Enhancing Entrepreneurship Enhancing Entrepreneurship in SME Development and in SME Development and

Export Consortia Export Consortia

((20 July-14 Aug 200920 July-14 Aug 2009))

Khon KaenKhon Kaen

Organized byOrganized by Thailand International Cooperative Agency Thailand International Cooperative Agency

National SME Development National SME Development and Business Clustersand Business Clusters

Presented byPresented by

Saroj KoiralaSaroj KoiralaDepartment of Cottage & Small IndustriesDepartment of Cottage & Small Industries

Kathmandu.Kathmandu.July 2009July 2009

Geographic SituationGeographic Situation Nepal Lies between two big country China and India Nepal Lies between two big country China and India

(Land luck Country)(Land luck Country) Total land area of 1,47,181 sq km. Total land area of 1,47,181 sq km.

0.3% of the total land of Asia 0.3% of the total land of Asia 0.03% of the total area of the Earth. 0.03% of the total area of the Earth.

Divided into three zonesDivided into three zones

i)i) Snow Capped High Himalayas, 15% of total area Snow Capped High Himalayas, 15% of total area ii) Mountainous region including long terraces & fertile valleys and ii) Mountainous region including long terraces & fertile valleys and 68%68%iii) Sub-tropical plain Region 17%iii) Sub-tropical plain Region 17%iv) Land elevation from 70 mt. to 8848 mt, Highest Mountain Mt, iv) Land elevation from 70 mt. to 8848 mt, Highest Mountain Mt, EVEREST and other 8 highest peak in Nepal EVEREST and other 8 highest peak in Nepal v) Lumbini is the birth place of Lord Buddha is in Nepal.v) Lumbini is the birth place of Lord Buddha is in Nepal.

Economics Situations Economics Situations Population :Population : 26.5 million26.5 million Per capita Income: $468 per annumPer capita Income: $468 per annum Population Growth rate:Population Growth rate: 2.2% per annum. 2.2% per annum. The composition of Nepalese economy:The composition of Nepalese economy:

i)i) Agriculture sector 40%;Agriculture sector 40%; ii) Commercial sector 10%;ii) Commercial sector 10%;iii) Industry sector 10% out of which, Small and Cottage Industries are iii) Industry sector 10% out of which, Small and Cottage Industries are nearly 90% .nearly 90% .iv) Employment contribution by cottage and small industries : 76%iv) Employment contribution by cottage and small industries : 76%v) Value addition contribution by Small and Cottage Industries: 50%v) Value addition contribution by Small and Cottage Industries: 50%vi) service sector and others 40% vi) service sector and others 40%

Literacy of population:Literacy of population: 62% 62% Potential recourses is hydroelectricity total capacity is Potential recourses is hydroelectricity total capacity is

83,000 megawatt. 83,000 megawatt.

Current Status of SMEs in NepalCurrent Status of SMEs in Nepal

SNSN CategoryCategory NumberNumber

11 Agro and Forest BasedAgro and Forest Based 27172717

22 ConstructionConstruction 34133413

33 Energy BasedEnergy Based 197197

44 ManufacturingManufacturing 3453734537

55 MineralsMinerals 2626

55 ServiceService 3823238232

66 TourismTourism 44654465

TotalTotal 8358783587

Number of Large Scale Industry Register Number of Large Scale Industry Register by Category (Up to April 15, 2009by Category (Up to April 15, 2009

Note: 1$(US)=74 RS (Nepalese Rupee)

CategoryCategoryNo. of No. of

IndustryIndustry

Total Project Total Project Cost (Rs in Cost (Rs in

Million)Million)

Total Fixed Total Fixed Cost (Rs in Cost (Rs in

Million)Million)

Total Number Total Number of of

EmploymentEmployment

Agro and Forest Agro and Forest BasedBased

178178 10645.3310645.33 9040.049040.04 2553725537

ConstructionConstruction 3333 3234.033234.03 2982.142982.14 20792079

Energy BasedEnergy Based 4646 36957.7136957.71 34365.8934365.89 81988198

ManufacturingManufacturing 19771977 133607.25133607.25 94070.3194070.31 238186238186

