Trade and Export Promotion Centre, Nepal
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This document provides a summary of a project report on a visit to the Trade and Export Promotion Centre in Nepal. The report includes an introduction to Nepal's economy and the objectives of the Trade and Export Promotion Centre. Some of the key findings from the visit were that India is Nepal's largest trading partner, accounting for over 60% of both imports and exports. There is a large trade deficit, with imports being around 9 times the value of exports. The report also outlines some of the existing challenges to Nepal's trade, including poor product quality, lack of access to markets, and outdated technology.
Trade and Export Promotion Centre, Nepal
- 1. A PROJECT WORK Based on the organizational visit To “Trade and Export Promotion Centre” By: Rohan Byanjankar Submitted to: Binod Ghimire Department of Management Sainik Awasiya Mahavidyalaya
- 2. II ACKNOWLEDGEMENT We would like to express our gratitude to Sainik Awashiya Mahavidyalaya, Sallaghari, Bhaktapur, for providing the golden opportunity to prepare a project work on “A Project Work Based on the Trade and Export of Nepal prepared by visiting Trade and Export Promotion Centre.” Our horizon of knowledge has expanded and has made us aware about the contemporary situation of trade and export of Nepal, and its contribution in Nepalese economy. Moreover, we experience and enjoyed the difficulty in conducting research, however, we got opportunity to hone our language, knowledge, and talent. We are extremely thankful to Mr. Netra Suwar, the faculty members of International Business, for his immeasurable contribution in choosing the appropriate TEPC. Moreover, we express our sincere thanks to Mr. Binod Ghimire for his immeasurable guidance, inspiration, and resource materials, without which we would not have been able to prepare this project work being in bound of complete formality. In addition, we would express our sincere gratitude to Mr. Shambhu Koirala, Director General, Department of Commerce and Supply Management, and Mr. Suyash Khanal for their valuable time and information. Last but not the least; we would like to express our sincere thanks to employees at Sainik Awasiya Mahavidyalaya for their direct or indirect contribution in shaping up this study. We would be obliged to any suggestions and comments from the readers that will assist in further improvement of this project work. 10 February 2016 Fifth Semester
- 3. III ABSTRACT The project report is based on the organizational visit to Trade and Export Promotion Centre (TEPC). The project report is a research work. The project report encompasses introduction to Nepal, which includes the general description of Nepal, its political situation, and economic condition. The report is basically focused on Trade and Export of Nepal, so introduction of TEPC along with its some of the major objectives has been included in the project report. Moreover, the report clearly traces out core objectives of preparing this research report. Some of the major finding of this organizational visit has been enlisted such as import and export of Nepal, Nepal’s Balance of Trade, role played by TEPC in the upliftment of business and trade across the national borders and so on. The report also sets light on the existing challenges in the development of trade and promotion of export.
- 4. IV TABLE OF CONTENTS ACKNOWLEDGEMENT................................................................................................. II ABSTRACT .....................................................................................................................III 1. Background of Study...................................................................................................1 2. Methodology of Study.................................................................................................1 3. Introduction .................................................................................................................1 3.1. Introduction to Nepal...........................................................................................1 3.2. Introduction of Trade and Export Promotion Centre ...........................................2 3.3. Objectives of Trade and Export Promotion Centre..............................................2 4. Objectives of study......................................................................................................3 5. Findings .......................................................................................................................4 6. Existing challenges......................................................................................................6 7. Recommendation.........................................................................................................8 8. Conclusion...................................................................................................................9 BIBLIOGRAPHY..............................................................................................................A
- 5. 1 1. BACKGROUND OF STUDY Trade and Export Promotion Centre (TEPC) is the organization established under Ministry of Commerce and Supplies with an aim to promote foreign trade in general and export trade in particular country. The “Trade and Export Promotion Centre (TEPC)” was established on 20th Bhadra, 2063. The organization is situated at Na Tole, Pulchowk, Lalitpur. The merging of Trade Promotion Centre, Export Promotion Board and Carpet & Wool Development Board has formed TEPC. The organization has been engaged in the expanding the domestic and foreign trade, assisting domestic business organizations to participating in business fairs, and other trade promotion activities such as branding and trademarking, and so on. The visit to TEPC was our organizational visit to get hold of information regarding contemporary trade statistics, import and export pattern, and interdependency between trade, agriculture, industry and Gross Domestic Product. 2. METHODOLOGY OF STUDY The report is based on the organizational visit to Trade and Export Promotion Centre. The stringent effort has been applied to collect data from from various sources so that the report will encompass a wide range of information, facts, and figures. The data have been collected from both primary and secondary sources, however, the report is basically based on information obtained from primary source. The hour long seminar conducted in the organization provided about sixty percent of information. The questionnaire session was very fruitful in retrieving the information. Information from the primary source was not adequate to prepare entire report, so information from secondary sources also played a crucial role in accomplishing the report. The reference from the e-brochure of TEPC was also helpful in preparing the report. Moreover, the website of TEPC (http://www.tepc.gov.np) was one of the most reliable secondary sources. 3. INTRODUCTION 3.1. Introduction to Nepal Nepal is one of the smallest nations of the world that lies in the South Asia, and is one of the nations that is economically struggling to combat with slow economic growth rate, meagre Gross Domestic Product (GDP), and low Per Capita Income.
