Thursday, March 31, 2011

Govt to collect Rs 2.46 billion from VAT evaders

At a time, when revenue mobilisation has been slow, almost in a state of stagnation, struggling to meet the target, the government could rake in Rs 2.46 billion into its coffer, if the current investigation into fake VAT bills is not interrupted.
“After probing 31 tax payers, we have found income tax liabilities come to Rs 1.41 billion and fake VAT liabilities come to Rs 1.5 billion, making a total of Rs 2.46 billion,” revealed the Inland Revenue Department.
According to an IRD report, using fake VAT bills, three industries have defaulted revenue worth Rs 1 billion, one housing company has defaulted Rs 150 million, eight authorised automobile dealers Rs 200 million, seven exporters Rs 890 million, four construction companies Rs 810 million, three electronics business houses Rs 110 million, three hardware shops Rs 140 million, one multinational company’s authorised dealer Rs 100 million and one supplier has defaulted Rs 800 million.
“The department has also forwarded a list of 480 tax payers — suspecting them of using fake VAT bills — across the country to keep them under strict watch,” said IRD Chief Rajan Khanal.
“Using fake VAT bill is a serious crime that equals to using fake currency notes,” said Deputy Prime Minister and Minister for Finance Bharat Mohan Adhikary today at a press meet he called, snubbing the parliamentary Public Accounts Committee that had called him this morning ‘to explain the possible revenue-default of billions’. “The government is committed to making VAT defaulters pay fine,” said Adhikary, trying to come clean on ‘allegations’ that he pressured Finance Secretary Rameshwor Khanal to give amnesty to VAT defaulters. “I have no relations with the alleged VAT defaulters, the pongee Unity scam, casinos’ revenue cheating and transfer of finance ministry officials to lucrative posts.”
Finance Secretary Rameshwor Khanal on Tuesday went on home leave after ‘he was pressured to take decision that could have hurt the government coffer’. Khanal’s decision to go on leave saying he would not return, has hurt those who engineered his removal where it matters the most. Chief Secretary Madhav Ghimire said Khanal is on home leave till April 13 and has tendered resignation with effective from April 14.

Wednesday, March 30, 2011

'Give special treatment to landlocked LDCs'

Land-locked Least Developed Countries (LLDCs) should get special treatment, said experts. "The LLDCs should get separate treatment as they are additionally handicapped," said former National Planning Commission (NPC) member Dr Dilli Raj Khanal at an interaction on 'En route to UNLDC IV: Preparatory works and Nepal's Leadership, organised by South Asia Watch on Trade Economics and Environment (SAWTEE) here today.
"The cosmetic changes will not help LDCs meet the target unless there is socio-economic transformation," he said, adding that the structural transformation can alone benefit.
However, LDCs like Nepal have to enhance production capacity with changes in policy, he suggested, adding that productivity could not be enhanced with current industrial policy, institutional mechanism, and tariff regime.
The fourth United Nations Conference on the Least Developed Countries (UNLDC IV) is going to be held in Istanbul, Turkey on May 9-13. The purpose of the conference is to assess the results of the 10-year action plan for the LDCs adopted at UNLDC III in Brussels, Belgium in 2001 and to adopt new measures and strategies for the sustainable development of the LDCs into the next decade.
LDCs, including Nepal, have been engaged in preparatory works for the conference at national as well as regional and global levels through the participation of government organisations, civil society organisations, international organisations, private sector, academia, media, and all relevant stakeholders.
Currently, Nepal is the chair of the LDC Group, and therefore, the role it is playing in the preparatory process for UNLDC IV is extremely important.
"Integration of LDCs in access to multilateral trade regime could help sustainable development, said Permanent Representative of Nepal to the WTO and Permanent Mission to the United Nations Office at Geneva ambassador Dr Dinesh Bhattarai, who has been coordinating the preparatory tasks among the LDC representatives in Geneva.
In UN parlance, they are the 48 LDCs. Thirty-three are located in sub-Saharan Africa; 14 in southern Asia and Oceania; and one (Haiti) is in the western hemisphere.
Balanced on a knife edge between sorrow and hope, the case of the LDCs poses the next big globalisation challenge.
Investors are now eager to engage on a worldwide stage, and the world's new investors – the rising powers from the global south – are fast becoming major LDC trading and investment partners.

Tuesday, March 29, 2011

Secretary walks out on finance minister

Has the finance secretary taken the bull by the horns or was it just a reaction in a fit of rage? It will take some time for the truth to come out, but the bureaucratic circle today was taken by surprise when Finance Secretary Rameshwor Khanal left his office, on foot refusing to take the government vehicle, following a tiff with Finance Minister Bharat Mohan Adhikari.
According to sources, while leaving, Khanal even said he would not return to office.
Though tussles between secretaries and ministers are a commonplace, following today’s incident, rumours were doing the rounds that Khanal had even tendered his resignation. Even the donor agencies were all ears to find out what exactly happened, as they have been closely working with Khanal for quite some time.
When The Himalayan Times tried to find out, Khanal briefly said he was not in the mood to talk. “I cannot speak anything now. I need some rest.” In bureaucratic circles Khanal is known as one of the most disciplined civil servants.
“Khanal was against amnesty to VAT defaulters but Adhikari was hell-bent on saving them, as he was under the influence of the defaulters,” said a highly-placed official at the finance ministry, who was well aware of the brewing tension between the two.
Worried about low revenue mobilistion in the current fiscal, the ministry has come hard on VAT defaulters and was raiding firms almost every day, but the crackdown came to a halt after Adhikari became finance minister, said ministry officials. “VAT defaulters are supposed to pay Rs 1.30 billion to the government, but instead, they influenced the finance minister,” said the ministry official.
“However, the brewing tension today spilled out of the brim at a time when Unity — a pongee scheme that has fled with billions from people — was trying to regroup itself by influencing political parties and VAT defaulters were pressing the finance minister to transfer Khanal,” added the official.
Today’s incident is observed by the bureaucrats as an addition in the series of tussles as in recent times they have seen war of words between former energy minister Prakash Sharan Mahat and secretary Shankar Prasad Koirala, former minister for labour and transport management Mohammad Aftab Alam and secretary Dinesh Hari Adhikari, former forest minister Deepak Bohara and secretary Yubraj Bhusal and former deputy prime minister and foreign minister Sujata Koirala and secretary Madan Kumar Bhattarai during Madhav Kumar Nepal-led government.
However, bureaucrats believe that there was an urgent need to overhaul the working culture of ministers.
“How can people expect bureaucracy to work for public welfare when ministers pressure secretaries to work to fulfil their partisan and personal interests, that too going against the rule of law,” added the official.

