The official export of the cement from Nepal to India began on Friday with Palpa Cement Industries Limited exporting its Tansen brand of cement to India.
The cement and clinker worth Rs. 1.76 billion have been exported from Nepal during the first six months of the current fiscal year 2023/24. During this period, the overall export of the country decreased by 7.23 per cent.
In the midst of various challenges faced by Nepal in narrowing down its widening trade deficit, one significant ray of hope emerges in the form of the surging momentum seen in the export of cement. The FY 2022/23 witnessed Nepal earning around Rs 780 million from cement exports, a feat not to be underestimated.
In the midst of various challenges faced by Nepal in narrowing down its widening trade deficit, one significant ray of hope emerges in the form of the surging momentum seen in the export of cement. The FY 2022/23 witnessed Nepal earning around Rs 780 million from cement exports, a feat not to be underestimated.
Citing the growing production and decreasing demands in the domestic market owing to the sluggish development and construction, President of Cement Manufacturers Association (CMA) of Nepal, Dhruba Thapa, has urged the government and stakeholders to create a favourable environment for increasing the export and consumption of cement.
Nepal's growth and development is highly dependent on foreign trade. Before 1970, only India and Tibet were included in Nepal's international commerce. With convenient access to markets with more than 2.6 billion people, Nepal is now advantageously positioned between China and India, two globally emerging economies which are both booming so quickly. Trade is the catalyst for developing countries to benefit from openness and globalization if we use it properly. At the same time, imports increase competition and provide customers with a range of domestic marketplaces. International trade enables companies to access more sophisticated capital inputs like machinery and tools, which also boosts productivity. Foreign trade encourages allocating capital and labor to comparatively more productive sectors of the economy. It has particularly aided in the continuous transfer of some manufacturing and service industries from developed to emerging nations. Although Nepal's foreign trade performance has been suffering thus far, the government has decided to ban the import of ten different types of ‘luxurious’ goods this year because of the country's growing trade deficit, low remittance revenues, and gradually declining foreign reserves, which have severely impacted the lives of regular citizens. Since imports are growing and exports are still relatively low, Nepal's trade deficit is getting worse every year.The key difficulties are the existing exporter tax laws, the accessibility of raw materials for manufacturing companies, the emphasis on sustainable production, employee pay rates and their political rights, and high-cost output. Besides effective use of quality technology for the production of goods are lacking and cost of transportation are consistently high due to landlockedness and developing infrastructure. Ineffective government policies are discouraging investment and failing to support smaller firms at lower levels to sustain rural productivity and production, which was ultimately linked to the growth of exports.
Nepal has the lowest labor productivity in South Asia, according to the Asian Productivity Organization. Despite having the highest minimum wage in South Asia, a shortage of highly skilled workers, and low levels of education, Nepal exports a lot of less original research-based products. On the other hand, Nepal's working age is anticipated to reach over 20 million by 2025. To have an impact on output and export, technical industrialization tactics and educational reform are heavily dependent on infrastructure quality.
Trade with India also provides transit practically for all Nepal's commerce with third world countries. India is also the nation from which it receives most of its foreign investments. However, due to the country's lack of adequate transit infrastructure, Nepal's trade with other countries has been hampered and restricted. Since the 1980s and 1985s, Nepal's trade policy has shifted toward becoming liberal and market-oriented. In 1992, numerous reform initiatives were also implemented. It is observed that Nepal's commerce with India is steadily growing. The value of bilateral trade between Nepal and India for the final eleven months of the fiscal year 2020–21 exceeded NRS 976.78 billion, with imports from India totaling NPR 886.59 billion and exports to India exceeding NPR 90.19 billion. A significant increase in Nepalese exports to India and a matching increase in the flow of commodities out of Nepal occurred after the 1996 trade agreement, which allowed Nepalese goods to enter India duty- and quantity-free.
Likewise, while talking about Nepal-China trade, the total trade balance significantly favors China. According to the Nepalese Department of Customs, between mid-July 2021 and mid-April 2022, Nepal imported NPR 211 billion (USD 1.7 billion) from China. Comparing transit through China to Nepal's exports to China over this period, which totaled NPR 622 million (USD 5 million), is essentially unrealistic. As of September 1, 2022, China will allow tea produced in Nepal to be sold on its market. This agreement will make it easier for these nations to share market prospects with China.
What should the Nepal government do?