- 6. 2 In global marketplace, Nepal is renowned for garment, and hand-made woolen products. Nepalese garment products are highly demanded in most of the western nations such as the US, the UK, Germany, and other European nations. However, the Nepalese garment scandal related to the employment of children in the garment industries besmirched the fame of Nepalese garment products resulting international sanctions and the rapid erosion of market share of Nepalese Garment products from the world market. In recent days, Nepal is facing a huge gap between import and export ensuing a huge trade deficit. The import of about 9 times more than export according to 2014. The massive earthquake of 2015 followed by unofficial embargo by India has plunged economic growth rate to nearly 1%. Nevertheless, Nepal is persistently trying to catch up with the neighboring nations. 3.2. Introduction of Trade and Export Promotion Centre The economy is the driving factor of the contemporary world. Trade has been one of the inalienable aspect of every nation, and every nation rely on other nation for either resources or finished products or both. China has superseded rest of the nations of the world in the export of goods, and has got over Japan in the nominal GDP, and even the US in the GDP Purchasing Power Priority (PPP). Nepal has also deemed to make effective utilization of business resources and stimulate trade and export. The “Trade and Export Promotion Centre (TEPC)” established in 20th Bhadra, 2063 under Ministry of Commerce and Supplies has an aim to promote foreign trade in general and export trade in particular of the country. It has been established as a focal point by merging three organizations namely Trade Promotion Centre, Export Promotion Board and Carpet & Wool Development Board. TEPC has been persistently engaged in the expanding the domestic and foreign trade, assisting domestic business organizations to participating in business fairs, providing protection to the product image through branding, and trademark, analysis of global market and market opportunities, and assisting in conducting Business to Business (B2B) meetings in national and international level. 3.3. Objectives of Trade and Export Promotion Centre TEPC has been established with a primary objective of promoting foreign trade in general and export in particular of the country. There are a number of the objectives of TEPC, however, some of the major objectives are as follows:
- 7. 3 i. To advise the Government of Nepal in formulating policies for the development and expansion of trade and export. ii. To contribute to strengthening the national economy by developing and expanding trade and export of the country. iii. To support in achieving the goal of poverty alleviation through the development of rural economy by enhancing internal and external market for agro-based and other products. iv. To assist in diversifying trade by identifying potential market for exportable products. v. To implement appropriate programs so as to attract investment at the national and international level for export-oriented and import management project. vi. To act as information pool by collecting, disseminating and publishing useful trade-related information. vii. To study and identify the problems of foreign trade and advice the Government of Nepal with appropriate measures to solve such problems. viii. To organize buyers/seller meet and conduct training seminar and workshops. ix. To promote and protect the Nepalese product especially the garment products through trademark and branding. x. To stimulate and assist the domestic business organizations to participate in trade fairs. xi. To seamlessly coordinate and cooperate with international economic institutions such as World Trade Organization, International Trade Centre, Food and Agricultural Organization and so on. 4. OBJECTIVES OF STUDY The visit to Trade and Export Promotion Centre on ______________, -------------- ------, was our organizational visit to get hold of following information: i. The current situation of trade and export of Nepal. ii. The roles played by the TEPC in enhancing the domestic and foreign trade. iii. The impact of massive earthquake, and unofficial sanction by India on the trade and Export of Nepal.