USAID helps $30 million

The US is helping Nepal strenghten fiscal and trade policies.
"The US Agency for International Development (USAID) through Nepal Economic, Agriculture and Trade (NEAT) project will also encourage competitiveness and exports, enhance food security and increase access to financial services," said US ambassador Scott H DeLisi at the launching the NEAT programme here in the Valley today.
"Development assistance alone cannot improve lives of Nepalis, DeLisi said, Lauding the private sector's role. "The private sector could transform the economy and create opportunities for youth not the international donors."
NEAT will invest $30 million to foster a conducive business environment for private sector-led growth, encourage competitiveness and exports in selected agriculture and non-agriculture commodities or services, initially tragetting lentile, ginger, orthodox tea and vegetables, said NEAT's chief of Party Phil Broughton.
The programme will help improve trade and fiscal policies and practices to facilitate trade and increase revenues without distorting the economy, he said, adding that the programme will also strenghten microfinance policy and institutions to increase access of women, poor and disadvantaged to financial services.
Broughton also emphasised on the need to create Credit Information Bureau (CIB) for microfinance institutions to check multiple lending -- that has been observed recently -- as the over lending could create systemic problem in the microfinance sector.
The two-and-a-half year NEAT programme also targets to work in selected districts in the Mid-West and far-West regions. "Working with a broad range of partners including the government agencies business associations, farmers' cooperatives microfinance institutions, NGOs and local research institutions, the programme is expected to impact millions of lives in the rural areas, he added.
Similarly, taking part in the panel discussion Laxmi Bank CEO Suman Joshi said that marriage of technology and microfinance can help expand reach of financial access to rural youths and reverse the trend of increasing informal economy.
"Capacity building of bureaucracy, professional trade union and policy stability can help propel economic growth," he said, advising to reform capital market to attract Foreign Institutional Investors as without foreign direct investment, the country cannot invest on huge infrastructure projects.
"The national savings is too low to fund big projects leaving no alternatives to attract foreign direct investment," he added.

Monday, March 28, 2011

Nepal, Taiwan sign pact to jointly combat money laundering

Nepal signed a memorandum of understanding (MoU) with Taiwan today to join hands in fighting against money laundering, terrorism funding and other financial crimes.
Head of the Financial Information Unit of Nepal Rastra Bank Dharma Raj Sapkota and director-general of Investigation Bureau (IB) under Ministry of Justice of Taiwan Chang Chi-ping signed the MoU on behalf of their respective institutions in Taiwan.
Under the MoU, the two countries will exchange information about suspected money laundering and other cross-border financial criminal activities, including terrorism financing.
Nepal and Taiwan both are members of the Asia Pacific Group (APG) on Money Laundering. The two countries began discussions last year on the MoU during an annual APG conference in Singapore.
As Taiwan was designated to help Nepal meet the requirements to join the Egmont Group to counter money laundering, Taiwan has sponsored a training programme for central bank officials of financial intelligence department on how to craft a legal framework for documentation of financial dealings and prevention of money laundering.
Only Egmont Group membership qualifies Nepal to exchange information -- relating to Money Laundering and Terrorism Financing -- with and among the FIUs around the world. Nepal has made preliminary application for Egmont Group membership in January 2010.
The Egmont Group of Financial Intelligence Units (FIUs) provides a forum for FIUs to improve cooperation in the fight against money laundering and the financing of terrorism and provide support for the implementation of domestic AML/CFT regimes.
The Group was founded in 1995, when a group of FIUs met at the Egmont Arenberg Palace in Brussels, and now has 116 members worldwide. The member FIUs meet regularly to find ways to cooperate, especially in the areas of information exchange, training and the sharing of expertise.
Currently known as the Egmont Group, these FIUs meet regularly to find ways to cooperate, especially in the areas of information exchange, training and the sharing of expertise.
As part of the recognised global network of FIUs, Egmont members can take advantage of the cooperation and mutual assistance fostered by the group. Meetings and workshops provide a forum for the sharing of best practices, and allow all members to participate fully in Egmont Group decision-making. Members share experiences and ideas, offer advice, and learn from the successes and mistakes of colleagues.
The Egmont Group has fostered a collegial environment over the years, a forum of goodwill where colleagues meet, become acquainted and openly and eagerly assist one another.

ADB grant to spur agribusiness, higher incomes in hilly districts

The Asian Development Bank (ADB) is to help thousands of households in remote mountainous areas of Nepal gain more income from the production and sale of valuable agricultural produce.
A grant of $20 million from ADB’s concessional Asian Development Fund for the High Mountain Agribusiness and Livelihood Improvement Project will be provided to small farmers and rural enterprises to help them increase the value and salability of their goods, said the Manila-based agency.
The initiative is expected to generate new jobs for an estimated 7,500 people, directly benefiting about 5,000 households in 10 districts across four development regions.
"The goal is to make mountain agribusinesses more commercially viable and to take advantage of improving rural infrastructure, as well as rising private sector interest in their goods," said Hans Woldring, agriculture and natural resources economist with the ADB.
Agriculture employs about two-thirds of Nepal’s population and contributes over a third of the country’s gross domestic product (GDP). Despite the sector’s importance, growth has been constrained by farmers’ limited access to services, marketing, and employment opportunities.
The country is not only a net food importer, but it is also witnessing a rising private sector demand for many mountain products such as wool, seeds, off-season vegetables and medicinal plant products.
By supporting activities such as improved processing, packaging, distribution and marketing, the project will help agribusinesses add quality and value to their goods, increase investment opportunities and links with the private sector, and boost off-farm employment.
"It will be especially beneficial for women as many farm households are headed by them, and they are heavily involved in small rural enterprises engaged in producing high-value items from local materials," the bank added.
The government will provide over $4.5 million equivalent, while beneficiaries sponsoring private sector investments in the industry will extend over $5.7 million equivalent, for a total project cost of over $30.2 million. The Ministry of Agriculture and Cooperatives is the executing agency for the project which has an expected completion date of April 2017.

Zhao leaves Kathmanu
KATHMANDU: Vice-President of ADB Xiaoyu Zhao reiterated ADB’s continued assistance for Nepal’s efforts to reduce poverty and promote inclusive growth and at the same time urged Nepal to remain focused on the country's reform and development agenda, while taking the peace and constitution drafting process forward. Zhao was informed of the government’s plan to address the energy crises and he affirmed ADB’s support to help address the power shortages. He stressed that developing alternative and renewable energy in a sustainable manner and strengthening Nepal’s economic and infrastructure linkages with neighboring countries through regional cooperation were also important and also called upon greater investment in public-private partnerships for sustainable development. He also congratulated the new government and expressed confidence that the new government would continue to forge a broad-based political consensus for taking the peace and constitution drafting process forward, along with creating a conducive environment for development activities and inclusive growth for all. Zhao made the comments at the end of a three-day official visit to the country. During his visit, Zhao held consultations with the newly-elected PM Jhala Nath Khanal and DPM and Finance Minister Dr Bharat Mohan Adhikary. Zhao also made field trips to various ADB-assisted projects in Lumbini and the surrounding areas, and met up with the project staff and beneficiaries. He visited the South Asia Tourism Infrastructure Development project, where ADB is supporting development and improvement of infrastructure and services in Lumbini. Zhao also visited the Bhairawa-Bhumai road that was constructed under the ADB-assisted Subregional Transport Facilitation Project.

