Monday, June 30, 2008

Five financial institutions seal deal with NMB

Five financial institutions — Mahalaxmi Finance Ltd, Birgunj Finance Ltd, Siddhartha Finance Ltd, Butwal Finance Ltd and Himchuli Development Bank — have signed an accord with NMB Bank Ltd to issue rights shares.
"The companies that currently have Rs 60 million to 90 million paid up capital have to increase their paid up capital to Rs 400 million each to make a total of Rs 2 billion required for a commercial bank," said Upendra Poudyal, issue manager and CEO of NMB Bank, adding that they would float rights shares within three months.
After a special AGM, they proposed rights shares but at different ratios according to their present capital structure.
They signed an accord on April 28 to merge and upgrade to an A-level commercial bank. On Jue 24, they had applied to the central bank for Letter of Intention (LoI).
"They are planning to increase their paid up capital to Rs 400 million each to upgrade to a Rs 2 billion commercial bank," said Ramesh Kumar Bhattarai, coordinator of the merger committee.
The proposed A-class commercial bank will have its head office in Kathmandu and the head offices of each of the financial institutions in the districts will work as branch offices, Bhattarai said, adding that it was an added advantage for the bank as the five financial instituions already have their foothold in different districts. "Unlike other newly opened institutions, we don't need to search for a new market," he said.
However, Nepal Stock Exchange (Nepse) has halted share trading of these five financial institutions until further notice till May 8. The news of their merger and upgradation to an A-class commercial bank has fuelled the share prices of these financial institutions, forcing Nepse to act immediately.
The four finance companies and the development bank jointly announced their merger to become a commercial bank with a paid up capital of Rs 2 billion, but citing a huge difference in the size of their paid capital, unclear policy on their liability and the ratio between share and capital reserve Nepse asked them to bring the LoI from Nepal Rastra Bank (NRB), the regulatory authority of the financial market.
"They also have not got any approval from NRB, the central bank," said Nepse. As per the regulation, they must get the regulatory authority's prior approval. The stock market is also sensitive to rumours that it may lead to 'unnatural' price rise of their scrips making new investors more vulnerable.

Budget Watch: Series 3

* Import of pharmaceutical products from India should be allowed only through Duty Refund Process (DRP) under Excise Invoice which also increases government's revenue collection by about four per cent on total import.
*If any biotech product is developed within the country then the import of such products must be completely stopped to provide business incubation time for such companies.
*Import duty on drugs (which is five per cent at present) has to be modified to match with duty rates applicable in neighboring countries in South Asia. Pharmaceutical imports in India are subject to excise duties and VAT is also applicable in India.
*Registration procedures for drug import into Nepal must be revised to match with provisions of all SAFTA member countries. The company registration fee and product registration fee should be the same as per Indian regulations. Lower registration charges for foreign companies creates unfair competition for Nepali companies and also causes revenue loss to the government. Hence, it should be hiked based on similar fees applicable in India.
*Nepali pharmaceutical companies should get reciprocal opportunity to export their products to India. Nepal has allowed 225 Indian companies to market in Nepal whereas not even a single company from Nepal is allowed to sell its products in India.
*As capital cost for R&D of drugs and related substances including the development of herbal drugs is very expensive, the investment in R&D should be facilitated by providing tax benefits for such investments. Customs duties and VAT applicable on various high-end scientific equipment for biopharmaceutical and biotechnology research work especially of HS Code should be abolished and made tax free. Joint research and developments of drugs and related substances including the development of herbal drugs should also be promoted with the help of government institutions and companies including institutions like NAST and Nepal Medicine Laboratory within DDA.
*Government should promote Bulk Drugs Production (raw materials for Pharma Industries) in Nepal by providing incentives for such industries. This will help pharma industries in Nepal to compete in the world market.
*The government should invest resources in quality control of all drug products produced and imported into Nepal. There has to be proper legal mechanism to control the substitution of drug products in the market which is one of the reasons of poor recovery for critically ill patients. This is also a serious infringement of the intellectual property and brand capital of the companies in contravene to the existing regularly Trade Market and Patent Law of our country.
*Nepal should bring a National Research Policy to promote Research & Development specially in biopharmaceutical, biotech and industrial sectors. For investment in R&D, government should establish a 'Technology Development Fund' and provide cash subsidies for all research works which help develop technology on a commercial basis within the country.
Hari Bhakta Sharma,
Executive Director,
Deurali-Janta Pharmaceuticals

Sunday, June 29, 2008

Budget Watch: Series 2

Nepal has long been suffering from economic and industrial unrest.
On the one hand, people's aspirations have gone too high to be included within the framework of economy and social justice while on the other because of unrest the industrial sector is unable to sustain employment needs.
We have been long talking about a clear departure from traditional economy to an economy of comparative and competitive advantage.
Now, Nepal has entered a new political phase and it is time that we take radical steps so that the economy can take off and become self-driven. Again, this is possible only through understanding on Minimum Economic Agenda (MEA) on common ground.
This budget could be the first step towards that direction. We are trying to advocate a caucus group within the present Constitutional Assembly & Legislative Parliament.
Here are some measures that could help the economy to take off:

* Time-bound One-Window mechanism for the industrial sector so that it doesn't have to wait for years and run around from one ministry to another to attrack investments.
* One-Window committee to back Nepal Electricity Authority to allow fast track decisions for new hydro projects.
* Open up new sectors in tourism like white snow skiing, access to indigenous lakes like Rara and Khaptad etc.
* Create a cell to allow industrialisation based on value addition of agriculture products under patent rights, intellectual properties and bio-diversities under an integrated frame work of WTO.
* Develop Nepal as the hub of South Asia.
* Link Beijing to Bangalore and vice-versa with Nepal as transit facilitator.
* Develop Nepal as a Health, Education and Sports destination.
* Develop Nepal as an offshore centre (we already have a law on this).
* Implementation of SEZ for exports.

Nepal is passing through historical change and if this change cannot deliver the peace dividend the country's future generation will never forgive us. This is the right time to act in order to stop future political conflict. I see a greater chance to deliver and have an equitable society and this is possible through rapid economic growth.
After coming to the end of political issues, now it is up to us to take socio-economic issues and influence the political parties to take the lead. This budget could be an exceptional example of such common understanding.

Rajendra Khetan,
chairman, Khetan Group

Saturday, June 28, 2008

Budget Watch: Series 1

The budget 2008-09 is being prepared and there are several critical issues that need to be addressed if the economy is to be saved:

• Despite an encouraging growth of five to six per cent for the fiscal year 2064-65 BS, which by no means can be discredited, only the manufacturing sector has recorded de-growth. And, without the manufacturing sector performing, sustainable long term employment will always be a problem.
• Exports to India and other countries have declined. As a result, the balance of payment with India has suffered seriously resulting into more than Rs 2 billion Indian currency being paid in hard cash.
• Fuel costs are rising and that will have a significant impact on cost of production and transportation.
• No attention was given in the past to corporatise agricultural sectors. Unless it is made attractive enough for business houses and corporates to enter, this sector will continue to under-perform.
• Farmers continue to pay interest to the tune of 12 per cent whereas consumers who buy vehicles and white goods get consumer financing at about seven per cent.
• The state subsidy is completely concocted and does not reach the targeted levels. For example, the huge subsidy on fuel which is being given across the board to everyone. However, this should be aimed at limited to people through public distribution system/rationing. Likewise, some other essential items can also be included as a part of this. There is nothing wrong in developing a PDC in a poor country like ours.
• Decision making and implementation of declared policies in the past is a serious issue. Without clear accountability, no budget or annual programmes can deliver the desired results.

