Exports might look upward

Nepal's export might improve in 2011.
"Nepal will record a negative growth of one per cent in 2011 and 1.1 per cent in 2012," said the Asia-Pacific Trade and Investment Report, launched here today.
However, export has been dwindling in the last few years. "Exports sharply deteriorated in 2010, with an estimated negative growth of 17 per cent value based on constant prices, while imports increased more than 13 per cent," the report said, adding that the country is ranked seventh — among the ten countries — in South and South-West Asia in terms of trade in goods and services, whereas Nepal accounts for some 0.2 per cent of South and South-West Asia's merchandise exports and 0.8 per cent of imports, while its share of South and South-West Asia's commercial services is about 0.58 per cent for imports and less than 0.5 per cent for exports.
But in the greater Asia-Pacific region, Nepal represents less than 0.01 per cent of the region's exports of goods and services.
"Abject poverty, corruption, instability and poor governance have taken toll on the country's exports trade, said Prof Dr Madan Kumar Dahal during the launching of the report.
Nepal has experienced a persistent merchandise trade deficit throughout the past decade, the report revealed, adding that the country ended 2010 with a deficit of $4.55 billion, which was about 31 per cent of the total GDP. The share of exports to GDP stood at 6.4 per cent in 2009.Similarly, Nepal's trade in highly dependent on intraregional markets. Based on the 2009 data, some 78 per cent of the exports went to countries of Asia-Pacific, where 83 per cent of the imports came from the region.Nepal has only two regional trade agreements but they cover as much as 57 per cent of the total trade.
"The government failed in prioritising the trade, despite a huge markets in the neighbourhood — India and China," said joint secretary of the Ministry of Commerce and Supplies Chandra Ghimire.According to the report, the country witnessed an inflow of $41 million in Foreign Direct Investment (FDI) from 2005 to 2009 that accounts for only 0.02 per cent of the South and South-West Asia's FDI inflow.
The report highlighted that the country's trade cost is very high relative to the world in an average. "The high rate of inflation may adversely affect private consumption, increase production costs and hurt the export competitiveness of the country, the report cautioned, adding that Nepal is ranked 147th — of the 155 countries — based on the value of the World Bank's Logistics Performance Index with a score of 2.20, said the report that aims to deepen understanding of regional trends and developments in trade and investment; emerging issues in trade, investment and trade facilitation policies; and impacts of these policies on countries’ abilities to meet the challenges of achieving inclusive and sustainable development.
With its theme of 'Post-crisis trade and investment opportunities', this year’s Asia-Pacific Trade and Investment report identifies challenges and opportunities for trade and investment in the region. It also concluded that with strengthened regional cooperation and the right policies, the region will be able to continue its strong trade-and investment-led growth.
The report identifies areas of opportunity in trade and investment for regional economies such as intraregional trade and investment, trade in services and trade and investment in climate-smart goods and technologies. It offers three key sets of policy actions to turn those opportunities into reality. One is through measures and strategies aimed at reducing trade costs within the region as well as between the region and the rest of the world. While trade facilitation has become almost a household term, there are still many areas where trade facilitation policies have not been effective. The report focuses on these recurrent problems and spells out concrete actions for Asia-Pacific economies to consider.
Secondly, since these and other policies are aimed at enabling firms to do business more easily, the report also explores the conditions necessary for SMEs to connect not only with one another but also to regional and global value chains in order to enhance exports. Finally, the report posits that the increasing number of regional trade agreements and the dynamic growth of trade among Asia-Pacific economies are not causally correlated and provides some examples why that might be the case.
The report offers concrete policy responses at the national and regional levels for improving the governance of the noodle bowl of overlapping preferential trade agreements.