Global smartphone shipments to hit 653m by 2016

The global smartphone market will double in size by 2016 to hit shipments of 653 million, according to a study by Ovum.
Android will drive the growth and will emerge as the dominant platform, outperforming Apple with a 20.5 per cent lead on market share.
Smartphones will grow at a CAGR of 14.5 per cent between 2010 and 2016, and will account for approximately 40 per cent of the mobile phone market. Asia-Pacific will ship just over 200 million units by 2016.
Western Europe and North America will remain strong markets with 175 million and 165 million shipments respectively. There will be shifts in dominance for smartphone software platforms, with Android taking the lead with 38 percent market share, compared to Apple iOS' 17.5 per cent, by 2016. Just behind Apple iOS will be Windows Phone, with 17.2 per cent market share by 2016, followed by BlackBerry OS with 16.5 percent.
The partnership between Nokia and Microsoft has redrawn the smartphone market and will result in a reduction in shipments of Symbian-based handsets as Nokia transitions to Windows Phone as its primary smartphone platform. However, Nokia still expects to ship 150 million Symbian-based handsets so there will be shipments beyond 2012 and in some regions into 2016.

East African community to discuss regional cyberlaw

The East African Community (EAC) Task Force on Cyberlaws will meet in Mombasa, Kenya on March 28–30 to discuss the next phase in putting into effect laws endorsed by countries of the region to smooth the conduct of business through information and communication technologies (ICTs).
The meeting will be followed by a March 31- April 1 briefing for members of the Parliament of Kenya on selected legal and regulatory issues relating to e-commerce, m-commerce and business operations conducted by mobile devices, said the UNCTAD press note.
The opening session of the briefing will be attended by the Kenyan minister of information and communication technology, Samuel Poghisio.
The Task Force meeting, organised jointly by the EAC secretariat and UNCTAD, will review progress in implementing the Cyberlaw Framework’s Phase I, which covers electronic transactions, electronic signatures and authentication, data protection and privacy, consumer protection, and computer crime.
In addition, officials will consider a draft framework for Phase II, which focuses on intellectual property rights, competition, e-taxation and information security.
The intent is to finalise the draft and submit it for adoption by relevant EAC institutions. Thirty-five members of the task force will attend, including representatives from the Ministry of East African Cooperation and national officials from Ministries of Justice, Law Reform Commissions, ICT Ministries, and regulatory institutions dealing with telecommunications, revenue and competition. Other participants will come from the East African Business Council and the East African Legislative Assembly. Also, representatives from the United Nations Economic Commission for Africa (UNECA) and the United Nations Commission on International Trade Law (UNCITRAL) will attend. The framework for Phase I of the harmonization project was endorsed by the EAC Council of Ministers last November. Developing country officials are increasingly aware of the need to adapt and harmonize legislation to take into account the Internet economy and the potential of both e-commerce and m-commerce for boosting domestic and cross-border business.
UNCTAD supports activities to build the capacities of developing countries in the ICT field. In East Africa and other regions, it has helped lawmakers prepare cyberlaws that protect both consumers and businesses, and encourage economic growth. EAC member countries have taken a number of steps to adapt legislation to the increased use of ICTs, in particular mobile phones, for business and financial operations. The briefing of members of the Kenyan Parliament will cover legal and regulatory issues relating to e-commerce and m-commerce, and review the EAC cyberlaw harmonization process. The briefing, organized by the Commission on Communications of Kenya and UNCTAD, aims not only to accelerate the process of enacting draft cyberlaws, but to ensure proper implementation and subsequent administration of the EAC framework.
The briefing is particularly relevant because delivery of the Government’s development strategy, Vision 2030, depends in great part on ICT platforms. The strategy also includes major targets related to regional trade. The Government has shown strong determination to advance on cyberlaw reforms, given the increasing use of mobile phones within the country forfinancial transactions. Kenya is currently deploying many new mobile money services and applications following the introduction of its M-PESA – a mobile-phone based money transfer service – in 2007. These latest activities on cyberlegislation are being funded by the Government of Finland, which since 2006 has supported EAC efforts to harmonize cyberlaws.

Sunday, March 27, 2011

Supplementary Budget in offing, lawmakes at dark

The government is bringing Supplementary Budget by Friday, but the parliamentarians have no clue of who is preparing the budget and where.
"Even the Finance Ministry is being kept in dark,” claimed the parliamentarians.
But Dr Dilli Raj Khanal, a member of the Supplementary Budget preparatory team that also has Dr Sriram Poudel and Dr Dinesh Chandra Devkota, said that they are bringing Supplementary Budget by the end of this week.
Khanal also claimed that Supplementary Budget will address current economic anomalies, and stimulate exports encouraging private sector investment, though there is less time to implement it.
The fiscal year has only four months. "Due to less time to implement the budget, it will be realistic, he added.
“Evaporation of exports has bled the economy,” Khanal said, adding that the fiscal policy must stimulate exports’ share in the total trade that has dropped to 14 per cent.
“It will also address the current liquidity crunch in the banks and increase their lending capacity to the productive sector,” he said, adding that without new investment on productive sectors more employment could not be created.
The current ordinance budget presented by Surendra Pandey lacked vision as it has come without programme and policy, he justified the need of the Supplementary Budget that he thinks will expedite capital expenditure and stimulate economic activities.
However, parliamentarians today raised hell over the style of budget preparation in the Legislature Parliament.
At a time when there is only four months left in the fiscal year, the government is bringing Supplementary Budget, said Dr Ram Sharan Mahat, the Nepali Congress lawmake objecting the style of budget preparation. "We have heard that the Supplementary Budget is being prepared in ‘Guerrilla style,” he said, adding that a new economic policy is need of the hour to boost production and create conducive investment environment.
The production sector is perfoming poorly due to regular power outage, labour problems and lack of government initiatives.
Tabling a Proposal of Public Interest, Mahat seconded by Dr Prakash Chandra Lohani and Binod Chaudhary urged to boost the investors’ confidence, stop capital fligh and contain the price hike.
The consumption expenditure to GDP ratio has increased and gross national saving is shrinking, Mahat said, adding that industries are being closed blocking the no new employment opportunities, due to plunge in exports Forex reserve has dropped and the country is moving towards uncertain future.
Similarly Binod Chaudhary, CPN-UML lawmaker, said that the government has to create conducive environment for the industries to propel the economic growth.
The then finance minister Surendra Pandey had brought Rs 337.9 billion budget through ordinance for the fiscal year 2010-11, four months late than the schedule.

Saturday, March 26, 2011

GDP growth in last 10 years

Nepal's GDP growth in last 10 years

2001-02 – 0.16 per cent
2002-03 – 3.77 per cent
2003-04 – 4.41 per cent
2004-05 – 3.23 per cent
2005-06 – 3.73 per cent
2006-07 – 2.75 per cent
2007-08 – 5.80 per cent
2008-09 – 3.77 per cent
2009-10 – 3.97 per cent
2010-11 – 3.47 per cent (projection)

Nepal's GDP per capita in last 10 years
2001-02 -- $259
2002-03 -- $255
2003-04 -- $261
2004-05 -- $293
2005-06 -- $328
2006-07 -- $350
2007-08 -- $390
2008-09 -- $465
2009-10 -- $556
2010-11 -- $642

GDP Growth: Economic growth is the increase of per capita gross domestic product (GDP) or other measures of aggregate income, typically reported as the annual rate of change in real GDP. Economic growth is primarily driven by improvements in productivity, which involves producing more goods and services with the same inputs of labor, capital, energy and materials. Economists draw a distinction between short-term economic stabilization and long-term economic growth. The topic of economic growth is primarily concerned with the long run. The short-run variation of economic growth is termed the business cycle.