Some specific areas that need to be addressed in the budget;
• Arrest the decline of exports to India.• Provide incentive to raise production aimed at exports to Indian states including the North-east and Tibet/China.• Create an open Special Economic Zone (SEZ) and providing tax incentives to compete with Indian SEZ to make production competitive.
• Arrest decline of third country exports.
• Open SEZ for viable products such as carpets, garments and pashmina and initiate backward integration for raw materials and packing materials through backward integration.
• Introduce uniform packages in select territories as in North-east India, Sikkim, Uttaranchal, Jammu & Kashmir to promote new investments.
• Introduce special labour policy in select SEZ like Tea, Garments, Carpets.
• State should acquire land for SEZ and enter into joint ventures for developing and selling back to various SEZ.
• Allow significant incentives for corporatising agriculture to induce entrepreneurs/corporates, such as no limit on landholdings, special labour policies, no taxes, concessional interest rates for land acquisition or production infrastructure for limited time through government subsidies.
• Decvelop forestry:follow Finnish models of Sarnath for corporatising forests as long term contracts through tenders by involving co-operatives or private sector joint ventures.
• Massive promotion of dairy industry: follow the Amul model of Gujrat.

Binod Chaudhary,
president, CNI

Friday, June 27, 2008

Inflation can be tamed: IMF

A visiting mission of the International Monetary Fund (IMF) thinks that the inflation in Nepal that is inching towards double digits is 'still' under control and manageable. "Nepal has a disciplined budget policy for the last couple of years," Brain J Aitken, deputy division chief, Asia and Pacific Department said, adding that as long as Nepali currency that is pegged with Indian currency (IC) is maintained, inflation would not create any trouble. IMF has predicted eight per cent average inflation.He, however, stressed on the adjustment of oil prices. The government has adjusted prices recently and it is one of the major reasons behind the rising inflation. "But it will not be unmanageable," he said. "The introduction of an automatic pricing mechanism to allow adjustment of prices to world levels would help depoliticise the elimination of oil subsidies," Aitken suggested without elaborating the model of such a mechanism.It is the regular visit of the IMF mission. Every year, an IMF mission visits Nepal before the budget to interact with the government. "The current visit focused on the budget for the coming fiscal year," he said, adding that despite the political turmoil, the macro-economic outlook had remained stable.Led by the service sector and agriculture, the output growth for this year could rise to 4.75 per cent, according to the IMF. "In the coming year, it could rise to 5.5 per cent," Aitken said.

ADB team, maoist brass hold parley
A visiting delegation of Asian Development Bank (ADB) — led by director Sebastian Paust — met senior leaders of the Communist Party of Nepal-Maoist here on Friday. Maoist chairman Pushpa Kamal Dahal and his deputy Baburam Bhattarai held discussions with six board members of the ADB team that arrived here on Monday. Nepal is a founder-member of ADB and, till December 31, 2007, cumulative lending to Nepal by the ADB had reached $2.3 billion, with investment grants amounting to $183.9 million and technical assistance of $127.6 million.

Thursday, June 26, 2008

Inflation, budget deficit continue to rise

Over the last few months, Nepal has been experiencing rise in inflation. Food and beverage prices have pushed inflation up as it posted 9.2 per cent in mid-May from 4.6 per cent last year whereas the year-on-year salary and wage rate index rose by only seven per cent in mid-May, compared to a rise of 11.9 per cent a year ago.
"Inflation is mainly driven by the 13 per cent rise in prices of food and beverages during the review period. The price rise of food and beverages was 6.1 per cent a year ago," according to the current macro-economic situation report of Nepal Rastra Bank, based on the first 10 months' data of the current fiscal year.
Prices of rice and rice products of this sub-group increased by 25.2 per cent compared to an increase of 3.8 per cent a year ago. "Of the items showing price rise, price indices of the edible oils and ghee sub-group increased by a whopping 27.6 per cent on a y-o-y basis in May compared to an increase of 9.9 per cent last year," states the central bank report. Region-wise, the price rise in Tarai region is 10 per cent followed by 8.6 per cent in the hills and 8.5 per cent in Kathmandu Valley. Last year, it was five per cent, four per cent and 4.4 per cent, respectively.
Despite pressure on salary index on account of hike in salary of civil servants including security personnel, teachers and employees in public enterprises by 17 per cent in July 2007, pressure on wage rate index with a higher weight remained modest resulting in a rise of national salary and wage index in the review period at the same rate as in the previous year.
The wage rate index increased by 5.9 per cent in the review period compared to an increase of 13.8 per cent in the same period last year. Wages of agricultural, industrial and construction labourers increased by 6.3 per cent, 4.6 per cent and 7.1 per cent, respectively, in mid-May 2008. Last year, they increased by 10.9 per cent, 19.2 per cent and 11.5 per cent, respectively.
Similarly, government budget deficit has also amounted to Rs 6.4 billion in the first 10 months of the current fiscal year. The budget was at a surplus of Rs 2.86 billion in the corresponding period last year. "The relatively higher growth of government expenditure resulted in the budget deficit in the review period," states the central bank report.
Domestic financing of the budget deficit through the issue of securities (excluding overdrafts) amounted to Rs 13.33 billion in the review period. The government's cash balance with NRB amounted to Rs 9.87 billion in mid-May 2008. Including the cash balance of Rs 3.12 billion for the previous year, the cumulative cash balance reached Rs 12.99 billion in mid-May.
However, net domestic borrowing of the government remained at a negative of Rs 1.94 billion on account of repayment of Rs 5.40 billion domestic debt and cash balances to the central bank in the review period.The outstanding domestic debt — including cash balance with NRB — of the government stood at Rs 94.24 billion in mid-May. Such outstanding debt was at Rs 96.18 billion in mid-July 2007.The external financing of budget deficit amounted to Rs 3.12 billion, showing a 26.1 per cent growth from the level of a year ago. In the previous year, the government had received foreign debt amounting to Rs 2.47 billion.
In the first ten months of 2007-08, revenue mobilisation soared by 24 per cent amounting to Rs 78.99 billion compared to an increase of 22.5 per cent in the corresponding period last year. Such an impressive growth of revenue was on account of substantial increase in the import of merchandise goods.Of the total revenue mobilisation, VAT revenue grew by 21.8 per cent to Rs 25.3 billion in mid-May. "Growth in VAT revenue was on account of growing imports and consumption induced by the rise in remittances and reforms in VAT administration such as establishment of Large Taxpayers Unit (LTU), strengthening of billing system and non-filers management," the report states.
In the review period, customs revenue rose by 21.5 per cent to Rs 16.16 billion compared to an increase of 13.1 per cent in the same period of last year. Reforms in customs administration, increase in imports of high tax yielding vehicles and spare parts as well as a rise in the amount of Indian excise refund contributed to such a high growth of customs revenue.
In the review period, excise revenue increased by 23.9 per cent to Rs 8.32 billion compared to an increase of 36.3 per cent in the same period of the previous year. Reforms in excise administration, and identification of new excisable goods also accounted for higher excise revenue in the review period.
Income tax revenue increased by 34.4 per cent to Rs 13.87 billion in the first 10 months of 2007-08. The evolution of the corporate culture on account of the growth in banks and financial institutions contributed to such a higher growth of income tax collection. Last year it had risen by 32.1 per cent.

