Agriculture, Industry and Tourism

Agriculture, Industry and Tourism
Agriculture
8.1 Nepal is an agricultural country. About eighty percent of the people are dependent on
agriculture for their income and employment. Agriculture sector contributes 36 percent of
GDP. Agriculture sector was given top priority in the planning documents in the past
considering the fact that the sustainable economic development was not possible without the
development of agriculture. Long–term Agriculture Development Plan is under
implementation aiming to reduce poverty and increase economic growth by means of
increasing employment opportunities and agricultural production.
Production Status
8.2 There is a preliminary estimation that Nepal’s total food production (paddy, wheat, maize,
millet and barley) would to decline by 2.48 percent or 3,27,000 metric tons to 7.329 million
metric tons (mt) in the current fiscal year compared to the same period last year. Such
production was expected at 7.656 million mt in the last fiscal year. In FY 2006/07, the total
area covered by food crops is estimated to decline by 1.7 percent to 3.304 million hectares
(ha). The share of paddy production is 50.22 percent of total food production in Nepal. In spite
of fair of growth in the production of maize and good production of wheat, overall decline in
the total food production was attributed to the decline of paddy production in the current fiscal
year.
Box: 8(A) :
Major Activities of Agriculture Sector
1. In accordance with the Government of Nepal's policy of to implement the “one-village one-product”
program in FY 2005/06, aiming to increase the production of exportable under the modality of
public-private partnership, “one-village one-product” working procedure, 2007 has been prepared.
The main objectives of this program are to help reduce the level of poverty and boost economic
development at the local level by increasing the export of value added products. For this Ramechap
and Sindhuli districts for junar; Siraha , Banke and Bardia for bel; Bhaktapur for lapsi and Nuwakot
and Rasuwa for rainbow trout fishes have been identified.
2. The Bio-diversity Policy,2007, which was announced for the purpose of food security and poverty
reduction, has the following objectives:
• Promote the development of the agriculture and consolidate the food and nutrition security by
conserving, promoting and utilizing agro-bio-diversity,
• Promote and protect the farmers’ rights to traditional knowledge, skills, innovations, technology
uses and practices,
• Secure equitable and fair distribution system of opportunities and benefits created through the
access and uses of agro- genetic sources and substances,
• Contribute to the promotion of eco-balance through the conservation
3. The guidelines for the operation of relief fund for the agriculture disaster management have been
prepared. The main objectives of this guidelines are to protect the welfare of the farmers, to maintain
the share of agriculture in the GDP, to respond to the disasters promptly, to assess the damage and
provide relief, identify and mobilize internal and external financial and technical resources and to
monitor post disaster situation.
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Source: Ministry of Agriculture and Cooperatives
8.3 The production of oilseeds (mustard, yellow mustard, sunflower, etc.) is estimated to be 135
thousand 660 mt, a decline by 2.63 percent, in the FY 2006/07. The harvest area is also
estimated to decline by 2 percent limiting to 184 thousand hectares. The production of oilseeds
in the oilseed-producing major districts in the Tarai. Is estimated to decline due to no
precipitation for a month at the time of flowering of oilseeds and also eating up the oilseeds
plants by the insects in some places. In the current FY productivity of potato is estimated to
decline despite the marginal increase in area under cultivation. The area and production of
tobacco are expected to decline. Similarly, the area and production of sugarcane is estimated to
increase where as the production, area and the productivity of jute crops are estimated to
decline.
8.4 The production of pulses (musuro, black lentils, rahar, chana, soybeans, gahat, khesari and
others) is estimated to increase by 2.6 percent, from 267 thousands mt last FY to 274 mt, in
this fiscal year. Similarly, the fruit production is estimated to increase by 5 percent, from 535
thousand mt to 562 mt. The vegetable production is estimated to go up by 6.69 percent in this
fiscal year. This growth is attributed to the increase in cultivation of vegetable farming lately,
instead of the other types of farming.
8.5 In FY 2005/06, the shares of food crops and cash crops in the total agricultural production
were 49.44 percent and 50.56 percent respectively, where as in FY 2006/07, it is estimated to
be 47.75 percent and 52.25 percent respectively. out of total cultivated area, the total area
covered by the production of food crops and cash crops remained unchanged at 76 percent and
24 percent respectively in both FY 2005/06 and FY 2006/07.
8.6 In FY 2006/07 as compared to FY 2005/06, the production of food crops declined by 2.78
percent in terms of agro-production index, in FY 2006/07 the production of vegetables,
livestock and nursery went up by 6.67 percent and that of the fruits and spices by 5.25 percent.
The production of meat products increased by 3.19 percent in this fiscal year.
Production Status of Principal Food Crops
8.7 Paddy: Having occupied more than a half share of principal food crops, production, area and
productivity of rice is estimated to decline in the current fiscal year. Accordingly, production
of paddy is estimated to decline by 12.55 percent, from 4.209 million mt to 3.68 million mt. As
compared to last fiscal year the paddy production area is estimated to go down by 7.0 percent
to 1.439 million ha and the productivity is also estimated to decline by 6 percent to 2,557 Kg
per ha. This fiscal year witnessed early monsoon. However, low level, of precipitation was
recorded during the crucial paddy plantation time from the third week of July to the third week
of August, 2006. As a consequence of this, the productivity and the production of paddy
declined due to late plantation, no plantation and inadequate water feeding for the planted rice
field.
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8.8 Maize: The production of maize is estimated to increase by 5 percent from last year’s
production of 1.734 million mt to 1.820 million mt in this fiscal year. The maize cultivated
area and its productivity is estimated to increase by 2.29 percent and 2.58 percent reaching 870
thousand ha and 2,091 kg per ha respectively. The production of maize remained satisfactory
due to good harvest of winter crops in the plain and the hill areas.
8.9 Wheat: In FY 2006/07, wheat production is estimated to increase by 8.68 percent from the
level of last year’s production to 1.515 million mt. Adequate winter rainfall and significant
increase in the cultivated land in this fiscal year have led to the increase in the wheat
production. The wheat production area increased by 4.56 percent from 672 thousand ha in FY
2005/06 to 702 thousand ha in this fiscal year.
8.10 Barley: The area covered by barley crops and its production is estimated to go up in this fiscal
year. Since the area of barley crops has increased by 1.35 percent, production of barley is
estimated to increase by 2 percent. The total area of barley crops and its production is
estimated 26 thousand 5 hundred 80 ha, and 28 thousand 2 hundred 93 mt respectively. The
main reason for the low increase in the production of barley is found to be the farmers'
attraction to the other crops and the decline in the productivity due to fall in the area of
cultivation in the inner Terai region.
