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N T I S2010Table 10.2Nepal GATS Commitments in Computer and Related ServicesModes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural personsSector and subsector Limitation on market access Limitation on national treatmentComputer and related services(a)Consultation services related to theinstallation of computer hardware (CPC841)(1) None(2) None(1) None(2) None(b)Software implementation services (CPC842)(c) Data processing services (CPC 843)(d) Database services (CPC 844)(e)Maintenance and repair service of offi cemachinery and equipment, includingcomputers (CPC 845)(3) None, except onlythrough incorporationin Nepal and withmaximum foreign equitycapital of 80 per cent.(4) Unbound, exceptas indicated in thehorizontal section(3) None(4) Unbound, except asprovided under horizontalsection(f)Other computer services- Data preparation services (8491)- Other computerservices (CPC 8499)Source: WTO Report of the Working Party on the Accession of NepalBarriers to Trade in IT and BPO ServicesRegulatory Barriers Nepal’s GATS commitments in the ICT sectors are largely concentrated on Modes 1 and 3. Mode 4 isone of the most restricted categories within the service sector, including restrictions on visas and workpermits for people coming to stay and work as employees. In addition, Nepal restricts foreign equitycapital up to 80 per cent for companies incorporated in Nepal, to provide these services as per itscommitments in the WTO; Although the monopolistic market of Nepal Telecom was terminated by providing additional licences toprivate sectors, the telecom sector still lacks a true competitive market. This is due to legal ambiguities,court cases, frequent changes of government, and a lack of expertise in regulatory mechanism; In many cases, there are no clear boundaries in the respective jurisdiction of the Ministry of Informationand Communication and HLCIT/Ministry of Science and Technology. This discourages investment; Though the office of controller of certification was established in 2007, the implementation of PKIinfrastructure has yet to take place. Nepal has not been able to attract the market of data conversionand medical transcription, particularly from European countries, due to weak data protection laws; IT and BPO service exports are considered as just another form of export with a 20 per cent export taximposed. So far, no tax measure has been reported on import of software. In case of warranty-relatedtransactions, theoretically, one-time import tax is applied, but in practice there is no clearly definedprocess and businesses are forced to pay import taxes numerous times for the same item; Although the short-term movement of natural persons as business representatives/promoters toanother nation is usually not restricted (except by a few countries), the dollar exchange policy appliedby the Central Bank remains a constraint. The exchange limit is set at US$2,000, but this is too low forbusiness promotion purpose. In principle, a Nepalese company can open a subsidiary in foreign soil,but again there is no provision for foreign currency exchange to establish such outfit. This is a majorbarrier for IT companies that may need to gain confidence of onshore clients by opening a foreignsubsidiary.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT219
N T I S2010Economic and Infrastructural Barriers The only IT park in Nepal is located outside the Kathmandu valley with a capacity of 300 persons. Thisis insufficient for a decent IT and BPO service provider; At times, the sector has experienced 16 hours of load-shedding every day. This is a problem even forICT providers equipped with generators due to regular scarcity of fuel for generators and the high costof such electricity; The cost of bandwidth is five times higher than that of India; The Capability Maturity Model Integration (CMMI) appraisal is the international benchmark standardof quality and delivery capacity. Only one company in Nepal meets the CMMI standard so far; The sector lacks senior personnel with experience in space allocation, productivity-based perks, definedprocess (standard operating procedures), project management tools/techniques, security measures,etc.; Nepalese companies have not been able to effectively market their software products and capability inthe international arena.Education ServicesBackground on Education Services in Nepal As of 2005, there were 35,540 public schools and 4,480 private schools in Nepal, six universities, twouniversity-level medical institutions, and 621 affiliated campuses under these universities; Schools are scattered across country, but the higher educational institutions are mostly located in theKathmandu valley; Providers of education services can be broadly categorized as private and public. During 2005–07,public institutions accounted for more than 90 per cent of the supply of education services in Nepal; The GoN permitted private universities to come into operation starting in 1991; In 2001, government institutionalized the increase in private investments in schools and othereducational institutions, by allowing them to be established under Nepal Company Act; The private educational institutions are supervised by the GoN in terms of academic content, but theyhave financial and administrative independence; The GoN allocates an average of 16 per cent of the annual budget to the education sector, which standsat about 4 per cent of GDP. This is the highest allocation in South Asia; 3 In a study of education trade during 2001–03, 683 foreign students came to Nepal in pursuit of highereducation as against an outflow of 2,087 students to countries other than India. A total of 801 Nepalesestudents went to India for higher studies, creating a net outflow 2,205 students during the period; 4 India is Nepal’s major education trading partner, followed by the USA, the UK, China, and Australia. 5Potential for Educational ExportThe 2008 SAATEE study ‘Nepal’s Export Potential in Services’ suggests that there are many factors that makeNepal ideal for exporting educational services. Among these factors natural environment and religion are amajor part of the equation. Nepal is a geographically diverse country endowed with natural beauty and quiet3SAWTEE (2008) Nepal’s Export Potential in Services (Health, Education and High-End Retail Services), report submitted to Enhancing Nepal’sTrade Related Capacity, Ministry of Industry, Commerce and Supplies/UNDP.4Raychaudhuri and De (2006) Assessing Barriers to Trade in Education Services inDeveloping ESCAP Countries: An Empirical Exercise. WTO/ARTNeT Short-termResearch Project.5Shrestha (2004) Shrestha. Rameshwar. 2004. Education Nepal. APARNET online publication available at: http://www.aparnet.org/documents/education_and_training_info/nepal.rtf.220NEPAL 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 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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N T I S2010Production Capacity: Nep
