Nepal sends list of products for GSP facility to US

PRABHAKAR GHIMIRE KATHMANDU, Sept 29: The government has sent a list of Nepali products to the US, seeking Generalized System of Preferences (GSP) -- a duty free facility -- in the world´s largest economy. A team led by Ishwari Ghimire, executive director of Trade and Export Promotion Center (TEPC), had finalized the list. The Ministry of Commerce and Supplies (MoCS) on Sunday forwarded the list of goods to the US. Abha Shrestha, under secretary at the MoCS, told Republica that Nepal has sought continuation of GSP to all products that have been enjoying the facility so far and added seven new products in the list. Similarly, Nepal has also requested the US officials to include 70 new products such as ready-made garments (RMGs), which fall under US legal system for GSP for only African and Caribbean countries only, for the facility. The US had requested different countries, including Nepal, to revisit the list of products for existing GSP and sought the list of products for the facility. The US had given the countries until October 4 to send the list of products for GSP. Few years ago, Nepal had requested to the US government to provide GSP facility for 11 Readymade Garments (RMGs) and pashmina products. Nepal´s RMG exports have been falling ever since the US government ended the Duty Free-Quota-Free facility in 2005. Nepali hand-knitted carpet is getting limited access to the US market, thanks to comparatively liberal customs duty compared to the duty imposed on RMG and pashmina products. “We finalized the list of products for GSP after holding extensive discussions with the private sector,” said Shrestha. Rajendra Singh, an official at TEPC, told Republica that certain varieties of carpets, cigar, handicrafts, textiles and woolen products have been enjoying the GSP facility from US. Singh told Republica that some garment varieties, pashmina, footwear, carpets and handicraft goods, which have good export prospects in the US, are among the seven new products included in the list. “We have also demanded GSP facility for 70 products which lost GSP facility after the phase out of duty-free quota-free facility in 2005. Such products mainly include shorts, paints, blouse and skirts,” added Singh. According to Uday Raj Pandey, the US has been imposing an average of 17 percent customs duty on Nepali RMGs and pashmina products. This has weakened the competitiveness of Nepali products in the US market compared to the products from other countries that are enjoying the GSP facility. The legal authorization of GSP program expired on July 31, 2013. However, the US Congress is considering a legislation that would extend the authorization of GSP. The GSP is a program designed to promote economic growth in the 127 countries of developing world by providing preferential duty-free entry for up to 5,000 products. US imported products worth US$ 19.9 billion under the GSP program in 2012. According to a study commissioned by US Chamber of Commerce in 2005, over 80,000 American jobs are associated with moving GSP imports from the docks to farmers and manufacturers. Products eligible for duty-free treatment under GSP includes manufactured items like different types of chemicals, minerals and building stone; jewelry; carpets; and some agricultural and fishery products. Similarly, some textiles and apparel products, watches, footwear, handbags and luggage products are among the goods that are not eligible for duty-free treatment under GSP.