8.11 Millet: The production of millet is expected to decline by 2.1 percent, from 291 thousand mt in
last year to 285 thousand metric ton this fiscal year. The area of millet cultivation is expected
to increase by 1.33 percent In this fiscal year primarily due to the planting of millet instead of
paddy in some districts. Due to adverse weather condition, the productivity of millet is
expected to decline by 3.39 percent from 1,112 kg/ha in last fiscal year to 1,074 kg/ha in this
fiscal year.
Status of Cash Crops Production
8.12 Sugarcane: Cultivated as a principal industrial crop, the area covered by its cultivation
increased by 3 percent to arrive at 64 thousand ha in this year and the production increased by
5.57 percent to 2.6 million mt.
Agricultural Crops
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8.13 Oilseeds: As compared to last year, oilseeds production (mustard, yellow mustard, sunflower,
etc.) is estimated to decline by 2.63 percent to 135 thousand 660 mt in the current fiscal year.
The preliminary estimate is that the total area of cultivation of oilseeds has come down to 184
thousand ha, a decline of 2 percent. Oilseeds production in the Terai districts declined mainly
due to the absence of winter rainfall or delayed rainfall and crops destroyed by the insects.
8.14 Potato: In the current fiscal year, the potato production is expected to reach 1.943 million mt,
a decline of 1.6 percent, with the marginal increase in the area of cultivation to 153 thousand
ha. The productivity is estimated to be 12.36 mt per ha. The productivity of potato in this fiscal
year declined due to the disease.
8.15 Tobacco: The production of tobacco is estimated to declined by 2.58 percent to 2,648 mt. Its
cultivation area has continued to decline for the past few years. In this fiscal year, the
cultivated area is expected to decline and come down to 2,729 ha. Such decline is mainly
attributed to the declining interest in its cultivation on the part of the farmers.
8.16 Jute: In the jute producing six districts of eastern development region, namely Jhapa, Morang,
Sunsari, Saptari, Siraha and Udayapur, jute production, cultivated area and its productivity are
estimated to decline by 10.1 percent, 6.1 percent and 4.3 percent respectively.
8.17 Pulses: The total production of pulses (musuro, black lentils, rahar, chana, soybeans, gahat,
khesari and others) is estimated to have increased by 2.6 percent from last year’s production of
267 thousand mt to 274 thousand mt in this fiscal year. The area of cultivation is also estimated
have to increased by 1.9 percent from 314 thousand ha to 320 thousand ha. Increased
production of peas, black lentils, soybeans, musuro, beans, etc., have contributed to boost the
entire production of pulses despite slight decline in the production of chana, rahar, etc.
Table 8 (a): Productivity of Agricultural Products
(kg/ ha)
Production Fiscal Year
2005/06 2006/07*
Food crops 2,279 2,218
Paddy 2,717 2,557
Maize 2,038 2,091
Wheat 2,074 2,156
Millet 1,112 1,074
Barley 1,059 1,064
Pulse 853 859
Horticulture
Potato 13,090 12,657
Vegetable 11,500 11,743
Fruits 9,469 9,875
* Estimate
Source: Agriculture Promotion and Statistics Division, Ministry of Agriculture and Cooperatives
Other Crops’ Production Status
8.18 Fruits: The production of fruits is estimated to increase from 535 thousand mt last year to 562
thousand mt this year, resulting in an increment of 5 percent. On the other hand, the fruit
cultivated area is expected to increase (by 0.83 percent) from 56,548 ha to 56,912 ha. The total
production of fruits is expected to increase this year because of on year production of mango
season and the increase of apple production.
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8.19 Vegetables: The production of vegetable crops is estimated to increase by 6.69 percent, from
2.19 million mt last year to 2.329 million mt this year. The cultivated area covered by
vegetable crops is expected to stand at 198 thousand ha. The unabated increase in both the area
covered by vegetable crops and the production is attributed to the increased interest of the
farmers towards vegetable farming as a means of principal cash crops in lieu of other crops.
8.20 Spices: The area covered and production of spices like ginger, garlic, turmeric, cardamom
etc., is found to have increased slightly. The productivity of spices like garlic and ginger has
declined despite the increase of area and their production. The area of cultivation, production
and productivity of chilly (green pepper), turmeric and cardamom are found to have increased
this year.
8.21 Tea, Coffee and Cotton: The production of industrial cash crops like tea, coffee, and cotton
has increased significantly. The area of cultivation and production of coffee has shown
significant growth.
8.22 Honey: With no change from the last year, the number of beehive (honeycombs) and the total
production of honey this year are expected to remain at 125 thousand mt and 650 mt
respectively. Despite the increase in the number of modern bees like serena and molifera, no
significant change in the total production of honey is noticed because of decline in the number
of beehives’ of the wild bees like mudhe khope, etc.
8.23 Floriculture: Floriculture is estimated to have a transaction of about Rs. 220 million from 550
nurseries and 56 showrooms in the Kathmandu Valley this year. This amount represents an
excess of Rs. 3.8 million over the last year.
Status of Livestock Products
8.24 Number of Animals/Birds: The number of cattle is estimated to be 7.044 million, an increase
by 0.59 percent , in FY 2006/07. The number of milking cow is estimated to be around 908
thousand i.e., 12.9 percent of the total number of cattle. Similarly, the number of buffaloes has
gone up to 4.367 million, an increase of 3.85 percent over the last fiscal year is out of this total
number, 25.8 percent (1.124 million) are the milking buffaloes. In the current fiscal year as
compared to the same period last year the number of sheep, goats and pigs is estimated to
increase by 0.19 percent, 5.74 percent and 3 percent and reach 814 thousand, 7.846 million and
989 thousand respectively. The number of fowl is estimated to increase from 23.2 million in
FY 2005/06 to 23.9 million in the current fiscal year, an increase of 3 percent over the same
period last year. The production of fowl could not increased as expected due to the spread of
bird -flu in Bangladesh and the restrictions imposed for the import of such birds from India.
Likewise, the number of ducks is estimated to increase by 0.48 percent to reach 394 thousand.
8.25 Milk: In the current fiscal year, milk production from cows and buffaloes (except Nak and
Yak) is estimated to reach 1.351 million mt, more than 3 percent over the last year's
production. Of the total milk production, 393 thousand mt and 958 thousand mt are from cows
and buffaloes respectively.
8.26 Meat Products: As compared to the preceding year, the total meat production is estimated to
increase by 3.6 percent, totaling 227 thousand mt in the current fiscal year. Of the total meat
production, 147 thousand mt is expected from buffalo, 2,747 mt from sheep, 44,933 mt from
goats, 16,000 mt each from pigs and fowl and 231 mt from ducks. As stated earlier, the
production of meat from fowl has increased nominally due to spread of the bird-flu in
Bangladesh and the import restrictions.
