Govt bid to boost export
KATHMADU, JUL 31 -
With the country’s total export income failing to even foot the petroleum import bills, the government is all set to provide cash incentives to exporters who send goods abroad and earn in convertible foreign currencies.
Exporters to India cannot enjoy this facility as the government has confined the facility only to those earning US dollar, euro and others but not Indian currency. They, however, have to maintain at least 30 percent value addition on their products.
The last fiscal year 2010-11 budget had announced the provision of cash incentives and the current budget has also continued it. The cabinet endorsed working procedures on it last month which provision that exporters maintaining value addition between 50 percent and 80 percent will get refund of 3 percent in Nepali currency.
Those maintaining value addition of more than 80 percent will get refund of 4 percent. According to the budget speech last fiscal year, such exporters are also entitled to get income tax exemption of 25 percent.
Joint secretary to the Ministry of Commerce and Supplies (MoCS) Chandra Ghimire said maintaining value addition of 30-50 percent would get refunding of 2 percent. “The move was taken to encourage exporters and help the country’s terrible balance of payment status,” he said. The country’s balance of payment has just turned positive as of the first 11 months of the last fiscal year in the last two years. In order to provide cash incentives, the government has allocated Rs 300 million this fiscal year. It had allocated an equivalent amount last fiscal too which has been deposited with Nepal Rastra Bank in a non-freezable account. It means, the government has Rs 600 million to provide qualified exporters.
According to officials, nobody has received the refund until now given the delay in introducing working procedures and the central bank also issuing the circular for banks and financial institutions (BFIs) as per the working procedure this week.
Ghimire said given that the policy was introduced last fiscal year, the exporters can claim refund of both last and current fiscal years by submitting required documents as provisioned by the working procedures.
As of the first 11 months of the last fiscal year, the country’s export to countries other than India is worth Rs 19.18 billion in convertible foreign currency.
However, exporters say procedures to get refund from the government are not easy to comply with. Garment Association of Nepal President Udaya Raj Pandey said the Department of Industries, which has been mandated to fix the degree of value addition, is struggling to set the criteria of value addition and exporters will find it hard to follow these. “Instead, we are demanding flat incentive of at least 2 percent to all exporters on the basis of foreign exchange received,” he said.
According to working procedures on cash incentives, he exporters will have to submit documents to their banks proving earning of convertible foreign currency.
The exporter concerned should also produce the degree of value addition certified by the Department of Industries to claim cash incentives from his/her bank.
As per the demand of exporters, the banks concerned will have to deposit the equivalent amount of value addition in the bank account of the exporter within seven days at the purchase exchange rate of the central bank for the day.
After depositing money in the exporter’s account, the bank concerned will have to seek reimbursement from the government’s export cash incentive reimbursement account with the central bank.
The central bank stated in its circular that banks operating outside Kathmandu valley can demand reimbursement through its central or corporate office or make demand directly to the foreign exchange management department of the NRB.
Source: Kantipur
With the country’s total export income failing to even foot the petroleum import bills, the government is all set to provide cash incentives to exporters who send goods abroad and earn in convertible foreign currencies.
Exporters to India cannot enjoy this facility as the government has confined the facility only to those earning US dollar, euro and others but not Indian currency. They, however, have to maintain at least 30 percent value addition on their products.
The last fiscal year 2010-11 budget had announced the provision of cash incentives and the current budget has also continued it. The cabinet endorsed working procedures on it last month which provision that exporters maintaining value addition between 50 percent and 80 percent will get refund of 3 percent in Nepali currency.
Those maintaining value addition of more than 80 percent will get refund of 4 percent. According to the budget speech last fiscal year, such exporters are also entitled to get income tax exemption of 25 percent.
Joint secretary to the Ministry of Commerce and Supplies (MoCS) Chandra Ghimire said maintaining value addition of 30-50 percent would get refunding of 2 percent. “The move was taken to encourage exporters and help the country’s terrible balance of payment status,” he said. The country’s balance of payment has just turned positive as of the first 11 months of the last fiscal year in the last two years. In order to provide cash incentives, the government has allocated Rs 300 million this fiscal year. It had allocated an equivalent amount last fiscal too which has been deposited with Nepal Rastra Bank in a non-freezable account. It means, the government has Rs 600 million to provide qualified exporters.
According to officials, nobody has received the refund until now given the delay in introducing working procedures and the central bank also issuing the circular for banks and financial institutions (BFIs) as per the working procedure this week.
Ghimire said given that the policy was introduced last fiscal year, the exporters can claim refund of both last and current fiscal years by submitting required documents as provisioned by the working procedures.
As of the first 11 months of the last fiscal year, the country’s export to countries other than India is worth Rs 19.18 billion in convertible foreign currency.
However, exporters say procedures to get refund from the government are not easy to comply with. Garment Association of Nepal President Udaya Raj Pandey said the Department of Industries, which has been mandated to fix the degree of value addition, is struggling to set the criteria of value addition and exporters will find it hard to follow these. “Instead, we are demanding flat incentive of at least 2 percent to all exporters on the basis of foreign exchange received,” he said.
According to working procedures on cash incentives, he exporters will have to submit documents to their banks proving earning of convertible foreign currency.
The exporter concerned should also produce the degree of value addition certified by the Department of Industries to claim cash incentives from his/her bank.
As per the demand of exporters, the banks concerned will have to deposit the equivalent amount of value addition in the bank account of the exporter within seven days at the purchase exchange rate of the central bank for the day.
After depositing money in the exporter’s account, the bank concerned will have to seek reimbursement from the government’s export cash incentive reimbursement account with the central bank.
The central bank stated in its circular that banks operating outside Kathmandu valley can demand reimbursement through its central or corporate office or make demand directly to the foreign exchange management department of the NRB.
Source: Kantipur
