Nepal-Australia Trade Relations: Current Scenario and Future Outlook

Trade between Nepal and Australia is characterized by a significant trade deficit, with most of Nepal's trade being with India. The trade deficit has been attributed to various factors such as consumption patterns, production challenges, and weak marketing. The COVID-19 pandemic further impacted trade volume, with imports declining more than exports. Despite challenges, there are prospects for enhancing trade relations between Nepal and Australia post-COVID-19.

• Nepal
• Australia
• Trade relations
• COVID-19 impact
• Future prospects

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1. Trade between Nepal and Australia : Trade between Nepal and Australia : Present scenario and future prospects Present scenario and future prospects A presentation prepared for Webinar on Exploring Trade and Investment Opportunities between Nepal and Australia in the post COVID-19 context August 8, 2020

2. Nepals Trade: At a Glance Nepal s Trade: At a Glance Total Trade AUD 18.7 bn (2019) Import AUD 17.2 bn (2019) Export AUD 1.3 bn (2019) Export-Import ratio 1:12.8 Out of total trade, nearly two third is with India Nepal s Trade with Australia 8 August 2020

3. Nepals Trade : At a Glance Nepal s Trade : At a Glance Trade deficit in increasing trend Trade Deficit in 10 years (NRs) 1400 1200 Trade deficit slightly gone down in 2019 1000 compared to 2018 due to reduction in import volume 800 600 400 200 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Widening trade gap In the past 20 years, import gone up by 3.8 folds while export grew by 2.2 fold only Nepal s Trade with Australia 8 August 2020

4. Reasons for increasing trade deficit Reasons for increasing trade deficit Consumption Pattern Increased income Demand for manufacturing goods Supply system problem Production Pattern Low agriculture productivity Small manufacturing industries Trade Pattern Diversification goods and countries Small service trade Weak marketing High trade cost Economic Growth Import based inputs Aid conditions for use of goods and services Weak domestic capacity Nepal s Trade with Australia 8 August 2020

5. COVID COVID- -19 has the impact 19 has the impact Trade volume gone down Import reduced by 15.6 % (FY 2019/20) Export almost same Trade deficit down by 16.8 % The last four months (Mid March to Mid July) of FY 2019/20 saw trade drastically going down Before pandemic export up by 22 % and import down by 2.6 % Nepal s Trade with Australia 8 August 2020

6. COVID COVID- -19 has the impact 19 has the impact Industry and business most hit sector Long lockdown and restrictions crippled the industry and business Impact still on Business activities yet to reach the status before pandemic Impact on employment Overall, slowed the process of Graduating from LDC status Becoming MIC by 2030 Nepal s Trade with Australia 8 August 2020

7. COVID COVID an opportunity ? an opportunity ? COVID -19 has the positives too Harness the domestic potential Scaling up the production Invest in virgin areas invite foreign investors Government initiative to revive Post Covid Economy In a bid to create and promote employment, Investment in skill development increased Nepal s Trade with Australia 8 August 2020

8. Nepals Trade with Australia Nepal s Trade with Australia Export Import Ratio Export (Rs. mn) Import (Rs. mn) Total Trade (Rs. mn) Nepal's Trade with Australia (Rs. mn) Year 10000 9000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 713 663 682 626 595 609 519 325 346 295 7132 7913 5388 5070 3639 2542 2307 2038 1508 2947 7845 8577 6070 5696 4234 3151 2825 2363 1855 3242 1:10 1:12 1:08 1:08 1:06 1:04 1:04 1:06 1:04 1:10 8000 7000 6000 5000 4000 3000 2000 1000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Export Import Total Trade Nepal s Trade with Australia 8 August 2020

9. Nepals Trade with Australia Nepal s Trade with Australia Trade between two countries not large Trade volume declined in the last 10 years Both Nepal s export and import to and from Australia gone down by nearly 59 percent since 2010 to 2019 Nepal is third largest source country for international students Nepal s Trade with Australia 8 August 2020

10. Reasons for small trade Reasons for small trade High trade cost Market diversification Nepal s small production base Insufficient promotional activities Nepal s Trade with Australia 8 August 2020

11. Nepals Trade with Australia Nepal s Trade with Australia Major Export items to Australia Woolen carpet Tea, coffee Felt items Cotton suits and cotton jackets Silver jewelry Malt extracts Major Import items from Australia Rapeseeds Chickpeas Red lentils Metal scraps (zinc, aluminum, copper) Food supplements Alcoholic beverages Nepal s Trade with Australia 8 August 2020

12. Nepals Trade with Australia : Prospects Nepal s Trade with Australia : Prospects Strengths Strong bilateral ties Australian aid for production (e.g. MEDEP) Nepal s Comparative advantage on certain products (e.g. carpet, tea) Opportunities Increasing Nepali population in Australia (nearly 100,000) 17th largest migrant community Growing number of Nepali students in Australian institutions 3rd largest source country for international students Nepal s Trade with Australia 8 August 2020

13. Nepals Trade with Australia : Prospects Nepal s Trade with Australia : Prospects Prospective commodities Gems and precious stone (from Nepali mines) Tea, coffee Herbal products Handicrafts Services Handmade jewelry Tourism 3 .tures of Nepal Nature, Adventure and Culture Pashmina Woolen Carpets Skilled human resources Nepal s Trade with Australia 8 August 2020

14. Promoting Nepali products in Australia Promoting Nepali products in Australia Study for Nepali products in Australia Study Australian legal provisions for import Study import pattern of Australia Explore the possibilities of market penetration by Nepali products Promote products identified by Nepal Trade Integration Strategy (NTIS) Increase production base in Nepal Scale up the production of exportable commodities Nepal s Trade with Australia 8 August 2020

15. What we are doing? What we are doing? Preparing country specific strategy Analyzing market of Nepali products in the destination countries Information dissemination to potential exporters Exporters capacity development Information portal trade statistics, export products, potential exporters with contact details, legal provisions in the destination countries (www.staging.nepaltradeportal.gov.np) Nepal s Trade with Australia 8 August 2020

16. What we are doing? What we are doing? Quality and standard of exportable commodities Measures to reduce trade cost Exporters consortium Export House Facilitating Expos Showcasing of Nepali products in diplomatic missions abroad Product profile preparation Human capacity development focusing service trade Nepal s Trade with Australia 8 August 2020

17. More to do More to do Formal mechanism between two countries for trade and investment promotion Proactive diplomatic mission today s program a good initiative Nepali Diaspora be the goodwill ambassador for trade Business to Business forums Increase Australian investment in Nepal targeting export commodities Nepal having favorable investment policies Improved doing business index Government of Nepal developing SEZ, CBEZ, Industrial Estate Nepal s Trade with Australia 8 August 2020

18. More to do More to do Policy reforms A continuous process Process reforms Up to the ground level Tariff restructure Marketing Cooperation among the stakeholders Nepal s Trade with Australia 8 August 2020

19. Thank you ! Thank you ! Thanks for kind attention !!!! Nepal s Trade with Australia 8 August 2020