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8.27 Eggs: The production of eggs is expected to increase by 2.34 percent, from 600.8 million in
FY 2005/06 to 614.8 million pieces in FY 2006/07. Of this number, production from fowl and
ducks is expected to be 600.9 million and 13.9 million pieces respectively.
8.28 Fish: In FY 2006/07 as compared to the last fiscal year's level, the total production of fish is
projected to increase by 3 percent and reach 46,800 pieces. It is also estimated that half of the
total production would be from the ponds and the rest from the natural sources.
8.29 Wool: After a period of long gap, wool production from sheep is estimated to increase from
587 mt to 588 mt.
Impact of Monsoon/Weather
8.30 Through the monsoon arrived early this year, inadequate rainfall during the period from the
third week of July to the same week of August delayed the paddy plantation, more than 1
hundred thousand ha of paddy field was left barren and already planted saplings were dried up.
This resulted in the decline in productivity and the overall production of rice. The Terai
districts of Eastern and Central Development Regions were badly affected by the prolonged
drought. An average of less than a half of the normal rainfall was recorded in these regions
during that time. On the other hand, relatively good rainfall recorded in Kailali and
Kanchanpur districts of Far west Development Region positively contributed to the production
of rice. According to the recorded data at different locations under the Department of
Hydrology and Meteorology, the precipitation was 78 percent, 77 percent and 79 percent in the
months of May-June, June-July and July- August respectively. In the month of August-
September 101 percent of precipitation, more than the average, was recorded. The excessive
rainfall in the month of August- September and less than the average rainfall in other months
caused negative impact on the production of paddy.
8.31 Weather condition remained favorable for the winter crops like wheat, barley, pulses and
fruits. Less than average of precipitation was recorded in the months of September October,
October November, and December January, where as in the month of January-February, more
than four times of average rainfall was recorded. All this contributed to increased the
production of the winter crops.
Impact of Natural Calamities
8.32 The paddy production was affected due to flash flood, landslides, and inundation particularly
in Banke, Bardia, Achham and Nawalparasi districts. However, the whole nation was affected
by the drought. Most of the Terai districts, particularly Siraha, Saptari, Dhanusa, Mahotari,
etc., were severely affected by the drought. The latest flood affected districts like Banke and
Bardia. Similarly, heavy snowfall in the first half of February and hailstones in February
through April hit the vegetable and horticulture farming hard. Hailstone also damaged wheat
production. Hailstones-affected districts include Sindhupalchok, Dailekh, Kathmandu,
Bhaktapur, Tanahu, Kaski, Gulmi, Lamjung, Okhaldhunga, Bhojpur, and others.
Chemical Fertilizers and Improved Seeds
8.33 Chemical Fertilizers: Agriculture Inputs Company Limited, since its inception, has been
selling and distributing chemical fertilizers to the farmers as per their demands. The company,
in order to ensure continued supply system, has been purchasing the fertilizers as per the
needs, from manufacturing company directly, its authorized dealers or from renowned
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fertilizer trading concerns. In addition to this, the Company has been continuously procuring
subsidized fertilizers from the Government of India. The Company has started undertaking
study on the potentials of trading of other chemical fertilizers, micro-fertilizer, compost and
other agricultural products. In FY 2006/07 Agriculture Inputs Company Limited supplied
8,137 mt nutrient unit of chemical fertilizer. In the first eight months of FY 2005/06, the
Company supplied 7,269 mt nutrient unit of chemical fertilizer against the distribution of 9,186
mt nutrient unit of chemical fertilizer during the same period in FY 2006/07.
8.34 Improved Seeds: In accordance with the policy of encouraging competition with the private
sector for the trading of improved seeds, the National Seeds Company Limited continued to
make available quality seeds through its dealers at the farmers’ door-steps. In line with its
goals, the company collects quality seeds from its own farm and from the farmers under the
Seeds Promotion Program. The company then treats and processes such seeds using pesticides
and germicides and thereafter sells at the local level. In FY 2005/06, the Company had
distributed 644mt, 2,859 mt and 11 mt of paddy, wheat and maize seeds respectively. In the
first eight months of FY 2006/07 the Company sold 92 mt of paddy, 2,451 mt of wheat and
5.601 mt of maize seeds. The distribution of seeds of paddy and maize has been found falling
short of the set targets. The main reasons for not meeting the set target include failing to
collect appropriate seeds from farmers as per the contract, increasing inclination of farmers
towards hybrid seeds of vegetables and others except food crops, influx of low quality seeds
through open border from India and high transportation cost to be incurred in the hill districts.
8.35 Irrigation: The government agencies and the Agriculture Development Bank are
implementing irrigation-related development projects, as in the past. In the first eight months
of FY 2006/07, government agencies and the Bank have provided irrigation facility to 12,530
ha and 128 ha of land respectively. The total area of land made available for irrigation through
these schemes thus stood at 12,658 hectares. In FY 2005/06, government sector had provided
irrigation facility in 17,960 ha and the Bank provided facility in 442 ha of land through their
respective projects.
8.36 Agricultural Credit: Agricultural credit play an important role in the agriculture production.
In FY 2005/06, Agricultural Development Bank extended Rs.12, 855.6 million worth of credit,
whereas recovery amounted to Rs. 11,841.6 million. The arrears stood at Rs.22,187 million at
the end of the last fiscal year. During the first eight months of FY 2005/06, Rs. 8,503.2 million
was extended as against Rs. 8,902.5 million equivalent of credit extended (an increase of 4.7
percent) during the same period of FY 2006/07. Almost half of the loan investment goes to
agro-industry, buying and selling business and godown construction, whereas least volume of
credit goes to tea and coffee farming.
8.37 Small Farmers Development Bank: The Small Farmers Development Bank has been
involved in promoting cooperatives in the rural areas through the implementation of microfinance
program for the socio-economic development of small farmers and the povertystricken
people. Social mobilization, livestock insurance, small farmers institutional
development program and financial sector micro-finance programs are the main programs
implemented by the Bank. Under the social mobilization program first the poor and small
farmers are identified and then the group of 5 to 10 members are formed representing every
household. The ward-level group is constituted comprising representatives from the same
ward. Small Farmers Cooperative is institutionalized after the formation of village-level
working committee comprising one representative each from the ward-level group. In FY
2005/06, total number of groups affiliated with the Bank were 141, and this number reached
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159 in the first eight months of FY 2006/07. Loan disbursement reached at Rs. 203.44 million,
while the principal repayment and interest payment reached at Rs. 197.5 million and Rs. 28.84
million respectively in the first eight months of FY 2006/07. This Bank has made an
arrangement for launching livestock insurance scheme in 159 VDCs. In FY 2005/06, 4,466
livestock were insured for an amount of Rs. 54.2 million. In the first eight months of this
current FY 2006/07, an additional amount of Rs. 40.06 million was insured for 3,700 extra
livestock through local institutions. With the help of this Bank, Small Farmers Institutional
(replication) Program was implemented in 4 VDCs. The ownership of this program has now
been transferred to the local-level groups after making them capable for direct supervision and
management. In the first eight months of FY 2006/07, 159 small farmers cooperatives have
received loans. This program has supported altogether 94,194 individuals, of which 45,784 are
women and 48,410 are men. Eighty-five thousand seven hundred thirty individuals, 41,256
women and 44,474 men, were benefited from this program in FY 2005/06.
