Governments Instability is Major Problem for Doing Business In Nepal : GCR,2016/17

Businesses operate according to forecasts and scenarios about the future that comprise surprises as well as certainties. However, as much as businesses factor in uncertainty, the one thing that wants to avoid at all costs is the instability in the macro environment that results from political gridlock, extremism, and political dysfunction. Businesses like to operate in an environment that is not marred by frequent strikes, social unrest, and chaos as their operations would be hit adversely due to these factors.

Review of Global Competitiveness Report 2016-2017 

The report assesses the competitiveness landscape of 138 economies, providing insight into the drivers of their productivity and prosperity. This year’s edition highlights that declining openness is threatening growth and prosperity. It also highlights that monetary stimulus measures such as quantitative easing are not enough to sustain growth and must be accompanied by competitiveness reforms. Final key finding points to the fact that updated business practices and investment in innovation are now as important as infrastructure, skills and efficient markets.

Figure I: Top 10 competitive economics of the world

Switzerland, Singapore and the United States remain the three world’s most competitive economies.The Report series remains the most comprehensive assessment of national competitiveness worldwide. Main source of article is here. Top ten competitive economics of the world are as listed in table I.The two Himalayan economies, Bhutan (97th) and Nepal (98th), both improve their positions this year, by eight places and one place, respectively. 

Figure 2: GCI score range across the 12 pillars in South Asia, 2016–2017

Nepal stands at 98th position out of 138 economics. South Asia continues its upward trend and competitiveness improves in most economies in the region, which is experiencing positive economic momentum, and in 2016 is set to grow more quickly than China for the first time in more than 20 years.Out of 12 indicators infrastructure, technological readiness, innovation and business specification Nepal is least poor in south Asia. Better in only one indicator that is macroeconomic environment in the region.

Government competitiveness index overall review are as follows:

As per report 2016/17,Major problematic factors affecting doing business in Nepal are government instability.

Political instability is harming Nepal’s struggling economy, which is expected to grow only 1.5 percent this year, and threatens to stall further relief for victims of last year’s devastating earthquake. While Nepal’s political leaders are embroiled in interminable fights, the country’s needs are going unaddressed (nytimes).

No government formed after 1990 has competed its full term of five years. The political instability has been costly for the economic development of the nation. No development project concludes in time due to political instability. Moreover, no long-term plans for the economic development could be formulated when there is political instability as there is always a trend of replacing the development plans introduced by the previous government immediately after the replacement of the government. Most of the chiefs of development projects get replaced with the change in the government. These activities only increase time and cost to complete the project (peoples review).

The political quagmire in Nepal is of its politicians’ making and India will do well to avoid getting its hands mired in that mess(deccan herald).

The frequent changes in government in Nepal have badly hampered the country’s development and

Political development in Nepal
Source : development politics blog

 economic growth. Even after the constitution’s promulgation, there is no sign of political stability in Nepal. Ordinary people are not concerned about who will come to lead the government but there is worry across the board that political instability has badly affected every sector in the country. The country has been riding a wave of political chaos since Maoist rebels launched their war in 1996 — two decades of political instability.
Despite the promulgation of the constitution, it seems that Nepal is doomed to face further political instability. Unless the major parties come together, there cannot be progress on addressing the key issues facing the country, whether rebuilding after the earthquake, implementing the constitution by holding layers of elections, or simply growing the economy(The diplomant).

This is time to raise question to politician "Up to when political chaos would continue in Nepal?

आर्थिक विकासमा रेमिट्यान्स परिचालन

यो लेख कारोबार दैनिकमा २०७३/०४/१७ सोमबार प्रकाशित भएको थियो ।

विश्व बैंकका रिपोर्ट,२०१६ अनुसार विश्वको जनसंख्याको करिब ३.४ प्रतिशत (२४ करोड ७० लाख) जनसंख्या आफ्नो जन्मभूमि बाहिर रहन बाध्य छन्। सन् २०१५ मा विश्वमा जम्मा रेमिट्यान्स प्रवाह ६ सय १ अर्ब हुँदा विकासोन्मुख मुलुकमा रेमिट्यान्स आप्रवाह झन्डै ७२ प्रतिशत अमेरिकी डलर ४ सय ३१ अर्ब पुगेको छ ।विश्वमा भारत सबैभन्दा बढी अमेरिकी डलर ६९ अर्ब रेमिट्यान्स भित्र्याउने मुलुकमा पर्दछ, त्यसैगरी चीन अमेरिकी डलर ६४ अर्ब, फिलिपिन्स अमेरिकी डलर २८ अर्ब र कुल गार्हस्थ उत्पादनमा रेमिट्यान्सको धेरै अंश बढी भित्र्याउने मुलुकमा ताजकिस्तान(४२ प्रतिशत) किर्गिस्तान(३० प्रतिशत) र २९ प्रतिशत अंश सहित नेपाल तेस्रोमा पर्दछ ।

नेपालमा विं.सं २०४६ सालको राजनीतिक परिवर्तनपछि वैदेशिक रोजगारीले व्यापकता लिएको देखिन्छ । विं.सं २०५२ सालबाट सुरु भएको माओवादी सशस्त्र युद्ध र त्यसपछिका राजनीतिक परिवर्तनले युवा जनशक्तिको विदेश पलायनलाई प्रोत्साहन गरिरह्यो। घरेलु पुँजी निर्माणमा कृतसंकल्पित हुनुपर्ने ऊर्वर उमेर वैदेशिक रोजगारीको लामो शृंखलामा यात्रारत छ। यसबाट प्राप्त हुने रेमिट्यान्सले हाम्रो तत्कालीन गर्जो त टरेको छ तर दीर्घकालसम्मको भूमिका सुखद छैन। हामी निर्वाहमुखी कृषिमा आधारित अर्थतन्त्रलाई रेमिट्यान्समुखी अर्थतन्त्रले प्रतिस्थापन गर्दैछौँ।

