Export earnings from listed or high value products barely budged in the first quarter, inching up 2 percent year on year as experts blamed the lacklustre performance on a narrow range of goods and lack of coordination between government agencies.
According to the Trade and Export Promotion Centre, shipments during the first three months of the fiscal year—the period mid-July to mid-October—were worth Rs10.30 billion, compared to Rs10 billion in the same period last year.
The government rolled out the Nepal Trade Integrated Strategy (NTIS) in 2010 with the main objective of increasing and promoting exports to narrow the trade deficit; but even after a decade, exports of high value goods are barely crawling, say experts.
Shipments of cardamom, tea and ginger dropped while yarns, carpet, pashmina, medicinal herbs, textile, footwear and leather increased by a few percent during the first quarter.
The total share of listed products in Nepal’s exports was 15.7 percent.
Trade economist Posh Raj Pandey said the total share of listed products has been declining due to an inadequate product list in the basket and a coordination failure between government agencies in implementing the policy.
“There are three possible reasons for the decline in exports, either the goods listed in the NTIS are the wrong products or the policies might not support the export of such goods or the implementation of policies failed,” he said.
“I do not think the problem has occurred due to wrong identification of products, but the listed products in the basket might be insufficient,” he said. “The government has been unable to identify dynamic comparative advantage products,” Pandey added.
“The government as a whole should have taken ownership, increasing production and promoting goods, which did not happen,” he said. Currently, the Industry Ministry is looking after NTIS products, but other concerned ministries are not doing anything regarding the production and promotion of goods.
“The government’s understanding that the Industry Ministry’s only responsibility is looking after the export of the goods is wrong,” he said.
The list of NTIS products is reviewed every five years. The ministry was expected to review the list last year and identify new potential products, but due to the political changes, it did not happen.
The major market for NTIS listed farm products is India. Europe and the United States are the largest buyers of NTIS listed handicraft goods.
Tea exports saw a steep fall of 53 percent to Rs1 billion. Shipments in the first quarter of the last fiscal year amounted to Rs2.18 billion.
Cardamom shipments declined by 12.8 percent to Rs1.28 billion from Rs1.47 billion in the same period last year.
Exports of pashmina increased by 2.6 percent to Rs791.4 million during the review period from Rs771.67 million previously.
Textile shipments increased by 6.8 percent to Rs832.57 million in the first quarter of the current fiscal year from Rs779.25 million in the same period in the last fiscal year.
Carpet shipments saw an increment of 20.5 percent to Rs2.45 billion in the first three months compared to Rs2 billion in the same period in the last fiscal year. Ginger exports during the review period declined sharply by 17.6 percent to Rs142 million from Rs448 million last year.
The export of footwear jumped sharply to Rs277 million from Rs185.88 million.
Leather exports in the first three months of this fiscal year jumped to Rs77.15 million from Rs23.89 million in the same period in the last fiscal year.
Exports of medicinal herbs increased by 1.1 percent to Rs359.96 million from Rs355 million.
While indigenous listed products were not able to make substantial progress, exports of soybean, palm and sunflower oil, which are not produced in the country in quantities enough to fulfil domestic requirements, have risen steeply to make up 57.5 percent of total exports.
The country exported soybean oil valued at Rs22 billion in the first quarter of the current fiscal year, a sharp jump of 189.5 percent from the same period in the last fiscal year when exports stood at Rs7.60 billion.
Palm oil exports shot up from Rs443,000 in the first quarter of the last fiscal year to Rs13.51 billion in the first quarter of the current fiscal year.
The export of sunflower oil jumped by 944.9 percent to Rs1.82 billion in the review period from Rs174.39 million previously.
Manish Lal Pradhan, chairperson of the Export Promotion Committee of the Federation of Nepalese Chambers of Commerce and Industry, said that the government talks about increasing exports in speeches, but does not work on export policies due to which the export potential is not being realised.
“The current problem in the export trade is that freight charges have more than doubled, and with the increase in freight charges, the cost of production also increases,” he said. “If the buyers are able to sell the export products at a higher price, they will place orders for goods.”
Pradhan said there was a shortage of containers globally. Export goods are stuck in warehouses because of the lack of containers.
“We do not have an accredited lab to test export goods. We have been asking the government for a lab from before the pandemic, but nothing much has happened. We even informed the Ministry of Industry, Commerce and Supply again after the pandemic, but we have not got any response from them,” he said.
“The government has talked about branding and marketing exportable goods, but government agencies have not done anything about that,” Pradhan said.
“There are many administrative hassles regarding paperwork that still remain even though we have talked to the government about it,” he added. “We have informed the government about the problem, but we have not received any response. The Industry Ministry is without a minister, but the prime minister can also look after these issues.”
Pradhan added that the Special Economic Zone was supposed to give priority to export-oriented factories, but there are no basic facilities like electricity, sewage and drinking water.
“E-commerce is playing a major role in the purchase and sale of goods in the international market, but the country has not been able to formulate laws for e-commerce even two years after its inception,” he said.