Wednesday, June 25, 2008

Liquidity crunch may hit market

The market is likely to experience a liquidity crunch. As a result, the interbanking rate is expected to shoot up.
Unlike paper transactions earlier, the issue manager has to deposit the total collection at Nepal Rastra Bank (NRB) for at least three days. The recent directives of the NRB and Securities Board of Nepal (Sebon) dictate the financial companies to deposit the collection in an account in the central bank.
“The ‘cash’ has to be deposited in the central bank,” said Pravin Raman Parajuli, head-Merchant Banking Department of NMB Bank Ltd, the issue manager of the Clean Energy Development Bank (CEDB).
“Tentative Clean Energy Development Bank (CEDB) attracted Rs 4 billion that is around 42 times of what the bank had called for. CEDB floated its 9,60,000-unit shares worth Rs 9,60,000,00 for the public.
Similarly, Shikhar Finance Company floated 2,00,000-unit of shares worth Rs 20,00,00,00. It might have also collected more than triple the called for amount, Rs 60 million. Subekchhkya Development Bank floated 1,20,000-unit shares worth Rs 1,20,00,000 today. It is also expected to collect 10 times the call. Lord Buddha Finance Company is also floating 2,25,000-unit shares worth Rs 2,25,000,00, and is expected to collect some 10 to 12 times of the call money.
“This is a clear indication that there will be liquidity crunch in the market,” said Rabindra Bhattarai, a share analyst. The crunch may be really serious one as there are more companies in the pipeline to float public shares.
For example, Kaski Finance Company is floating 2,00,000-unit of shares worth Rs 2,00,000,00; Triveni Development Bank is floating 1,50,000-unit shares worth Rs 1,50,000,00; Pashupati Development Bank is floating 8,00,000-unit of shares worth Rs 8,00,000,00; Sagarmatha Merchant Banking and Finance is floating 2,00,000-unit shares worth Rs 2,00,000,00 and Reliable Investment Finance Company is floating 2,47,500-unit shares worth Rs 2,47,500,00.
There are numerous financial institutions in the pipeline to float public shares worth about half-a-billion rupees.
Due to the Initial Public offerings (IPOs) of huge amounts at the same time, the secondary market is bearing the brunt. Nepse registered a fall on the first three days of this week, Sunday, Monday and Tuesday, due to capital diversion. However, it recovered today.
During the first nine months of the current fiscal year, all major indicators of secondary market showed a substantial rise. During the period, the trading of equities rose by about 169 per cent to Rs 14.92 billion, while market capitalisation and Nepse recorded a sharp rise of 91 per cent and 51 per cent, respectively.
Similarly, market indicators registered a significant growth in March-April. However, monthly data for mid-March-mid-April compared to last month’s data (mid-February-mid-March) showed a sharp decline (42.4 per cent) in the trading amount and only a moderate rise in Nepse and market capitalisation.
The performance of the primary market was also encouraging during the first nine months of the current fiscal year in comparison to the performance in the same period in 2006-07.
The number of traded shares increased by 29.59 per cent and the traded amount also increased by 111.86 per cent during the month compared to the traded shares and amount of the same period last year.

Tuesday, June 24, 2008

NDM finalists announced

The 25 finalists — for Nepal Development Marketplace (NDM)-2008, branded as 'Lau Na Aba Ta Kehi Garau' contest, a collaborative effort between the World Bank (WB) and the Nepal Poverty Alleviation Fund (PAF) — has been announced here today.
The 25 finalists will receive grant awards from a Rs 37.5million ($6,00,000) award pool funded by a partnership between the WB and PAF,according to the WB. Each winner will get approximately Rs 1.5 million to implement their innovative ideas aimed at delivering basic services and expanding livelihood opportunities in rural population.
"The innovative and homegrown solutions — to deliver basic services to rural communities — that were presented here today have a huge potential to make a difference in the lives of poor," Susan Goldmark, WB country director for Nepal, said, adding that peace and development are interrelated. "Without peace, it will be difficult to have development and conversely, without development, there will be no peace.”
Earlier, fifty innovative ideas and inventive partnerships from across the country had entered in the final round of NDM-2008. The technical assessors three weeks ago had selected top 50 proposals for graduation to the national competition. All the fifty finalists were today invited to submit detailed proposals for today's final competition.
An independent jury of eminent personalities like Anuradha Koirala and Kumar Thapa, examined the detailed proposals received from the finalists and interviewed them before selecting the winners.
The finalists range from grass-roots service providers, including public sector development agencies, community based organisations and NGO, to schools and universities, as well as private sector businesses. The enterprising ideas and creative partnerships focus on improvements in the delivery of basic services in education, health, water and sanitation, agriculture, irrigation and food security, financial services, small business and micro-enterprise support, energy, information and communication technologies, infrastructure, integrated rural development and employment creation.
The cash awards will be provided to apply fresh approaches to peace-building through development for a period of one year beginning from July 1.
A nation-wide publicity campaign during March and April has attracted nearly 500 eligible entries reflecting the theme 'Securing Peace Through Development' by the time the call for proposals closed on April 30. Since then, a technical team composed of over forty development practitioners, sectoral experts and journalists screened and ranked all proposals against a set of assessment criteria and narrowed down the most promising proposals to a short-list of 215. The criterion included innovation, partnership, sustainability, replicability, impact and cost-effectiveness.
NDM was last held in 2005. It is a competitive programme sponsored by the WB and various partners that use a transparent process to identify and support grassroot initiatives.