कृषिमा आधारित नेपालको अर्थतन्त्र रेमिट्यान्स आयले चलायमान बन्न पुगेको छ। आर्थिक बर्ष २०७२/७३ को आर्थिक वृद्दिदर मात्र ०.७७ प्रतिशत रहँदै गर्दा उक्त आर्थिक वर्षमा रेमिट्यान्स आय कुल ६ सय ७९ अर्ब रुपैयाँ (स्रोतः नेपाल राष्ट्र बैंक २०७२/७३) भित्रिएको थियो ।विश्वको कुनै पनि देशले आफ्नो जनशक्ति बाहिर पठाउन चाँहदैन तर नेपालको कुल जनसङ्ख्याको करिब एक तिहाई नेपाली विदेशमा कार्यरत छन् । वैदेशिक रोजगार विभागका अनुसार आ.ब. २०५०/०५१ देखि २०७१/०७२ सम्म श्रम स्वीकृति लिई वैदेशिक रोजगारमा जाने कुल नेपालीहरुको संख्या ४० लाख ९६ हजार ५ सय र करिब ६० लाख जनशक्ति छिमेकी मुलुक भारतमा विभिन्न क्षेत्रमा श्रमकर्ममा क्रियाशील छन् ।

द्रुतगतिमा आर्थिक विकास र वृद्दिको बाटो बुनिरहेका विश्व अर्थतन्त्रका दुई उदीयमान मुलुकहरु  चीन र भारतको विचमा रहेको नेपालमा बार्षिक करिब ४ लाख ५० हजारभन्दा बढी युवाहरु श्रम बजारमा प्रवेश गर्दछन् । राजनीतिज्ञहरु देशको राजनीतिक नक्सा कोर्नमै व्यस्त भैरहँदा देशका    खम्बा युवाशक्ति दैनिक पन्ध्रसयको हाराहारीमा वैदेशिक रोजगारमा जानका लागि श्रम स्वीकृति प्राप्त गर्दछन् । आफ्नो र परिवारको सुनौलो भबिष्यको नक्सा कोर्न अवसरको खोजीमा जन्मभूमि छाडेर विदेशिन बाध्य छन्। ठूलो मेहनतका साथ तयार पारेको उर्जावान जनशक्ति अरु मुलुक बनाँउन खटिईरहँदा हाम्रा राजनीतिक दल र नेताहरु स्पष्ट प्रमाण, दृष्टिकोण र कार्ययोजनाविना नै मुलुक विकासका मीठा आश्वासनहरु बाँड्दै केवल सत्तारोहण र अवरोहणको दुष्चक्रमा फसिरहेको प्रतित शिवाय केही गरेको देखिँदैन ।

खास गरी वैदेशिक रोजगार नेपाली युवाका लागि बाध्यता र संस्कृति बन्न पुगेको छ । बिभिन्न जोखिम र दुरावस्थाका बावजुद नेपाली युवा जनशक्ति विदेशिन बाध्य छन् र उनीहरुका बालबच्चाहरु समेत विदेशिनुलाई आफ्नो भाग्य र बाध्यता देख्न थालिसकेका छन्। विदेशिने संस्कृति विकास हुनुको मुख्य कारण सरकारले वैदेशिक रोजगारीलाई संस्थागत गर्ने प्रयास गर्नु, स्वदेशमा रोजगारीका अवसर सिर्जना नहुनु र खाडी लगायतका मुलुकहरुमा रोजगारीका अवसरहरु बढ्नु रहेको छ। अन्य कारणहरुमा देशको राजनीतिक दुराबस्था, बढ्दो जनसंख्या, दोहोरो अंकको बेरोजगारीदर, अति न्युन पारिश्रमिकदर र रोजगारीका आशा र भरोसायोग्य कुनै ठाँउ नहुँदा विदेशिनु आम युवाहरुको लागि बाध्यता बन्न पुगेको छ ।

देशमा एउटा दशक सन् १९९६-२००६ माओबादी जनयुद्दमा सकियो, अर्को दशक सन् २००६-२०१६ संविधान निर्माणको राजनीतिक चरणमा सकियो । यसको कारण अर्थतन्त्र शिथिल बन्नुका साथै कैयौ युवा जनशक्ती देश बाहिरिन पुगे फलस्वरुप देश रेमिट्यान्समा आश्रित बन्नुपर्यो । सन् १९९०/९१ मा कुल गार्हस्थ उत्पादनमा रेमिट्यान्सको अंश ०.४६ प्रतिशत रहेकोमा सन् २०००/२००१ मा आँउदा १०.६९ प्रतिशत हुँदै सन् २०१५/१६ मा करिब एक तिहाई भाग ओगट्न पुगेको छ । सरकार र निजी क्षेत्र  रोजगारी सिर्जना गर्न असफल भएको अवस्थामा रेमिट्यान्स आम्दानी गरिबी निवारणको लागि स्वचालित संयन्त्र बन्न पुगेको छ ।

आर्थिक सर्वेक्षण, २०७२/७३ अनुसार कुल गार्हस्थ उत्पादनमा कुल गार्हस्थ बचतको अंश ५.३ प्रतिशत हुँदा कुल गार्हस्थ उत्पादनमा कुल राष्ट्रिय बचतको अंश ४२.९ प्रतिशत रहनुले स्पस्ट पार्दछ कि कुल गार्हस्थ उत्पादनमा रेमिट्यान्सको हिस्सा बढ्दो छ ।स्थिर पुँजि निर्माणमा कुल गार्हस्थ उत्पादनको अंश २७.७० प्रतिशत छ । जसबाट अझै प्रस्ट हुन्छ कि उत्पादनशिल क्षेत्रमा रेमिट्यान्स परिचालन हुन सकेको छैन र राष्ट्रिय पुँजी निर्माण हुन सकेको छैन। कुल गार्हस्थ उत्पादनमा उपभोगको अंश आव २०७१/७२ ९०.२ प्रतिशत रहेकोमा चालु आव २०७२/७३ मा सो अंशमा वृद्दि भई ९४.७ प्रतिशत भएको छ ।समस्या उपभोग र उपभोग बढेर बचत कम हुनुमा छैन, समस्या त आन्तरिक उत्पादन र निर्यात घटनु, आयात बढ्नु र लगानीको लागि अवसर र वातावरण नहुनु हो । डुईङ विजनेस प्रतिवेदन २०१६ को १८९ मुलुकमा गरिएको सर्वेक्षणमा नेपाल ६०‍.४१ अंकसहित ९९ औं स्थानमा पर्दछ ।लगानी बढाउने वातावरण नबन्ने हो भने स्थिर पुँजी निर्माण हुन नसकि उपभोग बढ्दै जानेछ ।

