KATHMANDU, JUL 15 -
Political turmoil coupled with deteriorating business climate has taken its toll on the country’s industrial sector. This is what the Economic Survey 2011-12 shows. The study has painted a bleak picture of the industrial sector that is projected to grow at 1.3 percent rate this fiscal year. The growth rate was at 2.3 percent last year.
The industrial sector has been underperforming for the last five years, with the average growth rate remaining at 1.2 percent. “The industrial growth target could not be achieved due to the prolonged political transition, energy crisis and regular disturbances in industrial relation,” states the survey. “These figures suggest that we should be serious towards finding solutions to the problems faced by the industrial sector.”
Despite a huge potential, the sector has not been able to utilise its full capacity because of the government’s failure to create a business-friendly environment, according to the survey. “However, some industries’ capacity utilisation has increased in 2010-11,” says the survey.
According to the study, factories producing cigarette and beer operated at 92 and 80 percent of their installed capacities, respectively, in last fiscal year. Likewise, sugar factories used just 32 percent of their capacity and cement factories 56 percent.
The survey has projected growth in the production of noodles, cigarette, shoes, plastic products, cement, iron rods and alcohol, among others. It estimated that noodle production would increase by 2,142 tonnes, while production of juice would rise by 2 million litres. Similarly, production of sugar and tea is expected to go up by 9,533 tonnes and 816 tonnes, respectively.
Nepal attracted foreign direct investment (FDI) worth Rs 5.63 billion in the current fiscal year, according to the survey. The energy sector received the largest chunk of FDI, followed by the service sector. Likewise, a total of 7,050 small and cottage industries were registered in the first eight months of the fiscal year, with a combined investment of Rs 9.61 billion.
Over the eight months, some 3,857 ropanies of land has been leased to industries in 11 industrial estates. As of the eighth month, 471 new industries have come into operation and 88 industries are under construction. And, 51 industries have been closed.
The survey shows that a huge amount has been invested in different industrial corridors. Over the review period, private industries invested some Rs 18.52 billion and Industrial Estate Development Limited (IEDL) put in some Rs 299 million.
Some of the government’s concrete steps in the first half of the fiscal year will bear positive results in upcoming years, the survey says. Amendments to most of the industry- and investment-related acts and the establishment of Nepal Business Forum (NBF) for continued dialogue between the state and private sector, among others, will help boost confidence of the industrial sector, it said.
On the signing of the Bilateral Investment Promotion and Protection Agreement (BIPPA) and Double Taxation Avoidance Agreement (DTAA) with India, the report said the deals will simplify trade business. “The government is also preparing to sign BIPPA with six other countries,” added the report.
Pradeep Jung Pandey, vice president of the Federation of Nepalese Chambers of Commerce and Industry, said it is the high time that the government seriously think about the industrial sector’s promotion. He blamed the government’s indifference towards the industrial sector, ambiguous policies and neglecting the country’s potential sectors, including hydro, agriculture and infrastructure, for sluggish industrial growth.
Source: http://www.ekantipur.com/2012/07/15/business/industrial-growth-remains-pretty-dismal/357177/
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