horizons in Educa Trade in High Educa A Study in Nepali Economic History. tu ti es in Nepal (speci ow quality of educa barriers to educa anguage is one of the leading non-technical ti Ins an educa environment for educa Nepal’s educa (2007), Nepal scored 1.60, lower than South (2007), Nepal scored 1.60, lower than about the educa personal contacts. Foreign diploma of Nepalese educa levels and by all facul Market Development Barriers is minimal. S amendment to the N L L Quality Barriers (2008). eharadun, the tradi are required. The barriers to export of educa cant changes degree of poli The high The amount of marke

is similar to that of physical environment of Nepal’s hill region ons favourable for study. The fi EE D ti egmi (1971). haniya (2007) night (2002), WT K R K A World Bank (2007)

has been witnessing substan The greatest poten Hinduism and Buddhism since ancient Hinduism and Buddhism since ancient S factor, including for foreign students coming from well-to-do families. foreign students coming from well-to-do factor, including for physical for such export. In sum, a pleasant provisions create a favourable environment simple cross-border religious a cost of living, possible cultural and environment, the low provisions create a posi simple cross-border 6 7 8 9 and Barriers to Nepal remains a net importer of educa loca signi universi that Nepal has an opportunity to create a market niche in this sector. that Nepal has an opportunity to create R 11 10 While interna E type ofexports(foreignpa A important. of thecountry’sna There aremanyvariablestoconsiderinanalysingNepal’sexportpoten Health Services From apolicyperspec quoted fromS increase inexportofhealthservices. services, theaccessiontoWT Nepal’s T Nepal withamaximumforeignequitycapitalof51percent. sub-sector, exceptinmarketaccessMode3,whereforeignservicesprovidersmustbeincorporated services havecreatedopportuni service systems,providingcomputersandinternetaccesstofacilitatetelemedicine,collec promo a of living,andtheprovision From atradeperspec have beeniden regarding herbsandintellectualproperty,enhancingresearchac private sectorandenhancedtheoverallcompe investment inthehealthservicessectorremainsachallenge. A eport Submi N tt s indicatedintheS t present,however,Nepalremainsanetimporterofhealth servicesand,despitea nvironment forNepalese K rac armacharya, Binod R B (2005)

Nepalese educa N T I S ti 222 ve. Furthermore,theliberalpoliciesadoptedby ti A investment inthissector. failure toliberalizeF that thecostofdoingbusinessinthissectorremainshigh. higher educa to liberalizetradeinthela laboratories, libraries,dormitories,andinforma ng, andexpandingtelemedicine,developing mong the Y tt I A ed to Nepal’s WTOServiceSectorCommitments andItsImpactonBalanceofPaymentSitua 2010 P WT recognizesthepoten ti EE onal tradeinhealthservicesNepalislimited,par ti AD NEPAL TRADE I BACKGROU

(2008). fi ed topromotesuch developments. K B. umar andNephilMatangiMaskay.2006. fi A ve educa ve ti ti onal healthcaresystem,regulatory environment,andgovernmentpoliciesaremost on, adulteduca WT ti ve, agoodphysicalenvironment,thelowercost ofhumanresources,thelowercost ti ti ve, Nepal’saccessiontotheWT onal ins EE N ti 2008studycitedearlier,exportofhealthservicesviaMode2remainsthedominant ents travellingtoaNepalesemedicalins D D I andthehighincidenceofcorrup R NT ti on sectorsiden EPOR ayurvedic ti EGRA 10 ti tu es forhealthserviceexport.Therearenomajorspeci O tt er three.However,thereispoorimplementa ti E andtheensuingcommitmentsinhealthsectorhaveledtoagradual ti al forhealthservicetradeandincorporatesstrategieslikeestablishing, T ons lacksu xport ofHealthServices 11 TI ti

on, andothereduca O N prac S T RA ti T ces arethemajorfactorsthatmakeNepal’s healthservices ti ffi ti

EGY 2010 cient infrastructure.Theylackwell-maintainedlecturehalls,

fi ti ed bytheWT Economic Coopera veness ofthesector. ti on centres. O anditscommitmenttoliberalizetradeinhealth ti on), Nepalhasmadecommitmentunder 12

G ti ti on betweenEastAsiaandSouthAsia:NepalCountry Study. O on areprimarycausesofdecreasingforeign oN hasencouragedtheinvolvementof (primaryeduca A ccording to ti ti ti tu cularly whencomparedtoothertrade vi ayurvedic ti al inhealthservices.S ti ti es. However,noconcretestrategies on fortreatment). ti on. K K andotheralterna athmandu: Nepal armacharya andMaskay,the ti ti tt on ofthiscommitmentso on, secondaryeduca rac ti ve policies,a fi climita ti ng informa ng ti R ll, thespeci astra Bank., ti ons in this ti ve health ve tt rac GA ti ti on, ti fi on ng cs TS ct on A me ti ti N T I S ct of (2008) A EE on and ti WT lan (1997–

2010 cost erent 223 A ff P ons for the ti ct and Foreign on among the on among ti A T mployment l repatria ti E on are very rare and EPOR ti on and transporta R ti on; , no concrete strategies a ti ti ons of 1995. Nepal has ther factors, such as P EGY 2010 ti D I ng more investment from T O N ountries: Implica ti Y C I and fewer consumers; le coordina mployment RA tt E T D eren ong-Term Health ff egula L S R N O ng of this export. Most consumers eveloping TI ti D BACKGROU nue to limit the increase in women’s ow of F c ti fl fi EGRA aci P shows that there are consumers willing to shows that there are consumers willing NT . sia- EE ons between the temporary and permanent O A ti ed marke ed fi erent health care systems have di ff WT i cal instability, genera nc ti A ti D lans, and the current T the lack of market on is required. However, due to ti P ct of 1993 and the supply of this service; c export fi esearch and Training Network on Trade. Quoted from S A le uni le R tt ct of 1992, the Foreign A c fi on NEPAL TRADE I ct of 2007, compared to the Foreign ti ves in Selected aci ti A P cult; ffi sia- al to market to a larger target popula abour A ti L evelopment D on and Incen on in the sector. ti ti rst is the lack of dis fi mployment olicy of 1991, the subsequent Second olicy of 1991, the subsequent Second nd, there is very li E survey conducted by S ances from overseas Nepalese workers have become a major component P A tt A iberaliza abour Services: L f the two main problems that hamper the export of professional human er quality. However, these other forms of di ons tend to emphasize their low costs. While the cost of health services is ons tend to emphasize their low costs. L ti tt O aper Series, No. 22, P ons. ons. ti tu c policies, as well as due to poli ti on available to the consumers is poor. There is li to the consumers is poor. There on available fi ti tu ti onal Health on limits Nepal’s poten ti ti educa onal spending on training and xport of ons of 2007, and the Immigra ti ti d/artnet. limited to, poor infrastructure, overcharging foreigners, security, ons include, but are not c and foreign investors is di ti E ighth, Ninth, and Tenth ti ti E xports of Health Services xports of Health on and speci egula E ti R ty, addi ty, ti not favourable The general business environment is in Nepal remains a challenge. cal instability ti on with the family. on with ti ther limita lthough the development of the health sector has been guided by policies, programmes and plans lthough the development of the health oli . both domes also need to be considered. pay a higher price for be of health services; yet to be explored by Nepal’s exporters who come to Nepal to receive medical treatment are informed only by word of mouth. This lack of who come to Nepal to receive medical market integra integra various medical ins only factor that generates demand. indeed cheaper than in India, it is not the language barriers, etc. for doing business, including in health services. This means less including in health services. This means for doing business, needed to receive a service, quality of service, costs and quality of accommoda needed to receive a service, quality of structures. Informa A such as the Na quan O P and policies have been delineated for mode-speci 2017), the ve step taken by the Foreign ti P

and are limited. In order to increase human resources in both quality Skilled health care professionals Nepalese medical ins integra There is a lack of market N G p://www.unescap.org/ posi s shown earlier in this chapter, remi Maskay, et al (2006). Foreign Investment mployment xport of labour services is governed by the tt Health Service Sector in Nepal, Working h 12 not made any commitment regarding this service under the WT A resources in developing countries, the reintegra 1985, is the removal of the need for women to secure permission from a guardian, which had hampered 1985, is the removal of the need for women to secure permission from a employment. Though the their freedom and restricted their movement and chance to gain overseas has removed this provision, psychological fear and cultural values con overseas employment. E Barriers to the remain un Barriers to labour export start right from the beginning of recruitment and Labour Services A Barriers to of E among migrantworkersisaround2.5percent,includingengineersandsurveyorsaswell.Inaddi country. BasedonaninterviewwiththeForeign Most exportsofengineeringservicestakeplacethroughtheactualmovementengineersoutside horizontal commitmentsthatapplytoothersectorsaswell. per centofthenumberlocalemployees(includingmanagers,execu allowed for A 10.4 restric E Export ofEngineeringServices immigra movement ofworkersastheprocessiscomplicated,non-transparentandcostly;second recommenda absorp about 20engineeringcollegesinNepalproducingsome 2,000 engineerseveryyear. There ispoten details). engineering of auniformprocessfortheevalua in other raised intheseconcludingparagraphs. from Nepalcanbediscussedunderthefollowingpoints: ngineering serviceswereliberalizedaspartofNepal’saccessiontotheWT c ti oal recommenda onable

Womenmigrantworkersfaceproblemsandrisksthatareuniquetothemwhichthe Thereisalackofservicesaimedateasingthereintegra Thereisextensiveuseofinformalchannels,whichputsmigrantworkersatriskabusebothinthe Nepal’sexportoflabourservicesisnotwellorganizedonthegovernmentside.Bureaucra N T I S 224 ti ti also o P aggravate thelackofproperandadequatepre-departureorienta receiving countryandbyagentswhodonotprovideproperdocumentstoworkers.Thistends abuse, psychologicalandphysicaltraumaorworkthatisrisk-prone. equipped toaddress,includingprotec monitoring andsupervisionbythe lack ofe requirements arecentralizedin services inthereceivingcountry; arduous workinghours;salarynotprovidedaccordingtocontract;andlackofadvisorycounseling abuse; threatandmentalharassment;impoundingofpassportsbyemployers;long,irregular to protectNepaleseworkersfromproblemsfacedinreceivingcountriessuchasverbalandphysical onsofthisserviceunderModes1and2. on capacityofapproximately500engineers,forcingtheresttoremainunemployed, seekemployment oten ti fi O on policies.Theotherproblemsincludelackofuniformityintrainingandstandardsworkers, elds, orseekforeignemploymentintheirareasofexper 2010 verall fi rms incorporatedinNepal. fi ft ti rms have startedexpor ti al migrantworkershavedi en lackofinforma ons aredescribedin ti al forexpor ff NEPAL TRADE I BACKGROU ec ti ve Nepaleseembassiesorconsulates inreceivingcountriesmeansveryli R ecommenda ti N ons arelistedinthe ti D ng engineeringservicesonlybecauseoftheavailabilityengineers.Thereare R NT EPOR EGRA ti on safechannelstoremitsalaries; ti on ofqualityand skillsofworkers.Thebarrierstoexportlabourservice T C TI hapter 2.S ti ng computer-baseddesignstoforeigncompanies(See O K N athmandu anddi ffi U culty securing S G nder Mode4,thenumberofforeignemployeescannotexceed15 T ti oN whenneeded.Nepalesegovernmento RA ons ti ng theminthereceivingcountriesagainstviolenceandsexual T EGY 2010 ti ll, anumberofbroadcross-cu E U mployment nder Mode3,upto66percentforeignequitycapitalis A c ti on Matrix,andmoredetailedsector-by-sector fi nance tocovertheini ffi cult toaccessforpoten ti on ofreturnees; A ssocia ti se. ti on,thepercentageofskilledlabour ti ti on andtraining; ves, andspecialists)asperNepal’s O ti in al costsoftheirtravel.They tti ng issues canusefullybe ti A al migrantworkers.The pril 2004.Thereareno ffi cials are ill-equipped O f this,Nepalhasan C tt hapter 2for le support, le ti on, some G oN isill- ti c

O c N T I S ti eference on in line ) has been R ti

2010 225 O EPC onal Trade in ti T entre (T EPOR C R t present, weak human A EGY 2010 D es. The WT ti T N on ti vi on services related to WT RA ti ti T ons intended to assist in the cs of Interna ti ti S s N romo ti tu ti O P TI division. However, the enquiry point division. However, BACKGROU ed professionals is also required to ve manner. ve fi O ti ng in the area of tourism. ons, including those that support the ti ti xport EGRA ec E commitments in the area of services. The ff ons. Because of this highly fragmented ons. tu ti NT ll these indicate the need for strengthening O ti A ccoun tu ti A the services sector in a holis er the interest of ng services from Nepal. ft ti ct 2036, formulated 30 years ago). A oint under its WT vailability of quali P NEPAL TRADE I A ommerce for providing informa ommerce for providing C Trade and l now, the nquiry ti on looking a E ons and acts that govern individual sectors and that are out of ons and acts estaurants n ti ti in high cost of internet bandwidth, which is a business ons results R ons to abide by its WT U ti ti tu ti countries such as Nepal, which are beginning ons so that developing ti er people. er people. on of Tourism Satellite tt ti vely. vely. ti c regula c on, and engineering services. onal Trade in Services. ti ti ec ti epartment of ff S$2,000 per Nepalese travelling abroad is a problem for service exporters in a S$2,000 per Nepalese travelling abroad is a problem for service exporters in cular ins onal trade in services, can gradually structure the available informa ti ng be ti D tti U N (2002) has prepared the Manual on Sta N (2002) has prepared the Manual U on of service exports. ti on e on ti on of service exports in a coherent and e ti cs of Interna ti onal standard framework. ate the prepara ti s ti on in telecommunica ti ti

ti S has established a Service S has established a Service cs on interna on cs C on of its recommenda ti ti s er the products sector. ti ft oning properly for lack of necessary manpower, equipment and ac necessary manpower, equipment and oning properly for lack of ti ons The manual represents an important advance in providing a clearer, more detailed, and more The manual represents an important onal Issue onal ti ti 13 oN needs to create a service export ‘champion’ and strengthen ins oN needs to create a service export ‘champion’ oN needs to take a serious look at improving its measurement of the service sector and service trade in oN needs to take a serious look at improving tu cient compe cient G G ffi ti ers also does not func tt N (2002) Manual on Sta U entre established under the entre established under onsidering this problem,

The Nepal. with the new interna Nepal should also ini manner. The Mo development and promo

Services. to develop sta impediment to most service sectors. is not func C The structure, there is not any par structure, there is not skilled human resource abroad, resources is a serious problem in the tourism sector due to the movement of web-based services, companies forcing some hotels to run their businesses through internees. In the IT and have to compete hard for ge promote export of health, educa Regula Nepal needs to formulate domes Quality of Services The quality of services is one of the constraints on expor step with current needs (e.g the Hotel and Data Constraints sector and trade in services in Nepal. There is very limited data on the service C of such trade. The manual also proposes a phased approach to comprehensive system for the measurement the implementa training and other capability development programmes and ins sectors targeted for promo country needs to review and reform regula The current exchange limit of number of sectors and needs to be revisited. Insu Ins ins involves 17 agencies and government The service sector ma looking only a 13

N T I S

2010 sub- onal, 227 ti ons (TSIs) are ons. ti ti T tu tu ti ng Nepal’s export ti ti EPOR R ended the focus group tt onnairesand enterprises enterprises onnairesand EGY 2010 D ti T me secretariat, a business ons; N ti ti RA ed in the NTIS 2010. Twenty T ons) and approximately 190 apacity fi ti

S ti C N tu T unit, a product display hall, and O ti ons, 342 public and private sector C ti TI key to consolida BACKGROU A onnaire. It also incorporates the gaps evelopment evelopment hapter 11 hapter ti onal fora; onal D onship with those ins ti C EGRA ti (na ons that have geographical ti NT ons. ons. ti tu ti I include: ) centre, an I CC RD onnaires TSIs were asked to describe their services, ti onal trade fairs and exhibi ti NEPAL TRADE I onal and interna ti ons were surveyed through ques onal remits. Nepalese Trade Support Ins ti onal, and specialized ins ti ti export sectors, including al Nepalese exporters across many ng TSIs. ng ti ng exports and investment; ti ti tu ti ons: Business Business ons: ti ered by the FN ff services. In 2010, requires a range of trade support als in the NTIS ne hundred and forty-three enterprises a ne hundred and forty-three enterprises ti tu O S) o ons; ti ti D onal and interna c, and func ti fi Services for Trade Supply for Trade Services range of ins ered by a wide apacity and Needs onal and district level. on and research services; ff ti ti C ngs. Through the ques ons for promo ti ti onnaire. ti on in na onal chambers of commerce and industry. It has a full- ti ti , or even joint public-private organiza es. ti GO on ed and surveyed. Ins fi ti cipa

ti ti er industrial rela ed as export poten tt fi

ti ng facili ng ng the business community in na ti ti ng par ng ng joint ventures; be ng ti ti ti Industry (FNCCI) on of Nepalese Chambers of Commerce and Trade Support Ins Trade I is the apex TSI of the Nepalese private sector. It was established in 1965 to promote and protect I is the apex TSI of the Nepalese private sector. It was established in 1965 to ti on provides a snapshot of the TSIs that responded to the ques epresen reparing recommenda romo roviding advisory service to exporters, importers, and investors; romo roviding business informa ti CC R P P P P P ed by exporters in the services of the TSIs based on their rela fi ngs.

Facilita

sectors selected; and The needs of Nepalese exporters in the 19 priority The capacity development needs of exis ti ti onal, and bilateral), sector-speci ti supply capacity lies in strengthening TSIs and improving the mechanisms for exporters to access their services. and improving the mechanisms for exporters to access their services. supply capacity lies in strengthening TSIs the success of the country’s trade support infrastructure is that it The most important factor underpinning must reach out to producers at na This chapter addresses: either public, private, N TSIs responded to the ques mee their strengths and weaknesses, as well as perceived needs. their strengths and weaknesses, as well among the 19 priority sectors iden TSIs and enterprises were selected mostly na Nepal, trade support services are o Nepal, trade support businesses were iden by means of focus groups mee iden library, a training unit, a human resource development (H conference/mee The business development services (B The FN 11.2 Nepalese TSIs: 11.2 Nepalese This sec Federa or municipality chambers of the rights of businesses and industries. Its membership includes 92 district commerce and industry in all 75 districts, 73 commodity or sector associa Twenty-eight TSIs (apex, sector, district, bi-na Twenty-eight TSIs (apex, sector, district, undertakings, and ten bi-na 11.1 Introduc of current or poten Strengthening the capacity the 19 sectors iden agencies, andS The FN The T Trade andExportPromo O agro businesssector.TheFedera Forum (N The T Board. organiza Nepal. IthasaWT A ssocia bserva Seektechnicalassistancefromna Supportthedevelopmentofaddi Supportthegoal ofpovertyallevia Strengthenthena FN FN FN FN FN FN FN Strengthening sub-na EPC

EPC N T I S 228 CC and analysisofexportimporttrends; D L A and othermul L P P C P trade; di internal andexternalmarketsforagro-basedotherproducts; produc and members; standard ofexportableproducts; ti aunch programmestoincreasethesupplyofexportableproducts bypromo inkages tomostotherTSIsareonanadhocbasis; on. ItpromotestheNepalese roviding ‘one-stop’servicetomembers. roviding publica romo onduc dvise the iversify tradebyiden ti ff ons: theTrade ’s mandateisto: isthe Y I hasprojectsandcoopera erent agencies; CC CC CC CC CC CC CC BF). ti 2010 ons fromenterprisesandotherstakeholders: I needstechnicalassistancetoprovideonwardsupportstakeholderswithregardtheWT I lacksanup-to-datetradeinforma I doesnotpromoteadequatelydialogueandliaisonbetweenbusinessesgovernment; I isshortoffunds; I’s leadershipamongthenetworkofNepaleseTSIsisweak; I lackssu I hasashortageoftrainedhumanresourcestoprovideadequateB ti ti ng entrepreneurship; ti vity, entrepreneurship,qualitymanagement,environmentaletc.; AARC ng, training,workshops,andseminarsonchambermanagement,industrialrela NEPAL TRADE I BACKGROU G oN’s maintradepromo G oN informula O . Incoopera ffi ti cient in-housecapacitytoprovideenterprise-orientedT cellandaNon lateral andbilateralobliga ti P ons, informa ti onal economybydevelopingandexpanding tradeandexportofthecountry; romo N D ti onal chambersandassocia ti R NT fying poten EPOR ti on EGRA ti on with ti ti ng policiesforthedevelopmentand expansionoftradeandexport; ti on anditsmemberchambersissuecer on Centre(TEPC) ti C T on agreementswith entre, the TI ti R O on exchange,documenta Y esident NepaliN N oung S ti ti ti U ti onal ins onal onorganiza ti onal andinterna on throughthedevelopmentofruraleconomybyenhancing al marketsforexportableproducts; T S RA A I E T D ti E ntrepreneurs’ Forum(N EGY 2010 on unit;and, , itestablishedthe xport ti ons ofNepal. ti tu P ti ti ons andorganiza on,establishedinNovember2006bymergingthree romo ti R U ons; N cell,whichfunc N agencies,theWorldBank,bilateraldevelopment ti onal organiza onal ti on Board,andthe ti on; and, A gro YE E nterprise ti F) andtheNa ons thatcanassistindiversifying ti ti

ons toimprovethequalityand fi ti cate oforiginforexportsfrom ons astheSecretariatofN R T D A C S, includingmarketresearch arpet &Wool toitscons C entre topromoteNepal’s ti ng coordina ti onal ti tuent chambers Y outh Business D evelopment ti on among ti ons, R O N

N T I S on of ti perators

2010 O 229 ssocia ve is to take S needs; ti A D onally. ti T onal arrivals, one ti onal and capacity- onal ti EPOR on of Tour ts from bilateral and ts from bilateral ti fi R EGY 2010 D mate objec mate T ti N ons and provide targeted ons ti RA ssocia es. The tourist service fee ti T A tourism ng Nepal as a premier ti S vi ti N O TI BACKGROU EGRA NT oN on appropriate measures to solve these; oN on appropriate measures G on; ti N), and the Nepal on of the sector, its ul ti ous: two million annual interna onal or foreign investment for export- or import- onal or foreign investment for export- ti AA ti TZ adviser to assist with organiza nancial independence. nancial fi G NEPAL TRADE I ract na ract tt me ti ng itself from other apex organiza ng itself ti ng and promo ti a on of Nepal (T ti ti and match its human resources and skills with the B ff erings of others; and, ff on with tourism industry stakeholders like the Hotel on with tourism industry stakeholders like the Hotel ti eren has a full- ff ngs; ssocia ti ons as well as product development ac A ti EPC arliament in 1999. It is responsible for marke support services ng to quality control, insurance and transport and enhance P ti c tourism. c sta le its ti on for the tourism sector. It was established as a joint government-private on for the tourism sector. fi ng the o ti on is currently undergoing a change management process. ti ti gents onal arrivals; Forty per cent of the arrivals to travel beyond the present tourism onal arrivals; Forty per cent of the arrivals to travel beyond the present tourism products; ng of exportable A ce in Biratnagar in eastern Nepal, and has linkage bene ce in Biratnagar ti ti ffi ons. ti t present, T ally focused on marke A ti es of the NTB, thereby assuring its ti . on of domes ti should focus on di should come out of its public sector ‘shell’ and become more responsive to and focused on should come out of its public sector ‘shell’ lacks capacity to represent and promote service exports. lacks capacity to represent and promote should re-pro A on by an act of vi ti ons; ti T t present, the Board is working towards rebranding the image of Nepal interna ti R A EPC EPC EPC EPC foreign trade issues and advise the fy and analyse other stakeholders: ons from enterprises and ti na ti ti N), the Trekking S, instead of replica has a branch o y per cent increase in investment in tourism infrastructure; and, , the NTB works in coordina A ft ne million interna rganize buyers-sellers mee rganize buyers-sellers ssist in market tes D onsolida ollect, disseminate, and publish trade-related informa ollect, disseminate, and, onduct training seminars and workshops; on. on. ti B for export transac clients’ needs; des O C C A O C oriented projects; s). EPC PPP Fi The T The T The The T The T The Simplify procedures rela programmes to a Implement appropriate Iden O lateral T na ti T ti A bserva s a nances the ac A Nepal (H (N fi The NTB is working currently on the following targets: over the sector’s regulatory func building issues. The organiza While the Board ini mul The T million individuals employed in the sector, and people-centered sustainable development for Nepal’s tourism million individuals employed in the sector, and people-centered sustainable development sector. Nepal’s ‘Tourism Vision 2020’ targets are even more ambi des The NTB is the apex organiza sector organiza Nepal Tourism Board (NTB) O O countries. C Two bi-na Bi-na O ( exchange ofinforma to playinfurtheringtradeandinvestmentrela The advocacy, includingregularconsulta are hydropowerprojects,highvalueagro-forestryproducts,andtourism.Itseemstofocusonlobbying smooth andincreasedbilateraltradeinvestmentbetweenthetwocountries.Itscurrentfocussectors The bi-na The N between thetwocountries,andgiven chamber inlightof and tourism.Inaddi tea, vegetableseeds,cardamom,pulses, CCP hamber of bserva bserva Nepal-ChinaChamberofCommerceandIndustry(NCCCI) Nepal-India ChamberofCommerceandIndustry(NICCI) IT) andthe The Both The NTBshouldworkwithotherstakeholderstostrikeabalancebetweentourismdevelopmentand TheNTBshouldworkwithotherstakeholderstoimproveNepal’sarrivalgateways;and TheNTBshouldworkwithotherstakeholderstoaugmenthumanresourcestandardsandskills; TheNTBshouldpromotecommunity-basedtourismini TheNTBshouldintroduceandenforcequalitystandards; TheNTBshouldaggressivelypursueinvestmentpromo Industrial rela ti N T I S onal TSIinNepal,giventhatIndiaisNepal’slargesttradingpartner.NI 230 CCC CC C environmental factors. and G the N third countrytechnicalcoopera ti onal TSIs hina, the overnment’s IndiaTrade I ti I’s sectorfocusforpromo C onal chambers,namely theNepal-India ti ti 2010 G L haveexcellentbilateraltechnicalcoopera ons fromenterprisesandother stakeholders: ons fromenterprisesandotherstakeholders: C hasa. C CCC oN shouldensurethepos ommerce andIndustry,respondedtotheques hina andIndiahaveadvancedTSIinfrastructuresfromwhich Nepalcouldlearn.Inthecaseof NEPAL TRADE I BACKGROU C I. InthecaseofIndia,nearlyallIndianTSIsareprivatesector organiza hina CCP C hina’s emergingrela ti ti ti on, with ons inthetourismindustryneedarenewedfocusandpartnership; on, itfocusesontheestablishmentofaSpecial IT hasaverygoodnetworkofo C hamber ofInterna N D R NT C EPOR hina’s twomajorTSIs, EGRA P romo T ti on withthe ti TI ng bilateral trade includeshandicra ti C ti O ng ofeconomiccounsellors inNew on programme. hina’s statedinterestinF N ti ti fl onship withNepal.Withtheproposedrailandenhancedroadlinks S on ti oriculture, leather,gems,ginger,herbs,co onal T RA O ti ons betweenthetwocountries.TheN T rganiza EGY 2010 C ommerce ( G oN andinvestorsfromIndia. C hamber of ffi ti C ces both across ti on programmesthatcanassistinbuildingcapacityat on (IT on hina ti CC C onnaire. PO ouncil forthe ti ti on; a wasfoundedin1994.Itisbyfarthelargest I C wasfoundedin1999.Itisakeybi-na C ti ) providesassistancetoNI D ). ommerce andIndustrytheNepal- ves; I inNepal,theN E conomic Zone(S C hina andoverseas.Both D ft s, P elhi and romo CC P ashmina, garments,carpets, I’s mainmissionistoenable CCC ti on ofInterna K ff CCC olkata, asalsoinBeijing ee, honey,vegetables, I hasanimportantrole E ti ons.However,the Z) betweenthetwo I haslinks,including CC I underIndia’s ti onal Trade CCP IT and ti C onal hina

