8/10/2019 NBE.pptx

1/126

Trade policy

The government announced the trade policyin 1992. The intention of this policy is toenhance the trade sector to the nationaleconomy of the country. The intention of thepolicy is to promote internal & internationaltrade & to increase the participation of the

private sector by increasing an open & liberalatmosphere.

8/10/2019 NBE.pptx

2/126

Objectives of the trade policy

in 1992. Promoting internal & international trade with

increased participation of private sector.

Diversify trade by identifying, developing &producing new exportable products through thepromotion of backward linkages for makingexport trade competitive and sustainable.

Expand trade on a sustained basis throughgradual reduction in trade imbalance.

Coordinates trade with other sectors byexpanding employment- oriented trade.

8/10/2019 NBE.pptx

3/126

Components of trade policy:

Basic policy

Import policy

Export policy

8/10/2019 NBE.pptx

4/126

Employment & Labor policy-1999

Employment & labour policy is one of the majorpolicy taken by the government as part of ongoing economic & social reforms. Nepalgovernment passed this policy to createconditions for the protection of labour fromun fair employment practices & to provide a

legal frame work through which industrialrelations are to be regulated.

8/10/2019 NBE.pptx

5/126

Parts of labour policy

Labour relations

Employment generation & human resource

development. Wages, discipline, skill development, labour

laws & social security are the foundation ofthis policy.

8/10/2019 NBE.pptx

6/126

Highlights of the policy

Promote the climate of labour managementrelations.(Improve harmonious industrial relation)

End exploitable labour system like kamaiya&Haligothala.

Self employment campaign will be expanded. The employers who enhance the skills of the workers

will be given tax incentives.

Traditional Nepalese skills will be increased by

promoting such skills. Emphasis will be laid to increase access of women in

skill development & training by conducting programesto educate them.

Employment exchange & information collection

programes will be made more systematic.

8/10/2019 NBE.pptx

7/126

8/10/2019 NBE.pptx

8/126

Necessary steps will be taken to establish anautonomous institution for promoting foreignemployment & making it reliable.

Labourers working in non organised sector will be

provided an environment to be organised. Programes will be conducted for increasing workers

understanding of policy issues of nationalimportance, for raising their awareness about their

rights & duties ,& for making them consciousthrough the massive extension of labour educationregistered trade unions & associations.

Programes for increasing participation of workersin management will be implemented.

8/10/2019 NBE.pptx

9/126

Tourism policy -2009

Nepal has tremendous potential for tourismdevelopment because of its unique naturaland cultural heritage.

8/10/2019 NBE.pptx

10/126

Objectives of tourism policy

To create self-employment opportunity for the ruralpeople &reduce the level of poverty through theextension & diversification of the tourism sector.

To develop Nepal as an attractive tourist destination

with the exploration, protection & promotion of thenatural, cultural, biological,& man- made nationalheritages of the country.

To expand and promote tourism sector by providing

dependable, safe & accessible network of air & landtransport facilities.

To make the sustainable use of natural resources fortourism development keeping in view the adverseeffects of tourism on environment.

8/10/2019 NBE.pptx

11/126

Policies & strategies

Diversify Nepals tourism products & services & taken tourism to new areas.

Encourage rural communities to launch various programs that contribute tothe growth & promotion of rural tourism.

Initiate promotional activities in the tourist generating locations inpartnership with the private sector.

Formulate new strategy for the promotion of domestic, regional as well asinternational tourism.

Activate the Nepal tourism board to implement these strategies.

Conduct air services agreements with additional countries for the promotionof tourism.

Encourage the private sector to participate in human resources development

activities and also in the qualitative development of tourism business. Apply the information technology to commercialize tourism business.

Upgrade the quality of tourist services and facilities and make Nepal a secureplace for tourists.

8/10/2019 NBE.pptx

12/126

Liberalization: Economic

reforms & StructuralAdjustments Economic liberalization refers to a country opening up tothe rest of the world with regard to trade, regulations,taxation,less restrictions on both domestic &foreigncapital,open market & other areas that generally affect

business in the country. Liberalization usually refers tofewer government regulations & restrictions in theeconomy with the participation of private sectors. Today alldeve loped countries of the world have already gonethrough this liberalization process. In developing countriesliberalization is in the form of delicensing, removal of

barriers to international trade & invest ment, unrestrictedflow of capital, stock market development freedom totransfer licenses & assets,simplified tax structure &procedurs.

8/10/2019 NBE.pptx

13/126

8/10/2019 NBE.pptx

14/126

8/10/2019 NBE.pptx

15/126

8/10/2019 NBE.pptx

16/126

Liberalization of the Nepalese

economy

Nepal started economic reform programmessupported by the IMF & the world bank from1985. The structural adjustment programscovered areas like subsidies, the priceenvironment & the public sectors.

8/10/2019 NBE.pptx

17/126

Aims of the liberalization

To modernize the industrial system.

Reduce unproductive controls.

Strengthen private invest ment & foreigninvestment.

8/10/2019 NBE.pptx

18/126

Mechanisms followed for

economic liberalization Internal liberalization i.e. deregulation , de licensing

& adjustment of subsidies , taxes &administeredprices.

External liberalization with the spirit & norms of freetrade in a global economy.

Privatization of public enterprises as a part of theprocess of down sizing the bureaucracy, relieving

the government of unnecessary burden from loss-making pes.

Involvement of private sector in economic activitiesof all kinds.

8/10/2019 NBE.pptx

19/126

Monetary policy

The central bank attempts to achieve economic

stability, growth, full employment, inflation,favorable balance of payment and so on.

Management of quantity of money in circulation,the availability of credit, and the composition of acountrys debt. Monetary policy refers to all the

actions of the central bank of a country which affect

directly or indirectly, supply of money, credit, rate ofinterest and the banking system. The three

instruments in order to implement the monetary

policy are : (a)open market operation (b) reserve

requirements, and (c) the discount window.

8/10/2019 NBE.pptx

20/126

Types of monetary policy

Restrictive policy: This policy seeks to raisethe rate of interest, reduce money supplygrowth rate & restrict the flow of credit & isgenerally aim to fight inflation.

Liberal policy: It is generally meant to fightrecession & stimulate demand through credit

liberalization, monetary expansion & fall inthe rate of interest.

8/10/2019 NBE.pptx

21/126

Monetary policy-2011

NRB announced monetary policy in 2011 toaddress the problem of slowdown theeconomy . The monetary policy focused theinflationery expections foreign exchangereserve, external & financial secter stability soas to create the environment supportive for

high & sustainable economic growth.

