Mott MacDonald | Unlocking Opportunities for the Private Sector in Nepal Promoting greener and more inclusive growth
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The number of enterprises in Province 2 by focus sector as of 2018 is outlined in Table 9. Percentage share of the province to total number of enterprises was less than 10% except for manufacturing. The relatively low density of formal enterprises in growth sectors sets limitations to the diversification and expansion of the economic base. Table 9. Number of enterprises located in Province 2 by focus sector, 2018 Sector Agriculture Manufacturing Construction Tourism ICT
Number of enterprises located in Province 2
% share to total number of enterprises (national)
1,231
5%
12,654
12%
110
7%
10,813
8%
246
9%
Source: (CBS 2019)
Province 2 has a sub-tropical to tropical climate and the most fertile plain area are suitable for agriculture, especially for growing major cereal, oilseed, and pulse crops and commercial tropical and sub-tropical fruits and vegetables. It is a major producer of rice, sugarcane, and wheat as well as the largest producer of farmed fish. Province 2 is engaged mainly in the primary production and trading rather than in value added processing. As can be seen in Table 10, only 5% of the agribusinesses in the country were located in Province 2, which was the lowest among the seven provinces. Industrial activity mainly involves the processing of agricultural produce including jute, sugarcane, tobacco, and grain. Proximity with India. The eight districts ((Bara, Parsa, Rautahat, Sarlahi, Mahottari, Dhanusa, Siraha and Saptari) in the province are linked with the Indian Territory. An important city in Province 2 is Birgunj Metropolitan City, which is dubbed as the “commercial capital of Nepal” as far as trade with India is concerned. Almost all of the country’s trade with India is via Birgunj and the Indian town of Raxaul. Products are transported to and from India via the dry port in Birgunj. In the manufacturing sector, the province had 12,654 enterprises or 12% of the total number of manufacturing companies in the country in 2018. Historically, the province has the highest GDP output per province in manufacturing. The Birgunj-Pathlaiya industrial corridor produces the following products: (i) food and beverages; (ii) tobacco/cigarettes; (iii) soap; (iv) industrial and consumer goods - fabricated metal products, nonmetallic mineral products, basic metals, cement, plastic and rubber products, textiles, apparel, furniture, electronics, leather and allied products. More than 50% of the production in this corridor is exported to India. The province has one industrial estate, the Gajendra Narayan Singh Industrial Estate, which is located in Saptari District. The estate can accommodate ten enterprises but currently has five locators. All the five enterprises have stopped operations due to failure of the estate management to address the following: (i) a separate feeder for power supply inside the industrial area; (ii) immediate construction of compound wall damaged by flood in 2017; (iii) arrangement of deep boring for clean drinking water; and (iv) arrangement of industrial security force (Setopati 2018). In the construction sector, Province 2 had 110 companies in 2018. Although the Province does not have its own limestone deposits, it has cement factories which source their raw material from neighbouring districts in Province 1 and Bagmati. Birgunj is the centre of tourism of Province 2. Visitors consist of domestic tourists and Indians. Hotels are mainly three stars. Other religious tourism sites in Province 2 are the Janaki Temple and Ram
February 2022
