Micro and Small Enterprises in Nepal Prospects and Challenges

__________________________________________________________________________________________Micro and Small Enterprises in Nepal : Prospects and Challenges of 12

Published in Journal of Finance and Management Review, March 2011, Vol. 2 , issue 2 pp 257-269

Micro and Small Enterprises in Nepal : Prospects and Challenges

Rabindra Ghimire Assistant Professor

School of Business

Pokhara University

Kask, Nepal

[email protected]

Abstract

This paper aims to deal with the status of micro enterprises, cottage and small scale industries in Nepal and observe and

analysis their contribution in the economy. Micro and Small Enterprises (MSEs) has contributed to the economy couldn't be

underrated. Least Developed Countries like Nepalese, MSEs is contributing to the economy through employment

generation, creation of added value, GDP, export activities etc. The paper is based on empirical evidence drawn from the

publication of government policies, report of Department of Cottage and Small Industries, Economic Survey, data available

from Federation of Handicraft Association of Nepal, and various relevant articles. Government of Nepal also has conducted various income generating program encouraging job. From governmental and non governmental sector some initiatives has

been carried out through multifold activities like community development program, micro finance program and cooperative

programs. Share in export of Handicraft product is one of the milestones of SMEs which can observed around 8% of total

export . But, as a part of the economy, lots of things required to do from the government sector in MSEs sector.

Key words: micro enterprises, cottage and small scale industries, Industrial Policy, informal sector, economic growth.

1. Introduction

Microenterprise is a very small business that produces goods or services for cash income. In general, microenterprises have

limited access to capital, have few employees, and are often home-based. Not all microenterprises are family operated, but

when family members do work for the business, they frequently do so without pay. Small cooperatives can also be

microenterprises. Microenterprises usually operate in the “informal sector” of a nation’s economy, not paying taxes and not

being tracked in official government statistics. Entrepreneurs in the informal sector are more likely to start their businesses

because of lack of alternative employment opportunities and are less educated on average. Informal sector entrepreneurs

employ fewer workers, are less likely to have permanent premises, and use less business financing than their formal sector

counterparts.

Micro, Small and Medium Scale Enterprises (MSMEs) are the starting point of development in the economies towards

industrialization. However, MSMEs have their significant effect on the income distribution, tax revenue, and employment,

efficient utilization of resources and stability of family income. The contribution of MSMEs to employment, growth and

sustainable development is now widely acknowledged. (UNCTAD: 2001). Their contributing to job creation and output

growth is now widely accepted in both developed and developing countries. It can also help to achieve a more equitable distribution of the benefits of economic growth and thereby help alleviate some of the problems associated with uneven

income distribution. In many developing and least developed countries (LDCs) there are number of micro and small

enterprises which have played crucial role for the economic development of the country. According to the United Nations

Industrial Development Organization UNIDO, for developing countries, integration into the global economy through

economic liberalization, deregulation and democratization is seen as the paramount way to triumph over poverty and

inequality. Important to this process, is the development of an animated private sector, in which small and medium

enterprises can play a central role (Bies, 2002; Fida, 2008). MSEs face various challenges, however, they remain important

source of growth and development. MSEs are continuously depending on more expensive alternatives to traditional loan

than big businesses. All these demonstrate that there is a need to implement a plan of action aimed at creating conducive and

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire of 12

supportive environment where MSEs could be promoted and expanded. The key to a successful strategy is to get the policies

right.

There is no single definition of micro, small and medium enterprises, and employee numbers may not be the sole defining

criterion. However, SMEs are generally considered to be non subsidiary, independent firms which employ less than a given

number of employees. This number varies across countries. The most frequent upper limit is 250 employees, as in the

European Union (UNCTAD). However, some countries set the limit at 200. Small firms are considered to be firms with

fewer than 50 employees, while micro-enterprises have at most ten, or in some country cases, five. These criteria are

influenced by the scale of economies, investment environment, government policy and to some extent it is influenced by the

external environment. SMEs in Asia can be generally characterized as the engines of growth, the backbone of national

economies, the highest employment-generating sector, a potential tool of poverty alleviation by creating self-employment

avenues, and significant contributor to a country’s industrial production, exports, national income and GDP. (Narain: ).

