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N T I S2010Dairy Products, specifically Milk PowderSujal Daity Ltd, a milk powder factory in Pokhara, was visited in the course of the fieldwork. It is fully Nepaleseownedand produces mainly skimmed milk powder, and also flavoured milk, yoghurt, and whitener. Milk issupplied by and collected from 3,000 farmers in the region, most of them small-scale producers. The companyassists farmers in raising productivity through several training measures.The current production of milk powder is 5 MT/day, which is below the capacity of the plant. The constrainingfactor is the lack of milk supply, which is currently at 60,000 l/day. Milk is bought for 24 NPR/l from farmers.This is similar to the current farm gate prices in the EU. 155The company has not yet exported milk powder, but has received positive feedback from potential buyersin Pakistan and the Middle East and sees itself as being able to compete in terms of both price and quality,even in markets where Nepal does not enjoy any tariff advantage (as in the UAE). The main problem is that,so far, the company is unable to supply the quantities needed by potential buyers, who prefer buying in bulk.Shipping facilities and costs are not seen as problems, according to a company representative.The sector appears to have a very positive socio-economic impact as it provides cash income for a largenumber of subsistence farmers. It also seems internationally competitive. However, Nepal is currently a netimporter of dairy products. 156Micro-Transformers and Distribution TransformersSince the early 1990s Nepal has developed a technical expertise and engineering production base tomanufacture and export electrical and electronic components. Production and supply of such items areon a contract manufacturing basis. There are two very different types of transformers that are currentlyexported: micro-transformers and electrical distribution transformers. Micro-transformers are, for example,used in the automotive and telecommunication industry and their production involves certain steps which aredifficult to automate. Components of such parts are imported into Nepal, manually assembled and then reexported.The leading company involved in this business is Nepal Bayern Electric, 157 which currently employs130 workers. One could in fact speak of an export of assembly services, rather than an export of microtransformers.According to trade data, annual exports of such products have been US$1-2 million per yearbetween 2004 and 2007, with a significant drop to US$0.6 million in 2008. However, a more appropriateexport measure would be the value added as the export is practically an export of assembly services, withinputs being imported by Nepal Bayern Electric (NBE). With currently 130 workers employed (down from apeak of 550), the annual value added should be somewhere around US$200.000. 158Large transformers, used for electricity distribution, are mainly manufactured for the domestic market, butare currently also exported, mainly to Bhutan. The main company involved is Nepal Ekarat EngineeringCompany Ltd (NEEK). 159 Export statistics for distribution transformers are inconsistent. Currently, NEEK isthe only exporter and Bhutan is the only export destination, with annual exports in recent years being aroundUS$200.000-300.000. Currently, NEEK is working to supply 1,100 units of distribution transformers to Bhutanand they have stated that they see a potential for export in the Middle East and Africa (e.g. Kenya). Smallercompanies find it difficult to take part in international tenders for distribution transformers because they lackthe required experience.155Source: http://www.clal.it/en/index.php?section=confronto_est156Annual imports of milk and milk powder were US$5-7 million in recent years. Exports were only US$200,000 in 2008.157Nepal Bayern Electric, (NBE), www.nbe.com.np158This is a very rough estimate based on an annual salary of US$1,000 and some overhead costs.159Nepal Ekarat Engineering Company Ltd. (NEEK), http://www.neek-transformer.comNEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT125
N T I S2010The industry is electricity-intensive and frequent interruptions have caused problems. Self-generation costsare 200 per cent higher than power from the grid. Transportation of distribution transformers to Bhutanrequires trans-shipment through India, which adds additional costs and potential delays.A significant increase in exports of transformers, in particular distribution transformers, may not be for the nearfuture. Such exports have been erratic in recent years, but it is hard to imagine that distribution transformerswill become a major export item, given the high transport costs and no evidence for particular comparativeadvantages in this sector. Labour-intensive assembly of micro-transformers or similar electronic componentsmight have greater potentials. These exports rely on low labour costs, but suffer from low labour productivity.It is a sector that has probably less in common with distribution transformers than with the garment sector,where Nepal’s competitiveness is problematic when compared to more efficient low-cost producers such asVietnam or China, especially once preferential access is gone.126NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT
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Nepal Trade Integration Strategy 20
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Table of ContentsForewordAbbreviati
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Table 2.17 Acreage and Production o
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List of BoxesBox 2.1 A Nepalese IT
