China becomes Nepal's fourth largest importer

PRABHAKAR GHIMIRE

KATHAMNDU, Jan 21: China emerged as the fourth largest export market for Nepal over the first five months of 2012/13, thanks to more than 250 percent rise in exports to the northern neighbor.

Government officials and traders said enhanced supplies capacity of Nepal amid massive commercialization of medicinal herbs farming in western parts of the country, sharp rise in demand for medicinal herbs, and hide and skins from mainland China are the majors behind rise in exports to China.

Data compiled by Trade and Expert Promotion Center (TEPC) shows exports to China increased by whopping 254 percent during the first five months of current fiscal year compared to the same period last year.

During the review period, China imported goods worth Rs 1.21 billion from Nepal, up from Rs 342.4 million in the same period last year. Nepal´s import from China also increased by 36.7 percent to Rs 30.59 billion during the review period.

“Impressive surge in demands for medicinal herbs as well as hide and skin drove up export volume to China significantly. Not only in Tibet, demand for these products has increased in mainland China as well,” said Suyas Khanal, director of TEPC.

China emerged as the fourth largest export market for Nepal after India, the USA and Bangladesh over first five months of 2012/13.

According to Khanal, export of medicinal herbs to China during the period increased by 478 percent to Rs 537.9 million. Similarly, Nepal exported hide and skin worth Rs 172.2 million, which is 376 percent higher than the export figures recorded in the same period last year.
“We have seen better trade prospects with China with the impressive rise in export of medicinal herbs that commands more than 44 percent of the total exports to China. Yarshagumba is the major medicinal herb exported to China,” Khanal added. He also attributed the rise in the export of medicinal herbs to growing commercialization of the products in western Nepal.

Similarly, wheat flour, statues and metal products, and carpet were the other top exported products during the period.

Data shows wheat exports increased by 203 percent to Rs 81.1 million during the review period. Similarly, exports of metal products and woolen carpets increased by 406 percent and 479 percent to Rs 71.7 million and Rs 68.9 million, respectively.

Traders said prolonged economic slowdown in Europe -- the traditional market for Nepali carpet - prompted them to explore market in China.

Naindra Upadhyaya, joint secretary at the Ministry of Commerce and Supplies (MoCS), said China´s liberal trade policy and positive impact of trade fairs between the two countries helped boost Nepal´s trade with the world´s second largest economy.

“We can increase exports by even higher rates, especially in cities nearer to Nepal, if we succeed in enhancing our supply capacity in line with the demands,” said Upadhyaya.

Top five exports to China
Medicinal herbs (+478%)
Animal Hide and skin (+376%)
Wheat flour by (+203%)
Metal statutes by (+406%)
Carpet by (+479%)