8.38 Nepal Agriculture Research Council: The Nepal Agriculture Research Council was
established to conduct research in the field of agriculture sector to effectively help develop this
sector, the backbone of Nepalese economy. The Council has been conducting different
research and experimental activities relating to several aspects of the agriculture sector, taking
into account the advice and suggestions provided at the workshops and seminars by the
people’s representatives and the practical problems faced by the farmers at the field level. The
Council is doing research on the major food items of Nepal such as rice, wheat, and so on. The
research will focus on the technology and techniques through which the production and
productivity of such major food items could be increased. Research works are under way for
the identification of appropriate varieties of off-season farming of tomatoes, cauliflower and
cabbages; control of insects and the techniques of safe storage. It is not possible to increase the
production of milk and meat products in the absence of nutritious food for the animals.
Therefore, research activities regarding animal procreation are being undertaken with a view to
identifying appropriate varieties of animal fodder and for increasing the production of milk and
meat products through the improvements of animal breeds. Special priority is accorded to the
research program for the production of carpet wool in Karnali and Mustang.
8.39 Status of Import and Export of Agro-Products: According to the classification group of
international standard (SITC), an estimated 4,656.7 million rupees worth of foodgrains, live
animals, tobacco and beverages products were exported in the first eight months of FY
2006/07 as against the export of Rs. 5537.2 million worth of such products during the same
period in FY 2005/06. Similarly, it is estimated that Rs. 8,337.4 million worth of goods were
imported to Nepal during the first eight months of FY 2006/07, Rs. 9,893.8 million worth of
such products were imported during the FY 2005/06.
8.40 Cooperatives: In line with the policy of Nepalese government to ensure the continuation of
economic and social development efforts through the promotion and development of
cooperative system, the process of encouraging capital formation and promoting
entrepreneurship awareness amid the poor people has gained momentum through mobilizing
cooperatives qualitatively. Several activities have been carried out to enhance the effectiveness
of Cooperative Act and Regulations with timely amendments, incorporating proper provision
of regulating cooperatives. A database has been created on the national cooperative
institutions, covering information like their types, transactions and employment level. An
audio-visual program has been prepared regarding cooperative awareness. In the first eight
months of the current fiscal year 300 groups have been affiliated with the cooperatives,
whereas 500 farmers groups were made affiliated with cooperatives in FY 2005/06. By the end
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of the first eight months of FY 2006/07, 5,289 cooperative workers and staff were trained. In
the current fiscal year, Jumla, Mugu, and Kalikot districts of Karnali zone have minimum
number of cooperative activities. Nevertheless, cooperatives-related programs such as
affiliation of farmers’ groups; basic cooperative management program and pre -cooperative
education programs were launched in these districts.
8.41 Land Reform: Out of the total number of Kamaiyas registered in the 2059 BS, 12,019 such
families have received land under the “ Freed Kamaiyas Rehabilitation and Livelihood
Development Program”. Central and district level committees are working on the 13,469
families of unrecorded freed Kamaiyas for their rehabilitation and livelihood. The Land
Information and Record Department is preparing an integrated land information system. In
line with the policy of ending dual ownership of land, separation of rights and ownership of
landowner and tenants is currently going on. The Land Management Training Center is
providing short-term and long-term training programs. The Land Revenue Offices are
providing 20 percent rebate charged on the registration and transfer of ownership in the name
of women.
Industry
8.42 In FY 2006/07, industrial sector GDP is estimated to increase by 2.16 percent over its GDP
level in the compared to last fiscal year. The production of food processing industry, milk
product, textiles and paper production has increased in the current fiscal year. However, the
industry sector is expected to record a nominal growth in this fiscal year, due to decline of
ready-made garments and carpet production.
8.43 Special Economic Zone: The concept of Export Processing Zone emerged from the idea of
making exportable items competitive while reducing the cost of production. In a country where
cheap labor force is available, such facilities are established and all kinds of import duty are set
aside or exempted on the import of raw materials required for the production of exportable
items. The Special Economic Zone developed out of the principle of Export Processing Zone,
covers export-related Export Processing Zone, Special Trading Area, Tourism/Recreation Area
and Banking Business Area. According to the recent principle followed in most of the
countries of the world, Special Economic Zone is a tax-free area where all services such as
customs, taxation, banking, insurance, security, etc are provided in one place through one
window for the production, import and export of exportable items. In terms of taxation
purpose, this area is like a foreign land. The main objectives of the Special Economic Zones
are to attract foreign investment, earn foreign exchange, increase export trade and to import
new and high technology. All industries established in this zone and using facilities available
therein, have to mandatory produce world-class goods and export 70 percent to 100 percent of
their production.
8.44 Accordingly, the Special Economic Zone in Nepal includes industrial estate, export processing
zone, special trading area, and tourism/ amusement park. In FY 2003/04, a Special Economic
Zone Project was established with the objectives of attracting foreign investment and attaining
high economic growth. Activities relating the the Special Economic Zone related Acts,
feasibility study and construction of basic infrastructure required for the establishment of such
zone have already been started. Four special economic zones have been identified including
export-processing zone at Bhairahawa, Birgunj, Panchkhal, and Ratmate Jiling of Nuwakot.
Necessary work for the establishment of export processing zone at Bhairahawa is going on.
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8.45 Micro-Entrepreneur Development Program: In the latter part of the second phase of the
micro–entrepreneur development program FY 2005/06, some institutional and structural
reforms have been accomplished. Ten district-based offices have been converted into local
NGOs/ private companies and established as to reform activities in the capacity of the business
development service provider organizations. An institutional structure has been created by
establishing inter-groups of micro-entrepreneurs and micro-entrepreneur union in 21 districts
aiming at promoting and protecting the rights and welfare of micro-entrepreneurs and also at
promoting collective marketing of their products. The micro-entrepreneur union at the district
provides services to the micro-entrepreneurs.
