Lengthy administrative process has not only increased trade deficit but also slow downed foreign direct investment (FDI) inflow to Nepal, according to a UN ESCAP report.
"Nepal takes around an average of 40 days for export and import compared to 28 days in other countries in Asia-Pacific," said the Trade and Investment Report 2013 that was launched by central bank governor Dr Yub Raj Khatiwada, here today.
"Industrial production contributes some 70 per cent of Nepal's export, whereas agriculture produces contributes to only 30 per cent," the report noted, adding that the not so better industrial environment has helped increase trade deficit that stands at 28 per cent of GDP from 26 per cent in 2010.
Likewise, the worse labour-management relations that has resulted in low productivity has failed to create conducive industrial environment.
"Nepal received $39 million foreign direct investment in 2009, which has increased to 92 million in 2009," the report revealed.
However, it is lowest in South Asia, said former senior economic adviser of Finance Ministry Dr Keshav Acharya, on the occasion. "The country is dependent on remittance that has fuelled consumption and import," he added.
Though the report has not mentioned, import substitution could help Nepal bridge the widening import, export gap, suggested trade expert Dr Ramesh Chitrakar.
The government is ready to bring structural changes suggested by the report, commerce secretary Madhav Prasad Regmi, promised on the occasion.
Intra-regional trade has been increasing in the Asia-Pacific region, the report said, "but the cost of trade in agriculture produce has been increasing."Despite the Asia-Pacific region achieving dynamic economic growth and significantly reducing absolute poverty, no matching results were achieved on other dimensions of inclusiveness, notably productive employment, especially of youth, and gender balanced access to public goods and economic opportunities, it read, adding that it is prime time to charge trade- and investment-led growth with delivering shared prosperity and reduced vulnerability for the poorest. "Unacceptably high trade costs undermine benefits for least developed and landlocked developing countries. In most cases, it remains costlier to trade between Asian sub-regions than between Asian sub-regions and external countries or regions."