8/10/2019 NBE.pptx

22/126

Features of the monetary

policy The CRR has been reduced to 5% from 5.5%. The balance of payment surplus has been targeted at Rs 5 billion

The foreign exchange reserve to be .maintained at least 6 months of import

The targets are set for broad money supply (12.5%); domestic credit growth(13.7%) ; credit growthto private sector (14%);& bank deposit growth(13%).

Bank rate remains unchanged at 7%.

NRNs are allowed to open dollar account.

Foreign exchange facility has been raised to US$2500 at one instant & up to $5000 in a year byshowing relevant documents.

The commercial, development bank &financie cos. Would need to lend 3.5%,3% &2.5%respectively of their total loan portfolio to the deprived sector. would be permited to issue loansin foreign currency in priority sectors like hydropower & infrastuture.

Legal actions would be taken against borrowers who use loans , taken for stated purpose , to run

differe nt un productive businesses. Loans of Rs 1.5 million would be given to micro finance institutions at gero interest rate if they

open branches in 9 remort districts.

8/10/2019 NBE.pptx

23/126

Effects of

liberalization:Emerging

business environment in Nepal. Business firms in Nepal operated under conditions of state regulation &protection for a long time. The decade of 1990s changes in Nepalsbusiness environment. Some of the development s that occurred inNepal during this period were as follows:

Open market liberalization & deregulation forced the entire business

community in to freedom & competition. Privatigation of major public enterprises changed the economy. The

economy favours the private sector.

Consumers & environmentalists started exerting pressure on businessfirms.

Human rights, protection of the interest of the minority groups, &

women empowerment issues became prominent.. Joint venture activities grew in the country.

WTO pushed the process of globalization &trade liberalization.

The new economic polices &reforms have affected all the sectors of theeconomy

8/10/2019 NBE.pptx

24/126

A synopsis of the emerging

business in Nepal is : Appearance of multinational companies.

Free enterprize system: Many opportunities have now been created with the change in businessenvironment arising from reforms. Enterpreneurs can focus their attention on the setting upindustries of their choice. They are free to make their own investment decision,freedom to raisecapital, with in the country as well as abroad.

Growth of the private sector: Private sector &public sector are now exchanging seats. Theexample of the areas are newly opened private sectors are: HYDROPOWER,OPEN SKY,

TELECOM,ROAD & WATER SUPPLY SECTORS ETC. Stock exchange market: Capital market provide opportunities for investors to seek out & invest in

cos. Of the future. NEPSE started automated trading system since 2007 replacing the previousopen out cry system.With this , the stock market has in tered in to a new era of stock marketcompetitiveness & accessibility.

Public private partnership:PPPconcept reflect the long term view that public authorities & privatecompanies can entered in to parternerships. The ppp has extended to 30 municipalities & 50VDCsin 2008 with the purpose of increasing employment opportunities by linking villages

&municipalities through mobilizing social groups , providing credit & conducting traningproramme.

Shift towards service sector: Service sector is growing very fast.Service , retailing & whole salingare growing.

8/10/2019 NBE.pptx

25/126

Emergence of information

economy

Private businesses,banks ,financialinstitutions, hotels & tourism ,airlineseducational institutions & internationalagencies operating in Nepal are in theforefront in the use of it resources comparedto the public sector.

8/10/2019 NBE.pptx

26/126

Emerging market place

scenario The market is flooded with wide ranging

imported from foreign countries. Demand forT.V. sets, audio system,VCRs,CD player,quartz watches,computers,two wheelers,pressurecookers,refrigerators,cooking

ranges,washing machines, dishwashers,vacuum cleaners & other homeappliances is growing.

8/10/2019 NBE.pptx

27/126

Nepals industrial sector:

structure & performance.

The industrial policy -2010 has classifiedindustries in to seven categories:manufacturing, energy-based, agro & forest-based, mineral, tourism, service &construction.

8/10/2019 NBE.pptx

28/126

MANUFACTURING INDUSTRIES

The number of industrial units doubled inevery census period till 1986-87. The periodafter 1990 recorded a significant decrease in

the number of industrial units. There was significant decrease in the number of carpet,ruggarment,brick, distillery & printing units.There was significant decrease in the number

of industrial units. The significant decrease inthe number of carpet,rug,garment,brick,distillery & printing units.

8/10/2019 NBE.pptx

29/126

Nature of manufacturing

industries Food beverage and tobacco. Food products,noodles, biscuits and confectionery, sugar softdrink, cigarettes, and distilleries.

Textiles. Jute, carpets, ready made garments,semi-processed leather and leather goods.

Building materials. Cement, iron bars,corrugated sheets for roofing, sanitary pipes.

Packing .Flexible pouches, bag-in-boxes, metalcontain, paper boards, wrapper.

Plastic. Plastic sheets, bags, pouches, andbottles.

8/10/2019 NBE.pptx

30/126

Positions of manufacturing

industries

Large scale industries exist only in the publicsector.Nepal is dominated by smallmanufacturing units.

They are more labour intensive, traditionaltechnology.

The contribution of manufacturing sector toemployment is less than 3% of the total labourforce.

About 95% of these units employed less than 100workers.

They are concentrated in kathmandu vallley,eastern & central development region.

8/10/2019 NBE.pptx

31/126

CONTRIBUTION

There contribution to the GDP is decreasingevery year since 2000.

At present there is about 6.5% contributionto the GDP.

8/10/2019 NBE.pptx

32/126

EXPORT ORIENTED INDUSTRIES

The main export products of Nepal arecarpet, garment, leather & handicrafts.

8/10/2019 NBE.pptx

33/126

CARPET INDUSTRY

The contribution of carpet industry to thenational economy is very significant in termsof export, employment & exchangeearnings.The share of carpet industry in thetotal foreign exchange earning of Nepal wasaround 7% in 2010.

8/10/2019 NBE.pptx

34/126

Features of carpet industry

It is heavily labour intensive.

Nepalese carpets are woven from woolen yarn made fromamixture of Tibetan &New zealand wool.

The carpet industry depends on foreign market totally.

External environment plays very prominent role in itsdevelopment.

90% of total units are concentrated in Kathmandu valley.

Small-sized units dominate the carpet industry.

Germany 7 USAare the main importer of Nepalese carpet. About 140000 persons are engaged in the carpet industry.

At present the market of Nepalese carpets has declined.

8/10/2019 NBE.pptx

35/126

Garment industry

This industry was started in the country inthe late 1970s. Now garment industry is amajor export industry of Nepal.

8/10/2019 NBE.pptx

36/126

Features of garment industry

It is the largest industry in terms of foreign exchange earnings

Directly or indirectly it provides employment to about 40000people.

The share of garment industry in the total overseas export of

Nepal has remaind at about 32%. The major importer of Nepalese garment is the USA.

The garment industry uses all the factors of inputs have to beimported from India.

