BUDGET BUZZ: Support Nepali handmade paper

Nepali handmade paper is one of the best industries due to its inherent features. The industry, which is entirely based on Nepali resources, simultaneously addresses poverty reduction due to its ability to absorb marginalised farmers in remote hills and mountains and also unskilled labor force in urban areas. Equally importantly, it is a major foreign currency earner as it is one of the top five handicraft export items.

The budget should focus on poverty reduction and export promotion of products. Such dual objectives can be fulfilled by boosting the growth of the handmade paper sector. The two contributory aspects of the handmade paper sector, namely poverty reduction and export promotion should be addressed with different budgetary tools.

Expansion of domestic market of labour-intensive industries like handmade paper sector can be achieved by the government with proactive purchase of Nepalese handmade paper for official use as the government is one of the largest buyers. In the case of Nepalese handmade paper, the government has recently decided to re-use it for citizenship certificate and other official documents. Such purchase should be prioritized while scripting the budget for the coming fiscal year.

New items like driving license, academic certificates for different universities and vehicle ownership documents should be added to the list. Categorical budget allocation with emphasis on Nepalese handmade paper products for these important documents will raise demand. Thus, the employment opportunities for marginalised labour force will increase and help reduce poverty. It also should be underlined that eventually most of these documents will be purchased by the user of the documentsand there will be no direct liabilities to the government.

Currently, Lokta paper is exported in different forms like stationery items, gift items, greeting cards, packaging items around the world. The budget should support the sector to expand its market in the world. The sector needs fiscal support to be competitive in the international market. Income tax incentive would be a major tool. Income tax exemption in export of Nepalese handmade paper will make it competitive as entrepreneurs can lower their price. Such income tax support will help cover up for the 'land-locked' cost of transportation from Nepal. Handmade paper sector is mainly manufactured by cottage and small scale entrepreneurs. They have limited human resources and managerial abilities to work with government sectors. It is essential to simplify procedures of VAT refund and duty draw-back facilities so that these small scale entrepreneurs can enjoy the existing facilities of VAT refund against export and duty draw-back facilities. There is strong potential for growth of Lokta paper in the international market. Nepal Handmade Paper Association is promoting Nepalokta brand in the global market. The government should support its marketing efforts by providing support to participate in important trade fairs. Funding for participation in trade fairs is essential as these entrepreneurs are small scale and cannot afford it from their own pockets. Allocation of such fund in the budget for participation in fairs will be a positive step in the promotion of Lokta paper worldwide.

Dr Milan Dev Bhattarai

Former President

Nepal Handmade Paper Association