Monday, June 23, 2008

Better investment climate urged

Entrepreneurs today suggested government that the next budget should address plight of export sector and create condusive investment climate changing tax rates and exploiting the potential areas where Nepal has comparative advantages.
"Its high time we need to think on how to rejuvenate export," said Binod Chaudhary, president of Confederation of Nepalese Industry (CNI), during pre-budget interaction with finance minister Dr Ram Sharan Mahat.
"How to attract more investment to fight double digit inflation, rising crude prices, acute food shortage, rising commodity and transportation cost," he said adding that lack of employment opportunities and dwindling public sector investment are some of the problems that government must address.Jagdish Agrawal, vice-president of CNI, presenting a paper admired political pa-rties for starting to take economic issues seriously.
Though, agriculture — a comparative advantage sector — contributes approximately 40 per cent to total GDP, its growth is not satisfactory. "To revive it, commercialisation of farming is a must," Agrawal added.
"CNI wants a transparent roadmap of investment to achieve double digit growth in the next five years," CNI suggests, adding that Rs 450 to Rs 500 billion per year will be necessary to achieve the growth target. The massive investment required for achieving it can be shared between private and public sector but the government should take lead in terms of massive allocation to infrastructure development, energy management, transportation and irrigation. "The funds with Army, Citizen Trust, Provident Fund could be used for development," CNI suggested.
The dependency on imported fuel should be reduced and alternative to fossile fuel should be given priority, said CNI.Finance Minister Dr Ram Sharan Mahat agreed on development of alternative sources of energy. "The government has been supporting bio-gas and solar energy," he said.
"Nepali coffee has more demand in the third country," Mahat added. "Cement industry has great potential as big hydro power projects are coming in the future," he added. CNI has categorised five industry: Cement, textile, petroleum refining, carbon steel and electricity generation."Political orientation, social and economic discipline, and labour relation effect investment environment," the finance minister said, adding that due to transition period there is a lack of social discipline at present.
However, dismal scenario could not hurt public investment and spending on rural infrastructure is also increasing. "Import is increasing that shows market is also expanding," he said. Except for manufacturing, all other sectors are growing and government can go to extra mile to push export, Mahat added.
He also blamed labour dispute for distracting new investment. "It would be solved amicably," he added.

Sunday, June 22, 2008

Short-term interest rates up

In the recent months, the short-term interest rates have been increasing.
However, some commercial banks are still providing interest rate oftwo per cent for such deposits. The interest rates on fixed deposits have also increased. The interest rate on fixed deposits of more than two years increased to 6.75 per cent in mid-April 2008 from 5.5 per cent in mid-July 2007. The minimum interest rates on such deposits increased to 2.75 per cent in mid-April 2008 from 2.5 per cent in mid-July 2007, states a Nepal Rastra bank (NRB) report.
Interest rates on lending have also changed marginally. Minimum interest rates on loans to the industrial sector declined to seven per cent in mid-April 2008 from eight per cent in mid-July 2007 along with a decline in its maximum interest rates by 50 basis points to 13 per cent in mid-April 2008.
Likewise, maximum interest rates on agriculture credit declined by 100 basis points to 12 per cent. Interest rates on commercial credit and overdraft declined by 50 basis points to 13.5 per cent in mid-April 2008.
Compared to the previous year, the weighted average monthly 91-day Treasury bill rate also stood at 4.07 per cent in mid-April 2008. Such a rate was 1.85 per cent in mid-April 2007.Similarly, the weighted average monthly inter bank rate remained at 2.69 per cent in mid-April 2008 in comparison to 1.69 per cent a year ago, states the report of first nine months.
Some changes in the interest rates of deposits and credit have also been witnessed lately. Maximum interest rate on saving deposits increased to 6.5 per cent in mid-April 2008 from five per cent in mid-July 2007.
In the first nine months of 2007-08, the liquid funds of commercial banks increased by 11.8 percent amounting to Rs 72.90 billion. Such funds had increased by 3.6 per cent amounting to Rs 65.20 billion in the same period of last year. Of the liquid funds, commercial banks' balance held abroad increased by four per cent to Rs 35.28 billion.Likewise, commercial banks' cash in hand stood at Rs 9.38 billion and balances with the NRB increased by 2.2 per cent to Rs 23.37 billion in the review period.
Including commercial banks' holding of government securities of Rs 64.79 billion, total liquid assets of commercial banks reached Rs 137.70 billion as in mid-April 2008, showing a growth of 13.3 per cent. Such liquid assets were Rs 121.50 billion as in mid-April 2007. Considering the public deposit of Rs 390 billion with the commercial banks, the liquid assets/deposits ratio of the commercial banks stood at 35.3 per cent in the review period.
A net liquidity of Rs 65.98 billion was injected through a net purchase of $1.03 million from commercial banks through foreign exchange intervention in the review period. A net liquidity of Rs 47.96 billion had been injected through the net purchase of $664.2 million from commercial banks in the previous year.
Indian Currency (IC) purchase has also been increasing. In the first ninth months of 2007-08, the NRB purchased 41.82 billion IC equivalent to Rs 66.9 billion by selling $1050 million. During the same period of the previous year, a total of Rs 40.97 billion equivalent IC was purchased through the sale of $570 million. A widening current account deficit with India along with a higher payment by Nepal Oil Corporation (NOC) to Indian Oil Corporation accounted for such an increase in purchase of IC in the review period. The sale of the US dollar to purchase IC remained higher than the purchase of the US dollar from commercial banks in the review period.
In the course of monetary management, the NRB absorbed a total liquidity of Rs 11.04 billion including Rs 6.57 billion through reverse repo and Rs 4.47 billion through outright sale auction in the review period. In the same period of the previous year, a total liquidity of Rs 22.96 billion was absorbed through outright sale auction of Rs 8.9 billion and reverse repo auction of Rs 14.06 billion.

Friday, June 20, 2008

140 Nepalis selected for Korea

South Korea has selected first batch of Nepalis. Among the 6,767 candidates, who have filled out the job application form to go to Republic of Korea for employment purpose under employment permit system (EPS), the Department of Labour and Employment Promotion (DoLEP) has today received 140 names.
Out of the total 31,175 who have appeared in the Korean Language Test (KLT), a first step inthe process of getting jobs in South Korea under EPS, only 6767 have passed the test.
Out of the total 6,767-passed candidates, 140 names have been selected from the merit list. “We are in a process of receiving more names,” said Keshar Bahadur Baniya, director general (DG) at the DoLEP. “Now they will undergo training for a maximum of 15 days,” he said, adding that immediately after they get certificate of conformation of visa issuance (CCVI), the governmentwill fix the airlines to fly them to Korea.
“Government will select the airlines that offers the low cost,” he added.
Around 5,500 will get a chance to go to South Korea, where they will be paid no less than $900 salary excluding lodging, fooding and medical expenses. A total cost for the whole process doesnot exceed $970 (around Rs 63,050) that includes $17 for the test that they had already paid and tickets.
The KLT-EPS exam was jointly conducted by EPS section of DoLEP and the Human Resource Department of Korea but conducted by the Tribhuvan University (TU).
The Korean HRD officials had taken the answer sheets back to Korea for final marking.According to the Korean government’s Foreign Workforce Plan, Korea plans to bring in 1,32,000 foreign workers — of which 60,000 will be ethnic Koreans living overseas and 72,000 foreigners — in 2008.
The total figure for 2008 is up by 23,000 from 1,09,000 of 2007. “But if 1,27,000 foreigners to be imported to replace those who will be deported due to the expiry of their sojourn period and illegal stay are excluded, there will be a net increase of just 5,000 workers,” states the plan.
At a meeting of the Foreign Workforce Policy Committee, chaired by the head of the Office for Government Policy Coordination, on February 14, the Korean government had announced its 2008 Foreign Workforce Import Plan.
Destination Korea for jobs is considered to be among the most preferred for Nepali jobseekersbecause of better earnings and cheaper initial cost to get job under EPS.
Nepal and South Korea had signed a memorandum of understanding (MoU) in July last year. The agreement has set proficiency of the Korean language as a major condition of eligibility for employment in South Korea.Nepal — after South Korea and Bahrain — is also looking forward to sign agreement with Japan.

