Docstoc

Nepal economy Role of Service Sector in

Document Sample
Nepal economy Role of Service Sector in Powered By Docstoc
					Role of Service Sector in the
     Economy of Nepal

                       Presentation by
                  Dr. Ramesh C. Chitrakar
                 Rameshc977@yahoo.com
                           Expert 1

                            At
   Second National Stakeholder Workshop on Services
               (27th – 28th October 2009)

  Co-organized by UNCTAD-Ministry of Commerce and Supplies
                      Kathmandu, Nepal

                     October 27, 2009                        1
I. Importance of Service Sector to
   Nepalese Economy
 Emerged as major contributor to GDP in the world: more
 than 70 % in developed and around 50% in developing
 countries.
 Investment and growth associated with services can
 contribute     to   poverty   alleviation    and    human
 development if the right policies are in place
 The GON’s increasing emphasis in services considering
 its contribution to GDP (> 51% in 2007/08), employment,
 international trade and balance of payments.
 CBS/ Nepal introduced a new series of National
 Accounts Statistics since 2006/07 taking 2000/01 as the
 base year
 Follows System of SNA 1993 adopted by a number of
 countries around the world. Prior to this, Nepal’s national
 income statistics was based on SNA 1968.                 2
Under SNA 1993: Economic activities classified into 15
sectors unlike 9 sectors in SNA 1968. The ISIC, Revision 3
has, in fact, classified the entire economy into 17 sectors.
In Nepal, the classification brought down to 15 sectors as
the contribution of workers in the private households and
from activities of foreign mission, and INGOs to the GDP is
found negligible & so these two sectors included in the
Other Community, Social and Individual Services category.
New series includes many activities not included before -
like microbus, cable car services under transportation;
PCO, mobile telephone, internet, cable television,
communication; renting; services of employment agencies,
cooperatives, consultancies, computer and photography,
private postal services, private sector education services,
community forestry and others.
9 Economic Sectors under service
30 new surveys and studies conducted to strengthen the
national income statistics
                                                        3
Figure 1: Sector wise contribution to GDP according to
          the new classification (FY 2007/08)

                              Se ctorwise GDP C ontribution, 2007/08




                          1.3 3.4                                      Non-service Industry
                    6.0
              1.8                                                      Wholesale & retail trade

       8.8                                                             Hotels & restaurants

                                                                        T ransport, storage &
                                                                       communications
     4.9                                              48.8              Financial intermediation

                                                                        Real estate, renting & business
      9.6                                                              activities
                                                                        Public administration & social
                                                                       security
             1.5                                                        Education

                     13.9                                              Health & social work

                                                                       Other community, social &
                                                                       personal activities       4
Table : Sector wise GDP Composition in Percent, 200/01-2007/08
         Sector           2002/01   2001/02   2002/03   2003/04   2004/05   2005/06   2006/07   2007/08
Agriculture and Forest      36.15     36.92     36.03     35.45     34.71     33.09     32.04     32.11
Fishery                      0.43      0.49      0.46      0.48      0.47      0.49      0.47      0.49
Mining and Quarrying         0.43      0.48      0.49      0.48      0.49      0.50      0.49      0.49
Manufacturing                9.03      8.50      8.20      8.05      7.92      7.59      7.48      7.16
Electricity, Gas &
water                        1.82      2.06      2.42      2.31      2.26      2.09      2.13        2.01
Construction                 6.01      6.49      6.54      6.42      6.47      6.50      6.46        6.53
Wholesale and retail
trade                       16.44     14.59     14.51     15.29     14.09     14.31     13.43       13.94
Hotels and restaurants       1.99      1.61      1.59      1.73      1.57      1.49      1.44        1.49
Transport, storage and
communications               7.39      7.87      8.31      8.94      9.06      9.72      9.91        9.58
Financial
intermediation               2.69      2.75      2.72      2.65      3.06      3.49      4.08        4.86
Real estate, renting
and business activities      8.29      8.23      8.08      7.72      8.69      9.53     10.15        8.77
Public administration
and social security          1.24      1.63      1.70      1.55      1.69      1.74      1.75        1.83
Education                    4.08      4.69      5.19      5.08      5.59      5.55      5.81        6.00
Health and social work       0.98      1.04      1.14      1.12      1.24      1.24      1.26        1.29
Other community,
social and personal
activities                   3.03      2.66      2.63      2.73      2.69      2.67      3.12        3.44
Sub-total (Non-
service Industry)           53.87     54.94     54.14     53.19     52.32     50.26     49.07       48.79
Sub-total (Service
                                                                                                5
Industry)                   46.13     45.07     45.87     46.81     47.68     49.74     50.95       51.20
Table: Sectoral contribution to GDP and GDP Growth Rate