- 8. 4 iv. The trade policies planned to be formulated in consideration to huge economic and financial losses in massive earthquake, and the unofficial embargo. v. The dumping of agricultural products by India, its impact on agro-based Nepalese economy, and the anti-dumping measures adopted by Nepal. The measures adopted by TEPC to increase the competitiveness of the product. vi. The major import and export partners of Nepal along with the major importing and exporting goods from and to those nations respectively. 5. FINDINGS The organizational visit to Trade and Export Promotion Centre was really opulent and fruitful. Being a student of business, our keen interest was on knowing about Nepalese trade, international market and Nepalese product, import and export related information, business ties with different nations, and multiple privileges granted by WTO for the upliftment of international business to the under developed nations. Some of the major findings of our visit to TEPC are as follows: i. Nepalese products are exported in 138 countries and 175 countries and economic zones, and is predominantly exported in India that is about 64.5 percentage of total export. The major exports of Nepal comprises of Garment products. ii. The major import partner of Nepal are India and China. India has dominance in Nepalese import with 63.7 percentage of total import followed by China with 11.9 percentage. The major imports of Nepal includes Petroleum Products, Iron- Steel, and machinery. India 64% China 3% Others 33% Export (2014) India 64% China 12% Others 24% Import
- 9. 5 iii. There is yawning gap between import and export. The total imports of Nepal is nine times the total exports in the year 2014/15. iv. Nepal has been suffering a series of negative Balance of Trade (BoT) since last decade. The major trade partners includes India, China, Japan, Germany, and the United States. Among these nations, Nepal has positive balance of trade with United States while negative balance of trade with other nations. v. TEPC plays a vital role in organizing the Nepal’s participation in International Trade fairs and also makes arrangement for those companies who wish to participate the fairs of their own interest. vi. Nepal Trade Preference Act for duty Free Quota free entry of Nepalese Garment to US. United States has provided duty free access to the Nepalese Garment products in order to provide relief to the crumbling Nepalese economy, which is the aftermath of devastating Earthquake. 01:06.2 01:06.7 01:07.8 01:07.9 01:09.2 01:05.7 01:06.1 01:06.5 01:07.0 01:07.4 01:07.8 01:08.3 01:08.7 01:09.1 01:09.6 Import: Export 2010/11 2011/12 2012/13 2013/14 2014/15 -6000 -4000 -2000 0 China India Trade Deficit and Surplus with China and India 2011 2012 2013 -60 -40 -20 0 20 Japan Germany USA Trade Surplus and Deficit with Japan, Germany, and USA 2011 2012 2013
- 10. 6 vii. There has been a trade treaty between Nepal and India for the imposition of zero percent tariff to Nepalese product exported to India. viii. Nepal has received the Generalized System of Preference (GSP). Nations such as Japan, Canada, US, Korea, and Turkey are giving duty free access to Nepalese products. China has been providing duty free access to more than eight thousand Nepalese products. ix. Nepalese woolen and garment products are superior to products of other nations, so to preserve the brand image and loyalty among the customers trade-marking has been introduced to basically Pusmina products in more than 46 nations. The trademark has been introduced to carpets, and leather products too. x. The unofficial sanction has badly impinged the Nepal-India trade. The export and import has been reduced to two-third of previous year import and export. The export of petroleum products has been tumbled by two- third. xi. Enhanced Integrated Framework by World Trade Organization has supported in enhancement of Nepalese economy. It has supported in cardamom production, and has granted $20 million for Pusmina Industry. 6. EXISTING CHALLENGES Nepalese economy is agrarian economy. The agro-based Nepalese economy has turned Remittance based economy. The dearth of skilled manpower has made the situation of Nepalese economy dearer. Nepal’s foreign trade has also shrunk due to lack of technology, mass desertion of manpower (brain-draining), and ineffectiveness of plans and policies. Some of the major existing challenges are as follows: 1. Poor Quality Product One of the major problems in Nepalese product is the poor quality. Nepalese products are poor in quality due to lack of training, seminars, and workshops. Many of the Nepalese products are not up to the quality standards, thus lacks competitiveness. 2. Less production of goods
- 11. 7 Nepalese industries are still using traditional technologies. The agriculture is not commercial rather than its substantial farming. The agriculture is based on monsoon, thus adequate rainfall in time results to good harvesting, but meagre rainfall results to starvation. Nepalese industries produce goods in limited quantity which is even insufficient to catch up with domestic demand. Nepal, being an agricultural country, imports sugar from Brazil, chickpeas (Chana) from Australia, and rice and dal from India. For instance: Japan demanded for 8000 tons of coffee from Nepal, but due to dearth of sufficient production Nepal failed to fulfil the demand. Nepal produces less than 1000 tons of coffee per year. 3. Price Nepalese products are expensive in comparison to the products of China and India. The cost of production of high as the raw materials are imported from abroad, significant idle time to the workers due to continuous strikes, and opaque management. 