Published on 2013-09-30 02:37:49

Unfolding abnormalities plaguing overseas job prospects

PRABHAKAR GHIMIRE KATHMANDU, Sept 26: Irresponsible activity of Nepali envoys, swindling of jobseekers by manpower agencies, involvement of government employees themselves in fake documentation, flouting of contracts by employers and unionizing by workers in overseas destinations have been the features of Nepal’s foreign employment sector. But, the slim chances of getting jobs within the country continued to drive down the productivity of young Nepalis, pushing them to seek overseas labor markets despite such abnormalities. The departure of more than 1,500 working-age young Nepalis to different overseas job markets every day demonstrates severe scarcity of employment opportunities in the country. The inflow of remittance has been keeping Nepal’s economy afloat ever since the start of the Maoist-related conflict even though economic activity was slowing then. But in recent days, Nepal’s foreign employment sector has been marred by different abnormalities threatening its long-term prospects. The problem doesn’t only emanate from foreign employment agents but also from the very government bodies that are supposed to make this sector systematic. Even the diplomatic image of Nepal has suffered in some major labor importing countries such as Qatar and Saudi Arabia with Nepali ambassadors deputed there having demonstrated ‘undiplomatic activities’ and forgetting dignity of their post. In the most recent case of shame for Nepal, the Nepali envoy to Qatar -- Maya Kumari Sharma -- has become so unpopular in the host country that the Qatari ambassador to Nepal had to ask the Nepali government to recall her citing her ‘undiplomatic attitude’ and the seriousness of controversies involving her. A couple of years back, the government had to recall Hamid Ansari, the then ambassador to Saudi Arabia, one of the four largest recipient countries of Nepali workers, as he was found misappropriating the compensation provided to Nepali victims of abuses there. A series of deportation of Nepali workers for various cases and involvement of some Nepali embassy staff in manipulating documents and exploiting Nepali workers have also been frequently surfacing. Recently, it was uncovered that the staff at the Nepali embassy in Malaysia had been fleecing Nepali migrants, making them hand over hefty sums to provide them travel documents. Nepali workers abroad have also been involved in organizing industrial strikes that challenge the law of land in their respective destination countries. “It is the failure of the government policy to adopt the control mechanism in foreign employment rather than promoting public private partnership (PPP) in the recruiting process. We can’t single out any one sector for such chaos,” Kumud Khanal, vice president of Nepal Association of Foreign Employment Agencies (NAFEA), told Republica. Khanal said the blame game played by the private sector and the government agencies of passing on the responsibility for the anomalies in the foreign employment sector to each other has worsened the situation. In the past, only the manpower agencies had been found to be highly responsible for a host of problems that emerged in labor migration. Fake documentation, false promises of jobs and collection of excessive charge from job-seekers are still practiced by recruiting agencies. But in recent days, government agencies supposed to regulate and systematize foreign migration have been found to be more responsible for inviting the worsening situation in this sector. Some of the Nepali missions abroad were opened entirely to facilitate and help migrants in foreign lands. But, reported involvement of some embassy officials in undiplomatic activities, swindling of workers and rude behavior while providing service to migrants, have tarnished our image in labor receiving countries. Cases seen in Saudi Arabia and Qatar are sufficient enough to highlight the plight of diplomacy in the key labor market for Nepali youths. Other cases of irresponsible behavior of Nepali diplomatic staff toward migrants frequently surface with the growing complaints against them. But the government has done nothing to improve the diplomatic capacity and efficiency of mission staffs so that problems of migrants could be resolved in a diplomatic way and ensure safer migration in coming days. “But, we can’t expect an instant solution in diplomacy so long as succesive governments pick politically-affiliated people in the labor destinations. We have to send diplomatically capable staff to create an environment for workers for their better welfare,” Khanal added. The problems are not cropping up abroad only, the root cause of crisis lies at the Department of Foreign Employment (DoFE) and the immigration office at the Tribhuwan International Airport where illegal activities such as manipulation of documents and kick-backs remain a means of sending workers through unauthorized channels to international market. “The use of fake documents in collusion with DoFE and immigration staff by unscrupulous manpower agencies to take benefit of loopholes in the existing legal provisions has been plaguing the foreign employment sector and