I, D I ve A ti CC

N T I S S 2010 U 231 N was created ve years, which fi athmandu. T K LCA ces are more than a es local TSIs confront EPOR ti ti R EGY 2010 D T cul N and similar district-level N ffi RA T LCA S ve management that is focused ti I is also hampered by its limited N urrent prac O ve support to service the needs of ti CC C TI ng the spread of diseases that have BACKGROU ti ve of the di ikewise, ti athmandu, including through the FN L gh EGRA K fi NT N could help in providing extension services LCA red professionals from civil society to help with red professionals from civil , as part of their support to boost rural household ve since 2002. ti ngs and seminars. ti ti D I A S es. es. ast. This TSI has a proac et, the needs of growers are great; ti ng re U NEPAL TRADE I ti E Y vi ti er technical and substan on as a major market for hill produce. tt ti orps/ on is quite representa ti C nd despite requests to on ac on A ti biased against growers, onal weights and measures ‘Fawa’ system, ti vely the needs of their clients. I major achievement of the technical support provided through ti A ec cers. cers. on of Nepal (LCAN) ffi ff ti onalized mechanism to ensure prompt assistance from N is very limited. ti in the area. Farmers are reluctant to seek advice from inexperienced ons ti oned above); and, sia) and the Middle ti A tu ti onal TSIs need be LCA espite its small size, limited infrastructure, and budget, it has used innova limited infrastructure, and budget, it espite its small size, ti astern Nepal and has been ac D E I men S to its clients such as enlis S to its clients such CC D nancial support of Mercy fi ve serious exporters of large cardamom from Birtamod. Though small in number they are fi ons could help educate farmers. ti ons from enterprises and other stakeholders: other stakeholders: ons from enterprises and ti ti I and similar sub-na lant diseases have reduced planted acreage by almost 40 per cent in the preceding lant diseases have reduced planted acreage by almost 40 per cent in the preceding CC their members; urgently needs to be arrested. With proper resources, P century old and reduce the resistance of plants to diseases. to growers (like I organiza farming and post-harvest methods need to be introduced. New The service capacity of requirement; and, Support for extension services is also an important There is need for an ins I N is based in Birtamod, I is hampered by lack of capacity to train cardamom farmers in I is hampered by lack of capacity to train I was founded in 1967. It has between 70 and 80 member enterprises that export large cardamom, tea, enterprises that export large cardamom, It has between 70 and 80 member I was founded in 1967. bserva bserva resources that restrict its ability to organize mee nancial CC CC reached almost epidemic propor government agricultural extension o in rural Nepal in trying to address e I no assistance has been forthcoming. This situa no assistance has been forthcoming. This fi capacity building and knowledge dissemina There are about O Large Cardamom Associa LCA O ILAM Chamber of Commerce and Industry (ICCI) of Commerce and Industry ILAM Chamber I (South and ginger to the region on the needs of its clients. on the needs of its methods to provide B methods to provide the largest players by virtue of the town’s loca with technical and and by SNV has been to replace the tradi incomes in the area around Birtamod. with a more equitable system of weighing produce. fi A O capacity fororganichoneyproduc There arearound15majorexportersofhoneyinNepal.Thecountrypossessespoten Nepal. Founded in2002andbased Apiculturists NetworkNepal(Apinet) O enterprises opera More than100enterprisesareinvolvedintradingandprocessinggingerNepalwitharound30to40 The N Nepal GingerProducersandTradersAssocia and lackofaclearexportstrategy,Nepalisunabletoharnesstheavailableopportuni tons ofhoneyareproducedeveryyearwithoutsucrosefeeding.However,duetolacktechnicalknow-how handling. Theassocia U the highqualityofNepalesehoneyanddemandforproductininterna linkages withanagriculturalresearchins which isaseriousS E provides supporttoproducersandtradersinmarke nancial resources.Nevertheless,itcouldfocusonthefollowingB urope, NepaleseenterprisesareunabletoexporthoneyduethelackofM pinet isinaposi S bserva bserva A I D lobbyforthe promptestablishmentofaninterna lobby forthedevelopmentandimplementa encourage foreigninvestmentinapiculture; help inraisingawarenessofS help inmarke provide inputsforbeekeepingandhoneyprocessing; encouragedevelopmentofhoneypackaging; encourage consolida disseminatetradeinforma Muchworkneedstobedoneinformbusinessesaboutqualitymanagement systemsandintroduce N T I S GP 232 . Itsupportsgingerfarmersandtradersbyprovidingtechnicalsupportatfarmlevelinpost-harvest C P economic actorsinthesector; A those inthesectortoensureacceptabilityofproducthighervaluemarketsthanSouth G processors; should disseminateinforma rovide beekeepingtraining; arry outbeekeepingresearchanddevelopment; sia region.This,again,isanareawheretheN inger beingahigh-valueproduct,thereisscopeforfurtherin-countryvalueaddi T A

ti ti 2010 wasestablishedinJhapa2005.ItistheTSIforgingersectorNepal. ons fromenterprisesandother stakeholders: ons fromenterprisesandotherstakeholders: NEPAL TRADE I BACKGROU ti ti ng intheeasternregion.TheN ontoprovideper P S issue. ti ng of honey; ti on istryingtomoveupthevaluechainbyestablishingaprocessingfacilityandseeking N ti D on ofbeekeepinginlargerproduc R NT EPOR EGRA L ti alitpur, on honey; ti on duetofavourable beekeepingecologyandbiodiversity. T P ti TI on valueaddi ti S issues; nentB O N S A ti tute forenhancingpost-harvestmanagementofginger.Italso T pinet istheTSIrepresen RA D T S tobeekeepersandexporters,butisconstrainedbylimited EGY 2010 ti GP on of a na ti ng andhelpscreateawarenessof GP T A ti T wassetupthroughtheassistanceofMercy onally accreditedlaboratory. ti A o opportuni on shouldinformanddisseminateknowledgeamong ti ti on (NGPTA) onal policy forapiculture;and, ti on units; D S: ti ng honeyproducersandexportersin ti es amonggrowers,traders,and RL controlandtes ti onal markets,especiallyin ti al todevelopsubstan ti es. Inaddi CODE ti on. TheN X standards. ti U ng capacity, ti on, despite p to10,000 C GP orps/ ti T al A

A S ng ti on. on. U ti N T I S onal ti COOP should ng and 2010 ti /HIM 233 ng involving ng ti COOP PA ng, post-harvest T ti /HIM PA urasia. EPOR T ermany, and the E R O G EGY 2010 D T N RA T ng Nepal’s tea growers and ti c and export marke ast and S ti E N O rthodox variety. HT TI O on could further improve market BACKGROU ti va EGRA ti overnment; G NT I claims that a lot of its work involves dealing I claims that a lot of sector is highly dependent on output ls. The ti es; es; on/Himalayan ti ti ti processing l (pulse) sector of Nepal. There are 30 ROP ti is the TSI suppor vi ti N A COOP on with the ng ac ng ti ti NEPAL TRADE I export markets for the product are within ons. The main lity. lity. ti ti ndings. fi /HIM t analysis comparing domes fi PA on (HANDPASS) on T ti O athmandu and the len K tea is a niche product and targeted market entry can result ons. Nepal’s on and increasing organic cul ti ti ve (HOTPA/HIMCOOP) ve alitpur, H ti a L es being exported to markets in the Middle ti ti

ng paper-making enterprises in the central and rural areas of the country and ti ti eren ff I is based in ROP of quality standards and help introduce those ng greater awareness and understanding ti plan on should play an important role in brand extension and increasing organic tea ons should work also with the sector to improve packaging and bring it up to interna N ti ti A on to its current support to growers, processors, and exporters, H I should support the sector in consulta I should assist with the sector’s marke in dealing with the highly cyclical nature of the I should develop a strategy to assist growers I should carry out a cost-bene ti len country specializing in split and whole ls in the demand and is characterized by vola c ti ons from enterprises and other stakeholders: other stakeholders: ons from enterprises and Pulses Industry (ANROPI) of Nepalese Rice, Oil, and on ti ti ti ti ROP ROP ROP ROP SS was established in 1992. It represents and supports 20 enterprises that export to over 80 countries. to over 80 countries. SS was established in 1992. It represents and supports 20 enterprises that export eveloping and promo N N N N standards; and, improving the living standards of low income communi educate growers and processors about its educate growers and processors about and processing. D A sector; and, A A A assist in crea in the sector; als and increase revenues. ti

The associa The In addi In associa The

DPA N bserva bserva ers technical and commercial assistance to growers, processors, and exporters on plan ers technical and commercial A ff the region, with minimal quan buyer and seller interfaces at trade fairs and exhibi buyer and seller interfaces at trade fairs and domes sector mostly through direct marke a lobbyist for the sector. It promotes the with government as poten are main export markets. The tea planted in Nepal is the Himalayan are main export markets. The tea planted exporters. The sector includes approximately 30 large exporters. India, Japan, exporters. The sector includes approximately Nepal Handmade Paper Associa H It focuses on: O Founded in1998 and based in mills for len Associa Himalayan Orthodox Tea Producers’ Tea Producers’ Coopera Furthermore, product di O Associa Founded in 1972, o handling, and cross-border transac and superior packaging of product can increase revenue reten in greater revenues. Brand development impact itscompe Nepal. O FH Federa O sector isbesetbymanyproblems,including: FH bserva bserva A A N wasestablishedin1972andisbased N alsosupportsthewoollenproductsectorwheresome250 enterprisesoperate.Thewoollenproducts

The woollenproductssectorneedstaxincen Thesectorisdependentonimportedrawmaterialsandshould striveforself-su The The The The Thesectorlacksagemmologyins Thetaxregimeimpactsthesectornega Thesectorisconfrontedwithlabourissues; Themixingofcadmiumwithsilverunderminestheexportpoten Weak promo H In addi Helpingpapermanufacturersinmarke N T I S 234 G sector andtoencourageinnova materials; A L sector strategytopromotegreatergrowthandsustainability; O made ofsuchpaper;and, O C employment ofwomenandsocially disadvantagedci value andenhancedmarketvisibility. enhancement; is apoten familiar withtheworkingofindustry; A ack ofmodernmachineryandtechnology; rea bsence ofspeci A oN needstosupportskillstraining anddevelopmentinthesectorasitexhibitsgreat poten rganizing trainingandseminarsontopicssuchaspromo rganizing enterprisesengagedinproduc pproximately 350enterprisesoperateinthissector.Thesectorisfacedwithissuesthatnega ti N on ofHandicra ti ti 2010 A G A DPA ti A ons fromenterprisesandotherstakeholders: ons fromenterprisesandotherstakeholders: ng asuppor ssocia ssocia oN policiesandregula ssocia ti on toitscurrentsupport,H SS shouldalsoassistwithbrandbuildingfortradi NEPAL TRADE I BACKGROU ti ti al exportchampion.

ti ti ti ti veness inexportmarkets.Theseinclude: on shouldlobbythe on shouldlobbyforatransparent andrule-basedexportregimeforthesector; on shouldhelpincrea ti on supportfromthe ti fi ve communityamonghandmadepaperproducersandproductmanufacturers; c rulesandregula N D R NT EPOR EGRA ft Associa ti ons arenottransparent; T TI O ti on andproductdiversi N G ti tute. S overnment toprovidegreatera G T A overnment togemsandjewelryexports. ti RA ng agemmologyins N ti ti on ofNepal(FHAN) DPA T ti vely; and, ons concerningexportandimportofgemsrelated EGY 2010 ti K ti on ofindigenousNepalipaperandvarioustypesmaterials ng theirproducts,inproduct development,andinskill athmandu. FH SS shouldassistwithandlobbyfortheiden ti ves to remaininterna ti zens; and fi ca A ti ti on andproduc onal Nepalesepapertohelpcreatehigher ti ti N supportsthegemandjewelrysectorin tute toassistinstandard-se on; ti als ofsilverjewelry; tt en ti onally compe ti on andsupporttoasectorthat ti on standards. G oN ins ffi ciency; ti

ti ve. ti tu ti

ti tti fi ons arenot ng for the for ng ca ti on ofa ti al for al ti vely on N T I S ti cular, 2010 ti 235 on Industry on on Industry ti ti on; T ti onstruc onstruc C EPOR C R role to play in on has a ti in areas in on’s capacity ti EGY 2010 D T N RA ve trademark. In par T ti ssocia ssocia S ons related with construc A ti A N O TI BACKGROU egula support measures to cal and enabling ti R ng to over 80 countries worldwide. The ti EGRA N has established a on sector contributes around 11 per cent ti NT CA c market needs. ashmina collec ti P vity. To improve the management capability oN to ensure that the ti ashmina products; cts and G P A worldwide ty’ and has embarked on an aggressive tudes for chyangra (capra hircus) farming for the tudes for chyangra (capra hircus) farming for The onal markets. ti ti ti ng ti obby L NEPAL TRADE I on (NPIA) on on of Nepal (FCAN) ti ti ). It provides large employment to semi-skilled and seasonal ve enterprises, expor ti GDP onal markets for ti ciently and proper budget support to the Board is allocated. ffi and strengthening of the nued support ti roduct ( strategy with prac ve and sustained ashmina; P ti ons e ons P ti c ti ve. ashmina products by providing a ti athmandu. Various training programmes have been launched but they are not athmandu. Various training programmes have been launched but they are professionals and trades people, F on to help producers respond c training in product design and product development on of a transparent and business-friendly tax assessment system; P fi ti ti success in interna veness and K nalized a ‘logo and brand iden ti fi

omes onal and interna ti ti D ves of the sector tend to focus on domes ti oN to review and update the exis ross oN; G entre in G G C and, on programme of its trademark to ensure the integrity of this brand; on of top quality ti ti has recently provides speci other stakeholders: ons from enterprises and ons from enterprises and other stakeholders: enterprises and other stakeholders: ons from epresenta ti ti ti on of Contractors’ Associa A A I I R ti P P evelopment Board func evelop linkages among industrial, commercial, governmental, and non-governmental actors in the evelop linkages among industrial, commercial, romote quality of ncourage introduc ncourage and assist people living in the high al ncourage and assist people living in the obbythe obby on behalf of the sector and seek to improve the business environment for the sector; obby on behalf of the sector and seek D lobbying registra Training sustainable without external support; and, industry; and skill of construc ensure its compe produc which it is already ac N L E E D sector; P to market demand. L ashmina sector has approximately 175 ac ashmina sector has approximately 175 Introducea standard contract document to achieve uniformity in contract administra ac Seek donor support to sustain some of its training Stakeholders wish to see con N Help promote na Facilitate sourcing of raw materials; The sector needs a suppor provides support to its members in the following areas: provides support to its members in the P N should: N supports the civil engineering sector in Nepal. The construc A I bserva bserva bserva P CA CA N F F O Federa O to the country’s Nepal Pashmina Industries Associa The O workers. overall trade.S successfully tocreategreater‘pull’onqualityandbudgetconscioustravellers,agrowingsegmentofthe contracts inneighbouringcountries,including for a to dowithindustrialrela Tourism, animportantrevenueearnerforthecountry,hasitsownshareofproblems,mostwhichhave increase intouristtra the NepalTourismBoard.With2011being‘Visit members representthefullstarspectrumofhotels.H graduate fromprivatesector colleges. government hospitalbedsby ara AP Associa O H Hotel Associa CA O Web-based servicecompaniesinNepalarerepresentedby Computer Associa A bserva bserva HNH representstheprivatehealthcare sectorinNepal. N should: N wasestablishedin1966torepresentthehospitalityindustry.Itisbased H H H Support e Helpenterthe HelppromoteNepalasanalterna ff N T I S ordable, yetcomfortable,touristclasshotelsthatsomecountriesintheregionshavedeveloped 236 ‘value formoney’projects. A C P E E L L implementa obby forspeedyimplementa obby ncourage establishmentofanelectronic ncourage immediateestablishmentofa ar reate incubatorfornewentrepreneurs; tt A A A ract Venture N shouldworkwithinvestorsinthesectortoencourage investmentinqualityhotelsandbudget N hasaroletoplayinimprovingindustrialrela N shouldac ti ti ti ti

cipate intheindustryinterna 2010 on ofPrivateHospitals andNursingHomes(APHNH) ons fromenterprisesandother stakeholders: ons fromenterprisesandotherstakeholders: G oN sothatNepal’sI NEPAL TRADE I BACKGROU ti ff ll, severalofNepal’smoreestablishedhotelgroupsarenowventuringintomanagement orts bythesectortoa ti ti on ofNepal(HAN) on ffi ti c. GLOCAL vely seektoexportNepal’smanagement exper C ti me lineisapprovedbythe apital and ti ti ons andinvestment.In addi on ofNepal(CAN) N D R NT market; EPOR EGRA ti o of over2:1.Nearly90percentofthecountry’smedical professionals A T ngel Investment. ti TI C on ofthee T O N tt P ti ti ain IS onal tradeshows; S ve des olicy 2000( T RA C T O EGY 2010 hina, anindica A ti D and P G na nd, igital SignatureInfrastructure( ayment Ma C ti on forso abinet; C P A R MM standards; project; ti evised in2003)withana N workscloselywiththeothertravel-relatedTSIsand on, Nepal,thusfar,has notcapitalizedontheniche ti ons inthesector;and, C G urrently, inNepalprivatehospital bedsoutnumber Y CA ateway and ear’, H N. ti ft on ofthematuringindustry. ware andB A N isgearinguptowelcometheexpected ti se inthehospitalitysector; D igital clearingHouse; PO s; PK tt I); endant ac endant K athmandu andits400 ti on planand ,

N T I S PPP ng. TSIs ti

2010 on Forum 237 ti romo T P EPOR R xport ) in the sector to enhance ) in the sector to enhance E EGY 2010 D T N PPP RA on, market analysis, market T ti erent TSIs, taking into account fying and lobbying for sector- S ff ti on, product design and product N ti O onal, and district level. However, TI ti BACKGROU on both sides through regular dialogue, on both sides through regular dialogue, EGRA ve’ and the lack of clear sector strategies ngoing advocacy should be mainstreamed ngoing advocacy should be mainstreamed ti on with government agencies, and others. others. on with government agencies, and O NT ti ve networking seems to be limited to the PPP ti on of this chapter indicates that TSIs have ti es, including bridging human resources gaps, es, including bridging ti ec ) trade integra ff ves. ves. O ti a ti oned to serve. role of cians and bureaucrats) and helping evolve the ti ti onstant networking is lacking. Nepal should encourage NEPAL TRADE I C roup on Trade to be formed in the NBF to avoid spreading G ve network of TSIs as other countries in the regions have done. ve network of TSIs as other countries in the regions have done. ve’ rather than ‘proac ti ti on of the Nepal Business Forum (NBF) is an opportunity to set the on of the NBF. ti ti fy and address capacity needs of di ons, the level of e ec ti ti ff I should merge or bring its recently created cials (both poli lia ffi ffi CC ons ti on plan for the sector; ti onal a ti ons are valuable partners, not subordinates. ti ng from regional and global (WT tu ti ti etc. on, family planning), tu cal role to play in helping change the structure of the sector, including changing cal role to play in helping change the structure ti ti ons or in periods of crisis. ti er equipped to assist their clients. bserva ti tt cal role to play in changing the mindset of the public sector. It needs to realize that cal role to play in changing cal role to play in business advocacy, including iden cal role to play in business advocacy, including ti ti O me-bound ac me-bound ti es resul es ti on of a structured and e ti regulator, quality controller, promoter of partnership; nancier, fi best be posi erent roles that each might ff capacity of TSIs in issues and helping shape the business environment. In general, however, the c fi other stakeholders: ons from enterprises and verall ti F) under the umbrella of the Working NH should lobby for moving towards a sector strategy and policy framework that focus on NH should lobby for moving towards of NH can help enhance the conceptual understanding HN has a cri HNH has a cri in ad hoc responses to government ini en results O elated to the above, the survey conducted in prepara elated to the above, the FN ft EP mes of TSI elec an important role to play to assist exporters in areas of trade informa understanding of development, understanding of market requirements, including standards, opportuni The network could be used to iden the di the crea R ti despite formal ins resources and focus thin. should support speedy implementa ( dialogue between the government and the business, including export business, on a new foo dialogue between the government and the business, including export business, R into their business models. The crea government from that of a service provider primarily to that of a service ensurer, facilitator, policy government from that of a service provider maker, private sector ins speci the mindset of government o o development, technology, enterprise management, interac There is a marked shortage of trained manpower within TSIs and urgent need to build such capacity so There is a marked shortage of trained manpower within TSIs and urgent need that they are be including a projects;and, sharing and learning sessions, and joint AP AP AP AP this area is weak. Most TSIs are ‘reac ons (e.g. immuniza

ti bserva 4. 3. Nepal has a TSI infrastructure that spans the apex, sector, bi-na 2. 1. TSIs have a cri service delivery in the country and increase export opportuni service delivery in the to improve hospitals, introducing telemedicine of government district and zonal improving management public health sector medical system to provide in remote areas, using the private access to medical services func 11.3 O Stakeholders believe there is wide scope for increased public-private partnership ( there is wide scope for increased public-private Stakeholders believe 6. 5. 7. 9. The 8. N T I S 238 a diseasethatis is nega E to theins on thebasisofelectedleadership.Trainedfull- empowered independentoftheelectedo TSIs. A a representa can contributetoimprovingNepal’sbusinesslandscape,throughimprovedproduc poten E further developingexportopportuni C could respondtothisneedprovidedtheyhaveminimumresourcesandtrainedhumanresources. another ins sectors shouldalsobelookedatclosely,itthroughstrengtheningoftheT resul developed. SelectedTSIsshouldbuildcapacitytoprovidetheirmemberbusinessesproac markets bypos exposure tonewandinnova well asincountrieswheretheNTIS2010hasiden and TSIs.Thefocusofthesepos the T and func A incuba vidence suggeststhattheagriculturalsector,whichincludesanumberofexportpoten xposure tonewandemergingtechnologies,cu rea lso relatedtotheaboveisneedforstrengtheningins s partofafocusondevelopingandstrengtheningstructuredTradeSupportNetwork,themandate 2010 G ti ti ng astrongerTSIinfrastructureatgrassrootslevelisthekeytoensuringNepal’ssuccessin EPC ng inthecountry’sexportsbecomingdiversi A oN shouldmakestrongeruseofitsoverseasdiploma ti al forgrowthinNepalaswellsupportnovelbusinessventuresthroughprojectincuba ti ti professionalcadreofmanagersneedstobebuilt--atleastinsomethelargestTSIs--and on support. vely a ti NEPAL TRADE I BACKGROU shouldbeclearlyalignedwiththemandateandfunc ti ons oftheT tu ti tu ti ti ve organiza on’s mandateandinlinewiththeneedsofmembership. ff ected bythelackofe ti ti on. ng trainedcommercialcounsellorsandencouragingstronginterac ff ec N D ti EPC ng thecardamomplants.Inmanyareas,however,district-levelandlocalTSIs R NT EPOR EGRA ti shouldberede on thatspeaksfortheinterest oftheevermoreimportantserviceexports ti ve waysofdoingbusiness,aswelldevelopingmechanismsforbusiness T TI O ti ngs shouldbeincountrieswhereNepalisalreadyalargeexporteras N S T ti ff es intheagriculturalsectorpar RA ec T ti EGY 2010 ve extensionservicestofarmers,enablethem to confront fi ffi ned andstrengthened.Sta ce-bearers. MostTSIsinthecountryseemtobemoulded ti me managersareneededtooperateTSIsinadherence ti tti

fi ng-edge businessprocesses,sunrisesectorswith fi ed, andnewmorecompe ed strongmarket opportuni ti c missionstoassistexportersinaccessing ti ti tu ons oftheorganiza ti onal governancemechanisms of ff skillsandhumanresourcesin ti cular. EPC inthisareaorthrough ti es. ti ti ti vity andinnova

ons betweenthose ti ve productsbeing ti on. Thelackof ti al products, ti velywith ti ti on, on, ee on ed aris ti tt tt

N T I S P ommi

2010 , including 239 C A T R T oN should keep in G on of a Sector Wide ssistance veness of aid. The ti ti EPOR A oN in support of NTIS cials that commi ffi R ssistance? G ec O ff EGY 2010 D A T N oN needs to be mindful of RA G oN is a signatory to the T G S s; N A on, alignment, and management O evelopment ti on. TI ti D

BACKGROU on, the hapter 12 hapter ti overnment, private sector, and donor overnment, private sector, and donor IF) and the promo E G C EGRA OECD NT on and management in adherence to the on and management ti gencies, and Senior S; A hief Secretary and co-chaired by the Secretary, hief Secretary and co-chaired by the Secretary, C C IF-Tier 1 Trust Fund to assist with some of this IF-Tier 1 Trust Fund to assist with some ces and increase the e veness and the Accra Agenda for veness and the Accra Agenda for E ti ; ti s) being considered by the U elated Technical A ec R so, the on arrangements. In doing ff ti veness’. ti NEPAL TRADE I ves of key line ministries with a stake in the trade sector. line ministries with a stake in the trade sector. ves of key ti to Implement NTIS 2010 NTIS to Implement overnment. In addi ec G ff A stronger NTIS 2004, including the need for on of the earlier ed in 2005 by the ti E ft Nepal. T id R DP ) based in the Mo A ), chaired by the N U ons and monitoring indicators. The C on with the NI ti ti U rrangements (NI ; A A on on on nhanced Integrated Framework ( disbursement, implementa nit (NI ti T E on on Aid E veness’, dra veness’, ee (NS ee U R ti tt ti on ti on and implementa s), with representa ti ODA fT and T fT and C ec on ff ti eclara ons to working towards greater harmoniza E A ti F), currently D ommi hanged in Trade D id C resources, as well as 2010 will require mobilizing fresh donor ons proposed in NTIS ti A C on of the c ti ees (T ees aris tt on is to include key trade stakeholders on the is to include key trade stakeholders on A P ti oN has secured the support of the C G ed several preliminary mechanisms to enhance country ownership of T ed several preliminary mechanisms fi

ti on on on ommi ti C p), like approach to improve government-donor coordina p), like approach to improve government-donor onal Implementa A ti s will work in close coopera on of the C Managing Managing onal Steering onal onal Implementa onal ti eclara S. The NS ti ti C onor Facilitator ( D on and leadership on the part of the ti D ossible capacity development needs to strengthen the proposed NI on. on was endorsed by over 100 Ministers, Heads of on was endorsed by over xamples and lessons from other countries that have taken steps to put in place similar xamples and lessons from other countries that have taken steps to ti ti 2010; arrangements. P E The T Mo sides; aris oN has iden

The new environment for T Na The a Nepal Business Forum (NBF); a a Na a Na a Technical ), laid out new guidelines to harmonize donor prac P G on ti place robust coordina ng in tti eclara eclara pproach (SW DAC Such mechanisms will include but are not limited to: Such mechanisms will include but are not through the implementa A the changing environment for principles of the ‘2005 The coordina mind the lessons learned from the implementa mind the lessons learned pu The 2005 Paris Declara The ‘ 12.2 What Has Has 12.2 What Ac 12.1 Introduc Implementa capacity building. This chapter reviews:

D of aid for results based on measurable ac D Technical assistance support will be required to strengthen the capacity of those various implementa Technical assistance support will be required arrangements. The their countries and organiza ( detailed monitoringforthe systems. aid. progress madeinintegra While Nepalisasignatorytothe2005 Nepal’s ProgressinMee they needfromwhomeverandwherevercangetthebestqualityatlowestprice. Untying: Condi Country Systems: Predictability: Mutual Accountability: Results: Harmoniza Alignment: Ownership: The keyprinciplesincludedinthe spent tocondi P and withGovernmentstoavoidduplica The and tacklingcorrup summarizes theprogressmadebyNepalasofend2007. aris A

D N T I S ti ccra 240 onality: eclara

Developing countriesanddonorsshi Donors willrelaxrestric A

ti 2010 on:

genda for Donor countriesalignbehindtheseobjec ti Developing countriessettheirownstrategiesforreducingpoverty,improvingins on andadds: ti

ons basedonthedevelopingcountry’sowndevelopmentobjec

Donors willprovidepartnercountriesthree-to-

NEPAL TRADE I BACKGROU Donors willswitchfromrelianceonprescrip Donor countriescoordinate,simplifyprocedures,andshareinforma

ti Partner countrysystemswillbeusedtodeliveraidasthe on. A ti

c Donors andpartnersareaccountablefordevelopmentresults. ng theParisDeclara ti ti on ( on ng the N D D R eclara NT AAA EPOR EGRA ti fi D ons thatprevent developingcountriesfrombuyingthegoodsandservices ve mainprinciplesintotheirrespec ), drawnupin2008,buildsonthecommitmentsagreeduponunder eclara ti T on. S TI O ti on. P N aris S ti on are: ti T ll, annualsurveysareconductedamongallcountriestoevaluate RA ft ti D focustodevelopmentresultsand resultsgetmeasured. on Principles T eclara EGY 2010 ti ti on, thecountrywasnotincludedin ves anduselocalimplementa ti ve condi fi ve-year forwardinforma ti ons abouthowandwhenaidmoneyis ti ve developmentagenda.Table12.1 ti fi ves. rst op rst ti on systems. ti ti onamongthemselves on, ratherthandonor ti on theirplanned fi rst roundof ti tu ti ons, on ti

N T I S on of on s) and ti nance, A fi B OECD

2010 P 241 on and ease ti T ons. ‘… harmoniza ti onal and regional ve by 2010, ons by donors and ti ti ti greements. It is part ve, ec ti EPOR cult for many Nepal- ff A vely, and implement ffi

R ti O ec EGY 2010 D ff T ec N ned. It includes technical ff fi RA ts trade facilita on needs to be expanded to fi T ti S on framework should be noted. should be noted. on framework N ti s, to build the trade capacity and on at interna O ti nancial accountability action plan nancial accountability action fi onal capitals among trade, TI ti BACKGROU LDC es in these areas and their member es in these Implement Poverty Reduction Strategy Paper Implement Poverty Reduction establish and Three-Year Interim Plan; budget clearer linkages with the annual public expenditure Government to implement and Extend sector-wide approaches into sectors beyond health and education Donors and government to agree on common monitoring and evaluation framework in sector-wide support programmes Build and implement a joint action plan for aid effectiveness ti on costs of managing aid. on: Making Aid More E ti ate more e ti EGRA ti er harmonize interven NT tt cular ti on in na ti on: Making Aid More E ti on of the NTIS 2004 recommenda ti ict environment ows are on fl fl of common arrangements help reduce duplica on NEPAL TRADE I ti fT is broad and not easily de A Table 12.1 p as a way to be )—grants and concessional loans—targeted at trade-related A le use is made of programme-based approaches ( le use is made of programme-based tt 2008 Survey on Monitoring the Paris Declaration: Making Aid More Effective 2008 Survey on Monitoring the Paris Declaration: Making vity, ODA ti ons with core responsibili ons with ti Some progress has been made in the cal work is conducted jointly. ti ons and lower the steep transac ti 2008 Survey on Monitoring the Paris Declara s) to commit long-term support to a trade development agenda. This is t from market opening, including through the WT ssistance ( fi Limited extent to which aid Limited extent to which aid Limited use of programme-based and sector- wide approaches Relative absence of measurable performance assessment framework Lack of mechanism for mutual assessment of aid effectiveness budget and to which detailed information on budget and to which detailed to government disbursements is provided Enhancing country capacity and commitment Enhancing country capacity plans and for ownership of development programmes in the post-con A ee, tt DP ve ommi vely low level of implementa ti C ti ve depends on building closer coopera ti a ti a ti cials. This needs to be matched by closer coopera ffi on of country analy ti evelopment Moderate Low ssistance deepened; overall, harmoniza on sectors but it needs to be D A Implementation of the Five Paris Principles on Aid Effectiveness in Nepal, 2007 Five Paris Principles on Aid Effectiveness Implementation of the ti 2008 Survey on Monitoring the Paris Declara fT) is about helping developing countries, in par The stress put on the use of SW A 1 cial ffi of aid delivery procedures and adop on OECD Publications. ti OECD, Development Assistance Committee, O cal changes that have occurred in Nepal since 2006 in Nepal have made it di evelopment ti ons. ti D vely unadvanced in Nepal. To date, li vely unadvanced in Nepal. To date, , ti PRINCIPLES 2007 CHALLENGES PRIORITY ACTIONS by 2010, AlignmentHarmonization Moderate Low Managing for results Mutual accountability Source: Ownership Moderate ublica OECD P orts and overlap among interven id for Trade ( ccording to the ff is rela other sectors.’ e based development partners ( demonstrated by the rela health and educa only a small propor 1 Engagement of Nepal’s Development Partners in TRTA The poli Aid for Trade Ini A A the need to agree, as soon as possible, on a common monitoring and evalua the need to agree, as soon as possible, Harmoniza countries. infrastructure they need to bene level among intergovernmental organiza outcomes as well as some infrastructure investment (especially that which bene and development o of doing business.) The success of the ini of overall programmes and projects. Because trade is a broad and complex ac assistance—helping countries to develop trade strategies, nego competence, aswell to monitorimplementa and representa the Mo submi and povertyreduc The mul more trademainstreamingac While mostofthe A Na challenges andrequirementsarisingfromNTIS2010as somebuildingblocksbegintotakeshape. of the to capturetherequirementsofjobathandandnew environmentforaide To helpimplementthe 12.3 Nepal’s C The Enhanced IntegratedFramework That beingsaid,Nepalhasbene three-year planarealignedwiththoseiden provide suchpublicandpoli as wellthethree-yearplanscheduledtobereleasedinmid2010couldproverightopportuni trade asanengineofeconomicgrowthandpovertyreduc from the accession--the WorldBank,the A the pastfewyears.Theseinclude oncretely, Na s notedearlier,NepalhassecuredsupportfromtheTier1windowtoassistinestablishingitsNTISNI ti ti E E lateral ti onal SteeringCommi Facilita Buildingtheins Strengtheningcountry-level managementof Mainstreamingtradeintona onal Steering IF, hostedintheWT

