Developing Nepal’s Export Strategy

By Padma Jyoti

I had the good fortune of attending the Executive Forum organized by International Trade Center in Annecy, France in September 1999. The topic was "Redefining Trade Promotion - The Needy for a Strategic Response".

Executive Director of ITC warned us of the enormous changes taking place in the world trading system and the intense pressure on each one of us to become internationally competitive, both at home and in the world. Nepal’s third country export stands on two legs - garments and carpets. It can topple if we do nothing about it. It is as if we are used to driving very slow on the left in Nepal. Suddenly all rules of the road have changed and there are no speed limits. But the big question is - what are we doing about it?

I think we have to think carefully what steps to take and how to allocate our very limited resources. In other words we ought to have an export strategy to guide our efforts in the future.

This strategy has to encompass all factors relevant to reducing cost of export transaction, reinforcing forward and backward linkages, moving up to higher value adding production, newer technologies, newer export-oriented competency.

The other important lesson is that export, or for that matter trade, is no longer an isolated subject. National export strategy must be integrated into the overall economic planning framework. To be really successful in the New World we have to improve through reform all sectors of our economy in harmony. Investment environment, taxation policy, fiscal issues, financial sector, skill development, governance at national and corporate levels are examples of such areas.

The challenge is not being satisfied with merely offshore market development and promotion activities, but to take up the challenge of building an export culture and a within the context of all sectors of the economy. Therefore, inter-ministerial involvement and inter-agency consultation in decision making is going to be Nepal’s Waterloo, Panipat and Kuruchhetra where we will win or lose the battle.

If we want to benefit from world trends first we have to understand them and then start building capability at home. A sustainable way is to build institutions to accumulate knowledge and experience so that they become available for further and for adding further value.

We must also always remember that increase in export and trade is not an end in itself but a means for the betterment of as many of our people as possible in a sustainable way.

The explosion in the amount of information available and improvement in technology to deliver all of this to us has been dramatic. Access to information and to technology is easier now than ever before. What is lacking is our ability to absorb knowledge, adapt technology and use them productively and profitably. This is where a lot of work has to be done in further, specially in developing countries. The Secretary General of UNCTAD gave an eye opening example - Germany accounts for 9% of world coffee export without growing a single bean - only because of Germany’s knowledge of this business.

Nepal has to realize that competition is no longer on low price or cheap cost. Competition is now on quality, service, value and networking - all results of putting knowledge to use. Competition today is on who can respond the fastest to the market.

Annecy forum recognized the following strategic challenges:

• Balancing developmental needs at national level with short-terms commercial needs of the enterprise

• Demands made by firms for quick profits and the actual needs of building competency may be different

• How to speed up the capability for total competitive response

• One can not sell what one does not have or cannot make - the challenge of on-shore capacity building to take advantage of the opportunities

• Synergies through backward linkages and joint marketing groups

• Lowering the cost of doing business in the country

• Shortening and hastening the process of internationalization of business firms

• Helping the exporting firms to develop long-term relationships and sustain them

• Promoting FDI

History tells us that all economically successfull countries in the world have grown through export route leaving behind countries who looked inward or were content with domestic markets only.

For example let us look at the approaches some of these countries took

• Finland - close trade-industry linkage focused on internationalizing the economy

• Philippines - development focused approach integrating trade, investment and industry

• New Zeland - bottom up strategy development

• Mauritius - a coordinated approach based on institutional specialization

• Ireland - combining inward investment promotion with developing indigenous export capacities

• Chili - product and market development through international standards of competitiveness

Building and implementing a national export strategy is possible only through direct and continuous public-private sector consultation. All sectors - public, private or international have to work together in a partnership of trust.

Building and implementing a national export strategy is possible only through direct and continuous public-private sector consultation. All sectors - public, private or international have to work together in a partnership of trust.

It is a historical fact that the prosperity of the world on a total scale has gone up in the last century. But unless we take control of our boat the high tide of increased world trade will not get us anywhere. I may add further here that for many of the developing countries the boat seems to be sinking. In Nepal we sometimes feel there is no boat and we are already in deep waters.

The task before us is so immense that each one of us has to contribute and become a member of the rowing team of the boat.

(Adapted from a paper Mr. Jyoti Presented at NUSACCI workshop held at Kathmandu on April 4, 2000)