Tuesday, January 17, 2017

Nepal tops regional ranking in inclusive development index

Nepal is not only advancing – in the last five years – in the Inclusive Development Index (IDI) but also ranks first in the South Asian region, a global report published today shows.
"Under the developing economies category, with overall score of 4.24, Nepal ranks 27th on the IDI, showing remarkable improvement over the last five years,” the Inclusive Growth and Development Report-2017 published by the World Economic Forum (WEF) reads.
"Nepal ranks 26th in Growth with a score of 3.35, whereas the country ranks 51st in Inclusion with a score of 3.25, but ranks 1st in Intergenerational Equity with a score of 6.11.”
“Intergenerational equity, which refers to whether economic performance is being pursued at the expense of future generations, is another limitation of GDP," the report reads, adding that increasing output, which at first glance would be 'good' for GDP, may come at the expense of externalities such as environmental damage, reduced leisure time, or the depletion of natural resources. "In other words, there is no link between GDP and the sustainability of the economy."
Though the country is ranked second to Lesotho – under the developing economies – for most improved five-year trend, it far below at 72 in GDP per capita, the report adds.
“Nepal, among the six countries, registered IDI scores that are 20 or more places higher than its GDP per capita rankings, suggesting that its development model is considerably more balanced and inclusive than that of countries with a comparable national income per capita.”
Notably, Nepal’s poverty rate has declined by 25 percentage points in this time, and its income inequality – net income Gini – by almost 8 percentage points, it reads, adding that Nepal outperforms all others on the intergenerational equity pillar during the most recent year, and has relatively low unemployment, including youth unemployment, and strong female participation in the workforce. “However, it performs poorly on GDP per capita and labor productivity.”
The framework indicates that the informal sector is dogged by low wages, leaving many workers in poverty. Priority areas include tackling corruption and administrative barriers to starting and growing a business, as well as continuing to improve infrastructure and basic services including education; particularly the availability and quality of vocational training, the report added.
Regionally, Nepal ranked 27th is followed by Bangladesh at 36th, Sri Lanka at 39th, Pakistan at 52nd and India at 60th in the IDI -2017.
The Inclusive Development Index (IDI) has been calculated by giving equal weight to the three pillars – growth, inclusion, and intergenerational equity – as well as the 12 indicators therein. However, if the bottom-line measure of national economic performance is sustained, broad-based progress in living standards, then a case could be made that the indicator or indicators that most closely approximate this concept should be weighted more heavily.
As measured by household surveys, median household income is attracting growing interest as an alternative to GDP per capita, the more commonly cited measure of a country’s material wellbeing. One drawback with GDP per capita is that it takes no account of distribution: it simply divides a nation’s income by the size of its population, the report states, adding, “If inequality in that country is very high, the resulting figure will provide a misleadingly optimistic suggestion of living standards for most individuals.”
Analysis of the 12 Key Performance Indicators (KPIs) that comprise the Inclusive Development Index, alongside the seven pillars of Policy and Institutional Indicators, suggests that median household income is indeed a reasonable proxy for inclusive growth and development as a whole even though it captures only one of the four dimensions of broad-based progress in living standards – income; opportunity; security; and quality of life – emphasised in the report.

IDI-2017 (Nepal)
GDP – 3%
Labour productivity and growth – 2%
Health lIfe expe nctancy trend – 1 yrs
Employmemt trend – (-0.3%)

Net Income GINI Trend – (-7.7)
Poverty Trend – 25.3%
Wealthy GINI Trend – 11.8
Median Income Trend – $1.2

Adjusted Net Savings Trend – 3.4%
Carbon Intensity Trend KG per$ of GDP – (-4.4)
Public Debt Trend – (-3.7%)
Dependency Ratio Trend – (-8.8%)