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LoD Limit of DetectionM&E Monitorin
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Chapter 1Trading Environment, Expor
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N T I S20101.3 Capacity Development
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N T I S2010Table 1.1Balance of Paym
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N T I S2010Changes in the Nepalese
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N T I S20101.5 Expanding an ‘Incl
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N T I S2010 Index 4 measures the po
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N T I S2010Table 1.9Impact of 19 Ex
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N T I S2010Table 1.10Geographical D
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N T I S20101.7 Declining Importance
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N T I S2010negotiate for the inclus
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N T I S2010Types of Exported Produc
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N T I S2010Table 2.2Large Cardamom:
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N T I S2010Index 4: Socio-economic
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N T I S2010Index 1: Export Performa
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N T I S2010exporters. Nepal permits
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N T I S2010RankCountryExports Nepal
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N T I S2010like China and Australia
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N T I S2010The opportunities for pr
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N T I S2010Lentils are subject to o
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N T I S2010Production Capacity: Nat
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N T I S2010Gender Impact: This sect
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N T I S2010Export Prospect: Accordi
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N T I S2010Cost and Quality of Infr
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N T I S2010Attractive markets for T
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N T I S2010Market Access Conditions
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N T I S2010Gender Impact: The respo
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N T I S2010Information from industr
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N T I S2010Cost and Quality of Infr
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N T I S2010RankCountryTable 2.26Att
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N T I S2010# Botanical Name 41 Spec
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N T I S2010Current Export Destinati
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N T I S2010significant attention fr
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N T I S20109) Silver JewelryBackgro
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N T I S2010Availability and Quality
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N T I S2010Attractive Markets for S
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Page 92 and 93: N T I S201012345678910# Name of Ste
Page 94 and 95: N T I S2010Export Prospect: Accordi
Page 96 and 97: N T I S2010Gender Impact: Female wo
Page 98 and 99: N T I S2010The value added of those
Page 100 and 101: N T I S2010sheep population, which
Page 102 and 103: N T I S201013) TourismBackgroundTou
Page 104 and 105: N T I S2010Index 2: World Market Co
Page 106 and 107: N T I S2010There are also about 24
Page 108 and 109: N T I S2010Index 1: Export Performa
Page 110 and 111: N T I S2010Index 2: World Market Co
Page 112 and 113: N T I S2010Contribution to Skill De
Page 114 and 115: N T I S2010Types of Exported Servic
Page 116 and 117: N T I S2010Cost and Quality of Infr
Page 118 and 119: N T I S201016) Health ServicesBackg
Page 120 and 121: N T I S2010medical services are bei
Page 122 and 123: N T I S201017) Education ServicesBa
Page 124 and 125: N T I S2010should be interpreted ca
Page 126 and 127: N T I S2010foreign students. The me
Page 128 and 129: N T I S2010Under mode 4 (presence o
Page 130 and 131: N T I S2010Index 4: Socio-economic
Page 132 and 133: N T I S2010generate revenue of US$3
Page 134 and 135: N T I S2010monopsony power. Several
Page 136 and 137: N T I S2010The possibility of direc
Page 140 and 141: Chapter 3Access to the Indian Marke
Page 142 and 143: N T I S2010The Nepal-India Trade Tr
Page 144 and 145: N T I S2010Most issues reported abo
Page 146 and 147: N T I S2010Nepalese Domestic Issues
Page 148 and 149: N T I S2010India’s view is that t
Page 150 and 151: Chapter 4Access to the Chinese Mark
Page 152 and 153: N T I S2010products must be wholly
Page 154 and 155: N T I S2010The findings discussed h
Page 156 and 157: N T I S20104.5 Other Impediments to
Page 158: N T I S20104.7 Recommendations: Cha
Page 161 and 162: N T I S2010inflow between 2000 and
Page 163 and 164: N T I S2010Industrial Parks and SEZ
Page 165 and 166: N T I S2010Lack of up-to-date polic
Page 167 and 168: N T I S2010Apart from the critical
Page 169 and 170: N T I S2010capabilities in all five
Page 171 and 172: N T I S20105.5. Combining Investmen
Page 174 and 175: Chapter 6Trade FacilitationN T I S2
Page 176 and 177: N T I S2010In the 2005 Trade Facili
Page 178 and 179: N T I S2010The latest phase of impl
Page 180: N T I S2010improve efficiency. Few
Page 183 and 184: N T I S2010Figure 7.1Future Organog
Page 185 and 186: N T I S2010EU countries, special pr
Page 187 and 188: N T I S2010Act 1980. So far, 130 fi