8.46 World Trade Organization: It has already been three years since Nepal joined the WTO.
Nepal has been the first among the least-developed countries to have joined the WTO after
completing the negotiation process. As committed during the time of joining the WTO, some
Acts and regulations are required to be reviewed and amended. Some of the regulations are in
effect, some bills are in the process of being presented at the parliament and some preliminary
draft bills are under discussion.
BOX: 8(B)
Activities being undertaken after the WTO membership
1) In accordance with the provision made in some agreements with the WTO, Enquiry Points have to
be established to give information to the member countries. For this purpose, Department of Food
Technology and Quality Control, under the Ministry of Agriculture and Cooperatives, and World
Trade Organization Division at the Ministry of Industries, Commerce and Supplies have been
designated as focal points for the Sanitary and Phyto-sanitary and for the Technical Barriers to
Trade respectively.
2) Coordination mechanism is in place with the establishment of high level governmental focal Points
in order to have effective inter-governmental coordination in fulfilling the Nepal’s commitments
related to the WTO.
3) WTO Reference Center is in place to provide information about WTO. This Reference Center is
organizing interaction programs on WTO-related matters every month by inviting experts.
4) The Promotion of Competition and Market Protection Act, Company Act, Multi-model
Transportation Act, Bank and Financial Institutions Act, Electronic Act, Export Import and
Intellectual Property Rights Act and some other Acts have been amended and are in force.
5) As per the commitment made by Nepal at the time of accession to the WTO, adjustment in the
customs tariff is being made.
6) Enhancing Nepal’s Trade-Related Capacity Project is under implementation with the financial
support of the UNDP. Activities such as strengthening of public/ private trade related capacity,
promoting stakeholders' participation for the preparation of trade and industrial policy, enhancing
market analysis capacity and skills development and creating investment-friendly environment are
under implementation through this project.
7) People awareness programs, at the central, regional and district level in close cooperation with the
private sector are being organized so as to deliberate on the question of opportunities and
challenges that might occur after Nepal’s accession to the WTO.
Source: Ministry of Industry, Commerce and Supplies.
Status of Industrial Production by Groups and Industrial Indices
8.47 Analyzing the status of major industrial products in FY 2006/07 As compared to FY 2005/06,
production of most of the food products, beverages, tobacco, shoes, wood and wooden
products, paper and stationery board, other chemical goods, mineral products other than metals
is expected to increase. During FY 2006/07, under the food product, production raises have
been recorded on noodles by 3,233 mt, squash (including juice) by 1.517 million liter, sugar by
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4,923 mt, and tea by 579 mt. Similarly, the production of vegetable ghee is expected to
increase by 8,961 mt, that of liquor by 451 thousand liter, paper by 1,495 mt, soap by 2,241
mt, detergent powder by 166 mt and production of cement by 30,682 mt.
8.48 The industrial indices by groups has been increased by 2.17 percent in FY 2005/06 over the
preceding year. During FY 2006/07, production of the food items and goods under food group
have increased by 24.77 percent in the vegetable oil and butter, dairy products by 27.98
percent, cereals and animal feeds by10.57 percent, other foodstuff by 14.74 percents, wood and
wooden products by24.48 percent, paper and paper products by 6.68 percent, other chemicals
by24.34 percent , plastic goods by 2.57 percent, non-metal mineral products by 24.03 percent,
fabricated metal products 22.78 percent, and electric items is by 14.40 percent. However,
production has decreased in beverage by 1.44 percent, tobacco by 1.85 percent, fabrics by
19.54 percent other clothes by 20.59 percent, knitting clothes by 35.64 percent , and leather
and leather products by 3.69 percent. Expected improvements could not be achieved in the
production of industrial indices due to several factors such as adverse situation of internal
security, increased unemployment, weak income pattern, low saving and consumption ability,
unfavorable trade balance and change in consumption pattern.
8.49 The preliminary estimate for the industrial indices by group in FY 2006/07 indicates a nominal
increase from 102.17 last year to 104.32 this year. During the review period, the industrial
indices of vegetable oil and butter, milk products, cereals and animal feeds, other food items,
plastic goods, publication, printing and recording, other chemical items, non-metal mineral
products fabricated mineral goods and electrical appliances are expected to increase. On the
other hand, industrial indices of goods such as garments/outfit, textiles, other clothing,
beverage, tobacco and leather and leather products are expected to decline.
Foreign Investment in Industries
8.50 New areas for foreign investment are opened up through the amendment of Foreign Investment
and Technology Transfer Act. With an objective of providing necessary permission, services
and facilities to the foreign investors through one door system, Foreign Investment Promotion
Committee Working Manual, 2062 BS is under implementation. This has been done in
accordance with the provision of the concerned Act to simplify the procedure for attracting
foreign investment for the fast economic development of the country.
8.51 Nepal’s rich natural and human resources have not been optimally utilized, thereby referring to
the Nepalese people as “poor in a rich country”. Foreign investment and technology transfer is
essential for leading the nation’s economic system towards the attainment of self-dependency
and making it a robust, firm, dynamic and competitive through the optimum utilization of
available natural and human resources. The foreign investment helps bring capital, modern
technology, and managerial and technical skills, opens access to international market and
promotes competitive business culture. Such improved business culture contributes
significantly to the national development leading towards self-reliance and self-dependence,
through the expansion of industrial development and internal revenue base. In FY 2004/05, 64
industries with the total project cost of Rs. 1,801.0 million were permitted to be established
under the foreign investment. In FY 2005/06, under foreign investment, 81 industries with the
total project cost of Rs. 2,870.5 million obtained permission. During the first eight months of
FY 2006/07, 106 industries having a fixed capital of Rs. 2,050.7 million and project cost of Rs.
2,591.5 million were granted permission to operate in Nepal under foreign investment.
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8.52 In an effort to attract the foreign investment by adopting open, liberal, practical and timesuitable
policy, a total of 1,207 industries got permission in the first eight months of FY
2006/07. The fixed capital and the total project cost of these industries are Rs. 80,043.7 million
and Rs. 96,653.2 million respectively. A total of Rs. 31,987.1 million equivalent of foreign
investment has been proposed in these industries. Following the operation of these industries,
additional 1,12,393 Nepalese would employment opportunity.
Table 8(b): Industries Permitted for Foreign Investment in FY 2005/06
(Rs. in million)
Types of Industries No. Total Project
Cost
Total Fixed
Capital
Foreign
Investment
Employment
Creation in
No.