GDP Per Capita: Per capita income or income per person is the numerical quotient of income divided by population, in monetary terms. It is a measure of all sources of income in an economic aggregate of a country. It does not measure income distribution or wealth.

Friday, March 25, 2011

PAC directs Casinos not to allow Nepalis, strictly

Public Accounts Committee (PAC) under the Legislature-Parliament today reiterated its earlier direction to revoke licences of those casinos that have not adhered to the strict ruling of the committee not to allow Nepalis in the casinos, and have not paid their dues.
The parliamentary committee also directed the concerned ministries to recover dues by auctioning casinos' property, ensure rights of staffs currently working in casinos, keep entry records of visitors and present Casino Regulation within a week before the committee.
The committee reiterating its decision of December 28, 2010 and January 27, directed Finance Ministry, Tourism Ministry and Inland Revenue Department to present the update every 15 days.
Earlier on January 27, the parliamentary committee has directed the Tourism Ministry to revoke the licence of the casinos, if they didnot pay their dues within 35 days. "However, the casinos are still operating without paying dues and allowing Nepalis in to play against the law of the land and directives of the committee," said Constituent Assembly (CA) member Dhan Raj Gurung.
After the committee's decree, some casions have cleared their dues, some have paid only a little and others have disobeyed, he said, adding that the earlier directives should be implemented immediately. "If casinos will not pay, the hotels that have been granted licence to operate casino will pay." The casinos have paid Rs 512 million after the committees decree to revoke the licence, if they donot pay their dues.
"However, some of the casino owners are out of touch disobeying the parliamentary committee," another CA member Lal Babu Pandit said, accusing them of trying to influence the politicians and bureaucracy to seek amnesty.
"If the committee does not bring them to book, government coffer will hit hard," he added.
Most of the parliamentarians showed serious concern over social security of staff, who are employed in the casinos that have not paid their dues.
"To safeguard social security of some 7,000 to 8,000 staff, the assets of those casinos -- that have not paid by the deadline -- have to be auctioned and staff be paid their salary," said CA member Narayan Dahal. "Some of the casinos have not paid their staff since four months. One staff is reportedly committed suicide yesterday as he was frustrated with the casino that did not pay his salary."
Though parliamentarians came heavily on the casinos, they opined that the tourism sector should not be discouraged as the five-star hotels that have the licence to operate casinos are paying their taxes regularly. "Casinos have to be regulated and brought to book without discouraging tourism sector," they said. The parliamentarians also thanked tourism minintry for closing mini-casinos after their order.

Casino Anna gets new investor
KATHMANDU: Casino Anna has got new investor Shivam Intex Hotel and Restaurent Pvt Ltd owned by Arun Kumar Singh and Ashok Wassan. "We have got the new company -- that has registered itself yesterday formally -- to operate Casino Anna," said Nepal Tourism, Hotel, Casino and Restaurent Workers' Union executive member Krishna Pandey. Shivam Intex Hotel and Restaurent Pvt Ltd bought 50 per cent share from Nepal Recreation Centre (NRC) that was operating the casino earlier and is brining investment from India.

Thursday, March 24, 2011

Central Bank declares Gorkha Development Bank 'troubled', to send Samjhana Finance to liquidation

The central bank declared Gorkha Development Bank a 'troubled financial institution' and decided to send Samjhana Finance to liquidation.
The central bank’s board of directors meeting today evening has taken the decision under the Nepal Rastra Bank Act that gives the central bank the right to declare any banks and financial institutions troubled in case of financial discrepancies.
The bank will now be restricted to mobilise deposits and float loans after being declared a troubled financial institution.
Gurkha Development Bank (Nepal) Ltd -- promoted by British Gurkhas had been in trouble after a scandal over ‘embezzlement’ of Rs 130 million by its former executive director D B Bomjan and other staffers.
The bank replaced its ‘tainted’ executive director Bomjan and his team with chairman Nirmal Gurung in the second week of March. But last week, Bomjan again took over ‘forcefully’ replacing Gurung.
The central bank could not remain silence in such cases as the banks and financial institutions are losing their focus from good governance and regulatory compliance and involved in petty interest exposing the depositors’ money to risk.
Earlier, the central bank had directed Gurkha Development Bank to prepare a Due Diligence Report after former executive director DB Bamjan was found to have been involved in embezzlement while issuing credit to a customer Panchalal Maharjan.
Recently most of the banks and financial institutions have come into trouble after they failed in maintain good governance.
Similarly, the central bank decided to send Samjhana Finance after its explanation could not satisfy the central bank. The finance company submitted its explanation with proposal of new management that would take the management over and run it but central bank rejected the proposal and today decided to send it to the liquidation.
After declaring Samjhana Finance a troubled financial institution, the central bank has last year restricted it to mobilise deposits and float loans on the basis of its weak capital base and high non-performing asset.
The Banepa-headquartered finance company has an outstanding loan worth Rs 210 million and its non-banking assets stands at Rs 300 million.

Anti-Money Laundering case gone wrong

A man claims 'illegal money' in the US Court, dupes Nepal's finance ministry, foreign ministry and central bank easily and 'gets away' with $1 million, almost.
Its not the case of poor communication between the authorities rather a case of how deep the coruption is rooted in the bureaucracy and how one can 'influnce' the ministries and even the central bank.
Though, the central bank is still silence on the issue, the finance ministry has asked the Nepali embassy in Washington to get the detailed information on the case and forward the report to the US Court that the ministry sent today through courier.
The US Court had asked central bank and finance ministry on the claim of Asim Khatri Chhetri (KC) but the responsible authorities never received the letter.
"It proves that strong lobbying of KC inside the central bank and finance ministry," a senior central bank official said, adding that the letter never reached central bank governor or finance secretary but made its way back to the US Court that gave verdict on the basis of the
However, today the ministry has directed Nepali embassy in washington DC to hold talks with the US authority and clarify the government's stand on the case that is a clear case of money laundering.
In his petition to the US Court, KC had sought retrieval of the money he paid to Wu Lixian, a Chinese national for supplying logistics to the Nepal Army and Nepal Police.
The money was received in 2008 by Nepal Bangladesh Bank, Bhaisepati branch in the account of Chinese national Wu. But the bank suspecting something fishy reported the central bank instead of paying it to him.
"Neither the purchase has been made in Nepal nor the goods were delivered in Nepal," the finance ministry said, adding that the money has been however transferred to Nepal in a Nepali bank. "It is a clear case of Anti-Money Laundering but handled in a most unfortunate way."
But, this time around KC has 'almost' received the money after the US Court in New York issued a verdict in his favour two weeks ago.
Based on the court's verdict, Chase Bank that made the payment on July 14, 2008 had deducted $1 million from an account of Nepal Rastra Bank in New York to make the payment.

Revenue and Anti-Money Laundering Department gets cases
KATHMANDU: After the Anti-Money Laundering Act came into effect, the Revenue and Anti-Money Laundering Department has investigated 62 case. "Of them, three are finalised," said Mahesh Prasad Dahal, director general of the department. "Of the three also, one was fined Rs 600,000 as he could not provide the source of income of Rs 300,000," he said, adding that the remaining two got clean chit from the Special Court.

