The new form of re-export business became possible after Ministry of Commerce and Supplies (MoCS) unveiled the guidelines for re-export trade this week. The guideline was developed in consultations with Ministry of Finance and Nepal Rastra Bank. [break]
“Any trader can now jump into re-export business from Nepal to the third country; meaning there is no licensing on the re-export trade,” said Commerce Secretary Purushottam Ojha.
And unlike in the past, they can now even export back commodities by purchasing them from the domestic market. So far, traders were not allowed to re-export goods imported in the country for domestic consumption. Those into re-exporting business were required to declare beforehand that their import was meant for re-export.
For imports meant for re-export, they were also required to pledge 100 percent customs guarantee and complete re-exports within six months. On production of document verifying receipt of payment, the government used to refund them 90 percent of the customs guarantee amount.
Under the new guidelines, the traders need not go through all those processes now. But they will not get the customs rebate.
“Those re-exporting goods by purchasing them from local importers or dealers will not get the facility of customs rebate,” said Ojha.
Likewise, re-exports of any foreign manufactured products will have to be done under Most-Favored Nation status, meaning they will not enjoy duty-free market access facility in the importing country.
The traders will also need to produce certificate of origin, specifying the country of its origin, and guarantee that they will receive payment in convertible currency through letter of credit or telegraphic transfer or advance payment.
The government has opened the new trade largely hoping that it would enable the country earn more foreign currency, something much-wished to address country´s swelling current account deficit.
As key commodities continued to fail in the international market, Nepal´s exports dropped by more than 21 percent, whereas imports grew at a strong rate of 40 percent, widening country´s trade deficit by 59 percent to Rs 158 billion in the first six months of current fiscal year.
While workers´ remittance grew at lower rate, current account deficit crossed over Rs 24 billion in the first half of the current fiscal year.
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