Indian enterpreneurs & workers occupy a big share of theindustry.

The cost of production is 15 to 20% higher than the other southasian countries.

Quality of garment products, dependency of one market,poorinnovation &marketing are major features of Nepalese carpetindustry.

8/10/2019 NBE.pptx

37/126

Leather industry

Leather industry has great potential becauseof the possibility of value addition & export.

At present the takes place in semi finished ,wet blue &crust form.

This industry is very traditional, so there istraditional skills & technologies.

The leather industry need to diversify theleather products with the changing consumertastes.

8/10/2019 NBE.pptx

38/126

Handicraft industry

Handicraft industry is providing employment opportunity &is also the source of foreign exchange earnings.

Nepal exports handicrafts to over 50 countries around theworld.

The major markets are USA, UK,GERMANY, FRANCE,TAIWAN, SINGAPUR, JAPAN etc.

These products are unique & welknown for craft manship.

Gold plated items , bronze & brass arts icons house holdutencils , hand made paper & paper products paintings &

thankas

wood carving basketary works , potteries, maska & so onare the major handicrafts items.

8/10/2019 NBE.pptx

39/126

Import substituting

industries. Cement, paper, sugar, pharmaceuticals, and

so on. A brief account of some importsubstitution activities in Nepal.

8/10/2019 NBE.pptx

40/126

Pharmaceutical Industries

Import of pharmaceutical products for the year 2009-2010 wasabout Rs. 12 billion. The demand for pharmaceutical productsis expected to increase over the year.

India based national and multinational companies meet muchof the Nepalese demand. Drugs are also imported from other

countries like USA, Australia, UK, China, Japan, & Thailand. At present , there are about 40 industrial units in Nepal

manufacturing different types of drugs . Good prospectsexist for the establishment of industrial units producingformulated drugs .

The best areas for immediate investment are in theproduction of the major high volume product lines ofessential drugs , identified by the department of drugAdministration , Ministry of Health.

8/10/2019 NBE.pptx

41/126

Electrical & electronic

industries. Demand for heaters,radio transisters, Tv sets,

communications equipments, electrical applianceshouse wares , batteries, wires cables, switches,lighting fixuters is increased.

Nepal offers very good prospects for thedevelopment of electronic industries.

The lower cost of labour would give Nepal acompetitive advantages compared to other Aseancountries.

Computer key boad assembly, circuit board, coretransfermers, multi socket, power strips & similarother asssembly industries have a good prospects.

8/10/2019 NBE.pptx

42/126

Other import substituting

industries Tobacco industry: various types of cigarettes, bidis & other products are

being produced by these industries. It is also the traditional industry inNepal.Now there are about 78 units operating in Nepal.

Cement industry: Hetauda & Udayapur cement factories are two bigcement factories in the public sector.Some cement factories are

operating in the private sector.At present there is a very satsfactorydevelopment in the cement production. There are more than 60 unitswhich produce various types of cement.

Chemical industries: chemical products such as soap, detergent powder,matches, plastic, fertilizer etc have wide spread growth. There are about64 units producing such products.

Paper industry: There are about 90 units producing paper & paperproducts in Nepal.

Sugar industry: sugar factories are both in the public & private sectors.About 30 units exist in the country producing sugar &other relatedproducts.

8/10/2019 NBE.pptx

43/126

Service sector

The following five major industries can beidentified in the service sector: (1) tourism (2)transport (3) construction (4) trade & services

& (5) financial & consultancy services. Thissector now accounts for almost 51% of theGDP.

8/10/2019 NBE.pptx

44/126

Tourism industry

Tourism industry engaged in tourist lodging, motel hotel,restaurant, resort,travel agency, gliding, water rafting cable carcomplex, treking, hot air balloning, polo horse rding etc.

The government has decided to celeberate the year-2011 asNepal tourism year,establishing Nepal as a unique tourist

destination. The total no. of tourist arrival was 602867 in 2010-11.

The share of this industry in foreign exchange earning was 7.5%in 2010-11.

This industry employed about 267000 people.

Nepal has great potential in tourism. Mountains, snow covered peaks, rivers , lakes, valleys, colour ful

fairs & festivals, national parks & wild life, ancient temples withsuper sculptured ornaments,peace loving & hospitable peopleincrease its importance.

8/10/2019 NBE.pptx

45/126

Trade & services

Trade refers to retail & wholesale business. Services are widerange of economic activities like banking, insurance,telecomunication, cultural & sporting services etc. services areintangible &invisible.

There has been a substantial growth in this sector in Nepal during

the last two decades. Service industries includes like workshops, printing press,

consultancy service, cinematography,construction business,public transportation business,photography, hospital, nursinghome, educational& training institution, laboratory air services,cold storage etc.

It is important for imports,exports & the domestic market.

Private sector is basically centered on trading activities.

The share of the GDP was 51% in 2010-11

Direct employment in trade & services was about 500000 in 2011.

8/10/2019 NBE.pptx

46/126

Transport industry

Road ropeways, railways, civil aviation,& waterways are Nepalstransport sector.Road & civil aviation have progressed significantly thanthe other mode of transport. At present, altogether 21455 KM of roadnetwork exists in the country.Only 6874 KM is black topped.

At present there are 19 airlines have been operating.

This industry is also providing direct employment to around 131000persons as drivers, cleaners, conductors, counter clerks, inspectors &managers.

A total of about 32000 buses & mini buses operate in the countary

The total number of trucks, & tankers & pickups was around 44,ooo in2011.

The road network is very limited in the country. The roads are overcrowded , the transportation costs are relatively higher due to fuel&syndicate system.

8/10/2019 NBE.pptx

47/126

Construction industry

Construction industry includes construction &operation ofroads,bridge, ropeway,railway, trolley bus, tunnel & alsothose engaged in the construction of industrial, commercial& residential complex.

At present there are about 430 contractors in Nepal underA,B,C &D classes.

The foreign construction cos. Have been dominating theNepalese construction industry. There are 20 chinese, sevenIndian, two Bangladeshi, one pakistani & eleven otherinternational cos. Operating in Nepal.

The total business available to construction industry isaround RS 42 billion per year.

This industry is the most important source of employmentfor unskilled &semiskilled work force.

8/10/2019 NBE.pptx

48/126

Problems & constraints of

industrial sector

The world bank, in colaberation with theFNCCI, undertook a survey manufacturingfirms to investigate the problems facing such

firms & offer suggestions for policy reforms& assistance services to address them. Themajor problems of industrial sectors are

sumarised as:

8/10/2019 NBE.pptx

49/126

Government regulations &

policy: Corruption is wide spread. It is more where discretion of public officialsis required &where laws are unclear.

Complex regulation practices, contradictory rules etc.