Wednesday, June 18, 2008

Nepal's exports continue to fall

Exports of Nepali products have seen a continuous fall in the recent months. But this Chaitra it made a marginal recovery than the last Chaitra.
In the first nine months of 2007-08, total exports went down by 2.6 per cent in comparison to a decline by 2.9 per cent in the corresponding period of the previous year. The declining merchandise export has been a matter of concern for the exporters and the government also.
In the review period, export to India plummeted by 8.3 per cent and to other countries increased by 10.3 per cent. In the previous year, export to India had declined by 2.3 per cent and to other countries by 4.2 per cent.
In the first nine months of 2007-08, total imports increased significantly by 19.5 per cent compared to a rise of 7.4 per cent in the corresponding period of the previous year. Of the total imports, imports from India soared by 22.6 per cent in the review period compared to a growth of 9.5 per cent in the corresponding period of 2006-07.
Similarly, imports from other countries went up by 14.3 per cent compared to a rise of four per cent in the previous year.
The overall Balance of Payment (BoP) also posted a surplus of Rs 13.68 billion in the first nine months of this fiscal year, according to the data of the central bank. The BoP had registered a surplus of Rs 10.89 billion in the corresponding period last year. Despite the rise in trade deficit, the increase in the workers' remittances and capital transfers accounted for surplus in the BoP.

Tuesday, June 17, 2008

VAT collection increases

Despite regular unrest, the government has been successful in revenue collection.
In the first nine months of 2007-08, revenue mobilisation of the government rose by 25.1 per cent amounting to Rs 70.85 billion compared to an increase of 22.2 per cent in the corresponding period of the previous year. Such an impressive growth of revenue was on account of substantial increase in the import of merchandise goods, according to the current macroeconomic situation based on the first nine months' — the third quarter (Q3) — data of this fiscal year.
Of the total revenue mobilisation, VAT grew by 23.2 per cent to Rs 22.22 billion in mid-April 2008. The growth in VAT was on account of growing imports and consumption induced by the rise in remittances and reforms in VAT administration such as establishment of Large Taxpayers Unit (LTU), strengthening of billing system and non-filers management.
In the review period, customs revenue rose by 23.6 per cent to Rs 14.68 billion compared to an increase of 22 per cent in the same period of the previous year. "Reforms in customs administration, the increase in imports of high tax yielding vehicles and spare parts as well as a rise in the amount of Indian excise refund contributed to such a high growth of customs revenue," states the report by Nepal Rastra Bank (NRB).
In the review period, excise revenue increased by 23 per cent to Rs 7.29 billion compared to an increase of 31.6 per cent in the same period of the previous year. Reforms in excise administration, identification of new excisable goods and increase in the imports of high tax yielding vehicles accounted for such a higher excise revenue in the review period.
Income tax revenue increased by 33.8 per cent to Rs 12.84 billion in the first nine months of 2007-08. The increase in the income of some public enterprises and private enterprises as well as the rise in investment income accounted for a higher growth of income tax collection. Last year, such revenue had grown by 34.3 per cent, it stated.
In the review period, non-tax revenue increased by 20 per cent to Rs 10.42 billion compared to an increase of 28.2 per cent in the same period of the preceding year. Such an increase in non-tax revenue was on account of dividend paid by some public enterprises including the NRB.In the review period, the government received foreign cash grants of Rs 11.61 billion. The government had received foreign cash grants of Rs 11.43 billion in the corresponding period of the previous year.
The outstanding domestic debt (excluding overdraft) of the government stood at Rs 93.80 billion as in mid-April 2008. Such outstanding debt had stood at Rs 96.18 billion at the beginning of the current fiscal year, the report stated.

Monday, June 16, 2008

Sebon alerts sales, issue managers

Securities Board of Nepal (Sebon) has issued directives to the issue and sales managers to make capital market more transparent.According to the new directives, the regulatory authority of capital market has asked sales and issue managers to submit report of collection centres — the amount and forms collected — everyday or the next day by 12 noon.
Similarly, the board has asked to open a joint account in the name of banker to the issue (commercial bank) and ownself to deposit the collected amount for the IPOs. "Every next day the money thus deposited must be deposited in an account — opened for this purpose in the Nepal Rastra Bank (NRB) — at least for three days.
The applicants will also get the interest, though a nominal, till the date the shares are alloted, states the new directives."The new directives are needed as over Rs 2 billion Initial Public Offerings (IPOs) and bonds are being issued soon," Dr Chiranjivi Nepal, chairman of the regulatory authority of the capital market said, adding that enforcement of rule is more important than bringing the rule itself.
The board is, this time, very cautious about the citizenship certificate also, as its monitoring unit had last time raided and confiscated the Nepal Development and Employment Promotion Bank's (NDEPB) IPO application forms — from different collection centres — with suspicious citizenship certificates.
The NDEPB had received 5,00,000 applications amounting to over eight billion rupees that it claimed to be oversubscribed. The eight billion rupees claimed to be collected was not 'the cash'. The collection of cash did not exceed half-a-billion and the amount was only in the papers.According to the new rule now, the cash must be deposited at a NRB account unlike the earlier practise of showing it on paper only.
To check the 'fake oversubscription' of IPOs, Nepal Rastra Bank (NRB) had also issued directives one month earlier."Public has, recently, lost their appetite for IPOs and the new move by the board is hoped to reinstall their confidence," said Nepal.
Due to the 'fake citizenship issue' of NDEPB, over 3,000,00 applications were dumped. Now, the Sebon thinks that Merchant banks will be more responsible and the problem will not be repeated as the board has strictly asked the investors not to use fake citizenship certificate or face the action.

