According to the World Bank Doing Business Reports 2006- 2013, Nepal does not fare well in trade facilitation. The country's rank is decreasing from 136th in 2007 to 171th in 2012. Nepal's key trade facilitation indicators exceed the average level in South Asia
Among others, key factors for such weak performance are as follows:
(i) Large Number of Trade Documents. Preparation of documents takes considerable amount of time and constitutes a major barrier to trade facilitation. In 2012, it takes 11 documents and 41 days, and costs US $ 1,975 per container to complete a normal export process. It takes 11 documents and 38 days, and costs $ US$ 2,095 per container to complete a normal import process (See Table above). In addition, Nepal has yet to conform to accepted standards on trade documentation specified in the International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention [RKC]).
(ii) Inadequate Customs Automation. Nepal is currently using Automated System for Customs Data (ASYCUDA)++ for customs operations at 10 major customs offices, and applying risk-based customs clearance at five major customs offices. However, the entire customs process is not fully automated and there are technical difficulties in the operation and efficient usability of the system. In addition the current Informix data base is obsolete, and needs to be migrated to a new system. There is a need for a master plan for E-Customs and customs automation in Nepal. Currently 70% to 90% of cargoes are inspected at the border checkpoints. Risk-based inspection procedures are generally not applied, except, in a limited way, at five land border crossings. Physical inspection of most cargo is needed, in many cases, due to the lack of modern equipment to support the border clearance procedures.
(iii) Lack of transparency and publicly available trade and custom-related rules is one of non-tariff barriers to Nepal's trade. One of priorities of Nepal's private sector for trade facilitation is therefore timely and comprehensive publication of trade and custom rules and regulations, and their effective and transparent application.
(iv) Other behind border barriers. Other issues such as quarantine testing, clearing and freight forwarding, insurance, terminal handling, and port services are all critical nontariff barriers to Nepal's trade. It is therefore important to undertake comprehensive assessment to review these nontariff barriers and come up with specific measures to remove these barriers.
Nepal has taken several initiatives to facilitate trade, such as the application of harmonized system codes for customs tariff; adoption of the WTO Customs Valuation Agreement; enactment of new Customs Act, Rules and Regulations; and the establishment of the ASYCUDA++ for clearance at 10 major customs offices and the introduction of risk-based customs clearance at five major customs offices. Nepal has constructed an inland container deport at Kakarbhitta, supported by an ADB loan.
Nepal is actively participating in the activities of the South Asia Subregional Economic Cooperation (SASEC) working groups on trade facilitation and transport (TFTWG). As part of the TFTWG, Nepal is taking part in an ADB-supported subregional trade facilitation program grant / loan which also involves Bangladesh and Bhutan. The components of the program grant in Nepal are as follows:
(i) modern and effective customs administration: ADB will assist Nepal (and Bangladesh, Bhutan) in acceding to and complying with the provisions of the Revised Kyoto Convention and in applying World Customs Organization's Framework of Standards to Secure and Facilitate Global Trade;
(ii) streamlined and transparent regulations and procedures: ADB's support will focus on enhancing Nepal's automated customs management systems, which is important for the establishment of a National Single Window; and
(iii) improved services and information for traders and investors: ADB will assist SASEC governments in implementing reforms that will provide greater information and increased responsiveness to importers and exporters, notably through electronic trade portals and the establishment of national trade facilitation committees.