रेमिट्यान्सबाट आएको आयको अधिकांस भाग उपभोगमा खर्च भएको देखिनु स्वभाविक र दुर्भाग्य देखिन्छ ।स्वभाविक यसकारण कि जुन देशमा मानिसको आधारभुत आवश्यकता नै पुर्ण हुन सकेको छैन र प्रतिव्यक्ति आय मात्र अमेरिकी डलर ७६६ रहेको छ । रेमिट्यान्स आय केबल गाँस, बास र कपासको जोहो गर्दैमा सकिने नै भयो। दुर्भाग्य यसकारण कि नेपालमा आर्थिक वृद्दिको मोडेल रेमिट्यान्समा आधारित उपभोग बन्न पुगेको छ ।रेमिट्यान्स उत्पादनशील क्षेत्रमा परिचालित हुन सकेको छैन। विदेशी मुद्रा (रेमिट्यान्स आयलगायत बाट) ठुलो परिमाणमा भित्रिँदै जाँदा नकरात्मक परिणामहरु उत्पन्न हुन जान्छ ।जसलाई “डच डिजिज” भनिन्छ। जुन १९६० मा नेदरल्याण्डको उत्तर समुन्द्रमा भेटिएको प्राकृतिक ग्याँसको संचयले निम्त्याएको संकट लाई बुझिन्छ ।जसको कारण विश्व बजारमा डच गिल्डरको मुल्य बढ्न गई तेल बाहेकका वस्तुको निर्यात कम प्रतिस्पर्धात्मक बनेको थियो। यसको असर देशमा उत्पादित वस्तुको मुल्यको प्रतिस्पर्धात्मक क्षमता र निर्यातमा गिरावट आउने र आयात बढ्दै जान्छ। 

आर्थिक विकासले सम्पुर्ण आर्थिक सामाजिक संरचनालाई प्रगतिशील परिवर्तनतर्फ डोर्याउँदछ । दीर्घकालिन प्रकृतिको भएकाले विकास निरन्तरको प्रयासपछि मात्र प्राप्त हुन्छ। विश्वमा त्यस्तो अन्य कुनै मुलुक छैन जहाँ राष्ट्रिय सम्पतिको महत्वपुर्ण हिस्सा आप्रवासीद्वारा आयातित आम्दानीबाट पुरा हुन्छ। रेमिट्यान्सलाई विकासमा जोत्नु अझै पनि चुनौतिका रुपमा रहेको छ। रेमिट्यान्सलाई उत्पादनशील क्षेत्रमा लगानी गराउने हेतुले नेपाल राष्ट्र बैंकले वैदेशिक रोजगार बन्ड जारी गर्यो तर बढ्दो मुद्रास्फिती, प्रचारप्रसारको अभाव र लगानीमैत्री वातावरणको अभावमा उत्साहप्रद रहन सकेन ।

प्रो. विलियमसनको भनाई छ, आर्थिक विकास एउटा प्रक्रिया हो, यस्तो प्रक्रिया जसले देशमा उपलब्ध स्रोत साधन यसप्रकार प्रयोग गर्दछ कि देशको प्रतिव्याक्ति आय बढ्दछ । आर्थिक विकासको लागि नेपालमा उपलब्ध स्रोत साधन केके हुन त ? रेमिट्यान्सबाट आएको पुँजी र प्राकृतिक स्रोत साधन (पानी,हिमाल,उर्वर भूमि,बनज‌ंगल आदि) नै हुन । यिनै स्रोतसाधनहरुलाई अधिकतम परिचालन गरि देशको प्रतिव्यक्ति आय बढाउन सकियो भने बल्ल देश आर्थिक रुपले सबल भई मुलुक समृद्दितर्फ लम्कन सक्छ ।

विदेशमा बगाएको पसिनाबाट सिर्जित रेमिट्यान्सबाट आएको महत्वपूर्ण पुँजी उत्पादनशील क्षेत्र कृषि, जलविद्धुत र पर्यटनमा लगानी गरी अर्गानिक कृषि उत्पादन र जलविद्धुत निर्यात गर्ने तथा कैयौंको संख्यामा पर्यटक भित्र्याउने वातावरण तयार गरी विदेशिएको युवा शक्तिलाई स्वदेशमै परिचालन गर्नेु समयसापेक्ष माग हो। त्यसरी विदेशमा बगाएको पसिना स्वदेशमा पानीसँगै बगाउने र पर्यटकसँगै नचाउने कार्यवातावरण सरकारी अग्रसरतामा सम्बन्धित निकायले तयार गरेमा भावी पिँढीले विदेशिनु पर्दैनथ्यो र समग्र राष्ट्र अनि जनताको हित हुने थियो ।

बढ्दो विश्वव्यापीकरणसँगै अन्तर्राष्ट्रिय बजारमा प्राप्त हुने रोजगारीका अवसर र घरेलु अस्थिर राजनीतिक अवस्थाका कारण सिर्जित समस्याले संकुचनमा परेको हाम्रो रोजगारी बजारले झट्ट निकास पाउने अवस्था देखिँदैन। रेमिट्यान्सको हिस्सालाई कोषको रूपमा विकास गरेर कृषिl, जलविद्युत र पर्यटनमा लगानी गरी आर्थिक विकासतर्फ लम्किनु आवश्यक छ । रेमिट्यान्सको सही उपयोग भनेको देशको कृषि प्रणालीलाई आधुनिकीकरण गरेर आन्तनिर्भर बनाउँदै लैजाने हो र देशमा खेर गैरहेको अपार जलसम्पदालाई विद्युतमा परिणत गरी विद्युत उत्पादनमा आत्मनिर्भर भई बढी भएको विद्युत डलरमा बिक्री गर्ने अवस्था ल्याउने अनि प्रकृतिको सुन्दर छटामा बिदेशी पर्यटकलाई मन्त्रमुग्ध बनाउनका लागी अनेकन उपाय अपनाउन सकेमा देश स्वतः आर्थिक समृद्धितिर लम्किने छ। यसतर्फ सरोकारवालाको ध्यान जाओस् ।

कारोबार दैनिकमा प्रकाशित लेख

Exporting Human Resources

Human resource is the primary resource of an economy and important drivers of long-run economic growth.Without human resources, physical, financial and all other resources cannot be put into use. Its macroeconomic determinants are still not well understood in Nepal. It is simply not possible to reap the fruits of modern agriculture and the abundance of modern industry without making large investments in human Beings.Optimal ratio of human resources to capital has to be maintained to reach the attainable rate of economic growth. Given the endowment of capital and other material resources, Human resources could accelerate the production process and thereby economic growth. However, there is increasing recognition of the need for skilled workforce as a basis for future development. Therefore, manpower planning is becoming a critical issue for least developed countries like Nepal. Development of human resources is primary objective of any country for long term economic growth but Nepal government has been giving increasing priority to exporting human capital rather than utilizing golden resources for country’s development.

