NATIONAL7Spotlight Weekly)]

Untapped Potential

As economic relations expand, entrepreneurs see the scope for further growth

By A CORRESPONDENT

After India, Germany is the second biggest export market for Nepal. Germany alone consumes nearly 80 percent of Nepal's total exports of carpetóone of the leading foreign exchange earners. And the list continues.

Germany has remained an important economic partner for Nepal for the last several years. Despite some ups and downs, German buyers have shown their preference for hand-woven woolen carpets manufactured in Nepal. The ninth annual general meeting of the Nepal-German Chamber of Commerce and Industry (NGCCI) last Friday provided an opportunity for reaffirming the pledge to promote bilateral cooperation, especially in the areas of trade and development.

Shrestha addressing the NGCCI meeting : Trade first

"Nepal needs to work very closely to attract more investment from Germany," said Prithvi Raj Ligal, Vice Chairman of the National Planning Commission. "There is tremendous scope to enhance knowledge-based industries."

Besides looking for new opportunities, there is also ample scope for promoting trade relations between the two countries. Nepal's exports to Germany stood at Rs 7820 million (20 percent of the total exports of the country) in 1998/99 while imports stood at Rs 1463 million.

"As a least developed country, Nepal will continue to be a priority target for economic development cooperation from Germany," said newly appointed German ambassador Rudiger Lemp.

Entrepreneurs say Nepal needs to make concerted efforts to tap the market potential in one of the highly developed economies of the world. "There is a greater need to diversify and expand our export base," said B. K. Shrestha, President of NGCCI, who has been re-elected to the post.

"Although we can increase exports to Germany, the availability of limited products has hampered the possible growth. Despite big possibilities to attract foreign direct investment and technology from Germany, we have not been able to realize the full potential."

Shrestha said the new NGCCI executive committee would work out detailed plans for the development of trade, investment and tourism. "Nepal lies in a very strategic location with two huge markets on northern and southern borders. But we still have not been able to get the information across to the German investors to invest in Nepal."

NGCCI Vice President Rohini Thapaliya blamed the government for not being pro-active to exploit the country's economic potentials. "As the government is preoccupied with political agendas, its commitment to economic development largely remains on paper. Implementation is weak and frustratingly slow, the law and order situation is worsening and corruption is rampant," said Thapaliya.

As a way out, a German expert, Jim Tomecko, team leader of GTZ-PSPP, said there should be a close partnership between the government and the private sector to tap the opportunities and face the challenges thrown open by the World Trade Organization and proposed SAFTA. Such a partnership will be instrumental in working out tariff reduction schedules, competitive positioning of businesses and understanding market dynamics.

The Nepalese government and private sector can ignore this message at their own risk.

PARAMOUNT CARPET
Quality Pays

Paramount, a private industry that manufactures and exports hand-knotted woolen carpets, received the NGCCIís Best Exporter Award for traditional items this year. The company retained its position consecutively for the second year by exporting 83,000 square meters of carpet worth Rs 740 million.

Established in 1989, Paramount started exporting carpets to Germany in 1991. It also markets its products to France and the United States. It provides direct employment to nearly 3,000 people in its complex.

Bhattarai

"Though our major competition in the German market is with Indo-Nepal carpet exported by Indian traders, we have got a distinct position due to our technology and designs," said Deepak Bhattarai, managing director of Paramount. "There is tremendous scope for increasing our exports to Germany, other European countries and the US only if the government assisted such endeavors."

According to Bhattarai, the government needs to introduce a separate Labor Act to govern the carpet sector in order to avoid risks like strikes and lock-outs or transfer carpet factories by setting up Export Processing Zones. The government is also failing to boost the efforts for the market diversification and promotion of carpets, he said. Despite some problems like unrealistic floor price and unhealthy practices by some unscrupulous elements, Bhattarai sees a bright future for the Nepalese carpet industry. "We can accomplish a lot only if we have effective public-private partnership."