Tax law is one of the biggest problems facing by business organizations.They find difficult to comply with the tax regulation.

Vat administration are also difficulty & uncertainty in obtaining refunds,inadequate enforcement that allows many firms to escape vat,inadequate training of tax officers & limited dissemination ofinformation to firms & the public.

Lack of security for business firms. Cases of theft, crime, forceddonation, damage to building & property etc. are increasing. Business

firms have very little protection from government. Smuggling of goods is wide spread along the indo-Nepal boarder.

The duty drawback scheme is designed to encourage exports byexempting them from import duties on raw materials used for exportedgoods. Under this scheme the problems are: delay in refunding, rigiddeadlines, insufficient bank guarantee.

8/10/2019 NBE.pptx

50/126

Demand related problems:

Low demand is the major cause for low capacityutilization.

Textile, chemical & paints, & metal productsindustries have been facing problems of inadequate

demands for their products. Low cost import s from China & India has been

posing problems for most of the Nepalese businessfirms.

Fluctuation of demand regularly to project thedemand & prepare the plans for manufacturing.

Little protection by the government from thegrowing liberal imports.

8/10/2019 NBE.pptx

51/126

Finance related problems:

High interest rate, large collateralrequirement & other factors prevent firmsfrom obtaining sufficient finance.

Administrative & procedural barriers.

Difficulty in borrowing to the smaller firms toget enough credit due to insufficient

collateral.

Trade credit practice poses problem inbusiness.

8/10/2019 NBE.pptx

52/126

Infrastructure related

problem: Electricity problem High cost of electricity.

Transportation problem. Low quality of local roads

cause high repair costs of vehicle. Closure of the highways frequently due to accidents,

bandhs, & chhaka jams.

Limited supply of trucks &their higher costs.

Limited number of international cargo flights thecost of the service & the lack of capacity in the peakseason specially to garment& carpet exporters.

The quality of postal service is so poor.

8/10/2019 NBE.pptx

53/126

Labour regulations:

The labour act 1992 & its regulation requiresbusiness firms to make all employespermanent after working 240 days. After

their permanent, workers can not be laid offwithout the consent of the department oflabour.

Labour union are wide spread & very strong

in Nepal. Inter union rivalries often creat problems for

the management.

8/10/2019 NBE.pptx

54/126

Other problems:

Lack of business support system.

Lack of research & development programmein business.

Lack of domestic raw materials.

Absence of business information center.

8/10/2019 NBE.pptx

55/126

8/10/2019 NBE.pptx

56/126

8/10/2019 NBE.pptx

57/126

Natural environment & energy

situation in Nepal:

8/10/2019 NBE.pptx

58/126

Socio- cultural environment

Socio- cultural environment is formed of the social institutions, classstructure, beliefs, values, behaviours of people, customs of people, &their expectaions, etc. A business firm is established by people ,sells tothem, buys from them, employs them. So people are the vital & integralpart of business firms. Societies culture reflects & shapes its values, &attitudes including time ,authority, age, status, & education. All these

factors affect business operations in numerous ways , such as in hiringpractices, job satisfaction, labour turnover, & so on. Social culturalfactors are also mixed up with all the managerial functions , such asfinance, human resources, production & marketing management.Without proper understanding of these socio cultural forces,management functions can not be effectively undertaken. Poverty,illiteracy, skill shortages, family system, caste or religious structures,

culture & traditions, increasing awareness of citizens right &consumerism & complicate managerial functions in respect tosupervision , discipline management, marketing control system & thelike.

8/10/2019 NBE.pptx

59/126

COMPONENTS OF SOCIO-CULTURAL

ENVIRONMENT:

Attitudes & beliefs: A n attitude can be definedas any affective reaction to a person, object,idea, or activity. It might also be thought of as

ajudgement about where a person, object ,idea, or activity liked or disliked. A personsbelief reflects his view points. Culture createsattitudes towards time, leisure work & business.Attitudes influence business. Bholi or tomorrowis the common attitude toward time in Nepal.Fatalism & superstition dominate values &beliefs of NEPALESE PEOPLE.

8/10/2019 NBE.pptx

60/126

RELIGION:

Religious coexistence is present in Nepal.Religion influences food habits, dress & datesof travelling.

8/10/2019 NBE.pptx

61/126

Language:

Language reflects culture. Nepal is amultilingual country. More than 40 languagesare spoken by Nepalese people. Language

diversities in a society often createscommunication problems for a business firms& its manager.

8/10/2019 NBE.pptx

62/126

Education:

Education is the learning process, which equips anindividual to take his or her place in the society.Education plays an important role in transferringcultural values from one generation to another.

The educational environment in any countryinfluences every aspect of managerial & industriallife.

Educational level have an impact on organizations.Higher education level allow people to earn higherincome, leads to increased expectations of workers& increased job mobility.

8/10/2019 NBE.pptx

63/126

Family structure & social

organization:

Every society has a structure of relationship.The social institutions are dynamic entities.Family structure constantly changes due to

various social, political, & economictransformation. Social institutions consists of:

8/10/2019 NBE.pptx

64/126

Family

Family as a social institution significantlyaffects purchase decision in Nepal. Nepal stillhas predominantly a joint family system.

Generally, the head of the family serves asthe decision making centre. Nuclear familieshave now become common in the Nepalese

society, particularly in urban areas.

8/10/2019 NBE.pptx

65/126

Reference groups

Reference groups are also social units in theform of common interest groups & thecommunity. They influence attitudes &

behaviour of customers.They influence values& attitudes towards business & theirproducts. Friends are important reference

groups in Nepal.

8/10/2019 NBE.pptx

66/126

SOCIAL CLASS

Nepalese social class can be divided in toupper, middle, & lower. The lower class is inlarge majority. Middle class is growing.

Buying behaviour is substantially influencedby social class in Nepal, which also influencesbusiness.

8/10/2019 NBE.pptx

67/126

Pressure groups

They are special interest groups organized toadvance their position. They pressurize &lobby business organizations. Pressure

groups are related toconsumerism,environmentlists, humanrights,women & good governance. They

influence business decisions too.

8/10/2019 NBE.pptx

68/126

Social change

The buying behaviour of consumers changesover time.

Social trends are changing in Nepal

Participation of married women in workactivities is increasing.

In urban areas, marriges are begin delayed.

Family planning has made families smaller.

8/10/2019 NBE.pptx

69/126

Socio-cultural changes & their

effect in Nepalese business: Growing urbanization & consumer awareness.

Individualized lifestyles & world oriented outlook.

More informed & demanding consumers due togrowing education.

Fashionable life styles,blending of traditionallydefined male-female roles.

greater pleasure orientation culture.

Smaller size family structures.

Growing demand for more effective & promptpublic services.

Equal opportunity for all walks of national life.

