Nurture Start-ups To Cut Trade Deficit

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In a trend mirroring the global trends, foreign trade of the country has declined by 22 per cent during the first six months of the current fiscal year 2022/23, according to the Department of Customs. The International Monetary Fund (IMF), the major financial institution of the United Nations, in its bleak outlook for 2023, has predicted that the world’s economy is teetering on the edge of recession. After COVID-19 pandemic exposed the vulnerabilities of globalisation, many businesses that rely on off-shore production have decided to onshore their manufacturing in a bid to shield themselves from the risk. The result is the decline in global trade volume. 

The Department’s statistics has shown drop in both imports and exports. While the imports in that period amounted to around Rs. 800 billion, exports totalled only a meagre Rs. 80 billion. The plunge in import has been attributed to the restrictive measures rolled out by the government to keep goods deemed non-essential out of the country in an effort to maintain healthy balance of payments. The measures have been lifted now, though. In another worrying trend, exports of domestically manufactured goods have seen steep plunge, with exports of soybean and palm oils, which made up the bulk of the export until recently, dropping markedly. Trade is the lifeblood of economies of the resource-poor countries. It is also the massive creator of jobs. In order to make up the trade deficit, we have no option than increasing the volume of export. 

One right step towards that direction is fostering start-ups in the country. Deputy Prime Minister and Finance Minister Bishnu Prasad Gautam, addressing the SME’s Summit organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) on Monday, pledged to introduce working procedure on start-ups and do the needful to adequately fund them. This is a welcome move and raises hope of retaining youth talent. Many talents have left the country for lack of seed money needed for the start-ups. We should keep in mind that world’s now-great companies were once start-ups. Companies – Apple, Microsoft, Google, Amazon, Dell, HP, and now OpenAI, developer of powerful Artificial Intelligence tool ChatGPT, among many others - once had been start-ups funded and nurtured by a variety of investors with seed money. 

 The countries with ingrained start-up culture have not only developed and prospered, they have changed the world for the better. Enterprises, especially small and medium-scale ones, across the country have been battling unprecedented onslaughts. The dramatic rise in prices of fuel has meant that the economy has lost the momentum. The cost of borrowing money has skyrocketed with sky-high interest rates. Runaway inflation has increased the cost of importing raw materials and price of practically all merchandises. 

Many industries have been running at well below capacity. Banks and financial institutions have remained stuck in liquidity crisis. The implications for the economy have been dire. Given such scenario, it’s incumbent upon the government to address the genuine demands raised be the private sector, the engine of the economy. Its small steps can make a pronounced difference. Lowering interest rates, access to capital and assuring markets for the domestic goods can go a long way to turn the tide and can bring a huge relief to the economy, cheering businessmen and the consumers alike. 

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