Importance of SMEs in economic development is highlighted by the UNCTAD Report that in Bangladesh and India, SMEs

sector has provided 80% of industrial employment and 5% of GDP in Bangladesh and 40% of industrial output of India has

been contributed from SMEs sector. In China the export of SMEs to GDP ratio is 30% and share of SMEs export on total

export is 40 – 60%. These figures are sufficient to support the significance of the SMEs in economic development. It doesn't

mean to underestimate the role of high scale industries. In the present global context, the sustained high growth of

economies with equitable income distribution is not possible without building the capacity of the low income families.

2. Review of Literature

Micro and Small enterprises are not new phenomenon in the world and even in Nepal. These are as old as human

civilization. Numerous studies have been carried out in the field of the micro enterprises, small and medium scale industries

in the world. SMEs have been played pivotal role to the industrialization of the countries. Its contribution in economy

couldn't be underestimated. Various researches have been conducted on Nepalese micro and small enterprises sector. Accepting the significance role of micro enterprises, Micro Enterprises Development Project (MEDEP) had been

implemented in the joint efforts of United Nations Development Fund and Government of Nepal. International Labour

organization also conducted indepth nationwide survey study in 2003 and published a report on the micro enterprises. Least

developed countries (LDC) like Nepal are suffered from low saving, low investment and low capital formation. However,

micro and small level industries require comparatively low amount of investment, low technology and small market than

medium and large scale industries. The importance of small and medium- sized enterprises (SMEs) in contributing to job

creation and economic growth is now widely accepted in both developed and developing countries.(UNCTAD). The

available evidence suggests that MSEs have played a major role in the growth and development of all the leading economies

in Asia. The Asian experience clearly shows that it is mainly the growth-oriented medium-sized enterprises among the

MSEs that have a high propensity to apply technology and training and serve specialized niche markets. According to the

report of Role of trade unions in micro and small enterprises in Nepal the growth of MSE sector in the urban areas

comprising of the manufacturing, construction, trade and hotels, transportation and communication is apparent from the fact

that the proportion of people involved in these sector, which was 7.2 percent in 1991, has increased to 17.2 percent in 1999.

Whereas, the rural based activities like agriculture, fishery, forestry, mining and quarrying and community and social

services have decreased from 92.8 percent in 1991 to 82.8 percent in1999. From the socio-economic development

viewpoint, SMEs provide a variety of benefits (Advani: 1997). According to Mukole, SMEs play significant contribution in

the transition of agriculture-led economies to industrial ones furnishing plain opportunities for processing activities which

can generate sustainable source of revenue and enhance the development process. SMEs shore up the expansion of systemic

productive capability. They help to absorb productive resources at all levels of the economy and add to the formation of

flexible economic systems in which small and large firms are interlinked.

i. Evolution of MSEs in Nepal

Nepal is famous on craftsmanship. Chinese travellers like Wanghunshe and Huansang in 648 AD have appreciated Nepalese arts and crafts and the skills of Nepalese craftsmen and artisans in their travelogues. It is also described about the exported

product from Nepal in Kautilya's Economics during the time of Chandra Gupta Mouriya, in fourth century. From the

beginning up to the mid-nineteenth century, the rulers of the country promoted national industries and trade to various

measures of production, promotion and encouragement. To save the national industry commodities were not allowed to

imported except those which were not produced locally. Towards the end of the nineteenth century, Nepalese arts and crafts

industry and the entire home based industries in general suffered a great deal due to the general liberal import policy of the

government. Prior to the establishment of British regime over India and entering a peace treaty with Tibet in 1904 AD,

Nepal was interpreted as the main route to Tibet for external trade with other countries. Nepal also enter into the age of

industrialisation in the Rana regime.


History of industrialization in Nepal dates back to 1936. This year Jute Mill had been established joint venture with Indian

industrialist in Biratnagar. In 1940 Thirty Five new joint companies were established till 1951 but after that for one decade

not companies were established due to the social and political unrest. In Rana regime ( 1836 to 1951) Cottage Skill Awareness Office (Gharelu Ilam Prachar Adda) was established in 1940. After formation of the elected government in

1958, new industrial policy was announced and government also realized that Nepal being a hilly topographic country,

small and cottage industries will have a play very important role in economy. For the promotion of cottage industries in

private sector, in various district Training Centre were established. During 1970 to 1990, cottage industries development

program initiated in different forms like industrial and technical service program, handicraft design program, village

industries program, sales management program, training program.( GON, 1970). To promote and foster various kinds of

cottage and small industries enhancing their industrial productivity increment along with making congenial environment for

industrial investment in accordance with policy, Department of Cottage and Small Industries (DCSI) have been constituted.

