National SME Development and Business Clusters

1. Enhancing Entrepreneurship in SME Development and Export Consortia (20 July-14 Aug 2009)Khon KaenOrganized byThailand International Cooperative Agency

2. National SME Development and Business Clusters Presented by Saroj Koirala Department of Cottage & Small Industries Kathmandu. July 2009

5. Geographic Situation • Nepal Lies between two big country China and India (Land luck Country) • Total land area of 1,47,181 sq km. 0.3% of the total land of Asia 0.03% of the total area of the Earth. • Divided into three zones i)Snow Capped High Himalayas, 15% of total area ii) Mountainous region including long terraces & fertile valleys and 68% iii) Sub-tropical plain Region 17% iv) Land elevation from 70 mt. to 8848 mt, Highest Mountain Mt, EVEREST and other 8 highest peak in Nepal v) Lumbini is the birth place of Lord Buddha is in Nepal.

6. Economics Situations • Population :26.5 million • Per capita Income: $468 per annum • Population Growth rate: 2.2% per annum. • The composition of Nepalese economy: i)Agriculture sector 40%; ii) Commercial sector 10%; iii) Industry sector 10% out of which, Small and Cottage Industries are nearly 90% . iv) Employment contribution by cottage and small industries : 76% v) Value addition contribution by Small and Cottage Industries: 50% vi) service sector and others 40% • Literacy of population: 62% • Potential recourses is hydroelectricity total capacity is 83,000 megawatt.

7. Current Status of SMEs in Nepal

8. Number of Large Scale Industry Register by Category (Up to April 15, 2009 Note: 1$(US)=74 RS (Nepalese Rupee)

9. Institutional framework for SMEs • The Department of Cottage and Small Industry (DOCSI) • The Cottage and Small Industry Development Board (CSIDB) • The Industrial Enterprise Development Institute (IEDI) • Department of Commerce • Department of Industry • Trade and Export Promotion Board • Micro-Enterprise Development Program (MEDEP) • National Productivity and Economic Development Center (NPEDC) • Butwal Technical Instute(BTI) • Industrial District (11 Nos.)

10. Present Status Industrial zones

11. Capacity Building of SMEs in Nepal Some of the Highlights: • Industrial policy 1992 and industrial Enterprises Act 1992 gave priority and provided tax incentives to SMEs. • Role of Government determined as regulator, facilitator and monitor • Private-Sector Encouraged • Foreign Investment & Technology Transfer Act 1992 implemented 100 percent foreign investment opened for industry except traditional cottage industry and security-concerned Industry.

12. Expectation from the course • To support industrial development of the country, • To provide technical and environmental consultancy services for the industries • To register and promote cottage and small-scale industries. • To conduct skill development training programs. • To prepare and distribute Industrial Schemes and Training Manuals. • To prepare Industrial Statistics and General Information booklets on Industry. • To conduct workshops on cleaner production (CP), green productivity, business incubation and other areas. • To provide technical support and counseling on all industry related matters.

13. Expectation from the course cont… • To enhance the knowledge on Entrepreneurship Development and Export Consortia.. • To know about quality products and services in Thailand. • To enhances analytical skill to identify managerial problem. • To enhances problem solving skill. • To Develop interpersonal interaction skill. • To exchange ideas among the participant.

14. Issue and Challenges of SME • Due to liberalization and globalization, SMEs have to face global competition. • Large-Industries of Mass production are in neighboring countries China and India. It is difficult to compete with them. • Nepal suffered by insurgency for 12 years, it has deeply stricken to all the economic activities. • Nepal being a least developed country, There is scarcity of technical skilled manpower, financial resources etc.

15. Issue and Challenges of SME • Infrastructures of development are poor such as electricity-power, transportation facility etc. are not sufficient. • Capacity of entrepreneur's is low. They can not develop relationship in international sectors. They are confined within boarder. • Political Instability has created crisis of confidence in policy regime

16. Industrial Support. • Dept of Cottage and Small Industry (DoCSI) provides Various training to entrepreneur's • Institute of Entrepreneurship and Institutional Development (IEDI) established. • Industrial Estate (ten) are in operation to support industries. • Micro Credit fund and fund for cottage and small industry created. • Many Bank and Financial Institution established and started financial support. • Butwal Technical Institute Provides apprenticeship-oriented training for many years • IT park-established • More than 1000 IT and ICT industries are producing IT, ICT experts. • One window-Committee provides incentives to the industries. • Industrial-Promotion Board looks on every problem of industry. • From 2007government with private sector partnership fund of 2000 Million Rs (28.3 m US$) particularly to revive sick industries

17. Areasof Improvement • Solution of insurgency and political stability • Policy-stability and create confidence in investor • Adopt appropriate technology and use of IT and ICT. • Focus on institutional-development such as IT park, Institute of Technology, Technical School. • Provide information such as electricity transportation, telecom etc. • Financial support, Create Venture Capital Fund. • Strengthen Marketing Network inside and out side of country. • Development R&D aspects.

18. Future Plan and Prospects Policy and strategies for promoting SMEs Nepal has felt importance on major three prongs strategic approach for promoting and developing SMEs competitiveness • Revitalizing the traditional attitude of entrepreneurs to the modern business dynamics, • Supporting for creation of new venture businesses. • Improving the sustainability of the existing enterprises and newly createdenterprisesthrough capacity building.

19. Future Plan and Prospects Cont…. • Attracting national and international agencies to set up their information-based activities including foreign investment and export • Encouraging Non-Resident Nepali (NRN) investment Establishing technology based Business Incubator centre. • Allowing Technology Transfer & Foreign Investment in almost all sectors except negative list industry. • Facilitating Research and development in this sector

20. Future Plan and Prospects Cont… • Creating model IT Park to promote private entrepreneurs to invest on such parks in other areas of the countries. • Developing skilled human resources and expertise in the field of SMEs • Establishing development fund for capacity building, technology improvement, market access & infrastructure of SMEs • Providing one-window service to entrepreneurs.

21. Concluding Remarks • Major challenges and opportunities emerged to the local enterprises especially to the SMEs’ after being 147th member of the World Trade Organization (WTO) on 23 April 2004. • Creating synergy among major stakeholders (Entrepreneurs + Academia + Researchers) for ensuring progress in technology building and innovation • Developing ‘Public and Private Partnership (PPP)’ to enhance the competitiveness and capacity building of the SMEs.

22. Thank you