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N T I S2010The current projects inc
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N T I S2010The NBSM as a secretaria
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N T I S2010Many more organizations
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N T I S2010Table 7.8Existing Nepal
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Table 7.9Standards Issues for Ten E
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N T I S20107.14 Priority Actions an
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N T I S2010It is not clear what amo
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N T I S2010GeneralNepal’s general
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N T I S2010a crucial part of the PR
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N T I S2010residue limits (MRLs) ar
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N T I S2010The viral diseases chirk
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N T I S2010SPS issues Affecting Tra
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N T I S2010Indian phytosanitary sta
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N T I S20108.5 Conclusions and Reco
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N T I S2010Simpler requirements suc
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Table 8.4Summary of Export Environm
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N T I S2010To register a patent, a
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N T I S2010breaches of law. The Nep
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N T I S2010Intellectual Property is
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Chapter 10Barriers to Service Trade
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N T I S2010Constraints in the touri
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N T I S2010Table 10.2Nepal GATS Com
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N T I S2010locations favourable for
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N T I S2010Barriers to Exports of H
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N T I S2010Institutional IssueThe s
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N T I S2010 Strengthening sub-natio
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N T I S2010Observations from enterp
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N T I S2010Nepal Ginger Producers a
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N T I S2010 Helping paper manufactu
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N T I S2010Computer Association of
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N T I S20105. Also related to the a
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N T I S2010The key principles inclu
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N T I S2010That being said, Nepal h
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N T I S2010Nepal Business ForumOn M
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N T I S2010Third, capacity developm
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N T I S2010expected to emerge from
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N T I S201012.7 Possible Options fo
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N T I S201012.8 RecommendationsThe
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N T I S2010GoN / MoF (2009), Econom
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N T I S2010Thapa, Ajit N.S. (2006).
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N T I S2010NEPAL TRADE INTEGRATION
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N T I S2010MainOutcomes Recommended
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N T I S2010NEPAL TRADE INTEGRATION
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N T I S20102. GINGERStrengths Tradi
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N T I S20104. LENTILSStrengths High
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N T I S20105. TEAStrengths Very fav
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N T I S20106. INSTANT NOODLESStreng
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N T I S2010 Review, simplify, and i
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N T I S20109. SILVER JEWELRYStrengt
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N T I S201011. CHYANGRA PASHMINA PR
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N T I S201013. TOURISMStrengthsNatu
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N T I S201015. IT AND BPO SERVICESS
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N T I S201017. EDUCATION SERVICESSt
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N T I S201019. HYDRO-ELECTRICITYStr
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Appendix 1Methodology for Export Po
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N T I S2010B. Data SourcesThe analy
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Appendix 2Market Attractiveness Ind
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N T I S2010Rank13) Tourism1 Germany
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Appendix 3Updated Legislative Actio
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N T I S2010specified management sys
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N T I S2010than pesticide residues
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Appendix 5Malaysia GAP (Skim Amalam
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N T I S2010E. Document ControlQMS d
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Appendix 7Good Agricultural Practic
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