Nepal Rastra Bank has issued a new circular for the import of gold which will be valid till end of the end of current fiscal year. Due to the up soaring demand of gold in the domestic market and repetitive requests from the bullion traders, it has increased its quota from 15 kg to 20 kg per day.  As a result, there will be easy access of gold to the customers in this wedding season.

After the EU has restricted the import of silver products containing cadmium from the beginning of 2012, the export of silver has dipped down. According to FHAN (Federation of Handicraft Association of Nepal) the export has been down to Rs. 110.95 from Rs. 181.37 million as compared to same period of last year. The reasons behind the decline in exports are due to: 

• Delays in providing certificates by cadmium lab.
• High cost of testing the products (Rs. 500 per unit).
• Increase in price of raw materials.
• Lack of innovation in product design.
• Shortage of skilled manpower

The export data of silver products for the first 6 months of the fiscal year 2011/2012 reveals the top 5 silver exporting destination are US, followed by Canada, Japan Netherland and Italy.

According to the export data of silver products for the first 6 months of the fiscal year 2011/2012 provided by FHAN, the top 5 exporting destinations of silver are US (Rs.33.79 million),  Canada (Rs. 15 million), Japan (Rs. 14.88 million), Netherland (Rs. 6.55 million) and Italy (Rs. 5.87) million.  Out of the total handicraft exports, the silver products accounts for 5.32%.

Nepal is an agricultural country where 66% of populations are involved in agriculture.In spite of this fact, it has imported around 80 billion of agro products in the fiscal year 2010-2011 which is higher by 24% as compared to last year.  The major imported agro products are vegetables products, prepared foodstuffs, oil & their seeds, cereals, edible fruits & nuts, live animals, maize, betel nuts and dairy produce.

According to the MOAC, Nepal imported vegetables products worth Rs 26.09 billion in the last fiscal year which increased by 24 percent compared to previous year of Rs 21.08 billion. 

The above figures show that the import of agro commodities is gradually increasing in the country. This is because of inadequate supply of raw materials for industries as well as government failure to meet the required support to the farmers in the agro sectors.  This has led to domestic production being unable to meet the country’s growing demand. The income of Nepalese has also increased thus increasing the consumption rate of people and thus forcing the rise in import.

However, it is good to know that the country saw a significant decline in the import of fruits and nuts due to the development of roads access in the major production areas of fruits. To decrease the import by the nation, there should be proper effort from various levels involved in agriculture sector. The government should also prioritize and focus on promoting local products by supporting the farmers to enhance the capacity of local industries. Proper seminars, trainings and knowledge enhancement mechanism can be provided from the agro research center and government. Motivating Incentives and subsidy could also be offered to the farmers along with adopting new and sophisticated technology for the agro based industries and services.

Prime Minister Baburam Bhattarai revealed a very ambitious development plan for the nation on January, 2012. He gave major emphasis on infrastructure development and creating massive employment opportunities in Nepal. Some major projects for Infrastructure development include Kathmandu-Terai fast track, second international airport outside Kathmandu, melamchi drinking water Project, hydroelectricity and others. Other priorities include the peace and statute drafting processes, good public governance and the country's economic transformation. The 55-page “Immediate Action Plan for Economic Development and Prosperity” also foresee creating 677,000 new jobs in different areas like 240,000 in the employment centric program, 150,000 in the agriculture sector and 50,000 each in the tourism, energy and foreign employment sectors. The plan also aims at higher economic growth, increased investment and creating employment opportunities within the current budget structure which supports the revealed development plan more highly optimistic than being achievable. The government has presented another ambitious plan of attracting $1 billion in foreign direct investment (FDI) in the ‘Nepal Investment Year 2012’.

For building the infrastructures and financing those projects, the government is planning to invite international investors.  But the development plan seems to highly optimistic as some projects are expected to complete within this fiscal year which seems merely achievable looking at the ongoing development progress of various sectors with no clear sources of resources. During the “Nepal Tourism Year 2011” also, a target to welcome 1 million tourists was not achievable due to lack of proper planning and management. Result to that only 80% of the target was being achieved.