Saturday, January 14, 2017

NAC to buy European aircraft from US company

Nepal Airlines Corporation (NAC) today selected an American Company to purchase 2 wide-body European aircraft.
The corporation will issue a letter of intent (LoI) to the American leasing company – AAR Corp – tomorrow to supply two-wide body Airbus A 330-200 aircraft, NAC managing director Sugat Ratna Kansakar informed. A letter of intent is a document expressing an intention to enter into a contract at a future date.
The NAC board – led by secretary of Ministry of Culture, Tourism and Civil Aviation – today unanimously agreed to award the supply contract to US-based AAR Corp.
The board has selected the lowest bidder – AAR Corp – which has proposed to supply each aircraft for $104.8 million, he said, adding that the negotiations with the supplier will be held very soon in Kathmandu. "The cost of the aircraft and delivery date will be finalised during the negotiations."
Kansakar said that the ‘offer price’ quoted by the company was not the final price as it may go up slightly up due to inflation when final contract negotiations are completed. "When the cost of the aircraft will be finalised, a purchase agreement will be signed after the negotiations."
"We will ask the supplier to come to Nepal as soon as possible to sign an initial memorandum of understanding (MoU),” he said, adding that the corporation has targeted concluding the MoU within two weeks so that it can begin detailed technical and financial negotiations. A technical team consisting of members of the two parties would be formed to hold detailed negotiations. The entire process could be completed within three to four weeks.
There were six bidders in the final round. The corporation board selected AAR Corp due to the appropriate rate it proposed and the credibility of the company. Though the bid evaluation committee had evaluated the proposals of 10 bidders, four did not qualify in the initial stage itself.
A notice inviting proposals from aircraft manufacturers, airlines, aircraft leasing companies and bankers for two Airbus A330-200 aircraft was issued on September 26. There were 11 hopeful suppliers, and the highest price quoted was $146 million.
The corporation has stipulated that the jets should not have more than 1,000 flight hours on them, and that the date of manufacture should not be before January 2014.
The AAR Corp has – in request of proposal – offered to deliver the first aircraft by September 2017 and the other by March 2018.
The supplier should include the cost of a minimum set of flight and maintenance crews for the duration of at least one year. It should also include the cost of consumable spares and tools required for day-to-day line maintenance up to the ‘A’ check level for a year.
The carrier has proposed procuring long-range jets to serve destinations in North America, Japan, Australia and the UK as they have been identified as prospective markets for Nepal over the next 20 years.
The corporation had purchased two Airbus A320-200 aircraft in 2015 by borrowing Rs 10 billion from the Employees Provident Fund (EPF) in its first fleet expansion in 27 years.
The national flag carrier currently has two narrow-body Airbus aircraft and one narrow-body Boeing aircraft in its international fleet. The fleet is flying to eight destinations. After addition of two wide-body aircraft, the corporation start flying on long haul destinations, as the average flight range of the A 330-200 series aircraft will be nine to 10 hours.
The national flag carrier is preparing to fly to Japan and South Korea with the new two wide-body aircraft that is expected to not only increase its market share but also recover its lost glory.
So far, the national flag carrier has received landing permit for Inchhan International Airport in South Korea and Saudi Arabia. Kansakar also informed that the corporation has also approached civil aviation authority of Japan to receive landing permit. "In the long run the corporation also plans to expand its network to Australia and Europe," he added.
Though, international lenders are ready to invest on corporation, the corporation has approached EPF and Citizen Investment Trust (CIT) for the loan to buy the two aircraft.
The corporation had – in the past too – borrowed from the EPF and CIT to purchase the two narrow-body Airbus aircraft. The government-owned financial institutions have been charging nine per cent interest rate from NAC. "But this time the corporation has also approached some private banks," Kansakar said, adding that the private financial institutions are positive about consortium financing. "They are expected to quote an interest rate that is lower than that of the government-owned financial institutions."
The government is giving guarantee for the loan that NAC is planning to obtain.
The corporation will soon finalise loan agreement with the government-owned financial institutions, as the supplier has been issued LoI and invited for negotiations," he added.

