Secondary and Tertiary Sector Development - Status, its contribution to national economy and challenges

Introduction to Secondary Sector Development

Secondary sector in economy refers to the manufacturing economy which is responsible for the production of final goods. The industrial development had begun very late in Nepal. The industrial development had started with the establishment of industrial council in 1936 BS by enacting the company act 1936. The process of planned industrialization started with the launching of economic plan in 1956. Many large-scale industries such as cigarettes, sugar, cement, leather, brick, cotton, paper industries were established in the public sector under foreign assistance. Juddha Match factory, Nepal plywood and Bobin Company, Morang cotton Mills, Morang Sugar Mill, Raghupati Jute Mill etc. were initially established industries in Nepal.

Industries can be divided into Cottage, Medium and large industries.

Cottage Industries :- Easy to establish, Self-employed opportunities, Basis of development of large industries, Use of local resources, Preservation of art and culture, source of National income, source of national income, source of foreign income etc. are the major importance of cottage industries. Lack of capital, Deficiency of raw materials, problem of transport, Limited market, Illiteracy etc. are the major challenge of cottage industries in Nepal.

Medium and large scale industries :- Development of basic industries, Increase in the employment opportunity, Increase in the living standard, increase in the public revenue, utilization of local resources, development of agricultural sector etc. are the importance of medium industries and large industries. Lack of capital, Scarcity of raw material, small domestic market, Lack of managerial talent in local level, Lack of physical infrastructure, etc. are the major challenges in the sector medium industries and large industries.

Industries registered from beginning to the first eight month of 2074/75

Status of industries Province wise

According to the economic survey of 2074/75 out of total registered industries large industries occupies 13.6 percent, Medium industries occupies 22.2 percent and Small and cottage industries occupies 64.2 percent. On the basis of total investment in industries, large industries 85.8 percent, medium industries 9.3 percent and small industries 4.9 percent.

Contribution in National economy

• Industries provides 567074 employment opportunities in Nepal.
• This sector had recorded a growth of 6.2 percent in the fiscal year 2014/ 15 BS.
• The contribution of secondary sector to GDP at current price that stood at 17.0 % in the fiscal year 2001/02 has dropped 14.5 % in the current fiscal year.
• Significant contribution in GDP.
• Source of Employment
• Use of local raw materials
• Basis of economic development
• Mobilization and utilization of natural resources.
• Basis of export

 Introduction to Tertiary sector of development

The tertiary sector is known as the service sector or service industries. Especially it includes institutions who provide service to the people and receive certain amount of incentives. The focus of tertiary sector is on the people interacting with one another and servicing the customer rather than manufacturing the physical goods. It depends on intangible production or services. It includes retail, transportation, distribution, food services, and other service dominated industries such as private school, college, hospital, hotel, etc. 

Contribution to National economy

Challenges of Secondary and Tertiary sectors

• Lack of Capital
• Technological Backwardness
• Lack of Market
• Presence of Multinational company
• Lack of energy supply
• Landlocked position of Nepal.
• Lack of natural resources
• Lack of proper infrastructure development
• Defective government policies
• Bureaucratic procedure
• Political instability
• Lack of business environment