 Description       2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08R
 Annual GDP                   0.16    3.77    4.41    3.23    3.73    2.74      5.26
 (constant
 price) Growth
 Rate
 Primary Sector               3.15     3.33      4.75      3.54     1.86       0.98     4.68
 Secondary                    0.66     3.09      1.48      2.91     4.37       4.02     1.82
 Sector
 Tertiary Sector             -1.78     3.68      6.82      3.33     5.63       4.49     7.00
 Composition
 of GDP (in
 percentage)
 Primary Sector     37.01    37.89    36.98     36.42     35.67    34.08     33.00     33.09
 Secondary          16.86    17.05    17.15     16.78     16.65    16.18     16.07     15.70
 Sector
 Tertiary Sector    46.13    45.06    45.87     46.81     47.68    49.74     50.93     51.21

Source: GON/MOF, Economic Survey, Fiscal Year 2008/09
R: Revised.
Note: Primary: Agri, Fisheries & Mining; Secondary: Industry, Energy & Construction.    6
Service Trade FIows: Contribution                                                     to Trade
                                                   Nepal’s Exports and Imports of Services (Million US$)
  The imports and
  exports of services in           Year                     Export                     Import                 Net Export
  the world are at about
  the same levels, with            2000                      506                        200                       306
  developed countries
  exports being higher             2001                      413                        215                       198
  than imports &
  developing countries             2002                      305                        237                        68
  imports higher than
  exports                          2003                      372                        266                       106
  In case of Nepal,
  exports exceeded                 2004                      461                        385                        76
  imports until 2004
  indicating                       2005                      380                        435                       -55
  importance of the
  sector to the                    2006                      386                        493                      -107
  economy.
  Deteriorated from                2007                      477                        657                      -180
  2005 onwards             Source: UNCTAD Handbook of Statistics, 2008(www.stats.unctad.org/Handbook/TableViewer/tableView.aspx

                                                                                                                      7
     Table: Trade in Services in Nepal by
            Major Sectors (Million US$)
     Year        Export/Import                                   Sectors
                                  Total Services     Transport             Travel   Other Services
    2000         Export               505.9             61.4               157.8        286.8
                 Import               199.9             64.8                73.3         61.9
                 Net Export           306.0              -3.4               84.5        224.9
    2001         Export               413.3             47.3               143.8        222.2
                 Import               214.7             71.6                79.7         63.3
                 Net Export           198.6             -24.3               64.1        158.9
    2002         Export               305.2             36.2               103.5        165.5
                 Import               236.8            110.9                69.2         56.7
                 Net Export            68.4             -74.7               34.3        108.8
    2003         Export               372.1             35.9               199.5        136.7
                 Import               266.2            115.0                81.2         70.0
                 Net Export           105.9             -79.1              118.3         66.7
    2004         Export               460.9             32.5               230.3        198.2
                 Import               385.0            141.5               153.8         89.8
                 Net Export            75.9             -109                76.5        108.4
    2005         Export               380.4             32.6               131.3        216.4
                 Import               434.7            160.8               163.2        110.7
                 Net Export            -54.3           -128.2              -31.9        105.7
    2006         Export               385.7             35.1               127.8        222.7
                 Import               492.8            186.3               185.3        121.2
                 Net Export           -107.1           -151.2              -57.5        101.5
Source: UNCTAD Handbook of Statistics, 2008                                                8
(www.stats.unctad.org/Handbook/TableViewer/tableView.aspx?ReportId=1914)
     Table : BOP Contribution (Rs. Million)