Wednesday, March 23, 2011

GDP growth declines, GDP per capita doubles

In the last five years, income of a Nepali citizen has doubled from $350 to $642, if we go by the country’s gross domestic product (GDP) per capita but the GDP growth rate has seen no encouraging growth as it is hovering below four per cent in an average. In a country where more than half of the population lives below the international poverty line of $1.25 a day, the rate of unemployment and underemployment approaches half of the working-age population forcing the citizens to move to Malaysia and Gulf states in search of work, and the general standard of living enjoyed by the average Nepali citizen has been deteriorating over the years, the growth in GDP per capita could be confusing to some extent.
“The GDP per capita is a measure of all sources of income in an economic aggregate of a country including the remittance,” said director of the National Accounts Division at the Central Bureau of Statistics (CBS) Suman Raj Aryal.
“However, the remittance is not the component of the GDP,” he added. “That explains the increasing gap between rising GDP per capita and lower GDP growth.
”The country had received Rs 231.72 billion remittance -- apart from pension and other such income from out of Nepal -- in the fiscal year 2009-10 and Rs 118.44 billion by the first six months of the current fiscal year. The key reason of rising GDP per capita but lower GDP growth is also rising consumerism. “The consumption is increasing,” he said, adding that the widening gap between the rising GDP per capita and lowering GDP growth is remittance is being wasted on consumption rather than on productive sector.
The consumption expenditure to GDP ratio that was 90 per cent in 2006-07 has increased to 93.3 per cent this fiscal year, according to the CBS report, revealing that the consumption is increasing. However, gross national saving as percentage of GDP is shrinking to 30 per cent against almost 35 per cent in the 2008-09.
“The decrease in national savings will also make the country dependent on outer resources for development activities,” he said, suggesting the policy makers to take it seriously and divert remittance to the productive sector that can help capital formation and contribute to the GDP too that is projected to grow by 3.47 per cent in the current fiscal year.
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Kush Kumar Joshi agreed. “The only remedy is to create conducive environment for investment and encourage production,” Joshi said, adding that agriculture alone cannot save the economy as the economy has diversified in the recent years.
"Other sectors like financial intermediaries emerged in the recent past, however, he opined that giving a boost to the manufacturing sector –that is expected to grow by a mere 1.47 per cent – is the only pills for the current economic ills.

GDP per capita
2006-07 -- $350
2007-08 -- $390
2008-09 -- $465
2009-10 -- $556
2010-11 -- $642

GDP growth
2006-07 -- 2.75 per cent
2007-08 -- 5.80 per cent
2008-09 -- 3.77 per cent
2009-10 -- 3.97 per cent
2010-11 -- 3.47 per cent

Tuesday, March 22, 2011

Economy to grow by 3.47 per cent

Economy is projected to grow by 3.47 per cent from its preliminary projection.
Poor performance of non-agriculture sector has pulled the economic growth below four per cent against the government projection of 4.5 per cent and Three Year Interim Plan's projection of 5.5 per cent, said the Central Statistics Bureau (CBS) releasing the national accounts report here today.
The non-agriculture sector that witnessed a gowth of 5.39 per cent in the last fiscal year is ecpected to grow by only 3.09 per cent this fiscal year -- compared to last fiscal year -- dragging the overall gross domestic production (GDP) below four per cent, said director at the National Accounts Division of CBS Suman Raj Aryal. "Boosted by the good crops yield, the agriculture sector is however, projected to grow by 4.11 per cent against last fiscal year's growth of 1.27 per cent."
Nepal's GDP is lowest among all South Asian countries against 12 per cent of Bhutan, six per cent of Bangladesh, nine per cent of India and even Southern neighbour China's 10 per cent, according to CBS.
Electricity, gas and water, and wholesale and retail trade are projected to post negative growth of 4.02 per cent and 0.23 per cent, respectively, whereas community, social and personal services; education; public administration and defence; real estate, renting and business activities; construction; and mining and quarrying are expected to register lower growth compared to the last fiscal year.
Similarly, agriculture and forestry; fishing; transport, storage and communication; financial intermediation; and health and social work sectors are the sectors that are expected to record more growth compared to last fiscal year.
The policy dilemma due to political intability, regular power outage, slowdown in construction and real estate sector due to regulatory barriers, and no new investments dragged the overall economic performnace resulting in the below four per cent growth.
Meanwhile, the Bureau has also revised the growth rate of last fiscal year 2009-10 to 3.97 per cent from its earlier projection of 3.53 per cent.
In the last one decade, the country had witnessed a growth of an average of a little over three per cent, except that in the fiscal year 2007-08, it had registered 5.80 per cent growth.

Per capita GDP at $642
KATHMANDU: The report also projected that the country could register $642 per capita GDP and $645 per capital gross national income (GNI). Per capita GDP -- that is income per person -- is the numerical quotient of income divided by population, in monetary terms that is a measure of all sources of income in an economic aggregate of a country but does not measure income distribution or wealth, whereas per capita GNI is the dollar value of a country’s final income in a year -- divided by its population -- that reflects the average income of a country’s citizens. But the classification by income does not necessarily reflect the development status of a country. A country with a biased income distribution could have a relatively high per-capita GNI while the majority of its citizens have a relatively low level of income, due to concentration of wealth in the hands of a small fraction of the population.

* Agriculture, Forestry and Fishing -- 4.11 per cent
* Non-agriculture -- 3.09 per cent
* Total GDP (at basic prices) -- 3.47 per cent

Nepal ranks 100 in property rights among 129 countries

Nepal ranked at the 100th position with a score of 4.4 out of 10 -- putting it in the bottom 20 per cent of the quintile in the International Property Rights Index for this year -- among the 129 countries.
The report launched globally today was launched by the Samriddhi Foundation here in the valley.
Compared to last year's score of 4, Nepal has scored a little higher to 4.4 due to improvement in Physical property rights but in overall property Right Status Nepal has scored 3.2, in Legal and Political Environment 5.8, in Physical Property Rights and 4.1 and in Intellectual Property Rights 4.1.
Flanking neighbours to Nepal -- Peoples Republic of China and India -- on the other hand have scored 5.5 and 5.6 respectively making the countries in the list of the countries, where there is more property rights.
Sweden and Finland have tied for the top spot in this year's index with a score of 8.5, Finland has retained its top spot for the fifth year in a row, whereas in South Asian region, Pakistan and Bangladesh that are below Nepal, scored 4.1 and 3.6, respectively. Nigeria with 3.9 is in the bottom of the list, according to the index.
While in the context of Property Rights and Gender Equality, Nepal ranks 68th along with Zambia and Uganda.
The International Property Rights Index (IPRI) is a publication of the Property Rights Alliance, with sixty-seven think tanks and policy organisations in fifty-three countries involved in research, policy, development, education and promotion of property rights in various countries.
"Wherever there has been a rights to property, those countries have shown to have better GDP, a stronger Foreign Direct Investment (FDI) inflow and more income," said senior economic journalist Prateek Pradhan. "Property Rights and Intellectual Property Rights need to be secured in Nepal too for the economic growth."
Stating that majority of the people are unaware of Property rights in Nepal, he said that personal property, roughly speaking, is a private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personality.
In the civil law systems personal property is often called movable property or movables - any property that can be moved from one location to another. This term is in distinction with immovable property or immovable, such as land and buildings. Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; and words,phrases, symbols, and designs.