A few months earlier Honorable Finance Minister stated in his budget statement on January 15, 2079, that exports of goods including cement, clinker, steel, footwear, processed water, IT-based businesses, and others will receive an 8% cash subsidy. Although it will take time, it is expected that exports will rise and the trade deficit will narrow. Nepal needs support from other countries in the areas of taxation and zero-tariff treatment. More than 100 countries have trading relations with Nepal. The Nepalese government has put in place a number of policies that are frequently altered to address this issue. It's probable that export trade with China and India will grow in the future.
Nevertheless, the government should move by reaching a political agreement, involving the nation's stakeholders, and reducing the number of imports to address the issues associated with trade deficits. Raising the import tax makes it possible to stimulate domestic companies to manufacture consumer goods and cut down on imports. The government should implement regulations restricting imports of goods, encouraging the establishment of new initiatives, and expanding domestic markets in order to support domestic industries and indigenous products with improved fourth generation technology. Improving S&T products, introducing new commodities, lowering manufacturing costs, producing export surpluses, and supporting R&D should all be done to promote export. An open market policy would only be beneficial for Nepal when its products can give consumers the chance to sample both native and imported goods in equal measure. In the bigger picture, the situation of foreign trade in Nepal suggests that, despite challenges, it is promising and a lot can be achieved and done.
KATHMANDU: The Palpa Cement Industry of Nawalparasi has started exporting cement to India. The industry has been exporting cement to India through Sunauli since Friday. At a program organized by the industry, Sunwal Municipality Chief Bimala Aryal said goodbye to the truck carrying cement to India. The industrialists are excited to export cement to India […]
Myanmar is one of the closest neighbors of Bangladesh. Before World War II, many people from Bangladesh used to travel to Myanmar (Burma then) in search of livelihood. Since then, the people of these two countries have developed an economic and social relationship. Apart from India, Bangladesh shares a border with Myanmar too.
The 271km-long Bangladesh-Myanmar border is very important for Bangladesh due to geographical reasons. Bangladesh can use Myanmar by land for communication with Southeast Asian countries including China. Road connectivity is possible through Myanmar, perhaps a new horizon of relationships and possibilities unfolds.
Myanmar can also use Bangladesh to reach South Asia, especially Nepal, Bhutan and India. Bangladesh and Myanmar both share a common regional platform like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). On the other hand, Bangladesh is considered a hub between South Asia and Southeast Asia.
It is true that Bangladesh is a Southeast Asian country geographically but a South Asian country culturally, demographically and historically. This is an outstanding geo-strategic characteristic of Bangladesh.
Therefore, without the involvement of Bangladesh, any connectivity among the states of ASEAN and South Asian Association for Regional Cooperation is absolutely impossible. Myanmar is a country rich in natural resources. There are huge amounts of natural resources like tin, zinc, copper, tungsten, coal, marble, limestone, natural gas, hydropower etc.
The major resource of this country is mineral resources and Myanmar can be a major source of energy for Bangladesh to ensure its energy security. Food and grains are produced in large quantities in Myanmar and it can also be a big supporter for Bangladesh in the field of food security.
The country has a huge potential for rice cultivation, but has failed to utilize it due to lack of human resources. Myanmar needs laborers as rice production in Myanmar accounts for approximately 43% of total agricultural production in the country, making it the seventh largest producer of rice in the world.
Out of 67.6 million hectares of land, 12.8 million are used for cultivation. In 2019 alone, Myanmar accounted for 13,300 million tonnes of milled rice production. Rice production in Myanmar is heavily dependent on human and animal power, both traditional methods of cultivation. However, it lacks manpower and technology in this regard.
But Bangladesh has these two things. It has a surplus of human resources which Myanmar can utilize for maximum gain. But Bangladesh has never been able to take full advantage of this opportunity as the country, comprising 135 tribes and different ethnic groups, has been under military rule for many years. That may be one of the reasons why the relationship between Bangladesh and Myanmar is not deep.
If Bangladesh had good relations with Myanmar, its dependence on India could have been reduced in many cases and if contacts were made in Southeast Asia and China through Myanmar, there would have been immense potential for investment and trade.
Bangladesh and Myanmar are both on the way to becoming developed countries. Bangladesh is going to be a South Asian Economic Miracle, playing a significant role in Myanmar and to some extent all of Southeast Asia.
For this, Myanmar should increase its diplomatic relations with Bangladesh for the better mutual interest for all of South Asia and Southeast Asia. The European Union, China, India, Russia and North Korea are becoming allies in Myanmar’s oil, gas, mineral resources and military markets.