Friday, January 13, 2017

Nepal has 20-35 percent working poverty: Report

Nepal has 20 per cent to 35 per cent working poverty, according to an international report.
World Employment and Social Outlook: Trends 2017 (WESO), which was published by International Labor Organization (ILO) today, said that 20 per cent to 35 percent of the country's workforce is living on less than $3.10 per day.
The outlook has also highlighted that Nepal has 55 per cent to 70 per cent vulnerable employment. "The percentage of own-account workers and contributing family workers as a share of total employment is more than half," the report added.
However, the report states that Nepal has unemployment rate of 4 per cent. This is equal to the United States and less than the UK and Germany.
According to ILO, persons in employment comprise all persons above a specified age, who during a specified brief period, either one week or one day, were in the following categories, paid employment or self employment.
The report also highlighted that the global unemployment rate is expected to rise modestly from 5.7 per cent to 5.8 per cent in 2017, representing an increase of 3.4 million in the number of jobless people.
The number of unemployed persons globally in 2017 is forecast to stand at just over 201 million - with an additional rise of 2.7 million expected in 2018 - as the labour force growth outpaces growth in job creation, according to the report.
The ILO's World Employment and Social Outlook: Trends 2017 takes stock of the current global labor market situation, assessing the most recent employment developments and forecasting unemployment levels in developed, emerging and developing countries.
It also focuses on trends in job quality, paying particular attention to working poverty and vulnerable employment.
"We are facing the twin challenge of repairing the damage caused by the global economic and social crisis and creating quality jobs for the tens of millions of new labor market entrants every year,” ILO director-general Guy Ryder said in the report.
“Economic growth continues to disappoint and underperform, both in terms of levels and the degree of inclusion," he said, adding that it paints a worrisome picture for the global economy and its ability to generate enough jobs. "Let alone quality jobs. Persistent high levels of vulnerable forms of employment combined with clear lack of progress in job quality - even in countries where aggregate figures are improving - are alarming. We need to ensure that the gains of growth are shared in an inclusive manner."
The report shows that vulnerable forms of employment – that is contributing family workers and own account workers – are expected to stay above 42 per cent of total employment, accounting for 1.4 billion people worldwide in 2017.
“In fact, almost one in two workers in emerging countries are in vulnerable forms of employment, rising to more than four in five workers in developing countries,” ILO senior economist and lead author of the report Steven Tobin, said.
As a result, the number of workers in vulnerable employment is projected to grow by 11 million per year, with Southern Asia and sub-Saharan Africa being the most affected.
Turning to policy recommendations, the authors estimate that a coordinated effort to provide fiscal stimulus and an increase in public investment that takes into account each country’s fiscal space, would provide an immediate jump-start to the global economy and reduce global unemployment in 2018 by close to 2 million compared to our baseline forecasts.
However, such efforts should be accompanied by international cooperation.
“Boosting economic growth in an equitable and inclusive manner requires a multi-facetted policy approach that addresses the underlying causes of secular stagnation, such as income inequality, while taking into account country specificities,” Tobin said.

Thursday, January 12, 2017

Malaysia reverses scrapping of levy

Malaysia has reversed the scrapping of levy and decided to continue with deducting levy from wage of foreign workers until January 2018, after its decision to shift the levy burden to employers, announced on New Year’s Eve, hit a snag.
The Malaysian National News Agency reported that the cabinet meeting yesterday agreed to postpone the implementation of levy payment on foreign workers by employers. "The levy payment will be enforced under the Employer Mandatory Commitment to next year."
Earlier, on December 31, the Malaysian government had announced that the levy should be paid by the employers on behalf of foreign workers. The scrapping of the levy would have increased the flow of remittance to Nepal as Malaysia is one of the most favoured destinations of the Nepali migrant workers.
According to president of Nepal Association of Foreign Employment Agencies Bimal Dhakal, the decision came as a bad news for both the migrant and the country’s economy.
“It sure would hit workers’ earning and flow of remittance," he said, adding that the decision will further discourage fresh migrant from going Malaysia.
Though, number of migrant workers going to Malaysia has dropped since earthquake of April 25, 2015, a period that saw numbers of policy level changes including Nepal’s decision to adopt free-ticket-free-visa policy and Malaysia’s move to regulate inflow of foreign workers to create more job opportunities for workers, it is estimated that over 700,000 Nepali migrant workers are currently working in Malaysia.
And they have been paying levy to the Malaysian government themselves, as of now.
Nepali workers used to pay up to 250 ringgits as levy for every 1,000 ringgits they earned.
With the decision put on a hold, foreign migrants working in the manufacturing, construction and service sector will continue to pay annual levy of 1,850 ringgit from their hard-earned wage, the Malaysian news agency reported, adding that the Malaysian authorities were forced to defer the date for the enforcement of the new levy related policies following protest from the employers’ unions. "It is not just on levy, but on the rights of the employer to have direct access towards the workers, rather than going through a middle man, how to cut down bureaucracy procedures and how to have fast employment of foreign workers."
It remains unclear whether the stalled new policies would be pursued after the extended deadline of 2018 or not.
Malaysia’s employers’ unions together with local workers’ unions had stood against shifting the burden of levy on local businesses arguing that it would increase the cost of production. They had also warned that the consumers would eventually end up paying more for their products and services if the levy is imposed on the local business. Workers’ unions, on their part, claimed that exempting foreign workers from levy would attract more migrants, dampening the prospect of locals getting the jobs.
Malaysia had first decided to impose levy on workers in 2013, shortly after raising the minimum salary of foreign workers to RM 900, up from RM 650. The minimum wage was later raised to RM 1,000. The levy rate was revised several times in the following years.
On the eve of New Year, Malaysian deputy prime minister Ahmad Zahid announced another major change shifting the burden of levy from foreign workers to employers, a decision that draw cheers from foreign workers and right groups, and strong opposition from employers’ and local workers’ unions.