Thursday, June 12, 2008

Nepal started exporting eggs

Nepal has recently started exporting eggs and chicken to Bhutan.
"National Breeder has recently started exporting eggs to Bhutan," said Guna Chandra Bista, president of Nepal Hatchery Association (NHA) and executive chairman of Avinash Group of Poultry Industries that is the first hatchery of Nepal.
Nepal is self-dependent on chicken and egg. Since the domestic production exceeds the consumption, it is started to be exported also. "Nepal had been self -dependent on eggs and chicken since last 10 years," he said, adding that it saves five to seven billion rupees. But he complained that they are forced to cut down the production to 60 per cent due to rumours of bird flu.
"The industry that has an investment of around Rs 13 billion needs a strong Poultry Policy. It is also one of the sectors that contributes handsomely to the GDP," he said. Government needs to bring a clear national policy to promote this business. "Due to unclear policy growth of the sector has stalled," he added.
"We do not have Avian Policy and 20 to 30 per cent of investment in the poultry farm is on live avian so there is no safety of our investment," an Osho deciple-turned-entrepreneur Bista, who is also known as Swami Krishnananda Bharati said.Nepal used to consume Rs 17 billion worth chicken in 2001. But it is reduced to around Rs 12.75 billion at present, he said adding, 'still domestic demand is around 0.2 million to 0.25 million chicken per day.'
"The demand of egg is rising by two per cent every year," he said, adding that the broiler chicken market is expanding by 10 to 12 per cent. "It can expand more, if we have slaughter house," he added.
Valley cold store is planning a slaughter-house that may help increase productivity and at the same time decrease price of chicken. He thinks that the business has more potential to increase as it is affordable and considered nutrition for the poor.
The hatchery industry employs around 80,000 people directly and around three times more indirectly. "But it needs the government backing for sustainability," he added.Out of the total 80,000 people involved in the business 35 per cent are in Chitwan only. Chitwan has 55 per cent contribution In poultry business, whereas in hatchery Chitwan contributes 45 per cent.
Nepal is self-dependent on chicken feed also. "Not only that Nepal exports chicken feed worth Rs 300 million to Rs 350 million," said Anada Bagaria, director of Pro Bio-Tech Industries, the largest Nepali chicken feed producer under Shakti brand.
Nepal has many feed manufacturing units that have capacity upto 50,000 metric tonnes of production.

Wednesday, June 11, 2008

Nepse rejected listing of Merchant Finance

To protect the investors, Nepal Stock Exchange (Nepse), the sole secondary market, today refused to list Merchant Finance Company Ltd's shares for trading.
Nepse, propelled by the financial companies, smelled rat after it found the Merchant Finance Company's prospectus misleading and accounts in red since it started operations in 2052 BS.
"The company has been continuously in loss since it started its operation," Rewat Bahadur Karki, general manager at the Nepse said, adding that the prospectus of the company is also misleading. After the listing, shares of the company is most likely to go sky high as other financial institutions. "Once, its shares are listed, the investors, who buy it thinking of making money might find themselves being cheated," he added.
Its not the first time for Merchant Finance Company, promoted by entrepreneurs and former Nepal Bank Ltd employees like Gambher Bajracharya, Dev Jyoti Kansakar, Gopal Manandhar, Bishnu Man Joshi, Shubha Kaji Shakya and Roshan Lal Shrestha that it found itself in such a situation.
Earlier, Nepal Rastra bank (NRB), the regulatory authority, has also stopped the company to collect deposite due to its bad financial health. "The central bank has also directed the management to appointment new management team," Samaj Prakash Shrestha, CEO of the company, said, adding that his appointment one-and-a-half year ago was also according to the NRB directives.
According to him, the Nepse has objected to the loss it has been incurring since its operation. "The company had projected profit for the fiscal year 2063-64 in its prospectus," he agreed, "But the company posted a loss in the fiscal year 2063-64 due to loan-loss provisioning."
The company — that started its operation on 2052.11.14 — floated its 114,000-unit shares at Rs 100 face value to the public after 13 years, on 2064.4.28. Despite, its 'poor' financial health, its Initial Public Offering (IPO) was oversubscribed by around four times. The issue manager, Nepal Finance And Savings Company Ltd of Merchant Finance and Securities Board of Nepal, (Sebon), the regulatory authority of the capital market, have also been blamed for not being thorough in their procedures.
On 2065.1.30, the company applied to the Nepse for the listing. But the Board of Director's (BoD) meeting of the Nepse on 2065.2.23, last Thursday, rejected its application on the grounds of its poor financial health and the possibility of investors being cheated.
According to its prospectus, apart from fiscal year 2061-62, when the company has registered 0.2 million profit, it has been continuously making loss.
Though, the Sebon is trying to make capital market more transparent, vibrant and investor-friendly, Merchant Finance Company is yet another eye-opener after the over eight billion rupees IPO scam of Employment Promotion and Development Bank (EPDB).

Tuesday, June 10, 2008

Agriculture growth may push GDP up

The real agriculture GDP, one of the key sector for Nepali economy, is expected to record a growth of six per cent for 2007-08. The growth in real agricultural GDP was 0.7 per cent in 2006-07, according to the current macroeconomic situation based on the first nine months' — the third quarter (Q3) — data of this fiscal year.
The agriculture growth could push the gross domestic product (GDP) to four per cent.
Based on the performance of agriculture, industrial, tourism and other services sector, the overall real GDP is expected to hover above four per cent in 2007-08. The real GDP growth was 2.5 percent in 2006-07.
The figure also reveals that Nepal's food security is not 'under threat' because the production is expected to grow despite government's apathy. "But the production must be increased to meet the increasing population," says Dr Mishri Lal Shah, chief at the Parwanipur Agriculture Reserach Station.
The agriculture growth is on the basis of agriculture output. As per the agriculture related statistics recently released by the Ministry of Agriculture and Co-operatives, the production of paddy showed a substantial growth of 16.8 per cent in the current year.
However, the production of paddy had declined for the last three consecutive years. The production of wheat, maize and millet is likely to increase by 3.8 per cent, 3.2 per cent and 2.2 per cent respectively in the current year, according to the report.
While the vegetable production is also expected to grow by 9.6 per cent in the current year in comparison to a growth of 6.7 per cent last year, the fruits and spice production is reported to grow by 8.4 per cent in the current year in comparison to a 5.4 per cent growth last year.
As a result of significant increase in the production of paddy, which contributes 21 per cent to total agricultural production and a satisfactory growth in the production of vegetable — that has a share of around 10 per cent in total agriculture production — and fruits and spice — that has a share of 7.04 per cent.
It is definately not an economic revival but a positve sign towards the ruarl economic growth, says an agro-economist. "But in recent days, it seems that government is 'unconciously' taking a policy shift and giving less priority to the agriculture sector," he blamed, adding that the absence of JTAs in the villages, inavailability of fertilizers, insecticides and pesticides, on time and not enough irrigation facility are stalling the possible-growth.
Nepal has a comparative advantage in the agriculture produces and agro-based industries but the government has not been serious to support them. "As a result the production cost of Nepali farmers per kg rice is Rs 1.50 costilier than Indian farmers because of the subsidy they get," says Shah.

