The package is being worked out as a part of the exercise to help exporters regain confidence to correct worsening current account deficit. [break]
Although the package is yet to be finalized, sources said it will have special provisions like income tax holiday for export-oriented industries that export at least 80 percent of their productions to the international market.
“It is also discussing the possibility of pledging loan facility at discounted interest rate for exporters, something which they had been demanding for long to cut down the cost of capital and doing business,” said a source.
As an input to the package, Ministry of Commerce and Supplies (MoCS) too had pushed for procedural simplification on bank guarantee and VAT refund for National Planning Commission (NPC) and Ministry of Finance to decide on.
“As a facility, we believe income tax holiday for export industry and soft financing facility will make immediate impact in the market,” said the source.
Kush Kumar Joshi, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), also agreed with the source. “Tax incentive and easy financing are big encouraging factors. They will instantly ensure cost effectiveness and help export regain confidence,” he told myrepublica.com.
The government is also discussing on ways that could enable the export-oriented industries enjoy uninterrupted power supply. But it is still to agree on a concrete program to this effect.
Apart from tax, finance and power support, MoCS has also proposed for short and medium terms measures that could boost exports of key commodities like hand-knotted woolen carpet, handicrafts and pashmina items in the medium term.
Supporting carpet manufacturers and exporters for registering the international trade mark and branding of hand-knotted woolen carpet is one of those medium-term programs that the ministry has suggested to the government, the source added.
Likewise, it has also suggested the government that a special outlet and focal person be established in the Nepali missions abroad to showcase and deal on trade potential of the country.
The issues and facilities being considered now are no different than what the exporters themselves had been pushing for since long. But exporters´ demand to ´declare export industries as strike free zone´ has still failed to draw serious consideration.
“If the relief package did not address labor unrest, it will fail to excite many exporters, particularly those engaged in labor incentive industries like readymade garment,” said Uday Raj Pandey, vice president of Garment Association of Nepal.
As political instability, labor unrest, rising cost of doing business and industrial insecurity bogged down entrepreneurs, Nepal´s exports declined by about 19 percent to Rs 25.11 billion, whereas imports jumped to six-fold its volume over the first five months of the current fiscal year.
While it exerted heavy pressure on foreign currency reserve, country´s BoP crossed over Rs 20 billion in the first quarter of the year.
milan@myrepublica.com
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