By PR Pradhan
The government has claimed that Nepal’s exports have increased significantly, in the same manner, imports have declined. Is this true? Economic observers say it is a big joke.
According to observers what are the exportable products so that it would contribute in our exports in the international market! According to reports, Nepal has exported palm oil in a significant quantity. Do we produce Palm oil? Accordingly, we don’t have huge production of lentils but we export this item also. We don’t produce nuts but we are exporting nuts. The fact is that we are importing such items from third countries and exporting them to India in the name of local products.
Therefore, this is a fake report, according to the economic observers.
In real terms, there are no agro-products except from some items such as tea, cardamom or some other limited items. Nepal used to export rice before, but in recent years, rice has become a major import item.
Exporting industrial products is far from the reality.
On the other hand, everything – from green vegetables to petro-products and vehicles, we are dependent on foreign markets. Our economists, planners, the planning commission and the political leaders didn’t give necessary thoughts for producing exportable items.
The international market is very competitive. Without government support, Nepali products cannot compete in the international market.
The major handicap is Nepal’s landlocked position. Still, if we are able to produce our products at low cost with quality and standard, surely, they can be exported and Nepal’s economy would prosper. While doing so, first of all, the country should be able to produce electricity by generating power from our rivers at very low cost and supplying power at low price to the industries. This is one important area Nepal should give special priority to.
The benefit of hydropower energy is that Nepal can reduce import of petro-products in a remarkable quantity. Petro-products have contributed a lot on our trade deficit. To end this alarming level of trade deficit, we should construct Budhi Gandaki project with priority.
The government should remember that foreigners will not come to construct such projects which will be the game changer for Nepal.
The other factor is low-priced and non-politicized labour market. Yes, we get low-priced labours but they are overly politicized. Nepali labours are more political than labourers. They are being used by different political parties for the purpose of demonstrating their political strength. The same applies with the students. Nepali students are being misused by the political parties to demonstrate their political strength. As a result, our education quality has deteriorated. Similarly, our labourers are fond of carrying flags of different political parties rather than doing their professional jobs.
If the political parties stop using labourers, the labour market will be peaceful and foreign investors may come to Nepal.
Along with economic prosperity in China, the labour market has become expensive. Therefore, investors are shifting their plants to the neighbouring countries including Vietnam, Cambodia, Myanmar, Bangladesh, among other countries. Yet, Nepal is not in Chinese investors’ priority. China is the next door neighbor of Nepal. Therefore, we could attract the Chinese investors to establish their plants in Nepal also, given assurance of a peaceful labour and other facilities needed to attract Chinese investment. Unfortunately, our government has not been able to do so.
Foreign investors say that it is very difficult to work in Nepal because of corrupt political leaders and a greedy bureaucracy.
There are many challenges in Nepal becoming a goods exporting nation from an import oriented country. We cannot achieve this goal. However, the first step to end trade deficit is to establish import substituting industries. If our imports are reduced, we can bring our international trade on proper track.
We don’t manufacture vehicles – motorbikes and cars, trucks, etc – however, the trend of importing vehicles is very high. It is because, our investment in road construction is huge. If the government gives incentive while assembling such vehicles within the country, at least, we could give employment to the Nepali workers. But the government attitude is different. The government is afraid of losing net profits of upto 288 percent from vehicle imports tax.
Look at the fate of the locally assembled vehicles assembling company – Mustang. The Hulash Motors was producing Sherpa, Mustang other different light vehicles having multiple uses. The Hulash Motors was very popular in the mountain districts. The Hulash Motors was compelled to stop producing vehicles due to the government’s discouragement, which is a sad story.
If the government will discourage local products and runs behind revenue received through import tax, Nepal’s present trend of trade deficit will never decline, rather, it will further increase.
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