The government has endorsed the Trade Logistics Policy 2022, targeting to reduce the costs for both internal and external trade. Narayan Prasad Regmi, Spokesperson of the Ministry of Industry, Commerce and Supplies (MoICS), said the government has introduced the policy in order to build trade related infrastructure. “This will help reduce trading costs of entrepreneurs,” he said. The new policy has identified three objectives and 13 strategies, which are mainly related to the development of trade related infrastructure, service and good governance. There are more than three dozen government agencies and private organizations that are associated with facilitating the country’s trade. However, lack of coordination among these agencies and poor infrastructure has led to the duplication in investment in a number of cases, while traders suffer for not having the necessary logistics in others.

The policy has envisioned developing Nepal as an economic corridor through the development of various transport networks. For effective implementation of the policy, a 14-member task force has been formed under the MoICS secretary.

The policy aims at constructing and operating trade related infrastructure in an integrated way. To facilitate domestic and foreign investment to build such infrastructure, coordination with stakeholders to improve the quality of trade infrastructure, capacity building of the service providers, increase access of micro, small and medium industries in trade logistics, use of innovative technologies to enhance supply chain and development of a master plan for construction of infrastructure for integrated trading system. Traders and freight forwarders however criticized the newly enforced policy, saying that it has floated vague ideas and has failed to address the underlying real problems in the country’s domestic and international trade. “Most of all, it has been developed just to please donor agencies and imposed unilaterally by ignoring the inputs provided by the stakeholders,” said a freight forwarder operator on condition of anonymity. In lacking trade logistics, traders have been facing excessive costs for transit, transport, delivery, storage and official procedures. On average, the traders have to bear around 28-32 percent more costs on top of the purchase price of the goods. According to the experts, the policy has failed to address the issues related to intermodal, and multimodal warehouses, among others, which are the key issues for reducing the costs of trading. “Rather than realizing the country-specific requirements, the policy represents an imitation of the policy implemented in other countries,” the source said. Currently, the importers are required to pre-inform the authorities concerned about the mode of importing goods, whether it is a railway or roadways. However, the policy does not talk about providing freedom to importers to change their decision in between. “Even the cargo transport routes and selling destinations cannot be altered other than the previously mentioned,” an importer said. According to the trader, the policy fails to talk about warehouse provision. “There is no clarity regarding the provision of bonded and non-bonded warehouses and related tax issues, which are the crucial parts of trade logistics.” In 2016, the World Bank in its report titled ‘From Evidence to Policy: Supporting Nepal’s Trade Integration Strategy underlined the role of improved trade logistics for the Nepali economy. It looked at Nepal’s current participation in global markets and made recommendations on how the country can increase trade integration and boost its economy. The report suggests that Nepal is in dire need of an economic transformation, which would require a shift away from remittance-fueled growth to growth driven by productivity and investment.