The World Bank (WB) has recommended Nepal to boost up export to lead the economic growth given the fact that Nepal’s economy witnessed contraction for the first time in 40 years by 1.9 per cent in fiscal year 2019/20.
The WB report published on April 12 projected Nepal’s real GDP to grow by 2.7 per cent in FY 2020/21 and 3.9 per cent in FY 2021/22.
The WB report pointed out at six key priority areas for Nepal to spur growth particularly by catalyzing the external sector.
The report states that Nepal needed to reform tourism sector to increase aggregate demand. “It propounds to promote green tourism, by improving access to credit for communities engaged in nature-based tourism, and upgrading skills.”
Secondly, the WB stressed on the need to attract more FDI for Nepal to boost economic growth. “There is a need to attract more Foreign Direct Investment (FDI). It will integrate regional and global value chains. For this, it is necessary to reduce the minimum threshold for FDI and streamline the approval process to set up multinational shops in Nepal. Further, there is an acute need for proactive economic diplomacy.”
Modernization of promotional activities of exports is another crucial dimension to boost up market share. It entails digitalization, simplification of the process, skill development and Cash Incentive Scheme for exporters, according to the report.
Similarly, reduction of trade costs is a critical aspect. Upgrading infrastructure, streamlined procedures and processes would be some crucial steps. Similarly, there is a need to reduce import duties particularly on raw materials and intermediates. These steps will ensure most efficient inputs at world prices, the WB said.
Investment to improve phyto-sanitary and quality control related infrastructure to increase standards and safety of exports are also emphasised. “Increase the capacity for plant pest surveillance and diagnostics and food safety testing”.
And boosting- up of the digital trade and e-commerce could be a game changer for Nepal, according to the WB. “The digitalization transcend from domestic to cross-border digital payment systems, consumer protection and data privacy regulations aligned with international good practices can improve efficiency and productivity of the economy”.
The report estimates Nepal’s untapped export potential or ‘missing’ exports at around US $ 9.2 billion, 12 times its actual annual merchandise export. The export potential represents an opportunity to create an estimated 220,000 new jobs and enhance productivity.
Source : THE RISING NEPAL,