MineralsMinerals 2727 2892.162892.16 2629.692629.69 30173017

ServiceService 10361036 61293.9161293.91 47950.2247950.22 7502675026

TourismTourism 661661 32501.4132501.41 28570.9328570.93 2868828688

TotalTotal 39583958 281131.81281131.81 219609.22219609.22 380731380731

Institutional framework for SMEsInstitutional framework for SMEs

The Department of Cottage and Small Industry (DOCSI)The Department of Cottage and Small Industry (DOCSI) The Cottage and Small Industry Development Board The Cottage and Small Industry Development Board

(CSIDB)(CSIDB) The Industrial Enterprise Development Institute (IEDI) The Industrial Enterprise Development Institute (IEDI) Department of CommerceDepartment of Commerce Department of IndustryDepartment of Industry Trade and Export Promotion BoardTrade and Export Promotion Board Micro-Enterprise Development Program (MEDEP)Micro-Enterprise Development Program (MEDEP) National Productivity and Economic Development Center National Productivity and Economic Development Center

(NPEDC)(NPEDC) Butwal Technical Instute(BTI)Butwal Technical Instute(BTI) Industrial District (11 Nos.)Industrial District (11 Nos.)

Present Status Industrial zonesPresent Status Industrial zones ID/IEsID/IEs Balaju

Patan

HetaudaDharan

Nepaljung PokharaButwal

Bhaktapur Birendranagar Dhankuta* G.N. Singh**

Year of EstablishmentYear of Establishment 19601963

1963 1973 1973 1974 1976 1979 1981 19841986  

Assistance/CooperationAssistance/Cooperation USAIndia

USA India India Nepal Nepal Germany Netherlands NepalIndia

Total

Total Area (Ropani @) Total Area (Ropani @) 670 293 2829 202 233 501 434 71 90 63294

5680

DevelopedDeveloped 670 293 2367 202 233 501 406 71 90 -171

5005

Leased OutLeased Out 526 218 1470 93 184 384 347 58 55 - 15 3350

LeasableLeasable - - 336 47 5 - - - - - 60 448

Land Occupied By Utility Land Occupied By Utility Services Services ++

144 75 561 62 44 117 59 13 35 - 96 1206

Investment (Rs. in Million)Investment (Rs. in Million)                        

Government SectorGovernment Sector 13.2 25.8 29.21 7.7 9.6 16.7 11.0 13.6 7.4 5.635.5

175.31

Private SectorPrivate Sector 2000410.6

3163.58 162.9 125 740 1000 280 5 -35.6

7922.68

No. of IndustriesNo. of Industries 94 108 59 24 34 72 61 35 22 - 6 516

OperatingOperating 62 85 42 13 20 59 47 36 22 - 4 390

Under ConstructionUnder Construction 14 6 2 4 7 3 4 2 - - - 40

ClosedClosed 18 17 15 6 7 10 10 1 - - 2 85

Employment Nos. Employment Nos. ++++ 38001522

3500 504 850 1512 1651 700 89 1 47 14214

Power Capacity (KVA)Power Capacity (KVA) 40001500

5000 750 750 700 1350 900 37.5 -100

15087.5

Water Supply (KL/Hr)Water Supply (KL/Hr) 20 1.25 92 1 7.75 20 6 20 4.1 - 8 179.92

Roads (KM)Roads (KM) 5.2 5.0 11 2.30 2.34 2.54 2.14 0.69 0.91 - 2.0 34.12

Capacity Building of SMEs in NepalCapacity Building of SMEs in Nepal

Some of the Highlights:Some of the Highlights:

Industrial policy 1992 and industrial Enterprises Act Industrial policy 1992 and industrial Enterprises Act 1992 gave priority and provided tax incentives to 1992 gave priority and provided tax incentives to SMEs.SMEs.