Taking advantage of US negligence, Myanmar’s military junta extended a helping hand to China for investment purposes. China is now the biggest investor in this country. According to Earth-Rights International, a private group, more than 26 Chinese companies are investing in Myanmar’s oil, gas, mineral resources and allied sectors.
China has already become its biggest ally in building and supplying arms to Myanmar. Myanmar has not only developed relations with China, but also with India and both countries are building trade relations with Myanmar.
The US is also changing its approach to the Myanmar question, which is why the US, a strong economic country, has started taking new initiatives to develop relations.
Recently, a 41-year dispute over the maritime border between Bangladesh and Myanmar has been settled with the help of the International Court of Justice.
As a result, the rights of Bangladesh have been established in an area of 11,000 square kilometers. Myanmar has also been provided with its claim and the dispute in the area has been settled. The possible eruption of tension in the Bay of Bengal has been resolved. Myanmar is rich in minerals, ores, oil, gas, precious stones and other natural resources and it is a major supplier of wood to the world.
At the time, when the foreign investment was limited to the oil and gas sector, the country has recently shifted its focus to attracting production-based investment.
The country is well ahead in power generation due to sound investments in hydropower generation. The tourism industry is also a promising sector of the country. “Myanmar’s economy has so far been limited to extracting natural resources,” said Nobel laureate economist Professor Joseph Stiglitz, who warned that the country would suffer a “curse of wealth” if it continued.
Some resource-rich countries in Africa, including Nigeria, Sudan and Benin, have been plagued by corruption, internal strife and poverty. These countries could not adopt a proper wealth management system and economists have opined that if democracy is restored in Myanmar and corruption is reduced, it will not have to go to the level of countries that have failed in wealth management.
Therefore, it can be assumed that Myanmar will become a country with rapid economic growth in a few years. The country’s biggest economic advantage is being a member state of the 10-nation ASEAN. ASEAN is one of the three most successful trade blocs in the world consisting of Singapore, Malaysia, Indonesia, Thailand, the Philippines, Brunei, Vietnam, Cambodia, Laos and Myanmar.
The bloc controls about 24% of total world trade and its share in world trade is growing every year and its trade relations with China, Japan and South Korea are deepening due to the increase in trade. ASEAN countries account for more than 50% of total trade among themselves and the three countries. As a result, Bangladesh has the opportunity to be benefited by strengthening its ties with this trade alliance through Myanmar.
Both countries are among the seven member countries of BIMSTEC, as such there is ample opportunity to increase trade and investment relations between them through the initiative.
There are many opportunities to enhance Bangladesh’s bilateral trade and investment relations with Myanmar. Through the import of gas and electricity, Bangladesh can obtain future energy security.
The two countries can jointly explore for oil and gas in the Bay of Bengal and Bangladesh can also contribute to the development of Myanmar’s infrastructure.
The proposed construction of the Asian Highway, funded by the Asian Development Bank and other donor groups, could also increase land connectivity between the two countries and there is ample opportunity to increase shipping.
Furthermore, joint investments can be made in the production of fertilizer, plastic, cement and furniture. Both countries will benefit if Myanmar produces raw materials and Bangladesh utilizes its skills, technical knowledge and labor. Myanmar imports almost every product while Bangladesh can export ready-made garments.
Bangladesh produces medicines, electronics. Myanmar can import these essentials from Bangladesh hugely. On the other hand, Myanmar is a source of agricultural products. Bangladesh can import it from Myanmar.
During the moment of Bangladesh’s onion crisis with India in 2019, Myanmar provided onions to Bangladesh. Bangladesh understood the importance of bilateral trade with Myanmar at that time. On the flip side, Bangladesh is keen to provide assistance to Myanmar, with COVID-19 vaccine diplomacy and counter terrorism approach for regional security in some sectors.
However, the Rohingya refugee problem has caused a rift between Bangladesh and Myanmar.
As such, Myanmar should solve this problem to serve its own and regional interests. The country should understand that the problem can cost the relationship between South Asian and Southeast Asian countries.
However, the two countries can also increase production in the agricultural sector through joint ventures. Apart from adopting joint investment projects, Bangladesh can increase imports of various agricultural products including pulses, spices, fish and rice.
Thus, enhancing bilateral relations could contribute to the growth of trade and investment relations with ASEAN and BIMSTEC countries. This will create an opportunity to solve the Rohingya problem and stop militant activities. They have to engage sooner than later to find a political solution and restore sanity and human dignity. Therefore, Myanmar and Bangladesh should take effective steps to strengthen bilateral relations.