8/10/2019 NBE.pptx

70/126

Concept of globalization

Globalization refers to a strategy of crossing nationalboundaries through globalized production &marketing networks. Deregulation, privatization,trade liberalization, protection of property rights,

promotion of foreign direct investment,opportunities for strategic alliance.

According to economist, it refers to an economicinter-dependence between countries coveringincreased trade, technology, labour & capital flows.

To a political scientist, globalization refers to anintegration of a global community in terms of ideas,norms & values. It means the creation of worldgovernment,i.e. WTO,WORLD BANK, IMF.

8/10/2019 NBE.pptx

71/126

Widely used definitions

Globalization is a free movement of goods,services, people, capital & information acrossnational boundaries.

Globalization is a process by which an activitybecomes world wide in scope.

Globalization is a process of integration of

the world as one market.

8/10/2019 NBE.pptx

72/126

Categories of globalization:

(1) World trade: Most of the world trade today is

among the industrialized countries. The service

trade has also been rapidly increasing during

recent years. World trade has been made easierby the following two reasons:

Technological advancement in transport, globalnetwork of banking & insurance & information

flows.

A number of international & regional agreement

promote & coordinate world trade.

8/10/2019 NBE.pptx

73/126

(2) Portfolio investment:

It is also known as indirect foreigninvestment. It is the purchase of foreignsecurities in the form of stocks, bonds, or

commercial papers to obtain a return on thatinvestment in the form of dividends,interests, or capital gains.

8/10/2019 NBE.pptx

74/126

(3) Foreign direct

investment: It is the long term capital investment. It involves

acquisitions by domestic firms of foreign basedfactories or any type of business firms. Theinvestors enjoy managerial control over theassets of the acquired firm. It may be financed byborrowing locally, by reinvesting foreignearnings, by the sale to foreign affiliate of nonfinancial assets such as technology, or throughfunds generated by licensing fees & paymentsfor management services to the parentcompany.

u

8/10/2019 NBE.pptx

75/126

(4) Multinational companies:ch

fi

rmsals

o

8/10/2019 NBE.pptx

76/126

Regional Economic Groupings of

nations:

A number of Regional Economic alliancesexists in all the continents.

8/10/2019 NBE.pptx

77/126

SAFTA: (south Asian free trade

Area)

Safta agreement was signed at the SAARCsummit held at Islamabad on January 6, 2004during the 20thSAARC summit in Islamabad.

This agreement came into effect from Jan-1,2006.

SAFTA provides for free movements of goodsin the region through elimination of tariffs,that include border charges & fees, & nontariff restrictions on movement of goods &any other equivalent measures.

8/10/2019 NBE.pptx

78/126

Objectives:

Eliminating barriers in trade &facilitating to crossboarder movements of goods betweenterritories of the contracting states.

Promoting of fair competition in the free tradearea & ensuring equitable benefits to allcontracting states.

Creating effective mechanism for theimplementation & application of the agreement

& the resolution of disputes. Promote regional cooperation & enhance the

mutual benefits of the agreement.

(

8/10/2019 NBE.pptx

79/126

SAPTA (SAARC Preferential

Trading Arrangement:

SAARC member countries entered into anagreement on SAARC preferential tradingarrangement in 1995.

It reflects the desire of SAARC countries topromote & sustain mutual trade & economiccooperation through exchange of

concessions.

8/10/2019 NBE.pptx

80/126

Basic principles of sapta:

Overall reciprocal & mutual advantages.

Step by step negotiation & periodic reviewsto improve & extend preferential tradearrangement in successive stages.

Inclusion of all products raw, semi processed,processed.

Special & favourable treatment to leastdeveloped countries, like Bangladesh,Bhutan, Nepal.

8/10/2019 NBE.pptx

81/126

PROVISIONS OF SAPTA:

The member countries may conduct their negotiations fortrade liberalization in accordance with any or acombination of the following procedures:

Product by product basis.

Across the board tariff reduction. Sectoral basis.

Direct trade measures.

The tariffs, para tariff & non tariff concessions negotiated &exchanged amongst member states shall be incorporated

in the national schedule of concessions. All member states shall provide, special & more favourable

treatment to the least developed members.

BIMSTEC (Bangladesh India

8/10/2019 NBE.pptx

82/126

BIMSTEC (Bangladesh, India,

Myanmar,Srilanka &Thailand

economic cooperation) Anew sub- regional grouping was formed in Bangkok &given the name BIMSTEC on June 6, 1997.

Myanmar attended the inaugural as an observer & joined asa full member at a special meeting on Dec 22, 1997.

Nepal was given observer status by the 2nd

ministerialmeeting in Dec. 1998 & full membership was given to Nepal& Bhutan in 2004

In the first summit on 2004, leaders of the group agreedthat the name of the grouping should be known asBIMSTEC or the bay of bengal initiative for multi-sectoral

technical & economic cooperation. The member countries signed the BIMSTEC free trade

area agreement in 2004 at Bangkok summit.

f

8/10/2019 NBE.pptx

83/126

Purposes of BIMSTEC

To create an environment for rapid economicdevelopment, accelerate social progress in the sub-region.

To promote active collaboration & mutual assistance

of common interest. To provide assistance to each other in the form of

training & research facilities.

To cooperate more effectively in joint efforts thatare supportive of, & complementary to nationaldevelopment plans of member states.

To maintain close & beneficial cooperation withexisting international & regional organizations.

P i it t l d b b

8/10/2019 NBE.pptx

84/126

Priority sectors lead by member

countries: Trade & investment led by Bangladesh.

Agriculture led by Myanmar.

Technology lead by Sri-Lanka

Energy led by Myanmar.

Transportation & communication led by India. Tourism led by India.

Fisheries led by Thailand.

Cultural cooperation led by Bhutan.

Environment & disaster management led by India.

Public health led by Thailand. People to people contact led by Thailand. Poverty alleviation led

by Nepal.

Counter terrorism transnational crime led by India.

I t f i l i

8/10/2019 NBE.pptx

85/126

Impacts of regional groupings

on the Nepalese business: There has been a phenomenal growth of industrial activities in SAARC economies over the years.

The following are the major issues having direct impact on the economy of Nepal:

There is the serious impacts on the agriculture sector. Cheaper prices from India has createdvisible impact on the domestic production & market.

Unrestricted & untaxed inflow of goods from SAARC countries create serious impact on domesticindustries. Many rice mills oil extracting plants & agri-business units have already closed down inNepal because of cheaper imports from India.

With the gradual decay of business &industries , there would be a big loss of job opportunities. Nepal has been facing the problem of trade deficit with India.

As the tariff for imports from India & other SAARC countries is given MFN treatment the importduties are minimal.

