1. Mainstreaming of Trade into Sectoral Plans and Programs Mainstreaming of Trade into Sectoral Plans and Programs with a focus on NTIS Implementation and Next Budget Chandra Ghimire Joint Secretary Ministry of Commerce and Supplies Presented to: An Interaction Program for Senior Planning Officials of Various Agencies

2. Coverage 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?

3. Trade is ever growing phenomena

4. Why trade so important 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;

5. Why trade so important 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;

6. Why trade so important for Nepal? Why trade so important 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'

7. Why trade so important 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

8. What is trade 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.

9. How to lead trade 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

10. Trade Mainstreaming in Nepal  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).

11. Trade Mainstreaming in Nepal 2 Institutional 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

12. 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 3

13. Role 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

14. Status of Nepal's Foreign Trade cf=j= )^%.^^cf=j= )^^.^& -?= cj{df_ % Jofkf/ cFz % ef/t 165=156=7216=657=5 ;d'b|kf/ 125=943=3159=942=5 s'n cfoft 291=0100=0 376=5 100=0

15. Status of Nepal's Foreign Trade 2 cf=j= )^%.^^cf=j= )^^.^& -?= cj{df_ % Jofkf/ cFz % ef/t 43=563=439=965=4 ;d'b|kf/ 25=136=621=134=6 s"n lgof{t 68=6100=0 61=0 100=0

16. Status of Nepal's Foreign Trade 3 cf=j= )^%.^^ -?= cj{df_ cf=j= )^^.^& -?= cj{df_ s}lkmo t ef/t 221=6176=7 ;d'b|kf/ 100=8138=8 s'n Jofkf/ 3f6f 222=4 315=5 Jofkf/ 3f6f j[l4 $@Ü

17. Status 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

18. Status of Nepal's Foreign Trade 5 qm =;+ = Import ePsf] j:t'd"No -?= cj{df_ ! Petroleum products51.3% @ Gold41.5% # Vehicle & Parts25.7% $ MS Billet13.8% % Telecommunication Equipments12.3%

19. Status 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

21. Indicators FY 066/67 Change in %FY 067/68Change in % Total Trade Deficit 57.3% 180 Billion -1.4% Export/Import Ratio 17.3%16.3% Total Export35.57 Billion -10.4% 37.91 Billion Export to India -5%+10.8% Export to Others -18.5%-0.8% Total Import218 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%

22. 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;

23. 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;

24. 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;

25. 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 1Large cardamom21,329highlowhigh medium 2Ginger8,130mediumlowmedium 3Honey500lowmedium 4Lentils22,258mediumhigh medium 5Tea16,805highlowmedium high 6 Instant noodles 10,390highmediumhigh low 7 Medicinal herbs / oils 11,000lowmediumhighmedium high Craft and Industrial Goods 8Handmade paper4,000low highlow high 9Silver jewelry9,519lowhighmedium 10Iron & steel products149,394 high medium 11Pashmina products22,074medium highmedium 12Wool products16,450mediumhighmedium high Services 13Tourism352,000high 14Labor services2,448,000high mediumhigh 15IT & BPO services10,000medium 16Health servicesn/alowmediumlow 17Education services10,000mediumlow 18Engineering servicesn/alowmedium low 19Hydro-electricity0low high medium

26. 19 Priority Export Potentials Agro-Food 1Cardamom 2Ginger 3Honey 4Lentils 5Tea 6Noodles 7Medicinal & Essential Oils Craft and Industrial Goods 8Handmade Paper 9Silver Jewelry 10Iron and Steel 11Pashmina 12Wool Products

27. Services 13Tourism 14Labor Services 15IT & BPO Services 16Health Services 17Education 18Engineering 19Hydro-electricity Others Potential Exports 20 Transit Trade Services 21Sugar 22Cement 23Dairy Products 24Transformers

28. 10 Most Attractive Markets for 16 Goods and Services #1#2#3#4#5#6#7#8#9#10 Agro-food Cardamo m PakistanSaudi Arabia UAEUKUSAMalaysiaJapanSouth Africa KuwaitOman GingerIndiaPakistanBanglade sh USANetherla nds UKMalaysiaGermanyYemenVietnam HoneyUKFranceJapanUSAGermanyBelgiumPolandAustraliaSaudi Arabia Slovakia LentilsTurkeyUAESri Lanka AlgeriaIranEgyptSaudi Arabia SpainUKPakistan TeaEgyptUAERussiaUSAUKIranPakistanGermanyKazakhst an Australia Instant Noodles ChinaIndonesi a JapanUSAVietnamSouth Korea Philippin es ThailandRussiaIndia Medicinal herbs USAFranceGermanyVietnamSingapor e JapanItalyRussiaBelgiumSouth Korea Essential oils Singapor e Switzerla nd IndiaFranceGermanyUSAUKJapanChinaMexico

29. #1#2#3#4#5#6#7#8#9#10 Craft and Industrial Goods Handmad e Paper DenmarkCanadaNetherla nds Saudi Arabia NigeriaIndiaQuatarEgyptJapanMalta Silver Jewelry Hong Kong USAGermanyUKFranceDenmarkAustraliaSpainNetherla nds Canada Iron/steelGermanyBelgiumPolandIndiaUAEUKThailandFranceItalySweden PashminaUKGermanySpainFranceHong Kong USAItalyJapanChinaSwitzerla nd WoolProd ucts GermanyFranceUKItalySpainJapanCanadaBelgiumUSAHong Kong

30. Services LabourUSARussiaSwitzerl and Saudi Arabia SpainGerma ny ItalyLuxem burg Netherl ands Malaysi a LabourChinaUKFranceOmanJapanNorwayKazakh stan KuwaitSouth Korea Belgiu m TourismGerma ny Saudi Arabia USAUKFranceIranChinaRussiaItalyUkraine Educatio n ChinaIndiaSouth Korea Uzbekis tan Germa ny BoliviaVietna m NepalLao PDR Belarus Enginee ring UAEChinaIndiaBrazilQuatarUSANigeriaUKTurkeySaudi Arabia

31. The Work in-progress

32. How many are the activities to undertake? Activities under 4 strategic objectives: –Product/service wise 171 –Cross cutting 87 –Total 258 activities

33. Involvement of Government & other 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

34. Who are responsible for Implementation? MoCS MoI MoAC MoF/DoC MoLT MoE MoST MoH MoFSC MoCA MoPP&PW NPC MoFA PMO NRB

35. What do we expect in next 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

36. What do we expect in next 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

37. What do we expect in next 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

39. Who Says Nepal can’t set an example?