1

Nepal’s Export Potential

International Trade Center(ITC), Geneva

Researcher: Andreas Lendle

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Nepal’s

Examined 18 products and services

Great Export Potential:

• Large cardamom

• Lentil

• Tea

• Instant Noodles

• Medicinal herbs and oil

3

Nepal’s

Tourism and Labor: Services found to

show much promise

Labor: Largest export worth US $ 2.4 billion

and will remain in future too.

Tourism: US $ 352 million in 2008.

Lentil: US $ 22 million followed by

pashmina products and large cardamom

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Nepal’s

Potential was determined on the basis of:• Existing level of export• Size of the world market and conditions of • market access (tariff structure)• Domestic supply condition.Medium-level export potential (Other sectors)Ginger, honey, silver jewellery, pashmina products, wool products, information technology and business process outsourcing(BPO) services and engineering services

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Nepal’s

Low Potential

Handmade paper, health services and

educational services

Examined 18 sectors: 12 goods and 06

service sector

Comparative Advantage

9 products in terms of tariffs being imposed on

Nepal against its top five competitors

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Nepal’s

Advantages in (Tariffs)

Ginger, honey, tea, Instant Noodle,

Medicinal herbs, silver Jewellery,

Transformer, Pashmina and Wool products

in terms of tariffs.

Disadvantage Against Other Competitors

Handmade paper, Lentil

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Nepal’s

SuggestionsReduce high dependency on India for export of:• Cardamom, ginger, Lentil and Tea.• Brand these products including NoodlesOffshore Business • Significant potential but hardly utilized• Some sectors needed government support despite

their low potentials as they can have a significant impact on poverty reduction

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Nepal’s

Socio-Economic Impact

1. Instant Noodle

2. Handmade Paper

3. Medicinal Herbs and wool products and

4. Services like tourism and labor

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Business Environment: Nepal

Environment Scaring Away Investors• Security• Law and Order• Load Shedding• Credit Difficulties and continuous poor

performance environment in the World Bank Ranking

• No Loan, high interest rate(14-15%) not feasible

• Labor problem

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BE: Nepal

World Bank(2010). Logistic PerformanceIndex(LPI)

• Nepal: One of the top poorest performers in the world in terms of:

• Logistical support while exporting and importing goods

• Worse than other South Asian Countries• Stands at 147th position out of 155 countries rated• Somalia: Worst Performer• Germany: Best Performer

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BE: Nepal

Reasons• Freight cost due to landlocked nature• No easy access to sea port like Switzerland• No railway• No fast track road• Existing road infrastructure is also poor and

frequently obstructed• Syndicate system and increase in transportation

cost

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BE: Nepal

World Bank: Doing Business 2010Nepal’s Position 123 from 121 in 2009Deteriorating Areas:• Starting business• Dealing with construction permits• Paying taxes• Level of Labor Rigidity• Getting Credit• Trading Across boarder• Protection of investors

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BE: Nepal

• Nepal’s position is the worst in South Asia

regarding labor rigidity, one step ahead of

Afghanistan in trading across boarder

• Remained same in the areas of enforcing contracts and closing business

• Did better in Ease of registering property in which Nepal performed the best in South Asia

14

BE: NEPAL

CONCLUSION

‘One after another report about the worsening situation in Nepal to do business scares away the potential investors from within the country and outside.’