An analysis of trade- Import
For internal Purpose Only
Introduction
This document provides a brief overview of some of the key observation from the trade (import) related data. The data upto Chaitra of current FY is available, hence, for the purpose of this analysis, I have made use of data from last three FY (all upto Chaitra).
Please note that the tax rate here used is not the tax rate as specified by the government, but obtained from calculation from the dataset (revenue/value). Hence, the tax rate in some HSCode such as Petrol is not accurate (as fuel taxation is based on quantity imported not price of the commodity).
Also, I have noticed that the tax rates as specified by the Government and as obtained from the data doesnt match many times. Not sure if that is leakage or anything else.
Top 20 items of upto Chiatra 2079 with highest import value
| SN | HSCode | description | Value of Import | % of value | % of revenue generated | Tax rate |
|---|---|---|---|---|---|---|
| 1 | 27101930 | Diesel | 112.41 Arab | 9.36 % | 13.9 % | 34.14 % |
| 2 | 27101210 | Petrol | 49.75 Arab | 4.14 % | 9.79 % | 54.3 % |
| 3 | 27111910 | Liquidified Petrolium Gas (LPG) | 44.85 Arab | 3.73 % | 3.03 % | 18.65 % |
| 4 | 72031000 | Ferrous products obtained by direct reduct on of iron ore,in lumps,pellets or si | 30.64 Arab | 2.55 % | 1.57 % | 14.12 % |
| 5 | 15071000 | Crude soya-bean oil | 30 Arab | 2.5 % | 1.49 % | 13.73 % |
| 6 | 15111000 | Crude palm oil | 22.04 Arab | 1.83 % | 0.54 % | 6.75 % |
| 7 | 71081200 | Other unwrought gold (incl gold plated wi t platinum), non-monetary. | 20.03 Arab | 1.67 % | 0.15 % | 2.03 % |
| 8 | 27011900 | Other coal, not agglomerated, nes | 19.34 Arab | 1.61 % | 1.3 % | 18.55 % |
| 9 | 85171300 | Smartphones | 18.66 Arab | 1.55 % | 1.26 % | 18.67 % |
| 10 | 30049090 | Other - Medicaments put up in measured dos s or in forms or packing for retail s | 18.32 Arab | 1.52 % | 0.33 % | 4.92 % |
| 11 | 31021099 | Other Uria | 17.74 Arab | 1.48 % | 0 % | 0 % |
| 12 | 71081300 | Gold | 17.28 Arab | 1.44 % | 0.71 % | 11.39 % |
| 13 | 72071900 | Semi-finished products of iron or non-allo steel, <025% carbon, nes | 16.6 Arab | 1.38 % | 1.34 % | 22.36 % |
| 14 | 27101920 | ATF | 16.16 Arab | 1.34 % | 0.47 % | 8.08 % |
| 15 | 10061090 | Others Paddy | 15.94 Arab | 1.33 % | 0.29 % | 5.01 % |
| 16 | 15121100 | Crude sunflower oil | 13.29 Arab | 1.11 % | 0.71 % | 14.76 % |
| 17 | 72253000 | Hot-rolled steel alloys, nes, in coils, >= 00mm wide | 12.88 Arab | 1.07 % | 1.05 % | 22.41 % |
| 18 | 72083900 | Flat/hot-rolled iron/steel,in colis, width >=600mm, not pickled,<3mm thickness | 12.08 Arab | 1.01 % | 0.72 % | 16.55 % |
| 19 | 10059000 | Maize (excl seed) | 11.29 Arab | 0.94 % | 0.21 % | 5.16 % |
| 20 | 31053000 | Diammonium hydrogenorthophosphate (diammon um phosphate) | 11.27 Arab | 0.94 % | 0 % | 0 % |
Observation based on above table:
- We have imported 11.29 Arab worth of Maize (excluding seed) in the current fiscal year. Majority of the the imported maize in Nepal is used in poultry industry. Following could be the Fiscal and other policy on Maize:
- Government should target to limit the total import by at least 50%, ie no more than 7 Arab worth of import.
- This should compliment with the resource allocation in Maize-cultivation related program.
- Currently, up-to chaitra, Maize comprises of 0.95% of total value of imported goods while its composition in the revenue generated is that of 0.21%. This import replacement is a net gain as the cost of import in terms of revenue generated is much higher.