4. Lack of Easy Access to Market One of the significant hurdles in Nepalese trade is lack of Easy Access to Market. Nepal is land locked nation, thus lacks easy access to sea route. The disputes in the southern belt or in Terai region significantly halts the import and export. One of the blazing contemporary issues, the Terai Dispute, has plunged the trading activities. The unofficial sanction by India has further deteriorated Nepalese trade and export. 5. Technological impoverishment Nepalese farming techniques are still based on traditional technologies. The Nepalese industries are not so up to date with the ever changing technology. The manual work is still prevalent in the nation. The introduction to new technology and import of sophisticated machinery must be simultaneously backed by training, seminars, and workshops. 6. Lack of time based delivery Japan is the world’s most time conscious nation. It is the world most accurate nation with accurate bank clock, and timely arrival of workers. But Nepal has weak focus towards the passage of time. Most of the foreigners are unsatisfied with Nepal’s misty view on time. Most of the delivery by Nepal are beyond the
- 12. 8 delivery date due to political factors, economic factors, geographical factors, and so on. 7. Dearth of business confidence Business confidence is dwindling among the business people. Commercially Important People such as Binod Chaudhary, Rajendra Khetang and other top business persons are reluctant to conduct business in Nepal due to high operating risk, and agitation. More than 2500 factories has shut down their operation due to incessant strikes, and unofficial sanction resulting to unavailability of raw materials. Thus, investors are in averse of investing in Nepal due to political instability, agitation, chaos and has lost the business confidence. 7. RECOMMENDATION Nepal is the land of opportunities. There is abundant availability of natural resources in Nepal. The economic fragility of the Nepal is the consequence of underutilization of the natural resources bestowed by nature. Thus, we all Nepalese must focus on utilizing our available resources in the most beneficial way without deteriorating the Mother Nature. Moreover, trade and export is the backbone of every nation in the contemporary business world. Thus, Nepal can also strengthen the trade and export by best utilizing its available resources. Nepal exports medical herbs amount to Rs. One Arab (Rs. 1 billion) in every year but the processing of herbs and exporting the processed material will yield multiple times more than the export of raw herb. The trade and export of Nepal is weakening due to the political instability, inability to formulate plans and policies, and lack of better mobilization of funds. Hence, to get a better pace at the development of trade and export, Nepal must be politically and ideologically un-fragmented. The trade policy must go along with fiscal policy and monetary policy. Brain drain is one of the most virulent disease that has spilling effect on social- cultural, economic, and demographic factors. Remittance Based Economy is the consequence of excessive brain draining. Nepalese economy is based on remittance, thus the nation is submerged in the dearth of skilled manpower. Paucity of manpower, technological impoverishment, sporadic training, seminars and workshops are the primary hurdles in the development of trade and export. Hence,
- 13. 9 acquisition of skilled manpower in the nation is the utmost requirement of present context. The mass production is the resultant of blend of skills of people, advance technology, and utilization of resources at the optimal level. Quality, quantity, price, and time are the inevitable factors in the business world. Thus, Nepal must have bird’s eye view on these four factors that has shrouded the contemporary business. 8. CONCLUSION Trade and Export Promotion Centre is the government organization that operates under Ministry of Commerce and Supplies. TEPC is playing the vital role in promoting trade and export related activities. TEPC is responsible for the formulation of trade policies, thus the organization has keen insight on formulating the trade policy in consideration to huge economic and financial losses in devastating earthquake. Moreover, Nepal has adopted anti-dumping measures and countervailing duty to protect the domestic and infant industries. TEPC has been vigilant towards the upliftment of trade and export of Nepal and been continuously conducting trainings, seminars, and workshops. TEPC basically focuses on major exporting goods of Nepal such as Pusmina, Leather, Woolen, and garment products, and provide special support to these industries. It also provides machinery support to these industries along with periodic training to the employees. TEPC works simultaneously with WTO, FAO, ITC and other international organizations. The major import partners of Nepal are India, china, and Germany, and major export partners of Nepal are India, China, Japan, US, and Germany.
- 14. A BIBLIOGRAPHY Agrawal, Govinda Ram (2014). International Business. Bhotahity: M.K. Publisher & Distributors Victoria Business School. How to Write a Business Report. Wellington: Victoria University. Trade and Export Promotion Centre. Retrieved from http://www.tepc.gov.np/pages/about-us TEPC Publication. Trade and Export Promotion Centre. Retrieved from http://www.tepc.gov.np/pages/tepc-publication