Mainstreaming of Trade Mainstreaming of Trade into Sectoral Plans and into Sectoral Plans and

ProgramsProgramswith a focus on NTIS Implementation and

Next BudgetChandra Ghimire

Joint SecretaryMinistry of Commerce and Supplies

Presented to:An Interaction Program for Senior Planning Officials of Various Agencies

CoverageCoverage

• Why trade so imperative for us?

• What is trade mainstreaming?

• How to lead trade mainstreaming?

• Trade mainstreaming in Nepal?

• What is NTIS 2010?

• Which agencies are responsible for what?

• What expectation with various agencies?

Trade is ever growing Trade is ever growing phenomenaphenomena

Why trade so important Why trade so important for Nepal?for Nepal?

• Growth Pattern after shock (as per the WB's Global Economic Prospects 2010)

– HI Countries 1.8%– China 9%– India 7.5%– LDCs 5.7%

• In the global GDP– LDCs account <1%– Growth Rate of LDCs 7% per annum (in normal period)

• As per World Trade Report 2010, – World merchandised trade US$ 15238000 million– LDCs’ share accounts US$ 163960 million, i.e. <1%;

• Ample rooms for expanding exports: from LDCs grew by 20% whereas total world grew by 11% during 2000-2007;

• It seems the LDCs’ potential remains under-use;

Why trade so important Why trade so important for Nepal?for Nepal?

As World Trade Statistics 2010

• Exports US$950 million.• Imports US$5500 million.• Share in World merchandise export 0.01% whereas

import is 0.03% as shown in the statistics.• Annual growth in export 15.45% & in import

25% with comparing the data of 2009.• GDP growth rate is <5%; (GDP remain same)• The trade is growing faster than the GDP;

Why trade so important Why trade so important for Nepal?for Nepal?

• Nepal's own market so scant• Many empirical studies illustrate: "outward-oriented

economies have higher growth rate than inward-economies"

• Two robust economies in the neighbor• Big size of growth Nepal needs to meet its development

goals • To benefit out of multilateral, regional and bilateral trade

arrangements • Globalization intensified a 'relentless interdependency'

Why trade so important Why trade so important for Nepal?for Nepal?

• Being a LDCs special privileges, i.e. S&DTs; Zero-Tariff (EBA) alone China ‘0’ tariff in 361 products

• Nepal eyes 'export-led growth' & 'inclusive growth'• Essential infrastructures underway of rapid

development, ie banking, finances, insurance, freight-forward, dry-port, custom reforms etc.

• Nepal's strong access to ITs • Exposures with outer world knowledge, skills• Network of business institutions their capacity• In global market, growing demands for services i.e.

tourism, labor, ITs, education, health etc & Nepal very potential

What is trade What is trade mainstreaming?mainstreaming? Appropriate PRESCRIPTION for LDCs/Developing

world

A process for articulating trade-related priorities in the national development plans, programs and strategies, e.g. 3-Year Development Plan and sector specific policies like Industry, Agriculture, Education and Energy) to attain the development goals (MDGs, poverty reduction etc.).

Translating policy statements into operational/action plans.

Linking action plans to resources (domestic and external).

Implementation of strategies.

Monitoring and evaluation for better results.

How to lead trade How to lead trade mainstreaming process?mainstreaming process?

Mainstreaming at:– Political level (to ensure political commitments for

development of various sectors with trade orientation)

– Policy level (to better place trade priorities in development plan and sector development policies/strategies etc.).

– Implementation level (for coordinated efforts to develop sectors to become more competitive)

Mainstreaming by: Dialogue with stakeholders (Government agencies, private

sector and development partners) to reflect trade priorities in their dev agenda.

Institutional framework and appropriate processes for trade mainstreaming at various level (NBF, NSC, NIU, DF, TWGs etc).

Sensitization/awareness creation on trade and development issues.

Resource assurance from all fronts, i.e. Govt, DPs, private sectors etc

Trade Mainstreaming in Trade Mainstreaming in NepalNepal

3 Year Development Plan (Strategy 6 and priority 2).

Recently launched Nepal Trade Integration Strategy (NTIS 2010) provide underpinnings for trade mainstreaming. Identification of main constraints to effective

integration of the economy with the global market.

