National 10 (Spotlight Weekly)

Under Regulations

With the imposition of state of emergency, Nepal-China trade is more regularized

By AKSHAY SHARMA

The nation's almost exclusive focus on the security operations against the Maoist rebels has made it almost impossible for some unscrupulous money-makers. According to official estimates, the smuggling of Chinese products via the Khasa route has been declining since the state of emergency was imposed in November last year.

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Some are making allegations that government officials give tacit blessings to the illegal trade in exchange of hefty bribes. Other business observers, however, dismiss the smuggling allegations as part of a carefully calibrated propaganda campaign to stop the flow of relatively inexpensive but high-quality Chinese products into the country.

Shiva Sharan KC, a director at Everest Bank Limited and a general member of the Nepal Trans-Himalayan Border Trade Association (NTHBTA), say some executive members of the NTHBTA, in collaboration with government officials, have been promoting such unauthorized trade practices.

Durga Bahadur Shrestha, president of the NTHBTA, vigorously denies accusations that NTHBTA executive members are involved. Shrestha, however, accuses the custom officials of not helping them to clear the goods soon.

If remaining irregularities and leakages were to be controlled, Shrestha says, revenue collection could surge by as much as twice. Nepal normally generates customs revenues worth between Rs. 1.5 billion and Rs. 2 billion annually from the Khasa border.

If the revenue leakage is controlled, it can bring in large amount of money to the treasury. For an economy that has been forced to cut back on development expenditure in order to fund the security budget, stricter patrolling and monitoring of the trans-border movement of goods and people could be a boon.
"The Royal Nepalese Army has been patrolling the border region from the day the state of emergency was imposed," says Ram Chandra Man Singh, Deputy Director-General of the Customs Department of the Ministry of Finance. "Importing goods through illegal channels is simply out of the question," he adds. "As the geography (on the border with China) is different from that in the southern belt, however, there are isolated cases of irregularities. But this represents only a small amount - and occurs perhaps once or twice a year," he adds.

Responding to allegations of administrative delays leveled by traders, Singh says: "It takes between one and two hours to clear each consignment, depending on the volume of goods in transit. The duration also depends on whether all the required documents are in place or not. We are working to develop an effective customs valuation system."

Deep Basnyet, Director-General of the Department of Revenue Investigation (DRI), too, sees the decline in unauthorized trade, arguing that it would be physically impossible for that to happen now. "Every container carrying imported goods is sealed before it passes through the customs checkpoint," he says. "The DRI is the sole department which breaks the seal once the containers pass the checkpoint."

Khasa is the sole entry point to Nepal from the Tibet Autonomous Region of China. Accusations of corruption and illegal imports are bound to focus attention there. But officials maintain that the allegations are aimed at pressuring the government to slash the valuation rate.

Basnyet says that his office has been able to conduct physical monitoring and patrolling more effectively because of the state of emergency.

Despite many hindrance and obstruction, the trade with China continues to increase. From Maoist threat to official disturbance, Nepal-China trade is surviving in the very difficult phase.