- if we are to increase the internal maize cultivation to accommodate 50% of current import volume, total of 1,40,000 ton maize needs to be cultivated which will create jobs in multiple points of supply chain.
- government ले आयात प्रतिस्थापन गर्नका लागि आव ७६-७७ मा ल्याएको मकै उत्पादन प्रवद्र्धन कार्यक्रम performance audit गर्नु पर्यो । साथै substantial अनुदान दिँदा पनि यसको राज्यलाई rate of return ठूलो हुन्छ ।
चामल र मकैलाई हेरौं
Following are two plots which shows imported value of maize and paddy in last three FY. Data upto Chaitra for each FY is used.
Above plot suggests few things:
- For Maize:
- आयत गर्न परेको खर्च हेर्ने हो भने, यो आव को चैत्र सम्म मात्र ११.२९ अरब खर्च भएको देखिन्छ भन्ने अघिल्लो आव मा १३.९९ र १०.९१ अरब भएको थियो। खर्चको अनुपातमा खासै परिवर्तन देखिन्न !
- तर, आयत गरेको परिणाम हेर्ने हो भने कुरा फरक छ । यो आव को चैत्र सम्म जम्मा २ लाख ७६ हजार मे.टन मकै आयत (अघिल्लो वर्ष ४ लाख तीन हजार मे टन को तुलनामा) भएको छ । भन्नुको अर्थ, अघिल्लो वर्ष भन्दा यो वर्षको आयतमा प्रति केजी (वा मेटन) मकैको मूल्यमा ठूलो फरक छ - महँगिएको छ ।
- यस प्रभाव हामीले कहाँ हेर्न ?
- मकैको अत्याधिक प्रयोग हुने क्षेत्र poultry हो , यो वर्ष कुखुराको मासु र अण्डाको मूल्य के भयो ? आन्तरिक उत्पादन उल्लेख्य मात्रमा बढेको देखिंदैन । यद्यपी कुखुराको मासु र अण्डाको मुल्यमा खासै परिवर्तन देखिंदैन । यो कसरी सम्भव छ , मतलब के हो ? -> मूख्य raw material को आयत मूल्यनै महँगो हुँदा पनि बजार मूल्यमा परिवर्तन नहुनुले के दर्साउँछ ? -> कुखुरा पालन व्यवसाय distress मा छ , यसको भार थेग्न चोरी पैठारीबाट भारत वा तरस्रो मुलुकबाट आयात गरिएको कुखुराको मासु र अण्डाबाट बजारमा मूल्य स्थिर हुन सम्भव भएको हो । so, are farmers getting price of their chicken ? All facts suggests that the price of chicken and/or eggs should have been high, it aint, so how are they sustaining ? or how long before poultry industry is dead in Nepal, in absence of government intervention and fair playing ground ?
- यसबाट एकातिर महंगो मकै हामी आयात गर्दै छौं र अर्को तर्फ राजस्व चुहावट बढ्दैछ । त्यस्तै किसानको investment को हिसाब कसले राख्ने ? कती job cut भयो होला ?
- आयातित मकैको मूल्य बढ्यो , यसको प्रभाव poultry मा हुन्छ भन्ने कुराको जानकारी हुँदा हुँदै सरकारले poultry industry लाई protect गर्न के गर्यो त ?
- for Paddy:
- यो आव को चैत्र सम्म हामीले लगभग १६ अरब बराबरको चामल खरिद गरेका छौं ! यो अघिल्लो आव को भन्दा १ अरब बढी हो । तर आयत गरिएको volume हेर्ने हो भने अघिल्लो वर्ष भन्दा ६८ हजार टन कम आयत भएको छ । मकै भन्दा चामलको price elasticity कम भएको ले महंगै भए पनि चामल किन्ने हाम्रो tendency देखिन्छ ।
Opportunity for increased revenue
There are few items such as concentrate of non-alcoholic soft drinks which has opportunity for increased revenue.
Currently the tax rates (at point of custom, as per data from Custom department) for concentrate of soft drinks is around 34%. Concentrate of soft drinks are used to produce sugary drinks and/or beverages.