IF seekstoassist N T I S 242 tti E ng to the P P E P D P C IF guidelines.Someofthosearrangementsarelikelyto evolve asthe nhancing supplysidecapacityfortrade. reparing andupda roviding opera romo apers ( eclara S asco-chair.Secretariesfrom variouslineministries,high-levelo U

N system( 2010 DP LDC ti ti ng acoordinateddeliveryofT ti ng andsuppor s, isakeymechanismthroughwhich PR on; and, ti NEPAL TRADE I BACKGROU ves fromtheprivatesectorare alsomembersoftheNS s canaccessfundsmadeavailablebydonorsthroughtwowindows(Tier1andTier2) S E ti DP P IF projectproposalsthatfocuson: on objec C s); ommi s men P E ti A ti tu LDC S ti onal supporttoNI G roposed Na on oftheNTIS2010 c CAP O TZ, ti ti ons iden N tt onal andhumanresourcecapacityofthe ti and s inintegra ee (NS ng a ti D oned abovehaveindicatedwillingnesstosupportmoretradedevelopmentand ti , F D ves by: ti ti R NT ti cal endorsement,especiallyifthe ons, manyarewai FI ng trademainstreamingac EPOR AO fi D EGRA nanced throughatrustfund fi A D ted fromsome,iflimited,supportmul , andFinnish U sian , IT C iagnos tt ti N ) hasbeenestablishedwiththe

T ee fi DP TI ed in NTIS2010,the C ti onal developmentplans,especiallythe ti , D O ng theworldeconomyinamannerthatsupportstheirdevelopment U Nepal--whichprovidedsupportto N evelopment Bank,the ti NI c TradeIntegra S ti A T ti onal Implementa DO s, includingsomelocalrunningcostsandequipment;

RA fi A R ed inNTIS2010. c T , T C ti A EGY 2010 U ons, ensureproper oopera ti ; ng forstrongsignsfromthe N C LDC T AD A fT andT ti on. s canaccess , WT ti ti G on. Themuch-awaitedNepal on Study( ti ons iden oN hasbeenorganizinganumberofNI O fi nanced byasigni , tonameafew)intheirrespec E R uropean T C A A hief Secretaryaschairandthe Secretaryof c ti inamannerconsistentwiththe A

A E ti D fi ons proposedundertheN fT support,ensuretheirmainstreaming ed inthe IF NI fT. TIS); or, ti on C ffi C cials fromtheagencies concerned G . ThemainroleoftheNS A ommission, anumberofagencies oN beforeandfollowingtheWT s; G ti lateralandbilateral A G fi oN thatitgenuinelyconsiders D cant number ofbilateraland P oN internalizessomeofthe ff rrangements TIS. ec overty ti veness, includingsome D evelopment Forum, R educ ti ve spheres of ti o Strategy on A D s intended F andthe DP C willbe A ti s over es to es s. P aris O

on es, ti ti onor N T I S onal ti s (the D ves in ves ti P ssistance will work

2010 A 243 U on Matrix, ti projects are c ons, and will ti ons. A A ti T R T ees being created representa tt will provide senior P DP -year work plan and on of NTIS priori EPOR ti ve Secretariat. ve ti cularly the Ministry of ti ti R IF-F EGY 2010 ca D ees will work closely with E fi lanning and Interna T tt irector. The NI nent Technical nent

N ti ti P xecu D on of projects intended to RA ti E T IF s so as to create an ‘extended S E P N ). The s based in Nepal or other sources O roject P F ees have been proposed thus far, t from many of the same capacity IF Secretariat. tt fi P ves as well as TI O DP ti E on of per BACKGROU ti fully ons of the NTIS 2010 have been ti , assess the NTIS and its , assess the NTIS and EGRA oint (F and the U P C NT on and buy-in among various government on and buy-in among various government ti IF Tier 1 on at all stages of the NTIS implementa IF agencies to ensure that T E ti ons. s will bene E ti P nanced by nanced on of the NTIS 2010 recommenda fi ti es. ng from the ti ti IF Focal ees will be established to address various priority as well as other trade-related ministries and public, as well as other trade-related ministries E tt on between the technical commi ti IF and on and formula ti ees will be chaired by the Secretary of the Ministry CA E tt ng to the NS ve technical commi ng network of WT ng network s. The F ti fi ti ve coordina NEPAL TRADE I P ca ti fi TIS priori

ti ons (to be D ). ti ec oordinator and ff ves origina ves will work closely with the relevant line Ministries, the will work closely with the relevant line ti C onal space for discussion and iden onal space for discussion

P ti s) in key Ministries and departments, par a U ti P . s, and other stakeholders. IF-F U ee. While Ministries. The technical commi nent line S. The Joint Secretary who heads the S. The Joint Secretary who heads the E ng the implementa ti tt DP ti C on of the Tier 1 project. With support of the network of F will lead the development and formula ti ons to ensure coordina ti U Appendix 8 oints (F P tu griculture, the MoT ti . The A on of the NTIS recommenda will monitor the work of the NI will monitor the work U ti ve Secretariat of the ees C ti tt , several technical commi on Unit on ti U ons, provide na ’ to assist in the iden and respond to the ti s, the NI will serve as NI cular commi cular U P 2 C xecu ti itself and a network of F S has been designated as the S cials from per from cials E ffi on of the NTIS 2010 ac C U ti ivision. PR D onal plan suppor

ti ees will probably include private sector representa O ivision overnment (see tt ves targeted at the NI D G s, the ti s and the working groups created under the Nepal Business Forum (NBF). Many issues s and the working groups created under the Nepal Business Forum (NBF). and the NI A a , the Ministry of ti C DP on zed interven ti ’) and the T ti PC IF Tier 2 trust fund resources), will be responsible for preparing a mul IF Tier 2 trust fund resources), will be U F), ed in NTIS 2010. The technical commi ed in NTIS 2010. The technical E fi D

ti will monitor the implementa onal development plans, and ensure e onal development plans, and ensure oopera is being established in the Mo ti sector, civil society, ons, private U C s of the ‘extended NI ti U cal issue to be addressed early on will be coordina P o on to government onal Implementa onal ti ti ti ’ composed of the NI tu ti U cri n NI s part of its mandate, the NS s part of its mandate, Formerly known as the WT be responsible for monitoring progress and for repor such as the detailed annual opera mainstreamed into the and monitor and coordinate with various ini and monitor and coordinate The NI ‘extended NI support the implementa Facilitator ( management oversight of the NI development ini as part of the NI 2010 proposed ac tackled under the NBF are likely to be similar to those addressed in the NTIS A approve priori process. The current idea is to strengthen the exis process. The current idea is to strengthen NI the F projects to facilitate implementa 2 To assist the NS NTIS Technical Commi Na A Finance, the N private and non-governmental ins The Secretary of the Mo EIF Focal Point into na ins A Trade addi closely with other designated Focal areas iden designated to lead the par their structures and numbers will be reviewed once the recommenda internalized by the The technical commi development forum’--ajointini The businesscommunitywillneedtoreviewhowbestpullthee present situa In theory,theNS NSC Constraints The NTIS2010NI resources aresomeofthefactorsthathavecontributedtounevenimplementa L A 12.4 need toreviewthispar that the E Donor Facilitator promo launched formallyonMay26,2010.TheForumhassixworkinggroups,includingagrouptrade aimed atanalysingand O Nepal BusinessForum G its workinggroupontradepromo and theNTIStechnicalcommi reduc However, itisimportanttorecognizethattheroleoftrade asanengineofinclusivegrowthandpoverty level ofpublicdebateabouttheroleandimportancetrade ininclusivedevelopment. from othercountriesalsosuggestthat 1 projectsecuredbythe provided thepresentcapacityneedsofvariousbuildingblocksarerecognizedandaddressed.The previously, therewillbeaneedto raising worktobedoneputtheNS work willneedtobedone con NBF areallposi Three- shown bythe The par ack ofstrongownership,weakinter-ministerialcoordina xperience fromother overnment. Inrecentyears, n May16,2010,the rrangements N T I S ti 244 on isnotfullyunderstoodorinternalizedatseniorpolicylevel.So,theres Y ti on. ti ear cipatory andinclusiveapproachusedbythe D C F hasacri

apacity 2010 P lan beingpreparedbytheN ti G on, monitorprogressandimplementa oN tocoordinatethe ti NEPAL TRADE I BACKGROU ve signsthattradedevelopmentisbeingelevated withinthe A C structurethatistakingshapehasthepoten isaformidabletooltopushforwardthetradedevelopment agenda,takestockofthe ti calroletoplayinensuringpropercoordina LDC C ti C fi cular arrangement. abinet approvedthecrea nding concretesolu G onstraints oftheNa N s thathavetakenstepstoimplementthe oN willgosomedistanceinaddressingofthoseneeds,thoughexperiences D R NT tt U ees. EPOR N EGRA fi DP rm thattheissueisbeingstronglyanchoredwithin thatagenda. ti a fi ti nd anappropriatebalancebetweentheworkofNBFworkinggroups T on toavoidunnecessary duplica -Nepal hasbeenservingasa ti fi ve oftheMo TI ndings ofNTIS2010withsometheissuestobehighlightedinnew C O inastrongerposi DP N PC S s willneedtobringaddi T , thecrea RA ti ons tobusinessenvironmentproblemsinNepal.TheNBFwas T EGY 2010 ti onoftheNBF--anewpublic-privatedialoguemechanism C G S andtheFN ti ti on ofaWorking oN and on oftheNTISrecommenda ti on toprovideleadershipthisissue. ti onal Implementa ti on, lackof DP ti al toremedymanyofthosepastlimita s intheprepara D ti F. ti onal supporttoful onamong CC E G IF structuresandaTradeSW I--under theumbrellaofNBFand ti oing forward,the on. on. ff G G orts oftherecentlycreated‘export oN- roup onTrade A DP nd morebroadly,assuggested G DP coordina oN’s policyagenda.Butmore ti ti on oftheNTIS2004. on ofNTIS2010,theinterest s andbetween ti ons, andbringahigher fi ll allneeds. ti ll alotofawareness- ti G P on ti romo oN and on, weaktechnical ti on underthe DP DP A p suggests s andthe s willalso E IF Tier ti ons is on on A are ti ti ons T ti onal U N T I S . The ti R U tu ti on of the orts have orts ti 2010 ff 245 ’. ons of the ti on with the U ti s. A T s through regular cials to go beyond ffi DP onship between the ti EPOR xperiences from other R on to the regular work resources generated in resources generated E ed in it. ti fi onal. While e A EGY 2010 D

ti ti T T N R RA on for the Tier 1 proposal rela lateral trade issues, T ti to onal development priority ti ti representa ees, the ed. Much work remains to be S fi tt

oN and the N ti es iden es G O ti dedicate 100 per cent of ng or can TI ti cult for those o BACKGROU ffi oN are not yet fully in place, making it S has been designated as the NI S has been designated s come in addi C G R EGRA are described in detail in the Ins oN is planning to increase gradually the oN is planning to increase gradually the network of the ‘extended NI U P G NT and other mul O cial is dedica is cial constraints and the requests of line ministries for constraints and the requests of line ministries ffi ) of the Mo pril 2009 in prepara ve technical commi A fi C that more T onal structures needed to ensure o A are based in part on the recommenda ti nuing buy-in from C IT ti C ees will need to be reviewed in conjunc tt P IT tu ti NEPAL TRADE I P S in of agreements. The division is also in charge lateral trade ti ve manner by the C ti ons. It is even more di ti s). However, the To c R ll nascent. Furthermore, the proper rela ec ti ivision ( A ff onal resources to fund such advisors. donors. es with local ees cannot be considered as fully func D ti ti tt vi ti S dealing with the WT on oN is making trade development a na ti on approach in Nepal, to ensure smooth monitoring and evalua on approach in Nepal, to ensure C es is s 1 guidelines on the recruitment of long-term advisors ons put by Tier G ti ti t present, no ti low level of T on, but, at present, given the A ti cials to each of the nd addi ffi . fi S and address wider NI U oopera C C ees created by the NS tt resources mobilized from local donors in the recent past, Nepal, at present, resources mobilized from local donors communi A and mul ons, bilateral ti T ons, and to sustain the con ons, and to sustain on of the technical commi onal DP of the NI ndings of that assessment in terms of addressing the capacity needs cials. To address this constraint, the cials. To address this constraint, ti R ti ti fi ffi the NI of ff ees and the NBF working groups will need to be iden cular, the limita above and beyond the support received under its onal advisory services that it will need tt ti ti or Trade Mainstreaming A T F to help mobilize more technical assistance to be channeled through the NI p-like donor coordina R to a few ac on is limited on and aid coordina ti D A me sta me ti ti F constraints are several. First, the ins onal organiza onal D ti s want clear signs that the ssessment commissioned by the Mo A DP me to T has dedicated terms of reference (To on and launch of NTIS 2010 to ensure they truly support the priori ti on, at present, the technical commi ti of the NI onal, individual, and systemic capacity constraints ti U ti lanning and Interna is also the main division of the Mo is also the main division P tu C ti cult for the for cult ffi apacity IT naliza the immediate needs of the Mo dedicated full- his/her of the division and its o The NI dialogue. Nepal, this func donor mobiliza of the NTIS recommenda countries clearly point to the need for such advisors, including to supervise and guide the implementa countries clearly point to the need for of the capacity development plan formulated under Tier 1, to put in place the mechanisms and procedures of the capacity development plan formulated for a Trade SW NTIS technical commi done in these areas. with interna will mean that Nepal will need to been made to assign government o private sector and of the P C development. The main discussed below. Because of the limited T cannot count on addi Tier 1 project. In par In addi DF Constraints The current di TCs Constraints The current technical commi The NIU Constraints technical assistance, including strengthening and developing the F technical assistance, including strengthening Ins NTIS 2004. The composi fully commit themselves. fi mobilized, managed, and coordinated in an e Second, In theearlystagesofNTISimplementa apply toNepal,andwhythe members oftheNS a keyrelaybetweentheNS Some ofthekeycapacityneedsNI NIU and‘Extended’NIU/NetworkofFocal Points The NS The high-levelpar Na To formulateandimplementaresponse,the 12.5 Third, capacitydevelopmentisalong-terminvestmentandneedsmul above butalsoincorporatetheneedtoshi S development ontheT ti implementa The e development, implementa training coursesonhardmanagementskillstocoachingandmentoring,prac other mes maycon ti ll, theNS ti onal SteeringCommi N T I S ff 246 LDC orts tobringaboutresponsesshouldbecoordinatedbytheNI C appraised bytheNI E P E R NTIS; nsure goodgovernanceandtransparencyintheuseoftrade-relatedtechnicalassistanceresources. ndorse fundingdecisionsforthetechnicalassistanceproposalssubmi rovide guidanceonpriorityareasforthecountry’stradedevelopmentagenda; willneedtorelyontheworkofNI eview progressinNTISimplementa A s intheregioncouldproveusefultoNepalmanyways.

ddressing 2010 C ti willneedto: on, andshouldcontemplatemanytypesofcapacitydevelopmentac fl ict withdonorheadquarters’emphasisonshort-termresults. NEPAL TRADE I BACKGROU ti C cipa . ItisimportantthattheNS R T ti A on intheNS , N U ti A C C D on, andmonitoringofsound technicalassistanceprojects. ; members,theNI G fT, and apacity NeedsoftheNI R NT oN needsadi EPOR EGRA tt T ee E TI IF, orday-to-dayimplementa ti O on, awarenesstrainingin C N mightmakeithardforindividualmemberstokeeptrackofall U S and‘extended’NI ft T fromaprojecttoprogrammeapproach. ff RA ti erent approachtomanagementofaidinthetradearea. on measuredagainstmonitoringindicatorsdevelopedforthe U U T G , andthelineministries. EGY 2010 foritsregularsessions.TheF C oN willneedtonotonlyaddresstheconstraintsiden membersunderstandthe U aresummarizedintable12.2. A ti fT andNTIS2010shouldbeprovidedtoall A on oftheNTIS2010. s ti U -donor,long-termsupport,whichat , ac A ti ng asaSecretariattotheNTIS fT mechanisms,howthosemay P s ofthe‘extendedNI ti tt cal hands-onsupportto ed bystakeholdersand ti ons, fromshort-term E xperiences from U ’ willbe ti

fi ed ng N T I S ti ons are ti c 2010 s; and 247 A A T EPOR R cal role in implemen EGY 2010 ti D T N on, while the government ti RA T ees in the NTIS NI nancial incentives tt proposals, including EIF Tier 2 proposal generation through technical committees to develop new TRTA proposals, including EIF Tier 2 proposals management, institutionalize use management, institutionalize of operation manual management in MoCS tools for all TRTA projects like approach in Nepal for trade mainstreaming and resource mobilization of Capacity Development plan and Promotion mechanisms, non- fi plan, assigning one staff to be coached by programme director S Develop strategy for new TRTA Assist line ministries, private sector NIU, engage Empower Start developing basis for SWAp- Regular update and implementation Performance Appraisal Systems Develop internal capacity transfer N ees through ongoing or planned O tt TI BACKGROU will play a cri U EGRA on the basis ees will need to be reviewed tt NT projects in support of the NTIS on workshop; on A ti onships between the working groups dealing with ti NEPAL TRADE I Table 12.2 TRTA projects on NTIS and EIF with donors, private sector cookies’) by EIF FP communications tools for NIU tools, operation manual, procedures, checklists. Increase exposure of all MoCS staff to NIU work mechanisms developed (support from outside long- term non-resident TA) training at home and overseas on soft skills (depending on orientations and objectives of NTIS) s of the ‘extended’ NI Start monitoring ‘Quick-Win’ Awareness raising campaign Regular social events (‘tea- Develop an NTIS/EIF website other Develop Develop management Develop Monitoring and evaluation Participation in trade-related Individual training actions P s to one or several technical commi DP s during the start-up of NTIS 2010 implementa C ees tt ons. Many ideas and proposals for T ons. Many ideas and proposals ti Develop ToRs for NIU, proposals supportive of ‘Short-to-Medium-Term’ Priorities working through Extended NIU and Technical Committees communication strategy and how TDF work becomes part of individual aspirations and career development plan external reporting lines with FP, NSC plan raising/orientation workshop of extended NIU on NTIS 2010, Action matrix, EIF training providers (local and international) assign position, provide dedicated space, purchase equipment ons emerging from the NTIS 2010 valida Develop ‘Quick-Win’ TRTA TRTA/NTIS/EIF Develop Update training plan Develop individual ToRs Recruit an NIU manager Develop internal and Start implementing training awareness Organize Recruit outside support Develop inventory of Capacity Needs of the NIU and Network of Focal Points (‘Extended’ NIU) NIU and Network of Focal Points (‘Extended’ Capacity Needs of the ti with the support of the F ees, tt TERM (1-12 months) SHORT MEDIUM TERM (12 – 24 months) and beyond) LONG TERM (24 months ecommenda ossible support individual trade and services issues in the NBF and the proposed technical commi P R technical assistance. rela The emerging structure of the NBF and the

INSTITUTIONAL DIMENSION INDIVIDUAL DIMENSION SYSTEMIC DIMENSION s noted earlier, the focus and membership of the technical commi the NTIS recommenda capacity to manage, monitor, and update the country’s trade development agenda is steadily developed. capacity to manage, monitor, and update the country’s trade development agenda Technical commi Technical Commi A development partners Following a model developed in other countries, it might be possible for individual to serve as co-coordinator of T of: partners associatedwiththecommi them. Manyprojectsareexpectedtobeimplementedbyindividuallineministries,agenciesorprivatesector of PDR Nepal mightusefullylearnfromtheexperiencesotherSouth of theworkingrela A Nepal BusinessForum Based ontheexperiencesfromothercountries,itisparamountforsuccessofNTISimplementa A expected toemergefromthecommi Several ini an e D working groupsandthoseaddressedintheT issues dealtwithattechnicallevelintheworkinggroupsof therespec through theTradeSW and resourcesavailablefromthe concerned lineministriesandagenciestosolvetheproblems.TheNBFcouldtakeadvantageofexis a keyroleiniden NTIS T s suggestedpreviously,therewillneedtobeconsulta ccordingly, theircapacityneedstobedevelopedearlyon. iagram 12.1presents,inasimplis C ambodia and , Bangladesh,others)wheresimilarmechanismshavebeenopera ff ec TechnicalassistanceisprovidedtoeachT N T I S 248 C P P P that areul P website; P R created inallT A as ac A O be submi and 12-18monthsmonitoringindicators; they cancontributetotheworkofdesignatedT administra leaders/coordinators foreachT s tobe ti ossibility ofcoopera resenta resenta rogress reportsaresharedwithrelevantworkinggroupsundertheNBF,basedonarrangements rogress reportsareforwardedonaregularbasistotheNS egular trainingsessionsareorganizedonspeci wareness of roadmapforeachT ffi ve ande cialsfromlineministriesaswellprivatesectorrepresenta ti

a 2010 ti ons andinputsneededtoreachthose.Theroadmapcouldalsoincludedra ti ves couldhelptheNBFandNTIS NI tt er bridgethegapbetweenprivatesectorsconstraintsandissuesrequiringtechnicalassistance ti ti NEPAL TRADE I BACKGROU tt on oftheNTISconclusionsandrecommenda on oftheNTISconclusionsandrecommenda ed to ti ti ffi L ti mately iden ve sta cient rela fying constraints,limita aos, although ti onship betweentheworkinggroups oftheNBFandNTIST A C fT, thecountry’stradedevelopmentagenda,NTISandIntegratedFrameworkis s; A DP p T ff college,etc.),includingjointprepara N s; D C ti C ti s (called‘ ng bystrengtheningcapaci R NT onship betweentheNBFandNTIS implementa ispreparedproposingshort-termobjec ti EPOR

fi EGRA ed betweentheNTIS T DP DP ti c form,thecoordina tt T s arestronglyinvolvedintrade-relatedtechnicalassistance, inpar s tosupportNepal’stradedevelopmentagenda. ees. Thecommi TI tt ees, tobeformulatedbytheirmembers,and/or‘ve C O P ; N illars’ in S T ti ons, andbarrierstoinvestmentbusinessinmobilizing RA C s. T EGY 2010 C C onhowtodevelopworkplansandbankableproposals ambodia), thereisinsu A tt ees willworkwiththeNI s headingtowardsthesamesustainabilityobjec fi c areasofNepal’s tradedevelopmentagenda; ti C on mechanismsthatcouldbedevelopedinNepalfor ti ti s andtheNBFworkinggroups. ons anddiscussionsearlyontoclarifythenature es inkeyins C s. Thisshouldalsoincludeiden ti ti ons atW ons atNBFplenarymee ti on of T E ast ti ti ve government-privatesectorforum’s ti ng foranumberofyears.Inthecases ti C tu ves andlong-termoutcomes,aswell A ti G A andtheNI ves areformallyappointedearlyso proposals; sian countries(e.g. mee ti ffi ons (privatesectororganiza cient coordina cient ti U ngs; and, tomonitorimplementa ti on structure. U , andbepostedona C ti ngs; s. TheNBFwillplay ft annualworkplans ti ti on betweenthe

fi C ca ambodia, tt ed’ through ti on ofteam ti on that: ti ti ves: cular ti ons, ti L on. ti aos ng s A on N T I S ti p)

2010 A 249 on needs to ti ng principles. principles. ng ti T EPOR R EGY 2010 D T N on of common monitoring ti RA T S pproach (SW N A O TI BACKGROU EGRA ps in sectors such as health or educa p is driven by a set of opera A NT c expenditure programme (including both A ti cult to put in place than in most other sectors in no ffi NEPAL TRADE I ng those, a SW ti on of a single, shared sector strategy (that addresses private ti on of the NTIS, the steps taken to put in place the NTIS NI on of the ti ce more di ti me to changes and moving under government leadership towards p approach can happen in parallel. But a note of cau ti A ather than focusing on a short- to medium-term limited package of R p is in prac A to a SW es aimed at suppor ft ti resources) to implement the strategy, the formula vi rogramme-based Sector-Wide rogramme-based Sector-Wide DP ti me to achieve. This is in contrast to SW P ti to a ft on may take en one or two ministries, at most, are responsible for the sector’s development. ti ft p is a programme-based approach to development that brings together governments, donors, and p is a programme-based approach to development that brings together governments, IF support, and the shi and/or ac c policies A E fi s experience elsewhere shows, the formula SW where o be raised here that a Trade SW small part because trade development issues cut across many ministries and agencies and intra-governmental small part because trade development issues cut across many ministries and agencies coordina The approach involves responding over arrangements, and more coordinated procedures for funding and procurement. A with speci broadening of the policy dialogue, the formula and public sector issues), the development of a common, realis government funding and 12.6 Shi A Figure 12.1: Possible Linkages between NTIS Technical Committees and NBF Working Group Linkages between NTIS Technical Committees Figure 12.1: Possible other stakeholders within a sector. LDC government ‘inthedriver’sseat’andpromote thus far,toestablisharrangementsimplementtheirtradedevelopmentstrategyinamannerthathelpsput Figures 12.2,12.3,and12.4showhowthreecountries,namely, arrangements, setofculturalvalues,etc.ThesameshouldhappeninNepal. Figure 12.2:CambodiaNIAs U 12.7 l ti mately, eachcountrywilldesignasetofNI N T I S 250 s. P

ossible 2010 NEPAL TRADE I BACKGROU O p N D ti ons forNepal’sNTISNI R NT EPOR EGRA T TI O N S T RA T EGY 2010 A s that P aris P rinciples of fi t withinitsownsystemofgovernment,poli C ambodia, A A id s: E L ff aos, andTanzania,haveproceeded, ec L ti essons from veness. O ther ti cal N T I S 2010 251 T EPOR R EGY 2010 D T N RA T S N O TI BACKGROU EGRA NT NEPAL TRADE I Figure 12.4: Tanzania NIAs Figure 12.3: Lao PDR NIAs Figure 12.3: Lao PDR The issuesraisedinthischapterlendthemselvestoafairlystraigh 12.8 NepalneedstoputinplacethekeybuildingblocksofNI 1 Nepalneedstofullyformulateandquicklyini 2 4 The NS 3 The NS 5 The NS N T I S 252 ac a func of NTIS2010.TheNS de 1 tosupportthecapacitydevelopmentprogramme; needs toworkwith various structuresoftheNTISNI con to pursuesomeoftheshort-medium-termpriori priori D forward; evelopment agenda,includingadop R ti fi ons, andappropriaterepresenta ne thebestpossible rela fi

ecommenda 2010 rma ti es iden ti C C onal NI onal C andtheT , withsupportoftheMo , withsupportfromMo NEPAL TRADE I BACKGROU ti on ofa ti

U fi ed intheforthcomingthree-yeardevelopmentplanandNTIS2010priori intheMo D C s needtofocusearlyontheformula N F; DP D R NT C s toiden EPOR isalreadylargelyinplace. ti EGRA ons C ti T onship betweentheNTIST S withadequatesta TI ti O fy resourcesaboveandbeyondthoserecentlysecuredunder C C N A S IFF S, needstotakeearlystepspromotemainstreamingoftheTrade S s alongthelinessuggestedearlierinthischapter.The ti T on ofthetradedevelopmentagendainforthcomingN RA ti on ofNTIS2010bythe T P EGY 2010 , needstothoroughlyexamineandconsultwiththeNBF ti ate aprogrammeofcapacitydevelopmentforthe ffi ng, consolida ng, ti es iden O ti ther structuresneeda on ofQuickWinproposalstobefundedby C s andtheNBFworkinggroups; tf orward setofrecommenda ti A

fi ed intheNTIStokeepmomentum C s thatwillsupporttheimplementa abinet, properalignmentofthetrade ti on ofthenetworkF tt en ti on. Theseinclude ti ons: P s, T G ti oN also C E es and D IF Tier s, and F. ti DP on s

ve GO on N’S ti ti sian on’s

N T I S A ti PPA n Trade hambers nterprise oods and C O 2010 E 253 G dministra nited Na gro ommunica p://www.cea. A mployment in tt U C E A evelopment and h eport T eview Workshop, D R on held at I R ti I). imited for the B, Manila. EPOR L ed to ed CC tt R istrict. eport on on and AD ti EGY 2010 D R D T on of Nepalese N onal Trade in ti vailable at conomic resenta ti RA E A P T ang Hydro S D ti roject I. N ve. ti P O eport. TI )/Federa R BACKGROU athmandu, Nepal (Brochure of N td (2006). Study L entre for K AEC C EGRA ) for Nepal, Submi hicago. ciency td (2004). Study rrangements of Foreign ffi C NT L A E PR ves ti ivision on Interna enter ( D Fact Book on Informa ves C ti policy perspec on Balance on A ti ommerce and Industry (FN ), A onal nergy ti earney, C E K repared by West Se o-opera athmandu. AD tu P C eview (NS K athmandu. T ti .T. enera R K C o-opera A G NEPAL TRADE I N nterprise athmandu, Nepal. C U E K roducing Small Farmers in eport). evelopment, Vol. 1, No. 2, June/July, Issue 2, Singhdurbar, olicy vity and and vity P oad ti R roject. P D L urpose

