Government revenues take a hit as imports decreaseTraders cite weak demand and high import duties for the decline.
Government revenues took a hit as imports of major commodities dropped 12 percent year-on-year in the first two months of the fiscal year, said officials.
“Imports of major revenue generators such as automobiles, gasoline, gold, cement, retail garments, billet and iron rods fell below forecasts,” said Manish Kumar Mahato, information officer of the Birgunj Customs Office. “The fall can be attributed to a stringent valuation and clearance policy adopted by the government to curb revenue leakage and decline in trade.”
Last month, the Customs Department enforced the maximum retail price declaration rule which requires importers to disclose and record online the maximum consumer prices of 12 highly traded commodities including automobiles before clearing the shipments through customs.
“Around 90 percent of the products entering through Birgunj have posted genuine manufacturing bills and prices while issues have cropped up in clearing some automobiles, garments and cosmetic items,” said Mahato. “The issues will be sorted out before the Dashain festival begins.”
Birgunj Customs, a major entry point for imported goods, reported an 8 percent drop in revenue collection in the first two months of the current fiscal year compared to the corresponding period in the last fiscal. Customs and excise duty collection was down Rs2.07 billion from the previous year.
Other major custom points like Biratnagar and Bhairahawa also missed their revenue collection targets.
Traders said that apart from customs clearance hassles, weak consumer demand ahead of the festivals compared and high import duties and interest rates also led to a decline in imports.
“The market is not vibrant as consumers have not got into a festival spending spree yet,” said Shreeyans Jain, a garment trader in Biratnagar. “Also, high interest rates on overdraft loans and steep taxes on imports have made life difficult for importers.”
Imports and sales of gold, which is heavily traded ahead of the festivals, fell drastically as prices escalated owing to rising global demand for safe-haven assets as the trade war between the US and China prolonged.
With gold prices going sky-high, both sellers and buyers are in a gloomy mood. Jewellery shops on New Road and Asan look forlorn in the midst of the festival shopping season while sales of imitation jewellery are on the rise.
Though the vehicle sector remains a top contributor to government revenue, the market has shrunk compared to previous years because of the higher down payment on auto loans, car traders said.
“The market has seen a slower growth rate because of the increased down payment on four-wheelers,” said Ramesh Danekhu, assistant manager, corporate communications and marketing at MAW Enterprises, the authorised distributor of Yamaha motorcycles and Skoda cars.