The lower tax rates doesnt make sense. For example, for HSCode 20099000 item (mixture of juices, unfermented, not containing added spirit), the tax rate is approximately 90.86% and for which (upto Chaitra); for apple juice (HSCode: 20097900), the tax rate is around 40.7%. What is the rational of current tax rates on concentrate of soft drinks?
चैत्र सम्म ८ हजार ९ सय टन concentrate नेपाल भित्रिएको छ जसका लागि ५.५ अरब बाहिरिएको छ भने जम्मा १.८ अरबको राजस्व सङकलन गरेका छौं ।
Soft drink have adverse health related repercussion, increase in tax rates in soft drink will:
decrease demand as price increases to customer which would ideally decrease net outflow of currency for purchase of such concentrate
[even if we are to assume that the price elasticity of the soft drink is relatively inelastic], increase in tax rates will help increase (at what rate will be determine by its elasticity) revenue.
Lets look into fruits !
Lets look into import volume and value of few fruits
| description | 2077 | 2078 | 2079 |
|---|---|---|---|
| Apples, fresh | 62779 | 69412 | 66411 |
| Banana . | 36916 | 46177 | 30097 |
| Fresh grapes | 21124 | 24009 | 21470 |
| Oranges, fresh or dried | 25417 | 22254 | 14751 |
| Guavas, mangoes and mangosteens, fresh or dried. | 9202 | 10306 | 7097 |
| Pineapples, fresh or dried | 1617 | 2365 | 2251 |
| Kiwifruit, fresh . | 162 | 196 | 357 |
| Avocados, fresh or dried . | 80 | 156 | 139 |
| Strawberries, fresh | 5 | 3 | 7 |
| Total | 157302 | 174878 | 142580 |
At least 1 lakh 42 thousand tonnes of fresh fruits were imported in Nepal upto Chaitra.
यो आव मा fresh fruit को आयात marginally घटेको छ । Even so, we have imported around 66 thousand tonnes of Fresh Apple and some 30 thousand tonnes of fresh banana.
हरेक वर्ष domestic fruit (apple in specific) ले बजार पाएन भन्नदै आएकोमा, domestic उत्पादनलाई competitive बनाउँदै कम्तिमा स्याउको आयात ३०-३५% सम्म कम गर्ने गरी targeted program गर्न सकिन्छ ।
| description | 2077 | 2078 | 2079 |
|---|---|---|---|
| Apples, fresh | 9.64 | 9.57 | 10.92 |
| Avocados, fresh or dried . | 10.02 | 10.05 | 17.29 |
| Banana . | 9.07 | 10.44 | 23.63 |
| Fresh grapes | 5.04 | 5.07 | 5.09 |
| Guavas, mangoes and mangosteens, fresh or dried. | 9.03 | 9.06 | 17.58 |
| Kiwifruit, fresh . | 5.81 | 6.07 | 8.57 |
| Oranges, fresh or dried | 9.05 | 9.07 | 9.37 |
| Pineapples, fresh or dried | 9.03 | 9.01 | 17.63 |
Observations from the plots above:
why is there such weird variance in tax rates ?
यो आव को चैत्र सम्म मात्र नेपालमा ५ अर्ब ३३ करोड बराबरको स्याउ र १ अर्व ४४ करोड बराबर को अङ्गुर आयात भएको छ ? Shouldnt there be specific plans to address this ? maybe increased investment in apple, grapes, and banana farming & research ?
केराको ~23.63% हुनु र स्याउको 10.92 र अङ्गुरको 5.59 % मात्र हुनुको rational के हो ?
केराको कर बढे संगै यो पाली आयत अघिल्लो वर्षको ४६ टन बाट घटेर यो वर्ष ३० टनमा पुगेको छ । do we have domestic production to offset the demand ?