Economic growth and development processes affect and are affected by migration of people. People migrate when they are pushed by lack of opportunities at home and pulled by the hope of economic gains elsewhere. The history of migration dates back to the beginning of human civilization. Migration and migrant are terms with several meanings. 

According to the IOM Migration Terminology, "Migration" is the movement of a person or group of persons from one geographical unit to another across an administrative or political border, with the intention of settling indefinitely or temporarily in a place other than their place of origin. The term “migrant” is a person who migrated. This term does not specify the direction of the movement like in the word “emigrant” or “immigrant”.
According to the World Bank’s Migration and Remittances Fact book 2016, more than 250 million people, or 3.4 percent of the world population, live outside their countries of birth. The volume of South-South migration stands at 38 percent of the total migrant stock, larger than South-North migration.

Migration of Nepal
Actually, no country wants to send large section of its workforce outside the border. Nepal is primarily an agricultural based economy with a real per-capita GDP of US$ 766 having GDP growth rate of only 0.77 percent in F/Y 2014/15 along with a rising unemployment rate, which reached 3.7 percent in 2014. Currently, more than one third of the country’s total population of 27 million is estimated to be working abroad. About six million Nepalese work in India alone; while remaining four million are employed in other countries. Unending political and economic chaos in Nepal has compelled a large number of youth to leave. Push factors such as poverty, unemployment and risk of life are coupled with pull factors like lucrative job opportunities abroad.

The current scale of foreign labor migration from Nepal is unprecedented, providing an alternative to hundreds of thousands of youth who are unable to find satisfactory, or even any, employment within the country. Foreign labor migration is now an intrinsic part of everyday life for a majority of Nepalese, with its impact clearly visible in every sphere of society – social, economic, cultural and even political. It has also become a source of lucrative business for those involved in sending workers abroad. Foreign labor migration, hence, has multi-dimensional implications and is of significance to all concerned, including, but not limited to, migrant workers and their families; foreign employment entrepreneurs; government agencies; and employers in destination countries(Labour Migration Nepal Policies).

History of Migration
Labor migration from Nepal to foreign lands has a long history, but this phenomenon has seen rapid acceleration in the past couple of decades.  The history of labor migration from Nepal dates back to the period of unification, more than 300 years ago. The mass migration from the unified territory to the neighboring countries to escape the new State’s taxation system, which was often exploitative, could be considered the first incidence of out migration of labor from Nepal.

The history of formal entrance of Nepalese citizens in foreign employment begins in 1814-1815 after the Nepal-British India war. The formal migration of Nepalese out of the country is generally associated with the induction of young Nepali males into the British army. A total of 4,650 Nepalese youngsters were recruited to the British armed forces as a British-Gurkha regiment. It was only in 1886 that the recruitment of Nepalis into the British army was formalized. Hundreds of thousands of Nepali youth fought in the First and Second World Wars on the side of the British, which were the earliest instances of a concerted recruitment of Nepali men to work abroad.

The 1947 Tripartite Agreement between Nepal, India and Britain opened the way for a newly independent India as well to recruit Nepali men into its army. Hence, even two centuries later, the tradition of recruiting Nepali youth into foreign armies (the British and Indian as well as the Singapore police) continues broken.

Even as some Nepalese were joining foreign armies, others had begun migrating to different states of India, particularly the Northeast. In fact, the migration of the Nepalese to Northeast India began as early as the 1820s and continues till today. The 1950 Nepal-India Treaty of Peace and Friendship formalized the free movement of people between the two countries without requirements of any formalities like passports and visas.

The human capital which have to consume efficiently within country has exported.

The  production and export of goods/services which is not happening because human capital had exported.

There is only production of unaccountable political leaders. Through this way achievement of development and growth is almost impossible.

The country has faced a rising emigration rate since the late 1990s, with a significant amount of remittances and, moreover, it’s largest source of foreign capital. The land-locked economy battered by a decade-long Maoist insurgency (1996–2006). It has made people displaced from their usual place of residence and the alternative means of employment for displaced youth is established as foreign employment. The conflict has also limited the development activities throughout the country and expansion of industries is stagnated. This situation has created more insufficiency to get employment within the national border and ultimate step of the people is to go abroad for foreign employment. Nepalese workers have often migrated to obtain better employment opportunities, higher wages and better working environments.

Income received from remittance source has become an automatic instrument for poverty reduction in Nepal as both the government and the private sector have failed to create adequate number of jobs. Since the last 30 years, a "culture of migration" has emerged, with millions of Nepalese eager to work abroad, despite the risks and vulnerabilities they are likely to face. Interests in leaving the country is not limited to adults, children of overseas foreign workers also had plans to work abroad. The development of a culture of migration in the Nepal has been greatly aided by migration's institutionalization. The government is trying to facilitate migration, regulates the operations of the recruitment agencies, and looks out for the rights of its migrant workers. However, the continuing demand for workers in the Gulf countries and the opening of new labor markets in other regions, especially in East and Southeast Asia, fueled further migration. On the supply side, the push factors have not abated. The absence of sustained economic development, political instability, a growing population, double-digit unemployment levels, and low wages continue to compel people to look abroad.

Labor Migration: Statistical Overview
Nepal’s population has grown rapidly over recent decades. According to the 2011 Census, Nepal’s population was 26.495 million, up from 23.151 million in 2001. The population is young: the median age was 21.4 in 2011, while around 70 per cent of the population were under the age of 35. The opportunity to reap a demographic dividend will persist into the 2040s. However, the success of this demographic transition depends on the nature of economic growth, structural transformation and job creation in the coming years. The economic impact of migration on origin countries, and in particular on economic growth, productivity and poverty alleviation is not uniform. It depends on the local context, as well as the nature and intensity of migration flows.

Source :Labour Migration Nepal Policies

As the decennial national census has been recording the population absent from home (including those who are out of the country) over the years, but the data collected groups together everyone who has left the country for any purpose (such as study abroad, marriage, business, etc.) and not just for foreign employment.Another source would be The Department of Foreign Employment does record the number of individuals going abroad for employment, but this source also does not accurately reflect the scale of foreign labor migration. First, it is based  only on the number of labor permits issued by the government to go abroad as labor migrants. 

Source : Labour Migration Nepal Policies

Hence, these records do not account for those who go to India for employment. Second, the data from the DoFE only indicates the number of labor permits issued and does not take into consideration the fact that the same individual may have received multiple permits over the years and/or there could be cases where permits have been issued but not used. Despite some shortcomings, the DoFE figures currently represent the most valuable source of information on the number of people who have left the country for foreign employment (to countries other than India). As shown in following Figure, the DoFE recorded 3605 Nepali migrant workers seeking foreign employment in the fiscal year 1993/94. 

