The Phnom Penh Post

Investment, trade in Nepal fall victim to virus outbreak

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WHILE no foreign investors in Nepal have showed up in recent past, both imports and exports have slowed, officials say.

It all started in China in December last year. The coronaviru­s outbreak threatened the nation’s health as well as its economy. The Chinese government took drastic measures to control the spread. Now with the spread largely contained, China is trying to get back on its feet.

Covid-19, the disease caused by the virus, however, has by now taken the shape of a pandemic. Nepal may not have reported any new cases, but its trade and investment have taken a huge beating, as the rest of the world struggles to cope with the virus.

“Since the coronaviru­s outbreak in China, we have seen nominal presence of foreign investors at our office,” said Jiwan Prakash Sitaula, director general at the Department of Industry. “Now with the global outbreak, we have not received even a single foreign investment applicatio­n in the last two weeks.”

During the first six months of the current fiscal year, foreign direct investment (FDI) pledges increased by 315.3 per cent to Rs190.36 billion, according to the Department of Industry, which is responsibl­e for registerin­g industries including those with foreign investment­s.

Most of the foreign investment commitment­s were received from China.

Foreign investment is one of the sectors affected by the novel coronaviru­s, which has so far infected more than 145,000 people and killed 5,000 people globally.

The Nepal government on Thursday temporaril­y stopped issuing on-arrival visas to tourists from all countries, put an end to all spring mountainee­ring expedition­s, including Everest ascents, and halted the issuance of labour permits— all to prevent the spread of Covid-19. This meant a huge blow to the tourism and aviation sectors.

Now while foreign investment­s have slowed, the virus impact is being seen on the trade sector as well.

One of the exports that has massively suffered is handicraft.

“Ex por t s have pract ica l ly stalled for now,” said Dharma Raj Shak ya, immediate past president of the Federation of

Ha nd ic r a f t A s s oc i at ion of Nepal, a grouping of handic r a f t p r o d u c e r s . C h i n a , Europe and the US are major market s for Nepa l i ha nd icrafts and they too are struggling in the wake of the Covid-19 outbrea k.

“Our statistics show that monthly export is worth around Rs1 million to Rs 1.5 million,” said Shakya. “Foreign tourists used to purchase handicraft­s in Thamel and other tourist spots and handicraft­s sales in these areas have also gone down as tourists are no longer coming to the country.”

According to the federation, handicraft exports are worth around Rs6 billion a year.

Shakya said handicraft production has also been affected due to a shortage of raw materials, which mostly come from China and other virus-hit countries.

“For example, wool and yarn come from China for pashmina products and metals come from China and Singapore for metal crafts,” said Shakya.

Exports of garment and carpets are also expected to suffer as they depend largely on Europe and the US.

Since China is the secondlarg­est trading partner, imports have also been hugely affected.

Importers said that imports have come down drasticall­y since February. Currently, movement of people and goods has been halted at both border points with China – Rasuwagadh­i and Tatopani.

Bachhu Poudel, president of the Trans Himalaya Border Commerce Associatio­n, a grouping of traders involved in Nepal-China trade, said that there has been no import of goods from China through the land routes for the last two months and import through the sea routes has also been largely halted.

“We used to supply new goods in the market at an interval of 15 days to one month, which is not happening now,” he said. “There is no big demand for goods from the market.”

The share of wholesale and retail activities in the local economy is the second-largest after agricultur­e.

“If the situation prolongs, more people who depend on the trading sector may lose their jobs,” said Poudel.

Businessme­n say they have not been able to import raw materials needed for various industries as well, particular­ly from China.

With several businesses affected, banks and financial institutio­ns are worried about the recovery of loans.

According to the Nepal Rast r a Ba n k , t he ba n k s a nd f i na ncia l i nst it ut ions have loan exposure of Rs138.68 billion in t he hotel and restaura nt sectors a s of t he f i r st seven months of the current f isca l year. “We are a lso worried about the recover y of the loa ns,” sa id Bhuva n Da ha l, president of Nepal Bankers’ A ssociat ion, a g roupi ng of chief executive of f icers of t he commercial banks. “Let’s see what happens by the end of the third quarter [mid-April], when the repayments are to be made.”

As Covid-19 poses a threat to various businesses, Nepal’s economy is staring at a slowdown.

Asian Developmen­t Bank, in its recent report, projected that the country’s economy could lose from $12.12 million to $36.78 million depending on the extent of the pandemic. “It may result in job losses for 5,210 to 15,880 people,” the report unveiled in early March stated.

 ?? AFP ?? A worker sprays disinfecta­nt to sanitize a public bus as a preventive measure against the coronaviru­s at a bus depot in Kathmandu.
AFP A worker sprays disinfecta­nt to sanitize a public bus as a preventive measure against the coronaviru­s at a bus depot in Kathmandu.

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