     Supply of Services                                     Fiscal Year
                          2000/01      2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
    Net                    9302.3       3938.4 7049.7 9074.9 -2034.2 -6818.3 -8377.3 -11393.4
    Credit                 29821.7      23508.2 26518.9 34315.9 26001.9 26469.7 32078.9 42236.1
    Debit                 -20519.4     -19569.8 -19469.2 -25241.0 -28036.1 -33288.0 -40456.2 -53629.5
    Credit: Travel         11717.0      8654.3 11747.7 18147.4 10463.8 9555.8 10125.3 18653.1
    Government Services 7614.2          8894.5 6624.0 7143.9 6804.9 7441.5 12336.4 13301.8
    Other Services         10490.5      5959.4 8147.2 9024.6 8733..2 9472.4 9617.2 10281.2
    Debit: Transportation -9308.7       -8854.4 -8618.4 -9382.1 -10602.2 -12592.3 -14557.4 -22969.2
    Travel                 -5520.4      -5731.1 -6171.5 -10021.5 -9691.9 -11960.8 -15785.0 -20862.0
    Other Services         -5690.3      -4984.3 -4679.3 -5837.4 -7742.0 -8734.9 -10113.8 -9798.3
    Remittances                                                     65541.2 97688.5 100144.8 142682.7

Source: Quarterly Economic Bulletin, Various Issues, Nepal Rastra Bank                           9
                   Table: Industries Permitted for Foreign Investment by Mid-March
Table: Industries Permitted for Foreign Investment by Mid-March 20092009

                                                                           (Amount in Million Rs.)
                                                                                  Targeted
                                           Total Project Total Fixed Foreign
                     Industry Type Numbers                                      Employment
 Of 1743 total
                                               Cost        Capital Investment
 industries                                                                      (Numbers)
 permitted for
 foreign
                    Industrial        634      447,260.0 318,520.0 172,250.0       72,941
 investment by      Products
 Mid-March,         Service Industry  482     250,330.0 205,860.0 114,970.0        25,285
 2009, the
 number of          Tourism           479      183,720.0 173,070.0    68,500.0     22,099
 service            Industry
 industries
 including
                    Construction       40       34,360.0    25,480.0  25,950.0      2,890
 tourism services   Energy             37       43,720.0    38,220.0  26,510.0      2,848
 is 941 (54%).      Agro-based         21       54,000.0    40,940.0  28,810.0      4,219
                    Mining             50        293,590     275,260  84,440.0      9,310
                    Total            1743 1,306,980.0 1,082,350.0 521,430.0       139,592
               Source: Department of Industries, Tripureshwore

                                                                                       10
The social contribution
                    Table: Employment in various services sectors, 2007

                                                       Employed Population

Poverty                                                                               % of       % of       % of
reduction,                      Sector                  M         F        Total    Total (M)   Total (F)   Total
employment         Construction                      229,464   48,321    277,785       4.4        1.3        3.1
                   Wholesale and retail trade        441,811 182,154 623,965           8.5        4.9        7.0
including those
                   Hotels and restaurants             77,991   40,565    118,556       1.5        1.1        1.3
of women, rural    Transport, storage and
development,      communications                     153,997    5,689    159,686       3.0        0.2        1.8
and                Financial intermediation           39,645    6,769     46,414       0.8        0.2        0.5
development of     Real estate, renting and
                  business activities                 25,398    3,433     28,831       0.5        0.1        0.3
transport and
                   Public administration and social
communication,    security                           262,499   34,651    297,150       5.0        0.9        3.3
education,         Education                         166,814   58,151    224,965       3.2        1.6        2.5
health and         Health and social work             43,172   17,936     61,108       0.8        0.5        0.7
cultural           Other community, social and
                  personal activities                 60,379    9,947     70,326      1.2         0.3       0.8
development.
                   Sub-total (Service Industry)     1,501,170 407,616 1,908,786       28.8        11.0      21.4
                   Total (All industry)             5,212,329 3,689,065 8,901,394
              Source: GON/ CBS, Statistical Year Book of Nepal, 2007


