Kishor Agrawal  Private Secors Perspective Final
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Kishor Agrawal Private Secors Perspective Final

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This paper was presented in the Trade facilitation meeting of International Finance Corporation, Kathmandu, Nepal.

This paper was presented in the Trade facilitation meeting of International Finance Corporation, Kathmandu, Nepal.

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  • Thanks, idea’s , real time experience of grass root traders, comodityasso, concerned stake holders, inside truth but cover main points, long journey –lot to be done more, continues process, joint efforts for enhancement of trade
  • Some common problems faced by all traders of the region,
  • Specific issues

Transcript

  • 1. Private Sector’s Perspective on Challenges to Trade in South AsiaInternational Finance CorporationKathmandu, Nepal17thJuly 2011Presented ByKishorAgrawal
  • 2. A word from Auther
    This Paper is based on Feed back, Ideas and real time experience of the stake holders of current Import-export chain , and insights received from exporters, importers, commodity associations and other stake holders and represents the essence of their views.
    A lot of work for trade facilitation, capacity building, procedure simplification and custom reforms has been done in past but still there is ample scope to do more to enhance the trading environment for sustainable economic growth.
    Previous studies like trade and investment report 2009 from UNESCAP, Doing business report of world bank etc clearly indicates about cost, time, paperwork, business environment and ease of doing business, about logistic performance index etc and we all know that the ranking of Nepal is very low and there is potential for Nepal to improve on it.
  • 3. You have to be very rich or
    very poor to live without trade.
    Albert Camus
  • 4. About Us
    Type of Organization : BSO -Chamber of commerce
    Main Activities : Trade facilitation, business support
    Established in : Year 1952
    Membership Strength : More than1,600 ordinary members and 8,000 registered firms.
    Affiliated Members : 12 Bi-national Chamber of Commerce 61 National level commodity associations
    Main trade focus : India, Bangladesh, Bhutan, China, Hong Kong, Singapore, Korea, UAE, Japan ,USA, EU Countries etc.
  • 5. Barriers to Import/Export
    Lack of similarity of legal and regulatory framework across the region
    Excess Time and paperwork required to comply with foreign and domestic market regulation
    Lack of Regional Transit and Transshipment Protocol
    Procedural requirements imposed by agencies like banks, insurance companies, shipping / Transport organizations and Port Authorities
  • 6. Barriers to import/export contd..
    More focus on manual processing of documents which is time consuming
    Lack of proper infrastructure in terms of logistics and energy
    Excess Government intervention
    Unstable political climate resulting in short term economic vision and frequent changes in policies
    Labor and Security related issues
    Fragile economy
  • 7. Banking sector related issues
    Carteling by banks in self interest for L/C Margins , exchange rates and other terms
    Extra 10 percent of Transaction amount as security deposit for imports
    Non practical and less trader friendly banking norms in comparison to other countries
    Higher Interest spread rates and liquidity problems resulting in difficulties in taking business loans
  • 8. Shipment issues
    Nepal, being a landlocked country, the cost of Multi Model Transportation (Sea/Land) is high.
    High risk of damage /pilferage and high cost due to multiple loading-unloading and transfer of Cargo.
    Access to Limited sea ports i.e. India/Bangladesh.
    Limited Direct Air / Ocean Connections from International ports.
    Absence of Nepalese Dry Ports in International Shipping Maps.
    Limited detention free period and burden of returning of container to shipping company ‘s yard
  • 9. Problems in Indian Ports and Customs
    Heavy Port Congestion and lack of transit area for containers resulting in heavy detention and demurrage
    Non preferential treatment for Nepalese trade
    Provisions of Bilateral / Multilateral Trade treaties
    Recommendation letter from Nepalese Consulate
    Requirement of Duty undertaking
    Judistriction of Central/ state Government
  • 10. Problems in Indian Ports and Customs
    Exceptional delays and problems in Cargo movement by rail
    Centuries old congested border Check points with limited staff in Indo-Nepal Borders
    Non transparent charges payable at port and customs
    Different Working Days
    Different Public holidays
    Labor problems
  • 11. Issues related to trade via Bangladesh
    Limited logistic support, ware housing, infrastructure in transit route of Kakarbhita – Panitanki – Phulbari -Banglabandh to Mongla port of Bangladesh
    Problems in cargo movement by rail from Radhikapur (India) to Biral (Bangladesh).
    44 kms road corridor from Kakarbhita to Banglabandh via India is highly congested
    Poor coordination at Indo-Bangladesh Customs
    Issue related to visa and vehicle movement at Zero point
  • 12. Issues related to trade via Bangladesh
    Multiple custom formalities, CTD processing in Indian customs, TDI (Transit Declaration Invoice) processing in Bangladesh Customs to be met by trader beside other Provisions of Bilateral / Multilateral Trade treaties .
    Need for more logistic service providers beside NTWCL
    Low bilateral trade volume of limited items due to poor trade facilitation e.g.; Fertilizers, Jute, Yellow lentils
    Lack of knowledge and awareness among Nepalese traders about this route and its potential benefit
    Traders are habitual to conventional routing mechanisms to avoid psychic cost.
  • 13. Complexities in ICD/Customs
    Manual Handling of Cargo at customs
    Lack of proper Warehouse facilities/ Storage facilities
    Revenue generations targets by Higher authorities to Custom officers.
    Following GATT Valuation method in principal but not in practical.
    Incomplete implementation of ASYCUDA System (Automated System For Custom Data)
  • 14. Complexities in ICD/Customs
    Shortage of subject specialized skilled man power
    Problems to combat under invoicing, illegal trade practices.
    Low salaries and incentives to officials resulting in higher rate of corruption.
    Involvement of Multiple revenue agencies.
    Firms capabilities and constraints in terms of financial ,technological and human resources
  • 15. Recommendations to improve import/ export
    Simplification and harmonization of procedures and documentation along the supply chain
    Implementation of electronic processing and enhanced automation
    Maintaining database of importers/ exporters/ clearing agent’s with scanned copies of all the required documents and one time registration
    Introduction to Digital signatures and use of Online payment gateway
    Online custom declaration and custom clearance
    Improvement in border inspection and clearance of goods
  • 16. Recommendations to improve import/export
    Mechanisms to support minimum direct contact of importers and Custom authorities
    Reducing custom duties to encourage genuine trade
    Special vigilance and enforcement of acts
    Reforming administrative system and procedures as well as custom and clearance
    Improvement in trade logistics to avoid delays, high cost and damage
  • 17. Recommendations
    Trade diversification
    Over 60% share of Total Nepalese trade is with India
    Around 96% share of total trade of SAFTA region is limited to India only
    Modalities for regional connectivity, transit and transshipment.
    Creation of a visionary group comprising of members from public as well as private sector to lead the reform process.
    Timely revisions/amendments in related acts
  • 18. Taking import and export to newer heights..
    Reducing official fees and government charges
    Proper mechanism of Identifying importer and commodities considered low risk for routing via the green lane with minimum number of intervention
    Eliminating the role of Revenue Investigation after the inspection and release of cargo from customs
    Improving the transparency of all the costs incurred during import/ export
  • 19. It started from the Barter system,
    And it continues till date
    Provide us the appropriate climate
    Then we would prosper in trade….
    KishorAgrawal
    KanikaAgrawal