Thursday, January 5, 2017

Langtang features in NYT's '52 places to go' list

Nepal's Langtang Region has been featured in The New York Times-Travel '52 places to go in 2017' list.
Stating that there are thousands of getaways to explore this year, The New York Times has listed Langtang Region of Nepal at the 43rd spot among the 52 places to visit in 2017.
Visitors to this hinterland 40 miles north of Kathmandu dwindled following the 2015 avalanche that nearly wiped out Langtang village, the nerve center of the area, the newspaper writes, saying that a crumbled town springs back. "In an effort to revive tourism, the travel outfitter Intrepid now offers a spectacular 15-day Tamang Heritage Trail Trek through alpine terrain, verdant midlands, rustic villages and monasteries," it further writes, adding that the newly opened portion of Langtang National Park called the Tamang Heritage Trail affords an opportunity to meet the Tamang people, originally Tibetan horse traders.
Canada tops the list followed by Atacama Desert of Chile in the places to go in 2017.
After the last year's devastating earthquake, tourists have started to come to Nepal as the country offers unique geography, a part of the Himalayan range, and, of course, the highest peak of the world, Mt Everest. The government has also been planning to promote the country as tourism is the key source of foreign currency and one of the largest employment providers.
Last week, Nepal Tourism Board (NTB), during its anniversary celebration, announced to celebrate the year 2017 as a 'Visit Nepal Year' in Europe as part of its initiatives of promoting Nepal as a tourism destination and with the aim of bringing maximum number of tourists from European countries.

Tuesday, January 3, 2017

NAC to start Kathmandu-Seoul direct flights from October

Nepal Airlines Corporation (NAC) is planning to launch Kathmandu-Seoul flights soon.
The national flag carrier has recently received ‘take off and landing’ permission from a major South Korean airport, according to the airlines. "Incheon International Airport of South Korea has allowed NAC to take off and land on every Sunday and Wednesday," the corporation said, adding that Nepali airline has not yet been flying to South Korea till now.
According to corporate director and NAC spokesperson Ram Hari Sharma, NAC will start flying to and from South Korea sometime in October this year as per the slot provided by Incheon International Airport.
NAC will be flying its wide-body Airbus of the series of A330-200 with a capacity of 250 to 280 seats for its flight on Kathmandu-Seoul route.
"Our flight will take off every Sunday and Wednesday at 7:20 pm from Kathmandu," he said, adding that the aircraft will return at 7:15 am local time. "It takes 6 hours of direct flight from Kathmandu to Seoul."
NAC has also made business plans to fly from Kathmandu to Seoul and from Seoul to Tokyo, he added. "NAC will prove a good connecting flight for those traveling to the western parts of the US from Seoul and Tokyo."
Not only those returning to Nepal from those parts will also find it easy but lots of Nepalis working in Korea will also be able to fly own national flag carrier.