                                                                                                            11
   Source of Livelihood             Non-farm             Pro-poor growth         Revitalization of local
                                   livelihood                                   culture & preservation of
                                  opportunities                                      traditional skills



  Jobs: employment and
     empowerment                                                                 Education and Training




 Growth and diversification                  Tourism and                      Enterprise, development and
                                                                               micro, small and medium-
in marginal or remote areas                    Poverty                             sized enterprises



                                                                                Health care, infrastructure
   Reduction in isolation                                                              and services


                `
  Access to markets for                                                        Sustainable environment
                                Global partnership     Corporate social
        the poor                                                                    management
                                 for development        responsibility


Source:    Modification of Sheet No 3: Tourism and Poverty Reduction Making the Links, Pro-poor
           Tourism Partnership 2004, adapted from UN (2007), Study on the Role of Tourism in Socio-
           Economic Development.
                                                                                                       12
         Table: Rural Employment in Various Services Sectors, 2007
                                     Employed Population            Per Cent   Per Cent     Per
                                                                    of Total   of Total   Cent of
              Sector                           F         Total        (M)         (F)      Total
                                   M
 Construction                   184,216     39,949      224,165        4.1        1.2       2.9
 Wholesale and retail trade     305,996     138,231     444,227        6.9        4.1       5.7
 Hotels and restaurants         50,189      28,206      78,395         1.1        0.8       1.0
 Transport, storage and
communications                  104,520      3,182      107,702       2.4        0.1        1.4
 Financial intermediation       24,209       3,278      27,487        0.5        0.1        0.4
 Real estate, renting and
business activities              15,653      1,871       17,524       0.4        0.1        0.2
 Public administration and
social security                 177,170      20,057     197,227       4.0        0.6        2.5
 Education                      132,734      37,425     170,159       3.0        1.1        2.2
 Health and social work         30,634       11,334     41,968        0.7        0.3        0.5
 Other community, social and
personal activities              43,823       6,538      50,361       1.0        0.2       0.6
 Sub-total (Service Industry)   1,069,144    290,071    1,359,215    24.1        8.7       17.5
 Total (All industry)           4,443,476   3,343,113   7,786,589    100.0      100.0     100.0
Source: GON/ CBS, Statistical Year Book of Nepal, 2007

                                                                                           13
 Table: Urban Employment in Various Services Sectors, 2007

                                                      Employed Population         Per Cent of     Per Cent     Per Cent
                    Sector                         M          F         Total     Total (M)     of Total (F)   of Total
 Construction                                   45,248      8,372      53,620         5.9           2.4           4.8
 Wholesale and retail trade                     135,815    43,923      179,738       17.7           12.7         16.1
 Hotels and restaurants                         27,802     12,359      40,161         3.6           3.6           3.6

 Transport, storage and communications          49,477      2,507      51,984        6.4            0.7          4.7
 Financial intermediation                       15,436      3,491      18,927        2.0            1.0          1.7

 Real estate, renting and business activities    9,745      1,562      11,307        1.3            0.5          1.0

  Public administration and social security     85,329     14,594      99,923        11.1           4.2          9.0
  Education                                     34,080     20,726      54,806        4.4            6.0          4.9
  Health and social work                        12,538      6,602      19,140        1.6            1.9          1.7
  Other community, social and personal
 activities                                     16,556      3,409      19,965        2.2            1.0          1.8
  Sub-total (Service Industry)                  432,026    117,545     549,571       56.2           34.0        49.3
  Total (All industry)                          768,853    345,952    1,114,805     100.0          100.0        100.0
 Source: GON/ CBS, Statistical Year Book of Nepal, 2007.

