NEFPORT ISSUE 46 – SEPTEMBER 2021
MANUFACTURING AND MANUFACTURING CONSTRUCTION CONSTRUCTION The manufacturing sector represents a major portion of the industry in Nepal, making its development crucial for employment generation, promotion of value-added trade, enhancement of income, and poverty alleviation. The manufacturing sector in Nepal can be broadly classified into three sub-sectors, namely Fast-Moving Consumer Goods (FMCG), industrial goods, and consumer goods. The share of manufacturing to the total Gross Domestic Product (GDP) of Nepal was 4.98% in 2019-20. Additionally, a large portion of the manufacturing enterprises is concentrated in the production of construction materials like metal and metal products, cement, and bricks. Outstanding credit to manufacturing sector:
the
The outstanding credit to the manufacturing sector stood at NPR 1,137.35 billion (USD 9.54 billion) in mid-June 2021 as compared to an outstanding credit of NPR 957.46 billion (USD 8.03 billion) in mid-July 2020, which is an 18.78% increase in the credit deployed.214 This represents 27.77% of the total credit deployed by the Banks and Financial Institutions (BFIs) in mid-June 2021. Within the manufacturing sector, 59.45% of the credit is disbursed to agriculture, forestry, and beverage productionrelated, followed by construction having a 35.01% share. Listed companies and Market Capitalization: In Nepal, there are
19 manufacturing and processing firms that are listed with the Securities Exchange Board of Nepal (SEBON). These include Arun Vanaspati Udhyog, Bottlers Nepal, Shivam Cements, Nepal Lube Oil Limited, Himalayan Distillery, and Harisiddhi Brick and Tiles Limited. However, out of 19 companies, only 9 companies
are actively traded in the stock market; these include Bottlers Nepal, Gorkhali Rubber Enterprise, Himalayan Distillery, Nepal Lube Oil, Raghupati Jute Mills, Shivam Cements, and Shree Ram Sugar Mills. POLICIES UPDATES
AND
REGULATORY
Inclusion in the Business Continuity Credit Plan: As per the newly
introduced monetary policy,215 the manufacturing industry will be included in the business continuity credit plan, which was introduced in the previous Fiscal Year (FY) to help firms pay their employees and continue their businesses. This will allow manufacturing firms to avail credit at a subsidized interest rate of 5%. Financial concessions and exemptions to the vaccine manufacturing industry: The
Ministry of Industry and Commerce has announced financial concessions and exemptions216 to the vaccine manufacturing industry, with a provision
of a loan at 1% interest and up to 50% discount on electricity tariff. For the establishment of the vaccine manufacturing industry, loans at base rate, interest capital facility, projectbased loan, concessional loan at special refinancing rate, and loan renewal facility will be provided. Furthermore, while importing machine equipment required for the establishment of the vaccine industry, a full exemption in customs duty, value-added tax, and excise duty will be given for three years from the date of registration of the industry as per the approved scheme. SUMMARY OF REPORTS Detail Study of Self-Reliant Industrial Goods in Nepal: This report217, which
was published in June 2021, identifies and analyses the current production status of five self-reliant industrial products, their demand and supply conditions, their problems, and their solutions. These products are tea, electrical cables and conductors, footwear, paints, and GI sheets (Jasta pata). In the year 2019-20, the total production of tea was 24,000 metric
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