A GLANCE on Nepals Socio-economics and SMEs Development
Bhumi Shwor Pokhrel Section Officer Ministry of Commerce and Supplies Kathmandu Nepal
1-8 July,2011, Colombo, SriLanka
Geographical Elevation of Nepal Area:147,181 sq. km (Length 885 Km and mean width 193 km)
Panorama of Mount Everest
Geographical Features
Landlocked country surrounding by India( South, East,West) and China (North) Terai Area ( Plan Land) from sea level up to 300 meters15%. Hilly Area from 300 meters up to 3,000 meters 68%. Mountainous Area 3,000 meters up to above 17% Urban Area 20 % , Rural Areas 80% Main River: Karnali , Koshi and Gandaki Mount Everest,highest 8848 mtrs peak in the world. Similarly kanchanjangha 3rd highest peak in the world and other six peaks higher than 8000mtrs. Tilicho lake situated in highest place of the world. Main lake:Rara ,Sephoksundo ,Phewa
Climate
Diversity of weather and climate. Basically Four Seasons: Spring- February to April Summer-May to July Autumn-August to October Winter-November to January Mean annual temperature varies from 300c to below freezing point . Average rainfall 1600 mm. 80% of rain fall in Monsoon season( June- September).
Customs and Traditions
Dashain and Tihar are celebrated as National festival by Hindus in September to October. Losar is celebrated by Gurung in November . Maghi is celebrated by Tharus in December. Ramjan is celebrated by Muslims Birthday of Buddha by Buddhists in April. Christian also observed in February. Cow as a native animal and is worshiped as a god also. Buffaloes, Lambs and Horses are kept in homes as cattle.
Economy
Main features of Economy Agro based economy Least developed & land locked country Mixed economy High rate of population growth Low rate of capital investment Dependant on foreign aid Unequal distribution of national income
Economy
Livelihood to 79 % of population and contribute 40 % to GDP of agriculture. Major Food Crops : Rice ,Corn Cash Crops : Potato, Sugarcane, Oilseed Agricultural products like Paddy,Wheat, Maize are main products. Leather goods, handicrafts are made. Similarly carpets sugar, tea and jute products are export items. People are engaged in different types of income generating activities. Such as agriculture works in their own land, engaged in public service, foreign employment and industrial works.
Tourism
For climbing Mountains. Treckking Rafting Bunji jumping For seeing ancient cities like Kathmandu, Lalitpur, Bhaktpur, Gorkha To observe traditional cultures.
Administrative Division
5 Development Regions
14 Zones
75 Districts
Administrative Division
S.N Development Regions 1 2 3 4 5 Eastern Central Western Mid -western Far -western Zones
Mechi,Koshi,Sagarmatha Janakpur, Bagmati, Narayani Gandaki,Lumbini, Dhawalagiri Bheri, Karnali, Rapti Seti, Mahakali
People
Population :- 25,873,917 (estimate).
S.N. 1 Particulars Religion Classification Hindu Buddhist Muslim and others Percentage 80.6% 10.7% rest Remarks
Language
Nepali Maithali Bhojpuri Tharu Tamang Newari Others
48.98% 12.4% 7.6% 5.9% 5.2% 3.7% rest
Official language
Literacy Rate
53.7%
Life Expectancy
59.7%
Energy One of the highest hydropower potential S.N. Particulars MW 1 Total Potential Capacity 83000 MW 2 Total Electricity Generated 3 Internal Demand 4 Export To India 523 MW 471 MW 52 MW
Energy Due to its geographical structures, lack of infrastructure and capital, only 0.6 % of the total potential capacity is utilized. Few big hydropower plant but most of them are either medium or micro scale in size. Most of the energy consumed comes from fuel wood, Nonrenewable sources of energy such as oil and kerosene has to be imported from India.
Foreign Trade
For geographical and historical reasons, most of Nepal s trade is with India.
S.N. Export Commodities Countries Import commodities Countries 1 Carpet India Petroleum Products India
Readymade Garment
USA
Machineries and Parts
China
Vegetable Ghee
Germany
Vehicles and parts
Singapore
Pashmina
Medicines
Hides and Skin
Textiles
Handicrafts
Electrical/ electronics
Herbs etc
Chemical Fertilizer etc
SMEs in Nepal LEGAL FRAMEWORK Industrial Enterprise Act, 1992 Foreign Investment and Technology Transfer Act. 1992 Classification of Industries Industrial Promotion Administration
Regulatory To implement Industrial Enterprises Act, Industrial Policy and other relevant Acts To register industries, to give permission and license to the industries, to certify for income tax exemption, to approve Initial Environmental Examination report, to monitor and supervise industries and to implement pollution standards.
