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  Nepal's labor productivity lowest in South Asia  


KATHMANDU, Aug 27: When Nepal´s immediate neighbors India and China are setting one after another record growths in their industrial production, Nepal witnessed a whopping 15 percent decline in industrial employment over past years, thanks to shrinking investments in the industrial sector.

Speaking at an interaction organized by parliamentary Finance and Labor Committee on the ´Problems and Prospects of Industrial Sectors in Nepal´, Industry Secretary Pratap Kumar Pathak said the total employment generated by the industrial sector has shrunk to less than 850,000 from over a million recorded some years back.

He blamed lingering political instability combined with worsening power shortage and labor relations for the speedy contraction in industrial sector and added that labor productivity has slipped to the lowest rank in the South Asia region.

Secretary Pathak also underlined that lack of laws and regulations related to protecting investments is hindering potential foreign direct investment (FDI) to Nepal and raised concerns over the rising lending rates.

Speaking at the same program, Nepal Rastra Bank Governor Dr Yuva Raj Khatiwada said the most worrisome fact is that no new industries have lately appeared to replace old industries that are vanishing with their natural deaths.

Khatiwada also said the central bank is working hard to channel the lately increased resources at financial institutions to productive sectors. He also expressed the hope that the lending rates might decline by 1 to 2 percentage points as they have already reached their peak points.

"However, it would not be practical to expect the lending rates declining to single-digit," he stressed.

Minister of Industry Mahendra Prasad Yadav said lack of coordination among ministries have been the biggest obstacles to industrial development in Nepal.

He further added that major ministries, including Finance Ministry, do not consult with the Industry Ministry while fixing new customs and excise duties. “Revenue policy focused only on mobilizing more resources that the Ministry of Finance has been adopting is hampering industrial development,” Yadav added.

Revenue secretary Krishna Hari Baskota said developing industrial sector has been a prime target of Ministry of Finance and refuted the allegations that the tax policies are not industry friendly.

Baskota also said the country has not been able to witness additional investments coming to the economy despite the fact that the government has awarded many concessions to promote industrial sector.

Secretary at the Ministry of Labor and Transport Dinesh Hari Adhikari said the ministry has not been able to launch concrete programs to promote domestic employment as it has been over-stretched on dealing with issues related to foreign employment.

Published on 2010-08-27 21:23:21
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Nepal's Labor Productivity Lowest In South Asia
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