Source : author's computation using data from DoFE,2016

Brain drain has important consequences for the sustainable development of origin countries. The impact depends on the size and level of development, the sectors and occupations involved, and the nature of migration (temporary, permanent or circular).The departure of skilled labor represents a loss of public investment in education, as well as in potential tax revenues. The departure of highly-skilled individuals could affect innovation and technological progress and, in turn, productivity and growth. Certain professions could be more affected by migration, e.g. health care and education, due to global demand which could lead to a failure in delivery of key social services in countries of origin. Moreover, migration raises the domestic skill level by increasing the interest in upgrading skills, which could benefit the domestic labor market.

Managing Migration 

International labor migration has emerged as a major global issue and ranks high on international, regional and national policy agendas. Patterns of migration are evolving rapidly, with the result that most countries are countries of origin, transit or destination. The main driver of migration continues to be employment related. Emigration rates tend to be higher in regions where overall economic conditions and in particular working conditions are poor and social protection low. Too many migrants face high social and economic costs in the migration process, inequality and discrimination in the workplace in destination countries, and difficulty in integration, particularly as integration programs have had mixed results.

The ILO projects that the labor force in Nepal will grow by 4.7 million or 30.1 per cent from 2015 to 2030. Over the longer term, therefore, the creation of more employment and entrepreneurship opportunities is critical. Only then will more Nepalese be able to earn a decent income in their country, further promoting sustainable development and poverty reduction.While observing the government policies and programmes, it is found several lacking to protect the rights of the migrant workers and assure their safe migration in the country of destination. Government has made promotional policy regarding foreign employment but at the same time less attention has been paid to provide services and facilities in the home ground. Some of the provisions mentioned in the Foreign Employment Act-2042 are like controlling the foreign employment business rather than promotional one.

Managing migration more effectively has to become a top policy priority for the developing countries like Nepal. But, Nepal government is unable to utilize and manage the available youth population  dividend  more effectively on time. It is widely recognized that migration, if properly managed, may generate important gains not only for migrants but also for host and sending countries.Developing countries like Nepal have to gain in terms of growth, investment, human capital accumulation and poverty reduction. If the government manage to restructure effectively their economies following emigration and diffuse these benefits throughout the economy. To do so, migration and development policies need to become more coherent. 

This blog post is prepared using different articles/News/study reports.

Deepening Trade Dependency of Nepal

There is growth and development of international trade because of globalization, liberalization, open market and increasing use of technology. Nepal is not exception from the changing world but unable to grab the opportunities created by changing market scenario and still dependent on foreign trade in terms of import. Nepal government is still enjoying the increasing revenue primarily based on custom duties from import.In my viewpoint, there are two layers of dependency, which pushes the Nepalese economy backwards.

At First, Nepal is dependent on trade because production within the country can’t fulfill the demand of goods within the country. Secondarily, there is unavoidable trade dependency with India. Trade with India become compulsion because Nepal as landlocked country share open border of 1876 square kilometers with India. There is Chickens neck "a narrow strip Passage in India : Siliguri Corridor" for direct trade link with Bangladesh and elephant like giant mountains with difficult physical structure to trade with China.

                                                                                           Source : author's computation using data from CBS Nepal(2016)

Over the years, export has almost been stagnated, and the import skyrocketed.The slow growth in export compared to the robust growth in import remains a major concern for Nepal. The average growth in export was 4.2 percent in the last decade whereas growth in import during the same period was 18.2 percent. Nepal’s import is 9 times bigger than export.                     The total export, which used to be 14.58 percent of the Gross Domestic Product (GDP) a decade ago in F/Y 2004/05, has squeezed to 11.67 percent, whereas import has swelled to almost 41.66 percent of GDP in F/Y 2014/15 - in F/Y 2004/05 it was 29.48 percent. During the last decade, import increased by 5.08 folds to Rs. 885 billion whereas export increased by 2.88 folds to Rs 239 billion in F/Y  2014/15. As a result, trade deficit was swelled by 7.35 times in the last one decade and has reached to Rs. 645 billion.The growing and continued mismatch between import and export has resulted in an alarming level of trade deficit in Nepal.

India continued to command a major share in Nepal's foreign trade. With Indian economy's growth accelerating and manufacturing as well as industrial base enhanced further and strengthened, India’s share in Nepal’s total merchandise trade in the last fiscal year increased to 64 percent - in 2003-04, it was 58 percent. China's trading share with Nepal also doubled in the last 5 years to 12 percent and around one fifth of the trade with India. The share of other countries continued to decline to 26 percent of Nepal’s total trade last year, with Nepal shifting its long-running dependency on other countries for the imports of vehicles and machinery, equipment, among others, to India.There are some reasons behind the increase in deepening trade dependency of Nepal.

Consumption Oriented Economy

Economic growth and fixed capital formation is a sluggish but demand in Nepal has remained strong in the last one decade because of remittance earning by migrant workers. If we compare the domestic savings-to- GDP ratio, which is currently around 10.10 percent, and national savings-to- GDP ratio standing at 40.27 per cent, the difference is larger due to remittance. Against the national savings-to-GDP ratio at 40.27 percent, the total fixed capital formation-to-GDP ratio is 22.58 percent, which reflects the failure of Nepali society to make productive use of remittance driven national savings.

Ratio of remittance as percentage of GDP was just 0.46 percent in 1990/91 AD and has significantly increased after the year 2000/01 and Nepal received remittance 29.11 % of GDP worth in fiscal year 2014/15. The ratio of remittance to GDP has highly increased in the nation because the increasing rate of remittance inflow is more than the increasing rate of GDP.

Increasing flow of sweat dollars have induced high consumption, which has in turn fueled higher importing driving the country’s trade deficit even further. But the government is enjoying the revenue generated by the higher imports, generating a kind of complacency, which is also called “Dutch Disease”.

For every rupee of remittance, the government raises 12 paisa through consumption tax (not counting its direct tax contribution). By taking a free ride on remittance and not correcting its negative effects, both fiscal and monetary policies have exacerbated the human exodus and the hollowing-out process. In a country where basic needs are unfulfilled, it is unusual that most remittance (80 percent) is consumed. The problem is not consumption; it is the lack of domestic production and exports to finance consumption. The problem is not low savings either; it is the lack of opportunity to invest and the policy-induced diversion of investment into sectors that do not increase employment and GDP but promote rent extraction.