Monday, March 21, 2011

Asia Pacific record growth in tourist arrivals

The Pacific Asia Travel Association (PATA) released preliminary figures for international visitor arrivals into Asia and the Pacific for January 2011, showing a seven per cent year-on-year expansion.
South Asia set the pace with the strongest arrivals growth from amongst the four sub-regions covered for January 2011, with a gain of 14 per cent. Sri Lanka ( 46 per cent), Nepal (26 per cent), the Maldives (18 per cent) and India (10 per cent) each set new records for the month (year-on-year). The ICC Cricket World Cup 2011, which started in mid-February in Bangladesh, India and Sri Lanka, is expected to help maintain the current growth momentum for this sub-region up to and including the final on April 02.
The destinations of Southeast Asia also reported a strong gain of ten per cent for the month, boosted by double-digit growth in international arrivals.
Growth in visitor arrivals to Malaysia remained sluggish with only a one per cent increase due largely to a small decline in arrivals from Southeast Asia, a sub-region that contributes more than 70 per cent of total visitor arrivals to Malaysia.
According to the report, Northeast Asia registered a comparatively slower growth of five and a half per cent, although it must be remembered that, because of the enormous volume base, this still equated to more than 940,000 additional arrivals for the month. Stronger arrivals growth was reported by Hong Kong SAR (22 per cent), Chinese Taipei (16 per cent) and Japan (12 per cent) and this offset subdued growth to China (plus one per cent), Macau SAR (plus one per cent) and Korea (ROK) (plus three per cent). No data is available as yet for Mongolia.
International arrivals to the Pacific recorded a steady growth of four per cent for January 2011, but this remained uneven across the destinations. Australia and New Zealand reported foreign inbound growth of five per cent and four per cent respectively, while the Marshall Islands (12 per cent), New Caledonia (16 per cent) and Palau (35 per cent) each saw relatively robust results. Samoa (minus two per cent) and Vanuatu (24 per cent) on the other hand recorded contractions in arrivals for the month.
Kris Lim, director, Strategic Intelligence Centre, PATA said, “The year 2011 started strongly for the travel and tourism industry in Asia and the Pacific, maintaining the arrivals growth momentum seen throughout 2010.
South Asia and Southeast Asia continued to deliver the stronger results while Northeast Asia and the Pacific posted comparatively slower growth. This early positive momentum however, is obviously expected to be negatively affected by the devastating earthquake and resultant tsunami that struck Japan on March 18.

Sunday, March 20, 2011

Economic growth stalls below four per cent

Poor industrial performance has pulled the economic growth below four per cent against the government projection of 4.5 per cent.
According to the preliminary report of the Central Statistics Bureau (CBS), the growth is projected to be around 3.9 per cent. "The low manufacturing growth, slowdown in the construction sector due to tight liquidity situation and higher interest rates; and regular power outage stalled the industrial growth pulling the obverall growth," said former member of National Planning Commission (NPC) Dr Puskar Bajracharya.
The industrial growth stands around 1.7 per cent, according to the preliminary forecast -- due to plunge in the key manufacturing items. The Manufacturing Price Index has recorded a growth of a mere 1.23 per cent in the second quarter compared to the first quarter of this fiscal year.
However, the agriculture growth recorded a good four per cent and service sector growth that stood around 5.2, according to the preliminary report, boosted the overall growth to nearly four per cent, though, it is not encouraging, he added.
According to the preliminary estimates of the Ministry of Agriculture and Cooperatives, the summer crop production has increased by 11 per cent and 11.5 per cent for paddy and maize, respectively compared to last year, while millet production has increased by one per cent giving relief to the agriculture growth.
The agriculture, that used to have around 40 per cent contribution in the gross domestic production (GDP), however, at present contributes to almost a quarter to the GDP that was projected to grow by 5.5 per cent in the Three Year Interim Plan.
"However, the delayed budget that slowed down the government spending, trade and consumption, coupled with the private sector economic activities hit the economy hard," he said, adding that there is also not any encouraging signal from the political quarters creating policy dilemma.
The economy grew by 3.53 per cent in the last fiscal year and by 3.95 per cent a fiscal year ago in 2008-09. In the last one decade, only in the fiscal year 2007-08, the country had witnessed a growth of 5.80 per cent.

Capital flows surge, volatility increases

After shrinking sharply in 2008, net capital inflows into developing East Asia surged to a record in 2010. Inflows were highly concentrated in China, Indonesia, Malaysia and Thailand, according to the World Bank's East Asian and Pacific Economic Update-2011 published today.
Globally, nine countries received 95 per cent of the portfolio equity, 50 per cent of the portfolio debt and 74 per cent of the short-term debt flows to all developing countries, it said, adding that East Asia’s experience with capital flows during and after the global economic crisis contrasts with the period after the 1997–98 Asian financial crisis when the crash was more severe -- although concentrated in three countries: Indonesia, Thailand and Korea -- and the revival slower.
Inflows of foreign direct investment and bank flows have also recovered. FDI inflows to East Asia held up well during the crisis, declining in 2009 only to 2007 levels before recovering in 2010. Cross-border credits from foreign banks have also returned, in particular to China and the middle-income countries. Foreign banks, which pulled back from the region at the onset of the global financial crisis and are still retrenching globally, have steadily rebuilt their assets in the region.
Outward investment by East Asian residents has also strengthened substantially. China, Malaysia, and Thailand have become significant sources of FDI in foreign markets. China ranked fifth among the world’s top FDI investors in 2008, with FDI outflows of $44 billion in 2009 and $20 billion in the first half of 2010 (compared with $75 billion by Japan, which ranks third globally.)
Malaysia and Thailand each invested $4 billion a year abroad. As a result of sustained outward flows, net capital inflows into emerging East Asia were less than half of gross inflows at about two per cent of regional GDP in 2009.
Net capital inflows are still dwarfed by current account surpluses across East Asia. The current account surplus accounts for the bulk of foreign currency liquidity into China. In the region’s other middle-income countries,capital account deficits -- including errors and omissions flows -- in 2005-09 turned into a surplus in 2010. Portfolio flows into the region’s equities and bonds have been particularly volatile recently. In Indonesia, foreign investors purchased $2.2 billion worth of equities and $9.6 billion of government bonds in 2010, but sold $0.7 billion of the former and almost a $1 billion of the latter in January alone. In the Philippines, the range in net monthly foreign purchases of securities widened considerably. Both the largest monthly purchase and sale have more than doubled from a year earlier in 2010.
The pattern of larger and more volatile flows is also evident in Korea where purchases of government bonds by non-residents fell from $53 billion in April 2008 to $28 billion in January 2009 before rebounding to $65 billion at present.
Portfolio inflows have buoyed the region’s asset markets, but increased recent volatility is a useful reminder how quickly such inflows can reverse. As a result of large non-resident purchases of East Asian equities through most of 2010, the regional stock market index has outperformed the global index by 1.5 times and is currently at a level twice as high as its lowest point during the global financial crisis, it said.
Similarly, the report revealed that stock market capitalisation for emerging East Asia also doubled to 110 per cent of GDP in 2010 from 2003. As corporate fundamentals improved and as corporate and government issuers have taken advantage of the historically low yields to ramp up bond debt issuance, East Asia’s bond markets have responded with a bond return index that is now three times higher than its level at the beginning of 2000 and a regional return index that is one and half times the global index.

