Time to invest in Nepal

The new government is focusing at improving the logistics infrastructure in the landlocked nation. With favourable regulatory and business environment the time is right for FDI in Nepal

Q How has been the year 2017 for Federation of Nepalese Chambers of Commerce and Industry (FNCCI) in terms of EXIM trade?

 Due to political instability the economy has been suffering for the past several years. The local development elections were pending from last 20 years. The year 2017 saw bringing into power a new stable government in the Federal Republic of Nepal.

 If we see the exim indicator of the year 2016, the import of Nepal was $9 billion while export was just $700 million. The exim ratio was 1:13 per cent approximately in 2016, while in 2017 the exim ratio increased up to 1:15 per cent. The imports grew tremendously last year, while exports declined. In 2016 approximately 60,000 containers carried Nepal bound cargo whereas in 2017 it went up to 75,000 containers.

 Q What measures is FNCCI taking to promote exports from Nepal?

 Every year decline in exports is a serious problem for us. FNCCI is working a lot to promote exports. First we had done basic works to change old labour policy, old industrial policy and promote private sector to invest in hydro electricity. Now the industrial and business environment is very good here therefore FNCCI organises a lot of seminar for FDI in Nepal. Side by side FNCCI promotes to exhibit domestic products in various global exhibitions.

 Q Movement of goods between farm and market is slow and expensive in Nepal. How can this issue be resolved?

I agree that movement of goods between farm and market is slow and expensive in Nepal, because Nepal is landlocked country. The road infrastructure is very poor in Nepal due to high mountains. A lot of new roads are being constructed and old roads repairing and widening work is in progress. The new government will work towards upgrading the infrastructure. If the road network connecting villages improves, the farm and market will come close.

 Q Rural road connectivity still remains a challenge in Nepal. What initiatives are being taken to improve road connectivity?

Nepal is an under develop country that has suffered for the past 20 years with political instability. With the formation of The Federal Republic of Nepal, the local and state government will take the initiative to improve road connectivity between village and city.

 Q Road being the predominant mode of logistics, what challenges do the logistics service providers face?

The new government is aggressively working to ensure that within the current year the road connectivity is improved throughout the country. The logistics sector is not very developed in Nepal but the future is bright. There are a lot of challenges in logistics business due to involvement of small investors without sufficient infrastructure. The time is right for corporates to enter this field. I want to develop the logistics business in Nepal, so I have recently started a logistics company named “Yash Terminal & Logistics Company (Nepal) Pvt. Ltd., which will provide all logistics services like ocean cargo movement, forwarding, terminal management handling, warehousing, multimodal services etc.

 Q What is the status of rail connectivity in Nepal for freight movement?

 The Indian railways provide connectivity only up to Birgunj. Rail connectivity to other parts of the country is in construction phase.

Q The Road Board Nepal plans to levy toll tax on all highways, while existing toll tax on certain highways will be increased. How do you see this impact the logistics cost?

 The levy of toll tax system is not bad if the road is smooth and wide. It will save many more costs. Toll tax system is prevalent everywhere in the world.

Q There are speculations about connecting Nepal to China through rail. How do you see Nepal’s trade benefit with rail connectivity to China?

 The Chinese rail connectivity is up to shigatse (Tibet) which is 386 km far from Nepal border kerung.

It’s very expensive to develop railway up to nepal border but china is going to connect in the near future. Of course Nepal trade will benefit with this connectivity. The cargo transit time will be reduced and so will be the dependency on Kolkata Port, thereby saving billions in revenue that is lost in detention charges to Kolkata Port every year. This railway network is also expected to boost Nepal’s exports.