multiplying the problems of migrant laborers. Even workers are not immune to blame. We have seen a host of examples of Nepali workers being involved in illegal activities such as strikes in industrial enterprises, running away from designated employers to join another office lured by better pay or to flee exploitation of former employers. “They sometimes overlook their rights, duty and responsibility resorting to illegal activities such as strikes to press forward their causes. Such a trend has weakened the bargaining strength of Nepali workers in coming days,” Khanal added. Though Malaysia has announced it will take in around 200,000 per year, it is cautiously watching the activities of Nepali workers in Malaysia and Qatar has restarted hiring Bangladeshis after a long gap. “We should not take foreign employment for granted. Negative responses from host countries will harm our foreign employment sector which has been contributing significantly to our state coffers,” Khanal added. Inflow of remittance has increased at a declining rate. According to Nepal Rastra Bank (NRB), the central bank, remittance inflow went up to Rs 434.58 billion increasing 20.9 percent during the fiscal year 2012/13, down from 41.8 percent recorded earlier. Data compiled by DoFE shows a number of workers leaving for foreign employment increased to 453,543, an increase by 17.9 percent during the 2012/13 compared to the number earlier. Out of the total workers leaving for overseas jobs during the review year, Malaysia hosted 34.6 percent, Qatar 20 percent, Saudi Arabia 19 percent and the United Arab Emirates (UAE) received 11.5 percent. Among the four largest destinations, Malaysia and Saudi Arabia reported rise in arrival of Nepali migrants by 59 percent and 7.2 percent respectively while Qatar and the UAE witnessed a decline by 14 percent and 4 percent, respectively. Ganesh Gurung, a foreign employment expert, attributed the deepening anomalies in foreign employment to weakness of the government to regulate this crucial sector. “As the government becomes weaker, the trend of challenging the law increases. This trend is vividly seen in the foreign employment sector where workers, agents and even Nepali mission staff work hand-in-gloveto defy the law,” said Gurung, who is also a former member of the National Planning Commission. The recent arrests of staff at DoFE and TIA immigration by the Commission for Investigation of Abuse of Authority on charge of irregularities in the process of sending workers in foreign job markets has highlighted the severity of problems. Responding to the action on DoFE staffs and immigration staffs, employee unions had taken to the streets demanding their release. “Protection of perpetrator-employees by employee unions is the key promoter of impunity,” said Gurung.
Published on 2013-09-27 11:04:50

A host of hurdles to journey to Developing Country status

----Analysis---- PRABHAKAR GHIMIRE KATHMANDU, Sept 12: "The 5.5 percent target for Gross Domestic Product (GDP) growth is ambitious, the 8 percent inflation target is conservative," the Asian Development Bank said in its ´Macro-economic Update 2013´ commenting on the targets set in current budget on the back of various factors that do look unfavorable to guiding the already country’s already slow economy back on track. Skyrocketing imports, prolonging power cuts, frequent labor unrest, slowing exports, declining shares of industries in economy and depreciation of the Nepali rupee against the US dollar have consequently jacked up the cost of production for domestic industries and fueled inflation in the domestic market. Though the timely announcement of a full-fledged budget and subsequent approval of the budget programs on time have rekindled hope for better progress in capital expenditures, the upcoming election slated for November 19 may affect development work. Over one and a half months, value of Nepali rupee lost its strength by over 15 percent to hit a new low of 109.3 against the greenback on September 3. The adverse impact of a weakening Indian rupee, to which the Nepali rupee is pegged, amid concern over a slowing Indian economy and increase in current account deficits amid better prospects of the US economy has been witnessed in Nepali economy. Increasing import prices have threatened to drive up inflation to 10.5 percent, well above the budgetary target of containing price hikes at 8 percent. The ADB´s report indicated weaker financial health of Nepal Oil Corporation due to a persisting gap between its import costs and selling prices, increased overall import bill leading to wider trade deficit, increased inflation as higher import prices get reflected in retail prices, increase in Nepal Electricity Authority´s payments to independent power producers whose prices are denominated in foreign currency and increase in debt service payments. "A significant decline in the value of the Nepali rupee against the US dollar is bound to jack up implementation costs of development projects making the allocated budget insufficient for achieving the targeted progress," Finance Secretary Shanta Raj Subedi said. Echoing the Subedi’s view, Chiranjibi Khanal, the Chief Economic Advisor to the Ministry of Finance, also