Role of Government determined as regulator, facilitator Role of Government determined as regulator, facilitator and monitorand monitor

Private-Sector EncouragedPrivate-Sector Encouraged Foreign Investment & Technology Transfer Act 1992 Foreign Investment & Technology Transfer Act 1992

implemented 100 percent foreign investment opened implemented 100 percent foreign investment opened for industry except traditional cottage industry and for industry except traditional cottage industry and security-concerned Industry. security-concerned Industry.

Expectation from the course Expectation from the course To support industrial development of the country,To support industrial development of the country, To provide technical and environmental consultancy To provide technical and environmental consultancy

services for the industriesservices for the industries To register and promote cottage and small-scale To register and promote cottage and small-scale

industries.industries. To conduct skill development training programs.To conduct skill development training programs. To prepare and distribute Industrial Schemes and To prepare and distribute Industrial Schemes and

Training Manuals.Training Manuals. To prepare Industrial Statistics and General Information To prepare Industrial Statistics and General Information

booklets on Industry.booklets on Industry. To conduct workshops on cleaner production (CP), green To conduct workshops on cleaner production (CP), green

productivity, business incubation and other areas.productivity, business incubation and other areas. To provide technical support and counseling on all To provide technical support and counseling on all

industry related matters.industry related matters.

Expectation from the course cont…Expectation from the course cont…

To enhance the knowledge on Entrepreneurship To enhance the knowledge on Entrepreneurship Development and Export Consortia..Development and Export Consortia..

To know about quality products and services in To know about quality products and services in Thailand.Thailand.

To enhances analytical skill to identify To enhances analytical skill to identify managerial problem.managerial problem.

To enhances problem solving skill.To enhances problem solving skill. To Develop interpersonal interaction skill.To Develop interpersonal interaction skill. To exchange ideas among the participant.To exchange ideas among the participant.

Issue and Challenges of SME Issue and Challenges of SME Due to liberalization and globalization, SMEs Due to liberalization and globalization, SMEs

have to face global competition.have to face global competition. Large-Industries of Mass production are in Large-Industries of Mass production are in

neighboring countries China and India. It is neighboring countries China and India. It is difficult to compete with them. difficult to compete with them.

Nepal suffered by insurgency for 12 years, it has Nepal suffered by insurgency for 12 years, it has deeply stricken to all the economic activities. deeply stricken to all the economic activities.

Nepal being a least developed country, There is Nepal being a least developed country, There is scarcity of technical skilled manpower, financial scarcity of technical skilled manpower, financial resources etc. resources etc.

Issue and Challenges of SMEIssue and Challenges of SME

Infrastructures of development are poor Infrastructures of development are poor such as electricity-power, transportation such as electricity-power, transportation facility etc. are not sufficient. facility etc. are not sufficient.

Capacity of entrepreneur's is low. They Capacity of entrepreneur's is low. They can not develop relationship in can not develop relationship in international sectors. They are confined international sectors. They are confined within boarder. within boarder.

Political Instability has created crisis of Political Instability has created crisis of confidence in policy regime confidence in policy regime

Industrial Support.Industrial Support.

Dept of Cottage and Small Industry (DoCSI) provides Various Dept of Cottage and Small Industry (DoCSI) provides Various training to entrepreneur'straining to entrepreneur's

Institute of Entrepreneurship and Institutional Development (IEDI) Institute of Entrepreneurship and Institutional Development (IEDI) established. established.

Industrial Estate (ten) are in operation to support industries.Industrial Estate (ten) are in operation to support industries. Micro Credit fund and fund for cottage and small industry created. Micro Credit fund and fund for cottage and small industry created. Many Bank and Financial Institution established and started Many Bank and Financial Institution established and started

financial support.financial support. Butwal Technical Institute Provides apprenticeship-oriented training Butwal Technical Institute Provides apprenticeship-oriented training

for many yearsfor many years IT park-established IT park-established More than 1000 IT and ICT industries are producing IT, ICT More than 1000 IT and ICT industries are producing IT, ICT

experts. experts. One window-Committee provides incentives to the industries. One window-Committee provides incentives to the industries. Industrial-Promotion Board looks on every problem of industry. Industrial-Promotion Board looks on every problem of industry. From 2007government with private sector partnership fund of 2000 From 2007government with private sector partnership fund of 2000

