Nepal loses service trade surplus

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Kathmandu, May 23 

The country has been gradually losing its surplus in service trade as the travel and transport expenses of Nepalis have increased substantially.

The country’s loss in service trade stood at Rs 2.79 billion, which was a 143 per cent negative growth compared to the same period of the previous fiscal. Surplus in service trade was witnessed at Rs 6.42 billion in the first nine months of the previous fiscal 2016-17.

The travel expenses of Nepalis was higher than the country’s earning from tourists, according to Nepal Rastra Bank (NRB). The country spent Rs 58.34 billion on travel, whereas the earning from travel stood at Rs 50.3 billion. Nepalis’ expenses on travel surged along with the increase in outflow of migrant workers and students. On the other hand, incentive tours provided by corporate houses and dealers of branded goods also helped to increase the travel expenses, according to tour operators.

“Moreover, the number of outbound Nepali tourists has increased exponentially as the tour operators have been selling packages of tourist destinations like Thailand, Indonesia, Malaysia, and United Arab Emirates, among others.”

Likewise, the expenses on transportation increased substantially by 39.6 per cent in the first nine months of this fiscal to Rs 46.33 billion. Such expenses also include the logistic cost of trade.

Exponential surge of imports caused the increase in transport logistics, according to Purushottam Ojha, former commerce secretary. “On the other hand, logistic cost in foreign trade in higher in Nepal due to hassles in Indian transit and weak infrastructure in the country. It takes a long time to ferry Nepal-bound cargoes via Indian transit, which increases the cost of trade.”

Another major reason for the deficit in service trade can be attributed to the expenses made by Nepali students abroad. Nepali students spent Rs 27.99 billion in the first nine months of this fiscal. Such expenses had gone up by 11.9 per cent compared to Rs 25.03 billion in the corresponding period of previous fiscal.

Likewise, the government spent Rs 2.15 billion to purchase consultancy services, technical advice and software, among others, in the first nine months of this fiscal. Such expenses amounted to Rs 583 million in the corresponding period of the previous fiscal year.

The country was enjoying surplus in service trade till last fiscal year despite the huge deficit in merchandise trade.


Expense details

  • Travel: …………………………………………………………………………………Rs 58.34bn
  • Transportation (major chunk is trade logistics):…….Rs 46.33bn
  • Education abroad:……………………………………………………………Rs 27.99bn
  • For consultancy/purchasing software:………………………Rs 2.15bn

Data of first nine months of fiscal 2017-18, Source: NRB

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Written by Sandeep
This news first appeared on https://thehimalayantimes.com/business/nepal-loses-service-trade-surplus/ under the title “Nepal loses service trade surplus”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.