During the Sixth Plan ( 1980-1985), emphasized has been given to cottage and small industries. The objective of this plan

was to reduce the income inequality by helping the low income people and increase the employment. The Eighth Plan had

focused on export promoting and import substituting industries specially emphasizing the role of cottage and small

industries. In Ninth Plan the contribution of industry sector in GDP was confined to 9.1% however the target was 14% set

for the Ninth Plan. Tenth Plan (2002-2007) also emphasized the development of industrial sector. Present Industrial policy

announced many more things to be improved in the industrial sector. Cottage and Small Industry sector is also kept on

priority sector. ( annex -3)

Now, garments and carpets, silk and Pashmina, Allo and Dhaka, metal craft, handmade paper, Thanka, ceramics, bamboo

and stone crafts are popular in Europe, Asia and America. (FHAN). Nepalese export markets fall into two broad categories:

mass-market exports driven by Indian markets and niche exports for markets in Europe and the United States. Now

Nepalese product is exporting to more than Seventies countries around the world.

ii Micro & Small Enterprises in Nepal

The population of Nepal is about 23.2 million ( CBS:2001) and its economy highly depends on agriculture, which employs

more than 78.1 per cent of the total workforce and account for about 39 per cent of GDP. The manufacturing sector is still

small but growing rapidly. It contributes about 10 per cent to the GDP. On the other hand, there are vast rural areas where

85.8 per cent of the total population of the country live. The development of infrastructure like road, communication,

electricity etc. is negligible in these areas, where people are largely dependent on agriculture. The technology used is traditional and the investment is very low. Large number of the people of these areas are poor and illiterate. The economy of

this rural sector is, therefore, less-monetized and traditional. Although only 20 per cent of the land is arable, most of the

farmers are busy in farming only for few months during the year and dreaming idle the rest of the time. Cottage industry

could play an important role in solving this problem, as well as raising the national income and creating a sound basis for

industrialization by mobilizing idle resources and manpower in the agricultural sector. It could help to fulfill the local

demand for consumers’ goods, to raise production by fully utilizing the leisure time, to develop cottage industry and

handicrafts by collecting the skills scattered in the village and suburban areas, and to prepare the skilled and semiskilled

workers needed for industrialization of the country. Poverty is closely linked to the levels of underemployment and

unemployment in Nepal. Therefore, the strategy of reducing the poverty in the economic plans of the country has focused on

generating and improving self-employment through micro-enterprise development. UNDP Nepal funded a programme on

micro enterprise development (MEDEP) addressing the issues of poverty and employment through sustainable development

of micro enterprises among the rural households. However, it was realized by the mid-term review of the programme in

2000 that a conducive policy and regulatory environment is critical in the growth of micro enterprises.

The Nepal Labour Force Survey (1998/99) estimated that the employment in MSEs was 1.6 million people. However,

women are more likely to be employed in micro enterprises than men, while men are more likely to be employed in small

enterprises than women. The MSE survey conducted by ILO in 2005 found that there was an average of three workers per

MSE. However, when examining small enterprises alone, this number grew to 17.9 workers per enterprise. The

manufacturing sector was found to employ the most, followed by trade and services sectors. In the micro sector, the ratio of

self-employed was high at 75.4 percent compared to 17.5 percent in small enterprises. Micro enterprises have therefore

generated employment opportunities for those trying to seek self employment. A survey in 1999/2000 found that there were

87,342 small manufacturing establishments in Nepal. Up to 1990/91 total registered cottage industries under Department of

Cottage and Small Industries were 47,426 which reached 2,16,663 in 2009/10. Survey found that 60.3 percent of small enterprises were found to be registered. It is estimated that about 6,00,000 micro enterprises are operating in rural and urban

area both registered and unregistered. Being a agrarian country, most of the micro-enterprises established so far are either

agro-based, forest-based, or livestock-based and rest of them are metal based, weaving, and somewhere shop and restaurant.