Industrial Production 33 1472.62 944.70 924.47 2974
Service Industry 40 2082.49 1876.57 1332.93 2739
Tourism Industry 38 233.67 189.68 164.68 1397
Construction 2 81.30 63.00 28.23 112
Energy 3 251.00 223.00 153.00 136
Total 116 4121.08 3296.95 2606.31 7358
Source: Department of Industries
Table 8 (c): Industries Permitted for Foreign Investment in FY 2006/07*
(Rs. in million)
Types of Industries No. Total
Project Cost
Total Fixed
Capital
Foreign
Investment
Employment
Creation in No.
Industrial Production 26 1342.55 948.99 1297.99 1817
Service Industry 48 934.14 842.12 876.55 2100
Tourism Industry 29 182.45 140.21 134.49 801
Construction 1 11.35 7.13 7.09 0
Energy 1 111.00 107.30 30.30 0
Mineral 1 10.00 5.00 10.00 128
Total 106 2591.51 2050.75 2356.42 4846
First eight months
Source: Department of Industries
Table 8 (d): Industries Permitted for Foreign Investment as in mid-March 2006/07
(Rs. in million)
Types of Industries No. Total Project
Cost
Total Fixed
Capital
Foreign
Investment
Number of
Employment
Recipient
Industrial Product 518 39461.92 28554.06 13763.65 65822
Service Industry 326 18300.73 15545.85 9082.08 20738
Tourism Industry 302 16286.10 15425.81 4860.26 17110
Construction 23 1186.93 909.77 691.01 1544
Agriculture 15 440.15 385.20 101.76 1023
Mineral 4 1163.14 1073.32 55.98 1257
Energy 19 19814.30 18149.66 3432.45 4899
Total 1207 96653.27 80043.78 31987.19 112393
Source: Department of Industries
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Table 8 (e): Foreign Investment (country-wise)
(industries in No.)
S.N. Countries FY2005/06 First Eight Months
2005/06 2006/07
1. India 31 8 20
2. China 21 6 21
3. Japan 10 4 12
4. USA 9 1 11
5. UK 8 2 8
6. South Korea 9 2 8
7. Belgium 2 1 -
8. Germany 3 3 3
9. Iran 2 - -
10. Netherlands 3 1 4
11. Spain 2 - -
12. Canada 2 - 2
13. French 3 - 3
14. Israel 1 - -
15. Others 10 7 14
Total 116 35 106
Source: Department of Industries
8.53 Among 116 industries given permission to operate in FY 2005/06, industries related to
industrial production were 33, service industries 40, tourism industries 38, construction 2 and
industries related to energy sector 3. In terms of country-wise investment, industries from India
were 31, from China 21, from Japan 10, from S. Korea and the United States 9 each, from the
United Kingdom 8, from France, Netherlands and Germany 3 each, from Belgium, Canada,
Iran, and Spain 2 each, and from Australia, Bangladesh, Israel, Malaysia, Pakistan, Philippines,
Poland, Russia, Switzerland, Sweden, and Turkey 1 each.
8.54 Of the 106 industries given permission during the first eight months of FY 2006/07, industries
related to industrial production are 26, service-related industries 48, tourism industries 29 and
construction, mines, and energy sector one each. In terms of country-wise investment, out of
the 81 industries permitted for foreign investment in the first nine months of FY 2005/06, 25
industries are from India, 16 from China, 8 from Japan, 5 each from the United States and the
United Kingdom, 3 from S. Korea, 2 each from Belgium, Germany, Iran, Netherlands and
Spain and other countries are involved in 9 industries. Out of the 106 industries given
permission for foreign investment in the first eight months of FY 2006/07, 20 industries are
from India, 21 from China, 12 from Japan, 11 from the United States, 8 each from the United
Kingdom and South Korea, 4 from the Netherlands, 3 each from France and Germany, 2 from
Canada and 1 each from Australia, Austria, Belgium, Finland, Ireland, Italy, Libya, Mexico,
U.A.E., Ukraine, Philippines, Russia and Switzerland.
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Utilization of Production Capacity of Some Industries
8.55 Analysis of the utilization of the production capacity of some selected industries shows that the
production of sugar and cement industries has declined in FY 2005/06 as compared to the
production in FY 2004/05. However, the production of shoes, beer and jute products has
increased in the same period. Of the total production capacity in FY 2005/06, the cigarette and
jute industries have utilized 87 percent and 72 percent capacity respectively. The sugar, beer,
shoes and cement industries have utilized 31 percent, 72 percent, 65 percent, and 40 percent
production capacity respectively.
Current Status of Industrial Estates
8.56 Industrial estates were established with a view to help provide support to the industrial
development of the country by making available essential physical infrastructures and other
facilities for the establishment, operation, and promotion of industrial enterprises. As of now,
there are altogether 11 industrial estates (at Balaju, Hetauda, Patan, Nepalgung, Dharan,
Pokhara, Butwal, Bhaktapur, Birendranagar, Dhankuta and Rajbiraj). Out of the 397 industries
established in these estates, 71 industries have been closed while 51 industries are under
construction. The Industrial Estate Management Ltd. has invested Rs. 169.6 million as a fixed
capital and the private industries have invested Rs. 8,488.2 million in these estates. Of the total
area of 5,680 ropanis of land, 5,005 ropanis are fully developed, of which 3,355 ropanis are
leased to different industries. The industries established at these estates have been providing
employment for 13,311 persons. Among all these estates, the Balaju, Hetauda, Butual,
Pokhara and Patan industrial estates have been respectively providing the largest number of
employment.
Sick Industries
8.57 The Government of Nepal introduced the policy and programs relating to sick industries in FY
2001/02 with a view to minimize adverse impact on industries, business and trade stricken by
the unsuitable environment for operation due to internal conflict and political instability in the
country. The refinancing program continues to remain effect, with the monetary policy for FY
2006/07 earmarking, Rs. 2 billion for this purpose. During the first nine months of FY
2006/07, a total of Rs. 154.9 million of refinancing facility was utilized by the sick industries,
three hotels and resorts utilized Rs. 124.9 million and one big industry utilized Rs. 30 million.
In FY 2005/06, Rs. 460.9 million worth of such facility was utilized. The Sick Industries
Revival Fund Directives, 2064 is under preparation. The main purpose of this Directive is to
help revive those sick industries affected by the conflict if they are found to have feasible and
competitive potentials.
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Table 8 (f): Refinancing provided from mid-July, 2006 to mid-March, 2007
(Rs. in 10 million)
S.N. Hotels/Industries Approved amount of
refinancing Percentage
1 Hotels and Tourism Business 12.49 80.6
2 Industrial Business 3.00 19.4
Total 15.49 100
Source: Nepal Rastra Bank
Nepal Industrial Development Corporation
8.58 Nepal Industrial Development Corporation (NIDC) was established to provide quality and
credible banking and financial intermediary services and also perform financial transactions
for the industries, business and service-related sectors for the economic development of Nepal.