Classification of Industry
As per Industrial Enterprise Act, 1992 has classified Industries;
Large industries: Industries with fixed assets of more than 100 million rupees . Medium industries: Industries with fixed assets between more than 50 million rupees to 100 million rupees. Small industries: Industries with fixed assets up to an amount of 50 million rupees. Cottage industries: Traditional industries that utilize specific (indigenous) skills or local raw materials and resources, labor-intensive and are based on national tradition, art and culture.
Classification of Industry in total Sector Manufacturing Energy based Agriculture and forest based Tourism Mineral Service Construction Total Number 31179 130 2785 3416 24 33690 3439 74659
Number of Cottage and Small Industries SN Category 1 Agro and Forest Based 2 Construction 3 Energy Based 4 Manufacturing 5 Minerals 6 Service 7 Tourism Total Number 1313 5008 880 43427 169 18693 2192 71682
Institutional Arrangement
Ministry of Industry, Ministry of Commerce and Supply Industrial Promotion Board The Department of Cottage and Small Industry (DOCSI) The Cottage and Small Industry Development Board (CSIDB) The Cottage and Small Industry Training Centre (CSITC) The Industrial Enterprise Development Institute (IEDI) Department of Commerce Department of Industry
Institutional Arrangement Export Promotion Board Trade Promotion Center National Productivity and Economic Development Center (NPEDC) Institute of Technology and Institutional Development (ITID and BTI) Institute Of Environmental Management (IEM) Industrial Estates (10 Nos.)
Major Players of SME Development in Nepal
Private Sector Nepal Chamber of Commerce (NCC) Federation of Nepal Chamber of Commerce and Industry(FNCCI) Women Entrepreneurs Association of Nepal (WEAN) Federation of Cottage and Small Industry (FNCSI) Federation of Women Entrepreneurs Association of Nepal (FWEAN) Centre for Business Development (CEBUD)
Major Players of SME Development in Nepal
Other Government Sector Ministry of Environment, Science & Technology (MOEST) High Level Commission Information Technology (HLCIT) National IT Center (NITC) Ministry of Information & Communication (MOIC) Nepal Telecommunication Authority (NTA)
Major Players of SME Development in Nepal
NGOs
GTZ, Private Sector Promotion Project Helvetas, Elam Project Small and Micro Enterprise Development Project (SMEDP)/FNCCI SNV/Private Sector Development Plan Micro Enterprise Development Program (MEDEP)/UNDP The Asia Foundation
Major Provisions of Industrial Enterprise Act, 1992 Industrial Promotion Program Cottage and Small Industries Training Center Hand Made Paper Training Program Ready Made Garment Training Program Leather Goods Promotion Program Ceramic Promotion Program
Objectives of CSI To promote cottage and small industries and to enhance the contribution of industrial sector in the economy. To promote traditional, functions To conduct skill development training programs on about 80 trades and Training Manuals
Challenges, opportunities, problems of the SMEs in Nepal
Technological development: Technical manpower: Research and development: Information Technology Policies and Plans Political stability
Challenges.. Policy have not adequately address Priority on labor intensive industries Lack of skilled or trained manpower Small size of local market Low level of physical infrastructure Shortage of capital
Cont
General Barriers on Industrial Development Availability of resources Transportation Government Policies Current Political Situations Availability of Resources Limited mineral resources. Major Natural resources :- water, timber, hydropower, scenic beauty, small deposits of lignite, copper, cobalt, iron ore Sufficient studies are not still made for commercial purposes.
Con
Most of the resources imported from India and third countries. Agro-based and forest based industries utilizes indigenous raw materials and other industries have to dependent on imported raw materials Government Policies More liberal, open and Market oriented policies to improve its competitiveness In 1990, new industrial and trade policies has been introduced. Government is playing more regulatory and supporting role. But Implementation of rules, regulation are poor. Monitoring activities are irregular.
Recommendation and Suggestions
Regular interactions between concern agencies and beneficiaries. Focused and coordinated to develop business incubation center.
Networking for promotion and business development demand driven activities.
Encouraging financial support for small, especially young enterprises. Mechanism for evaluating policies during their implementation. Establish High level policy exchange and learning centre. Develop incentives for more R&D investment. Improve existing efforts to promote government and private sectors. Develop and commercialize of technology and skills.
Conclusion Performance of the Nepalese industries is not satisfactory. The resources and capacity utilization are not up to the mark. The productivity of most of the industries is well below 50%. The challenges for the industries are more profound today than in the past especially in the wake of globalization and the emergence of WTO.
Con This is forcing industries to be more efficient and competitive to sustain in the world of globalization. The development of industries will take many years to materialize and require joint efforts and commitment from both the government and the private sectors to take concrete actions for the development of the industrial sector to strengthening country's weak economy.
Thank You
for your kind attention and patience