Remittance revenue is increasing but domestic industries are not capable to seize the opportunities in meeting increased demand of basic goods such as construction materials, household goods and clothing. Then, Nepal had no options but importing such items from other country. Hence trade dependency /import increased by 3.3 time in the last one decade with average annual growth of 15 percent.

Industrial Base is Very Low:

Apart from its contribution to economic growth, production, distribution creation of employment opportunities to the people, the private sector has an important role to play in the service delivery to the people through the market mechanism. Nepal’s manufacturing sector has not seen a robust growth. Even the growth in service sector remains in conventional sectors, not in the modern sectors.  Shrinking industrial activities is one of the disturbing features of Nepal's economy. The industrial sector that used to contribute 18 percent to the GDP a decade ago has squeezed - 15 percent in last year. The contribution of industry group to GDP stood 14.1 percent in 2010-2011 whereas the contribution of manufacturing to GDP was 6.5 % - annual average growth rate of 2.5% in the manufacturing sector in the last decade. 

         Source :author's computation using data from CBS Nepal(2016)

A decreased from 10 percent to 6.5 % of the manufacturing sector's contribution to GDP indicates that industrialization in Nepal is very much sluggish. This also indicates that Nepal's industries failed to capitalize the opportunities unveiled by the remittance-fueled consumption in the domestic economy, compelling the domestic economy to depend on imports to meet increased internal demand, let alone producing goods for exports. Industrial base become very poor because of poor investment, lack of raw materials, worst condition of energy, Increasing production cost, frequent strikes , blockade and government change.

Poor state of Infrastructure and policy support

The biggest constraint that is limiting the prospects of industrialization in Nepal is current status of infrastructure, which is very poor.

Nepal consistently stands out as a country with one of the poorest logistical and enabling trade infrastructure in the world. Nepal ranked 105 out of 160 countries with LPI score 2.59 in Logistical Performance Index (LPI) in 2014(World Bank).Lack of access to sea that adds around 15% to transit related transit cost in export compared to the countries that have access to sea. There are other major problems to develop strong industrial base are:

• Shortage of electricity:The shortage of electricity is forcing firms to operate at far less than the captive capacity. According to Enterprise Survey 2013, the percentage of firms owing or sharing generator jumped to 50.5% in 2013 from 15.8% in 2009 and almost 69 % firms identified electricity as a major constraints in 2013.
• Inadequate Transportation: Inadequacy of existing transport infrastructure and logistical hassles has been increased product costs and export competitiveness. About 1/3 rd of manufacturing firms identified bad transport facilities as a major constraints in 2013.
• Lack of adequate facilities for warehouse, handling equipment’s, scanning machines and testing laboratories have limited the prospects of export promotion.
• Poor financial access: There is very few practice of consortium financing by banks for huge projects and they rarely invest for small entrepreneurship development, because they are unable to put sufficient collateral to access  financial source for new venture investment.
• Underdeveloped Capital market: Nepal’s capital market is relatively under developed. This has resulted in low capital formation and in turn low investment.

Policy inconsistencies and implementation paralyses is another major problems in Nepal’s increasing trade dependency. After two decades of delay, the establishment and ope rationalization of Special Economic Zone (SEZ) in Bhairahawa. Similarly the “one window” facility for exporters and provision like “No Work No Pay” remains unimplemented. There is possibility that existing set of policies and sect oral promotion strategies may be termed ineffective without first fully implementing them and taking adequate time to evaluate actual output.

Poor Business Doing Environment

The World Bank’s annual Doing Business Report shows Nepal’s ranking at relatively low level. Nepal has the highest export lead time (days) in the region, as it needs 11 documents, 42 days and costs US$2,295 to export a container. According to doing business report 2016, for easing doing business ranking Nepal stands at 99 position out of 189 countries having DTF (Distance to Frontier) score 60.41.

Nepal’s long running political instability in the name of democracy has produced many negative effects to the economy.Industrial unrest's and strikes that are often organized by sister organizations of leading political parties. As a result, industrialists are often forced to talk to outsiders such as political leaders to settle unrest's and strikes in their factories.

Unpredictable strikes and unrest's have made exporters struggling all the time to meet supply deadlines set by foreign buyers. Such activities also further add to cost of production and erode competitiveness. Similarly, rigid labor policy that bars enterprises to adjust labor force as per the change in demand in the market. As per existing law, employees get permanent status after working for more than 240 days and after getting a permanent status, they can’t be fired until they are proven engaged in criminal activities. The provision has become a recipe of disaster for order-based industries such as ready made garments and woolen rugs and season-based industry such as tourism and hotels. Enterprises are compelled to keep on paying to the laborers even during the lean seasons, something that swells cost of doing business. Garments and Pashmina Productions are hit by the shortage of workers of all skills range. There is shortage of labor due to large scale migration.

 Dependency With India

Since transit through china is virtually impractical. India is viable for all commercial flows.  Nepal and India are two neighbors having unique relations dating back to antiquities perhaps even before the dawn of human civilization. Nepal share an open border of 1876 square kilometers with India and Nepalese currency is pegged with Indian currency. India is Nepal’s largest trade partner and source of foreign investment. Nepal's economic development has been inextricably linked with India. 

Source :author's computation using data from NRB(2016)

India is the largest single partner in Nepal's foreign trade and Nepal's dependence upon India for essential commodities has been immense India is also the only transit providing country for Nepal.Nepal;s transit trade is routed through twenty two designated routes from India-Nepal border to the port of Kolkata/Haldia. In addition, Nepal's trade with and through Bangladesh also transits through India. Increasing trade dependency on India because lack of development of productivity and competency compared to Indian products.

Nepal's dependence on India took an upward trend after the southern neighbor adopted an open market policy. The central bank's report shows that Import from India in F/Y 1989/90 is 4674.5 million rupees and it becomes 491655.9 million rupees in 25 years period of  time at F/Y 2014/15 with average growth of 20 percent. Trade deficit with India 4072 million rupees in F/Y 1989/90 and deficit mounting 435791.3 million rupees in 25 years. But export to India in F/Y 2014/15 it becomes 55864.6 million rupees. Which reflects very poor growth in exports and increasing trade deficit with India.                                                                        Source :author's computation using data from NRB(2016)

This figure reflects that there is huge trade deficit with India  than other third countries. Which is not a new phenomenon and it has been increasing in line with our excessive dependence on the Indian economy. High trade deficit and an unfavorable balance of payments situation signals troubles in an economy—especially its capacity to ensure exchange rate and macroeconomic stability, and to sustain imports levels to support rising domestic demand for foreign goods and services. There is consensus among policymakers and analysts that the rising trade deficit is unsustainable. It needs to be re-balanced. The only way we can correct trade balance with India is to increase exports. India has already opened up its market for most of the goods exported by Nepal. Unfortunately, Nepal has failed to advantage of the opportunities.