Power, politics put export prospects in peril

PRABHAKAR GHIMIRE Power shortage, political instability and economic slowdown in overseas markets blamed for falling exports KATHMANDU, Jan 11: Talk to any exporter of pashmina, readymade garments or woolen carpets in the country and phrases like economic slowdown in Europe and the US, lengthy power outages and deepening political crisis are most likely to shower upon you. Talk to them further and they will tell you these problems are eating away significant chunk of their revenue, pushing them to the verge of collapse. Then they pose a question: "When are we turning the corner?" Exports of pashmina, readymade garments (RMGs) and woolen carpets were once key sources of foreign income for Nepal. During late 1990s and early 2000 when situation in the international market was favorable and load-shedding problem was not severe in the country, sales of these products in overseas markets minted billions of rupees for the country every year. But as Maoist insurgency intensified in early 2000, problems started cropping up. In 2006, the move made by the Maoists to join the mainstream politics was expected to remove barriers. But soon fresh problems of continuous power outages, deepening political crisis and slowdown in overseas markets started hitting exporters. Since then the government has repeatedly promised to create favorable investment environment, but these pledges have turned out to be no more than rhetoric. "No one knows when the situation will improve given the roadblocks for exporters," said Rajesh Udas, proprietor of Ami Apparel, which is among a handful of RMG exporters that has survived. Presently, exporters are particularly worried as international buyers have started cutting down on Nepali RMG orders, questioning Nepali traders´ ability to meet the delivery deadline. "As of now, exporters should have been busy taking orders from international buyers to cater to the demand of summer season. But we are not in a position to ensure timely delivery given power shortage and political uncertainty," said Udas, who is exporting garments mainly to India. To beat the problem of power shortage, few exporters are now resorting to alternative energy sources to run their factories. But this has raised their production cost, which, in turn, is eroding competitiveness of their goods in the international market. Such developments do not bode well for Nepali exporters, especially at a time when Indian and Bangladeshi manufacturers are churning out products at relatively cheaper prices. "Power deficit has driven up prices of our products by around 5-6 percent in the Indian market compared with similar products manufactured in Bangladesh," Udas said. "Considering the economic crisis in Europe--the major market for Nepali RMGs--where austerity measures have forced many to cut down on expenses, overpriced items are definitely not going to be entertained." Worse, even small-scale importers in Europe have started reducing their orders. "They say they are facing tough time selling products given the weakening purchasing power of consumers due to economic slowdown," said Yagya Pokhrel, a trader who exports garments to Europe. If the situation continues more than 25 percent of small-scale Nepali exporters will be out of business by the end of this year, said Pokhrel, proprietor of Thamel-based United Fashion. "Given the adverse situation, it is estimated that exports of RMG to Europe in coming summer season will go down by at least 40 percent," Pokhrel added. Overall exports of RMG to different destinations fell by 30 percent in the first four months of the current fiscal year as against that of same period last year. Data compiled by the Trade and Export Promotion Center (TEPC) shows that 3.91 million units of garments worth Rs 1.3 billion were exported from Nepal in the four-month period to mid-November 2012. Garment is not the only product that is facing challenges. Exports of carpet also fell by a whopping 19.5 percent in the first four months of the current fiscal year. "We are in a wait-and-see mode on whether to continue business, as demand for Nepali carpets is fast shrinking in Europe. Our credibility to supply products on time has also taken a beating given the political uncertainty," said Gopal Krishna Joshi, former president of the Central Carpet Association. Worse, even the Chinese market, which was expanding for last couple of years, has started levying excess duty, weakening the competitive edge of Nepali carpets. This means Chinese market is also shrinking for Nepali carpets. Small wonder Nepal´s carpet export fell to Rs 18 billion in the first four months of the current fiscal year, as against Rs 22.35 billion recorded in the same period last year. Now, most of the carpet exporters are waiting for the response from international buyers participating in the Demotext-international textile trade fair, scheduled to begin in German City of Hannover on January 12. Pashmina exports are also facing similar fate. During the first four months of the current fiscal year, Pashmina exports dipped by 11.7 percent to Rs 709.8 million despite joint efforts from entrepreneurs and the government to promote exports. Pashmina is one of the 19 products selected by the government for export promotion under the Nepal Trade Integration Strategy (NTIS). The government has already registered the trademark of Chyangra Pashmina to pave way for its international promotion. Traders have also registered the trademark in more than three dozen countries. "Though we faced double digit decline in Pashmina exports this year, we are hopeful about boosting overseas sales by launching promotional activities with the support of the International Trade Center (ITC)," said Pushpa Man Shrestha, president of Nepal Pashmina Industries Association (NPIA). Although Shrestha is hopeful about turning the corner, other traders are not that optimistic considering the situation in the country.
Published on 2013-01-11 03:00:41

Wage hike awaits Nepalis working in Qatar

PRABHAKAR GHIMIRE The decision is expected to provide cushion to those bearing the brunt of high living cost KATHMANDU, Jan 14: The government is all set to jack up minimum remuneration of Nepalis working in Qatar by 400 Qatari Riyal (QAR) keeping in view the increasing cost of living in the labor destination. The government´s latest move is also expected to create uniformity in remuneration of Nepalis employed in major labor destinations in the Gulf, such as Saudi Arabia and the UAE. "We are making final preparations to increase the minimum wage of Nepalis working in Qatar so as to make the remuneration at par with that extended in Saudi Arabia and the UAE," Buddi Khadka, spokesperson of the Ministry of Labor and Employment (MoLE), told Republica on Sunday. Once the wage hike is introduced, the Department of Foreign Employment (DoFE) will allow manpower agencies to send Nepalis to that destination only if employers agree to provide the new minimum salary fixed by the Nepal government.