The third country investors may not come to Nepal due to higher investment cost. Because of freetrade area foreign investors might find india or other countries in the region with sea routes &ahuge population more attractive investment destinations than Nepal.

Nepal can attract tourists from the SAARC regions.

WORLD TRADE ORGANIZATION

8/10/2019 NBE.pptx

86/126

WORLD TRADE ORGANIZATION

The world trade organization (WTO) is aninternational body dealing with the rules of thetrade between nations. It was established on Jan1, 1995. Nepal got its membership on April23,2004. The membership of WTO currentlystands at 159 countries, representing more than97% of the worlds population. Theestablishment of the WTO aims at integrating

the world economy by cutting down the barriersin trade & investment flows. WTO nowadministers international trade & investment .

Obj ti f WTO

8/10/2019 NBE.pptx

87/126

Objectives of WTO:

Raising standard of living & incomes,

Promoting full employment, expandingproduction & trade &optimum utilization ofworlds resources.

Introducing sustainable development- whichenvisages that development & environment cango together.

Taking positive steps to ensure that developing

countries, specially the least developedcountries, secure a better share of growth intrade.

F ti f th WTO

8/10/2019 NBE.pptx

88/126

Functions of the WTO:

Administer & implement the trade agreement.

Act as a forum for multilateral trade negotiations.

Seek to resolve trade disputes.

Oversee national trade policies.

Cooperate with other international institutions involves inglobal economic policy making.

Maintain trade related database. Members are required tonotify in detail various trade measures & statistics.

Act as a watchdog of international trade.

Act as a management consultant for world trade.

Provide technical assistance & training for developingcountries.

N l b hi i WTO

8/10/2019 NBE.pptx

89/126

Nepals membership in WTO:

Nepal got the membership of the WTO on April23,2004. Nepal had applied for the membership ofGATT in 1989. This application of membership wasmade in view of the trade &transit problems with

India at that time. Nepal started the process of economic reforms in

the early 1990s. These reforms were essential toacquire the membership of WTO. Nepal was giventhe observer status in 1993.

Nepal presented its formal application to WTO INDec. 1995. After three rounds of working partymeetings during 2000-2003,Nepal finally wasgranted the membership in the cancun conference.

O t iti f WTO f th

8/10/2019 NBE.pptx

90/126

Opportunities of WTO for the

Nepalese business: Now there is the guarantee that Nepal will get the most

favoured nation status from all the member countries.

Nepal will now have assured market access & transit rights.

Nepal will also have access to WTO dispute settlementprocedures &legal recourse to contest undesirable trade policies

imposed up on it. Nepals membership is also expected to discipline its own

government.

It helps to enhance transparency & reduce uncertainty to trade &investment environment.

Nepals membership will provide opportunity to indulge inmultilateral trade negotiations.

This membership will give Nepal a seat at the negotiating table,allowing it to contribute to the debate on the future shape of theworld trading system.

Threats of WTO for the Nepalese

8/10/2019 NBE.pptx

91/126

Threats of WTO for the Nepalese

business.

Domestic industries will face the greater competition. The domestic market in goods & services sure to dominate by multinational

companies.

the government will face the fiscal adjustment cost of finding new importsurcharges introduced since 2000.

The cost of negotiation & transaction too are expected to put pressure on

least developed countries like Nepal. Nepal have to bear the burden of implementing trade related regulatory

rules. Which requires huge investment in administrative capacity , legalreforms & institution building.

Nepal has to undertake internal reforms to be able to match with globalstandards. Due to the shortage of reliable information it is difficult to design

action plan s to enhance the competitiveness & effectiveness of this sector. Nepalese products or service s are not competitive in terms of price,

quality, & delivery schedule. The prevailing system of coalition government isnot conducive & effective changes & their implementation.

T h l i l i t

8/10/2019 NBE.pptx

92/126

Technological environment

Technology is a powerful tool for povertyreduction. It creates income generating jobs. It isa key variable for productivity improvements.

Technology is the processes & systems used by

organizations to convert resources in to productsor resources.

Technology refers to the manner in whichorganizational inputs are transformed in to

outputs. Technological environment refers to all

technological surroundings that influencebusiness environment.

BUSINESS & TECHNOLOGY

8/10/2019 NBE.pptx

93/126

BUSINESS & TECHNOLOGY:

Business firms generally try to meet the changing needs of the society. Businessshould create market for their new products & services. Society also expectsinnovations & discoveries from business firms for better products &improvedservices.

Business firms also strive to contineously improve existing products throughchanging in design, engineering, or manufacturing.

Business & technology are inseperable. These are mutually complementary. Onecan not exist without the other.

In the present contest goods, people, information & technology are movingacross the globe at an increasing speed.

Today technology is a major item of international trade.

Technology is cutting across all political, economic & trade barriers.

Scientists have been creating technologies that were outside our dream a fewyears back.

Technological factors like use of specialized & automatic machine, applicationof mechanical power, integration of processes, design of machinery &plant,simplification & standardization of products &techniques, automation ofmanufacturing process & so on have greatly influenced industrial productivity.

Areas of technology relevant to

8/10/2019 NBE.pptx

94/126

Areas of technology relevant to

business: Methods of manufacturing a product.

Improvement in product design & manufacturing process.

Reduction of waste.

Reduction of manufacturing costs.

Using new raw materials. Using eco- friendly materials.

Improving quality & reliability.

Introducing new products & services.

New methods of distribution. New ways of management control &information.

e- business technology.

HUMAN FACTORS & TECHNOLOGY:

8/10/2019 NBE.pptx

95/126

HUMAN FACTORS & TECHNOLOGY:

With the change in technology ,serious impact can be felt in the total industrialsystem & the job market of a country.

Old industries may disappear due to technological development.

Occupational structure of the work force also changes.

Due to technological change the new skills also needed.

New technology may displace the employees. Technological capability of a nation revolves around its people.

The skill level of the people in a country decides the absorption & utilization oftechnology.

Inability to acquire new skills as demanded by the technology makes employeesout-dated.

Self development of managers & others at the top is also required foracquisition, management &development of new technology.

Conceptual & professional skills of the managers & personnel involved areimportant contributory factors for the successful use & upgrading oftechnologies.

SCIENCE & TECHNOLOGY POLICY:

8/10/2019 NBE.pptx

96/126

SCIENCE & TECHNOLOGY POLICY:

The science & technology policy is adopted inNepal with the objective to improve thecountrys S&T for the overall development &

scientific creativity in 1989.

Priority sectors of the

8/10/2019 NBE.pptx

97/126

Priority sectors of the

policy: Development of technologies & services for

priority areas of socio-economicdevelopment;

Fulfillment of peoples basic needs;

Qualitative development of humanresources;

STRATEGIES OF S&T:

8/10/2019 NBE.pptx

98/126

STRATEGIES OF S&T:

Ensuring maximum utilization of available resources.

