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Experts urge to boost trade in services

Experts suggested the government to take benefits from service trade as it has competitive edge against our neighbours.

Addressing an interaction organised by Ministry of Commerce and Supplies, here today, director general of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said that Nepal can develop niche products in health, education, information technology (IT) and tourism sectors to boost trade in services. “It could be Ayurveda in health or medical and engineering studies in the education sector,” he said, adding that the focus should be on developing service products with competitive advantage. “The current Nepal Trade Integration Strategy (NTIS-2010) also includes service sectors like health, education and IT but we need to focus on one sector at a time.”

NTIS-2010 has listed 19 products and services including tourism, labour services, IT and business process outsourcing services, health, education, engineering services and hydropower that have competitive edge.

The ministry is revisiting the NTIS-2010 by January 2015, as in recent years the service and goods listed in the strategy witnessed lower exports than it has been thought.

The developed countries have announced duty waiver for service trade of least developed countries (LDCs) including Nepal, according to joint secretary at the ministry Toya Narayan Gyawali, on the occasion.

As our products have easy access to developed countries now, Nepal has to work harder in boosting service trade, he said, adding that the eighth World Trade Organisation (WTO) ministerial conference had decided to waive duty for service trade from LDCs to increase their participation in service trade. “The ninth ministerial conference held in Bali of Indonesia took decision on operationalisation of the duty waiver.”

Trade in services account for over 70 per cent of the global gross domestic product (GDP) and 45 per cent of the world’s employment, according to the WTO.

More than 40 per cent of foreign direct investment (FDI) in the country has gone into the service sector, Gyawali added.

The ministry also asked different ministries including education, health, energy, tourism, physical infrastructure and transportation to align their programmes with the national trade strategy.

Apart from inter-miniterial coordination, there is a need to forge cooperation between public and private sector to create conducive environment that can attract new investments in particular sectors and sub-sectors identified by the NTIS-2010, according to Gyawali.

The stakeholders suggested to prioritise Ayurveda that holds competitive advantage compared to other sectors. They also suggested to link small and cottage industries on value chain which can be more effective for poverty reduction.

Though, Enhanced Integrated Framework (EIF) – under the global trade regime – is supporting the government in NTIS implementation through Tier 1 and Tier 2 support, the ministry has been lost in its bureaucratic process, and has not even been able to spend the budget to promote NTIS products and services.

The Tier 1 support is for institutional capacity enhancement of executing agencies, while the Tier 2 is for product development, according to the EIF.

Nepal has already received Tier 2 support for promotion of ginger, pashmina, and medicinal herbs and aromatic plants (MAPS).