P gro hambers of ft P C A B, Manila, 2008. - ra urpose urbar, ti on Technology, ti P D D on Index. Index. on AD onnec ti - I). C ti ) ( overnment Hospitals, Nepal, N Seminar organized by the C G O CC oca IT S B, Manila. L evelopment ( E D D on Mul ti AD onal Services onal on Mul on ti ti es ( es lectricity uthority (India). ti B). Hydroelectric E Study of Intraregional Trade and Investment in South Asia Country-Investment Study of Intraregional Trade and Investment in South Asia Country-Investment egulatory Barriers to Services, paper presented at NTIS ti A roblems, Issues and Ins ). eport 2008, Babar Mahal, romo on of Nepalese olicy 2006, Babar Mahal, R niversity Teaching Hospital, Introductory Brochure niversity Teaching Hospital, Introductory onducted for P ti AD R P P C U romo on of Non ti nergy Sector. P E Journal of Trade and on CEDA on ti ti lobal Services A ommodi reparing G C . (2008). Study . (2009). Na lectricity via onstraints Faced by Honey via P ssocia ommission for Informa C )/Federa C E on ( on A C A ti C A veness of Nepalese Honey. aper presented at I ti athmandu ivil AEC

P K ti C evel olicy entral amesh (2009). S (2009), L amesh P amesh C ommerce and Industry (FN R R R C OC evelopment Bank ( dministra enter ( onference on Trade and ompe athmandu. rajjwal S. (2008). S (2005). Nepal, A Forum, 2009. D and Hospitals). nic.in/god/gmd/lgbr_report.pdf of Technology Sector of Nepal, Singh C C K Services, and C November 2, 2009. Study-Nepal, P O earney (2009). H K N (2009). The N (2009). G B (2007). Nepal: West Se B (2009). Nepal: I (2009). oN / High oN / M .T. N ryal, charya, S. (2009). Barriers to hydropower development – charya, S. (2009). Barriers gri-Business and Trade gri-Business and Trade hitrakar, hitrakar, hitrakar, A AD A A CAA CE B&B Hospital, C Bibliography A A CAA AD G A G Shah, S. (2008). Nepal’s C C Mc Manipal L Manipal K K M M IT G K G IT G G IT I Hard Nepal& G IT IMF (2008).Sta IT IT LO au haiju, hatri, Sridhar a oN /MoF(2009), oN /M oN /M randon, TZ (2008).HoneyinNepal. C C C C C ECO OE D fl e Shivadevi(2009).“Foreign (2007a). (2007b). (2007c).Sectorstudyonlargecardamom.IT (2007d).SectorstudyonTea.IT (2007e).The K (2004). ti T (Mount er (2008). er insey (2005).The (2009).Nepal N T I S 254 , Introduc Medicine 67(2008).101-110. No. 15, Issues. Nepali) inNepal Nepal. R Booklet (inNepali),Singdurbar, Series), Volume.1No.3,July2008. K R athmandu esearch and O C C amkaji (2009).“ O ollege ofMedicalSciences(M ollege ofMedicalSciences(M T T R 2010 CA A CA aman (2007).NepaleseTourism:The E C n D xport P hyangra cashmereandsilkproducts– (2009).TourismVision2020:for igit Technology) (2005). O K K ro – ff E ti NEPAL TRADE I BACKGROU reportforthe2008 athmandu, Nepal . (2009). on aboutIT verview xport ofhealthservicesfromdevelopingcountries:The case ofTunisia.SocialScienceand L en E C P E ti conomic Survey2009/10. on (2008),Socio-economic oten ls SectorinNepal: E duca E duca merging G R P astra BankNews,54 overnment ofNepal,Ministry L R ti ti aper on abour Migra N al emi on inFigures 2009 ti D onal Informa ECO G A R NT TZ Nepal, tt P ssessment inNepal.IT EPOR ance ManagementinNepal”Nepal vt. EGRA G Nepal( E lobal O mployment, L C T td. (2004). verseas , TI A G r ti O K L on, ti eneva. O O cle IV N K abour Market: athmandu. E P MS). MS). athmandu. ti S xport ) on Management Sec L T E td, E RA mployment and mployment inNepal.I A D A A T C A K nnual SpecialIssues. P EGY 2010 D R C dmission dmission esk andField onsulta t- athmandu, Nepal( erformance and emi , evelopment A G - eneva. G E tt C xport ance andBalanceof lance, Monitoring C , P G ti hallenges, Nepal on. IMF,Washington P art I—The eneva. P P eace, rospectus ’08-09’, rospectus ’08-09’, C P ulture, Tourismand erformance andpoten R P P esearch overty anorama, ( P ti on ( eople and P oten D www.iteconepal.com LO emand for RE A , Nepal. O llevia R IMS). ti al. IT n I E astra BankNews,54 valua A C A P mul T ssocia P rosperity ti K on inSouth R P P C ayment: Nepalese D aiser Mahal, esources InNepal. okhara, Nepal. okhara, Nepal. , ti O ti on andSupervision . G - C ff eneva. C . D ti shore Talentin Services. on ofTourandTravel, ivil ti isciplinary al. IT A via ) C A , ti K sia, S on, Introductory on, G athmandu. eneva. R A esearch Study nnual Special ACEP C K ontext” (in athmandu, D S ivision, P aper ng N T I S ti eality: R conomic E 2010 B Working 255 R B conomy” in uthority (In nvironment, E R A E re-conference P onsultants’, 11- ublished on the C T P c, fi alitpur, Nepal. ons. N ti L ng on the consul okhara. EPOR aci p ti pproach. N P ole of R P A O R EGY 2010 D conomics & T N athmandu. E athmandu, Nepal Tourism K Souvenir RA K olicy T , A P okhara Tourism ti ulchowk, S athmandu, Nepal P evelopment Vision with P N K ances to Nepalese D ) O tt TI sia and the BACKGROU A emi olicy-oriented on Work: The verview, R P

ti EGRA O A NT overnment of Nepal n arkhel, Jorpa arkhel, onverging se: astra Bank, A G tt C R U A rogramme of monthly magazine devo lobaliza sia Watch on Trade, P A athmandu. A G ircuit ve , February, 2007 ti K www.nea.net.np C , conomic Impact and ngineers (May 6-8). athmandu. on ti E E K rogramme for CA , P T ngineers: CAGE roduc mployment and E NEPAL TRADE I O P CA E T on of on athmandu Nepal O ti rarambha). K ouncil, May 2009 P C ng of S on of ti ti ear 1, No.8 ve Y onven ti ances for ances C evelopment athmandu. tt ng Industry in Nepal: ows to Nepal: ows artnership in Tourism: In Focus 2008, artnership in Tourism: In Focus 2008, F, fl ti K D eport of Interac P onven al in Services. South aper, Number 20, Nepal athmandu: Nepal Tourism Board (in Nepali). M ers, Various Issues ( R ti C tt xecu cs 2008. M P onference on ‘Making B, K emi

ti ear 2008/09 CAE E C R on of Foreign R A Y ti s onsul ti eneral Mee oten C athmandu: Ministry of Finance, athmandu: Ministry G P onal ance In ance K ti tt onal ve (Byabasahik dventure Tourism, Buddhist ti ti ecade of A D ontribu a ccasional onsultancy okhara Tourism Mirror, Vol. 11 Issue 21, September 2008, emi ti athmandu. C C P nnual xport O R on (2005). 9th Newsle on, K athmandu, Nepal lan, Fiscal ti ti E A pril 2006. N K P B, A R ng a ti ouncil (2066). on ti ssocia ssocia ouncil, eview, C eadership, 13-15 May, 2009, L C R A A evelopment of ollege Journal, Vol. 11 No.3, September 2009, ollege Journal, Vol. Tourism Policy – 2008 Tourism Policy – 2008 D C pera elebra eport, 2006 (in Nepali) conomic Survey, C R O E ccasion of 17th eview No. 18, athmandu. aper No. 4. N roceeding on Interna (2008). Nepal’s ngineers conomic s produced on NTB, (2008). Nepal Tourism Sta (2008). Nepal Tourism (2008). ngineers’ ngineers’ E K O P Nepali) R Board service industry of Nepal of S E P 13 March, 2009, nnual nnual E E EE A CD A F (2007). F (2009). Technical F (2006). Business Ini CA CA (2009). Souvenir: 11th Na , (2009). Technical Journal, 27th T T WT O O EA EA EA okhara Tourism okhara Tourism ant, Bhubanesh (2008). Mobilizing ant, Bhubanesh (2006). CAE CAE A CAE S N S NTB (2009). P P P N N P M M NTB, NTB (Various Issues). Tourism News, NTB, Shrestha, Bijaya (2008). “ S Nepal Medical Nepal Nepal MoF (2009). S WT World InstantNoodles TI Thapa, U WT Z UGC Tribhuvan T U U UGC UGC U U W W WH R U N niversity N NWT NWT O E E S (2008).Nepal–TourismSector /Ins E C O O F (2009a).The F (2009b).TheTravel&Tourism (2009).TilgangaNewsle O S (2066).QualityImprovement , , BrochureonSecondHigher T (2008a).Trade (2008b).Measuring (2008).MedicalvisasmarkgrowthofIndianmedicaltourism.WH CO A

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N T I S 2010 257 T EPOR R EGY 2010 D T N RA T S N O TI BACKGROU EGRA NT ACTION MATRIX PART I ACTION MATRIX PART NEPAL TRADE I NEPAL TRADE INTEGRATION STRATEGY 2010 NEPAL TRADE INTEGRATION CONSOLIDATED CROSS-CUTTING ACTIONS CONSOLIDATED CROSS-CUTTING

N T I S

Ministries

integrated check-posts integrated

line concerned concerned line

to clear all cargo, including SPS-sensitive cargo, and develop develop and cargo, SPS-sensitive including cargo, all clear to

2010 years 2 Yes Yes Yes 259

MoAC, MoI and and MoI MoAC,

• Negotiate increased number of Indian border points with ability ability with points border Indian of number increased Negotiate •

MoCS, MoF/DoC, MoF/DoC, MoCS,

harmonization of computerized customs systems systems customs computerized of harmonization T

MoF/DoC, MoCS Yes 2 years 2 Yes MoCS MoF/DoC, • Establish a coordination committee with India to discuss discuss to India with committee coordination a Establish •

EPOR complaints

R

procedure for registering and addressing Nepalese traders’ traders’ Nepalese addressing and registering for procedure EGY 2010 D

MoCS, MoF/DoC Yes Yes 2 years 2 Yes Yes MoF/DoC MoCS, T N tampering of seals and cargo content within India and develop develop and India within content cargo and seals of tampering

RA • Negotiate with India a more robust law enforcement against against enforcement law robust more a India with Negotiate • T

S commitments N

O states on Nepalese exports in contravention of WTO rules and and rules WTO of contravention in exports Nepalese on states MoCS, MoF Yes 5 years 5 Yes MoF MoCS,

TI

• Negotiate elimination of fees and duties imposed by Indian Indian by imposed duties and fees of elimination Negotiate • BACKGROU

issues to MoCS to issues

EGRA

application of such. Create a system for Nepalese traders to report report to traders Nepalese for system a Create such. of application

MoCS, MoF/DoC Yes Yes 2 years 2 Yes Yes MoF/DoC MoCS, NT

Indian customs rules, duties, procedures and non-discriminatory non-discriminatory and procedures duties, rules, customs Indian

• Negotiate increased and expedited transparency in applicable applicable in transparency expedited and increased Negotiate •

wagons at Raxaul in the context of Rail Service Agreement Service Rail of context the in Raxaul at wagons

MoCS Yes 2 years 2 Yes MoCS

• Review procedures relating to cross-border movement of rail rail of movement cross-border to relating procedures Review •

second eastern Indian port and a western Indian port port Indian western a and port Indian eastern second Ministries

NEPAL TRADE I • Accelerate formalization of Nepalese transit cargo’s access to a a to access cargo’s transit Nepalese of formalization Accelerate • Yes 1 year 1 Yes concerned

India MoCS and and MoCS

focus on potential export sectors sectors export potential on focus Ministries

• Develop negotiation agenda and strategies and strengthen bilateral bilateral strengthen and strategies and agenda negotiation Develop • Yes 2 years 2 Yes concerned

Bilateral MoCS and and MoCS

ministerial consultation mechanisms consultation ministerial Ministries

• Develop negotiation agenda and strategy and strengthen inter- strengthen and strategy and agenda negotiation Develop • Negotiations Yes 2 years 2 Yes concerned

Multilateral and Regional and Multilateral Trade MoCS and and MoCS

ve 1: Strengthen trade nego trade Strengthen 1: ve ti Objec ons (especially Bilateral) (especially ons ti a ti

eform R

evelopment D

evelopment/ evelopment/ D

A T Strengthening/

egulatory egulatory R nd A A T urrent C Timeframe

osNa ons ti c A ecommended R utcomes O artner(s) P onal ti onal onal ti tu ti Ins

olicy P ecent or or ecent R ossible P

Main

equirements R

ACTION MATRIX PART I: CONSOLIDATED CROSS-CUTTING ACTIONS CROSS-CUTTING CONSOLIDATED I: PART MATRIX ACTION NEPAL TRADE INTEGRATION STRATEGY 2010 STRATEGY INTEGRATION TRADE NEPAL NEPAL TRADE INTEGRATION STRATEGY 2010 N T I S 260 ACTION MATRIX PART I: CONSOLIDATED CROSS-CUTTING ACTIONS 2010 Requirements NEPAL TRADE I BACKGROU Main Policy Possible Recent or Outcomes Recommended Acti ons Nati onal Partner(s) Insti tuti onal And Regulatory Timeframe Current TA Strengthening/ TA Development/ Development N Reform D R NT

EPOR Objecti ve 1: Strengthen trade negoti ati ons (especially Bilateral) EGRA Trade China MoCS and

T Negotiations • Complete the (underway) negotiations on preferential tariff rates concerned Yes 2 years TI for Nepalese goods Ministries O N

S • Negotiate improved rules of origin MoF/DoC, MoCS Yes 2 years T

RA MoCS, MoTCA, • Negotiate improved access for selected Nepalese service exports T line concerned Yes 1 year EGY 2010 (e.g. tourism, including passenger transport by road, health) Ministries • Negotiate increased and expedited transparency in applicable Chinese customs rules, duties, procedures, standards, and Yes 2 years negotiate non-discriminatory application of such. Create a system MoCS, MoF/DoC for Nepalese traders to report issues to MoCS Other Bilateral Negotiations MoCS, line • Negotiate additional bilateral agreements with labour-importing concerned Yes 2 years countries to assist with temporary migration of Nepalese workers Ministries • Establish embassies or consular offi ces in main destinations for MoFA, MoLTM Nepal labour exports

Cross-cutting MoCS/NIU and concerned Yes Yes Yes 2 years • Develop negotiations skills and develop trade policy research Ministries capacity

Objective 2: Strengthen the technical capacity of domestic NTB and other business environment supportive institutions Investment • Formulate and adopt an Act establishing a Board of Investment MoI/Council of Yes Yes 2 years Facilitation (BoI) Ministers • Establish BoI, provide budget, recruit qualifi ed staff MoI, MoF Yes Yes 2 years

N T I S

areas

Ministries

points (warehousing, cold storage) cold (warehousing, points in different different in

Yes Yes 5 years 5 Yes Yes concerned concerned

• Formulate a master plan and improve physical facilities at border border at facilities physical improve and plan master a Formulate •

2010 GoN PRC,

261

C, C, M C, F/D M O O O

ADB, GoI, GoI, ADB,

transparency; allow for new entrants new for allow transparency;

C Yes 2 years 2 Yes C F/D M T O O

• Review licensing arrangements for customs brokers; increase increase brokers; customs for arrangements licensing Review •

agency cooperation and coordination of inspection at border at inspection of coordination and cooperation agency EPOR

C Yes 2 years 2 Yes C F/D M CS, M O O O

R • Strengthen National Trade Facilitation Committee to improve inter- improve to Committee Facilitation Trade National Strengthen • EGY 2010 D

T N indicators, and creation of unit; train staff train unit; of creation and indicators,

RA

cation of monitoring monitoring of cation fi identi procedures, of establishment M C Yes Yes Yes 2 years 2 Yes Yes Yes C F/D O

O T • Risk management: Formulate a risk management plan, including including plan, management risk a Formulate management: Risk • S N

O C Yes Yes 2 years 2 Yes Yes C F/D Ps-laac ui:Bidcpct ihnDC ri tf M staff train DoC; within capacity Build audit: Post-clearance • O O TI

BACKGROU

ASYCUDA; train staff train ASYCUDA;

C Yes Yes 2 years 2 Yes Yes C F/D M O O

• Valuation: Improve valuation database and create interface with with interface create and database valuation Improve Valuation: • EGRA

including selectivity module; redesign procedures; train staff train procedures; redesign module; selectivity including NT

C Yes Yes 2 years 2 Yes Yes C F/D M O O

• Customs automation: Introduce new ASYCUDA modules, modules, ASYCUDA new Introduce automation: Customs •

Facilitation

e e er IMF years 5 Yes Yes C F/D IpeetCsosRfr n oenzto ln20-3M 2009-13 Plan Modernization and Reform Customs Implement • Trade O O

promote local multiplier effect and technology transfer technology and effect multiplier local promote

I Yes Yes 5 years 5 Yes Yes I B O • Consider supplier development scheme linked to FDI in SEZ to to SEZ in FDI to linked scheme development supplier Consider •

NEPAL TRADE I

results, improve approach improve results,

I Yes Yes 5 years 5 Yes Yes I B O

• Implement investment campaign in key target sectors, monitor monitor sectors, target key in campaign investment Implement •

promotion and trade/export promotion functions in a single agency single a in functions promotion trade/export and promotion

CS Yes Yes Yes 5 years 5 Yes Yes Yes CS M I, M O O

• Carefully review opportunity and merit of consolidating investment investment consolidating of merit and opportunity review Carefully •

I Yes Yes 2 years 2 Yes Yes I M I, Dvlpasrtgcivsmn rmto lnfrNplB Nepal for plan promotion investment strategic a Develop • O O

Nepal to other locations other to Nepal

I, M I, M I, CS Yes 2 years 2 Yes CS B O O O

• Undertake rigorous investment benchmarking studies comparing comparing studies benchmarking investment rigorous Undertake •

list to replace positive list positive replace to list

requirement. Duties on domestic production to remain. Negative Negative remain. to production domestic on Duties requirement. M I Yes 1 year 1 Yes I O

• Amend and enact draft SEZ bill, including removal of 75% export export 75% of removal including bill, SEZ draft enact and Amend •

• Establish one-stop investor facilitation service within BoI BoI Yes Yes 2 years 2 Yes Yes BoI BoI within service facilitation investor one-stop Establish •

BoI staff BoI Facilitation

I Yes Yes 5 years 5 Yes Yes I B O

• Develop and implement capacity development programmes for for programmes development capacity implement and Develop • Investment

Objective 2: Strengthen the technical capacity of domestic NTB and other business environment supportive institutions supportive environment business other and NTB domestic of capacity technical the Strengthen 2: Objective

eform R

evelopment D

evelopment/ evelopment/ D

A T Strengthening/

A T urrent C Timeframe

egulatory egulatory R nd A

osNa ons ti c A ecommended R utcomes O artner(s) P onal ti

onal onal ti tu ti Ins

ecent or or ecent R ossible P

olicy P Main

equirements R Requirements N T I S 262 Main Policy Insti tuti onal Possible Recent or Outcomes Recommended Acti ons Nati onal Partner(s) And Regulatory Strengthening/ TA Timeframe Current TA Development/ 2010 Development Reform NEPAL TRADE I BACKGROU Objective 2: Strengthen the technical capacity of domestic NTB and other business environment supportive institutions • Further negotiations with India on movement of rail wagons and access to sea ports. See Objective 1

Technical MOI, NSBM, • Speed up revision of Act and Regulations on Nepal Standards Yes 1 year N Standards MOCS D R NT MOCS, MOI EPOR

EGRA • Circulate draft revised Act, including among WTO member NBSM Yes 2 years countries, as per WTO provision for comments TBT Enquiry T

TI Point O

N • Nepal Council of Standards (NCS) to enforce ‘Code of Good EU/UNIDO

S Practice for Preparation, Adoption and Application of Standards’ NCS Yes Yes 2 years + ESCAP T

RA and notify ISO/IEC project T

EGY 2010 • Post-clearance audit: Build capacity within DoC; train staff MOF/DOC 2 years • Establish a national accreditation board; establish affi liation to international accreditation bodies; start accreditation process MOCS, MOI Yes Yes 5 years within Nepal • Develop and maintain registry of private, government or NGO, New National domestic or international product/ system certifi ers operating in Accreditation Yes 2 years Nepal Board • Strengthen WTO/TBT Enquiry Point to assist in providing Nepalese exporters with information on standards to be met MOCS, NBSM Yes Yes Yes 2 years in importing countries; strengthen capacity of Enquiry Point to coordinate preparation of WTO notifi cations NBSM, DFTQC, • Raise awareness of exporters about product and process product Yes Yes 2 years standards associations • Formulate national standards for products of export interest NBSM, DFTQC Yes 5 years harmonized with ISO/CODEX/IEC standards • Accelerate accreditation of government and private sector EU/UNIDO NBSM, DFTQC, laboratories, including NBSM and DFTQC laboratories. for product and other NGO or certifi cation by internationally recognized accreditation bodies. IInn Yes Yes 5 years ESCAP private sector SSPS,PS, ffocusocus sshouldhould bebe onon accreditedaccredited foodfood testing,testing, includingincluding MRLMRL project; organizations aandnd microbiologymicrobiology WB; ADB Product • Facilitate establishment of specialized laboratories by product associations, associations under the PPP approach for special purposes (e.g. Yes Yes 5 years MoI, NBSM, collective mark, trademarks, non-destructive assessments, etc.) DFTQC, MoCS

proper treatment and disposal of soiled water and solid waste solid and water soiled of disposal and treatment proper N T I S NGOs MoH,

between MoAC, MoAC, between water, potable air, clean on: focus with processing and production e e e er WHO years 5 Yes Yes Yes

• Launch efforts to promote enabling environment for food food for environment enabling promote to efforts Launch •

2010 Partnership 263

system system

FSC M LA, specialized staff outside traditional public servant staff rotation rotation staff servant public traditional outside staff specialized D O O

e e e er FAO years 2 Yes Yes Yes T PPD, DoLA, MoFSC) in a newly created biosafety agency with with agency biosafety created newly a in MoFSC) DoLA, PPD, DFTQC, PPD, PPD, DFTQC, • Consolidate SPS focal points (currently spread among DFTQC, DFTQC, among spread (currently points focal SPS Consolidate •

EPOR

DFTQC R farmers, MoAC/ farmers, EGY 2010 D

T

tea, lentils, cardamom, and ginger and cardamom, lentils, tea, N

sector and and sector

cation run through TPC. Could be launched initially for for initially launched be Could TPC. through run cation fi certi GAP Yes Yes Yes 2 years 2 Yes Yes Yes RA

NGOs, private private NGOs, T

• Launch internationally acceptable traceability systems based on on based systems traceability acceptable internationally Launch • S

specialized specialized

N PPP involving involving PPP O TI

BACKGROU

(CODEX)

DFTQC ng and procedures to answer queries, etc. queries, answer to procedures and ng fi staf

WHO WHO years 2 Yes Yes

AC/PPD/ • Strengthen WTO SPS Enquiry Point, including up-to-date website, website, up-to-date including Point, Enquiry SPS WTO Strengthen • M O EGRA FAO + + FAO

NT

(CODEX) stringent MRL requirements of trading partners trading of requirements MRL stringent

DFTQC

Yes Yes 2 years 2 Yes Yes WHO WHO to ensure that crop protection comply with changing and most most and changing with comply protection crop that ensure to

AC/PPD/ M O

FAO + + FAO • Review Pesticides Act 1991 and Pesticides Rules B.S.2050 (1994) (1994) B.S.2050 Rules Pesticides and 1991 Act Pesticides Review •

Veterinary Council Act B.S.2055 (2000) B.S.2055 Act Council Veterinary

OSYsYs2yasOIE years 2 Yes Yes DOLS • Review Animal Health and Livestock Act 1998 and Nepal Nepal and 1998 Act Livestock and Health Animal Review •

NEPAL TRADE I

DFTQC

Measures

e e er FAO years 2 Yes Yes • Amend current Food Act 1966 Act Food current Amend •

AC/PPD/ M O

nitary nitary

Phytosa- completed

CPDYsYes Yes AC/PPD AotRgltosudrtenwPatPoeto c 07M 2007 Act Protection Plant new the under Regulations Adopt • O

Sanitary and and Sanitary Just Just

WB; ADB WB;

standard setting role of DFTQC of role setting standard organizations project; project;

including possibly DFTQC; review/address possible con possible review/address DFTQC; possibly including NGO or private private or NGO with icts fl Yes Yes 5 years 5 Yes Yes ESCAP ESCAP

• Accreditation of several HACCP and ISO 22000 certi 22000 ISO and HACCP several of Accreditation • DFTQC, other other DFTQC, ers, fi and and

EU/UNIDO EU/UNIDO

WB; ADB WB;

standard setting role of NBSM of role setting standard organizations project; project;

including possibly NBSM; review/address possible con possible review/address NBSM; possibly including NGO or private private or NGO with icts fl Yes Yes 5 years 5 Yes Yes ESCAP ESCAP

• Accreditation of several ISO 9000, ISO 14000, SA 8000 certi 8000 SA 14000, ISO 9000, ISO several of Accreditation • NBSM, other other NBSM, ers, fi and and

EU/UNIDO EU/UNIDO

Objective 2: Strengthen the technical capacity of domestic NTB and other business environment supportive institutions supportive environment business other and NTB domestic of capacity technical the Strengthen 2: Objective

eform R

evelopment D

evelopment/ evelopment/ D

A T Strengthening/

A T urrent C Timeframe

egulatory egulatory R nd A

osNa ons ti c A ecommended R utcomes O artner(s) P onal ti

onal onal ti tu ti Ins

ecent or or ecent R ossible P

olicy P Main

equirements R Requirements Main N T I S

264 Policy Insti tuti onal Possible Recent or Outcomes Recommended Acti ons Nati onal Partner(s) And Regulatory Strengthening/ TA Timeframe Current TA Development/ 2010 Development Reform Objective 2: Strengthen the technical capacity of domestic NTB and other business environment supportive institutions NEPAL TRADE I BACKGROU Intellectual • Amend (or legislate new) Industrial Property Act to include Property collective and certifi cation marks and to comply with WTO TRIPS MOI, MOCS Yes Yes 2 years Agreement

N • Legislate Traditional Knowledge (TK) and Geographical Indication

D MOI Yes Yes 2 years (GI) laws R NT EPOR

EGRA • Strengthen capacity of current intellectual property offi ces, MoI, Ministry including training of staff, and equipment. Develop relevant of FAPACA & Yes Yes 2 years

T registration databases Culture TI

O • Launch awareness campaigns among businesses on the use MoI, Ministry N

S of intellectual property protection as a competitive advantage, of FACAPA & Yes Yes 2 years T

RA including among exporters in NTIS export potential sectors Culture

T • Establish GIs for several export commodities MoI, MoAC Yes Yes 2 years EGY 2010 • Establish an intellectual property training institute to train users, regulators, creators, judges, lawyers, and all who work on IP MOI Yes Yes 5 years issues • Consolidate all intellectual property and copyright matters in MoI, Ministry an intellectual property agency with specialized staff outside of FACAPA & Yes Yes Yes 5 years traditional public servant staff rotation system Culture Service • Establish a ‘champion’ institution to promote Nepalese service MoCS and Sectors exports (current WTO Service Enquiry Point weak; TEPC focuses concerned Yes 2 years Environment on goods; 17 uncoordinated agencies responsible for services) Ministries (cross-cutting) • Carry out detailed review of domestic laws and regulations MoCS and pertinent to individual service sectors and their impact on service concerned Yes Yes 2 years exports Ministries • Modify current restrictions on foreign exchange imposed on MoF, Nepal Yes 1 year Nepalese residents ($2,000) Rastra Bank • Formulate regulations for full enforcement of the Telecommunications Act to heighten competition (and lower cost) MOIC, NTA Yes Yes 2 years of high band-width internet • Improve government statistical instruments to measure, forecast CBS and monitor contribution of services and services exports to Nepal Rastra Yes Yes 5 years Nepalese economy Bank

• Upgrade airport infrastructure, including at TIA MOTCA, CAAN Yes Yes 5 years

agencies

N T I S govt specialized

associations,

based on TPC for selected Nepalese agro-food exports agro-food Nepalese selected for TPC on based

NGOs, product product NGOs, s Yes Yes 5 years 5 Yes Yes s

2010 systems management quality and safety food GAPs, Launch • 265

specialized specialized

farmers groups, groups, farmers

Cooperatives and and Cooperatives T

technology, etc. technology,

NTBs (especially standards), product design and development, development, and design product standards), (especially NTBs EPOR

TSI Network Yes Yes 5 years 5 Yes Yes Network TSI R in areas of business and trade information, awareness of of awareness information, trade and business of areas in

EGY 2010 D • Use TSI network to develop TSI grass roots service capacity capacity service roots grass TSI develop to network TSI Use • T N

RA

ned functions ned fi match staff and skills with clearly de clearly with skills and staff match T