Monday, January 2, 2017

PM directs ministers, secretaries to expedite development spending

Prime Minister Puspa Kamal Dahal today directed the government officials and ministers to expedite development spending and prepare criteria for qualifying projects as national pride projects.
Addressing the ministers and secretaries of various ministries during the meeting of National Development Action Committee (NDAC) – the prime minister-led mechanism that looks after the development projects – Dahal asked them to spend at least 80 per cent of the development budget citing there has been no significant progress when compared to the previous fiscal year, which had retarded the economic growth of the country.
Accepting the government’s apathy toward development work, he also directed the ministers and secretaries to prepare unified development plans and implement them accordingly to show the outcomes.
"As we have envisioned moving towards higher growth trajectory to upgrade our status to a middle-income country by 2030, we have to fully implement the budget to achieve the desired results," he said also instructing them to conduct regular monitoring of top priority projects – P1 projects – and introduce ‘carrot and stick’ policy targeting the project chiefs.
Asking them to prepare criteria for qualifying projects as national pride projects, Dahal also directed them to come out with a concrete plan, to complete the national pride projects, within a month.
Prime minister expressed concerns over dismal progress of critical projects including Kathmandu-Tarai fast track, Budhigandaki Hydroelectric Project, Second International Airport in Nijgadh, West Seti Hydro Project and Postal Highway.
The concept of national pride project was first introduced in 2012 in a bid to expedite the construction of schemes considered to be crucial for the country’s sustained development. However, there is no standard process based on which a project is described as ‘national pride’.
Currently, 21 projects have been identified as national pride projects. They include four irrigation projects, three hydropower projects, three international airports, six road projects, an electric railway project, a drinking water project, two projects aimed at promoting the holy sites of Pashupati and Lumbini and an environment conservation project.
The completion of these projects, according to experts, can change the face of Nepal and put it on a high growth trajectory. However, more than half of these projects failed to meet 50 per cent of their performance target in the first four months of the current fiscal year, according to the latest report of the National Planning Commission (NPC).
The Kathmandu-Tarai Fast Track Project, for instance, met only 0.1 per cent each of the physical and financial targets, making it the worst performer in the first four months of this fiscal year.
Likewise, the 1,200-MW Budhi Gandaki Hydroelectric Project has met only 1.1 per cent each of the physical and financial targets. Another worst performing project is the Lumbini Area Development Trust, which has achieved 7 per cent of the physical target and 10 per cent of the financial target.
Some of the common problems faced by these projects are delays in land acquisition, disputes between project officials and locals over the compensation amount offered by the government, unclear relocation and resettlement strategy, lack of coordination among officials and protests launched by their staff.
“Many projects also face problems while conducting Initial Environment Examination (IEE) and Environmental Impact Assessment (EIA),” said NPC vice chair Min Bahadur Shrestha, on the occasion. “We will list all the problems faced by these projects and try to address them by providing them certain benefits as directed by the prime minister," he added.
“If the bureaucracy continues to follow its traditional approach toward development works, we are not going to get any outcome,” the Prime Minister said, asking to change their working culture. "We have to think unconventionally to ramp up the capital expenditure."
Speaking at the meeting, the secretaries of various ministries updated PM Dahal on the progress of development projects being implemented under them.
Earlier in September too, PM Dahal had said that he would personally monitor the implementation status of national pride projects. Addressing the NDAC meeting, Dahal had said that he would prepare the schedule for implementation of concerned projects and monitor their progress.
His instructions, however, failed to speed up development spending. The government has, according to the Financial Comptroller General’s Office (FCGO), been able to spend only 8.89 per cent of the total capital budget by yesterday.
The first half of fiscal year is ending in mid-January. And of the total development budget of Rs 311.94 billion, the government has been able to spend only Rs 27.71 billion by January 1, according to the FCGO. Of the total budget of Rs 1048.92 billion, the government has managed spend only Rs 232.85 billion till yesterday.
The government had tabled the budget – for the current fiscal year 2016-17 – one-and-a-half months before the start of fiscal year calendar to break the trend of slow capital expenditure. However, the situation in the current fiscal year is no better than the last fiscal year.
While the government has not been able to spend, revenue mobilisation has been exceeding the target. As a result, the government treasury is ballooning. The government is sitting on a cash pile which is neither being productive, nor contributing to the economy. Had the government been able to spend, the private sector would have felt encouraged to spend, resulting in capital formation. However, the bulging treasury caused by the government’s inefficiency will hurt the economic growth and slow down capital formation in the coming fiscal years too.