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COUNTRY FEATURE

Nepal

➤ What are the immediate plan and the longterm vision of your government to expand industrial production? Nepal’s industrial development has decelerated in the last decade owing to not only loss of competitiveness but also because of a decadelong armed conflict and political instability thereafter. Addressing the loss of export competitiveness of major industrial products and the reduction in the level protection to domestic industries requires several policy reforms and infrastructure development. In this regard, the government is mulling over a twopronged strategy: promoting export-related industries through incentives and export infrastructure, and creating an enabling environment for the growth of domestic resources based import-substituting industries. Major policy reforms being considered by the government in this context are: (i) an amendment to the industrial enterprises act regarding a new industrial policy, (ii) the establishment of special economic zones and industrial estates, (iii) a one window industrial approval service for the big industries through the investment board, (Iv) access to road and other infrastructure so that private industries can to be established in currently inaccessible areas, (v) reforms to the labour law to create better industrial relations, and (vii) reforms of the laws related to industries, such as the company act, the insolvency act and the income tax act. As an adequate energy supply is critical for industrial production, the government has also considered a 10-year energy development strategy with the objective of ending electricity load shedding in one-to-two years and generating sufficient energy for industry and business in another few years. The government is also gearing up to establish export industries, particularly garment industries, to benefit from the trade preference offered for Nepalese exports in the US market. Meanwhile, the government is also encouraging foreign direct investment in export industries. With all these efforts, we expect the manufacturing sector to expand and industrial output to grow to encompass more than 15% of GDP within the next 10 years from less than 7% at present.

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Following the earthquakes of 2015, the government has focused on the reconstruction of Nepal. Damage to government buildings and key infrastructure, such as roads, bridges and utilities, poses additional economic challenges. Could you provide an update on the plan to provide training in masonry, plumbing and electrics to 50,000 young people in order to speed up reconstruction? Yes, the massive reconstruction work has demanded a large number of skilled and semiskilled workers in the construction industry. To meet this demand, technical training centres are being established in the earthquake-affected districts. These centres will provide trainers’ training and the trainers will eventually provide training to the masons, plumbers or electricians at the village level. The training has already started and it will accompany the housing grant being provided to the earthquake-affected households. The Sustainable Development Goals put particular emphasis on small-scale industries. Traditionally, small enterprises have formed the core part of Nepalese manufacturing. Products such as ready-made garments, pashminas and woolen carpets, as well as handicrafts representing rich Nepali culture, have suffered a severe decline during the years of conflict. Do you have any special initiatives to extend financial and technical support to these enterprises? Our government is putting much emphasis on small and medium-sized enterprises for the reasons of their employment intensity and backward linkages to the production sector. However, there has so far not been a strong backward linkage with the carpet and garment sectors. Our government is putting in place the backward linkage in the garment sector with a focus on areas from cotton farming to spinning, textile manufacturing and, finally, producing garments. This is taking place in the context of new avenues for garment exports that are likely to appear in the international market. In carpets, the government also intends to encourage sheep farming through small farmers’ cooperatives and individual firms.


Making It: Industry for Development #21