PRI Held a Public Policy Dialogue on Trade Logistics Development Policy

May 20, 2022, Policy Research Institute

The policy dialogue was held to collect feedback/suggestions on the “Trade Logistics Development Policy (Draft), 2078” prepared by the Ministry of Industry, Commerce and Supplies, which asked PRI to comment on. The dialogue was a part of PRI’ modus operandi to link a policy process, such as the discussion on the draft policy, to all the concerned.

Chaired by PRI Chairperson Dr. Bishnu Raj Upreti, the dialogue was attended by the representatives of almost three dozen related institutions that included the Federation of Nepalese Chamber of Commerce & Industries (FNCCI), Confederation of Nepalese Industry (CNI), Nepal Chamber of Commerce, South Asia Watch on Trade, Economics and Environment (SAWTEE), Nepal Freight Forwarders Association (NEFFA), and so on. Also, present in the event were the officials from the Ministry of Industry, Commerce and Supply and PRI researchers.

At the start of the dialogue, Dr. Upreti welcomed the experts present, took them briefly through PRI’s strategic priorities as well as policies and processes that govern research and other activities, such as the review of policy drafts. He then invited all experts to share their views and comments.

Former Secretary of the Government of Nepal Purushottam Ojha and former Member of National Planning Commission Dr. Posh Raj Pandey, who helped PRI peer-review the draft, initiated the discussion by presenting their comments and suggestions to the floor. In the floor discussion that followed, following comments were shared.

• As the Nepali translation of the word “logistics” does not communicate the same broader essence the word is expected of, it is good to use the English word “logistics” in brackets for the purpose of clarity.
• The main reason for Nepal not being able to attract foreign investment is due to the lack of proper trade logistics.
• The geographical position of Nepal (as a landlocked, least developed country) is not properly addressed in the draft policy.
• The draft policy seems to miss liability of contract, which is of supreme importance in trade logistics.
• Logistics policy should have provisions to regulate the operation of intermodal transportation.
• The policy should aim to make the optimum use of transit treaties with Bangladesh and China as well (it is only with India as of now).
• There are a number of institutional mechanisms regulating trade related issues and topics. These mechanisms should be consolidated and reorganized to make implementation effective.
• The main problem of the policy regime in Nepal is the lack of effective coordination and implementing mechanisms.
• The policy should foresee the aspect of value addition to agriculture and SMEs as the main exporting items are from the agricultural sector.
• The policy should clearly present legal frameworks related to logistics.
• The policy is not well defined and is open to various interpretations. Left as it is, the implementation may lead to chaos.
• Since this sector involves various layers of stakeholders, the policy must spell out mechanisms for coordination and collaboration among them.
• Reduction of transit costs should be the main objective of the policy.
• The policy has no provision for the regulation and operation of railway and waterway modes of transportation. It should address issues related to multi-mode transportation and its regulation.
• It must provide several strategies to implement the trade and transit treaty of Nepal with China and Bangladesh.
• The policy should not be focused on Birgunj Port alone. It should rather explore opportunities to build a secure centralized port in the area.
• The policy should focus on building large warehouses. The tendency to operate individual warehouses will only add to transit costs.
• The policy should offer a multi-model trade facilitating tool. It should ensure custom-to-custom and port-to-port connectivity so that all ports and customs offices are integrated. (Effect of the absence of an integrated policy is seen, some participants suggested, in the operation of the Chovar port, which requires investors to pay additional costs even after the payment at other transit points within Nepal.)
• The objective set by the policy is vague. It should be reformulated to make it as specific as possible. The policy should also provide for a timeline by which to implement the undertakings offered.