- केरा को demand relatively constant मान्ने हो र domestic production को limitation लाई पनि relatively constant मान्ने हो भने, यती खेर केराको मूल्य आकाशिनु पर्ने हो ? त्यसो नहुँदा, increased tax rates has caused for illegal trades and loss in revenue ?
| description | 2077 | 2078 | 2079 |
|---|---|---|---|
| Apples, fresh | 4.7535496 | 5.5613529 | 5.3306217 |
| Avocados, fresh or dried . | 0.0223828 | 0.0438359 | 0.0438782 |
| Banana . | 1.0621843 | 1.3118008 | 0.6764857 |
| Fresh grapes | 1.4178613 | 1.6465242 | 1.4403354 |
| Guavas, mangoes and mangosteens, fresh or dried. | 0.4261635 | 0.4800911 | 0.2746709 |
| Kiwifruit, fresh . | 0.0487841 | 0.0463734 | 0.0649242 |
| Oranges, fresh or dried | 1.3213357 | 1.2088614 | 0.8226483 |
| Pineapples, fresh or dried | 0.0719081 | 0.1060912 | 0.1012151 |
| Total | 9.1241694 | 10.4049309 | 8.7547794 |
Major Fresh Fruits हरु को आयतमा यो आर्थिक वर्ष कम्तिमा ९ अर्ब खर्च भएको छ ! Fresh fruits are one of major groups of imported goods important to general public. Government ले यसलााई नीति तथा कार्यक्रममा कसरी हेर्ने ?
Curious case of Petrol and Diesel
From above chart, it is clear that the total quantity of import of fuel has decreased (for example there is decrease in quantity of diesel imported from 13 lakhs KL from last year to 9 lakh KL this year (both up to Chaitra)). However, if we look at the expenses made to import such diesel has increased ~10 Arab ko ~11 Arab. Meaning the cost of Diesel has increased substantially.
Since, we tax fuel based on quantity and not on price, the revenue has dropped from 45 arabto 38.37 Arab. One reason for gap in revenue collection this year is rise in price petroleum product which do not relate to rise in revenue collection. The rise in price has caused us to use similar amount of foreign currency (in comparison to last year) to buy it but because of the rising price the total amount of imported petroleum has decreased leading towards lower collection of revenue from this heading.
Work in progress !
Lets try and explore areas of राजस्व चुहावट this FY
| SN | description | quantity | mean_quantity | imports_value | mean_revenue | imports_revenue | rate | lost_revenue |
|---|---|---|---|---|---|---|---|---|
| 1 | Other vehicle (Petrol engine) capacity >1000CC to <=1500CC | 988.0 | 7733.5 | 1125800.33 | 1703.13 | 264.48 | 234.93 | 1464.38554 |
| 2 | Motorcycles with piston engine of capacity exceeding 50 not exceeding 125cc | 40405.0 | 137029.5 | 3526550.46 | 1143.50 | 402.76 | 114.21 | 862.06673 |
| 3 | Semi-finished products of iron or non-allo steel, <025% carbon, nes | 205489608.2 | 700096464.1 | 16601107.97 | 871.10 | 371.20 | 22.36 | 625.30002 |
| 4 | Other vehicles having capacity <=1000CC | 312.0 | 2480.0 | 246376.40 | 418.89 | 58.06 | 235.66 | 388.33480 |
| 5 | Motorcycles with piston engine of capacity exceeding 200 not exceeding 250cc | 77.0 | 14050.5 | 13977.75 | 210.09 | 2.63 | 188.13 | 330.11025 |
| 6 | Unassembled Motorcycles with piston engine of capacity exceeding 50 not exceeding 125CC | 13076.0 | 54749.0 | 1245090.67 | 480.83 | 92.08 | 73.96 | 316.88196 |
| 7 | Goods Vehicle Singal-cab Vehicle 2 seater including Driver ABOVE 2000 cc | 592.0 | 4054.5 | 447973.88 | 304.68 | 57.34 | 128.00 | 272.76029 |
| 8 | Motorcycle wiht piston engine exceeding 250cc not exceeding 400CC | 880.0 | 6422.5 | 128606.43 | 161.15 | 34.30 | 266.70 | 261.06656 |