Developing and adopting appropriate technologythrough the mobilization of private sector.

Developing of a mechanism to conduct research &development activities.

Contributing in the socio-economic development ofpeople through the development of knowledge &skills in the science & technology sector .

Encouraging universities, concerned institutions &individuals in scientific researches

PROGRAMMES OF S&T STRATEGIES:

8/10/2019 NBE.pptx

99/126

PROGRAMMES OF S&T STRATEGIES:

The three year plan adopted the followingprograme in translate the S&T strategies in toaction:

DEVELOPMENT & EXPANSION:

8/10/2019 NBE.pptx

100/126

DEVELOPMENT & EXPANSION:

A high-level Nation science & Technologycouncil & a coordination committee would beconstituted that would adopt a national

vision and policy. Ministry of science and Technologys

competence would be enhanced to play an

active role in development and proper use ofscience & technology.

DEVELOPMENT OF HUMAN RESOURCES:

8/10/2019 NBE.pptx

101/126

DEVELOPMENT OF HUMAN RESOURCES:

Extension of cooperation in producingnecessary manpower in intricate technology,practical technology & industrial and service

sectors. Increasing the competence of universities in

producing quality human resources.

Controlling brain drain by introducingattractive programme to enhance abilities ofyoung scientists.

PROMOTION OF RESEARCH &

8/10/2019 NBE.pptx

102/126

PROMOTION OF RESEARCH &

DEVELOPMENT:

CONDUCTING PROGRAMS RELATED WITHLOCAL RESOURCES.

Conducting programs to develop necessarytechnology to uplift rural life standard.

Conducting programs focus on special area s andtargeted groups.

Conducting research and development with thehelp of S&T.

Conducting research & development programsto enhance national capacity.

Establishing a research fund.

SOCIO-ECONOMIC DEVELOPMENT OF

8/10/2019 NBE.pptx

103/126

SOCIO-ECONOMIC DEVELOPMENT OF

URBAN & RURAL SECTORS:

Developing, utilizing and expanding ruraltechnology.

Developing & expanding the use of modem

technology like biotechnology , Itand spacetechnology.

Managing and simplifying the transfer of

technology.

EXPANSION OF SCIENTIFIC AND

8/10/2019 NBE.pptx

104/126

EXPANSION OF SCIENTIFIC AND

TECHNOLOGY SERVICES:

Conducting and expanding water andmeteorological services.

Expanding forensic services .

Expanding equipment maintenance andservice.

ENHANCING AWARENESS:

8/10/2019 NBE.pptx

105/126

ENHANCING AWARENESS:

Establishing planetarium, science andtechnology museum, among others.

Publishing materials and conducting program

to create awareness.

Mobilizing professional organizations.

Raising the standard of science education in

school level courses.

PRESENT LEVEL OF TECHNOLOGY

8/10/2019 NBE.pptx

106/126

PRESENT LEVEL OF TECHNOLOGY

ADOPTED BY THE NEPALESE

BUSINESS: The industrial sector in Nepal is currently in the process oftransition. The overall technological system in industrialsector has remained relatively simple.

New technology is being introduced & the product rangeof goods & services is widening.

Village & cottage industry is being encouraged to grow andbecome more skillful.

Transport, communication, electric & electronics are theother areas in which Nepal has also felt technologicalchange.

The status of industrial technology in a country can beassessed by analyzing (1) R& D (2) export performance. (3)skill inventory.(4) technology transfer.

RESEARCH & DEVELOPMENT:

8/10/2019 NBE.pptx

107/126

RESEARCH & DEVELOPMENT:

Most of the industrial units remain dependenton imported & low graded technologies.Business firms in Nepal show little awareness

of the need for formal research . NEPAL SPENDS ONLY ABOUT 0.13% OF ITS

GNP ON RESEARCH &DEVELOPMENT

ACTIVITIES.

EXPORT PERFORMANCE:

8/10/2019 NBE.pptx

108/126

EXPORT PERFORMANCE:

The technological status of the Nepaleseindustrial sector may be observed by itsexport performance. Nepalese exports are

mainly in the form of raw or semi finisheditems. Lack of competitiveness in high valueadded , high skill products such as machinery& consumer durables may be taken as a signof Nepals technological backwardness.

THE SKILL INVENTORY:

8/10/2019 NBE.pptx

109/126

THE SKILL INVENTORY:

The skill base in Nepal may be assessed fromrelative enrolment figures at various levels ofeducation. The gross enrollment ratio has justreached 45% in secondary level schools. Thefemale enrollment at all levels of the school haveremained very low. The proportion of enrolmentat technical institutes average about 19% of thetotal enrolment in higher education.

The supply of mechanics, electricians, engineers,IT professionals,& other technicians are muchbelow the level of required quantity.

TECHNOLOGY TRANSFER:

8/10/2019 NBE.pptx

110/126

TECHNOLOGY TRANSFER:

The pace of technological transfer hasaccelerated as the production has becomeglobalized.

Nepalese business has been unable to drawfully on FDI to upgrade its technology.

The open door policy could not stimulate

foreign investment to the extent desired. Some of the facts indicate the lower status of

technology transfer s taking place in Nepal:

Contd

8/10/2019 NBE.pptx

111/126

Contd

FDI in to Nepal rose from US $5.4 million in 1991-1995 to US$19.3 million in 2001 . Thereafter, itstarted to decline.

The FDI inflows are significantly lower relative to

other SAARC countries. The extent of technology transfer was relatively

low in the FDI that did come in to Nepal.

The FDI promotion strategy in Nepal is not

targeted nor based on a clear idea as to whichactivities Nepal can offer a competitive forforeign firms.

Foreign direct investment

8/10/2019 NBE.pptx

112/126

Foreign direct investment

FDI is the international movement of capitalfor specific investment purposes. It is madefor the purpose of actively controlling

property , assets, or companies located inhost countries. Investors undertake FDI toexpand foreign markets or gain access tosupplies of resources or final products.

Forms of FDI:

8/10/2019 NBE.pptx

113/126

Forms of FDI:

Purchase of existing assets in a foreigncompany.

New investment in property like land &

building.

Participation in a joint venture with a localpartner.

Mergers & acquisition activities.

Reasons of FDI:

8/10/2019 NBE.pptx

114/126

Reasons of FDI:

TO ACCESS NEW OVERSEAS MARKET.

TO TAKE ADVANTAGES OF LOWERMANUFACTURING & OTHER COSTS.

TO ACCESS NEW TECHNOLOGY &SKILLS.

TO LOCATE A BUSINESS FUNCTION NEARCLUSTER OF SIMILAR OR RELATED

COMPANIES.

