"Worsening logistic performance discourages investment", say experts
KATHMANDU, June 29: Nepal has slipped 19 places to 124th out of 160 countries in the Logistic Performance Index (LPI) of 2016 published by the World Bank.
According to a bi-annual global LPI ranking of 2016 published by the World Bank on Tuesday, Nepal’s score also fell to 2.38 out of total 5 in the LPI scorecard compared to a score of 2.59 in 2014, indicating that overall competence and quality of trade logistics has further worsened over the past two years.
Logistics refers to a series of services and activities, such as transportation, warehousing, and brokerage, that help to move goods and establish supply chains across and within borders.
The report entitled ‘Connecting to Compete 2016, Trade Logistics in the Global Economy’ published along with the LPI index states that the low logistics performance face high costs, not merely because of transportation costs but also because of unreliable supply chains, a major handicap in integrating and competing in global value chains.
According to the World Bank report, LPI is the weighted average of the country scores on six key components of trade logistics that include efficiency in customs, quality of infrastructure, ease of arranging international shipments, logistics competence and quality, ability of tracking and tracing consignments and timeliness of shipments in reaching destination.
Nepal fared best in the sub-indicator of timeliness with a score of 2.93, followed by tracking and tracing (2.47), international shipments (2.5), infrastructure (2.27), logistics competence (2.13) and customs (1.93).
However, it was only the infrastructure component that improved marginally by 0.01 score as rest of all sub-indicators fell along with the LPI.
Experts warn that deterioration of logistic performance as reflected in the LPI may worsen country’s investment climate. “Logistic performance is all about facilitation of trade, or export and import, of the country. The fall in the index means that business enabling environment has also eroded over the two years, weakening the confidence of investors who want to put their money here,” said Purushottam Ojha, an expert on trade issues, told Republica.
“If you want to boost or increase our export and promote manufacturing, there is no choice to make improvement in the logistic performance of the country which has direct impact on the trade,” added Ojha, who is also the former secretary of Ministry of Commerce and Supplies.
Countries like Germany (4.23), Luxembourg (4.22), Singapore (4.14), Belgium (4.11) and the US (3.99) are some of the best performers, while Syrian Arab Republic (1.6), Haiti (1.72), Somalia (1.75), Zimbabwe (2.08), Tajikistan (2.06) are among the worst performers.
However, businessmen involved in trade logistic say that they have experienced improvement in logistic performance in recent years.
“Recent earthquakes and economic blockade of India have affected logistic performance last year and this year. However, the government efforts to introduce and implement measures of World Custom Organization for trade facilitation have improved logistic performance in recent years,” Rajan Sharma, chairperson of Surface Transport and Transit Department of Federation of Nepalese Chambers of Commerce and Industry, said.
In South Asia, Nepal is above only Afghanistan and Bhutan. India is at the top (35th position) with a score of 3.42. Sri Lanka was not included in the rankings.