Million Rs (28.3 m US$) particularly to revive sick industries Million Rs (28.3 m US$) particularly to revive sick industries

AreasAreas of Improvementof Improvement

Solution of insurgency and political stabilitySolution of insurgency and political stability Policy-stability and create confidence in investorPolicy-stability and create confidence in investor Adopt appropriate technology and use of IT and ICT.Adopt appropriate technology and use of IT and ICT. Focus on institutional-development such as IT park, Focus on institutional-development such as IT park,

Institute of Technology, Technical School.Institute of Technology, Technical School. Provide information such as electricity transportation, Provide information such as electricity transportation,

telecom etc.telecom etc. Financial support, Create Venture Capital Fund. Financial support, Create Venture Capital Fund. Strengthen Marketing Network inside and out side of Strengthen Marketing Network inside and out side of

country. country. Development R&D aspects. Development R&D aspects.

Future Plan and ProspectsFuture Plan and Prospects

Policy and strategies for promoting SMEsPolicy and strategies for promoting SMEsNepal has felt importance on major three prongs Nepal has felt importance on major three prongs strategic approach for promoting and developing strategic approach for promoting and developing SMEs competitiveness SMEs competitiveness

Revitalizing the traditional attitude of entrepreneurs to Revitalizing the traditional attitude of entrepreneurs to the modern business dynamics,the modern business dynamics,

Supporting for creation of new venture businesses.Supporting for creation of new venture businesses.

Improving the sustainability of the existing enterprises Improving the sustainability of the existing enterprises and newly createdand newly created enterprisesenterprises through capacity through capacity buildingbuilding..

Future Plan and Prospects Cont….Future Plan and Prospects Cont….

Attracting national and international agencies to Attracting national and international agencies to set up their information-based activities including set up their information-based activities including foreign investment and exportforeign investment and export

Encouraging Non-Resident Nepali (NRN) Encouraging Non-Resident Nepali (NRN) investment Establishing technology based investment Establishing technology based Business Incubator centre.Business Incubator centre.

Allowing Technology Transfer & Foreign Allowing Technology Transfer & Foreign Investment in almost all sectors except negative Investment in almost all sectors except negative list industry. list industry.

Facilitating Research and development in this Facilitating Research and development in this sectorsector

Future Plan and Prospects Cont…Future Plan and Prospects Cont…

Creating model IT Park to promote private Creating model IT Park to promote private entrepreneurs to invest on such parks in other entrepreneurs to invest on such parks in other areas of the countries.areas of the countries.

Developing skilled human resources and expertise Developing skilled human resources and expertise in the field of SMEsin the field of SMEs

Establishing development fund for capacity Establishing development fund for capacity building, technology improvement, market access building, technology improvement, market access & infrastructure of SMEs& infrastructure of SMEs

Providing one-window service to entrepreneurs.Providing one-window service to entrepreneurs.

Concluding RemarksConcluding Remarks

Major challenges and opportunities emerged to the local Major challenges and opportunities emerged to the local enterprises especially to the SMEs’ after being 147th enterprises especially to the SMEs’ after being 147th member of the World Trade Organization (WTO) on 23 member of the World Trade Organization (WTO) on 23 April 2004.April 2004.

Creating synergy among major stakeholders Creating synergy among major stakeholders

(Entrepreneurs + Academia + Researchers) for ensuring (Entrepreneurs + Academia + Researchers) for ensuring progress in technology building and innovation progress in technology building and innovation

Developing ‘Public and Private Partnership (PPP)’ to Developing ‘Public and Private Partnership (PPP)’ to enhance the competitiveness and capacity building of enhance the competitiveness and capacity building of the SMEs.the SMEs.

Thank youThank you