CS, TEPC Yes Yes 5 years 5 Yes Yes TEPC CS, M O

S ne mandate of TEPC, restructure TEPC and and TEPC restructure TEPC, of mandate ne fi rede Clearly • N

O NGOs TI

BACKGROU other business business other associations, associations,

EGRA

product product

• Create structured network of trade support institutions (TSIs) institutions support trade of network structured Create •

Yes Yes 2 years 2 Yes Yes NT organizations,

apex business business apex

govt agencies, agencies, govt

MoCS, selected selected MoCS,

Working Group on Trade umbrella Trade on Group Working

FNCCI

with NBF’s Working Group on Trade and/or bring EPF under under EPF bring and/or Trade on Group Working NBF’s with Yes 1 year 1 Yes

NEPAL TRADE I

MoI, MoCS, MoCS, MoI,

• Merge the Export Promotion Forum (EPF) operated by FNCCI FNCCI by operated (EPF) Forum Promotion Export the Merge •

organizations

2010

creation and effective operation of NBF of operation effective and creation Institutions apex business business apex

IFC/DFID 26, May Yes Yes

• Strengthen government-business policy dialogue through through dialogue policy government-business Strengthen • Support Ministries, Ministries,

Launched Launched

Trade Trade MoI, concerned concerned MoI,

others

policies for the 19 export potentials, as needed as potentials, export 19 the for policies associations, associations,

Yes Yes 2 years 2 Yes Yes

• Formulation of individual sector strategies and supportive supportive and strategies sector individual of Formulation • MoAC, product product MoAC,

MoCS, MoI, MoI, MoCS,

UNCTAD, WB UNCTAD,

others

I I II t r a P Part x i r t a M Matrix n o i t c A Action n i in s n o i t a d n e m m o c e r recommendations Sectors ITC, AUSAID, AUSAID, ITC,

associations, associations,

h t i w with s e s y l a n a analyses T O W S SWOT l a u d i v i d n i individual e e s see , , 2010 NTIS in ed fi identi Potential GTZ, UNDP, UNDP, GTZ,

MoAC, product product MoAC,

• For possible actions in the 19 Priority Export Potential Sectors Sectors Potential Export Priority 19 the in actions possible For • Export Priority from USAID, USAID, from

MoCS, MoI, MoI, MoCS,

Individual Individual Selected TA TA Selected

Objective 3: Strengthen the export capacity of ‘inclusive’ export potential sectors potential export ‘inclusive’ of capacity export the Strengthen 3: Objective

eform R

evelopment D

evelopment/ evelopment/ D

A T Strengthening/

A T urrent C Timeframe

egulatory egulatory R nd A

osNa ons ti c A ecommended R utcomes O artner(s) P onal ti

onal onal ti tu ti Ins

ecent or or ecent R ossible P

olicy P Main

equirements R Requirements Main N T I S

266 Policy Insti tuti onal Possible Recent or Outcomes Recommended Acti ons Nati onal Partner(s) And Regulatory Strengthening/ TA Timeframe Current TA Development/ 2010 Development Reform Objective 4: Strengthen GoN’s capacity to coordinate and manage TRTA and AfT and to implement NTIS NEPAL TRADE I BACKGROU • Align priorities of NTIS 2010 and 3-year NDP UNDP, DFID, NPC and MoCS Yes YES 1 year EIF National Finland Implementation • Incorporate Trade Sector Strategic Priorities of GoN in Nepal NPC, MoF, and UNDP, DFID, Arrangements Yes Yes 1 year

N Development Forum MoCS Finland D R NT UNDP, DFID,

EPOR • Get NTIS 2010 approved by Council of Ministers MoCS, GoN Yes Yes 1 year

EGRA Finland • Establish effective NSC MoCS, GoN Yes Yes 2 years EIF Tier 1 T TI

O • Establish effective NIU located in MoCS with focal points in MoCS, concerned N key Ministries, with staffi ng and procedures (procurement, Yes Yes 2 years EIF Tier 1

S Ministries M&E,…) T RA • Establish effective NTIS Technical Committees. Provide MOCS, T

EGY 2010 strong linkages between NTIS Technical Committees and concerned Yes Yes 2 years EIF Tier 1 NBF Working Groups Ministries MoCS/NIU, • NIU and Technical Committees to formulate and secure Technical Yes Yes 5 years funding to implement NTIS 2010 Actions Committees • NIU and Technical Committees to identify, formulate and MoCS/NIU, secure funding for small, quick-win TA proposals early on Technical Yes Yes 1 year after launch of NTIS 2010 (in line with short- to medium-term Committees priorities identifi ed in NTIS) • Institutionalize regular consultations between MoCS and MOCS, DPS Yes NO 2 years development partners • Create a dedicated web platform to communicate and monitor progress against NTIS and NDP benchmarks and Paris MOCS/NIU, DPS Yes Yes 2 years Declaration S

N T I S NS OR O

2010 T 267 TI EC AC

T T S EPOR R DED EGY 2010 D T N POR N RA X T E S E

N O TI AL BACKGROU MM EGRA NTI NT ACTION MATRIX PART II ACTION MATRIX PART E RECO T PO NEPAL TRADE I WITH F 19 O S E S ALY N NEPAL TRADE INTEGRATION STRATEGY 2010 NEPAL TRADE INTEGRATION A T O SW

N T I S , ce ti 2010 Phurke 269 , diseases and reate a C T I) for Nepal’s G Chhirke Jurjure EPOR on ( on R on of best prac ti ti EGY 2010 D , and T N al oil, cardamom paper, RA ti T ciency and obtain third ffi S Phurke N , boost quality ve to O on of the industry ti ti on costs on ti TI ng e ng ti BACKGROU at farm level on centres es within the country and reduce erence towards large cardamom ti ti ff lity ti Chhirke vi infrastructures ng transport EGRA ti ti eographical Indica NT and post-harvest on, quality improvement, G ti M va on ac on ti O ces in cardamom-growing areas. le or no incen ti ti tt ominance by a single export market (India) eteriora on of crop diseases such as ack of knowledge and adop ack of knowledge and ow quality of product i ack of collec ack of storage facility at farm and trader level ti market vola in Farmers not organized for farming of and trading cardamom D D L cul handling L L High transporta L L Illegal taxes and fees collected in districts Farmers’ indi because of

M onally purchase small cardamom. ) work and produce and distribute seed-based ti ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ on and consolida ti D & R NEPAL TRADE I ve mark or a on, catering to spice, essen ti ti ng materials on a large scale. ti on ca ti fi on to address the interest of all stakeholders involved in the on CARDA ti ti ons) so as to improve marke ti va ti 1. to improved 2 extrac ng a collec ti

ssocia tti drying technology to improve quality. CO A

and on area tti ti bha ). on industries. on ti ng associa ng bha ti es Threats ti PC onal ti ng equipment in central and regional laboratories. ti ardamom C on (T on ti Strengths Weaknesses rates in most markets al oil al ff pportuni ti quality vity and O . ca ti fi

ves, marke ves, improved processing on of from tradi ti ti ti ft gate possibility of crea ti cul c advantage in cardamom Jurjure ng essen ng ti ti ons ons romote large cardamom in markets that tradi nsure proper tes xplore avenues for product diversi xamine/implement programmes for aggrega ti market development for large cardamom al for party cer large cardamom. brand image for Nepal’s large cardamom. (coopera (opposed to sucker-based) quality plan incense, colour extrac E E E P and value chain. dependence on Siliguri (India) market. ti drying system

Introduce improved farming and post-harvest prac Widely introduce the and focus on eradica Improve extension services Strengthen research and development ( Strengthen the Strengthen Work with traders/exporters to increase value addi Inves tti ons nlike many other agricultural products, dried nlike many other agricultural products, dried eo-clima vailability of new technologies like oten arge scope for expanding produc ti uctua Increasing adop in markets where small green cardamom is consumed in markets where small green cardamom is Branding in niche markets L increasing produc for extrac technology; shi bha P fl cardamom keeps well; thus, minimal risks associated with physical loss during trade Nominal or zero tari A World’s largest exporter of large cardamom World’s largest exporter G where nothing else grows; Typically planted in areas for land with other crops thus does not compete price Major source of cash income for farmers despite U

Ac ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ Ac

Very nominallabourcostforweeding provide technicalsupportforfarmers P crop andexistenceofsuppor G addi candy, sauces—andotheropportuni High poten P industries inNepalandIndia Increasing useofcropby income, employment,andoverallruraldevelopment Signi marke in parttoexistenceofestablishedcoopera E domes P valuable chemicalcontents for producinggingerwithexcellentaromaandother Fer vegetables; so,averypro P system Tradi Introduc P ti

ase ofentryintogingerfarmingandmarke N T I S rogramme by romo reference forNepalesegingerbyconsumersin ossibility ofinter-croppingwithmaize,bean,and oten ons 270 overnment’s classi ti Implementfocusedprogrammestoexpandgingerfarmingareas,produc Introducehigheryieldingandbe le redsoilandhillclimateofNepalhighlysuitable ti fi on ti cant contribu areas/districts. R E D C E P E E can maintaintheBosenatureandqualityofginger.Mul R nego including simpledrying. address variousproduc groups, localgovernment, (coopera excellent opportunityforimprovingthequalityofNepaleseginger.) onal cropskilfullyincorporatedintofarming ti ti al forincreasing produc ti ti ncourage processingofginger forproductdiversi stablish gingercollec ncourage contractfarmingforginger. xamine/implement programmesforaggrega rovide traininginpost-harvesthandling. onduct regularbusinessmee esolve theunexpectedand esearch FarmhasreleasedanewimprovedvarietysuitableforNepal’ssoilandclimatethat ng thecrop iversify intoprocessinggingerextracts(oleoresin). 2010 on ofnewand diversi c andexportmarkets ti on of ti ti a al forproductdiversi NEPAL TRADE I BACKGROU ti ons. D ti G ves, marke epartment of inger andSpice O ti pportuni fi on ofthissector tofarmers’ tegh Weaknesses Strengths ca ti N on ofgingeras ahighvalue A fi D table crop yurveda pharmaceu R NT ti ti ti EPOR e Threats es fi ve policies ng associa ti ed spices EGRA on centres(similartovegetablecollec A ti ti on area on- andtrade-relatedissues. griculture ( D fi ca evelopment T DOA TI ti ti es forvalue on—jam, jelly, ad hoc O ti N ngs ofentrepreneurs,investors,farmers, andtechniciansto andtraders. S tt ti er qualityvarie ons) soastoimprovemarke ti T D ves for ti RA o ng due 2. import restric A T ti ) to cal EGY 2010 G IN ti on andconsolida ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ GER

ti Very highprice No agroservicecentreforginger with thisproblem Kuhine P India Intermi L risk ofpost-harvestdamage L No permanentsolu as inTibet More e storage duetorhizomerotdisease ginger fromNepalwheneverIndianproduc Indian government’sdiscouragementofimport produc High dependenceofmarketpriceinNepalonginger L is high es ofginger.(The ti fi ack ofpost-harvesttechnicalservices ack ofgoodstorage,includingcoldstorage;so,high oss ofupto30percentgingerinthe ons imposed byIndiathroughtrade erishable natureofproduct ca ti on and valueaddi ti ffi tt (rhizome rot)andlackoftechnicianstodeal ti on andpricing in India cient produc ent lis plica ti on centres)byinvolvingfarmers’ ti ti ti on ofthisseedcanprovidean ng e fl ng ofgingerasarestricteditemby ti uctua on oftheindustry ti on totheproblemof ffi G ciency andobtainT ti ti on inhillyareas ofIndiaaswell overnment ons ti ti on, andyieldinmajor on within thecountry, G inger fi eld andduring Gano PC . ti on es N T I S ti 2010 271 leneck for leneck tt T hina in major C s)—a bo on ti EPOR RL EU R EGY 2010 D nd new markets other ve quality supervision es and charges. on fi ng countries. ng ti T ti c market and ti ti N ti cal situa cal RA ec ti to pasture areas on access T ff ti S N O le poli le TI ti fy produce for conformity with BACKGROU ti produc es of export es and equipment for good ti on of domes ti

ti in bee pasture area cide ti ti EGRA both India and on from . ti

NT ti RL market and others se of pes bsence of proper equipment and laboratory facili bsence of proper equipment and laboratory ompe ack of facili ack of pasture management markets Strikes and vola U L quality honey Near satura to entrepreneurs’ inability than India that are Non-inclusion of Nepal in the list of countries authorized to export honey to A to test for residue presence (M L Small quan C EU Weak road/transporta EY and other honey impor

¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ N EU O NEPAL TRADE I ora fl 3. H e cide management and establish ti ons ti erent ff T on packing materials and abolish other du ons and ons A ti on. ti c condi c ti ca es Threats fi ti c condi c

ti ti es and V honey ng of ti ti onally accredited laboratories that can cer ng laboratory capacity in the area of M ora and fauna ti fl ti onal buyers onal ti cide residue control plan to the Strengths Weaknesses on ti pportuni ti on O ti ng market standards. ti beekeepers and stakeholders on between especially ve socioeconomic impact, ti ti the past ons in ti avour due to clima fl cquire organic cer educe import du rovide support to growers in pes and control systems. P impor A R interna on with ti Submit a pes tes Strengthen Set up interna ons rganic and fair trade honey nique rowing consump rowing number of commercial beekeepers ood rela bundance of natural clima vailability of appropriate lot of groundwork already done by di ela ti Sale through tourism O R G G income to poor landless farmers A organiza in Involvement of a large number of entrepreneurs the processing and marke G A A U Very posi High quality produc

Ac ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ Procurement facilita Export facilita Ac

P Huge marketsintheneighbouringBangladesh, P farming Training offarmersinqualityproductandcrop Improving packaging C thus savingonaddi residual ricefallowswiththeexis C na E L U and quality. compared toboldlen High apprecia G High qualityproduct A ti llage ti ong experienceinexpor

asy availabilityofrawmaterials–80percent N T I S akistan, andSri ossibili oming upoflargenewmarkets an begrownpro verage yieldhigherthanthatofIndia 272 ood reputa se ofmoderntechnology(coloursensing,de-stoner) ons ti onal produc Improve len Facilitate the Strengthen quaran T at alladministra key a markets. border. E L C D E U marke (as wasdonein2009). ower andtheneliminatedistrict taxesa EPC stablish alen xamine/implement programmesforaggrega

onduct studytoursofmillers,exporters,andgovernment o 2010 evelop qualitycer nder the ti es toboostyield throughsimpletechnology , tt rac NEPAL TRADE I BACKGROU C ti ti on ofNepalilen ti ng associa ti entral Bank,etc.). on on inSouth ti on concentratedin10districts ti L ve markets. G fi potnte Threats Opportunities anka tably evenbysmallfarmersin ti ti oN policy,classifylen tegh Weaknesses Strengths onal fer l datagenera ti A on ti ti ls orlen l market informa ssocia ti N ve levels(Mo ti D ti ng ons) soastoimprovemarke A ti ti R NT

ne treatment(fumiga ti sia andtheMiddle fi lizer, irriga ti EPOR ca ti on ofNepalese ls intheworldmarket. EGRA ti ls ofothercolours ti ti on tostrengthentheimageofNepalese exportsonworldmarket. ng soilmoisture, T ti TI on andanalysisatalllevels.Separate len O N ti AC on, and S ti on system. T ti , Nepal ls asexportableandrefrainfromimposingexportrestric RA 4. T E EGY 2010 R ast ice, LE ff ec A gricultural O ti NTI ti on) posts,withequipmentandtraining,atthe il and ti ng export products. on andconsolida ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ti

ng e L are costly C P and security) A and suitablevarie U L markets Increasing importanceofS exports inSouth scarcity isdrainingexportablequan Sharply increasingdomes High suscep R procurement, marke U G G U ack oforganizeddomes abour scarcityandsecurityissues L oor condi ontainers forshipmentarenoteasilyavailableand ela bsence oflocalsafetymeasures(policeprotec overnment policiessuchasexportban. rowing compe navailability ofqualityinputs,speci nstable governmenta navailability ofexperttechniciansin P S ulses Industries( ti ffi vely highlabour costs R ciency andobtainT esearch ti on ofroadstofarmingareas ti bility topestsand diseases ti ti C on oftheindustry (coopera

A ti ouncil [N ti on from sian markets es ofseeds ffi il t a to cials ti ng, andexport A ti ff N l from‘pulses’categories ec ti ROP c marketsforcollec ti c pricesdueto overall food P ti C ARC ng produc S measuresinimpor PC anadian and I) tosetupagentsin . tt ], Mo rac ti ty fi cally improved ti ti v overseas ve C ti me on, S, A C ustralian ustoms, ti on ti ti ves, ti ons ti on ng N T I S ls ti ) to on, ti arsa, P ls. 2010 ti 273 DADO on to len to on ti T ush irriga ce ( fl ffi en O tt EPOR hitwan, and R C EGY 2010 D T N RA T S N evelopment O D upendehi, TI R BACKGROU EGRA ang, NT D ons (priming the seeds, ons (priming the seeds, programmes as a major undertaking on ti ti lizers and herbicide) with support from lizers and herbicide) with griculture ti A istrict ivision in charge of pulses in the area of len ivision in charge of pulses in the area of ompany. D er harvest. er D C ft NEPAL TRADE I evelopment Fund should pay priority a D on of inputs (fer ti gronomy A

ARC ed technical recommenda ng client-oriented research. fi and Nepal Seed ti esearch and R ARC on ti in Birgunj, Bhairahawa, and Nepalgunj. ngs of stakeholders ti griculture and sustained improved seed produc ve l wholesale markets in Bardia, Banke, l wholesale markets ti A ti onal ti a year during and a ng three months and commercial banks. ti stablish len aunch proac on expansion facilita L of the private sector, N DADO E opera farmers, focusing on simpli and call for bids for conduc weeding). ti Strengthen the capacity of N Na The private sector distribu Strengthen Hold yearly mee assistance from Strengthen monitoring and Produc ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ Ac

C recognized cer Support availableforobtaininginterna D especially inviewofthedeteriora G for bio-organictea land forexpansionandnewplan L green tea New andrapidlyexpandingglobalmarketfororganic L interest rates material, toolsandmachinery,loansata G P Ins G E C Farmers coopera Fair Tradeprac for developingbe Very favourableclima World marketpricesareexpectedtorise E ti arge areaswithyoungteabushesandavailabilityof ow labourcost nvironmentally friendly xistence ofneworganicallycer N T I S rivate sectordrivenwithdonorsupport ode ofconductdrawnuptoachieve ontribu arjeeling (India)tea 274 ood brandimage,including overnment grantsandsubsidiesonlandlease,plant rowing demandinglobalmarket ons ti tu The NT Increasevigilanceontheindiscriminateuseofchemicalsand pes Improvequalitycontrolthroughmeasuressuchasfarmersensuringthattheirpluckers follow Improve transporta their opera polluted productsarenotsent tomarketwhetherexportordomes basis; c)introducingimprovedpluckingbagstokeeptheleaf intact. tea planta the prac leaf. E reject allunsuitableanddamagedleavesatfactorydoor. inferior qualityinputs(substandard andbannedproducts). ti ons areinplacetosupportthesector ncourage establishmentofnewfactoriestoincreasedomes 2010 ti on topovertyallevia NEPAL TRADE I BACKGROU CD ti ti ti

ces ce ofselec fi ca B mustdevelopaschemeto register allteafarmersandprocessors,howeversmall ti ti tt ves willingtoworktogether on pockets;b)impor ti O er qualityandspecialtyproduct on. ti pportuni on fornewand exis tegh Weaknesses Strengths ti c andgeographicalcondi N U D ndertake regularinspec ti R NT ti on ofgreenleaffromfarmtofactory by:a)construc ti ve pluckingandfactoriesarevery strict intheircontrolofleafintakeand EPOR e Threats es G EGRA ti I, couldbeestablished, on ti ti

ng fi ti ed growingareas ng imageof T TI O GAP ti onally N ti tt S ng factories rac ti / ng commercialvehiclessuitableto theindustryonduty-free T G RA M ti ve T P EGY 2010 ti and ons 5. T ti ons of premisessothatinferior,substandard,and EA ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬

High transporta prepare largeconsignmentsforexport L demand Inconsistent qualityofproducttomeetbuyers’ Scarcity ofskilledpersonnelandexper hazards) unsuitable forteaprocessingandposehealth standards (Somefactoriesandpackingplantsare Nepalese teatoIndianauc No centralauc L overuse, andincorrectapplica P L Very highdependenceonIndianmarket D credibility control andexportmarke L requirements ofdeliverysamples performance byexporters,includingfailuretomeet L L L Inadequate marketinforma D Financing di Irregular supplyofelectricity Shortage ofteaprocessingcapacitywithproper ack offacili ack oftechnicalschoolsandweakresearchfacili ow yieldofcul ack ofhumanresources,especiallyinquality oss ofcredibilitywithmajorbuyersduetopoor ack ofana ack ofwell-equippedandaccreditedlaboratories oor qualitychemicals(insec eteriora elayed V ti A ng infrastructure T refunds ti ffi ti onal organiccer culty es andstandardized quan ti c capacityforprocessinggreen ti oning systemandinaccessibilityof ti ti va on costs ti cides. ti on areas ti c. ti ng, contribu ti ti C on markets ng accessroadsto ti ontrol importof on ti ti cides andpes

ti fi on ca ti on system ti ti se ti ng tolossof

ti es to ti cides), ti es N T I S 2010 liya in liya in 275 ng ng EE titi

T oning oning ACCPACCP titi /H/H on and issue on and issue OO EPOR titi R EGY 2010 D T N es-based trends in es-based trends in imbula/Nuwara imbula/Nuwara titi RA T DD fying and conducfying and conduc titi S N O TI aroma, and strength. aroma, and strength. avour,avour, BACKGROU flfl the leaf quality and the leaf quality and mum use ofmum use of titi EGRA on opportuniopportuni on on NT titi ca ca fifi on centres. centres.centres. on on titi arjeeling in India and arjeeling in India and DD ng laboratories for cerng laboratories for cer titi ng such produce.ng such produce. ng, quality, and prices, set up tea aucng, quality, and prices, set up tea auc titi onal aucauc onal onal titi NEPAL TRADE I titi fy product diversify product diversi titi seasons to make op seasons to make op erenterent ffff es (tea training centre or tea school) for further quality es (tea training centre or tea school) for further quality titi vity growth. growth.growth. vity vity titi ces to dices to di titi ng government food tesng government food tes titi onal facilifacili onal onal titi tu tu titi I for orthodox tea areas similar to I for orthodox tea areas similar to ins ins GG DD on. on. && titi onally recognized reports.onally recognized reports. titi RR es and/or improve access to internaes and/or improve access to interna ca ca titi fifi anka as a basis for branding and markeanka as a basis for branding and marke

titi LL evelop a evelop a djust processing pracdjust processing prac ncourage and assist medium and large export-oriented factories to obtain IS to obtain IS medium and large export-oriented factories medium and large export-oriented factories ncourage and assistncourage and assist internainterna tests and analyses on residue level, heavy metal presence, and fungal infesta metal presence, and fungal infesta tests and analyses on residue level, heavytests and analyses on residue level, heavy facilifacili improvement and producimprovement and produc DD preferences, tea grades demanded, etc. preferences, tea grades demanded, etc. import volumes by target countries, tasteimport volumes by target countries, taste EE AA cercer their inherent characters and bring out the maximum natural the maximum natural their inherent characters and bring outtheir inherent characters and bring out Sri Sri up up Set Set In order to improve transparency in marke In order to improve transparency in marke In order to tap new markets, iden In order to tap new markets, iden Strengthen the exis Strengthen the exis ¬ ¬ ¬ ¬ ¬ ¬ Ac

as acushiontobu A Indian townsandworldmarkets A materials andservices Well establisheddomes L High investmentinthelatesttechnology Skilled manpower ti

arge produc N T I S largeandexpandingdomes verygoodandexpandingmarketinbordering 276 ons

dependency ofnoodlefactories. E P E stablish foodlaboratoriesfor ncourage wheat rovide incen 2010 NEPAL TRADE I BACKGROU ti on capacityalreadyinplace ff O er againstpossibleexportsetbacks pportuni tegh Weaknesses Strengths ti ves forestablishingnewwheat ti N c industrysupplyingraw D fl our millstoincrease theu R NT ti EPOR e Threats es ti c marketthatcan work EGRA 6.INST T TI O N Halal S T RA cer T EGY 2010 A ti

NT N fi ca ti on andtomeettherequirementsunder ti liza ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ fl our millsinthecountry tolessenimport

Very highcompe P L P Strikes and Insecurity Halal seasonings fromcountriesotherthanIndia D P meet thisrequirement consignment andproducersarenotwellpreparedto India requiresqualitycer Muslim and OODLE ti ack ofskillsinpenetra oli reven ower cutsareaproblem i on oftheirproduc ffi culty insourcingwheat ti cal instability cer ti on ofFood ti

fi ca bandhas A rab countries ti on notavailableforexpor S ti

ti on indomes A (shutdowns) dultera ti ti on capacity. ng newmarkets ti

fi ca fl ti our, palmoil,and on ( ti on foreach ti c market P F A ) restric ti ng tosome ti P ons F A . N T I S ces tutes ti ti N), al oils al onally

2010 ti 277 onal A ti ti B A c subs c ti on to on ti T S L I c plants and EPOR ti R hina O C EGY 2010 D c agronomical prac

fi avouring elements, avouring T

on of forestry and fl N ti ti cular high wages compared due to lack of ve markets on of Nepal (J ti RA ti ti T AL ) that issues interna S rac N tt O PPP ssocia ces TI NTI ti A BACKGROU E on development and technological ti on charges on ti herbal products and essen ng of vity EGRA ti ti India and on from SS ti

ed aluminium containers. NT ti ng prac ng fi ti

E sustainability of some raw materials on of egion to support economically deprived ti ti

on. R ti D ompe on costs. costs. on ow-price markets for chemical/synthe ack of technical and policy support for processing ack of technical and policy support for processing abour problems, in par ca ti fi High collec High cost of suitable packaging materials C L rules for High technical entry barriers with stringent processed materials Ques to produc Weak knowledge of scien and post-harvest technologies within the sector Inability to target a exposure and lack of knowledge of interna marke L and expor L ng produc ng ntrepreneurs

ti

N ti E

¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ti A on and steam processes for oil extrac ti , NEPAL TRADE I lla ti BS EO FF s in suppor E ER T, GO onal dis onal EA ti H ons , IF ti A ons in the Mid-Western AL ti s and N SS on with the Jadi Bu onally recognized onally ti cates. Such a laboratory should be supplemented by a branch in A ti fi tu

GO ti IN er use of resources. ti tt T, N es Threats C ti I er packaging materials such as cer al oils al ti tt onally recognized product cer ollabora ti mphasize a market-oriented approach. C ers possibility to explore new E and regula ves, ED ff products such as perfumes, food orts towards processed ti c products c ECOCER ff ti orts of IN al oils al Strengths Weaknesses ff pportuni ti e erent countries having onal laboratory through public-private partnership ( ff O ti D interna on from ti & R ca 7. M fi

ing from crude export to processing of ti ft as on such ate ti di ons of ti ti onal and Human Resource Development on of essen prospects through contract on extension processing centres in more than 15 on and ti oordinate e romote use of be stablish specialized ins ncourage private sector investment in farming, processing, and produc ti ti ti direc ve policy, Nepalgunj might be appropriate. people from mountainous regions through development of herbs and aroma plant products. reduce material wastage and to lower the produc reduce material wastage and to lower Nepalgunj. herbal products for be P E E C improvement. recognized product cer and fragrances. ti tu va Set up a na technology such as frac Support Facilitate interna Ini ti ti ons rganic cer radual shi rowing preference for organic and herbal-based rowing preference for organic and herbal-based vailability of collectors and intermediary workers vailability of collectors ul roac roduc ti Ins Business Environment Market Access Product and Technology G Biodiversity in Nepal o herbal products and essen accredita buyers Increasing environment- and nature-conscious G products over synthe and high-value products P P farmers farming system and purchase assurance to C districts O organiza Strong government and donors A human resources for in wild herbs and organized produc etc.