The major financial sources apart from FDI are foreign aids and remittance. Grants, concessional loans and technical assistance are the three major types of foreign aid components in Nepal while bilateral aid and multilateral aid (UN, World Bank, ADB, INGO’s etc). Japan is the largest donor followed by UK, Germany and US. World Bank and Asian Development Bank are the largest multilateral donors. Looking at other source, remittance is highly contributing the nation for economic stability. Its flow has increased by 10.8% to Rs. 206.66 billion during the ten months of 2010/11. The approval for foreign employment has also increased by 18.7% in the same period. The major destinations for foreign employment are Malaysia, Saudi Arabia, Qatar and United Arab Emirates.

It’s not that our country lacks technically sound programs, resources and capable human resource, but initiatives to improve weak institutional partnership and capacity to implement those programs on the ground. A massive reform is needed to bring constructive changes by creating conducive environment which is never impossible.

There is lack of participatory approach of policy makers, concerned stakeholders, and lack of co-ordination with implementing agencies while formulating programs and policies leads to the failure of programs. The government should not only make the plans but also follow good corporate governance rather than obstructing the constituent assembly. Government urgently needs to revamp institutional structure of the major agencies that are responsible for promoting good governance and development activities.                     

Ginger is one of the major crops of Nepal where more than 60,000 households are involved in it. According to the data provided by agriculture ministry, Nepal produces about 2, 40,000 MT of ginger from 20,000 hectares of land. Among them 80% of total ginger production is exported to India. During the export to India, traders are compelled to pay Rs. 1,750 as quarantine charge to Government of India.

In the year 2008, Nepal kept its records as the fourth largest producer of ginger and farmers were also able to get good price for their produces i.e. Rs. 50 per kg. By seeing the good return on it, many farmers shifted towards commercial ginger farming even by replacing other cash crops. But, since last two years, the price of ginger is in bearish trend. Last year it was traded at Rs. 20 per kg where as this year at Rs. 10 per kg which is fall by more 50% in comparison to last year and fall by 80% as compared to last two years. .

The subsidies provided by Indian government in the purchase of seeds and fertilizers needed for the ginger production has increased the overall production of ginger in India, as a result the price of Nepalese ginger has decreased. Although the price of raw ginger is decreasing rapidly in Nepal, the price of spices is moving in opposite direction as it is mostly imported from India. There are only few spices industries established by Golchha and Dugar and other small industries but due to lack of enough processing plant and updated technology. Even now, they are unable to provide qualitative spices as compared to Indian companies.

Nepalese ginger has good prospects as some of the farms have also got the NASAA and OCAN certification through which they can easily export to other countries.  There is high demand for processed ginger in the form of candy, oil, sutho, chana (dry ginger) and species in the international markets. Still, Nepalese farmers are following the traditional method of storing the ginger i.e. by keeping the ginger in under the farm for five months which is also called ‘Zero Energy Store’. Due to the lack of proper warehousing systems, specialized training to the farmers, lack of subsidies provided by the government for farming and establishment of processing plants; ginger farming is unable to grab the international market even having lots of export potentials.       

After the release of crucial news regarding Europe’s imposing sanctions on Iran over its nuclear program, it has created the fear of hike in price of oil. Iran has also warned that the price of oil will go up by $ 150 per barrel in upcoming days.

The ban on Iran’s oil import from July 2012 has created chaos how Europe will fulfill its demand for oil in prevailing market price as 18% of total oil is being imported from Iran.  The Europe may have difficulty in finding the other sources. However it can fulfill its demand by importing extra crude oil from Iraq, Saudi Arabia, and Libya. From these three countries, they are providing 1 million barrels per day which counts to double as what Iran is providing.

According to the International Monetary Fund the sanctions against Iran will decline the supply of oil by about 1.5 millions barrels per day. But senior oil executives, strategists and traders states that though Iran halts its supply to west it will increase its supply to the Asian countries by allowing discount to make it competitive as a result its net supply will remain stable or may even increase overall supply of oil.

The world’s leading oil exporter, Saudi Arabia who is pumping about 10 million billion barrels per day (bpd) has promised to make up any shortfall in Iranian supplies and would also increase its exports by about 500,000 bpd if there will be any extra requests from customers and Gulf Industry. Similarly, Iraq is starting a new Gulf Oil terminal and is targeting to expand its crude oil exports by 400,000 bpd which would take its overall sales to about 2.5 million bpd. And also after the overthrow of Gaddafi Libya is also returning to full capacity utilization and has already pushed oil exports to around 800,000 bpd.These all above facts assures that the oil production will be increased days to come as the demand for oil is always high.