Saturday, May 26, 2012

State of trade facilitation in Nepal

According to the latest trade facilitation ranking (Global Enabling Trade Report 2012), Nepal stands at 124 out of 132 countries. Nepal’s ranking is the lowest in South Asia. The report shows that Nepal’s tariff rate is one of the highest (ranking is 127 out of 132 countries) and physical insecurity is also one of the severest (ranking 128 out of 132 countries). The availability and quality of transport services and availability and use of ICTs are also poor (ranking 124 out of 132 countries). That being said, margin of preference in destination markets is one of the best (ranking 3) and  tariff peaks are low (ranking 46).

Enabling trade index ranking
Year Rank Value [1-7 (best)]
2009 110 (out of 121 countries) 3.22
2010 118 (out of 125 countries) 3.27
2012 124 (out of 132 countries) 3.07


Singapore topped the index, followed by Hong Kong SAR. Denmark and Sweden, placing third and fourth, respectively, “showed excellent performance based on their strong business environments, efficient border administrations and highly developed infrastructures.” The report also finds that security, quality and trade can be mutually reinforcing through supply chain integrity efforts, but a knowledge gap in identifying buyers remains an important barrier.

The Enabling Trade Index measures institutions, policies and services facilitating free flow of goods over borders and to destination. It breaks the enablers into four issue areas:

  • market access
  • border administration
  • transport and communications infrastructure
  • business environment

Recently, another global ranking of trade facilitation (Logistics Performance Index 2012) as well revealed poor standing of Nepal. It showed that Nepal has the fifth worst logistics efficiency in the world. With a score of 2.04, it ranked 151 out of 155 countries in 2012. Chad, Haiti, Djibouti and Burundi have worse logistic performance than Nepal’s. Compared to previous rankings, Nepal’s performance is sliding downward. In 2007 the ranking was 130 (out of 150 countries) with a score of 2.14 and in 2010 its ranking was 147 (out of 155 countries) with a score of 2.2.