Ac ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ N T I S 278 Strengthenbilateralnego Introduce collec Introduceapolicytointensifytheuseofrawherbsinproduc Implementapolicyandins R products. R cer incorporate selectedherbsinthelistofimportableitems and (b)issueopentransitmovementpermittoNepaleseherbsfromonestateanother. basis oflaboratorytestandcer if alaboratoryissetupinNepalgunj,the processing, customstari

emove alldistrictdevelopmenttaxesimposedonmovementofherbswithinNepal. eview, simplify,andimprovecurrentproceduresforcollec 2010 ti

fi cate developedbytheMo NEPAL TRADE I BACKGROU ti N ve patentrightstocoverspeciesofNepalioriginlikeTimurandothers. D R NT EPOR EGRA ff s oninputs,andexpor ti T a ti TI tu ti ons withIndiaandrequestthe O N ti ti onal systemforissuinganinterna S

AC fi ca T RA . ti on inNepalgunjitselfwithoutvisi T EGY 2010 D epartment ofForestryshouldpermitexportonthe ti ng ofherbsandherbproducts.Forexample, ti D on, royal G ti on ofessen epartment of overnment ofIndiato(a) ti onally recognizedorganic ti es, restric ti ng ti al oilsandherbal K P athmandu. lant Quaran ti ons, E I ti A ne , I EE , N T I S on by on hina ti 2010 C 279 orts, ff ves and and ves ti onal threats, onal ti on of on on e on ti ti T TS age industries age tt EPOR R EGY 2010 D , banana, and T N RA ngs, produc ngs, ti T promo ng and ti on, nursery management S ti Ketuke N PRODUC O

market contacts on, and TI ti BACKGROU similar products from on with collec ti

ti EGRA on through farmers’ coopera ti stronger than interna c threats NT foreign producers c and Lokta ti ti in terms of labour issues and strikes cular ti PAPER , India, and Thailand

omes roduct designs not well protected from imita rice compe ack of training in design and product development ack of training in design and product development ack of proper marke ack of management skills in co imited ability to meet large orders imited ability to meet D D Weak design and product development capacity to Weak design and product markets meet demand of new L L market informa L PRC P domes in par L P produc

N ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ A

Lokta NEPAL TRADE I nance training in fi onal trade fairs, buyer-seller mee ti ons for for ons to ti paper PAPER

Lokta Lokta on capacity of enterprises in the sector, including possibly support ti is an on technology sts and sts ti ti ve energy for processing (currently intensive use of wood-fuel). ADE ti on in interna es Threats ti ti M cularly strong due to its ti D cipa ti N tude Strengths Weaknesses ti pportuni on, and for the development of a paper processing system. O A ti are strong and unique raw materials are strong and unique es collected from ti va ti cient cluster of ar ffi prospects for c market paper is par ti Argheli 8. H se royal evelop use of alterna evelop the trade promo evelop new nurseries and planta ng in high al Lokta ti brochures, etc. and cul D U D D community forest users groups in as many districts as possible. community forest users groups in as many wastage of raw material and improving the quality of paper. This could reduce wastage by 25 wastage of raw material and improving cent. per cent and improve quality by 20 per bamboo. the costs of par and the processing system, including reducing Improve the paper supply capability by improving development of new sources of raw materials such as Support the Support the development of new products that are marketable in developed countries. Support appropriate waste water treatment plants for paper-making factories.

nique indigenous paper produc ons ti Market Access Product and Technology U Nepali products important selling point Value added through unique artworks Strong and e entrepreneurs High domes Lokta harves Foreign market prospects for value added paper Foreign market prospects for value added

Ac ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ Ac

Japanese marketispromisingwithnewcustomers A rings Niche productsforJapanesemarketsuchaswedding and demandfornewitems South Many newandpoten market fornewlycreateddesigns Industry sourcesseethe development P Well-established markets,e.g.inJapan Joint e E R High valueadded(40to50percentofexportvalue) exper U Skilled ande gems, andsemi-preciousstones G Market Access Product andTechnology ti

xtensive exposuretointerna N T I S roduct specializa egistered trademarksinmarkets vailability oftrainablelabouralloverthecountry 280 ood accesstoimportedqualityofsterlingsilver, nique arts,design,andproductdevelopment ons FacilitateNepal’spar ti exporters. equipment, etc.toupgradequality,(c)dissemina responsible for treaty. P O U D R to improveproduct. P E E process, rawmaterials,moderntools,equipment,market, designs,etc. and gemstones. se K ff ncourage improvementofjewelryproduc ncourage establishmentofinterna romote exportofjewelrytoIndia byincludingaspecialprovisionunderthebilateraltrade rivate orts todevelopdesignswithbuyers educe du 2010 evelop gold,pla ndertake marketresearchperiodicallyanddisseminate rganize buyer-sellermee orea, andSouth ffi NEPAL TRADE I BACKGROU cient ar fi rms andcompaniesshoulddialoguecooperatewithgovernmentonurgent need ti potnte Threats Opportunities ti es andtaxesonimportofequipment andtools. on andregulardesign tegh Weaknesses Strengths ti al marketssuch as ti sts andcra R N A & EU ti frica D num, whitegold,and D asthemostpromising R NT andtraining,(b)matchingfundtosupportinvestmentinmoderntools, ti EPOR ti cipa onal markets EGRA ft T spersons ti ti ngs in on inspecializedinterna TI 9.SI O N S R T ussia, K RA athmandu andmajormarkets abroad. ti L onally accreditedtes T V EGY 2010 ER ti tanium jewelry. ti on through(a)crea J ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ E

ti L L technical supportforproductdevelopment (c) modernso D compe L R D High costindevelopingmarketlinkages materials High costsofimportedrawmaterialsandpackaging machine forsoldering,(b)cas market penetra Trade volumesdonotsupporthighcostsofmarket designs Foreign compe and Mexico. Threat fromcompe components environment hasincreasedthecostsofvarious Mixing ofcadmiumhasa No ins W on ofinforma ack ofsophis ack ofsupportfordesignandproductdevelopment ack ofpolicyandins isks ofsinglebuyertosomeexporters i i ffi ffi culty in compe culty in iden ti onal tradefairsandexhibi ELRY ti ti tu

ti ti on veness fi ti ndings tomanufacturersand ti ng laboratoriesforpreciousmetal on tocer ft ti cated newtechnologysuchas(a)laser ware fordesign, (d)otherinnova ti tors haveimitated originalNepali ti ti ti on ofajewelryschool fying matchingpartners on technology,produc ti ng onpriceasoverall economic ti tors inIndia,Thailand, Indonesia, ti fy genuineproducts ti tu ti ff onal supporttostrengthen ected Nepal’sreputa ti ng equipmentset, ti ons. ti on ti on in ti ve er

N T I S ff

2010 ti 281 T s is too high. C / L EPOR R 20 per cent ves, including EGY 2010 D nancing ti fi T N RA overnment has come up with a T TS G S vity N ti O ons ti TI BACKGROU ons. ti EGRA Indian suppliers likely to get s on from ti

NT ti egula PRODUC leading to insecurity, demand for cal instability R

ti ompe oli oor labour rela ow labour produc package of industrial incen and tax subsidies on plant and machinery purchases holidays P supply Frequent changes in Indian trade policies and frequent changes in the provisions of Nepal-India Trade and Transit Treaty C now that Bihar State bribes, labour strikes, civil unrest, etc. High dependency on transport provided by Indian High dependency on transport companies High cost of pre-shipment P L High cost, unreliable, and inadequate electricity High cost, unreliable, and inadequate electricity

nancing. The current cost of fi ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ EEL ct and A NEPAL TRADE I ST on ti ive priority access (16 hours/day, 6-day-a-week) to D G N romo tute of tute P ti A in me and ti N vity and vity xport ti E td in supplying zinc RO L es Threats ti export on and ti mark ed to use the ISI tt 10. I ed by the Indian Ins fi

India on of Strengths Weaknesses ti pportuni ti O akistan onal customs transit points for land route to Bhutan (currently, only one border post ti P trade with India, Bhutan, on for ti Bhutan and Bangladesh cularly orpora ti C labour regulatory tude if appropriate tti Hindustan Zinc on by sector al investment from the private rid ti ti pen addi llow free transit of trucks on selected routes linking Nepal, India, and Bhutan. llow free transit of trucks on selected routes linking Nepal, India, and Bhutan. evisit foreign exchange systems. Forward exchange contracts are too expensive. eview and update Nepal rovide adequate electricity supply. es requested es G ti export-oriented sectors. A P R R closed only on Sundays to match Indian schedule. O allowed).

ti s are gradually being reduced in the regional ff Streamline and lower the cost of pre-shipment Streamline the duty drawback system. and Streamline customs clearance procedures, including customs post open 16 hours/day ons p-to-date technology for producing quality products p-to-date technology bility of Nepalese factories to deliver in ecent speedy development of infrastructure in ecent speedy development of infrastructure oopera roduct costs slightly lower than those of Indian origin roduct costs slightly lower than those of Indian ossibility to improve labour produc ower ong experience in produc ti C P provisions are introduced workers’ a markets, par R Nepal, India, and Bhutan has increased market prospects other Huge unmet demand in India, Bhutan, and regional markets P Several factories approved for quality standards by Several factories approved for quality standards to Nepal A quan access to Nepal-India Trade Treaty provides duty-free Indian market Tari management Strategic loca Bangladesh, and Standards (ISI) and permi P Substan U that meet market requirements L Several factories cer

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products suchasblanketsandpullovers EU markets U demand fortex New marketscanbeiden G E designers andbuyers assorted designsandquan C A Quality commitmentandconsistency E Workers availableonreasonablewages pashmina Favourable clima Innova Well-developed skillsandexper Market Access Product andTechnology ti

xcellent, long-termrela stablished andreliablesuppliersofrawmaterials N T I S apacity tomeettheordersoffashionbou vailability oflargenumbersloomsandequipment 282 ood upstreamlinkagesandproductimage S ons A hasnichemarketforadaptednewandquality StrengthenmarketlinkagesbyorganizingNepal’spar Support marke Setupana Implementalong-termsericultureprojectforthedevelopmentofsilksectorinNepal Set up Ini andMiddle study. into produc interna development, aswellmarketpromo D support fromthe U U ( Mustang, Mugu, training facili item thatrequirescon meet atleast20percentofthetotal Pashmina ti 2010 ve andnewproductssupportedbyforeign evelop propermarketresearchcapacitytoassistthesector inproductdesignand ndertake afeasibilitystudytosetup ndertake afeasibilitystudytosetup ti ate produc NEPAL TRADE I BACKGROU Pashmina ti Chyangra onal trade fairsandexhibi ti le fashionproducts inworldmarkets E ti 11. ti c andgeophysicalcondi ast arethemostpromisinghigh-end potnte Threats Opportunities on ti shawls usuallycontain30percentsilk),basedonthe ti onal ins on. tegh Weaknesses Strengths ti es toprovidequalityassurancefor ti ng ofa N ti C D processing plantsoncoopera onship withbuyers ti C farming developmentac D

olpa orHumla)toencouragepoorlivestockfarmersinremoteareasenter ti fi hamber of H

ed asthereisalwaysgood R NT ti ti es tute withappropriatelaboratorytes EPOR YA EGRA ti nuous marketwatch. ti ‘Chyangra Pashmina’ se T N TI O GRA C N ommerce andNepalesediploma S ti ons for T ti ques in RA ti ons in exis T

Pashmina EGY 2010 PA ti on strategiesandprogrammes. Pashmina Pashmina ti vi SHMIN ti trademark inthemostpromisingmarketswith es onapilotprojectbasisatsuitableloca ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ti ti ng and promisingnewmarkets. ve basisatappropriateloca yarn requirement.

Strong pricecompe and colourcombina L sector informa L Weak capacityforluxurypackaging L buyers D High costofnewproductdevelopment the introduc imita P L A Pashmina imited capacitytodevelopmarket-orienteddesigns ack ofmarketnetworksandlimited ack ofhigh-skilledtechniciansinkni ack ofguaranteedandgenuinerawmaterials ossibility ofmarketresistanceforlow-priced bsence ofna i kni yarn spinningplantinNepal. ffi culty inproducinglargevolumestoservebig ti tti ti cipa ng sectorinNepal. on A ti on ti fi

bre products,inspiteofthemechanismfor ng capacityandresearch ti PRODUC on inthemostrelevant and silkmaterials. ti on ofcollec ti onal infrastructuretosupportthe ti c missions. fi ndings ofarecent feasibility ti ti

ons ti on fromIndiaand ti ve trademarkbeing inplace Pashmina TS ti ons (e.g. tti ng plants is afashion C U hina pper ti ons to N T I S

2010 eru in the 283 P on on on ti ve ti a ti ng tti T PRC EPOR hina R olombia, and C C weak ng techniques, EGY 2010 D ti T N athmandu valley. K RA T S ng industries and exporters on from on cuador, tti N ti E

ti O on, market-oriented design ti on costs on on on modern technology ti TI ti designs on of BACKGROU ti TS EGRA on from on ers in villages to increase outsourcing ti tt

NT on capacity. on ti ti ng technology. ng changing fashion products requiring nuously investment in product development and nuous tti ti of woolen kni ti ca fi

S market on ompe ack of protec ack of informa ti modern technology High transporta L Seasonal business wool importers on quality and High dependence on grade assurance Weak knowledge of marke business networking, and lack of informa No improved breed sheep farming ini C con design C U Increasing compe L PPP

) farming projects as pilot projects with provision ) farming projects as pilot projects with ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ PRODUC

NEPAL TRADE I on. ti ons located in districts outside es and cer ti ti OOL Vyanglung tu and the ti A S tute to train workers in produc ti U in the cularly ins ti D & 12. W onal modern plants to provide dying services to small kni ti R erent markets erent ed in the ff fi bre products bre fi

ti on, and use of machines and quality standards. ti cient investment cient ng laboratory facili ffi ti on of computerized design and kni ti on, cleaning, scouring, and carding centres on regional basis. ti with buyers onships Japan es in ti ti Strengths Weaknesses Opportunities Threats ng through collectors or ins es and colours. tti ti buyers iden ve new ti onduct a feasibility study for technology upgrading in felt products, including the possibility of onduct a feasibility study for technology ncourage strategic alliances between exporters and kni nhance grade tes stablish high-tech yarn spinning plants through stablish a training and aunch improved-breed sheep (e.g. ed designers and quality products with government support and coordina and colour combina E E C L E E varie factories. for wool collec of kni introducing new stamping machines and other new technology. introducing new stamping machines and onal opportuni onal fi ti

introduc Support assorted Improve the wool spinning system to supply colour blended and high quality yarns in Make provision for addi Strengthen provision of reliable wool quality. erent types of products, such as blankets and A ff ons S ood prospects in world market, par ood infrastructure and su ood infrastructure and i ddi romising market for natural rospec ti Market Access Product and Technology P Netherlands A D pullovers, in high demand in di G U P G Quali Timely delivery Well-established rela

Ac ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ Ac

ac A especially inwesternNepal D infrastructure E travel operators Innova Service-oriented andcourteouspeople R A Natural endowments Market AccessandDevelopment Infrastructure andCoreServices ti

xpansion ofairlinksduetoliberaliza N T I S ich inreligiousandculturaltourism tt tt iscovery andlaunchingofnewtrekkingroutes, 284 ons rac rac ti vi Improvebrandingandmarke Introduceanopenskypolicytoinvitelargernumberofdomes Improve communica Improveairportinfrastructure,includingatTI Improveroadslinking ti Bhairahawa. des A R R E P P in viewoftheforthcomingNepal2011Tourism R C con Nepalese missionsabroadinpromo in For instance,the addi sector. might berequired). from the es aswell ti ti ng Indianand ve trekkingareas ti ncourage cross-bordertourism,includingimprovementin borderimmigra rovide necessaryincen romote community-basedruraltourism. hitwan and eview theveryhighmountaineeringroyal educe bureaucra einstate peaceandsecurityinthecountry.Thisisnumberonerequirement,especially 2010 mend thenow-defunctHotel and ve servicesandlongexperienceofsome fl ow oftouristsfromIndiaand ti fl na ict). ti onal entrypointsinJhulaghatand Baitadi. NEPAL TRADE I BACKGROU ti ons inthecountry. C hinese side. O pportuni P tegh Weaknesses Strengths C okhara. hinese touristsinothertourism N U D ti c requirementsfortourismentrepreneurs andtourists. S$50,000 feeperpartytoclimbMt. R NT C ti ti EPOR e Threats es on infrastructureandprovide24-hourbankingmedicalservicesin hinese touristsfaceproblemsat K EGRA athmandu, ti ves fortheestablishmentofeduca T TI ti O ti on andbe ng ofNepalasatouristdes N S 13. T C T hina (strengthenednego RA C R ti hitwan, on campaigns. estaurant T EGY 2010 tt er OUR ti es ins L A umbini and ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ in A Y

ct 2036(1980). ear (eight4-starhotelsshutdownduringthe P Brain drainofquali D poli Banks reluctanttoinvestintourismsectordue Internal disturbancessuchasstrikes,bandhas,etc. domes Insu Weak na Insu Shortage ofprofessionalandskilledhumanresources P ISM K ti oor infrastructure,includingelectricitysupply oli eteriora tuted bythe athmandu andatairportsin ti ti ffi ffi cal instabilityandunfavourabletraveladvisories cal instability cient aircapacity,bothinterna cient andsubstandardairportinfrastructure K E odari bordernowandthen. ti c (domes verest hasencouragedpar ti P ti onal ti na ng infrastructure okhara, thefourmaintourist ti a ti onal andtrainingins ti ti ons withthe on, includingbyinvolving ti fl c andinterna ag carrier G ti c mainlyfortrekkers) oN toclimbHimalayanpeaks. fi ed humanresources ti C on forincreased ti hinese authori onal airlines. P okhara and ti ti tutes forthe ti onal and O es toclimb pen ti es N T I S 2010 285 ve ti on and on T ti EPOR me of issuing ti R EGY 2010 D T N RA T S N O TI S BACKGROU EGRA CE of receiving countries on policies ti NT brain drain on causes ance are rarely invested in produc ti VI tt emi ack of a clear government policy on manpower ack of a clear government policy on manpower ER ct 2007. R enterprises in Nepal Migra L companies High dependency on economic situa immigra Most temporary migrant workers are low-skilled Most temporary migrant

A S ¬ ¬ ¬ ¬ ¬ tutes for quality. ti NEPAL TRADE I OUR on markets. on on programmes in the districts at the ti ti B mployment E na ti ate bilateral agreements with receiving countries and use this ti LA ve ti and c missions ng training ins ti ng earnings. ng ti tti onal training centres, if necessary. ti 14. c procedures at government departments prior to departure and introduce ti oN’s ability to nego stablish addi ances into produc Strengths Weaknesses tt E G Opportunities Threats Nepalese embassies in major host countries. cers in . ffi exchange c employment and foreign ti PPP diploma achés in overseas tt ssess the need for a separate labour bureau for migrant workers and take necessary steps for ssess the need for a separate labour bureau for migrant workers and take necessary ut in place a mechanism to look at the complaints made by the workers returning before their ut in place a mechanism to look at the complaints made by the workers returning ncourage and enable Nepalese manpower companies to visit the foreign companies concerned ncourage and enable Nepalese manpower companies to visit the foreign companies aunch training programmes in various districts with the involvement of manpower companies, aunch training programmes in various aunch basic awareness and informa al salaries al help build skills of workers (brain gain) on can Nepal on in ti ti as an opportunity to diversify des one-stop payment of fees. E when problems arise. L L A P relevant o passports. i.e. on the establishment of such a bureau. contract period. ti Improve channels for remi Increase access of Nepalese women temporary migrants to overseas employment markets. Strengthen Monitor and supervise exis Strengthen skill development programmes. Increase awareness of the Foreign bureaucra Simplify abroad, e.g. through increased number of Improve consular services to assist Nepalese workers ons ood quality of services provided by temporary ood quality of services provided by temporary vailability of training centres to prepare migrant vailability of training centres to prepare migrant hannel more remi ti earnings and has been a major contributor to poverty earnings and has been reduc G bilateral agreements with host countries Migra investments in Nepal Improve assistance to migrant workers through labour a migrant Nepalese workers A workers before assignment their Improve skills of migrant workers to increase poten C Temporary overseas employment has helped Temporary overseas employment generate domes

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(exposure inproduc because ofNepal’sloca O G P Skilled andquali India and L instead of25percent) R bandhas communica Steady improvementinhumanresourcesand L of languages(Hindi, L O ti ocated betweentwolargeoutsourcingmarkets,viz. ow labourcosts ess a N T I S ro educed incometaxforITservices(20percent 286 lobal IT/B pportunity toenterIndianand pportunity forlearningfromjointventurepartners ons fi Iden ciency in accommodate onlyupto300people.) E P C A R R and a C C importance anddynamismofthesector. follow-up. hindrance toproperdevelopmentofoverseasbusinessopportuni benchmark forqualityanddelivery. and regulatory environmentisanissue.TheoverlappingmandatesoftheMinistryInforma ff ected bypoli ncourage romote NepalinIndiaandelsewhereasano ollect dataonthesector,e.g.throughanextensivesurveyofIT/B reate alargerITparkwithgoodinfrastructuralfacili reate condi educe taxesonITequipment(hardwareandso eview taxstructureand 2010 mend foreignexchangerestric , etc.comparedtoothersectors C C ti PO hina fy bo ti tt ommunica on infrastructure NEPAL TRADE I BACKGROU rac E marketisgrowingfast nglish (callcentres) fi ed manpower ti tt ve toprivateinvestors.(TheITparkoutside potnte Threats Opportunities C R lenecks andpossiblegovernment/donorinterven MMI cer egularly monitorexportvaluestoincreasepublicawarenessoftheeconomic ti tegh Weaknesses Strengths ti ti E ons foratrulycompe on, sales,andmanagement) cal disturbances,strikes, nglish forIndianmarket) ti ti N on advantageand knowledge ons andtheMinistryofScienceTechnologyareaproblem.) D R NT ti EPOR

15. IT EGRA fi ca C hinese markets fi ti T scal incen on ofenterprisesinthesector.( TI O N S ti ons (Thelimitof A T RA N ti

ti O ti T ves forthesector. ve telecommunica EGY 2010 D nly oneNepalese B PO ff ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ shore des

ft Brain drainofskilledpeople countries L L centres asexport-basedindustry No facilita C of fuelforgenerators expensive thaninIndia)duetolackofcompe L P P ware) andfacilitateV S U ack ofdoubletaxa ack ofdataonthesector imited andexpensivebandwidth( oli oor infrastructure,i.e.electricitysupply,availability umbersome V S$2,000 perpersongoingabroadisa ti ER ti cal instabilityand securitychallenges es (electricityandtelecominpar K fi ti athmandu istoosmallandcan rm iscurrentlycer ti ons market.(Theabsenceofaclear VI na ti ng regula C MMI istheinterna ti CE on forITandB ti ons andstrategies. A T refundprocess S ti es.) ti PO on agreementswithexpor ti on foroutsourcingandcall companieswithregular A T refund. ti

PO fi ed.) ti services. onal fi ve ti mes more ti cular) ti on ti

ti ti on ng N T I S es as es 2010 ti 287 T EPOR yurvedic medical R A EGY 2010 D T N healthcare facili on of ti RA T S N on O ti TI S BACKGROU onal recogni onal ti EGRA CE ve markets. ve ti NT VI cal instability cal rac ti tt verall health system is underdeveloped verall health system is nreliable energy supply and other infrastructural nreliable energy supply and other infrastructural oli ack of a clear strategy supported by a clear policy ack of a clear strategy ack of air ambulance ER on. O L nurses in the country, also Shortage of doctors and due to out-migra U constraints L No interna assurance of quality healthcare Brain drain of skilled human resources P ti

¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ als and a NEPAL TRADE I TH S ti ed fi

ti EAL 9001 cer yurvedic ons A ti O yurvedic medicines 16. H A c condi c ti onal ti ents towards ents or are cal data through surveys, including surveys of foreigners that received, ti and laboratories in ng rooms ti ti Strengths Weaknesses s ti health services ng health-related laws and introduce new ones required to promote Opportunities Threats ti ract pa ract I from Indian healthcare providers tt oners to support improved medical educa ti D

ti ndertake detailed study of export poten evise exis ncourage procurement of new technology, equipment and medicines for ncourage procurement of new technology, a al to ti receiving, medical services in the country. receiving, medical services in the country. in Nepal, including the export of this service. in Nepal, including the export of this service. services. R prac E U cant F cant fi including easing entry of foreign medical Strengthen training of medical personnel in Nepal, Improve sta Improve ons vailability of unique tradi oten stablishment of more medical colleges, including for stablishment of more medical colleges, including njoyable and suitable clima njoyable and suitable inking tourism to health tourism ow costs in some areas ti foreign students L P medicines some hospitals, some of which are IS E E L A Well-equipped opera Signi

Ac ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ Ac

could beamajorincen Be countries P L other thanIndia,e.g.S P teaching hospitals P schools setupinNepal Nepalese studentsalsobene C some di D Some costadvantagesforsupportsta L G and collegestomoveNepal ti

anka ow costoflivingforstudents N T I S oten ossibility ofa osi ollabora egrees canberecognizedabroad(althoughwith 288 ood clima ons tt er andmorestablerecogni Improveinfrastructureineduca Improve sta Improvequalityofeduca Seekimprovedinterna ti ve side-e sta exports standorfalloninterna D P E level. Nepal (number, countryoforiginforeignstudents,feespaid,degreeobtained,etc.). ti al forstudents from Middle nforce useof ublicize educa 2010 iscourage poli ffi culty) ff ti . on withandinvestmentbyIndiancolleges ti c condi NEPAL TRADE I BACKGROU E duca tt ff ects forthehealthsectordueto rac potnte Threats Opportunities ti ti ti ng morestudents fromcountries ti s tegh Weaknesses Strengths on ons ti E cal measurementofthesectorthroughregularsurveysacrossuniversi AARC ti ti ti ve formoreIndian students cal interferenceintheeduca onal opportuni nglish languageineduca N A D ct. R NT countries,especiallySri fi EPOR

17. ti EGRA ng fromforeign ti ti on policiesbyIndia onal recogni ti on throughimprovedteaching.Facilitateaccessofforeignteaching T E TI ast and EDUCA ff O

N ti onal recogni S ti ti es availableinNepalforeignmarkets. onal ins T RA G ulf ti T on ofNepal’sdegrees,inpar EGY 2010 ti ti TI on asprescribedundertherelevantamendmentof tutes, includingpublicones,especiallyatuniversity O ti on ofeduca ti on sector. ¬ ¬ ¬ ¬ ¬ ¬ N S

Quality ofeduca P general educa lack ofseatsinthehomecountry,whichcouldchange Main reasonfor(Indian)studentstostudyinNepalis No worldwiderecogni High dependencyonIndianstudents High dependencyondiplomarecogni oli ti ER cal instability VI ti on. CE ti on policiesinIndia ti on isonlyaverage S ti cular inIndia. ti on asanexporterofeduca E ti duca on policiesand ti es ti on ti on N T I S 2010 289 water on, and ti F is T on on sector on ti ti AD EPOR R EGY 2010 ng engineering engineering ng D ng services and ti T ti N onal tenders onal RA ti T S S construc on in ed and experienced manpower ti fi N O is expor K TI CE BACKGROU hydropower, irriga se in IN ti se in proposal prepara ti VI EL EGRA on in interna ti NT ER cal instability cal cipa ti ti S es from Nepal (For example, eneral lack of experience in large-scale projects for eneral lack of experience oli ack of exper ti Weak exper Brain drain of quali G par L supply sectors P High level of corrup G

t present, Nepal has only a small desk at the t present, Nepal has only a small desk ¬ ¬ ¬ ¬ ¬ ¬ A IN NEPAL TRADE I

EER utch company and W AARC D IN ve of export of engineering and consul ti G N E lanning & Works to support this sector.) es Threats ti P 18. on ti ulf countries, and others that G markets (i.e. Japan for ng new ti , Strengths Weaknesses hysical ct, as necessary. pportuni in India, other S on sectors P A O ti PRC ng an outsourcing job for a ve ti ti se in development of engineering hina ti C foreign companies on with ti Nepal). ware and carrying out consultancy for foreign companies from ft nglish language skills among professionals stablish a consultancy development centre. ( stablish a consultancy development centre. rural engineering, land development, and se in E so comple suppor E Ministry of ti

Formulate a sector policy suppor Inform professionals about outsourcing opportuni ware and geo-technical services ft ons ood vailability of well-trained manpower vailability of well-trained ollabora ossibility of penetra xper ti rely on foreign manpower G hydropower within the country Booming construc countries, E road design and construc P outsourcing of engineering designs) C Massive development of infrastructure and A Some exper so

Ac ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ Ac

P C Nepal islessthan1 through supplytoenergy-intensiveindustries O genera storage (e.g.combinedwithmainlycoal-powered royal High poten urban areas also signi northern Indiaes High demandinIndia,withcurrentpeakloadde K power supplywithli In addi control P higher) and 83 Huge produc and helpmi A E ti

xports toBangladesh,wherethepeakloadde N T I S oten ossible posi osi andthe ould improvenaviga ddi 290 pportuni ons Setuparegulatorybodytofacilitatenego Setupaplanningbodyanddevelopmasterplan(withfocusnotonlyongenera Formulateaproperlegalframework.New ti ti onal revenuecould begeneratedthrough es orotherforms oftaxa for largeprojectsduetolackofinvestmentresources).Simplifythesystemtaxa (e.g. requirementthatatleast10percentinvestmentinprojectbeNepalidoesnotwork on transmission). royal A U O necessary arrangements. an analysisofBhutan’sapproachandwhythishas sofarnotbeensuccessfulinNepal. projects andtheircostsbene could berewardedforposi investors. Makeavailableasingle-windowsystemforpoten ti al forexportto ti ti 2010 G ccelerate nego on toexports,poten ndertake studiesthatanalysethedi on inIndia) verhaul thesystemoflicenceissuanceforhydropowerprojects. W (somees fi cant, istechnicallypossible ti es forexport-oriented backwardlinkages ti ti al for ti es toassuretransparencyforinvestorsandalsosigni gate risksof NEPAL TRADE I BACKGROU ti ti G ve side-e on poten anga byraisingdryseasonwaterlevel ti mated at5,500 MW fi O scal revenuegenera G pportuni tt tegh Weaknesses Strengths ti le trade-o W) mates areevensigni ti on majorriverssuchasthe C ff ti ti ects onirriga al, es N hina a D fl ooding, includinginIndia ti ons withIndiatoupdatetheexis R NT ti ti PRC EPOR e Threats es al forimprovinglocal ti mated atbetween43 EGRA ti ff 19. H on aresetproperly (currentdemandin , butlongdistanceto T ti TI ve externali ti O on and N ti on if S YDRO fi fi T cantly ts, includinganassessmentofhowhydropowerprojects RA fl T ood fi ff cit is EGY 2010 erent fi cit in ti es (suchasirriga ti a - D ELEC ti ra fi ons withpoten nancing andpricingop ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ft

