After aviation and tourism, investment and trade fall victim to global Covid-19 outbreakWhile no foreign investors have showed up in recent past, both imports and exports have slowed, officials say.
It all started in China in December last year. The coronavirus outbreak threatened the nation’s health as well as its economy. The Chinese government took drastic measures to control the spread. Now with the spread largely contained, China is trying to get back on its feet. Covid-19, the disease caused by the virus, however, has by now taken the shape of a pandemic. Nepal may not have reported any new cases, but its trade and investment have taken a huge beating, as the rest of the world struggles to cope with the virus.
“Since the coronavirus outbreak in China, we have seen nominal presence of foreign investors at our office,” said Jiwan Prakash Sitaula, director general at the Department of Industry. “Now with the global outbreak, we have not received even a single foreign investment application in the last two weeks.”
During the first six months of the current fiscal year, foreign direct investment (FDI) pledges increased by 315.3 per cent to Rs190.36 billion, according to the Department of Industry, which is responsible for registering industries including those with foreign investments.
Most of the foreign investment commitments were received from China.
Foreign investment is one of the sectors affected by the novel coronavirus, which has so far infected more than 145,000 people and killed 5,000 people globally.
The Nepal government on Thursday temporarily stopped issuing on-arrival visas to tourists from all countries, put an end to all spring mountaineering expeditions, including Everest ascents, and halted the issuance of labour permits—all to prevent the spread of Covid-19. This meant a huge blow to the tourism and aviation sectors.
Now while foreign investments have slowed, the virus impact is being seen on the trade sector as well.
One of the exports that has massively suffered is handicraft.
“Exports have practically stalled for now,” said Dharma Raj Shakya, immediate past president of the Federation of Handicraft Association of Nepal, a grouping of handicraft producers. China, Europe and the United States are major markets for Nepali handicrafts and they too are struggling in the wake of the Covid-19 outbreak.
“Our statistics show that monthly export is worth around Rs1 million to Rs 1.5 million,” said Shakya. “Foreign tourists used to purchase handicrafts in Thamel and other tourist spots and handicrafts sales in these areas have also gone down as tourists are no longer coming to the country.”
According to the federation, handicraft exports are worth around Rs6 billion a year.
Shakya said handicraft production has also been affected due to a shortage of raw materials, which mostly come from China and other virus-hit countries.
“For example, wool and yarn come from China for pashmina products and metals come from China and Singapore for metal crafts,” said Shakya.
Exports of garment and carpets are also expected to suffer as they depend largely on Europe and the United States.
Since China is the second-largest trading partner, imports have also been hugely affected.
Importers said that imports have come down drastically since February. Currently, movement of people and goods has been halted at both border points with China—Rasuwagadhi and Tatopani.
Bachhu Poudel, president of the Trans Himalaya Border Commerce Association, a grouping of traders involved in Nepal-China trade, said that there has been no import of goods from China through the land routes for the last two months and import through the sea routes has also been largely halted.
“We used to supply new goods in the market at an interval of 15 days to one month, which is not happening now,” he said. “There is no big demand for goods from the market.”
The share of wholesale and retail activities in the local economy is the second-largest after agriculture.
“If the situation prolongs, more people who depend on the trading sector may lose their jobs,” said Poudel.
Businessmen say they have not been able to import raw materials needed for various industries as well, particularly from China.
With several businesses affected, banks and financial institutions are worried about the recovery of loans.
According to the Nepal Rastra Bank, the banks and financial institutions have loan exposure of Rs138.68 billion in the hotel and restaurant sectors as of the first seven months of the current fiscal year. “We are also worried about the recovery of the loans,” said Bhuvan Dahal, president of Nepal Bankers’ Association, a grouping of chief executive officers of the commercial banks. “Let’s see what happens by the end of the third quarter [mid-April], when the repayments are to be made.”
As Covid-19 poses a threat to various businesses, Nepal’s economy is staring at a slowdown.
Asian Development Bank, in its recent report, projected that the country’s economy could lose from $12.12 million to $36.78 million depending on the extent of the pandemic. “It may result in job losses for 5,210 to 15,880 people,” the report unveiled in early March stated.
Frequently asked questions about the coronavirus outbreak
UPDATED as of April 4, 2020
What is Covid-19?
Covid-19, short for coronavirus disease, is an illness caused by the coronavirus SARS-CoV-2, short for severe acute respiratory syndrome coronavirus 2. Common symptoms of the disease include fever, dry cough, fatigue, shortness of breath and breathing difficulties. In severe cases, the infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death.
How contagious is Covid-19?
Covid-19 can spread easily from person to person, especially in enclosed spaces. The virus can travel through the air in respiratory droplets produced when a sick person breathes, talks, coughs or sneezes. As the virus can also survive on plastic and steel surfaces for up to 72 hours and on cardboard for up to 24 hours, any contact with such surfaces can also spread the virus. Symptoms take between two to 14 days to appear, during which time the carrier is believed to be contagious.
Where did the virus come from?
The virus was first identified in Wuhan, China in late December. The coronavirus is a large family of viruses that is responsible for everything from the common cold to Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). After an initial outbreak in Wuhan that spread across Hubei province, eventually infecting over 80,000 and killing more than 3,000, new infection rates in mainland China have dropped. However, the disease has since spread across the world at an alarming rate.
What is the current status of Covid-19?
The World Health Organisation has called the ongoing outbreak a “pandemic” and urged countries across the world to take precautionary measures. As of Wednesday, Covid-19 had spread to 204 countries and infected more than 1,098,762 people with 59,172 deaths. In South Asia, Pakistan has reported the highest number of infections at 2,686 with 40 deaths. While India has reported 2,547 confirmed cases with 62 deaths. Nepal has so far reported six cases, in which one patient recovered.
How dangerous is the disease?
The mortality rate for Covid-19 is estimated to be 3.6 percent, but new studies have put the rate slightly higher at 5.7 percent. Although Covid-19 is not too dangerous to young healthy people, older individuals and those with immune-compromised systems are at greater risk of death. People with chronic medical conditions like heart disease, diabetes and lung disease, or those who’ve recently undergone serious medical procedures, are also at risk.
How do I keep myself safe?
The WHO advises that the most important thing you can do is wash your hands frequently with soap and water for at least 20 seconds or use hand sanitizers with at least 60 percent alcohol content. Avoid touching your eyes, nose and mouth with unclean hands. Clean and disinfect frequently used surfaces like your computers and phones. Avoid large crowds of people. Seek medical attention if symptoms persist for longer than a few days.
Is it time to panic?
No. The government has imposed a lockdown to limit the spread of the virus. There is no need to begin stockpiling food, cooking gas or hand sanitizers. However, it is always prudent to take sensible precautions like the ones identified above.