Ministry of Commerce And Supplies - Enhanced Integrated ...

N T I S2010Availability and Quality of Labour Force: About 50,000 gold and silver craftsmen are available in the countryand 40 per cent of them are in and around Kathmandu valley. 63 There is no labour shortage and the industryis unlikely to face problems in attracting new workers.Labour Cost and Overall Production Cost: Recently labour cost has increased by about 20 per cent due tooverall inflationary pressure, but is cheaper than in competing countries, such as India and Thailand. Monthlysalaries for skilled workers are around US$100 in Nepal. Raw materials are available without any restriction onforeign exchange payment on import.Level of Processing Technology: Traditional technology is a unique selling point. The processes include cutting,molding or casting, embossing, buffing, policing, and studding of gemstones, as required. Entrepreneurshave felt an urgency to introduce modern machinery, equipment and tools 64 to reduce wastage and enhanceproduct quality and quantity.Cost and Quality of Infrastructure: Being a low bulky handmade item, jewelry does not attract manyinfrastructural facilities.Efficiency of Domestic Supporting Industries: Almost all silver and 95 per cent of gemstones and semipreciousstones 65 required for jewelry are imported from India, Brazil, Thailand, Pakistan, and Sri Lanka, and distributedby local importers.Domestic Demand: Output is supplied to domestic (50 per cent) as well as foreign (50 per cent) markets.However, products sold in domestic markets are usually exported later, either through resale to tourists orthrough informal exports. 66Business Environment: The poor business environment has encouraged informal trade in substantial quantity,which is also related to evasion of taxes, including income tax.Government Initiatives and Donor Involvement: The Commercial Policy 2009 stresses (a) a separate strategyfor gems and semi-precious stones for the promotion of jewelry, (b) mining of gemstones and gems processingthrough trade-friendly regulations, (c) duty-free import of equipment and tools, (d) provision of training,and (e) marketing promotion activities. There is no separate association for silver jewelry development andpromotion.Prospect for Domestic Supply Conditions: In the short-term, export of jewelry can be encouraged byextending support to introduce modern equipment and tools. In the long run, jewelry production for exportcan be outsourced from the districts outside Kathmandu valley to more remote areas provided special actionprogrammes are implemented. Some of such measures are training of craftsmen in modern equipment andtools, establishment of linkages between rural craftsmen and exporters in Kathmandu and strengthening ofexporters’ marketing capabilities.Index 4: Socio-economic ImpactCurrent Employment and Job-Creation Prospect: It is estimated that currently 10,000 craftspersons areavailable to work for silver jewelry production, with an FTEE of around 6,700. In addition, it is estimated that63Nepal Gold and Silver Entrepreneurs Association, See also International Trade Centre, UNCTAD/WTO, Export Potential Assessment in Nepal,2007.64Such tools and equipment are for casting, soldering, cutting, drilling, policing, vibrating, calibrating, etc.65According to the Department of Mines and Geology, 200 varieties of gems are available in Nepal. The most popular ones are Aquamarine,Beryl, Kyanite, Quarts, Ruby and Sapphire, Tourmaline, and Garnets. See also International Trade Centre, UNCTAD/WTO, Export PotentialAssessment in Nepal, 2007.66Jewelry exporters have reduced operating costs by engaging in informal exports that help to reduce procedural costs. Official trade figures aretherefore expected to be underestimated.NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT71