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SAWTEE and Nepal Chamber of Commerce (NCC) on 6 February 2022 held a virtual dialogue on the implications of Nepal’s LDC graduation with the objective of informing the government of the concerns of the private sector to ensure a smooth transition out of the LDC category for Nepal. The participants echoed the view that the LDC graduation could result in a significant impact on Nepal’s exports, particularly the exports by SMEs, and that the government has to put sincere efforts to ensure that Nepal’s LDC graduation will be smooth.

Dr. Posh Raj Pandey, Chairman, SAWTEE, emphasized that the cost of LDC graduation will be the loss of international support measures (ISMs) that Nepal is beneficiary to by virtue of being an LDC. He mentioned that the impact of losing ISMs will primarily be felt along three fronts—less preferential market access (higher tariffs, more stringent rules of origin), potential reduction in policy space, and potential reduction in development assistance. He pointed out that while LDC graduation will have some impact for Nepal, these impacts could be mitigated through the government’s support in the form of an appropriate transition strategy. Moreover, LDC graduation could also be a harbinger of opportunities for Nepal in the form of increased foreign investment and increased access to foreign capital, among others, and hence should be cherished, added Dr. Pandey.

Mr. Rajendra Malla, President, Nepal Chamber of Commerce, mentioned that some of our current top exports such as palm oil and soyabean oil benefit only limited traders and are vulnerable to policy changes but the exports, which include felt products, carpets, textiles, clothing, medicinal and aromatic plants, etc., that enter preference-granting markets such as European Union and the United States and hence stand to be impacted by LDC graduation are primarily exports made by SMEs. Hence, the government must really step up the homework to ensure that SMEs, which form the core of Nepal’s economy, do not get adversely impacted by the LDC graduation, emphasized Mr. Malla.

About two dozen private sector representatives from across the country participated in the event.

SAWTEE-NCC dialogue on Nepal’s LDC graduation