Note: 1.The employment number becomes much higher if indirect employment is
        included. Also does not include the contribution made by various services
        sectors in terms of trainings and capability building programmes.
         2. More role played by education and transport and communication in
        urban areas compared to rural                                     14
   Institutional Overview
  Sector                  Institution                                      Major Responsibilities
Construction   Ministry of Physical Planning     Policy, planning, and regulation
               and Works and line agencies
               Nepal Housing Finance             To provide detailed company information on Nepal housing development
               Company
               Department of Urban               To protect and promote tourist and historical places and to modernize
               Development and Building          infrastructures
               Construction
               Ministry of Commerce and          Policy, planning, and regulation
               Supplies
               Handicraft Association of Nepal   Focuses on the promotion and popularization of handicrafts locally and
                                                 abroad
               Export and Trade Promotion        Advise the Government of Nepal in formulating policies for the
               Centre                            development and expansion of trade and export
               Ministry of Tourism and Civil     Policy, planning, and regulation
               Aviation and line agencies
Wholesale      Nepal Tourism Board               To promote Nepal as quality tourism destination in the international arena
and retail                                       with specific brand image and offers information on tourism attraction and
trade                                            products
               Hotel Association of Nepal        To promote hotel industry in Nepal
               (HAN)
               King Mahendra Trust for Nature    To preserve the natural heritage, species of animals and plants
               Conservation
               Department of Wildlife and        To conserve and manage the rich and diverse biological diversity of Nepal
               National Parks                    with much emphasis on wildlife and protected areas
               Nepal Academy of Tourism and      To produce skilled manpower to develop the hospitality and tourism
               Hotel Management                  industry
               Nepal Mountaineering              To promote the mountaineering activities in the Himalayan region: to
               Association                       promote mountain tourism, climbing sports, protect mountain environments
                                                 and preserve and promote cultural heritage of mountain people.
               Nepal Association of Rafting      To assist the government and private sector in enhancing Nepal's river
Hotels and     Agents                            tourism industry
restaurants    Nepal Association of Tour and     Conduct various activities to promote Nepal’s tourism
               Travel Agents
               Trekking Agents Association of    To assist the government by providing suggestions to make trekking
               Nepal                             business to generate revenue and also to provide employment opportunity
                                                 to the locals
               Airlines Operators Association
               of Nepal
               Association of Helicopter         To promote remote corners of national heritage easily accessible
               Operators Nepal
               Restaurant and Bar Association    To promote the tradition of providing almost every kind of food for tourists
               of Nepal
               Tourist Guide Association of      To assist the government in promotion of tourism industry
               Nepal
               Freight Forwarders Association    To facilitate of export and import trade, in Nepal and all over the world. It
               of Nepal                          caters information, gives consultation, produces ports through work shop,
                                                 seminars, interactions, trainings etc
               Nepal Association of Tour         To make major tour operators such as hotel, airlines, golf course or the
               Operators                         cable cars to promote tourism industry
               Nepal Entrepreneurs Association   To promote entrepreneurship in tourism industry
               of Tourism                                                                                               15
               Non-Star Hotel Association of     To assist the government in promotion of tourism industry
               Nepal
                                                                                                                                                     Contd…
                           Ministry of Information &         Policy, planning, and regulation
                           Communication and line agencies


                           Ministry of Labour & Transport    Policy, planning, and regulation
                           Management

                           Nepal Telecommunication           To provide communication services for the promotion of service sector
                           Corporation
Transport, storage and
 communications            Radio Nepal, NTV                  To provide comprehensive information about Nepal for the promotion of service sector

                           Ministry of Finance               Policy, planning, and regulation

                           Nepal Rastra Bank                 Central banking responsibilities including guiding the development of the embryonic domestic financial sector


                           Commercial Banks                  To provide various banking services like accepting deposits and providing loans