Benefits of FDI:

8/10/2019 NBE.pptx

115/126

Benefits of FDI:

It is an important source of bringing in capital& technology in a country.

Improvement in productivity, technology

transfer, r&d expansion & promotion ofexports in a host country.

Encouragement of competitive corporateculture & technical skills for industrial

development. Benefits of foreign management skills in host

country.

Reasons for poor inflow of FDI

8/10/2019 NBE.pptx

116/126

Reasons for poor inflow of FDI

in Nepal: The FITTA act- 1992 is not clear on the foreign investment &

technology transfer.

Production base is limited due to non availability & poor access tomineral, forestry & other mineral resources.

Political instability & social unrest.

New investment areas are not explored to foreign investors. Absence of long term business plans & strategies backed by

proper information &R&D systems.

Lack of proper monitoring & supervision of the registered foreignprojects. They have not started their project construction &

operation. Implementation of FDI policies is often distorted by bureaucratic

delays & inefficiency.

Some pre conditions of FDI are yet to be fully achieved in Nepal.

Dimensions of the economy:

8/10/2019 NBE.pptx

117/126

Dimensions of the economy:

The economic dimension: it indicates thepurchasing power & pattern of consumptionof the people. The balance of payments &

exchange rates measure external economicperformance. Outputs, price & employmentmeasure internal economic performance. Themeasurement of supply side performance of

the economy includes saving, investment,productivity, wage increases, labour costs, &utilization of capacity.

Major challenges of the

8/10/2019 NBE.pptx

118/126

j g

Nepalese economy: Nepal just achieved about 4% growth rate over a decade

where as neighbouring countries have achieved thedouble digit economic growth rate.

Nepal couldnt achieve the desired growth rate due topolitical instability, fragile peace & security situation weak

infrastructure etc. The GDP structure is gradually changing. Contribution of

the primary sector as a value addition to the economy havecome down to 36.2% in 2000-2001. contribution ofsecondary sector is expected to remain at 14.1% with a

decrease of 2.8% over a decade. Similarly the contributionof agriculture sector has decreased by 1% over a period oflast one decade.

Contd

8/10/2019 NBE.pptx

119/126

Contd

The ratio of consumption expenditure to GDP acceleratedby 5% from previous years 88.3%. The ratio of fixed capitalformation to GDP decelerated by 1.2% from previous years18%.

Rate of inflation is very high. With inflationary pressure, the

cost of infrastructure would increase . The outstading debts grew by 8.3% totaling Rs 409.14

billion from Rs 377.59 billiion in the previous year.

The balance of payment is still in deficit. The deficit amountis Rs 19.12 billlion at the end of 2010-2011.

Securities market indicators like NEPSE indicator, stocktransactions & market capitalization have slid down. Theconfidence of investors towards the capital market remainsa challenge.

Contd

8/10/2019 NBE.pptx

120/126

Contd

Youths are compelled to heading for overseas seeking employment dueto failure in creating employment opportunities with in the country.

Migratory pressure on cities & secured locations with physical facilitieshas created the problems of urban poverty.

The countrys economy is becoming consumption oriented due toremittance income & other factors .

The saving & investment levels is decreasing due to unnecessaryconsumption.

Revenue mobilization also seems poor. Tax system , administrativereforms for custom valuation , simplification of income tax proceduresneed to be followed.

The value added tax & its effective implementation has yet to bematerialized. There is the practice of evading VAT by fake bills/vouchers

Delay in submission of regular budget, no elected representatives inlocal bodies, delay in providing contracts & opposition of local people todevelopment projects.

SOCIO-ECONOMIC DIMENSION

8/10/2019 NBE.pptx

121/126

SOCIO ECONOMIC DIMENSION

Population

Labour force composition

Employment trends

Migration & foreign employment

Labour market issues

Poverty situation

population

8/10/2019 NBE.pptx

122/126

population

Countries with growing population & income are indicative of growthmarkets, population size, can provide some basis for estimatingconsumption for the low priced , mass consumed products like softdrinks, cigarettes, clothes, soap, biscuits & many other food items.

If income grows over times, market also grows.

If income of the people decreased, unemployment problem indicatesless opening of new jobs to absorb the graduates.

Densely populated areas tend to make products distribution&communication simpler &less costly.

In Nepal mountains & hill region with over 78.8% of the total land area,contains 51.5% of the total population. The remaining 48.5% of the totalpopulation reside in the terai, which covers 21.2% of the total land area.

There is a growing shift of the population from rural to urban areascausesthe percentage of the labour force engaged in agriculture is alsodecreasing.

Labour force composition

8/10/2019 NBE.pptx

123/126

p

Labour force is the most important input into the production process.

The productivity & quality of production are affected by the quality of theavailable labour force.

Quality of labour force are mainly education, skill formation schemes, training,working conditions, wage levels, incentive systems & motivation.

In Nepal a large proportion of the labour force remains unemployed or under

employed. Currently there are about 11 million people in the labour force.

The growth rate of the working age population is 3% per year.

Most trained personsare in urban areas , rural areas have man power shortagesat all levels.

The share of the active population in the primary sector(agriculture, forestry,

hunting & fishing) has declined over the years. The gains in the secondary (mining, quarrying, manufacturing & construction) &

thirdly sectors (electricity, gas, water, transport, communication & services) havecompensated this loss of employment in the primary sector.

Employment trends:

8/10/2019 NBE.pptx

124/126

p y

There is the growing displacement of the labour force fromthe agriculture sector. The emerging employment trendsare as follows:

Informal farming, cottage &small industries are giving up.

The rural population has now been migrating to urbanareas for employment.

Some people are migrating abroad for employment.

In many places, new townships have developed generatingnew employment opportunities for people.

The educated women are now seeking out employmentopportunities.

Migration & foreign employment:

8/10/2019 NBE.pptx

125/126

g g p y

Migration & foreign employment are important components ofpopulation change.

In Nepal the number of people going abroad for foreignemployment has been increasing annually.

The government has made the following arrangement for

foreign employment: Foreign employment loan for marginally poor people from

among affected by the conflict, disadvantaged, minorities &women. Arrangement is made for providing 80% of such loanwithout any collateral.

A provision for an insurance scheme of Rs 500000 to every personto foreign employment has been made.

Foreign employment rehabilitation fund has been established forrescuing victimized in course of foreign employment.

Contd..

8/10/2019 NBE.pptx

126/126

Skill development &language training programs

as per the demand of international labour

market will be launched to martyrs families,

people injured in peoples movement,handicapped, blind, women, conflict affected

people& under privileged community.

Money transfer institutions are being

encouraged that the Nepalese workers couldsend their foreign currency earnings easily to