A Ini P P (whether foreignorNepalese/privatepublic) India) mightcreatehigh investment-friendly. P cost prices(thoughthisapparentlyworksinBhutan) L projects L Weak regulatorybodyinNepal popula buyers arewillingtopayabove-costprices. Welfare gainsmaybesmall.Theyareonlyassuredif imited willingnessofIndianinvestorstopayabove- ong lead ct beforeparliamentneedsimprovements ossible nega oli olicy, ti al likelydependence onasinglebuyer(namely ti T ti cal instabilitycould deterforeigninvestors ng powertradeagreementandother R ti A on (rese cts, and I ti ti C on and me of10ormoreyearsforlarge-scale fi ti cant taxrevenues. al investors. IT ti ti al publicorprivateforeign ve impactonenvironmentandrural tt Y R lements) egula fl ood control). ti ons forsomepoten ti ons currentlyinforcearenot fi nancial risksforinvestors ti on butalso A ti on and lso include ti al N T I S 2010 291 T EPOR R EGY 2010 D T N RA T S N ppendices O TI BACKGROU A EGRA NT NEPAL TRADE I

ng ti ons

N T I S ti hapter C .1.1. for 2010 A 293 als to do so ti vity and cost of ti T ed as high, medium fi EPOR onal demand (growth eld work presented in eld work presented ti R fi EGY 2010 D T N ve assessment using the ti ves, is presented in er indicator applies only to RA ti tt T ssessment S A N O ppendix 1 ppendix me employment generated by the ti TI al A BACKGROU ti ve assessments of other criteria, such ti on of 19 Sectors ti rst two indicators, which are weighted EGRA fi al (see table 1.7). ti oten NT ng industries. ng P ti mated full- mated ti and Selec xport E ach indicator is weighted equally (50 per cent each). ach indicator is weighted equally (50 c suppor c ti several of the the capacity to expand exports. For ect E fl NEPAL TRADE I ects whether industries have a favourable socio-economic fl rates, but poten cant export value or export growth ons (Index 3) is based on a qualita ons (Index 3) is based on fi ti ons (Index 2) combines three indicators: the size of the world market ons (Index 2) combines three indicators: ti ciency of domes of ciency onal markets (40 per cent weight). The la ffi ti methodology to compare sectors along four main indexes: methodology to compare sectors along Methodology for Methodology on of women, together with qualita C ti cipa ve dimensions were used to also rank the 19 sectors as high, medium and low. ve dimensions were used to also rank the 19 sectors as high, medium and low. ti ti c supply condi ti re al’ is used here broadly to Impact al and Socio-economic ti ti mated par mated ti of interna cular good or service (30 per cent weight), the dynamism ccordingly, for services, Index 2 combines only the ccordingly, for services, Index 2 combines ti on obtained by the team that carried out the detailed analyses and on obtained by the team that carried ti on factors, and the e nce ranked according to the two indexes, the 19 sectors were then classi A ti O advantage) to interna ff on, the study uses an IT ti hapter 2. The index combines indicators such as the quality of products, the produc hapter 2. The index combines indicators produc (tari of world imports between 2004 and 2008) (30 per cent weight) and Nepal’s market access condi of world imports between 2004 and 2008) C disadvantaged areas, on water and energy resources, and more as the impact on skill development, on broadly on the environment. goods. for a par informa sector, es Some adjustments were made in the case of some services for which detailed data is unavailable. Some adjustments were made in the case equally (50 per cent each). export growth rates between 2004 and 2008. export growth rates between 2004 and based on the es impact. The index combines indicators socio-economic impact (Index 4) re The index domes The index two indicators: the 2008 export value and annual Nepal’s export performance (Index 1) combines index world market condi The rst three indexes are combined to assess overall export poten fi A. Methodology Poten 1. Export detailed assessment of each sector, from both demand and supply side perspec detailed assessment of each sector, from See table 1.6. or low for each of the two indexes. For indexes 3 and 4, qualita an overall index based on the weighted average of the indices for individual indicators (see Box an overall index based on the weighted average of the indices for individual discussion). The For indexes 1 and 2, composite indicators from 0 (worst performance) to 100 (best performance) were For indexes 1 and 2, composite indicators from 0 (worst performance) to value). This allowed compu developed to compare the 19 sectors along each indicator (such as export are there. A 19 sectors, Nepal has yet to establish signi 19 sectors, Nepal has 2. In addi The term ‘export poten resul union appliesdi because * wherever datacouldbefound. In thecaseofserviceexports,mostlysizeimpor cent weightforsizeofimpor (size, dynamism,openness)andbasedonaranking onaweigh exports, rankingsofa D D M product arerankedseparatelyusingthreeindicators: U sector independently. In addi

Itshouldbenotedthattheindexcan higherforacountry Composite indicatorsarealsosensitivetothechoiceandweightofunderlyingindicators. quantitative comparisons.Inaddition,thecomponentindicatorsarebackwardlooking,asprospectsbasedonrecenttrendgr sectors, itwouldhavebeenusefultoincorporatenotonlytariffbarriersbutalsonon-tariffmeasures,doeslendi data thatcanbequanti It mustbenotedthatindicatorsandcompositeindexescanonlygiveapartialviewoftherealsituation:byde groups. Thefollowingformulaisthenapplied: thresholds. Thevaluesofthethresholds(i.e.lowerandupperlimits)arede to sectorswithvaluesbelow(above)acertainthresholdvalueandpointsbetween0100,dependingonthedistance The methodusedheretransformseachindicatorintoarangeof0(weakperformance)and100(bestperformance).Itgives(100 each methodhavingitsadvantagesanddisadvantages. measurement units(e.g.dollarvalue,percentagegrowthrate).Severaltechniquescanbeusedtostandardizeornormalizevari In ordertobuildacompositeindex,variablesusedforeachcomponentindicatorneedbeputoncommonbasiscomparedi Box A1.1.CompositeIndicators 100* etailed etailed resultsforeachsectorarepresentedintheindividual sectorpro sing IT A 2. Market A I isnotusedtocomparesectorswitheachother,butratheriden ti ng indexforSpainandFrancewillbedi

The The The N T I S Upper Limit 294 A compe to importsfromNepalandthedi rate forapar ti Value andBaremembersofacustomsunion). Thisisthecasebecause on tothefourindexesdiscussedpreviously,a C fi ’s databaseoftrade ndings areincludedinthedetailedsectorpro 2010 dynamism ofthemarket, size oftheimportmarket, market accesscondi − ff erent tari LowerLimit − ti LowerLimit tors inthepar NEPAL TRADE I BACKGROU tt fi ed andforwhichsourcesareavailable.For example,inordertoassessmarketaccessconditionsforgoods rac ff ti s. If,forexample,Spainimportsmostly from cular marketandworldaverage. tt rac ti veness Index ti N ve markets(impor D ti ti ng markets,50percentfordynamism, and20percentforopenness). R NT cular market.* EPOR fl ows andtari R EGRA ti ons (openness), ons ankings shownin ff erent, eventhoughbothbelongto acustomsunion. T asmeasuredbygrowthrates,speci TI measuredbyimportsforthepar O N ff S erence betweenthetari T RA ff ti s (more belowondatasources),allimportmarketsforeach ng markets)areshownbothaccordingtoindividualindicators T A EGY 2010 thanforacountryB,eventhoughboth applythesametari asmeasuredbytheadvaloremequivalenttari C hapter 2arebasedontheindividualindicators. ti C ng marketsanddynamismwereusedasindicators fi hina (hightari market a les presentedin A andBmayimportfromdi fi ned throughananalysisofthedispersionproduct tt ff rac ), andFrancemostlyfromItaly(zero tari ff s appliedtoNepalandits ti ng ofthethreeindicators(using30per ti ti veness index veness ti fi fy promisingexportmarkets foreach cular goodsorservices. fi les presentedin cally thedi C hapter 2. ff erent countries,towhichthecustoms ff fi erence betweengrowth nition, theycanonlyinclude (M A C I) isavailable.The hapter 2.Forgoods ff tself easilytostrict s toimports(e.g. ff fi ), thenthe ve largest ve ables, with owth. ff applied fferent these two ) points s, al ff ve ti ng on es, ti ti ti ti

N T I S ti on by on ivision ta . ti ti na ti D erences ff database ca EPA fi 2010 , and from 295 cal ons. These ti ti s EPC scal reasons). scal reasons). ti RADE fi on. However, nal des nal ti na fi ects enterprises enterprises ects ti T ff MT on collected from ng countries rather ti ti al basis for selec on on rules of origin. origin. on on rules of CO ti ti EPOR ons’ Sta ons’ S, from T R For example, many on. er solu ti ti tt C nal des EGY 2010 D fi T N na ccess Map database (www. ccess Map database ti RA A T lateral, regional, and bilateral ti S s and market access measures es for product diversi ff nited Na N ti because customs en less reliable U ft O TI and is based on quan eldwork BACKGROU er is used to validate the results and fi tt ve workshops organized in late 2009. in late 2009. ve workshops organized ’s Market ti di on, especially when absolute C EGRA ti al Sectors al ves from the Mo on. It allows users to analyse markets, ed through intensive discussions between ti ti nal export des ti NT fi fi

ti in 2007 served as an ini informa es and detailed C ti s as well as mul ff cally all countries that are current or poten xport data is o ti E on the on eldwork. The la ti access data. cs and market fi ti NEPAL TRADE I s rst exported to India. ti fi , Trade Map presents import/export values and quan , Trade Map presents import/export values c business and policy environment that a akistan import data could be a be ti -dumping du -dumping ti P ) prepared by IT is taken from IT data ff RADE EPA sing ’s Trade Map (www.trademap.org), which provides detailed export ’s Trade Map (www.trademap.org), which hapter 2 and representa ng countries and assess opportuni C U MT ti C ons through ons mates from a range of other sources, including some data available ti accurate. en more ti ft CO al trade between countries. ti an quotas, ff on of on ti akistan. with al sectors combines desk research ons, the tari ccess Map is a comprehensive source of tari ccess Map is a comprehensive source ti P ti ssessment ( A A es. es. on includes a review of relevant literature and informa ti ons. This was done through two consecu ons. This was done ti al tari ng countries. It includes MFN ti ti ti on. on. rates. Though not used for this study, the database also contains bound tari rates. ti ff and territories. Based on the les and trends for over 5,000 products in 200 countries ng and poten fi to use import data instead of ons for Nepal. There are also a number of good reasons ti mainly trade sta on includes oten ti al sectors selected for the study were iden ti ti P ons tend to be more concerned about the accuracy of import data (for ons tend to be more concerned na ti ti al tari ti rst-hand insights into the domes the ons might appear as exports to India in the Nepalese data, even though ve informa fi xport ti ti on of 19 Goods and Services Export Poten ) for the years 2004 to 2008. Therefore, no export data is available from the ) for the years 2004 to 2008. Therefore, E ti fying exis fying D ve informa ve tari lateral and bilateral ti ti ti ve informa ve NS ti ue to a lack of data from Nepal, ‘mirror data’ was also used, i.e. data from impor ue to a lack of data from Nepal, ‘mirror lso, export data does not give reliable informa akistan import data could show India as the source of import and not Nepal if the product was not akistan import data could show India as the source of import and not Nepal U from Nepal’s authori might be, for example, P trans-shipped “directly” through India, but administra India before they reach their Nepalese products are transshipped through transac A export data because they are o to gain companies and business associa than Nepalese export data. Nepal has not reported trade data to the than Nepalese export data. Nepal has not ( for those years. However, data is available for prac for those years. However, data is available iden export des in the various product sectors. D growth rates, market shares and market access informa growth rates, market shares and market review the performance of compe and import pro world’s largest trade database macmap.org). Market for over 170 impor preferen Manual adjustments were made in cases where more detailed data was required. Manual adjustments were made in cases mul ta ti Qualita

Trade data comes primarily from IT For market access condi C. Selec B. Data Sources B. Data In many cases, we also used es sectors, but some sectors were removed and others added. It was decided to include major agricultural and sectors, but some sectors were removed and others added. It was decided to in the previous manufacturing products, as well as several service sectors which were not covered The previous the team involved in the prepara Nepalese business associa and qualita Quan It should be noted that sector rankings should be interpreted with cau The 19 export poten The analysis of the export poten The analysis of the export are small, since many indicators lack precision. at themomentbuthavepoten seem small,butmostagriculturalexportsarecoveredandsomeoftheproductshardlyexported The twelvegoodssectorstogetherrepresentaround31percentofNepal’sexportsin2008.Thismay Chyangra pashmina preferences thatareeroding,underminingNepal’searliercompara presented in proposed sectorsinthisstudy.Nevertheless,shortassessmentsofasmallnumberotherare Several which isthree provided byNepalesetemporarymigrantworkersinIndia,theMiddle For services,currentlythetwomajorexportsectorsareclearlylabourservicesandtourism. A been thatthesewerealreadyverymatureandsu Some majorexportproductsareexplicitlynotcovered. of foreignexchangeearningsforthecountry. nother reasonmighthavebeenthattheyaredecliningexportsectorsorbene N T I S 296 9Hdooe .%n/a 0.0% n/a n/a 0 HLCITestimate ITCestimate n/a n/a MOTCA&NRB 1.0% >1.0% n/a WorldBank n/a 36.9% 10,000 TradeMapandITCestimate >10,000 256.7% 352,000 TradeMap(mirrordata) 1.7% TradeMap(mirrordata) 2,448,000 ITCestimate TradeMap(mirrordata) 2.3% 16,450 1.0% TradeMap(mirrordata) Hydropower Engineering services 0.4% Nepalcustoms(03/04to07/08) 19 15.7% TradeMap(mirrordata) ITCestimate 22,074 ITCestimate Education services 9,519 1.8% 18 Health services TradeMap(mirrordata) 17 4,000 149,394 2.3% ITservices 1.1% 0.1% 1.2% 16 16,805 Labour services 15 0.9% Tourism 22,258 14 10,390 500 11,000 TradeMap(mirrordata) 13 8,130 Woolproducts Pashminaproducts 2.2% 12 Ironandsteelproducts 11 Silverjewellery 10 Handmadepaper 21,329 9 8 Medicinalherbs/oils InstantNoodles 7 Tea 6 Lentils 5 Honey 4 Ginger 3 Largecardamom 2 1 ..Sector S.N. other sectors 2010 C Services TradeMap(mirrordata) Craft andIndustrialGoods 100.0% 30.6% 953,658 291,849 Agro-Food All goodssectorscovered All goodsexports hapter 2. ti mes higherthanthetotalgoodsexportsin2008. NEPAL TRADE I BACKGROU andwoolproductscoveredhere). wereproposedbystakeholdersinNepal.However,itwasnotpossibletocoverall N D R NT ti EPOR al forsigni EGRA 2008ExportValuesofthe19Potentials T TI O world (2008,US$1,000) N Nepal’s exportsto S fi T cant exportgrowthinthefuture. RA T EGY 2010 E s Table A1.1 ti ffi mates forannualremi cient knowledgeaboutthemalreadyexist(e.g.carpet). O ne reasonfornotselec exports in2008 Share ofgoods ti ve advantage (e.g.mostgarmentexcept E ast andelsewherearethemainsource tt ances goashigh ti ng somesectorsmighthave Source fi L ted fromtari abour services U S$3 billion, ff

N T I S applied ff ve largest

2010 ), then the 297 fi ff on). Both a ti erent products erent s to imports (e.g. ff ff ned as the most T fi al export markets, ti EPOR ng agencies, the index R ti equivalent tari EGY 2010 D T N on was not available. RA ti T erent countries, to which the customs ff fying poten fying S ti N does not always allow ally based, O ppendix 2 ppendix ti veness Index veness ti TI A ad valorem BACKGROU growth rates for the erence between nguishing between di ff ti rac EGRA tt s applied to Nepal and to its ff ), and France mostly from Italy (zero tari ff A NT (weight 30 per cent) cular product ti and B may import from di A Market hina (high tari C is essen ve markets all export countries around the world, we rank cally all ti ti NEPAL TRADE I as measured by the as measured by the rac tt than for a country B, even though both apply the same tari A s for prac ff a on of erence between the tari ti ff c factors play an important role in iden ca as measured by growth rates, di as measured by growth fi fi

ti were used depending on the available data. The main erent approaches ff ed for IT services, health services and hydropower. The following table ed for IT services, health fi erent, even though both belong to a customs union. ff

di ons (openness), ti ti ows of the underlying product which Nepal exports. For two products (large ows of the underlying product which measured by imports for the par measured by imports fl ows and tari cular market (weight 20 per cent).* fl ti services, to the markets de ned for goods sectors) are the main other exporters fi s. If, for example, Spain imports mostly from ff tors in the par ti on for Nepalese exporters. This is for example the case for cardamom. ti erent tari erent ff market access condi dynamism of the market, dynamism of the market, size of the market, (weight 50 per cent). and world average and absolute growth cular market fy the actual trade ti ve markets were iden ve markets ti ti ’s database of trade ’s database of trade C and B are members of a customs union). This is the case because tors (only de to imports from Nepal and the di par compe ti A ve ones, or the main exporters on the world market, where such informa ti rac tt ng index for Spain and France will be di ti • The • The • The rac sing IT etailed results for each sector are presented in the individual industry factsheets (see next sec etailed results for each sector are presented It should be noted that the index can be higher for a country ven though a lot of other, more speci tt

No a these three. shows a summary for all sectors except * U D can give an idea about whether there exist promising markets to which Nepal does not export yet. There are can give an idea about whether there indirectly via India and to which more direct exports could be a also several markets to which Nepal exports promising op according to individual indicators (size, dynamism, openness) and the weighted ranking is shown and rankings current export markets. World trade data, on which the iden because union applies di us to iden markets for each product separately along the following criteria: markets for each product primarily by the individual exporter or suppor which is something that has to be done resul compe (large versus small cardamom or instant noodles versus other pasta products). This is explained in detail in the (large versus small cardamom or instant industry factsheets. For a cardamom and instant noodles) other sources were used that allow dis cardamom and instant noodles) other sources E N T I S 298

ak1 admm2 igr3 oe )Lnis5)Tea 4)Lentils 3)Honey 2)Ginger 1)Cardamom Rank 2010 0Oa itNmSoai aitnAsrlaIda Malta India Australia Pakistan Slovakia VietNam Oman 10 Rank ni hn retn aaaKenya Canada Sri India Argentina Australia Turkey Germany China China Lanka Indonesia Thailand 3 India 2 1 uatYmnSuiAai KKzksa usa Japan India Korea(South) Russia USASaudi Egypt Kazakhstan Qatar VietnamNigeria Denmark Thailand Iran Philippines Netherlands USA Arabia Germany UK Pakistan Canada SaudiArabia China SaudiArabia UK Algeria Egypt Japan Spain Indonesia Yemen Egypt Poland Belgium Russia Australia Iran USA Malaysia UAE SriLanka Turkey Germany Germany Kuwait Netherlands UK SouthAfrica USA 9 Japan UAE Japan 8 Bangladesh UK Malaysia 7 USA France 6 UK 5 India Pakistan UAE 4 SaudiArabia 3 Pakistan 2 1 0Kra(ot)Mxc aaaSee wteln HongKong(S.) Switzerland Sweden Canada Mexico Korea(South) 10 ni noei hn UIayChina Italy France China Italy India Belgium Canada USA Japan China EU Korea Japan China Italy Italy Thailand USA China UK France Thailand Italy France China Spain Italy HongKong(S.) Indonesia France UK Netherlands Australia France Spain Spain Germany China 3 India Germany Denmark India 2 UAE China Japan 1 UK Poland Belgium USA UK Belgium France UK Germany Russia 9 Italy Germany 8 Germany France Japan HongKong(S.) USA 7 India Singapore Switzerland 6 Singapore VietNam 5 Germany 4 France 3 USA 2 1 NEPAL TRADE I BACKGROU Medical herbs 8-1) MPEO- N D R NT EPOR Essential oils 8-2) MPEO- EGRA Attractive marketsforCraftandIndustrialGoods T TI Overview TableAttractiveMarkets O N S Attractive marketsforAgro-Food Main competitorsforAgro-Food Main competitorsforAgro-Food T RA jewellery 9) Silver T EGY 2010 Table A2.1 steel products 10) Ironand 11) Pashmina identifying maincompetitors) 6) Instant noodles heterogenous toallow n/a (productsaretoo 12) Wool products 7) Handmade Paper

N T I S 2010 299 n/a T 19) Hydropowers EPOR R EGY 2010 D T N RA T services S N 18) Engineering O TI BACKGROU EGRA NT services 17) Education China UAE services 16) Health NEPAL TRADE I not available for services sectors Main competitors for Services Attractive markets for Services n/a n/a 15) IT services services 14) Labor 1 Germany USA 23 Saudi Arabia4 USA Russia5 UK6 France7 Iran Switzerland8 China9 Spain Arabia Saudi Russia Italy Germany Italy1 Luxembourg2 Netherlands3 India Korea (South) India Uzbekistan China Brazil Germany Bolivia Nepal Quatar Viet Nam Lao PDR USA UK Nigeria Turkey 10 Ukraine Malaysia Belarus Saudi Arabia Rank Tourism 13) Source: See section on attractive markets in detailed analysis of each export potential sector Source: See section on attractive markets in detailed Source: ExportdatafromTradeMap(mirror data).Forselectedsectors,exportsestimatedfromavarietyofsources. 10 12 11 igr011 igr ,3 Silverjewelry 8,130 9 14 21,329 8 27,665 7 6 Lentils dried,shelled,whetherornotskinnedsplit 071340 Tea Honey,natural 5 040900 Ginger 091010 Lentils 4 Cardamoms Honey 090830 3 Ginger 2 Cardamom 1 Industry # Essential oils herbs / Medicinal Paper Handmade noodles Instant products Iron andsteel products Wool products Pashmina N T I S 300 2010 NEPAL TRADE I BACKGROU 170Iiainjwlyns931 34 874 16 36 1,438 800 6,336 Imitationjewelrynes 711790 Imitationjewelrynesofbasemetalwhetheronotplatdwprec 711719 Articlesofjewelry&pttherofof/oprecmetw/nplatd/cladw 711319 Articlesofjewelry&ptstherofsilverw/nplatd/cladw/oprec 711311 (otheressentialoils) 330190 Resinoids 561 330130 Essentialoils,nes 330129 Essentialoilsofothermints 2,991 330125 Essentialoilsofcitrusfruits,nes 330119 Plants&ptsofplants(inclsedfruit)usdinpharm,perf,insect, etc 9,276 121190 92 Paper,hand-made,uncoated,inrollsorsheets 480210 1,114 15,530 Uncookedpasta,notstuffedorotherwiseprepared,nes 190219 115 Uncookedpastanotstuffedorotherwiseprepared,containingeggs 190211 Blacktea(fermented)&partlyfermentedinpackagesexceedg 3 1,056 090240 Blacktea(fermented)&partlyfermentdinpackagesnotexceedg3 090230 Greentea(notfermented)inpackagesexceeding3kg 090220 Greentea(notfermented)inpackagesnotexceeding3kg 090210 2Io n te 111,017 38,413 Articles ofironandsteel Ironand steel 73 72 650590 Women/girlsblouses &shirts,ofwoolor 620620 Women/girlsjackets,ofwool or 620431 Women/girlsensembles, ofwoolor 620421 Women/girlssuits,ofwoolor 620411 1,561 Men/boysjacketsandblazers,ofwoolor 620331 Women/girlsovercoats&simarticlesofwool/ 620211 Men/boysovercoats&similararticlesofwool/ 620111 Shawls,scarves,veilsandthelike,oftextilematerials,knitted 2,891 2,930 611710 Gloves,mittensandmitts,nes,ofwoolor 611691 Jerseys,pullovers,cardigans,waistcoatsandsimilararticles,ofhai 611012 Jerseys,pullovers,cardigans,waistcoatsandsimilararticles,of 611011 Women/girlsjackets,ofwoolor 610431 Women/girlsovercoats,anoraksetc,ofwoolor 610210 240Sal,savsvis&telk,fohrtxiemtrasntkitd974 Blankets(o/telectric)&travellingrugs,ofwoolor 2,943 630120 Shawls,scarves,veils&thelike,ofothertextilematerials,notknitted 621490 Shawls,scarves,veils&thelike,ofwoolor 621420 Shawls,scarves,veilsandthelike,ofsilkorwaste,notknitted 621410 2002 HS mat Hats &otherheadgear,knittedormade upfromlace,orothertextile N D R NT EPOR EGRA HS-6 forIndividualGoodsExportPotentials T TI O N S T RA Product description T fi n nmlhi,ntkitd1 ne animalhair,notknitted EGY 2010 fi fi n nmlhi,ntkitd338 ne animal hair,notknitted 554 ne animalhair,knitted Table A2.2 fi n nmlhi,ntkitd11 ne animalhair,notknitted fi n nmlhi,o 51 ne animal hair,not fi fi n nmlhi,o 365 ne animalhair,not fi n nmlhi,kitd1,455 ne animalhair,knitted n nmlhi,ntkitd16,670 ne animalhair,notknitted fi fi n nmlhi t389 ne animalhairnt n nmlhi,nt33 ne animalhair,not fi n nml543 animal ne fi n nmlhi 1,479 ne animalhair 5,331 2008 (US$ Exports 1,000) Nepal 3 (e.g. “envelopes”). from “normal”paper from productsmade not bedistinguished listed hereastheycan paper productsarenot Other handmade- Remarks N T I S 2010 301 T EPOR December 2009 Present status till R EGY 2010 D T N RA Act since 2004, which have delayed its submission to the legislative process New Plant Protection Act enacted New Plant Protection Act enacted on September 13, 2007 Preliminary draft prepared and still under discussion internally at the MoAC/DLS Preliminary draft prepared and still under discussion internally at the MoAC/DLS Final Stage in the MoLJCAA Under consideration by Council of Ministers Approved membership since May 8, 2006. Amended on January 24, 2008 MoAC maintains all the SPS contact points DFTQ control has been designated as an enquiry point for SPS and CODEX ( January 1, 2004) DLS is the OIE contact point DoA is the IPPC contact point Under consideration in MoEST MoFSC is going to initiate the task There have been several revisions to the new draft Food T S N O ppendix 3 ppendix TI Date A BACKGROU S, January 2010 S, January Approval Expected April 2005 Not known Not known Enacted December 2005 Not known December 2005 August 2004 June 2003 September 2005 December 2003 Not known P EGRA NT lan for S P on ti c NEPAL TRADE I A Table A3.1 ve ti Preparation of draft amendment by Preparation of draft amendment June 2004 Endorsement by Council of Ministers by January 2005 Preparation of amendments by the MoAC, DLS Preparation of amendments by the MoAC, DLS Preparation of draft amendment by September 2005 Adoption by Council of Ministers by December 2005 Preparation of regulations completed and still awaiting adoption by Council of Ministers as of January 2010 Endorsed by Council of Ministers in August 2002 Endorsed by Council of Ministers in August 2002 Submission of proposal by WTO Division, MoICSby April 2003 Adoptionby MoICS by June 2003 Preparation of draft amendment by MoPE by December 2004 Endorsement by Council of Ministers by July 2005 Endorsed by Council of Ministers in 2002 Preparation of Draft Law/Amendment with Technical Assistance from FAO in 2004. The current Food Act has been amended four times since 1966 and there are 105 regulations attached to it egisla L pdated Updated Legislative Action Plan for SPS, January 2010 Updated Legislative WTO Agreement Status of Draft/Intended Actions U Agreement on the Application of Sanitary and Phyto-Sanitary Measures Agreement on the Application of Sanitary and Phyto-Sanitary Measures Agreement on the Application of Sanitary and Phyto-Sanitary Measures Agreement on the Application of Sanitary and Phyto-Sanitary Measures Agreement on the Application of Sanitary and Phyto-Sanitary Measures Agreement on the Application of Sanitary and Phyto-Sanitary Measures Agreement on the Application of Sanitary and Phyto-Sanitary Measures Agreement on Sanitary and Phyto-Sanitary Measures General Agreement on Tariffs and Trade 1994 General Agreement on Trade- Related Aspects of Intellectual Property Rights Agreement on the Application of Sanitary and Phyto-Sanitary Measures Decisions Administrative Laws/Regulations/ Plant Protection Act 1972 (Amendment) Animal Health and Livestock Act 1998 Nepal Veterinary Council Act 2055 (2000) Plant Protection Regulation 1975 (Amendment) Regulations under the new Plant Protection Act of 13 September 2007 Instrument of International Plant Protection Convention (IPPC) Seed Act 1998 (First Amendment) Decision on the establishment of Enquiry Points Environment Act 1997 (Amendment) Plant Resources Act* Food Act 1966 – new replacement law

a 16 15. 44. 16. 17. 18. 19. 20. 24. 43. No. implementa the necessarymanagementinforma safe andmeetslegalrequirementsfortrade. the necessarypolicies,procedures,andrecordingsystems inplacetomeettherequirementsthataproduceis behind thedevelopmentofQualityManagementSystems (QMS)foragro-foodcompanies. The riskofmicrobiological,pes TechnicalBestPrac in theFarmingofFreshProduce C. Introducing B. Problem Statement The mostsigni A. Introduc human resourcesandbusinesscasetoobtainnecessarycer and cer cardamom, ginger,honey,len objec fragmented natureofNepaleseagriculture.Quitesimplyitisnotprac safety ismerelyama However, itisnecessaryforNepaltolookatthefutureinwhichcompliancewithworldstandardsfood cannot bemadetooo standards, requirestrainedsta However, demonstra evidence that,forthelistedcrops,actualpes A mo Solu traceability/provenance. of smallfarmers–aproblemexacerbatedwhenthetradedproductisaggregatedandmarketedwithoutclear to lookatacost-bene and/or thedeliveryofapublicgoodsuchassaferfood.Incontextthisstudy,ithasnotbeenpossible form ofabusinessand/oreconomiccase,e.g.throughbe the Nepalesecontextsigni related challengesandrecommendthemostappropriateprac A currently requiresconsignmenttes assistance (T lthough anumberofstudiesreferto‘problem’pes visitwasmadetosmallholdersinthe ti va ti ons totheS

ti N T I S 302 ves throughthephasedintroduc ti ti on, knowledgeextension,and

fi ca 2010 GAP ti ti A on offull on intoNepal’sexports,soastoprovidedemonstra ) fordevelopingthirdpartycer fi cant issuefacingexportofthepoten NEPAL TRADE I BACKGROU s (suchas P G A in the S problemgobeyondthetechnicalissuesandmoveintorealmoffarmerorganiza ti on ood ppendix 4 tt ti er ofwhenandnotif.Thisappendixoutlinesapossibleroadmapfor on ofcompliancewithaninterna ft fi GAP t casefordeliveryofeitherimprovedmarke en isthatimplementa A C GLO N fi s isnotallcost,asdiscussedbrie gricultural D ontext ofThird cantly lagbehindtechnicalknowledgeandsolu R NT B EPOR ti ff ls, tea(greenandblack),uncookedpasta,is pes ALGAP , andcomeat asigni EGRA ti cide, andgrosscontamina ti ce inFoodSafety:QualityManagementSystems(QMS) ti ng oftea,honey,andlen T ti on isprovided. TI ) andHazard O K fi nance. Thesearesocioeconomicratherthantechnicalissuesandin N athmandu Valleytoiden ti P on ofacombina S rac T RA ti