                           Financial Institutions            To provide financial services including micro finances

                           Cooperatives                      To provide micro finances

                           Insurance Companies               To provide various types insurance facilities

                           Security Board                    Apex regulator of Securities Markets in Nepal to offer advice to the Government on matters connected with the
                                                             development of the capital market

                                                             To impart free marketability and liquidity to the government and corporate securities by facilitating transactions in its
                           Nepal Stock Exchange              trading floor through member, market intermediaries, such as broker, market makers etc

                           Citizen Investment Fund           Operation of retirement schemes, unit trust schemes and the capital market services

                                                             To manage the provident fund of the government, public and private sector employees and to help them financially on
Financial intermediation   Employee Provident Fund           retirement or separation from their jobs

                           FNCCI                             An umbrella organisation of the Nepalese private sector. Its aims at socio-economic development of the country
                                                             through the promotion of business and industry by protecting the rights and interests of business and industrial
                                                             communities.

                           Nepal Chamber of Commerce         To assist in the development of national economy through the promotion and protection of commerce and industries,
                                                             both at the private and public sector

Real estate, renting and   Nepal Housing Finance Company     To provide detailed company information on Nepal housing development
business activities                                                                                                                                                      16
                                                                                   Contd….
Public                Ministry of General            Policy, planning, and regulation
administration and    Administration and line
social security       agencies
                      Ministry of Education          Policy, planning, and regulation
                      University Grants              To advice the government, to formulate policies, to
                      Commission                     coordinate among universities, allocate and disburse
                                                     government grants to universities and higher educational
                                                     institutions and take appropriate steps for the promotion
                                                     and maintenance of standards of higher education
                      Universities                   To produce skilled manpower essential for the overall
                                                     development of Nepal
                      Higher Secondary Education     To produce the middle level manpower and imparting
                      Board                          necessary knowledge and skills to the students pursuing
                                                     further education
                      CTEVT                          National autonomous body for the development of
                                                     human resources concerned with basic and middle level
                                                     technical education and vocational training
                      IGOs, NGOs                     To assist the government organizations in implementing
Education                                            education programmes
                      Ministry of Health and         Policy, planning, and regulation
                      Population and line agencies
                      Hospitals and Nursing          To provide medical, nursing and surgical treatments
                      Homes
                      Health Institutions            To provide medical academic training programs and to
                                                     render medical care and services
                      IGOs, NGOs                     To assist the government organizations in implementing
                                                     the programmes
                      Ministry of Physical           Policy, planning, and regulation
                      Planning and Works and line
                      agencies
                      Ministry of Local              Policy, planning, and regulation
                      Development and line
                      agencies
                      Ministry of Women,             Policy, planning, and regulation
                      Children and Social Welfare
Health and social     Social Welfare Council         Promotion, facilitation, coordination, monitoring and
work                                                 evaluation of the activities of the NGOs in Nepal
                      Central Children Welfare       To assist the government in building capacity of child
                      Committee                      rights and protection
                      Association of International   To promote mutual understanding, exchange information
                      NGOs in Nepal                  and share experiences and learning of work among
                                                     INGOs in Nepal for more effective collaboration
Other community,      Association of NGOs                                                               17
                                                     To promote mutual understanding, exchange information
social and                                           and share experiences and learning among NGOs in
personal activities                                  Nepal

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:78
posted:11/15/2011
language:English
pages:17
Description: Nepal is one of the poorest and least developed countries in the world with about one-third of its population living below the poverty line. Agriculture is the mainstay of the economy, providing for a livelihood for three-fourths of the population and accounting for 38% of GDP. Industrial activity mainly involved the process of agriculture produce. Security concerns relating to the Maoist conflict have led to a decrease in tourism, a key source of foreign exchange. Prospects for foreign trade or investment in other sectors remain poor due to Nepal’s small economy, its technological backwardness, its remoteness, its landlocked location, its civil strife, and its susceptibility to natural disaster.