Nepal mulls two percent incentive on all valued-added exports

Kathmandu - Nepali government is preparing to bring out the policy to provide at least 2 percent incentive of the total value added exports in convertible currencies in  an effort to encourage export.

The Ministry of Commerce and Supplies (MoCS) is soon forwarding the proposal to the Ministry of Finance (MoF) for approval. MoCS officials say they will push the MoF to introduce the  incentive scheme through the upcoming budget.

According to Tuesday's Republica daily, as of now, the government has been providing incentives only to exports with at least 30 percent value addition.

"All exporters, who are earning convertible foreign currencies, from their value added exports will be eligible for incentive of at least 2 percent if our proposal is approved by the finance  ministry," said Uday Raj Pandey, president of Garment Association of Nepal (GAN).

Pandey also said existing hassles created by officials at Department of Industry (DoI) would be lessened if our proposal for 2 percent incentive is approved.

The government had introduced export incentives from fiscal year 2010/11, provisioning 2 percent incentives on exports with 30- 50 percent value addition, 3 percent for exports with 50-80

percent value addition and 4 percent for exports with more than 80 percent value addition.

Pandey also said the MoCS has agreed to propose waive off the existing 25 percent amount of the total imports as refundable security deposit while securing bank guarantee by the

exporters. The bank guarantee includes security deposit, amount equivalent to customs duty and VAT on imports in addition to the import amount.

Realizing the shortage of skilled workforce for the apparel industry, GAN and MoCS officials have also agreed to conduct training programs to produce garment workers.

Garment entrepreneurs are facing severe shortage of manpower amid growing opportunities for skilled workers in India and overseas job market.

"Increasing outflow of skilled workers has forced us to produce new batch of workers. So, we have planned to conduct trainings for youths for the next two years with the target of producing  at least 500 new workers each year," he said.