After signing the transit agreement with china, it is widely anticipated that Nepal will do business through Chinese ports and its dependency on India will reduced. Such interpretations, particularly in Indian circles, are beyond the ground realities and one should understand that a transit treaty does not necessarily  measure up to implementations.

India's Transit warfare against Nepal

The world congratulated Nepal for her success of implementing new constitution but Nepal’s so called roti-beti closest neighbor sent a cold note and a mild warning. India has unofficially closed all the trade routes and tries to interfere with landlocked Nepal’s sovereignty and internal affairs. According to public International law, it is illegal for one state to impose an economic blockade on another. There are couple of international instruments which argues that land locked countries should be given transit access as international customary law. This is not the first time India blockade to Nepal. Nepal frequently mistreated by the closest neighbor India’s transit warfare.

Nepal had got the nearest transit point through India since the British regime as per the Friendship

treaty of 1923.Modern Nepal-India relationship has been guided by Peace and Friendship Treaty 1950 which allowed nationals of both countries to visit each nation without visas or passport and followed open border policy. National of both countries may work and pursue occupation in respective countries. This treaty also highlights on security, trade and transit between Nepal and India. The Trade and Transit treaty was renewed in the year 1960 and 1971.

The trade and transit treaty was bifurcated and separate transit treaty was signed in year 1978. The new transit treaty recognized the transit right of landlocked country which was separate and permanent in nature than bilateral trade. In the year 1989, the transit treaty of 1978 was unilaterally abrogated by India refusing to sign separate transit treaty. However, in 1991 Nepal and India continued separate transit treaty with the major provisions of renewal. In 1999 the transit treaty was signed with the provision of automatic renewal after every seven years.

However, Nepal has secured 15 transit routes for traffic in transit though Nepal has exercised only 7 routes presently. And, also India somehow has shown its liberalism by providing transit facilities through Radhikapur to Nepal by which Nepal has access to International Trade with Bangladesh and other countries. Moreover, separate transit treaty from other bilateral issues is one of the important achievements of Nepal with the provision of automatic renewal provision in every 7 years as mentioned.

Annual Report 2015 Highlights : World Customs Organizations

About World Customs Organization

Established in 1952 as the Customs Co-operation Council, the World Customs Organization (WCO) is an independent intergovernmental organization whose primary mission is to enhance the effectiveness and efficiency of Customs administrations worldwide.

As the only intergovernmental organization specialized in Customs matters, the WCO established its headquarters in Brussels in 1952, and currently represents 180 Members across the globe at all stages of social and economic development. As the global centre of Customs expertise and the voice of the international Customs community, the WCO provides an ideal forum for Customs administrations and their stakeholders to hold in-depth discussions, exchange experiences, and share best practices on a range of international Customs and trade issues.

WCO Mission Statement 

The WCO provides leadership, guidance and support to Customs administrations to secure and facilitate legitimate trade, realize revenues, protect society and build capacity. 

WCO Vision Statement

Borders divide, Customs connects. Dynamically leading modernization and connectivity in a rapidly changing world.

WCO Values 

WE are a knowledge-based and action-oriented organization. We believe in transparent, honest, and auditable governance procedures. We are responsive to our Members, stakeholders in trade, and society. We capitalize on technology and innovation.

Major Highlights of Annual Report 2015

• More than 8,40,000 Customs officers around the World.
• 13.3 Percent of head of Customs are Female
• Composition of Customs Revenue : 43.47% custom duties, 24.93% General Custom Duties,16.66% special consumption taxes
• More than 60% of Customs Administrations use custom-made automated clearance systems
• 45% of Customs Administrations are embedded within a ministry 28.3% are Revenue authorities 25% are Customs agencies
• 610 million Customs declarations excluding postal items and express consignments
• More than 40% of Customs Administrations use Single Window systems

Each year, the WCO opens its doors to hundreds of representatives from Customs administrations, other government agencies, the private sector, associations, and universities keen to discover more about the Organization. Such visits allow the Organization to showcase the diverse activities and programmes underway and to foster important links with institutions vital to the world of international trade and Customs.for detail follow the following link.

Source : Annual Report 2015 of World Customs Organization

Customs Environment Scan 2015

Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. World customs organization is scanning the customs environment for 2015.

The 2015 Customs Environmental Scan includes political, social, environmental, and administrative developments during 2014 that directly or indirectly related to Customs.

Macroeconomic Indicators

International trade slows
The World Trade Organization (WTO) reduced their forecast for world trade growth in 2014 to 3.1% (down from the 4.7% forecast made in April 2014). “International trade grew by only 2.8% in 2012 and 3.2% in 2013 in dollar terms, even as global GDP grew by 3.1% and 3.2%. When measured in terms of volume, trade is still growing faster than the world economy, but by a decreasing margin. Having soared from 40% of the world’s GDP in 1990 to a peak of 61% in 2011, trade has fallen back slightly to 60%, the same level as in 2008” (The Economist, 13 December 2014).

Peak Trade
Some economists think the slowdown in international trade growth is structural, and have accordingly accorded the term peak trade to describe this trend.

Major economies.
The US economy continued to strengthen with GDP growth of 2.4% in 2014 and unemployment rates under 6%. The European Union continued to feel the effects of deflation, unemployment exceeding 11%, and anemic economic growth. Japan introduced more fiscal stimulus to help prime economic growth. India and China both had economic growth of approximately 7.5% in 2014.

Rise of the US dollar.
The US dollar (USD) experienced a sharp appreciation against other currencies, particularly the Euro and the Japanese Yen. The USD rose to 1.19 Euro in January 2015, the highest in nine years. This will result in US exports becoming more expensive while European and Japanese exports will be less expensive. The rising USD may also have an impact on revenue collection for Customs administrations; depreciation of major currencies against the USD may improve Customs duty collection in these countries.

Oil prices plummet
The plunge in oil prices will have economic, fiscal, and geopolitical impacts. Countries that receive a substantial amount of Customs duties from oil imports may experience downward pressure on their overall revenue collection. Reduced oil prices will see a consequent reduction in transport costs, which may encourage trade. On the other hand, volatile oil prices have been identified as discouraging trade.