Monday, June 9, 2008

Cottage industry fair concludes

Pampha Bhusal, minister for Women, Children and Social Welfare today honoured 13 best entrepreneurs and presented awarads to them.Prabin Dhaka Udhyog, Jhapa received Rs 25,000 cash prize sponsored by Federation of Nepalese Chambers of Commerce and Industry. Similarly, Swanig Achar Udhyog, Kathmandu received Rs 15,000 cash prize sponsored by Nepal Chamber of Commerce, at the concluding ceremony of the 19th edition of National Small and Cottage Industry Exhibition.Gyan Devi Handicraft, Lalitpur bagged Rs 10,000 cash prize sponsored by Handicrafts Association of Nepal. Makwanpur Bamboo Handicrafts bagged the cash prize of Rs 10,000 sponsored by Nepal Cottage and Small Industries Federation, while Rs 10,000 cash prize sponsored by National Federation of Cottage and Small Industries was awarded to Milan Radipakhi Udhyog, Rumjatar.Rara Handmade, Mugu; Langhali Dhaka Kapada Udhyog, Ramechhap; Rochak Handicrafts, Kathmandu; Kanchan Khukuri Udhyog, Dhankuta; Bhaibahadur Nigalo Udhyog, Okhaldhunga; Noname Handicrafts, Lalitpur; Purna shoe Centre, Kalikot; Makwanpur Carpentor Woodcraft; Nepal Craft Paper Industries, Kathmandu; Laxmi Fruits Refinery, Ropla; Netra handicrafts, Gorkha and others bagged the best entrepreneur award with Rs 7,000 cash and trophy of 10-tola silver and certificate.Doormilla Dhaka, Udaypur received the best women entrepreneur award of Rs 7,000 cash prize and a trophy.The exhibition, organised to promote products of micro and cottage industries, attracted around 50,000 visitors within the five days. The event provided a platform for micro and small entrepreneurs to explore markets.Together 154 stalls of various products representing 65 districts under 13 different categories were on display-cum-sales in the event. The products from Pashmina to Dhaka clothes, readymade garments, metal crafts, bamboo products, clay and stone goods, leather goods, wooden craft, forestry products, carpets and woollen goods, handmade paper, food to drink items and others — displayed were produced using local raw materials and indegenious technologies.
Cottage and Small Industries Development Board, in association with eight different organisations, has organised the exhibition.

Petroleum products' price hike

Nepal Oil Corporation (NOC) after its various attempts hiked the price of petrol to Rs 100 per liter from Rs 80, the price of diesel and kerosene to Rs 70 and Rs 65 per liter, respectively. The price of cooking gas per cylinder has also been increased from Rs 1100 to Rs 1200 (for Kathmandu valley) and Rs 1180 (for outside Kathmandu).
The state-owned oil monopoly thinks that new price will help improve supplies. But its not that easy as the supply has been drastically cut down to 40 per cent recently.
according to the only oil supplier, even with the new price rise, the monthly losses of NOC stands at Rs 1.5 billion. Earlier its monthly losses stood at Rs 2.62 billion. Owing to severe rise of fuel price in the international market, it had been suffering huge losses and had reduced supplies by 40 per cent.
The board of directors today took decision to hike the price of petroleum products after they got green signal from the political committee of the cabinet to adjust market prices.
The government has also allowed the private sector also to import and supply the petroleum products. But the million dollar question is will it solve the problem or the ultimate solution is desolution of the white elephant NOC.

Sunday, June 8, 2008

Investors’ handbook

Rabindra Bhattarai, a share analyst and lecturer at Shankar Dev Campus, has brought yet another book for investors and to-be investors. But this one is a hand-book — Sharebazar ka Jigyasaharu — Frequently Asked Questions about share market.
Not only in Nepal but capital market worldwide is known for its irrational exuberance. Investing on stocks is one of the best options apart from investing on lands or gold, the traditional investment instruments. But books in Nepali to educate investors are difficult to find in the market. This book will, thus, be helpful to the investors and to-be investors to know the basics and dynamics of the Nepali share market.
The rules of investing or picking a stock donot change with the conditions in the market; either one would invest on Initial Public Offering (IPO) or in the secondary market. When one picks a stock from a secondary market or participate in an IPO from investment angle, then one should place importance on the company, its background and promoters, financials and valuations. Sharebazar ka Jigyasaharu will help understand these essentials.
Two rupees each from the sale of this book will go to Education First- an initiative by Fine Print to establish schools in every region.

Saturday, June 7, 2008

Air tickets to cost more

After the price hike of air turbine fuel (ATF) for domestic use at Rs 100 a litre and for international operations at $1500 per kilolitre the Airlines Operators Association of Nepal (AOAN) has today submitted a new air-fare to the Civil Aviation Authority of Nepal (CAAN).
"According to the earlier agreement, the CAAN must give a go-ahead within 48 hours of submitting the proposal of new air-fare," said one operator without being quoted.
Soaring oil prices have forced the state monopoly Nepal Oil Corporation (NOC) to raise ATF prices by Rs 10 per litre for domestic use and $170 per kilolitre (1000 litre) for international operations.
However, this is the second time the price has been hiked in aviation fuel in less than one month, which the state-run sole oil importing and distribution entity, termed an inevitable move to prevent from grave fuel crisis in the country.
On May 13, NOC had hiked the aviation fuel prices by 10 and 21 per cent for domestic and international usages respectively. "According to the agreement, the hike in Rs four will be enough for the operators to raise the airfare," he added.

Friday, June 6, 2008

Where have all these companies gone

The whereabout of more than three dozen companies worth around Rs 1 billion is unknown to their shareholders.
"38 companies — including once very popular and highly valued Necon Air that had its shares traded at Rs 700 per unit then — have been delisted from the Nepse," according to Nepse. The total amount of delisted shares worth around Rs 963.2 million. But the shareholders find themselves at the deadend once the company is delisted. There is no authority that looks after the interest of the shareholders. Who will pay back their money and how will it be paid, nobody knows.
Securities Board of Nepal (Sebon), the regulatory authority of capital market, had earlier started the search for these companies and their promoters. "We are trying to locate the companies and their promoters of such companies," said Dr Chiranjivi Nepal, chairman of Sebon. Some promoters have now become the promoters of other companies.
Nepal Stock Exchange (Nepse) has started Over-the-Counter trading from Wednesday to give a chance to the shareholders to sell or buy the shares of these companies. "However, who is going to buy the shares of such companies that have no existence," asked one investor. "Except Nepal Bank Ltd (NBL), nobody knows whereabouts of these companies," he added.
Nepse had delisted Nepal Bank Ltd's 3802846-unit of shares with face value Rs 100 per unit. But Nepal Rastra Bank, the central bank, has citing ongoing Economic Sector Reform Programme, has requested Nepse not to start its trading at present.From a company that has Rs 10 per unit face value like Nepal Metal Co to companies with their per unit share value Rs 100 like Necon Air, Bansbari Leather Factory and Nepal Med Ltd, a total of more than three dozen are nowhere in sight.
The shareholders have no idea where have al these companies and their promoters gone. Most of the delisted companies, except Nepal Bank Ltd, have already been closed.
According to the Stock Exchange Regulation-2002 the companies, which do not respond within 15 days of the decision of delisting to the Nepse are automatically delisted. For the first time Nepse delisted 26 companies on July 16, 2002 and for the second time on March 6, 2007, it delisted 12 companies.
After the Sebon's approval the OTC Market Regulation has come into effect but will it be operational is a million dollar question.One does not have to go to brokers to trade in OTC market. The buyer and seller can directly go to Nepse and trade paying the commission that is two per cent upto Rs 25,000 transaction, from Rs 25,000 to Rs 50,000, it is 1.5 per cent and Rs 50,000 over transaction will attract one per cent.

