Removal of import duties on Nepali exports will open avenues for farmers and businessmen in both countries.
Diplomats and merchants in Nepal are cheering Bangladesh’s decision to remove import duties on 108 agricultural products including vegetables, fruits and lentils from the Himalayan country.
- A Nepalese farmer walks through a paddy field to his home in Khokana Village, on the outskirts of Kathmandu, on September 4th, 2012. More than 66% of Nepal’s population relies on farming. Many will benefit from Bangladesh’s recent decision to waive import duties on 108 Nepalese agro-products. [Prakash Mathema/AFP]
The move, they say, will further boost trade relations between the two South Asian nations, and open markets for new agricultural products in both countries.
“This is a very welcome decision for Nepalese businessmen and farmers,” Abinash Bohora, president of Morang Merchants Association, told Khabar South Asia. “The agreement will not only boost Nepal’s exports. This will equally help open up Nepalese markets for various Bangladeshi products.”
Nepal currently exports lentils, vegetables, cereals, wheat flour, fruits, juice, dairy products, poultry feeds and handmade papers, among other products, to Bangladesh, which lies less than 60km from its eastern border. Nepal imports pharmaceuticals, textiles, electric goods, fish products, garments and jute fabric from Bangladesh.
A bilateral technical committee meeting in late-February in Dhaka finalised the list of Nepali products to be granted duty-free access. The agreement is expected to go into force after a joint commerce secretary-level meeting in Kathmandu in July.
Nepal and Bangladesh have enjoyed excellent ties since establishment of diplomatic relations in 1972. A Nepal-Bangladesh Joint Economic Commission was set up in 1978 to promote trade relations between the two countries. Bangladesh has permitted Nepal to use port facilities at Mongla since September 1997, following the opening of the Kakarbhitta-Phulbari-Banglabandha transit route.
“The agreement will help further deepen the ties that exist between the two friendly countries,” said Ministry of Trade and Commerce spokesman Naindra Prasad Upadhyaya. He expects the duty-free access agreement to sharply increase exports from Nepal.
“As Bangladesh has also sought preferential treatment to its various 153 products in Nepali markets, we are currently working out in what products we can provide preferential treatment to Bangladeshi products,” Upadhyaya added.
However, Minister and Charge d’Affaires at the Embassy of Bangladesh in Kathmandu, Forhadul Islam, said Bangladesh seeks no reciprocity from its “friendly neighbour”.
“This is our unilateral decision,” he said. “We can understand the limitation Nepal has now.” After a violent, ten-year armed conflict, the nation is struggling to restore sustainable peace, ratify a new constitution and grow its economy.
Bangladesh is Nepal’s second-largest South Asian trade partner. According to the Trade and Export Promotion Center, Nepal exported goods worth NRs 2.57 billion ($29.6m) to Bangladesh in fiscal year 2011-12 and imported NRs 8.09 billion ($92.1m) in Bangladeshi products in the same period.
Dhundi Raj Dahal, an M.A. candidate in Economics at Patan Multiple Campus in Lalitpur, said Nepal must do more within its own borders to boost its volume of external trade.
“We need to first have enough agricultural products at home to increase exports,” he said. “As huge areas of cultivable land remain barren due to the tendency of youths to go to Gulf countries and other labour destinations for work, this agreement is not going to make any substantial change.”
He also pointed out the need to adopt commercial farming to boost Nepali trade, a nation where more than 66% people still depend on agriculture. “It is high time we embraced commercial farming against the current practices of subsistence farming.”
But others are more upbeat about the country’s economic prospects. In fact, Nepalese exports to Bangladesh have soared by 63% in the first six months of the current fiscal year, year-on-year.
Hari Prasad Niraula, who grows lentils in his farm in Babiya Birta VDC (Village Devolopment Committee) in Morang district, had not yet heard of the trade agreement with Bangladesh. “But if there is such an agreement, we may not have to worry about the market,” he said.