Nepal suffers from a lack of both internal and external investment. This stems from low domestic savings, a small domestic

market, a severe shortage of skilled labor, chronically corrupt and inefficient public administrations, high transport and

operating costs, the inadequacy of power resources and, increasingly, political instability. There have been recent attempts to encourage investment and privatization through the Industrial Policy 2010 and Foreign Investment and One Window

Policy 1992, and the creation of industrial centers with governmental land and buildings on lease for private ventures.

However, the poor quality of local products has reduced their competitiveness and hampered the ability of rural people to

sell their goods beyond local markets. A large number of these enterprises are informal and unregulated, and therefore are unable to take the opportunities available through linkages to proper marketing channels. They are also constrained by a

lack of value addition, technology and product supply capacity, as well as by the absence of a supportive policy and legal

framework. At present there are two types of micro-enterprises: formal and informal. Informal enterprises are generally

initiated by an individual family to earn money by means of their traditional craft skills, whereas formal enterprises are

either initiated by NGOs and government agencies as income generating programs for poor families and the marginalized,

or self-initiated by the rural people themselves. Formal enterprises are often supported by training and the allocation of

funds. Often, however, business counseling and market linkages are not considered and environment-impact considerations

are neglected.

Micro-enterprises are very small and family-based, they are generally operated from home. This can have an adverse impact

on the home environment, depending on the enterprise (e.g. poultry raising, wool carding, chemical dyeing, welding,

furniture repairing). Since this impact is originated at home, it is rarely documented. Despite these limitations, micro-

enterprises tend to be more profitable entities because of the non-valuation of family labour and reduced overhead. In

underdeveloped countries like Nepal, micro-enterprises are one of the most viable options to create employment

opportunities and consequently to reduce poverty. Moreover, since Nepalese society is characterized by social exclusion,

the development of such enterprises can provide employment to a relatively wider section of Nepal's population, thereby

narrowing down income disparities. A large number of small enterprises are situated in the informal sector. These

enterprises are not regulated under the various industrial acts of Nepal, although they are generating significant income and

local employment and are often ignored by the government. A study on the small-scale, informal, forestry sector enterprises

in the Banke, Bajhang, Humla and Dolakha districts undertaken showed that a significant proportion of the non-wood and

wood-based enterprises were in the informal sector and it was unlikely that their contribution was reflected in the official

statistics.

There is no common definition and common policy of defining micro enterprises over the world. It differs country to

country because of the size of economy. The European Union makes a general distinction between self-employment, micro,

small and medium sized businesses based on number of employees. Self employed has no additional employee, where as in

micro enterprises number of employees range from 2 to 9, in Small business 10 to 49, and in Medium size business 50 to

249. ( UNIDO and OECD).

As per Industrial Policy, 2010 Nepalese industries are divided in four categories as per following criteria.

Table 1 : Criteria of Types of Industries

Types of Industries Fixed Assets Turn over Power used No. of

Employees

Micro Enterprises Up to Rs. 2 lakh, excluding Land

and Building

Rs. 20 Lakh 10 KW Less than 10,

self

employed

and self

managed.

Small Industries Less than Rs. 50 million,

including Land and Building - - -

Medium Industries More than Rs.50 million but less

than Rs. 150 million , including

Land and Building

- - -

Large Industries More than Rs. 150 million ,

including Land and Building - - -


Generally, micro enterprises are managed by the investors him/herself and numbers of employees should not be more than

9. Besides micro enterprises, other industries are not clearly define their turnover, no. of employees working in the

industries and power they used.

Government has realized the importance of the MSEs, various supportive programs have been carried out through

government agency and non-governmental and private sector. Bank and financial institutions, cooperatives and FINGOs

also conducted micro finance program which ultimate goal is to encourage deprived and target community to start micro

enterprise activities and empower them financially. Synopsis of these program are mentioned in table 2.

Table 2 : MSEs Support Program

Program & Organisation Coverage Duration

Department of Cottage and Small Industries 75 Districts, each From 1957 to date

continued

Micro Enterprise Development Programme

(MEDEP) / UNDP

36 Districts, with total beneficiary

number exceeding 40,000.

1997 to 2006

Poverty Alleviation Fund, GoN 40 Districts 2006 to date

Gramin Bikash Bank ( Micro Credit Bank) 5 Development Regions 1992 to date

Private Sector Microfinance Bank, FINGOs

and Cooperatives

Almost all districts to date

Department of Cottage and Small Industries regularly organizes various training program to initiate small scale business in

75 Districts through District office. Every year such types of training program being conducted and numbers of potential

entrepreneurs participated different sort of training.