Oil exporters
may experience a decline in national income. Countries which consume a significant amount of oil may experience new opportunities for allocation of the ensuing savings previously spent on fuel. Decreased oil prices are harming the potential of new extraction techniques such as fracking (shale gas) that generally cost more than conventional oil production.


Trade Agreements

WTO Trade Facilitation Agreement (TFA).
With the recent adoption of the TFA’s Protocol of Amendment, the TFA is back on track. While implementation will likely take many years in developing countries, the process will positively impact donor funding for Customs reform and modernisation.

Free Trade Agreements (FTAs) or Regional Trade Agreements (RTAs).
FTAs as a whole continue to increase. For countries signing FTAs, this will impact the level of revenue collected. According to the WTO, “as of 8 January 2015, some 604 notifications of RTAs (counting goods, services and accessions separately) had been received by the GATT/WTO. Of these, 398 were in force. These WTO figures correspond to 446 physical RTAs (counting goods, services and accessions together), of which 259 are currently in force.” (WTO website, 2015).


There are currently two major RTAs being negotiated. The Transatlantic Trade and Investment Partnership (TTIP) is a proposed FTA between the European Union and the United States. The Trans-Pacific Partnership (TPP) is a proposed trade and investment agreement which currently counts Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam participating as negotiating partners.

Euroasian Economic Union (EEU).
The EEU, which succeeds the Eurasian Customs Union, became operational on 1 January 2015. The EEU Members are Russia, Kazakhstan, Belarus, and Armenia with Kyrgyzstan scheduled to join in May 2015. EEU Members have lifted some internal Customs barriers and harmonised some procedures. The agreement focuses on the free flow of capital, goods and services, and workforce throughout a common market with an estimated output of $2.4 trillion, comprising more than 170 million people.

Trade in Information Technology.
In late 2014, China and the US reached a deal which could lead to a proposed treaty on trade in information technology among a coalition of willing WTO Members (The Economist, 13 December 2014).

Tax revenue
Revenue Sharing.
The process in which one country collects the duties owed to another country will continue to have implications for Customs. In some regions, where Customs revenue still accounts for an important share of the national budget, this revenue sharing concern is one of the major obstacles to regional Customs integration.

Political, Social, and Environmental Influences
Security.
Due to acts of terrorism and violent extremism, several governments moved to increase data collection for security purposes, such as requiring the submission by airlines of API and PNR data.

Narcotics Smuggling.
The international trade in illegal narcotics continued. Several countries in Latin America are softening drug laws. Two US states (Oregon and Alaska) and one city (Washington, DC) joined Colorado and Washington State in introducing legalisation of recreational and medicinal marijuana. This trend is important for Customs given that marijuana is one the most significant drugs in terms of seizures.

Cross-border e-commerce.
Cross-border e-commerce is increasing at an astonishing rate around the world due to a combination of factors such as continuously advancing internet technology, economic development in developing countries, and expansion of express delivery services and mobility of labor force. In particular, increases in cross-border e-commerce in Asia are noticeable. Cross-border e-commerce accounts for 10 to 15 percent of total e-commerce volume, depending on the region. By 2025, Asia may account for some 40 percent of the cross-border volumes and Europe may account for about 25 percent, followed by North America at 20 percent. A dramatic increase in cross-border e-commerce impacts Customs administrations in terms of revenue collection, supply chain security, and allocation of Customs resources.

Open data and “democratic knowledge
The social demand on public sector transparency is increasing, including in the fields of taxation and trade. Some administrations have launched or are launching initiatives to share data and policy simulation engines with the general public. Some experts and policymakers (i.e. EU, UNCTAD, and the World Bank) are advocating for the exploration of firm-level data to support reflection on trade and Customs policies. The concept of “firm-level data” is also increasing. Customs administrations maintain crucial databases (ACS) related to international trade and will be asked to contribute.

Impact of Ebola.
To halt the spread of the virus, the countries most affected by the Ebola virus disease implemented quarantines in areas where risk of infection is high while neighboring countries imposed restrictions on the movement of people and goods, including border closures. These measures, in turn, have reduced internal and regional trade, transport, and tourism. In particular, it is anticipated that there has been great damage to informal trade, which experts estimate ranges from 20 to 75 percent of GDP for West African countries.

Wildlife smuggling.
Many endangered species, such as elephants, rhinos, tigers, and jaguars, face extinction in the near future due to the illegal trade in wildlife.

Tobacco Control
Customs administrations and other revenue agencies continued to collect billions of dollars annually in taxes on tobacco products which are used to fund many government services. Evidence shows that tobacco taxation is a core tool in reducing the prevalence of smoking, and thus reducing tobacco-related diseases such as cancer, heart disease, stroke, bronchitis and emphysema. Approximately 6 million people were killed globally in 2014 by cigarette related diseases.

A growing number of countries (Australia, Ireland, UK, and France) have adopted plain (standardized) packaging of cigarettes. Preliminary data is being reported from Australia since the passage of its plain packaging law in December 2012. The Australian Bureau of Statistics reported that the December 2014 quarter showed a 2.9% decrease in tobacco consumption and a 12.2% reduction from December 2013 to December 2014. Australian Customs and Border Protection reported in its most recent annual report (2013-2014) decreases from 2012-2013 to 2013-2014 in several illicit cigarette trade indicators, including the level of tobacco seized (down from 183 to 178 tonnes); the number of cigarettes seized (down from 200 to 147 million of sticks); and duty evaded (down from 151 to 139 million Australian dollars).

Climate Change.
2014 was the warmest year on record. 9 out of the 10 warmest years ever came in the last decade. Atmospheric carbon dioxide (CO2) concentrations, which were 280 parts per million (ppm) in the pre-industrial era, are now 400 ppm. Extreme weather events due to human induced climate change are increasing, necessitating fast Customs clearance of natural disaster relief goods. A recent agreement between China and the United States commits for the first time both countries to emission reductions.

Administrative Influences
Corruption.
Customs corruption continues to be a problem as evidenced by NGO and media reports. The G20 has placed corruption on its agenda for discussion. The WCO continues to promote performance measurement contracts (PMC) as a tangible measure for reducing corruption.

Organizational risks to Customs.
Several Customs administrations and tax authorities are merging into revenue authorities in Eastern Europe. This follows the major wave of the establishment of revenue authorities in Africa in the 1980s and 1990s following advocacy by the IMF. Small countries frequently merge two fiscal authorities in order to save administrative costs.

Source : World Customs Organization