Thursday, March 17, 2011

Key foreign currency earner export items lose sheen

The key foreign currency earner export items have lost their sheen in last five years.
The weightage of garments, woolen carpet, textile -- the key export items -- have plunged by almost half in the Manufaturing Price Index (MPI) in this fiscal year comapared to the fiscal year 2007-08.
The weightage of garments -- one of the key export items -- has dropped by almost seven times to 1.17 per cent in the current fiscal year from 7.14 per cent in the 2007-08, whereas the weightage of woolen carpet -- another key foreign currency earner -- has dropped by half to 2.91 per cent in the current fiscal year from 4.32 per cent in the 2007-08, according to the Central Bureau of Statistics (CBS).
"Similarly, the weightage of other textile has dropped to 4.17 per cent in the current fiscal year from 6.59 per cent in the 2007-08, whereas pashmina -- yet another key export items -- could not make it to the Index due to its meagre weightage in the Index this time compared to 2007-08, when it had 1.18 per cent weightage in the index.
However, the items of domestic consumption have more weightage in the latest Manufacturing Price Index.
Due to plunge in the key manufacturing items, the Manufacturing Price Index has recorded a growth of a mere 1.23 per cent in the second quarter compared to the first quarter of this fiscal year. In the fiscal year 2007-08, the MPI had recorded a growth of 10.76 per cent over a fiscal year ago.
Entrepreneurs blame the higher cost of production for the drop in the manufacturing. "Increasing cost of production due to frequent labour troubles, power-outage and unfavourable security situation in the country has brought the key exports manufacturing down," said president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi.
"Our products have been loosing competitive edge over other countries' products," he said, adding that the labour and energy could have been our advantages, had the government acted on time to boost the manufacturing and investment climate.
The Manufacturing Price Index has this year listed 44 items based on 2006-07 manufacturing census from earlier 34 items -- that was based on 2001-02 manufacturing census -- to make it more inclusive, said director of National Accounts Division at the CBS Suman Raj Aryal.
"The addition of new commodities is also due to diversification of industry lately," he said, adding that some new industries have made it to the list and the old ones are on the way out as their weightage have started shrinking.
The new industry like furniture has been added, though it has a meagre 0.56 per cent weightage in the Index.

Entrepreneurs against proposed amendment on BAFIA

After the bankers now its entrepreneurs, who are against the proposed amendment to the Banks and Financial Institutions Act (BAFIA).
The proposed amendment of BAFIA is a regressive step as it has tried to back track liberal economic policy adopted by the country some two decades ago, said Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Confederation of Nepalese Industries (CNI) today.
It will discourage private sector investment as it has undermined the role of private sector, the entrepreneurs said, adding that no new investment will come, if such proposal is passed.
"The overall economy will suffer due to such Act," they opined.
The CA members have suggested amendments after discussions in Parliamentary sub committee but it seem to be guided through their political affiliation rather than economic sense.

Wednesday, March 16, 2011

Central bank postpones currency notes with former king's portrait withdrawal

The central bank has decided to postpone the phaseout of currency notes with the former king's portrait today until another month.
"Due to a small technical problem, it has to back track the decision to withdraw currency notes with the portrait of former king for the time bring," said a higher official at the central bank.
Someone complained at the Commission for Investigation of Abuse of Authority (CIAA) pointing out the technical error of the central bank prompting the anti graft constitution body to jump into the action.
The central bank has, however, realised its technical fault and promised to correct it soon.
"The decision to phase out or demonitise any currency notes should be published in the government Gazette," said secretary at the CIAA Bhagwati Kafle. "Only after the publication of such notice in the government Gazette, the central bank can phase out or even demonitise bank notes of any denomination," he said, adding that the central bank has, however, taken the decision on the basis of another notice that was to replace 'Shree Panch ko Sarkar' to 'Nepal Sarkar' in the bank notes -- published in the Gazette.
According to the Nepal Rastra Bank Act, the central bank board has to recommend the government for phase out of any currency notes and the government decision has to be published in the government Gazette.
The cabinet on June 12, 2010 had decided to phase out the currency notes with former king's portrait with that of Mt Everest to reflect the change in the country that has turned into republic. The cut off date was fixed for March 14.
The central bank has worked out the Clean Note Policy according to the decision and designated the banks' branches to replace the currency notes with the former king's portrait.
Though some quarters suspect the political pressure on the central bank's back tracking of the decision and postponing it, the CIAA denied it.
There is a speculation that some of the political forces are hoarding the cash and are shying to replace them fearing the exposure.
The bankers belive that the horading has created the current cash crunch in the banking channel.
However, the central bank officials denied any such possibilites. They informed that Rs 10.16 billion worth currency notes with various denomination that have former king's portrait is in circulation in the market.
The currency notes with the Mt Everest began to appear after 2006 when the country was declared republic. Though, the central bank is only withdrawing the currency notes with the former king's portrait and not demonitising them, the general people thronged the designated branches of various banks yesterday fearing demonitising of their currency notes.

Revenue mobilisation 'still' below target

After a sluggish growth of revenue mobilisation in the earlier months of the current fiscal year, the eighth month (Falgun) has witnessed a 16.5 per cent gowth -- compared to the same month in the last fiscal year -- in revenue mobilisation to Rs 123.03 billion.
In the same month last fiscal year, the ministry had recorded Rs 105.58 billion revenue."The eighth month's revenue mobilisation growth is the highest one in the current fiscal year," said revenue secretary Krishnahari Baskota.
The budget for the current fiscal year has targetted to collect Rs 116.64 billion in revenue. "To meet the target the revenue growth should be above 20 per cent," he said, adding that the revenue mobilisation in the post-budget months has increased, though it still needs to be boosted.
"The four months delay in the regular budget has hit the revenue growth," he accepted, adding that the seventh month has recorded a revenue growth of 14.2 per cent to Rs 107.67 billion.
As usual, the VAT contributes Rs 40.21 billion, the largest chunk of the revenue followed by customs that contributed Rs 23.43 billion and Income tax that contributed Rs 22.70 billion, wheras excise contributed Rs 17.29 billion, and registration, vehicles tax and non-tax collectively contributed Rs 19.40 billion by the end of eighth month (mid-February to mid-March).
"The revenue mobilisation is slowing on upward trend," Baskota said, adding that the recent action against the VAT evaders has also helped in the increase in the revenue mobilisation.