Failure to secure new transit facility might affect WB support

PRABHAKAR GHIMIRE KATHMANDU, Jan 10: The support pledged by World Bank (WB) for Nepal-India trade facilitation might be affected, as Nepal has failed to sign new transit treaty with India for paving the way for implementation of additional lock system for Nepal-bound transit containers and operationalizitation of new trade routes. Ministry of Commerce and Supplies (MoCS) was forced to abort the process of signing new treaty after Ministry of Foreign Affairs (MoFA) raised objection on provisions related to additional lock system in the draft. MoCS has now decided to go for automatic renewal of the existing treaty instead. The treaty expired on January 5.

Salary hike boon or challenge?

NEWS ANALYSIS

PRABHAKAR GHIMIRE

Employers may turn to less labor-intensive options

KATHMANDU, Jan 4: Over the years, the Nepal government has had the minimum pay for Nepali overseas workers in three countries- Saudi Arabia, the United Arab Emirates and Kuwait -raised. The minimum salary for workers employed in Qatar was already specified by the government a couple of years back.

With effect from New Year´s Day 2013, the Malaysian government set the minimum salary for both domestic and migrant workers, and this translated into a significant hike in their pay scales.

The moves by both originating and host countries to jack up the remuneration of workers are welcome, and are expected to ensure better earnings, and eventually higher savings. Nepali unskilled workers, who were paid meagerly, have benefitted from the rise in minimum salary.

Nepali workers are comparatively less skilled than those supplied by other countries, something which has weakened their bargaining power with their employers.

However, the demand for Nepali workers has not yet been badly impacted as employers in the host countries still want to hire Nepalis and get away with paying comparatively lower salaries. But foreign employment agents said the situation will not continue forever as major employing companies in the recipient countries are demanding fewer workers with higher skill levels and going for capital intensive mechanisms

Nepalis to gain as Malaysia hikes pay 65 pc

PRABHAKAR GHIMIRE KATHMANDU, Jan 3: The Malaysian government has implemented a raise of 65 percent in basic salary, benefiting millions of low-income workers including migrants, effective from New Year 2013, as part of the government´s drive to transform the country into one of the high-salary nations. Among those benefiting are Nepali workers in significant numbers. The fresh salary hike has been enforced in line with the Malaysian government´s Minimum Wages Order 2012, published in the Federal Government Gazette. As per the hike, workers are to get a minimum salary of up to Riggit 900 (Rs 26,000) per month, up from Ringgit 546, in most parts of Malaysia. “Remittance contribution of Nepalis working in Malaysia will go up significantly with the implementation of the salary hike,” Amal Kiran Dhakal, Nepal´s labor attaché for Malaysia, told Republica over the phone, Wednesday

Anomalies prevailed, despite reform moves

------------------------------Foreign Employment Review 2012-------------------

PRABHAKAR GHIMIRE

KATHMANDU: Despite some initiatives from the government to regulate overseas labor migration, the foreign employment sector remained in the limelight in 2012 for all the wrong reasons -- rise in incidence of swindling, illegal trafficking of job-seekers with promises of lucrative jobs, mistreatment and exploitation by overseas employers.

One of the oldest manpower agencies was caught red-handed attempting to traffic 200 youths to Canada through the use of fake documents --- an incident which exposed how manpower agencies systematically swindle job seekers.

The biggest disclosure came when the labor minister and senior officials were caught taking bribes. Minister for Labor and Employment Kumar Belbase, who took the bribes to reopen the registration of new manpower agencies, was forced to resign. The government had halted the licensing of new manpower companies since last year, citing rampant anomalies and lack of transparency in granting licenses.
A legal officer at the Department of Foreign Employment (DoFE) was also found taking a bribe. These incidents demonstrate how bribery has flourished within the government bureaucracy and plagued overseas labor migration.