Action Matrix identifies priorities for action (four objectives to address four main challenges: ensuring proper market access; building domestic support institutions; strengthen the supply capacity of exporters, especially in selected sector and mobilizing Overseas Development Assistance (ODA).

Priorities validated through broad dialogue with stakeholders, including private sector and development partners.

Country ownership (endorsed by the Council of Ministers).

Trade Mainstreaming in Nepal 2Trade Mainstreaming in Nepal 2Institutional frameworkInstitutional framework National Implementation Arrangement at place, i.e.

National Steering Committee led by the Chief Secretary, Focal Point, 5 Technical Committees and National Implementation Unit (NIU)/Extended NIU.

EIF support (Tier 1 Project) for inter-governmental and public-private coordination on trade and AfT issues. Strengthening links with line ministries related with trade

(planning, finance, agriculture, industry, tourism, etc).

Strengthening relations with the private sector and DPs.

Financial framework

Budgetary support from MoF, project identification, formulation and implementation – Tier 2

“Let the respective agencies implement” Approach

Donor coordination

Donor coordination via NIU of MoCS and via DF

Mainstreaming of trade in DPs’ agenda

Others Addressing capacity gaps: Build and sustain capacity to mainstream

trade (Train NIU and Extended NIU team in trade mainstreaming issues).

Tier 1 funding is available to address human resources and institutional support needs.

Strengthening consultative processes:

Advocacy/dissemination of analytical findings and trade-related information.

Consultation with the stakeholders.

Trade Mainstreaming in Nepal 3Trade Mainstreaming in Nepal 3

Role of Line Ministries/AgenciesRole of Line Ministries/Agencies MoCS alone can’t drive it. Many factors, sectors and actors required.

– Products development • Agriculture – tea, cardamom, lentils, ginger, honey, food standards etc.• Forest – herbals, essential oils• Industry – pasmina, handmade paper, wool products and gems & silver

jewelry, technical standards, IPRs, iron & steels etc.• Services (Tourism, Health, Education, ICT, Hydropower and Labour etc.)

– Trade related Infrastructure and TF• Transport and transit facilities (Roads, railways, airports etc)• ICDs/Dry ports• Customs modernization (ICPs)

– Other cross-cutting issues• SEZ/EPZ, FDI, SME development package• Incentives to export oriented industries• Legal enactments, institutional building, HRs

Involve Line Ministries/Agencies/Bus associations & others

Status of Nepal's Foreign TradeStatus of Nepal's Foreign Trade

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Status of Nepal's Foreign Trade 2Status of Nepal's Foreign Trade 2

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Status of Nepal's Foreign Trade 3Status of Nepal's Foreign Trade 3

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Status of Nepal's Foreign Trade 4Status of Nepal's Foreign Trade 4