In FY 2005/06, NIDC seems to have focused its attention only on loan recovery strategy rather
than on new lending and project analysis. During this period, NIDC extended Rs.25.8 million
loan to the old projects only and recovered Rs. 92.5 million as interest. During this period, 19
percent of total loan went to the hotel and tourism industries, 21 percent to the textiles, 15
percent to the electric appliances-producing industries, 10 percent to the rubber industry, 10
percent to the printing, 7 percent to the food industry and 18 percent to the other categories of
industries. In the first eight months of FY 2006/07, a total of Rs. 221.6 million was recovered:
Rs. 136.3 million in principal and Rs. 85.3 million in interest repayments respectively. No
satisfactory progress is seen for a long period of time on the project promotion and lending
operation in the absence of loanable funds, despite Nepal Rastra Bank’s authorization to
undertake financial transactions.
Cottage and Small Scale Industries
8.59 The number of industries registered under this category in FY 2005/06 as compared to the
figure in FY 2004/05 increased by 2.49 percent. On the basis of the types of industries, the
number of private firms increased by 5.02 percent in FY 2005/06, whereas the numbers of
private limited firms and partnership firms declined by 4.11 percent and 25.45 percent
respectively. Similarly, the ratio of fixed assets to the investment of the registered cottage and
small-scale declined by 39.15 percent, with the investment reaching Rs. 6,700.0 million.
During the first eight months of FY 2006/07, it is estimated that 4,813 industries have been
registered with the total investment amounting to Rs. 3,556.5 million.
Industrial Enterprise Development Academy
8.60 The Industrial Enterprise Development Academy, having set the goals of developing modern
technologies, quality management skills, entrepreneurship, and technical human resources for
the industrial development of the country, has continued to conduct research work on industrial
business, creation of new business, business management and training programs. During the
first eight months of FY 2006/07, the Academy has provided training on micro-business
creation program for 30 persons, instructors training for 48 persons and business promotion
awareness program for 63 persons. Similarly, 41 persons were involved in the Income
Generating and Increasing Program for the Dalits.
Mines and Geology
8.61 Work is in progress for the preparation and publication of geo-mapping covering an area of 1
hundred and 9 thousand square km in hilly regions of Nepal. This geo-mapping work will be
96
used for the systematic operation of geological survey, land engineering and geo-environment
study, National Seismic Measurement Center and mineral exploration and development of
mines. In the area of mineral exploration, activities like exploration of limestone, iron ore,
zinc, coal, marble, natural gas, and less expensive stones is being done. It has been a
challenging task for the nation to reap benefits from the exploitation of potential mineral
products on the basis of financial and technical feasible studies.
Tourism
8.62 Analyzing the number of tourists visiting Nepal, the growth rate of tourist arrivals and the
duration of their stay, the number of tourists had declined by 2.6 percent during the one year
period from mid-December 2004 to mid-December 2005 as compared to the same period of
the preceding year. However, the tourist arrivals increased by 4.9 percent during the one-year
period from mid-December 2005 to mid-December 2006. The duration of stay on average was
9.1 days from mid-December 2004 to mid-December 2005 and 9.5 days from mid-December
2005 to mid-December 2006.
Table 8(g): Quantitative Targets and Achievements on Culture, Tourism and Civil Aviation
S.N. Description Status
(FY 2001/02)
Targets
(FY 2006/07)
Progress
(FY 2006/07)
1. Tourist arrivals (in ‘000’) 365 516 394 (2006
Dec.)
2. Duration of stay (in days) 11.93 13 9.5 (2006
Dec.)
3. Foreign exchange earning(US$ million) 140 205 Rs. 9,556
4. Daily income per tourist (US$) 39.6 60
5. Contribution to GDP (%) 3.0 3.0 0.9
6. Employment: Direct (in ‘000’)
Indirect (in ‘000’)
80 100
125
7. International Airlines Services having regular Flights to
Nepal (in number) 13 17
8. The One-way Air Seats in International Sector 1000 1200
Source: Tenth Plan and Ministry of Culture, Tourism and Civil Aviation
8.63 Most of the tourists are found to have come to Nepal for recreation, trekking and
mountaineering purposes. During the period from mid-December 2005 to mid-December 2006,
it is found that 42.7 percent came for recreation, 16.4 percent for trekking and mountaineering,
5.9 percent for business, 4.5 percent for official visit, 12.7 percent for pilgrimage and 17.9
percent for miscellaneous purposes. Review of the same statistics last year shows that the
number of tourist arrivals for the purpose of official visit, business and pilgrimage increased
while the number of tourists coming for recreation remained stable.
8.64 Analysis of tourist data for the year form mid-December 2005 through mid-December 2006
indicates that 26.1 percent tourists came from Western Europe, 6.1 percent from North
America, 2.2 percent from Australia and the Pacific, 2.2 percent from Eastern Europe, 0.9
percent from Mid and South America and 0.3 percent tourists came from Africa. Out of 61.3
percent tourists coming from Asia, 25.7 percent came from India alone. The number of tourists
from India, Asia and East Europe increased over the previous comparable period.
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8.65 No increment was observed in the number of star-level hotels during mid-December 2005 to
mid-December 2006 period, with the number of hotels at 110. The number of hotels other than
the star-level increased by 9 to 905. In this period, the number of hotel beds in star-level hotels
remained at 10,911 and the number of beds in hotels other than the star hotels increased by 1.0
percent, reaching 29,159 beds. During the period, the total number of hotels and hotel beds
increased by 1.0 percent and 1.7 percent respectively.
8.66 The numbers of mountaineering teams and the mountaineers increased whereas the amount of
the government royalty decreased during mid-December 2005 through mid-December 2006 as
compared to the same previous period. The mountaineering teams increased from 128 to 133
and the mountaineers from 940 to 986. The seasonable employment declined insignificantly,
from 4,344 to 4,343. On the other hand, the government royalty came down from Rs. 156.24
million to Rs. 145.612 million. The mountaineers spent Rs. 423.9 million equivalents during
the review period.
8.67 Nepal Tourism and Hotel Management Academy has been conducting training for tourism
promotion and human resource development. The Academy has started a three-year course in
Bachelors in Travels and Tourism Management since FY 2003/04 with a view to produce
skilled human resources required for urban-based small and big tourism businesses. The
Academy is providing training required for the operation of tourism business in the rural areas
also. The Academy is providing different types of in-house and mobile training courses such as
guide, tour-travel agency and trekking, cook, leader, water journey guide and hospitality
courses. The Academy provided training for 960 persons in different courses in FY 2005/06
and for 1,024 persons in the first eight months of FY 2006/07. The total number of manpower
trained by the Academy so far exceeds 22 thousand.
