Poor supply capacity hits export growth

Poor supply capacity has hit Nepal's export, according to the expert.

While Nepal has accorded the highest priority to export promotion, even acknowledging the importance of promoting exports in the directive principle of the Constitution, the export performance in the past decade has been dismal, primarily because of poor supply capacity, chairman of South Asia Watch on Trade, Economics and Environment (SAWTEE) Dr Posh Raj Pandey said at a seminar on 'Trade policy and economic diplomacy in Federal Nepal', organised by SAWTEE, in collaboration with The Asia foundation (TAF), here today.

Likewise, speaking at the inaugural session, industry secretary Toyam Raya said that Nepal’s future trade policies must be formulated through proper and adequate consultations among all the tiers—local, provincial and federal—of the government as well as the private sector. "Diplomatic missions play a vital role in promoting exports," he added.

Discussing on the findings of two studies on 'Trade policy and economic diplomacy in Federal Nepal', on the occasion, foreign secretary Bharat Raj Paudyal said that federalism can be leveraged to address the major issues that plague Nepal’s exports: weak intergovernmental coordination, supply-side constraints, poor adoption of technology, weak production capacity, lack of trade policy coherence, and finally poor implementation of policies.

He also pointed out that economic diplomacy cannot function in isolation, hence collaboration and coordination between various stakeholders are essential.

On the occasion, executive director at SAWTEE Dr Paras Kharel said that as Nepal stands on the verge of graduating from the Least Developed Country (LDC) category in 2026, trade and economic diplomacy carry special importance in charting the post-graduation landscape.

Presenting the findings of a study, trade expert Purushottam Ojha and researcher at SAWTEE Neelu Thapa recommended identification and development of products along with the need for product and market diversification to boost Nepal’s exports. The study highlighted the need of technical support and capacity building programmes. It also recommended strong coordination within the three tiers of governments for effective implementation of trade policies.

The panelists, including former policymakers, on the occasion, emphasised on the need to make trade policy more focused.

Similarly, the private sector representatives including president of Federation of Women Entrepreneurs Association of Nepal (FWEAN) Neeru Rayamajhi Khatri, director at the Kanchanjangha Tea Estate and Research Centre (KTERC) Shanta Baskota Koirala and Entrepreneur at the Himalayan Natural Food Product and Export Pvt Ltd Rajendra Timilsina called attention to the need to integrate trade policy to promote entrepreneurship by increasing access to technology, infrastructure, knowledge, and capacity building activities of the entrepreneurs.

Urging the policymakers to take advantage of the federal structure, former president of Nepal Freight Forwarders Association Rajan Sharma emphasised on the need to allow subnational governments to play a role in enhancing the supply-chain.

On the occasion, former ambassador Dr Dinesh Bhattarai and research officer at SAWTEE Swastik Aryal presented the findings of a study on 'Economic diplomacy for trade facilitation and export promotion in the context of federal Nepal'.

The study has identified underutilisation of economic diplomacy for trade facilitation and low coordination within government agencies as well as with other stakeholders as the major gap. It also recommended strong partnership between government agencies for the utilization of economic diplomacy and the need to establish and strengthen the institutional arrangement for economic diplomacy.

Discussing on the the findings of the study on 'Economic diplomacy for trade facilitation and export promotion in the context of federal Nepal,' former ambassador Prof Shambhu Ram Simkhada highlighted the importance of focusing on improving structural and supply-side constraints to trade. He also emphasised to focus on high-value niche products instead of mass production of low-value products for export.

Likewise, former president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Suraj Vaidya gave an insight into the challenges faced by the private sector in trade such as lengthy bureaucratic processes. He called for putting Nepal’s internal house in order, which he deemed a precondition for diplomacy to work efficiently.

Trade and economic diplomacy expert Rabi Shankar Sainju, on the occasion, highlighted the importance of infrastructural development, better linkages between buyers and suppliers, and effective diplomacy to remove protectionist measures applied by other countries.