ti L fi P ces, FoodSafetyandQualityManagementSystems ti T egal andtechnicalrequirementsareiden ca onof EGY 2010 arty ti ti cide prac on foragro-foodexportsfromNepal. A nalysis and C C GAP ti fi ontrols ofopera er cant cost.Therefore,theremustbebothnecessary al agro-foodexportsiden ti onally acceptedstandardisdi ti cide residuesinNepalesecrops,thereisreasonable tt ti er marketaccessandthuspoten s needsaneconomicdriver.Thiscancomeinthe

ti on ofpublicandmarket-driven fi ca ti ce inNepal isnotnecessarilyasigni ti on ofagriculturalproduceisthemajordriver ti ti fl l exports. ces andrecommendaprogrammeoftechnical y in ti ti on ofNepaleseFood C ti

fy quality,foodsafety,andotherstandards- fi ri ca ti on ofcompliancewithimpor ti Appendix 7 cal ti ti o. on. cal toindividuallycer ti ng ofsafefoodand/orhigherprices. ti ons arethroughtheapplica C ontrol A furtherproblemisthehighly ti ons. ons. . P oint (H ti

fi ed in ed A ffi n importantpointthat cult atpresent,which ACCP ti ti

cide residuelimits. fi ed intheQMSand C E ti ti hapter 2,namely ally higherprices fy largenumbers xports GAP tt )-based systems A aining the QMSsetsout s. However, ti fi ng country cant issue. ti on ofa ti fi on, nal

t c A fi M, M]). GAP AL N T I S s. on of on ti AL [S ca GAP fi

2010 303 is a private ti ppendix 6). T A ALGAP B ood Manufacturing ood Manufacturing on of foreign body ti G cult to implement in EPOR M, also has a speci ffi R GLO AL EGY 2010 D ). T N C o RA C T procedure for cer on is di ng to see if it might be adapted ti S urope and beyond. While ti cant issue currently affecting E N fi on of key elements of ti O ga ti TI ALGAP BACKGROU fying large numbers of smallholders B onduct ( , a prerequisite programme up to the , a prerequisite programme ti C cant current investments in this fi er. In purely trade terms the following EGRA ff cation on, and traceability. fi GLO ti NT ACCP on will likely reduce or even eliminate the ti Skim Amalam Ladang Baik Malaysia ode of ca C fi es in cer

ti ze the applica ti ti standard, though not S cul cer in the form of er the farm gate ffi cant public health issues in production and processing ft on might di that is credible to Nepal’s trading partners. However, that is credible to Nepal’s trading partners. fi ti ALGAP GAP NEPAL TRADE I za ti B Table A4.1: enya has shown that this op ALGAP K ng in Malaysia ( B ti GLO iven the di G GLO ppendix 6). In the future, if Nepal adopts an equivalent of S ppendix 6). In the future, if Nepal adopts A cant moves towards demonstrated compliance. and it would be worthwhile inves fi Nepal, priority should on and the current status of smallholder farms in ti With the exception of soil on ginger roots exported to India, there have been no trade issues involving gross contamination. This is relatively easily solved. However, in the future, the issue of gross contamination will need to be addressed. The potential for pesticide residues is the most signi Nepal’s agro-food exports. There are signi sector in terms of laboratory testing capability. However, there needs to be more signi All agro-food exports under review (excepting honey) involve a ‘kill step’ before consumption. Therefore, the potential for transmission of human pathogens is low. However, there are signi that need to be addressed. Mycotoxins are a potential future issue. on Schemes as Models ti ALGAP s system opera B environmental pollu cide residues, ti ppendix 5). A s and an exit programme a s and an exit programme GAP GLO GAP on requires a farmer group to comply with certain extra requirements, including a on requires a farmer group to comply ed ti fi Nepal’s trading partners. In view of the high requirements of ng of produce entering ti Prioritization of Food Hazard Compliance for Trade Facilitation in Nepal M is adopted in Nepal, it should incorporate the M is adopted in Nepal, it should incorporate Gross contamination by foreign bodies that is increasingly being recognized by many retailers in that is increasingly being recognized by ed form of fi AL s). The QMS covers a range of issues, including product hygiene, reduc a range of issues, including product s). The QMS covers from on. However, experience ti P cide tes cide GAP on into Nepal ( ti , the cost of implementa ti M 1 Pesticide 2 Microbiology 3 ca pes on, minimizing fi ti G

ti Priority Risk Justi on is generally not a requirement of Nepalese smallholder customers, this is likely to be a future on is generally not a requirement of Nepalese smallholder customers, ti es are suggested (Table 1). ed management systems. The QMS usually consists of a H The QMS usually consists of a ed management systems. ALGAP ti ca fi ce. ces ( fi ti ti B

M is a simpli ti rac AL individually, it is important to note that the individually, it is important to note that for introduc this standard should be adopted on a needs basis and should be targeted at export sectors of Nepal’s agro- this standard should be adopted on a food exports. There is a form of simpli S priori need for pes to be given to establishing a system similar GLO prac then, given the nature of farming in the country, it would be necessary to incorporate a form of farmer then, given the nature of farming in group cer QMS for running the group (outlined in QMS for running the group (outlined standard for smallholders that are aggregated into formal producer groups (summarized in standard for smallholders that are aggregated contamina farmer groups. This op P enterprise level it should be recognized that priori requirement. However, in the short term, credible requirement. However, in the short term, cer If a version of S The approach proposed in the context of Nepal is to priori D. Proposed Approach D. Proposed farm gate in the form of farm gate in the form No such scheme operates formally in Nepal other than the tea No such scheme operates formally in Nepal speci D. Farm-level Accredita standard for C * Smallholder G Priority 2:Microbiology In addi GLO crops aswellthespeci a guidelineandonemorespeci A Nepal alreadyhassomeprovisionunderThe Priority 1:Pes freedom fromfood-bornediseases andmicrobiologicaltoxinsappeartohavealower cer poten strengthened asfollows: ‘Any person,ins the requirementsforcontrolofagrochemicalresidues. R pes ‘if anyperson,ins The curriculumshouldincludecropprotec necessary knowledge(i.e.viaaformalexamina smallholdings arealsorequiredtobelicensedthroughappropriatecer It isnecessaryfortheserulestobeextendedsothatallcropprotec as prescribedbythecommi making necessaryinquiriesinthisregard,grantalicenceofthepes may, subjecttothestandards for alicence)above,obtaininglicencetospraythepes riteria IntegratedFarm ule 13dealswiththegran n exampleofabasiccurriculumisthattheSmallholder enerally speaking,food-bornehumanpathogensaremore seriousthatpes ti cides shallhavetoobtainalicencefromthecommi B Introduc Howtostoreanddisposeofpes Thecorrectapplica Scou

ALGAP N T I S 304 ti alforillnessandmorbidity. However,withthepossibleexcep set quiteabitlowerthanthoseof well, forexample,becomplyingwiththe these maynotequatewith scien A as destruc K usage; ti on totherequirementfortrainingandcer nowledge ofbene requirementthatcompanieswithpes

G 2010 ti uide for ti standardshouldbeadopted,ifpossible. ng andmonitoringcropsforpestdiseases;

fi cally obtaineddatathatthey ti NEPAL TRADE I BACKGROU on ofsetrequirementsforfarmstoragepes ti ti tu ti cides on ofbene ti GLO A tu ssurance” (V3.0-2_Sep07, ti on orbodyintendingtocarryoutthebusinessofselling,formula B ti on orbodysubmitstothecommi ALG fi . c complexofpestsandbene A ti N fi on ofonlyapprovedcropprotec . cial organismsand ofintegratedpestmanagement(I ti tt P D ng oflicencestopes ee.’ ., fi R NT P fi cial organismsand pes xed byitinregardtotheuseofpes lant EPOR fi EGRA c toNepalneedsbedrawnupincludena P CODE rotec T TI O ti ti E on Module, cides correctly. X maximumresiduelimits(M N nglish Version) S CODE ti on informa T currently RA P T ti es X, o EGY 2010 on againstade U ti ti DRA ti cides currentlyregistered inNepaldemonstratethrough nited cide-spraying entrepreneurs: cides ft en atthe limitofdetec FT version-Nov09,Basedon“ ti complywithimpor

ti fi cide residuesabovethemaximumresiduelimit; fi ca ti cial organismsthatexistinthecountry.However, K on suchas: tt ee.’ ingdom R tt ti ee anapplica ules 2050(1994)forthepar on, the on, ti cides forthecommercialpurpose,commi R ti on measurestoavoidharmfulsidee G ule 10requiresthat: uide for fi ned curriculum). P ti es ti cides, ifitdeems ti cide sprayingentrepreneur,insuchaform R on advisorsandapplicatorswithinfarms/ ti ules underthe cide Safety RL ti ti

ti cides aswellproperrecordingof fi GLO onofhoney,intradeterms cer s). Indiaasanexportertothe ti cates obtainedbydemonstra ti on pursuanttoRule11(applica ng country requirements.Notethat GLO ti B on ( ALGAP ti cide residuesinterms oftheir B ALGAP ti onal laws,principalna P L D o M); irectorate M D .* Thisdocumentisonly P fi

). t tograntalicence C es ontrol ti alimplementa ti cide ti ti ng orsprayingthe

fi P ca oints and A ti on priority RL ct needtobe s, whichare ff ects such C ompliance ti EU ng the ti onof ti ti onal may

tt ti fi ft on ed ee er on ve, ti es); ti

N T I S ti oms. oms. tt on ti on. It is ti 2010 athmandu 305 K s perspec es and toilets,* and es ti T GAP EPOR R EGY 2010 D T N RA T on and accompanying animal ti S ranted that smallholder farmers N G O on; and (3) toxin producing plant on; and (3) toxin producing ti TI cant down hill/stream pollu BACKGROU fi EGRA on of this chapter, but these need not be complex or ti NT mately heavily pollute the valley bo mately heavily pollute the valley ti facili es such as toilets and hand-washing ti s compliance; way of inputs that is not already readily le in the tt GAP Typical provision of drinking water in the valley with signi NEPAL TRADE I es for cross-contamina It is important to note that mycotoxins are not destroyed note that mycotoxins are not destroyed It is important to ti on in Nepalese agriculture is unacceptable not only from a on in Nepalese agriculture is unacceptable ti ned for ti legisla cal to develop a culture of neighbourliness backed up by ti eld work that accompanied the prepara fi Fusarium spp. a er of public health. To address these three issues from tt hand washing facili on considerably. Backed up by proper ti ) ft and om le om animal produc on: It is vitally necessary to segregate tt ti Aspergillus on (bo on ti as a ma ve, but also cross contamina al ti ti c animals where there are opportuni c animals where there ti cide residues given that most agro-food exports are cooked (kill step) before consump exports are cooked (kill step) cide residues given that most agro-food ti rovision of clean water: It is cri The technology to provide soak-aways to return waste water into the water table in an environmentally The technology to provide soak-aways requires li sustainable way is cheap and simple and available locally. and technology in respect of water. Farmers go to some trouble to provide themselves with clean and technology in respect of water. it run down to ul water (Figure 2), but then generally let waste from the harvest and post-harvest treatment of food crops. waste from the harvest and post-harvest is mostly needed is awareness. In a rather typical instance have highly limited resources; in fact, what drying racks on the other side of the dwelling would reduce the illustrated (Figure 1), the use of simple poten this simple change would go a long way towards this simple change would go a long way P s perspec 1. Faecal contamina 1. Faecal 2. nimal feeding (right) with dried coles des GAP the following is necessary: pathogens such as by cooking. situa Nevertheless, the current microbiological (2) domes * It was not possible to look at toilets during the expensive, e.g. the ‘Blair’ toilet in Zimbabwe. A important to understand that food-borne human pathogens and toxins originate from three main sources: (1) and toxins originate from three main that food-borne human pathogens important to understand and inadequate provision of ameni humans (through ignorance human consump than pes C E. Recommenda This isafunc Priority 3:ControlofGrossContamina standards forapplica In termsofpost-harvestmicrobiologicalrisks(farmgatetoconsumer),therearecurrentlytwopossible adopted onthebasisofclearlyde business costandtheneedfordevelopingmoreadvancedcer case, forexample,inThailand).Businessneedsmayincludecustomerrequirementsand/ormarketaccess. urrently, nopack-houseinNepalhasbeenthroughaQMS/H

Thedevelopmentofatrainingsimilarschemefortheadvisorsandsellerspes Suitabletrainingandcer Farmersreceiveadviceonpes Nepal’s pes The This cer Nepalshouldseekadviceondevelopingana H QMS(QualityManagementSystem)(IS N T I S 306 appropriate, andmustbeaddressedbyacer (farmers, marketers,processors,handlers)ontheimplementa cer requirement foralladvisorsandsellersofpes sales sta cer A cer target markets; customers thattheyoperateunderthesamestandardsof pes U those thatareworkingwithins cer up instagesoveraperiodsoastomeetfullinterna body cer in prepara be toavoidbatchtes and commodityassocia cer it wouldbenecessarytoconsultwiththerelevantIndianauthori forwardplanofaphased ACCP nited ti ti ti ti ti

2010 fi fi fi fi fi D ca ca ca ca ca ti o on ofthefullimplementa StandardasadoptedbytheNS K A ti ti ti ti ti ti ff ingdom ti on body. on; on) shouldbepreparedtoenablepriori on, asoutlinedin on toavoidbatchtes

NEPAL TRADE I BACKGROU MoH and the

fi fi ca ti ca on forfullH ti cide registra cide ti ti on shouldbecloselycoordinatedwiththesocio-economicprogrammes,par ti on/compliance; on topack-housesitua P shouldhaveawideremittoprovidenecessaryongoingtrainingmanygroups P es D ti N ons o ti D ti cide Safety A ng ofagro-foodexportsforpes R NT . Thequalityofthisadvicemayvaryandinsomecases notbesafe,legalor ti ACCP EPOR ons; EGRA ti ti on andapprovalproceduresneedreviewtoensurecompliancewiththe Appendix 5

fi ned businessneedorproperlyenforcedlegisla fi ca T cer GAP TI ti ti ti ng; cides frommany di O o o pes of on ti ti ti tu N D

on of fi s system(adeveloped S irectorate permi ca ti T on buildingintheformofcoopera RA ti ti . Theoutsetgoalshouldbethatthestandardscan‘ratcheted’ on; O ti ons inNepal.Thesearetheintroduc on ofAgriculturalProducts T GAP 9001:2000).Thiscouldberegardedasa C EGY 2010 (IS ti cide advisorsandapplicatorsisnecessarytore-assure s andneednotbeconsideredfurther, ti ti O onal

ti fi cides; 22000:2005),whichcanbecer cate ofcompetenceincropprotec ti za tt GAP ed levels; ff ti ti erent sources.Thisincludespes onal standards.Theimmediateobjec on intermsofchemical>microbiological>foreign ti cide residuesattheIndianborder. standardwithamodi ACCP ti

fi ca GAP audit. ti on schemesforpack-housesshouldbe ti standardandsystemofaudi cide knowledgeasthosecompaniesin ti on of on ti es aboutanacceptableformof A ll cer GAP ti ves, marke ves, ti ti ve requirements(asisthe s,

ti fi on ofacompulsory: fi ca ed formofgroup- G ti ti M fi ti

cides inNepal. rst stagecer on processeshavea fi ed byathirdparty ti P on asamandatory s, andsubsequent ti ng associa ng ti cide company cide A ccordingly, ti ve would ti ti

ti ng and ng fi cularly ca GAP ti ons ti on s t A M.

N T I S AL on, but ti

2010 M, as they 307 ca fi

AL ti Skim Amalam ed version of fi T ce ( ti M cer AL EPOR rac R P EGY 2010 D T N RA T S N ve and is a simpli O ppendix 5 ppendix ti to adopt S ng more farmers gricultural tti on for Nepal? TI A ng the scheme more widely through a ti A on process is free, the inputs of the on process is free, ti BACKGROU ti on by growers. These designs should ti p ti O ca EGRA standards on the ground; ood ) ini fi

G A ti NT o the on of monitoring growers to ensure that adang Baik Malaysia): adang Baik ti GAP D L ossible P

A M standard. malam on a func ves such as a premium price and/or supply contract. implement this request by customers for growers to le ti ti AL tt A griculture ( NEPAL TRADE I about the ways of ge A A on Scheme for o ti D ca fi

(Skim ti on requirements (checks on spray records, etc); ti cide store designs, for adop on is limited as the cer on is limited as the M a legal requirement, promo er ti ti C requirements of S to have a full understanding of the ca AL fi ff nancial incen nancial GAP

fi M it was recommended that: ti epartment of AL cers’ job descrip job cers’ ffi D M cer ering eld sta ff fi AL M accredita Malaysia Malaysia AL cide store that meets the S data). ed (2008 ti fi

on, to o ti ti ). This is a in the Malaysian cant discussion fi . The cost of S as advisors are free and the requirement for an annual residue test on the crop is also free. an annual residue test on the crop are free and the requirement for as advisors ff specify the layout, design features, and materials to enable growers to understand the requirement of specify the layout, design features, and an acceptable pes growers maintain the S should be the major vehicle for training and maintaining should be the major vehicle for training sing and promo ti ALGAP pes To consider providing standard To train all of extension extension o To include in the sta B A o There is signi D Ladang Baik Malaysia only 200 have been cer In order to speed up the uptake of S GLO Malaysia operates the Malaysian Farm Malaysia operates adver The discussion ranges from making the S The discussion ranges from making the present, the scheme is voluntary and as yet there is li present, the scheme 1,000 growers who have requested for S standard. Thus far, there are approximately ensure thattheycon the producergroupaswell keysta group’s controloftheprincipal requirementsof and containedinaqualitymanual. The opera D. Quality Manual need toundergotrainingandevalua CompetencyandSta A C. to e ManagementandOrganiza The producergroupmusthaveadocumentedmanagementstructureandsu B. are eachseparatelylegallyresponsiblefortheirrespec registered producermembers/produc System (QMS)acrossthewholegroup.Thismustdemonstrablyensurethroughauditsthatgroup’s The producergroupmusthaveastructurethatenablestheapplica A. Quality Management In thecontextofagriculturalproductinNepal, approach andinterpreta key sta de competency requirements.Theserequirements, training,andquali of thoseinthemanagementstructureresponsiblefortechnicalcompliance. The producergrouporcoopera registered forcer only inthecontextofproducergroupsthatcarryoutcropproduc informed andawareofthedevelopments,issues,legisla groups thefollowingstructureandsystemsneedtobeinplaceorderachieve GAP being responsibleforthecompliancewith There shouldbedirectresponsibilityovertheproduc agricultural produc cer the legalen quan produc A GAP ll personnelwithresponsibilityforcompliance registerhastobemaintainedofallmemberproducersandtheapplicablesitesusedfor fi ti ned competency requirementsandrecordsofquali

ff s. s andthegroup’sdocumentedprocedures,policies,and,whereprovided,technicaladvice). fi ec ti ca N T I S ty foreachregisteredproduct. 308 ff ti ti (managers,auditors, inspectors,etc)involvedin on. Thismustincludenames,contactdetails,registeredproducts,growing/produc ti vely ensurethattheregisteredproducersmeetrequired on en on ti

ng andQuality ManagementSystems(QMS)relatedto 2010 ti ty (signedcontractsiden ti ty. Theproducergroupmusthaveadocumented rela NEPAL TRADE I BACKGROU ti

GAP A O fi ti ca on and/ortrading,andbeabletolegally contractwithandrepresentthegroupmembers. rganized in ti ppendix 6 nue ti on.

R ti on ofthestandards. equirements forSmallholderFarmers N GAP D R NT s standardsandthoseofthe producer group. EPOR EGRA ti ve mustbeadocumentedlegalen ff P Training T roducer P TI ti olicies andproceduresmust be su ff ti on,e.g.bydocumentedshadowaudits,toensureconsistency intheir . Thecontents ofthequalitymanualmustbereviewedperiodicallyto ti fying theproducer,produc O on loca N S ti on T RA G T ti GAP ons complyinauniformmannerwiththerequired EGY 2010 roups A GAP GAP systemmustbeinplacetodemonstratethatkeysta s aswellholdingthecontractualrela cer s andmustbeavailabletothe registeredmembersof GAP ti ti on, handlingandownershipoftheproducts,thus fi ve produc ve ti ca

GAP s havetobeadequatelytrainedandmeetde fi ca ti ons andtraininghavetobemaintainedforall ti s compliance.Internalauditorsandinspectors ti on ofindividualsmallholderscanbefeasible ve changesrelevanttothecompliance with ti ti on andmarke on loca ti on loca on GAP GAP ti on ofarobustQualityManagement ti ffi ty withthelegalrighttocarryout ti ciently detailedtodemonstratethe onship betweentheproducersand s. Thismustincludedocumenta s needtobestandarddocuments ti ons, commitmenttocomplywith ffi cient suitablytrainedresources ti ons. Theen ti ng coopera fi GAP ca ti ons shouldmeetthe cer ti ti

re cropmustbe ti fi onship withthe ti ca on areaand/or ti vely. Forsuch ti on. GAP s and GAP fi ned ti ff on is s

N T I S GAP 9000 O bsolete elevant eview of R O R

2010 standards. 309 GAP T ndings, and follow- fi EPOR R gated, followed up and ti EGY 2010 D T N RA T S N O ed, inves fi on at least once a year. TI

ti ti ons, and recording forms. ons, and recording BACKGROU ti ons which may result from internal or ti EGRA al. This must be through a documented ti NT on loca on ve ac ve ti ti s QMS requirements and compliance and kept s QMS requirements and compliance and ons ti GAP on Systems on standards. Internal auditors must comply with the ti NEPAL TRADE I requirements set for an internal group inspector and on and adequately controlled. These include internal controlled. These include internal on and adequately ti ecords of the internal audit plan, audit R GAP GAP on Inspec on s registered producers list. ti on. on. ve Ac ve ti ti ng procedures, work instruc ng procedures, work GAP ons ti the QMS is being controlled. on must be available where ti ti ve control of the ti ec ff on Loca on ti ng from an audit must be maintained and available. ons, customer complaints or failures of the QMS must be in place. ti ti on and must have issue number, issue date/review date, and be appropriately on and must have issue number, issue date/review date, and be vely rescinded. vely ti stored and maintained in en three years). Such records must be genuine, legible, ti ft ng them into the tti ec ff fy and handle non-compliances and correc ti ons resul ons vely managing customer complaints is essen ti ti on system must be in place to inspect the producers and farms against the ti ng to compliance, opera ng to compliance, ec ti ff ons, and accessible for inspec ti ve ac ve ti copy of all relevant documenta QMS must be audited at least annually. A on reports and producer status must take place. New members of the group must always be internally ons carried out at each registered producer and produc ti ti GAP roup records must demonstrate e procedure to iden n internal inspec system for e inspec inspected before admi reviewed. The procedure must be available to customers, as required. reviewed. The procedure must be available suitable condi external standards must also be controlled documents. The document control system is based on IS document control system is based must also be controlled documents. The external standards and includes the necessity for review and approval of new and altered documents by authorized persons and includes the necessity for review before issue and distribu paged. documents must be e inspec Internal inspectors need to comply with the for a minimum period (o documents rela procedure that describes how complaints are received, registered, iden procedure that describes how complaints up on correc J. A Non-Compliances and Correc external audits and/or inspec I. A Producer and Produc The internal audit system in place must both assess the adequacy and compliance of the documented QMS The internal audit system in place must and inspect the producers and farms against the A H. Internal Audits and Inspec G Handling G. Complaint of the area being audited. requirements set for an internal group auditor, be suitably trained and independent The F. Records E. Document Control E. Document be relevant to the opera QMS documents must inspec TechnicalSkillsandQuali The internalinspectorneedstohavetakenaprac P. e.g. atleastapost-highschooldiplomaindisciplinerelatedtothescopeofcer InternalProducerGroupInspector/Auditor:FormalQuali Internal inspectors’quali O. A N. Subcontractors for takingdecisionsonthepossiblewithdrawalofproduct,mechanismno as wellproceduresthatiden There mustbedocumentedproceduresinplacetoe WithdrawalofCer M. requirements inindividualcontracts. The groupmustoperateasystemofsanc L. Sanc in amannerthatpreventsmixingwithnon- ProductTraceabilityandSegrega P K. audits bythecer of experienceintherelevantsub-scopea livestock and/oraquaculture)oranagriculturalhighschoolquali GAP GAP subsequent correc for theiden shadow auditsbetweenthem.Theinternalinspectorshould complywiththefollowingrequirements: compliance withthelegalen conforming totheapplicableproduc roducts mee ny servicessubcontractedtothirdpar s standards. ’s approvedcer

Forlivestockandaquacultureaudits:basicveterinarymedicine andanimalproduc Forcropaudits: plantprotec Foodhygienetraining eitheraspartofformalquali TraininginQMS/H N T I S 310 ti including animalhealthandwelfare issues. of aformalcoursebasedontheprinciples course; the successfulcomple on (internallycarriedoutbythegroup)andfollowtwoinspec 2010 ti

fi ti ca ti ng therequirementsof ons andNon-Conformance NEPAL TRADE I BACKGROU ti ti on ofregisteredproductstoenabletraceabilityallproducts,bothconformingandnon- fyingbody).Wherethereismorethanoneinternalinspector thereshouldberecordsof ti ve ac ti

fi ca ti fi ti ACCP on bodyandmethodsofreconcilingstock. ca ons anddecision-makingprocesses. N D ti ti ti ons and experiencemustbeveri ty. R on of a formalcourse; NT principleseitheraspartofformalquali EPOR ti ti fy thetypesofeventwhichmayresultinawithdrawal,personsresponsible EGRA

fi ed Product ti T ti on, fer on sites. TI O GAP R fi ti N ca es mustbecarriedoutinaccordancewiththerequirementsof ecords mustbemaintainedofallsanc ft S er quali ti onsandnon-conformancewiththeirproducersthatmeets T ti GAP s standardandmarketedassuchmustbetraceablehandled lizer andI ti RA ons A T EGY 2010 massbalanceexerciseneedstobecarriedoutdemonstrate s approvedproducts.Thismustbeadocumentedprocedure ti on fi ca C ff ec ti odex ti cl inspec cal P on. M trainingeitheraspartofformal quali ti vely managethewithdrawalofregisteredproducts fi ca A limentarius; ti ons orbythesuccessfulcomple fi ed foreachsub-scopebytheproducergroup, fi ti ca on coursese ti ti fi on withadeterminednumberofyears ons (accompanyinganauditorshadow ca ti ons orbythesuccessfulcomple fi ca tti ti ng outbasicprinciplesof ons, includingevidenceof ti ti fying customersandthe ons ti

fi ca ti on (cropsand/or ti on ofaformal fi ti ca o training, on ti ons orby GAP ti on

ts N T I S fi ce is well

2010 ti 311 merica, but A T EPOR ces R le and well structured le and ti fi EGY 2010 D T N rac RA P T urope and North S yields reduces ciency and crop E ffi N athmandu valley showing typical O ppendix 7 ppendix K cultural crops (the prac TI ti A BACKGROU s is a business cost, the fact remains that s is a business cost, EGRA er in upper pro tt gricultural gricultural NT A GAP ield and Sustainability ield and Y ood llage into hor on of on ti G ti Forest soil in the organic ma upper horizon on ti NEPAL TRADE I romoters of romoters P s en than not improves business e ft A lizers, and increased crop yield. ti on, reduced soil-borne diseases (fungal, bacterial, and nematode), ti llage (Figure 3) to a fungal/animal-based forest soil (Figure 4). ti ltra fi onal ti restore soil microbiology and from a bacterially The aim of these farmers has been to eld crops). athmandu valley showing typical soil athmandu valley showing typical soil fi K the full standard more o on of ti evidence of gulley erosion (background) le and fi frica and Mozambique. The techniques were originally developed in temperate farming systems in established in and farming systems in South the system has been successfully introduced into tropical and subtropical soils A together with other bene The results are that soil carbon and accompanying biodiversity have increased, dominated one under conven input costs and most certainly improves long-term sustainability. certainly improves long-term sustainability. input costs and most introduced versions of conserva Many farmers have such as increased soil water in reduced need for agrochemicals and fer Terraces in pro implementa While it has been emphasized earlier that the implementa While it has been emphasized Ministry Ministry of of Health and MinistryofForestsandSoil Ministry Ministry Members: of of Industry (MoI) ebr: MoI Ministry Mo Members: of MoI Tourism Nepal Moand Ministry Bar Members: of MinistryofFinance(MoF) Federa FN MoMembers: C TC 5:Cross-Cu C TC 4:ServicesandTaxa C TC 3:Legisla C TC 2:PrivateSectorDevelopment(Manufacturing,SMEs,SEZ/EPZandTBT) C TC 1:Agriculture,Agro-industry,NTFP,andSPS the implementa Thus far, Insurance Nepal Nepal Nepal Telecommunica Nepal Medical Bar ebr: Members: in lightofthepriori hair/ hair/ hair/ hair/ hair/ C

S N T I S 312 L L L L L a iity Mo ead Ministry: MinistryofFinance ead Ministry: Ministry of ead Ministry: Ministry ofIndustry ead Ministry: Ministryof ead Ministry: fi ve NTIST 2010 ti on andIntellectual PropertyRights(IPRs) NEPAL TRADE I BACKGROU ti on oftheNTIS.Thefocusandcomposi tti ng Issuesand Trade-relatedInfrastructureDevelopment NTIS Technical A ti C es iden ppendix 8 s havebeenestablishedundertheNa N C C C P C D ti rivate Sector( NI omputer hartered hairs ofotherT ti

fi on CC R NT ed inNTIS2010. C C C EPOR S S S I EGRA R ti on ofNepal astra Bank T C A A C TI A A E C C L A ommi ouncil uthority ssocia O ccountant ssocia aw duca ommerce andSupplies(Mo ulture griculture and N S C AEC ouncil T C ti RA ti s ti on on tt on ofNepal , FN ees T C EGY 2010 o ti P ons tt CC age opula C I) ivil C C A A o-opera ti onserva A uthority on oftheT ti nd SmallIndustriesFN on via ti onal Steering ti on ti ti ves on C C S) s mayneedtoberevisitedandamended C ommi C tt SI ee tofacilitateitsworkand