Nepals Export Potential

International Trade Center(ITC), Geneva Researcher: Andreas Lendle

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Nepals
Examined 18 products and services Great Export Potential: Large cardamom Lentil Tea Instant Noodles Medicinal herbs and oil
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Nepals
Tourism and Labor: Services found to show much promise Labor: Largest export worth US $ 2.4 billion and will remain in future too. Tourism: US $ 352 million in 2008. Lentil: US $ 22 million followed by pashmina products and large cardamom
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Nepals
Potential was determined on the basis of: Existing level of export Size of the world market and conditions of market access (tariff structure) Domestic supply condition. Medium-level export potential (Other sectors) Ginger, honey, silver jewellery, pashmina products, wool products, information technology and business process outsourcing(BPO) services and engineering services
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Nepals
Low Potential Handmade paper, health services and educational services Examined 18 sectors: 12 goods and 06 service sector Comparative Advantage 9 products in terms of tariffs being imposed on Nepal against its top five competitors
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Nepals
Advantages in (Tariffs) Ginger, honey, tea, Instant Noodle, Medicinal herbs, silver Jewellery, Transformer, Pashmina and Wool products in terms of tariffs. Disadvantage Against Other Competitors Handmade paper, Lentil
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Nepals
Suggestions Reduce high dependency on India for export of: Cardamom, ginger, Lentil and Tea. Brand these products including Noodles Offshore Business Significant potential but hardly utilized Some sectors needed government support despite their low potentials as they can have a significant impact on poverty reduction
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Nepals
Socio-Economic Impact 1. Instant Noodle 2. Handmade Paper 3. Medicinal Herbs and wool products and 4. Services like tourism and labor

Business Environment: Nepal

Environment Scaring Away Investors Security Law and Order Load Shedding Credit Difficulties and continuous poor performance environment in the World Bank Ranking No Loan, high interest rate(14-15%) not feasible Labor problem
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BE: Nepal
World Bank(2010). Logistic Performance Index(LPI) Nepal: One of the top poorest performers in the world in terms of: Logistical support while exporting and importing goods Worse than other South Asian Countries Stands at 147th position out of 155 countries rated Somalia: Worst Performer Germany: Best Performer
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BE: Nepal
Reasons Freight cost due to landlocked nature No easy access to sea port like Switzerland No railway No fast track road Existing road infrastructure is also poor and frequently obstructed Syndicate system and increase in transportation cost
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BE: Nepal
World Bank: Doing Business 2010 Nepals Position 123 from 121 in 2009 Deteriorating Areas: Starting business Dealing with construction permits Paying taxes Level of Labor Rigidity Getting Credit Trading Across boarder Protection of investors
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BE: Nepal
Nepals position is the worst in South Asia regarding labor rigidity, one step ahead of Afghanistan in trading across boarder Remained same in the areas of enforcing contracts and closing business Did better in Ease of registering property in which Nepal performed the best in South Asia
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BE: NEPAL
CONCLUSION One after another report about the worsening situation in Nepal to do business scares away the potential investors from within the country and outside.
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