"We have almost completed the process to form a task force. It will soon hold consultations with stakeholders to finalize the guidelines to govern the distribution process," said Chandra Kumar Ghimire, joint-secretary at MoCS. [break]
The task force will include representatives from Nepal Rastra Bank, Ministry of Finance, Department of Customs, and the Inland Revenue Department, among others. The guidelines will identify the agency to certify value addition for different products, volume of exports and criteria for distribution of the incentives.
"It will lay down all the procedures to be followed for distributing the incentive, plugging the possibility of leakage," Ghimire told Republica.
The government has allocated Rs 240 million in total for distributing cash incentive to exporters. As the cash incentives will be in a range of 2 to 4 percent based on the degree of value addition, officials said clear guidelines are necessary for implementation.
Exporters, who were upbeat about the government´s announcement, said meanwhile that they are skeptical about effective implementation of the incentives scheme. They expressed wariness over the possibility of the process becoming complicated and time-consuming.
"The government must make sure that the budget is not misused, but at the same time it must also make the process for receiving the incentive convenient and simple," said Bikash Ratna Dhakhwa, president of the Federation of Handicraft Associations Nepal (FHAN).
He added that the cash incentive will prove meaningless if the disbursement process gets complicated. Dhakhwa also stated that most handicraft products generate the highest value addition and should get 4 percent cash incentive. Nepal exported handicraft goods worth Rs 3 billion last fiscal year.
Uday Raj Pandey, president of Garment Association Nepal (GAN), was of the view that the government should have pledged cash incentives at a flat rate to all exports. According to him, that would have freed exporters from the hassle of getting their products value-addition certified and plugged chances of manipulation and leakage.
He also demanded that the government make payments through banks and without any hassles. According to GAN, readymade garments should get 2 percent incentive under the scheme. Nepal exported a total of Rs 4.5 billion worth of garments to India and overseas countries combined in 2009/10.
The government has reintroduced a direct cash subsidy for exporters after many years, with the aim of exporting to fight the balance of payments (BoP) deficit.
Under the scheme, it has promised 4 percent cash incentive on total export income for commodities generating value addition of above 80 percent. Likewise, those generating value addition in a range of 50 to 80 percent are promised 3 percent cash incentive, while exports with less than 50 percent value addition have been pledged 2 percent cash incentive.
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