| 9 | Motorcycles with piston engine of capacity exceeding 125CC not exceeding 200 CC | 8565.0 | 25447.0 | 1253152.70 | 356.47 | 152.11 | 121.38 | 214.65343 |
| 10 | Other Sugar | 26375534.1 | 115180193.2 | 1648583.15 | 308.10 | 77.35 | 46.92 | 193.57013 |
| 11 | Electric car, jeep & van > 100KW to <=200KW | 65.0 | 719.0 | 271201.86 | 67.59 | 24.87 | 91.71 | 181.99555 |
| 12 | Flat/hot-rolled iron or non-alloy steel, w dth <600mm, <475mm thick,not clad, | 9497306.1 | 85416363.3 | 867555.78 | 149.85 | 24.02 | 27.68 | 170.19849 |
| 13 | Finishing Ceramics | 10545869.4 | 17169298.4 | 5354936.20 | 425.13 | 350.61 | 65.47 | 162.18546 |
| 14 | Goods Vehicle, double cab pick-up capacity of > 2 persons incl. driver upto 2000 CC | 1150.0 | 2106.0 | 1521988.86 | 398.91 | 208.71 | 137.13 | 161.43803 |
| 15 | Vehicles with diesel engine of cylinder ca acity 1500-2500cc | 285.0 | 715.5 | 423044.36 | 253.40 | 107.39 | 253.85 | 160.79695 |
| 16 | Other vehicle (Diesel engine) capacity upto 1500CC | 108.0 | 698.0 | 127008.17 | 179.43 | 28.74 | 226.28 | 155.20163 |
| 17 | Unassembled Motorcycles with piston engine of capacity exceedubg 125 not exced 200 CC | 14227.0 | 30770.0 | 1765625.84 | 257.69 | 131.10 | 74.25 | 126.60340 |
| 18 | Flat/hot-rolled iron/steel,in colis, width >=600mm, not pickled,<3mm thickness | 139868394.4 | 237627638.4 | 12082794.05 | 356.71 | 200.02 | 16.55 | 123.96958 |
| 19 | Other vehicles (Petro engine) >1500CC to <=2000CC | 34.0 | 264.0 | 75423.25 | 144.39 | 16.81 | 222.83 | 114.10131 |
| 20 | Other vehicle (Diesel engine) capacity >2500CC | 63.0 | 170.0 | 272821.15 | 176.85 | 66.46 | 243.59 | 113.54829 |
| 21 | Semi-milled or wholly milled rice, whether or not polished or glazed | 143708025.8 | 381808926.8 | 8701909.63 | 184.12 | 89.54 | 10.29 | 107.42143 |
| 22 | Other coal, not agglomerated, nes | 802053569.5 | 1491709946.1 | 19339293.19 | 455.14 | 358.83 | 18.55 | 94.33375 |
| 23 | Flat/cold-rolled iron/steel, in coils, wid h >=600mm, < 05mm thickness | 611160.0 | 40126856.8 | 58852.81 | 67.80 | 1.41 | 23.93 | 86.38444 |
| 24 | ATF | 579984.2 | 1633922.0 | 16155194.90 | 38.46 | 130.46 | 8.08 | 81.33713 |
| 25 | Gold | 2316586.0 | 3427250.0 | 17280782.05 | 291.32 | 196.91 | 11.39 | 75.73245 |
| 26 | Dumpers for off-highway use | 64.0 | 478.5 | 240281.94 | 68.07 | 12.85 | 53.49 | 64.90991 |
| 27 | Crude soya-bean oil | 143762396.8 | 193778306.8 | 30004681.86 | 239.46 | 411.87 | 13.73 | 57.64763 |
| 28 | Unassembled Motorcycles with piston engine of capacity exceeding 200 not exceeding 250CC | 1983.0 | 6780.0 | 346721.10 | 66.18 | 35.46 | 102.28 | 56.37039 |
| 29 | Silver | 8843711.5 | 59561290.4 | 837371.28 | 52.95 | 9.46 | 11.30 | 55.18561 |
| 30 | Other beauty or make up preparetions | 1425874.6 | 1512571.4 | 2293348.17 | 50.01 | 119.28 | 52.01 | 50.31322 |
Category of tax rates on imported goods
| Category of rate | Total no. of HS Code | % of HS Code |
|---|---|---|
| (1,51] | 13999 | 90.77 |
| (51,101] | 720 | 4.67 |
| [0,1] | 505 | 3.27 |
| (101,151] | 64 | 0.41 |
| (151,201] | 57 | 0.37 |
| (201,251] | 43 | 0.28 |
| (251,301] | 17 | 0.11 |
| (301,351] | 10 | 0.06 |
| (401,451] | 2 | 0.01 |
| (551,601] | 2 | 0.01 |
| (651,701] | 2 | 0.01 |
| (351,401] | 1 | 0.01 |
| (451,501] | 1 | 0.01 |