qm=;+=

lgof{t ePsf] j:t' d"No ?=cj{df

! Woolen Carpet 4=2

@ Lentils 3=7

# Readymade Garments 3=5

$ Pashmina and Woolen Shawl 1=2

% Handicrafts 0=5

Status of Nepal's Foreign Trade 5Status of Nepal's Foreign Trade 5

qm=;+=

Import ePsf] j:t' d"No -?=

cj{df_

! Petroleum products 51.3%

@ Gold 41.5%

# Vehicle & Parts 25.7%

$ MS Billet 13.8%

% Telecommunication Equipments 12.3%

Status of Nepal's Foreign Trade 7Status of Nepal's Foreign Trade 7

qm=;+=

lgof{t ePsf] j:t' d"No -?=cj{df_

! Iron and Steel Products 7=5

@ Yarns 4=5

# Textiles 4=1

$ Copper and Articles 1=6

% Large Cardamom 1=2

Trade Deficit of Nepal

-400

-300

-200

-100

0

100

200

300

400

500

Fiscal Year

NR

s. in

bill

ion

Exports Import Trade Balance

Nepal became WTO Member

Indicators FY 066/67 Change in % FY 067/68 Change in %

Total Trade Deficit 57.3% 180 Billion -1.4%

Export/Import Ratio 17.3% 16.3%

Total Export 35.57 Billion -10.4% 37.91 Billion

Export to India -5% +10.8%

Export to Others -18.5% -0.8%

Total Import 218 Billion 40.1% 218 Billion 0.1%

Total Import from India 35.5% 24.7%

Total Import from Others 46% 29.6%

Factors in growth & downfalls Export Increased due to "+" in:Yarn, Jute, Iron stripes, MS pipe, Plastics etc

Export Decreased due to "–" in:Handicrafts, Garments, Nepali papers, Herbals, Silver etc.

Deficit factors in Trade Import from India "+":Petroleum, MS Billet, Cold equipments, Chemical fertilizers, Other machinery parts

Import from Others "-": Gold, Garments, Other machinery & parts, Iron & Steel, Yarn, Supari

Trade of Goods in the First 7th Month of the Current FY (In NRs)

+ 6.6%

• A national trade strategy to largely respond to

'supply side constraint' of Nepal;

• Formulated during 2009-2010;

• Participated in its formulation almost all

business associations & stakeholders, i.e. FNCCI,

CNI, CoC, commodity associations, national & international

experts etc;

• GoN approved & launched it on 24.06.2010;

• 19 goods & services identified - services for the first time;

• Based on recent analysis with support of experts & global data base, i.e. ITC;

• Top 10 potential destination markets for each goods or service identified;

• Coverage of SWOT of each of the goods & services;

• Wider & deeper consultations with all stakeholders from formulation to finalization;

• China and India visited and consulted;

• On top of the 19, plus 5 other goods suggested;

• 3-5 years period for implementation;

• Positive parts of DTIS carried on & non-relevant things discarded;

 

Export Potential and Socio-Economic Impact of 19 Sectors 

# Sector

Nepali exports,

2008 (US$ 1,000)

Index 1: Export 

performance

Index 2: World market 

conditions

Index 3: Domestic supply 

conditions

Overall export potential

Socio-economic

impact

Agro-Food      

1 Large cardamom 21,329 high low high high medium2 Ginger 8,130 medium low medium medium medium3 Honey 500 low medium medium medium medium4 Lentils 22,258 medium high high high medium5 Tea 16,805 high low medium medium high6 Instant noodles 10,390 high medium high high low7 Medicinal herbs / oils 11,000 low medium high medium high Craft and Industrial Goods      

8 Handmade paper 4,000 low low high low high9 Silver jewelry 9,519 low high medium medium medium10 Iron & steel products 149,394  high high high high medium11 Pashmina products 22,074 medium medium high medium medium12 Wool products 16,450 medium high medium medium high  Services        

13 Tourism 352,000 high high high high high14 Labor services 2,448,000 high high medium high high15 IT & BPO services 10,000 medium medium medium medium medium16 Health services n/a low medium low low low17 Education services  10,000 medium low low low low18 Engineering services n/a low medium medium medium low19 Hydro-electricity 0 low   high  medium medium medium

19 Priority Export Potentials

Agro-Food

1 Cardamom

2 Ginger

3 Honey

4 Lentils

5 Tea

6 Noodles7 Medicinal & Essential Oils

 

Craft and Industrial Goods

8 Handmade Paper

9 Silver Jewelry

10 Iron and Steel

11 Pashmina

12 Wool Products

 