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N T I S2010ii.iii.required for the
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N T I S201012345678910# Name of Ste
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N T I S2010Export Prospect: Accordi
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N T I S2010Gender Impact: Female wo
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N T I S2010The value added of those
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N T I S2010sheep population, which
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N T I S201013) TourismBackgroundTou
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N T I S2010Index 2: World Market Co
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N T I S2010There are also about 24
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N T I S2010Index 1: Export Performa
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N T I S2010Index 2: World Market Co
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N T I S2010Contribution to Skill De
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N T I S2010Types of Exported Servic
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N T I S201016) Health ServicesBackg
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N T I S2010medical services are bei
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N T I S201017) Education ServicesBa
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N T I S2010should be interpreted ca
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N T I S2010foreign students. The me
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N T I S2010Under mode 4 (presence o
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N T I S2010Index 4: Socio-economic
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N T I S2010generate revenue of US$3
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N T I S2010monopsony power. Several
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N T I S2010The possibility of direc
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N T I S2010Dairy Products, specific
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Chapter 3Access to the Indian Marke
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N T I S2010The Nepal-India Trade Tr
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N T I S2010Most issues reported abo
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N T I S2010Nepalese Domestic Issues
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N T I S2010India’s view is that t
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Chapter 4Access to the Chinese Mark
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N T I S2010products must be wholly
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N T I S2010The findings discussed h
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N T I S20104.5 Other Impediments to
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N T I S20104.7 Recommendations: Cha
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N T I S2010inflow between 2000 and
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N T I S2010Industrial Parks and SEZ
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N T I S2010Lack of up-to-date polic
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N T I S2010Apart from the critical
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N T I S2010capabilities in all five
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N T I S20105.5. Combining Investmen
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Chapter 6Trade FacilitationN T I S2
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N T I S2010In the 2005 Trade Facili
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N T I S2010The latest phase of impl
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N T I S2010improve efficiency. Few
Page 183 and 184: N T I S2010Figure 7.1Future Organog
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Page 187 and 188: N T I S2010Act 1980. So far, 130 fi
Page 189 and 190: N T I S2010The current projects inc
Page 191 and 192: N T I S2010The NBSM as a secretaria
Page 193 and 194: N T I S2010Many more organizations
Page 195 and 196: N T I S2010Table 7.8Existing Nepal
Page 197 and 198: Table 7.9Standards Issues for Ten E
Page 199 and 200: N T I S20107.14 Priority Actions an
Page 201 and 202: N T I S2010It is not clear what amo
Page 203 and 204: N T I S2010GeneralNepal’s general
Page 205 and 206: N T I S2010a crucial part of the PR
Page 207 and 208: N T I S2010residue limits (MRLs) ar
Page 209 and 210: N T I S2010The viral diseases chirk
Page 211 and 212: N T I S2010SPS issues Affecting Tra
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Page 215 and 216: N T I S20108.5 Conclusions and Reco
Page 217 and 218: N T I S2010Simpler requirements suc
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Page 221 and 222: N T I S2010To register a patent, a
Page 223 and 224: N T I S2010breaches of law. The Nep
Page 225 and 226: N T I S2010Intellectual Property is
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Page 230 and 231: N T I S2010Constraints in the touri
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Page 236 and 237: N T I S2010Barriers to Exports of H
Page 238: N T I S2010Institutional IssueThe s
Page 241 and 242: N T I S2010 Strengthening sub-natio
Page 243 and 244: N T I S2010Observations from enterp
Page 245 and 246: N T I S2010Nepal Ginger Producers a
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Page 253 and 254: N T I S2010The key principles inclu
Page 255 and 256: N T I S2010That being said, Nepal h
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Page 265 and 266: N T I S201012.8 RecommendationsThe
Page 267 and 268: N T I S2010GoN / MoF (2009), Econom
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Page 272 and 273: N T I S2010NEPAL TRADE INTEGRATION
Page 274 and 275: N T I S2010MainOutcomes Recommended
Page 280: 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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