said that a stronger dollar can drive up export receipts and remittance, higher cost of imports can increase inflation hitting domestic industries which are dependent on imports for raw materials. The host of challenges in implementing the budget in the first year of the Three Year Plan 2013/14- 2015/16 has also threatened to disrupt Nepal´s journey to Developing Country status from Least Developed Country (LDC). The government´s recently approved approach paper for the three year plan has envisaged Nepal graduating to Developing Country by 2022 with an annual growth of six percent. Any nation qualifying for the Developing Country status has to have a minimum per capita Gross National Income (GNI) of US $1,190, a Human Asset Index (HAI) score of 66 or more, an Economic Vulnerability Index (EVI) score of 32 or less. In another condition, GNI per capita worth US$ 2,380 or more should be achieved even if HAI and EVI scores are not met. "Although Nepal has already met the EVI criterion, it still has to either increase its per capita GNI by US$ 770 or HAI score by 6.17 before 2015 to be eligible for consideration for graduation," said the ADB´s report. Nepal also has an alternative route to graduate to Developing Country status. For that per capita GNI has to be increased by US$ 1,960 before 2022 even when the threshold set for HAI and EVI are met. "Overall, it will be challenging for Nepal to graduate from the LDC category by 2022. However, an encouraging certainty is that it will be making clear and substantial progress towards graduation," said the report. Even the post-graduation period will not be easy even if Nepal did it. Loss of privilege now being enjoyed as an LDC -- such as hefty development assistance and preferential treatment in international trade -- will be major challenge for Nepal. "Concessional lending as well as market entry preferences accorded to Nepali exports in several developed and emerging economies will most likely erode," said the report. At a time when the industrial sector´s growth has been slowing, attaining higher contribution in GDP is next to impossible. Similarly, improvement in agriculture through promotion of high-value products and enhancement of service activities, political stability and good governance to ensure better economic performance of the country, are required to ensure better growth. However, Nepal has been confronting the lack of quality human resources, weak market infrastructure of domestic goods, negligible investment for research and development, high minimum wage and low productivity, policy inconsistency of the government, supply side constraints to bring down trade deficit, power deficit and transport bottleneck. The report also suggests that Nepal needs to develop necessary the infrastructure for economic development and improve the social condition by taking up different measures for high growth. Mainly, amid slowing economic growth and ballooning trade deficit, Nepal has to boost exports strengthening supply side constraints and has to effective utilize the external assistance and available trade privileges. Similarly, the country has to enhance the industrial contribution in GDP for higher growth rate, raised income of people and creation high paying jobs. Due to delay in announcing the budget, growth of both recurrent and capital expenditures slowed during the previous fiscal year which limited the growth of total expenditure marginally 3 percent. "A higher quantum as well as quality of capital spending is essential to address the country´s severe infrastructure bottlenecks, to achieve other social development objectives, and to lay the foundation for high and inclusive growth," the report says. In what is an uncommon economic phenomenon, the country witnessed budget surplus equal to 0.4 percent of GDP last year due to lower performance in the expenditure front compared to revenue growth. However, such surplus is not preferable to the economy. "While budget surplus and low levels of borrowing are desirable from the macroeconomic stability standpoint, this may not be optimal for the country given the need for increased capital investment to support higher growth," the report adds. The manufacturing sector which has long been witnessing slowing growth is not expected to report higher growth. Growth of the manufacturing sector declined last fiscal year to 1.8 percent from 3.6 percent reported a year earlier. Contribution of the manufacturing sector to GDP also marginally declined to 6.7 percent last year from 6.8 percent the previous year. The agriculture sector, contributor of 34.4 percent of total GDP, also suffered decline in growth to 1.3 percent last year from 5 percent a year earlier. Overall the industrial sector, which contributes 15 percent of total GDP, has suffered a decline in growth over the last few years. Industrial growth was registered at 1.6 percent last year down from 3 percent a year earlier. "Manufacturing activities -- which are relatively high paying, employment-centric, high productivity and high value added -- are not expected to recover from the recent years of downward slide," the report said.
Published on 2013-09-13 02:35:41
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