Private Sector Involvement and Investment in Nepal's Forestry
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Private Sector Involvement and Investment in Nepal’s Forestry: Status, Prospects and Ways Forward March 2014 Multi Stakeholder Forestry Programme Kathmandu Published by: Multi Stakeholder Forestry Programme (MSFP) Services Support Unit (SSU) Forestry Complex, Babarmahal, Nepal Tel: 977-1-4229669-70 Email: [email protected] www.msfp.org.np © 2014 Multi Stakeholder Forestry Programme (MSFP) The MSFP aims to improve livelihoods and resilience of poor men and women and disadvantaged people in Nepal. It will also strengthen the contribution of Nepal’s forestry sector to inclusive economic growth, poverty reduction and tackling climate change. Disclaimer This report is an outcome of an independent study commissioned by Multi Stakeholder Forestry Programme (MSFP) to Asia Network for Sustainable Agriculture and Bioresources (ANSAB). The views and opinion expressed herein are those of the consultant authors (ANSAB), and do not necessarily state or reflect those of MSFP. Further, MSFP does not assume any legal liability or responsibility for the accuracy, completeness of any information, data, methodologies, analysis and conclusions. Authors: Bhishma P. Subedi, Puspa L. Ghimire, Ann Koontz, Sudarshan C. Khanal, Prakash Katwal, Kabir R. Sthapit, and Shruti Khadka Mishra Contributors: Dilraj Khanal, Pradyuman Pokharel, Devendra Chapagain, Kalyan Gauli, Sushil Gyawali, Govinda Ghimire, Ritu Pantha, Lachana Shresthacharya, Tony Uhl, Nabin R. Joshi and Rijan Tamrakar Suggested citation: Subedi, B.P., P.L. Ghimire, A. Koontz, S. C. Khanal, P. Katwal, K.R. Sthapit, and S. Khadka Mishra 2014. Private Sector Involvement and Investment in Nepal’s Forestry: Status, Prospects and Ways Forward. Study Report, Multi Stakeholder Forestry Programme - Services Support Unit, Babarmahal, Kathmandu, Nepal. Contents Abbreviations and Acronyms viii Executive Summary xi 1 INTRODUCTION AND METHODOLOGY ................................................................................................... 1 1.1 Background, Objectives, Scope, Methodology and Study Structure ........................................................... 1 1.2 Significance of the Study ............................................................................................................................. 6 2 ASSESSMENT OF FOREST-BASED INDUSTRIES .................................................................................. 8 2.1 Nepal’s Forests, Forestry, Products, Services, Investment, Growth and Employment ............................... 8 2.1.1 Status of Nepal’s forests ............................................................................................................................. 8 2.1.2 Nepal’s forest management regimes .......................................................................................................... 9 2.1.3 Significance of Nepal’s forests .................................................................................................................... 11 2.1.4 Major forest subsectors, products and services .......................................................................................... 13 2.1.5 Private sector participation and investment in forest-based industries ....................................................... 16 2.1.6 Range of international buyers and investors .............................................................................................. 20 2.1.7 Present status of employment in forest-based industries ........................................................................... 23 2.1.8 Economic growth and employment generation potential from forest-based industries .............................. 25 2.2 Current Status and Growth Potential of Timber-based Industries .............................................................. 27 2.2.1 Assessment of current and future demand ................................................................................................. 28 2.2.2 Assessment of supply situation and trend .................................................................................................. 29 2.2.3 Supply potential ........................................................................................................................................... 33 2.3 Current Status and Growth Potential of NTFP-based Industries ................................................................ 35 2.3.1 Assessment of current and future demand ................................................................................................. 35 2.3.2 Assessment of supply situation and trend ................................................................................................... 37 2.3.3 Supply potential ........................................................................................................................................... 41 2.4 Current Status and Growth Potential of Forest Ecosystem Services-based Industries .............................. 42 2.4.1 Assessment of current and future demand of forest carbon ....................................................................... 42 2.4.2 Supply potential of forest carbon ................................................................................................................ 45 2.4.3 Assessment of current and future demand of ecotourism service .............................................................. 46 2.4.4 Assessment of supply situation and trend of ecotourism service ................................................................ 47 2.4.5 Supply potential of ecotourism service ....................................................................................................... 49 2.5 Current Status and Growth Potential of Forest Bioenergy-based Industries .............................................. 50 2.5.1 Assessment of current and future demand ................................................................................................. 50 2.5.2 Assessment of supply situation and trend .................................................................................................. 53 2.5.3 Supply potential .......................................................................................................................................... 54 3 VALUE CHAIN DYNAMICS AND ACTORS’ PERSPECTIVES ................................................................... 55 3.1 Domestic Inter-firm Cooperation and Coordination ..................................................................................... 55 3.2 Timber Actors and Their Perspectives ........................................................................................................ 61 3.2.1 Timber producers/managers’ perspectives ................................................................................................ 62 3.2.2 Timber harvesters, processors and manufacturers’ perspectives ............................................................... 66 3.2.3 International buyers and investors’ perspectives ........................................................................................ 69 3.3 NTFP Actors and Their Perspectives ......................................................................................................... 70 3.3.1 Producers and cultivators’ perspectives ..................................................................................................... 71 3.3.2 NTFP collectors/harvesters, traders, processors, and manufacturers’ perspectives ................................. 75 3.3.3 International buyers and investors’ perspectives ........................................................................................ 79 3.4 Ecosystem Services Actors and Their Perspectives ................................................................................... 80 3.4.1 Forest carbon actors and their perspectives ................................................................................................ 81 3.4.2 Forest-based ecotourism actors and their perspectives ............................................................................. 83 3.4.3 International buyers and investors’ perspectives on ecosystem services .............................................. 85 3.5 Forest Bioenergy Actors and Their Perspectives .................................................................................. 86 Private Sector Involvement and Investment in Nepal’s Forestry Sector 3.5.1 Forest producers/managers’ perspectives ................................................................................................ 88 3.5.2 Harvesters, processors, manufacturers and traders’ perspectives .............................................................. 89 3.5.3 International buyers and investors’ perspectives ....................................................................................... 91 3.6 International Buyers and Investors’ Requirements ..................................................................................... 94 4 ANALYSIS OF INVESTMENT CLIMATE ................................................................................................... 100 4.1 Policy and Regulatory Environment Governing the Forest Sector ............................................................. 101 4.1.1 Investment related and fiscal policies and legislations ............................................................................... 102 4.1.2 Industry, trade and labour related policies and legislations ........................................................................