× Tourism Watch Educational Management Best Print Advertisement Published on New Business 3rd National B-schools Rating-Ranking-Awards 2017 Investing Organisational Management Company Profile Education Dataspeak Business Visitors Nepal Politics Economy and Policy Cover Story Corporate Focus Business Financing Sectoral Tourism Trends Business Education Startup Scene Stock Taking Liquor Indicators Crossword Corporate Movements Living + Personality Interview No Laughing Matter Photospeak

June 2016 Economy and Policy

Published on: 2016-06-14 16:05:03     904 times read    0  Comments

--By Ganesh Prasad Lath

Recently almost all news media in Nepal wrote that China had opened its first combined transport service (rail and road) to Kathmandu. In a real sense, the news seemed like a surprise gift, everyone was in heaven. It was a moment of joy for the Nepali business community as well- though some question marks, expectations and doubts remained in the business community. Those people who used to say that it was just daydreaming are now, too, saying that daydreams can become true. 

According to the news, the first international freight train took off from Lanzhou to Shigatse (Xigaze). Then the entire cargo would be put in trucks and arrive in Kathmandu by road through the Kyirong/Goolong Point. The journey would continue from Rasuwagadhi to Kathmandu via Syaphrubesi-Trisuli-Galchhi, taking a total of 35 days. It sounds nice. Hope this route will be able to transport all types of cargo from China to Nepal and be economical in terms of time and cost. 

The enthusiastic comments of some experts got hyped up that from now on the monopoly of India over the transit route was over, with the media calling it a victory against the domination of India. But isn’t it too early for such kinds of comment? Wouldn’t it be better to focus on analysing its strengths as well as weaknesses? We at least should check the transit costs, real travelling time, availability of year-long service and safety of cargo and peoples etc. Rather than just blowing the trumpet, it would be wiser if the concerned authorities look into its weaknesses. 

Let’s go through some comparisons between traditional sea/rail/road routes and the recently launched rail/road route from China to Nepal. It’s commonly known that most business clusters as well as sea ports in China are situated at its southern /eastern part. Both are interlinked well with each other. As a result, the procedure of domestic transportation handing over the cargo at the desired sea port is comfortable and not expensive. On the other hand, for the newly introduced rail/road cargo, the loading port of Lanzhou is situated at the Northwestern part of China, far away from existing trading areas. Wouldn’t it be reasonable to be conscious about this and do some investigation? Additionally, we have yet to check domestic freight costs (from the trading region to Lanzhou) and the service availability of Logistic Companies/Freight Forwards. It now seems the proper time to facilitate some joint meetings and B2B talks between concerned logistic companies and stakeholders. Furthermore, logistic companies should be invited to bring their official set up to Kathmandu as well.

Nepali cargo generally gets shipped from China on mother vessels (giant size) to the Singapore port and gets unloaded there. It then gets reloaded onto feeder vessels (small size) for the Calcutta port. The entire sea journey from China to Calcutta is approximately 4650 Nautical miles (8611.8 kms). On the other side, the journey by rail from Lanzhou to Shigatse would only be 2,431 kms. Apart from these two transit points, the distance from Shigatse to Kyirong/Rasuwagadhi and from Rasuwagadhi to Kathmandu is around 564 kms and 160 kms respectively. In this way, the total distance from Shigatse to Kathmandu or Calcutta to Nepal’s border is nearly the same. 

Recently, The Trade Post (published by The World Bank) published an analytical report that said the basic reasons behind the high fees paid by landlocked countries are higher transit costs and poor logistics services. It means transit costs matter the most. At a glance, the Lanzhou to Shigatse route seems much shorter. However, it’s yet to audit its transit cost. It’s been noted that 80 percent of total international transportation is dependent on the sea route. Transportation by ship has been proved to be the most cost effective. Let’s hope that the transit costs of the new route will be more economic than the existing sea route. 

The Tatopani-Khasa and Rasuwagadhi-Kyirong trading routes haven’t just been discovered. These routes have been used for centuries. The fort at Rasuwagadhi recalls the memory of war between Nepal and Tibet. During the regime of King Mahendra, these two routes had got special consideration for Sino-Nepal trade. Till last year’s earthquake, trade through these routes occupied around 10 percent of total imports from China and 50 percent of total exports to China. Due to these routes being massively damaged, trade had come to a halt. The Rasuwagadhi-Kyirong route was restarted after six months. However, the state of the Tatopani-Khasa route is still uncertain. 