3. Research Focus

This is an exploratory research. Attempt will be made to explore the present situation of the micro enterprise and small

industries. Economic development can not be possible without proper development of industrial sector. MSEs is a part of

the industrial development. Given the study objective, the following research questions were explored:

There are basically two objectives to be focused on the following area: i. To trace out the present policy and existing status of the MSEs and government initiatives, and

ii. To explore the contribution of micro and small enterprises for the economic development of the country?

4. Data and Methodology

This was an exploratory study for which information was obtained through various secondary sources like document,

report and articles. It is very interesting to know the share of the cottage and small industries to the total export of the

country. Period is taken for the analysis from 1982 to 2010. Data are taken from Federation of Handicraft Association

of Nepal, Department of Cottage and Small Industries and publication of Ministry of Finance. Government has

recognized the cottage industries as a engine of the economic growth. The industries focuses on exporting the

handicraft, cultural goods to Europe and US markets.

5. Analysis

Government has not sufficient and reliable statistics of various enterprises and industries. Micro enterprises are so

common that they are found each and every road side and street. They are easily established and under the roof. At least

one member of the house operates the micro business but due to the lack of the proper management of database of

MSEs activities it is quite difficult to assess the present status and also hard to measure their contribution the economy.

Two criteria are taken to analyse the MSE contribution: foreign currency earnings and employment creation.

i Foreign Currency Earnings:

Cottage industries are good vehicle of foreign currency earnings. Except few years, the amount of export is increasing

constantly. So that we can say that it provides foreign currency in a reliable way.

Table -3: Export of Handicrafts Goods for FY 1982/83 to 2009/10 Rs. Ten Million


F.Y. 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92

Export 2.50

3.99

6.18

9.12

3.73

5.68

9.73 15.99 19.07

34.23

F.Y. 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000 2000/01 2001/02

Export 56.75

52.65

57.23

62.86

70.94

90.02

129.58 716.27

682.32

271.96

F.Y. 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Export

255.30

257.18

284.95

288.06

271.64

537.49

569.31 555.07

Export has multi faceted influence to the economic growth. It earns foreign currencies and reduces the trade deficit.

Export based form creates the employment opportunities. Most of the raw materials used by the handicraft exporting

cottage industries are domestics. MSEs export to total export ratio ranges from 1% to 14%. In 1999/01, handicrafts

goods export increased to 14% of total trade. Export was increased by 453% form 1999/2000 to 2000/01. The share of

export also increased from 4% to 14%. At the same time total export was increased by 40%. Figure 1 exhibit the share of handicrafts goods on total export.

Figure 1: Share of handicraft goods export to total export ( in percentage)

Source : Economic Survey 2009/10, FHAN Report, 2010

ii Employment creation:

Another contribution of MSEs to the economy is creation of employment opportunity. According to the record formally

registered and renewed cottage industries up to 2009/10 are 2,16,663 where Rs. 1,45,250 million of amount has been

invested. About 18 lakh 44 thousand people are getting an employment opportunities. There is no doubt that SMEs play

vital role to create job opportunities. Beyond this figure, it is estimated that about 600,000 micro enterprises are existing

in societies which also create additional job opportunities. (ILO:2005). Following data shows that in an average, each

firm provides job opportunities for 8 to 9 people. According to the Industrial policy 2010, to be a micro enterprises the

number of employees should not exceeds 9 including the owner.

Table 4: Employment and Investment in Small and Cottage Industries

Particulars Unit Total Rs. Per Firm

Investment Rs. 1,45,25,00,00,000 6,70,405

0%

2%

4%

6%

8%

10%

12%

14%

16%

19

82

/83

19

83

/84

19

84

/85

19

85

/86

19

86

/87

19

87

/88

19

88

/89

19

89

/90

19

90

/91

19

91

/92

19

92

/93

19

93

/94

19

94

/95

19

95

/96

19

96

/97

19

97

/98

19

98

/99

19

99

/20

00

20

00

/01

20

01

/02

20

02

/03

20

03

/04

20

04

/05

20

05

/06

20

06

/07

20

07

/08

20

08

/09

20

09

/10


No. of Registered Firm No 2,16,663

No. of Employment No. 18,43,908 8.5

Source : Department of Cottage and Small Industries, 2010

Data shows that in cottage and small industries there is average investment around Rs. 6 lakh 70 thousand per firm. It

includes land and building, other fixed assets and working capital. DCSI has further divided the industries in cottage

and small industries where 10% are cottage industries and rest of 90% are small industries.

