China tops list to realize Nepal's export potential: World Bank

Nepal has the potential of exporting 12 times higher than its existing annual exports, with the highest potential of boosting exports to China, the World Bank said in a report released on Monday.

Nepal's total export in the last fiscal year 2019-20 that ended in mid-July 2020 was worth 815 million U.S. dollars, according to the Nepal Rastra Bank, the central bank of the country.

The World Bank estimated in its annual Nepal specific report titled "Nepal Development Update 2021" that Nepal's untapped export potential stands at around 9.2 billion U.S. dollars, 12 times its actual annual merchandise exports.

"Realizing that potential is achievable in the medium term," the report said. "This export potential represents an opportunity to create an estimated 220,000 new jobs, with significant implications for productivity growth."

The multilateral funding agency has termed the untapped export potential as "missing exports."

From the perspective of destinations, Nepal's largest "missing exports" are with China (by over 2.2 billion U.S. dollars), followed by India (1.2 billion U.S. dollars), the United States (800 million U.S. dollars) and Japan (700 million U.S. dollars), according to the report.

Over the past two decades, Nepal's export growth has been stagnant. With export growth at 4 percent on average since the turn of the century, Nepal features among the 20 countries in the world with the least dynamic exports, the global lender said.

In order to realize untapped export potential, the World Bank has recommended a number of measures to be taken, including reforming the tourism sector for a quick and resilient recovery; simplifying and streamlining the processes to attract more foreign direct investment; modernizing export promotion and upgrading exporters' capability; reducing trade costs; investing in quality control-related infrastructure and boosting digital trade and e-commerce for more opportunities linked to global value chains.

During the virtual release of the report on Monday, Nepal's Finance Minister Bishnu Prasad Paudel said that the Nepali government was ready to discuss necessary policy measures to be taken to realize the country's export potentials.

The global lender also said that the stronger exports could help increase Nepal's economic resilience, and accelerate recovery from the devastating shock that the COVID-19 pandemic has posed to Nepal's private sector.

"Exports can not only bring foreign currency into the economy to finance well-needed imports, but also spur the creation of 'good jobs' in higher value-added activities," the report said.