Previously, only transportation by road was possible on the Khasa-Tatopani and the Rasuwagadhi-Kyirong routes. In those days it was obligatory to load/unload and trans-ship the cargo at some transit points. Additionally, heavy weight and extra length lorries weren’t allowed on such treacherous roads. As a result, heavy/bulky cargoes were mostly transported by sea or rail. Now, 75 percent of the Rasuwagadhi-Kyirong route would be completed by rail, as the China government has assured, the remaining 25 percent of the journey too will be rail tracked very soon.  

Beside these possibilities, China has agreed to construct an inland container depot (ICD) at Larcha of Sindhupalchowk and Timure of Rasuwa in time. It means the hassles of loading/unloading and transshipping along some transit points would be eliminated. The cargo, which would start from Lanzhou, would directly arrive at ICD, Timure, Nepal. As a result, the cost of transportation would be slashed. Additionally, bulky/weight/lengthy cargo too would be transported on this route. However, these possibilities are still just on paper and rely upon both countries going at it wholeheartedly. 

The ground reality is, “Transportation on this mountainous route, which lies above the altitude of 8856 ft above sea level, would be the most costly and crucial task.” According to Himalaya (the Journal of the Association for Nepal and Himalayan Studies), the Rasuwagadhi to Kathmandu route is one of the most landslide-prone areas in Nepal. During each monsoon season, it’s very common to experience the road being cut off for days and sometimes weeks. Crossing the area at any time is slow and tortuous. Numerous geological reports say, “The area is very close to the Main Central Thrust [MCT] of the Himalaya. This is the weak junction where the Indian plate slid under the Asian plate causing the Indian plate to shatter and crush.” 

 Considering the geographical proximity of this route, the movement of cargo here, throughout the year, seems a great challenging task. However, the Ministry of Physical Infrastructure and Transportation, the Nepal Army and Department or Roads have been assigned to widen the Galchhi-Trisuli-Mailung-Rasuwagadhi road to two lanes and black-top it within the earliest period. Though a silver lining, we should never ignore the black clouds. Let’s be technically equipped for this route, this time.

We still have to face further hassles—red tape and other legal procedures at the China–Nepal border. Simplified customs control mechanisms, equipped with the latest information and communication technology and client friendly procedures would be what this route needs for it to succeed. We have yet to see the Nepali and Chinese governments start upgrading their customs check posts and immigration process at the border. 

Presently, we have a total of 15 transit routes to access the Calcutta seaport, among which the Srisiya Dry Port is the busiest. Here also, we have been experiencing extreme delays in unloading/de-stuffing, documents clearance, handing over of empty containers etc. As per existing trading norms on sea cargo, Nepali importers are entitled to return empty containers to shipping companies within a given time frame. Otherwise, a heavy penalty has been imposed. No doubt, this has been burdening us with extra transit costs. Despite this, these routes have been serving us throughout the year and are convenient for lengthy/weighty cargo as well. 

Previously, the Kyirong-Rasuwaghadi route was limited to light weight and loose cargo. Therefore, there was no such kind of obligation to return empty containers. However, as soon as the rail/road route comes into full swing, containerised cargo of 40’ length and heavy/bulky commodities too would be unloaded at ICD Timure, Nepal. And we will have to face extra costs and obligations to return empty containers within the given time frame as is happening on the sea/rail/road route. It would be better to seek out an amicable solution in this regard as well.

Despite all, we shouldn’t give up dreaming. After all, any success story begins with such dreams. Let's see this dream as if portrayed on a canvas. As a half finished canvas always gives an incomplete picture, an artist, therefore, never gives up until he/she fills the canvas with the dreamed of colours. At present, the Lanzhou-Shigatse-KTM route is like a half finished canvas. Presently, it at least would grasp the earlier business transactions of the Tatopani-Khasa route. As soon as the railway linkage between China and Nepal comes into being, the canvas would be mostly complete. And, of course it would be the most beautiful canvas. We would be able to enjoy the optional route for China-Nepal trade in a real sense. 


The writer is former president of Birgunj Chamber of Commerce and Industries.


#  
No comments yet. Be the first one to comment.
Nepal in the Throes of Indian GST
After years of exercise, India finally implemented the goods and services tax (GST) from July 1, this year. That too by amending its constitution in the middle of the night! Those who think that the issue of constitution amendment crops up in Nepal only now know that it happens in India as well. In . . . read more »