Box: 8(C)
Major Activities under Tourism Sector
a) Tourism Master Plan: In an effort to give clear direction to the tourism sector, preparation of
an integrated tourism master plan, and review and timely revisit of tourism policy are at the final
stage.
b) Three-year plan: A three-year plan has been prepared for the tourism sector and sent to the
National Planning Commission for the approval.
c) Foreign Investment in Tourism Industry: Investment in travel, trekking, rafting and pony
trekking business have been opened for foreigners, in line with the policy of promoting foreign
investment in the tourism sector.
d) Travel and Trekking Agency, Regulations, 2062 BS: Amendment to the Travel and Trekking
Agency Regulations, 2062 BS has amended the provision with respect to the paid-up capital and
extended by one year the period of the bank guarantee to be placed in the name of the ministry.
e) Water Journey Regulations, 2063 BS: This regulation is already in effect.
f) Airport Construction and Improvements: Dhangadhi Airport in the Far-Western
Development Region has been improved as a hub airport. Construction works under the first
phase, which include extension of 1.2 km runway, taxiway, improvement of apron and
blacktopping, have been completed for which people’s participation was also mobilized.
g) Conservation of World Heritage: In order to conserve and protect important sites of world
heritage, details of 700 houses located within the protected area have been compiled and the
mapping works of the road-turns have also been completed.
h) Special Training: A special training program in the hotel and tourism discipline was conducted
targeting the conflict-affected Dalits, indigenous people and disadvantaged women. This
training is provided to help reduce poverty through availing foreign as well as domestic
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Chart 8(b): Foreign Currency earning from Tourism Sector
35.9
34.5
42.7
50.8
47.9
37.6
35.9
34.1
24.2
21.0
14.9
23.1
32.9
17.5
15.5
19.5
26.7
22.4 21.8
23.3
13.7
17.4 18.5
13.0 12.0
10.6
15.2
20.3
12.2
10.9
20.0
17.6
18.9
17.3
21.4
17.6
15.2 15.9
8.8
7.4
6.1
8.2
11.1
6.1
3.6 3.7 4.1 4.1 3.8 4.6 3.0 3.3 3.6 3.2 2.7 1.9 2.4 3.4
1.8 1.5
0.0
10.0
20.0
30.0
40.0
50.0
60.0
1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06
Fiscal Year
Percentage
As % of Total Value of Merchandise Exports
As % of Total Value of Exports of Goods & Non-Factor Vices
As % of Total Foreign Exchange Earnings
A % fGDP
employment opportunities.
i) Tourism Promotion Program: Tourism promotion programs are being implemented in the
tourism-potential countries, particularly focusing India and China, and in other countries like
Japan, Singapore, Malaysia, Thailand and Bangladesh.
j) Pokhara Visit Year, 2007 has been celebrated to attract more tourists and restore image that was
damaged by the conflict before the historical peace accord was signed.
Source: Ministry of Culture, Tourism and Civil Aviation
Foreign Exchange Earnings from Tourism Sector
8.68 The foreign exchange earnings from tourism sector declined by 8.68 percent to Rs. 9,556.0
million in FY 2005/06. During the first eight months of FY 2006/07, Rs. 6,176.0 million was
earned from the tourism sector, short of the earnings realized in the corresponding period in the
previous fiscal year. The foreign exchange earnings during the first eight months of FY
2006/07 accounted for 14.9 percent of total foreign exchange earned from the export of goods,
9.8 percent of total foreign exchange earned from total exports of goods and services and 4.4
percent of the total foreign exchange earnings. All these three ratios had declined during the
similar period in FY 2005/06.
8.69 Invitees from Hon Kong, India, Turkey, Philippines, USA, Malaysia, Thailand and Korea were
called for the introductory visits to Nepal. Various prints and electronic media along with the
writings, documentary, etc., were utilized to promote Nepal's tourism potential. Similarly,
Nepal participated in tourism fairs and exhibitions held in UK, Germany, Japan, China,
Malaysia and India. In view of the abnormal situation arising from blockades, strikes, etc.,
tourism police and transport services were arranged to guide the tourists to their destinations in
time.
Challenges
8.70 Nepal heavily depends on the monsoon for the agriculture in the absence of adequate
irrigation facilities, despite being rich in water resources. Food production and its productivity
have been declining partly because of the floods on account of the heavy rains and partly due
to drought which leaves fertile lands barren. To address this problem, extending irrigation
facility by means of deep sallow tube-wells and surface canals has become an important
challenge.
99
8.71 Inability to adequately supply improved fertilizers, seeds and pesticide / germicide in all
locations in time and inability to provide agricultural credit and technical services easily have
remained as big problems of the agriculture. The agriculture roads as the main infrastructure
for the agriculture, storage, fertilizers and agriculture market have not been fully arranged as
per the need. These problems remain as a big challenge. The farmers have to face tough
competition due to open border and the challenges brought about by the economic
liberalization. So, there is a big challenge to improve farmers' competitive capacity and
encourage farmers towards commercial farming away from the prevailing subsistent
agriculture, while reducing the cost of agriculture production.
8.72 It has also been a challenge to encourage farmers towards commercial farming of high yielding
cash crops, livestock and poultry, horticulture and vegetable farming, leading to selfsufficiency
in food and cash crops. Another challenge is to focus on agriculture research in
order to diversify and modernize the agriculture and increase the off-season vegetables and
fruit production significantly.
8.73 One major challenge is the situation where foreign investment-friendly environment has not
been created. The development of entrepreneurship, use of advanced technology, and
promotion of technical capacity have to be encouraged in order to reap benefits and face
challenges emerging after the WTO membership and the SAPTA, SAFTA, and BIMSTEC
agreements. Another challenge is to attract foreign and non-resident Nepalese (NRN)
investments and the remittances for the industrial development of Nepal.
8.74 Development of industrial sector with the active participation of private sector and revive sick
industries afflicted by internal conflict is a challenging task ahead.
8.75 Another challenge is to create friendly environment for foreign and domestic investment for
the exploration, development and commercial operation of national mineral endowments.
8.76 It is important to develop Nepal as a cultural-tourist destination with the conservation and
promotion of historical, cultural, and religious places and monuments as well as the living
cultural heritages. It is also inevitable to attract as much number of tourists as possible through
the promotion of eco-tourism by conserving and promoting natural beauty and bio-diversity.
8.77 Preparation of an integrated database by developing tourist infrastructure and identifying
cultural heritage spots, involvement of local bodies and individuals in the conservation of the
cultural heritage spots, and development of adventurous tourism, bio-tourism and other
innovative tourism have remained major challenges to be addressed.