How would you assess the current state of services exports from Nepal?
When evaluating our current position, we need to explore potential sectors for services exports. This includes not only business process outsourcing and IT-related fields but also other service sectors such as transportation, tourism, and financial services like insurance and banking. We possess various export-oriented services in these domains.
Taking a glance at our neighbouring countries, India holds a significant share of approximately 50% in the global business outsourcing market. Business process outsourcing serves as a major revenue source for them. However, in Nepal, the IT sector has not been able to thrive adequately. Despite having a favourable global time difference that could facilitate success in business process outsourcing, we encounter challenges across multiple fronts, ranging from manpower to the education system.
Since the 2000s, business process outsourcing has seen some positive developments, but the expected growth has not materialised. Additionally, in sectors like tourism, although we can offer services to tourists locally, there are certain bottlenecks that hinder further progress. For instance, Nepal excels in construction sectors, with hydropower projects having a capacity of 2000-3000 megawatts ongoing. We could leverage this expertise by exporting our manpower and engineers. Similarly, our medical treatment services are commendable, and we could export well-equipped personnel to serve abroad. Thus, it is essential to carefully consider the types of services we aim to export and strategize accordingly.
What are the key opportunities and challenges for Nepal in expanding its service exports?
It is essential to determine which sector we are analysing. If we are discussing the IT sector, we have various factors to consider, such as computer software, hardware, and telecommunications. On the other hand, when talking about the hotel industry, there is tourism and hospitality. The service sector encompasses countless areas, including information broadcasting, education, and the medical field. Consultancies present themselves as low-hanging fruits, given the availability of well-educated individuals, making it feasible for us to explore export opportunities. Additionally, we have the potential to enhance Nepali airlines. Any company performing well in the domestic market should be provided with an environment to expand abroad.
Can you highlight some specific service sectors in Nepal that have shown potential for export?
Basically, if we look at Nepal, business process outsourcing and IT sectors are thriving the most. However, we are lagging behind in the fields of research and technology due to the lack of appropriate technologies. Nevertheless, our advantage lies in having low-cost manpower, which enables us to reach greater heights in IT products. Moreover, we have the potential to export treatment services, but its success depends on effective coordination between the government and the people. Unfortunately, there are some legal barriers that hinder the exploration of potential areas.
To further harness opportunities, working abroad in the IT sector should be well-defined in terms of tax implications and registration. The youth in Nepal are also attracted to this sector, and strengthening the infrastructure can boost tourism. Nevertheless, software developers face numerous legal barriers here that need to be addressed promptly. Despite having expertise and a capable workforce, we are unable to export our services effectively, making regulatory reforms essential for progress.
Are there any specific professions or skill sets in Nepal that have a competitive advantage in the international market?
Our education system is a critical aspect that requires significant improvement to enable us to compete effectively in the international market. Presently, it falls short in meeting the global standards, hindering our potential contribution to the global economy. However, one viable approach to tap into our nation's potential is by strategically utilising the youth who return after accessing higher education abroad. These individuals can serve as invaluable resources in driving progress and innovation in various industries.
Taking inspiration from India, which has successfully introduced several services export schemes and established software technology parks, we too should consider adopting similar initiatives to boost our economic growth. By providing scholarships to outstanding students to study abroad and subsequently calling them back to our homeland, we can leverage their acquired expertise and skills to drive progress in our industries.
Furthermore, we must also focus on preserving our natural resources, recognizing their immense potential in driving sustainable development and fostering a thriving tourism industry.
What are the potential implications of digitalization and technological advancements on Nepal’s services exports?
Digitalization is now a way of life, and technology is no longer considered a luxury but a necessity. It is crucial that technology is integrated into educational courses starting from kindergarten. From coding to various other aspects, the next generation should be well-versed in these areas. We must wholeheartedly embrace technological advancements; otherwise, we will be the ones left behind.
Does the current government policy support the export of services from the country?
There are no direct barriers, but we do encounter delays and challenges throughout the operation, starting from the registration process. The rapid advancement of technology creates difficulties in understanding, while rules and regulations seem to evolve at a slower pace. An illustrative case is the ride-sharing app Pathao, originally developed in Bangladesh, which faced numerous obstacles when exported to Nepal. Although we have embraced online payment platforms, the recent development of e-commerce rules highlights the disparity between the speed of technological progress and regulatory reform.
Another challenge lies in the export process due to a lack of clarity regarding what to export and what not to. For instance, software has high value but low volume, making both import and export difficult. Consequently, it is crucial to prioritise regulatory reforms to address these complexities and create a conducive environment for trade and innovation.
Some people think the government should rethink its strict policy against investment by Nepalis in foreign lands if it seriously wants to promote service export. Is it true?
It is of utmost importance to address this matter promptly, as we find ourselves significantly behind schedule. There are two schools of thought on this issue. One emphasises the limited foreign currency reserves, leading to difficulties in the balance of payments. As a result, some argue for a halt in imports. On the other hand, there is an alternative approach similar to Thailand's during their economic crisis – allowing our business communities to invest in foreign lands and reap dividends, as they currently do.
To break free from this lose-lose situation, we must think outside the box and embrace the idea of letting businesses invest in foreign lands. However, to ensure mutual benefits, we can require these businesses to maintain a head office here in Nepal. This approach would create a win-win situation by not only generating remittances but also securing dividends. Instead of focusing solely on the drawbacks, we should recognize the numerous advantages that lie ahead.
How can the NRNs be roped in to promote the export of services from Nepal?
Nepal has a diverse community of Non-Resident Nepalis, comprising foreign citizens of Nepali origin, Nepali citizens residing in foreign countries, migrant workers, and students. The global Nepali diaspora extends across Europe, America, and Australia, with approximately 2,000,000 Nepalis calling these regions home.
Interestingly, there exists a significant demand for traditional Nepali products like Gundruk (fermented leafy greens) and Dalmoth snacks in foreign countries. When Nepalis travel abroad, they often carry these indigenous goods with them, creating a thriving market for these products overseas. By capitalising on this demand, we can significantly boost exports and cater to the needs of NRNs.
With effective export strategies, NRNs can become the largest market for Nepal's exports, transforming the current one-billion-dollar market to an impressive 5-6 billion dollars. It presents a golden opportunity to enhance our trade and economic growth.
Furthermore, it's not just goods that can be exported; we can also extend our reach in the services sector. Banking and insurance services can be exported, leading to even more substantial benefits for the nation's economy. By focusing on both goods and services, Nepal can tap into its full export potential and foster stronger economic ties with its global diaspora.