Delisted on July 16,2002
1. Balaju Yantrashala Sanitation Ltd
2. Kathmandu Pauroti Udyog
3. Pokhara Pauroti Udyog
4. Hetauda Leather Factory
5. Juddha Match Factory (Birgunj)
6. Balaju Yantrashala Electro Ltd
7. Indreni Soyabean Ltd
8. Raw Leather Collection Development Ltd
9. Gandaki Brick Factory Ltd
10. Agro Nepal Ltd
11. Nepal Metal Co Ltd
12. Nepal Jugal Wool Public Ltd
13. Nepal Trade Temple Ltd
14. Everest Wool Ltd
15. White Everest Byapar Co Ltd
16. Nepal Wool Imports and Supplies Co Ltd
17. Nepal Everest Co Ltd
18.Intrade Nepal Ltd
19. Greenhill Trading Co Ltd
20. Nepal Progressive Trading Co Ltd
21. Kasthamandap Trading Co Ltd
22. Lumbini Trading Co Ltd
23. Himalayan Trading Co Ltd
24. Nepal Unique Trading Co Ltd
25. Ram Janaki Trading Co Ltd
26. Nepal Bank Ltd

Delisted on March 6, 2007
27. Nepal Battery Co Ltd
28. Juddha Match Factory (Biratnagar)
29. Nepal Plywood & Bobin Co Ltd
30. Himal Cement Co Ltd
31. Sayapatri Colour Lab
32. Nepal Med Ltd
33. Ace Laboratories (Nepal)
34. Bansbari Leatherage
35. Necon Air Ltd
36. Nepal United Co
37. Plastic Trading Co
38. Nepal Byapar Bikas Co

Thursday, June 5, 2008

Comen starts copper, zinc futures

Comen has introduce three new metals - silver, copper and zinc — to be traded that provide investment, hedging and arbitration opportunities for the customers.
Silver, copper and zinc — extensively used for household utensils, wiring and jewellery — will boost the future market demand benefiting the producers, investors and traders, states a press release. "Currently the demand for zinc in Nepal is huge, which is a definite scope that will provide transparency to markets and help manufacturers earn remunerative returns," it adds.
Comen, established in 2006, is the first and only commodities and metal exchange in Nepal. Commodity and metal are considered ideal tools for economic progression. An exchange is an institution that hosts a market where stocks, bonds, options and futures, and commodities are traded.
Comen has also entered into a strategic alliance with Jamb technologies to initiate derivative training to its brokers and investors and enhance their skills. It conducts various training and educational programs related to derivative market to make the market more vibrant. "Comen, with the objective of bringing the act of Public warehouse system, also aims at fostering the flow of international investment, promoting sustainable growth of capital market and generating employment," claims the release.
With the advantages of price discovery of both cash and futures, creating savings and investments in the long run, developing intellectual capital awareness and representing broad based economic indicators like GDP, National income, Comen is eager to develop commodity futures market in the context of globalisation.It has also first started its trading in gold futures with a minimum spread, states a press release. "Comen maintains a maximum volume in a day transaction in Futures gold contract of 1kg, 500gms and 100gms respectively.

Metals Unit Contract Size
Silver 1 kg 30 kg
Copper 1 kg 1000 kg
Zinc 1 kg 5000 kg

Wednesday, June 4, 2008

Inflation at 8.9pc, budget deficit rises

The year-on-year consumer inflation stood at 8.9 percent in mid-April 2008 compared to 5.6 per cent in the corresponding period last year.
The inflation was mainly driven by the significant rise of 12.6 per cent in prices of food and beverages in the review period, according to the current macroeconomic situation based on the first nine months' — the third quarter (Q3) — data of this fiscal year.
"Of the items in the index of food and beverages group, the prices of oil and ghee, grains and cereal product and pulses increased by double digit," states the central bank. For example, the price indices of oil and ghee sub-group increased by a whopping rate of 33.8 per cent on year-on-year basis. Prices of rice and rice product of this sub-group increased by 25 per cent (y-o-y) compared to 4.9 per cent a year ago.
Similarly, the budget also remained at the deficit of Rs 5.29 billion in Q3 of the current fiscal year. "The budget was at the surplus of Rs 4.2 billion in the same period last year. The relatively higher growth of government expenditure resulted in the budget deficit in the review period," states the NRB report.
The government expenditure, on a cash basis, increased by 31.5 percent to Rs 90.32 billion in mid-April 2008 compared to an increase of 13.3 percent in the same period last year. The increase in government expenditure was on account of the rise in all three heads of government expenditures — recurrent, capital and principal repayments.
On the external front, the declining merchandise export has been a matter of concern. In Q3, total exports went down by 2.6 per cent in comparison to a decline by 2.9 per cent in the corresponding period last year. "In the review period, export to India plummeted by 8.3 per cent and to other countries increased by 10.3 per cent," NRB report states.
However, the overall BoP posted a surplus of Rs 13.68 billion in Q3 of current fiscal year. The BoP had registered a surplus of Rs 10.89 billion in the corresponding period last year.

Monday, June 2, 2008

NMB becomes 25th commercial bank

NMB Bank Ltd has, from today, officially became the 25th commercial bank — the youngest A-class bank — in a small scale economy like Nepal.
"As a commercial bank, we could now enjoy more facilities that we couldnot as a finance company," said Upendra Poudyal, CEO of the bank. "However, we will continue to work as a merchant bank that has been our identity since its inception some 12 years ago," he added.
Established 12 years ago as a Rs 200 million finance company, Nepal Merchant Banking and Finance Ltd turned NMB Ltd has increased its paid up capital to Rs 1 billion. "It's the first finance company (under C-class) that has been upgraded to a commercial bank (under A-class)," claimed Poudyal.
"Though there is a cut-throat competition in the market, as the youngest commercial bank, we will always try to exceed the expectations of our clients," he added.
"The central bank has permitted NMB to upgrade into commercial bank — after it increased its paid up capital to Rs 1 billion — on May 6," Poudyal said, adding that it is opening two new branches soon. "Within two years, NMB will add 10 more branches to its network," he added.
NMB Bank Ltd has been promoted by Nepali economists and entrepreneurs alongwith Employees Provident Fund (EPF) and Yong Lian Realty Sdn Bhd of Malaysia as a foreign joint venture partner that has 15 per cent stake.