Boosting exports

Boosting exports and curbing imports is the best way to lower the alarming deficit in the country’s Balance of Payment (BoP). This is a general classroom theory in economics but very difficult to translate in practice. Yes, the government has many means to check imports – it can raise custom duties, choke credit flow to sectors that are overheated and bring policies to substitute imports through domestic production, at least in the agriculture sector – but the million dollar question is: How can it boost exports at a time when basic requirements for industrialization such as infrastructure, power and security is at its weakest?



Even Nepal’s traditional exportable products like woolen carpets and readymade garments, to name a few, are battling hard to survive. Not that there were no attempts from the government to revive the export sector. Export duties were lowered and arrangements were made for low-interest financing but the outcome has continued to remain pessimistic simply because most of the efforts were launched haphazardly without identifying the main reason behind decline in exports. The continuously declining contribution of the manufacturing sector to the country’s total output itself is a testimony of our failed industrial policy. Against this background, the recommendations put forward by Trade Integration Strategy study, which was made public last week, is welcome in the sense that it has at least identified commodities and services with export potential. It is a good start but there are lots of other issues that need to be solved before we can expect to see a robust boost in our export figures.



The foremost is the fragile law and order condition, which has been the biggest obstacle in ensuring smooth functioning of liberal and market-oriented economic policy that Nepal has embraced since the nineties. But how can the private sector be expected to make additional investments when they themselves feel insecure? In such a scenario, why wouldn’t the private sector think of reallocating their businesses to secure places elsewhere? The business-doing environment in Nepal is so pathetic that many investors are now constantly on the lookout to make exits.



Having said that, we are not at all undermining the efforts made by the study in identifying 19 potential exportable items and services, but we still believe that the government should first of all pay priority to ensure a conducive climate for running businesses. It must focus on fighting criminals to boost the morale and confidence of the private sector so that they can make a fresh start, which would ultimately reflect in a surge in our exports.

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