Services

13 Tourism

14 Labor Services

15 IT & BPO Services

16 Health Services

17 Education

18 Engineering

19 Hydro-electricity

Others Potential Exports

20Transit Trade Services

21 Sugar

22 Cement

23 Dairy Products

24 Transformers

10 Most Attractive Markets for 16 Goods and Services#1 #2 #3 #4 #5 #6 #7 #8 #9 #10

Agro-foodCardamom

Pakistan Saudi Arabia

UAE UK USA Malaysia Japan South Africa

Kuwait Oman

Ginger India Pakistan Bangladesh

USA Netherlands

UK Malaysia Germany Yemen Vietnam

Honey UK France Japan USA Germany Belgium Poland Australia Saudi Arabia

Slovakia

Lentils Turkey UAE Sri Lanka

Algeria Iran Egypt Saudi Arabia

Spain UK Pakistan

Tea Egypt UAE Russia USA UK Iran Pakistan Germany Kazakhstan

Australia

Instant Noodles

China Indonesia

Japan USA Vietnam South Korea

Philippines

Thailand Russia India

Medicinal herbs

USA France Germany Vietnam Singapore

Japan Italy Russia Belgium South Korea

Essential oils

Singapore

Switzerland

India France Germany USA UK Japan China Mexico

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10

Craft and Industrial Goods

Handmade Paper

Denmark Canada Netherlands

Saudi Arabia

Nigeria India Quatar Egypt Japan Malta

Silver Jewelry

Hong Kong

USA Germany UK France Denmark Australia Spain Netherlands

Canada

Iron/steel Germany Belgium Poland India UAE UK Thailand France Italy Sweden

Pashmina UK Germany Spain France Hong Kong

USA Italy Japan China Switzerland

WoolProducts

Germany France UK Italy Spain Japan Canada Belgium USA Hong Kong

Services

Labour USA Russia Switzerland

Saudi Arabia

Spain Germany

Italy Luxemburg

Netherlands

Malaysia

Labour China UK France Oman Japan Norway Kazakhstan

Kuwait South Korea

Belgium

Tourism Germany

Saudi Arabia

USA UK France Iran China Russia Italy Ukraine

Education

China India South Korea

Uzbekistan

Germany

Bolivia Vietnam

Nepal Lao PDR

Belarus

Engineering

UAE China India Brazil Quatar USA Nigeria UK Turkey Saudi Arabia

The Work in-progress

How many are the How many are the activities to undertake?activities to undertake?

• Activities under 4 strategic objectives:

– Product/service wise 171

– Cross cutting 87

– Total 258 activities

Involvement of Government & Involvement of Government & other Stakeholdersother Stakeholders

• A single ministry (MoCS) alone can not drive the agenda of trade promotion. Many factors, sectors and actors are directly or indirectly associated with the trade.– Products development

• Agriculture – tea, cardamom, lentils etc.• Industry – pasmina, handmade paper, wool products and silver jewelry etc.• Services (Tourism, Health, Education, ICT, Hydropower and Labour etc.)

– Trade related Infrastructure and TF• Transport and transit facilities (Roads, railways, airports etc)• ICDs/Dry ports• Customs modernization (ICPs)

– Other cross-cutting issues• SEZ/EPZ, FDI, SME development package• Incentives to export oriented industries

Involve line Ministries/agencies, private sector and other stakeholders in the process

Who are responsible for Who are responsible for Implementation?Implementation?

• MoCS• MoI• MoAC• MoF/DoC• MoLT• MoE• MoST• MoST

• MoH• MoFSC• MoCA• MoPP&PW• NPC• MoFA• PMO• NRB

What do we expect in next What do we expect in next budget from all?budget from all?

• From all Ministries/Dept: – Inclusion of their parts of

activities as annual programs

– Inclusion of NTIS in respective sectoral policy/strategy

• From MoF: – Allocation of budget for

NTIS with a separate heading

– Implementation of its own part of NTIS, e.g. DoC

What do we expect in next What do we expect in next budget from all?budget from all?

• From NPC: – Making sure the

inclusion of the activities in the budget

– M&E of NTIS related activities

– Putting trade in priority

– Incorporating TRADE in sectoral policy/strategy

Such A Coordination

What do we expect in next What do we expect in next budget from all?budget from all?

• From Bus Associations & others:– Inclusion of NTIS

suggested activities in forthcoming budget

– Ready for PPP with governmental agencies

• From DPs:– Greater investment on trade

& dev esp. for hard-wares

– Stronger coordination with NIU, MoCS

Such A Commitment

Who Says Nepal can’t set an example?