Figure 2: No. of CSI and Employment for 1990 to 2010

Source : Economic Survey 2009/10, DCSI Report

ii Handicraft export in different continent

Handicraft product of Nepal is very popular around the world which is proved by the export data of different year. In

2006/07, Nepal had exported its handicraft product more than 87 countries almost all continent of the world. Details of

export amounts is shown in annex 2. As per the data available from the FHAN in 2006/07 Rs. 2.71 Billion of goods was

exported in different 87 countries out of this amount 45% was exported to Europe, 31% to America, Canada, Mexico

and Argentina, in Asia 22% and 2% to Australia and New Zealand, whereas in Africa less than 1% was exported.

Entrepreneurs should focus European market since there is high possibility of selling handicrafts goods.

Table 5: Export of Handicraft products to different continent ( 2006/07)

Continent Amount Rs. 000 Percentage of total export

1 Europe 12,18,094 44.77%

0

50

100

150

200

250

300

350

400

450

500

No. of Firm ( In Thousand)

No. of Employment ( in Thousand)


2 North and South America 8,39,466 31%

3 Asia 5,94,811 22%

4 Australia & NZ 57,694 2%

5 Africa 6,319 0.23%

Total 27,16,384 100%

Source : FHAN Report, regrouping of data by author

6. Conclusion

Cottage industries are not new for Nepalese society. Due to the fast liberalization process most of the existing industries are severely affected because of their inability to compete with consumer goods being freely imported after the

withdrawal of quantitative restrictions and the drastic reduction of import tariffs. There are challenging facing by the

SMEs. In the age of globalization, every local product should compete with the global product. Cost is first challenge of

the SMEs and quality also comes together. Lack of technical know how, lack of marketing strategies, lack of financing

are some examples facing by our MSEs. It is found that most of the micro enterprises are still operating their activities

in informal sector. Government is small efforts doesn't success to transmit them in the mainstream of the economy.

Lack of sufficient fund to MSEs also another challenges. Micro finance program has limited resources and do not cover

the whole country. Technology used by the MSEs is very simple, indigenous and low productive so that it hardly

compete with the medium and large scale industries. Most of the enterprises are run by the uneducated people so that

they have lack of proper management skill and knowledge. Marketing of the goods and services is another challenges.

Quality of product also a major issue. Most of the micro enterprises are established as a last alternative, until owner

receive the other alternative. Data shows some of the old firms are being discontinued due to various reasons.

There are tremendous opportunities with the challenges. Agriculture provides only seasonal employment for the rural

population, which constitutes 88 per cent of the total population. Hence, off- season and off- farm activities such as

weaving, knitting, basketry, teashops and roadside shops complement rural incomes. In addition, informal rural

microenterprises have the opportunities to supply goods and services to local manufacturers using traditional

technologies.

There is no doubt that SMEs play a fundamental role in utilising and adding value to local resources. In addition,

development of SMEs facilitates distribution of economic activities within the economy and thus fosters equitable

income distribution. Furthermore, SME technologies are easier to acquire, transfer and adopt.


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Annex – 1 : Export of Handicraft Goods and total export 1982/83 to 2009/2010

F.Y.

Export (Rs. Ten Million)

Ratio Handicraft Export to Total

Export

Handicrafts Total

1982/83 3 113 2%

1983/84 4 170 2%

1984/85 6 274 2%

1985/86 9 1707 1%

1986/87 4 301 1%

1987/88 6 411 1%

1988/89 10 419 2%

1989/90 16 516 3%

1990/91 19 739 3%

1991/92 34 1371 2%

1992/93 57 1723 3%

1993/94 53 1929 3%

1994/95 57 1764 3%

1995/96 63 1988 3%

1996/97 71 2264 3%

1997/98 90 2751 3%

1998/99 130 3568 4%

1999/2000 716 4982 14%

2000/01 682 5565 12%

2001/02 272 4694 6%

2002/03 255 4993 5%

2003/04 257 5391 5%

2004/05 285 5871 5%

2005/06 288 6023 5%

2006/07 272 5938 5%

2007/08 537 5927 9%

2008/09 569 6770 8%

2009/10 555 7468 7%

Source: Economic Survey 2009/10, FHAN Report 2010


Annex – 2: Country wise Export of Handicraft Goods in 2006/ 2007

SN Country to Export Amount Rs. 000 SN Country to Export Amount Rs. 000

1 USA 6,39,902

23 China 14,289

2 Japan 2,49,846

24 Czech Republic 13,357 3 Germany 2,40,354

25 Turkey 10,258

4 UK 2,23,894

26 New Zealand 10,143

5 Italy 2,05,909

27 Malaysia 8,290

6 Canada 1,93,111

28 Portugal 8,267

7 France 1,67,288

29 Pakistan 7,496

8 Tibet 1,33,340

30 UAE 7,157

9 Switzerland 63,921

31 Hungary 5,669

10 Netherlands 61,768

32 Thailand 5,533

11 Spain 51,401

33 South Africa 5,487

12 India 51,361

34 Bhutan 4,289

13 Denmark 49,031

35 Brazil 4,106 14 Australia 47,552

36 Greece 3,593

15 Taiwan 35,934

37 Finland 3,317

16 Sweden 29,153

38 Ireland 3,274

17 Hong Kong 24,015

39 Ukraine 2,965

18 Belgium 23,535

40 South Korea 2,787

19 Russia 18,092

41 Slovenia 2,673

20 Norway 16,888

42 Mexico 1,964

21 Austria 15,697

43 Israel 1,893

22 Singapore 14,600

44 Latvia 1,576

SN Country to Export Amount Rs. 000 SN Country to Export Amount Rs. 000

45 Lithuania 1,418 67 Bosnia & Herzegovina 266

46 Croatia 1,344 68 Qatar 261

47 Luxembourg 1,188 69 Indonesia 246

48 Poland 970 70 Slovak 212

49 Lebanon 918 71 Mauritius 193

50 Sri Lanka 878 72 Bulgaria 190

51 Vietnam 786 73 Romania 178

52 Egypt 725 74 Kuwait 174

53 Chile 724 75 Puerto Rico 158

54 Armenia 718 76 New Caledonia 109

55 Cyprus 662 77 Iceland 105

56 Bahrain 591 78 Macau 82

57 Belarus 574 79 Saudi Arabia 80

58 Mongolia 540 80 Jorden 28

59 Oman 517 81 Afghanistan 26

60 Estonia 514 82 Serbia & Montenegro 20

61 Philippines 454 83 Maldives 12

62 Argentina 378 84 Iran 11

63 Fiji 335 85 Georgia 8

64 Morroco 333 86 Colombia 4

65 Uruguay 304 87 Others 13,872

Total 27,16,384


Annex – 3: Special Policy of Government of Nepal to promote the micro, cottage and small scale industries:

a) Build infrastructure and organizational structure, form legal provision to promote, develop and extension of the micro, cottage and small scale industries.

b) To extend and make effective to the existing Micro, Cottage and Small Scale Industries Development Fund to

improve the competitiveness, market access and market extension.

c) On the basis of the availability of the natural resources, human resources and investment opportunities in

coordination with local authorities District Industrious and industrial development plan will be prepared and

implemented phase wise basis.

d) Focus will be given to the target community and motivate them and build capacity to operate the Micro, Cottage

and Small Scale Industries.

e) To deliver Business Development Service to production base industries in rural area, Community and Cooperative

Micro, Cottage and Small Scale Industries industrial cluster will be developed.

f) Identify the One Village One Product in each village and promote the appropriate product "Product Development

Centres" will be established and priority will be given to industrial promotion through Product Specific Industrial

Clusters.

g) To recognize the product of Micro, Cottage and Small Scale Industries assist to use Collective Mark and help to

promote the product.

h) Provide integrated and capable institutional provisions for the protection of the intellectual property and encourage

to proper protection and use of this property to Micro, Cottage and Small Scale Industries.

i) Suitable Information Technology will be provided to Micro, Cottage and Small Scale Industries to produce and

market promotion.

j) Priority will be given to social mobilization tools to promote, development and extension of Micro, Cottage and

Small Scale Industries.

k) Provide financial access through equity fund, credit guarantee fund, rural self reliance fund.

(Source: Industrial Policy, 2010)

Micro and Small Enterprises in Nepal Prospects and Challenges

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