Revenue mobilisation
First month-- Rs 13.16 billion
Second month -- Rs 25.07 billion
Third month -- Rs 37.54 billion
Fourth month -- Rs 51.25 billion
Fifth month -- Rs 65.10 billion
Sixth month -- Rs 91.33 billion
Seventh month -- Rs 107.67 billion
Eighth month -- Rs 123.03 billion

Food security situation stable

In February, the overall food security situation is reported to be stable across the country.
"Most of the Eastern, Central, and Western Hill and Mountain regions as well as the whole Terai are generally food-secure," according to a report.
"The seasonal improvement in the food security is mainly attributed to the good harvest of summer crops in 2010, following a normal winter crop production in April-May 2010," it said.
According to the preliminary estimates of the Ministry of Agriculture and Cooperatives, the 2010 summer crop production has increased by 11 per cent and 11.5 per cent for paddy and maize, respectively compared to last year, while millet production has increased by one per cent.
Poor or moderately impaired summer crop production was reported in parts of Saptari, Siraha, Mahottari, Dhanusha, Dailekh, Mugu, Dadeldhura, Bajura and Doti districts where localised disasters like dry spell, flood, and hailstorm have affected the crops.
"In part of the eastern Terai, namely Saptari and Siraha districts, significant proportions of paddy field remained fallow due to dry spell and lack of irrigation facilities," the report said, adding that District Food Security Networks (DFSNs) in the Eastern and the Far Western regions have identified a total of 33 VDCs in two districts -- Saptari and Baitadi -- that are highly food insecure.
The Mid and Far Western Hill and Mountain districts, which faces a chronic food insecurity, have reported low to moderate levels of food insecurity. The season appears to be one of the best seasons among the past years since the Food Security Phase Classification was first introduced in mid-2006, the food security report added.
Despite the late start of monsoon, the rain remained active from July till September 2010, providing a good irrigation to the crops. "Poor or moderately impaired summer crop production was reported in parts of Saptari, Siraha, Mahottari, Dhanusha, Dailekh, Mugu, Dadeldhura, Bajura and Doti districts where localised disasters like dry spell, flood, and hailstorm have affected the crops.
In part of the eastern Tarai, namely Saptari and Siraha districts, significant proportions of paddy field -- more than 50 per cent and 30 per cent respectively -- remained fallow due to dry spell and lack of irrigation facilities.
Eastern Hill and Mountain districts -- Taplejung, Terhathum, Sankhuwasabha, Panchthar and Bhojpur -- have benefited from cardamom production and sales, the report said, adding that the production has increased by 30 per cent in Taplejung pulling the selling price by more than five times compared to last year.
In the Karnali region, the population continued to earn good income from the sale of Yarchagumba (medicinal herb), apples, and walnuts. Opening of Tibetan border during the month of August helped people in the border areas to restock the food.

Tuesday, March 15, 2011

Attracting more FDI key to economic development: DPM

Deputy prime Minister and finance minister Bharat Mohan Adhikari said that Nepal needs to attract foreign direct investment (FDI) in the hydropower, infrastructure and mines sectors.
"Nepal needs to attract more FDI from other countries including from India,” he said, inaugurating the 16th annual general meeting (AGM) of Nepal India Chamber of Commerce and Industry (NICCI) here in the valley today.
“The current security related issues are temporary because of the transition period the country is passing through,” he said, adding that Nepal should think of increasing its exports and take advantage from the rising economic powers like China and India. “India’s help is crucial in solving the power crisis and boost for the economic development,” he added.
“India has contributed a lot to the development of Nepal,” said Indian ambassador to Nepal Rakesh Sood. “Around 45 per cent of FDI in Nepal is from India, he said, adding that the Indian investments in Nepal have generated some 30,000 jobs directly and the double the number indirectly to the Nepalis.
However, he complained of the discouraging investment environment in Nepal for the Indian investors currently. “The current issues have discouraged the new investments from India,” he said, also urging Nepal to check on diversion of third country goods to India and Intellectual Property Rights violation of the popular Indian brands.
Sood opined that the NICCI can play a key role in boosting Indian investors confidence and further strengthen the bilateral economic and trade ties.
On one hand trade ties with India is increasing and the other the trade deficit is also increasing that has doubled to Rs 317 billion between 2008 and 2010.
"Nepal has to think on how to bridge the trade deficit gap,"
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Kush Kumar Joshi, said, adding that Nepal could not take advantage of the Nepal-India Trade Treaty -- due to its own internal reasons -- that could help reduce the trade deficit.
Joshi also urged to open custom points and expedite refund of excise duty as stated in the treaty. Similarly, Nepal Chambers of Commerce (NCC) president Surendra Bir Malakar also requested to simplify the cross border trade. "Revised trade treaty between the two South Asian neighbours has addressed many issues," he said, adding that both the countries should encourage formal trade.
Welcoming the guests, NICCI president Arun Kumar Chaudhary said that Nepal could not harness the hydropower despite the regular power outage that could derail the development in the long run. "More than trade deficit, Nepal is suffering from Balance of Payment (BoP) deficit," he said, adding, there will be more issues once the trade increases. "The NICCI is playing the role of facilitator in the issues," he added.
NICCI has been established in 1994 to promote or make arrangements for promoting contacts and co-operation among industrialists, businessmen and other professional groups of Nepal and India, and work as a non-profit-making organisation.

Change of guard
KATHMANDU: NICCI on Tuesday elected its new team led by Sanjiv Keshava, general manager of Surya Nepal. He was executive committee member in the last committee led by Arun Kumar Chaudhary.

Monday, March 14, 2011

Bankers concern about proposed BAFIA amendment

Amendment back tracks the liberal economic policy

Nepal Bankers Association (NBA) has termed the proposed amendment of Banks and Financial Institutions Act (BAFIA) as a regressive step as it has not only tried to back track liberal economic policy but also curtail the central bank and private sector's roles.
“It is a policy reversal," said vice-president of Nepal Bankers Association Rajan Singh Bhandari. "It has also tried to encroach the territory of the central bank," he said, adding that the proposed amendment will clip the regulatory wings of the central bank and discourage the private sector investment.
"With such draconian proposal, no new investment will come," said former NBA president and CEO of Kumari Bank Radhesh Pant. "The overall economy will suffer due to such Act," he said, adding that the proposed reduction in the single promoter share could lead to a crash in the secondary market due to over supply.
"The promoters have to off load their shares flooding the secondary market that could bring the share prices to the lowest level," said Sudhir Babu Khatri, president and CEO of DCBL Bank.
The proposed amendment is going to create lots of confusions, according to the bankers. The cap on CEO's salary — the much controversial issue lately — CEO and director's roles and repsosibilities, hike in deprived sector lending and venture capital are some of the issues the bankers showed serious concern over.
"The Act should not categorically mention percentage and fix ceilings as it would create practical hurdles in the future," suggested CEO of Lumbini Bank Shovan Dev Pant. "The Act should be forward looking," he said, adding that the proposed amendment has, but, back tracked the liberal economic policy adopted by the country some two decades ago.
"It has also included the clauses that could be addressed by Nepal Rastra Bank's directives and Act," Bhandari said," The NRB Act and proposed amendment will contradict each other.
The proposed amendment has also discouraged the industrialists to open banks and financial institutions to avoid conflict of interest, which is principally correct. However, Bhandari asked, “If not the entrepreneurs, who has the money to be the promoters?"
The CA members have suggested amendments after discussions in Parliamentary sub committee but it seem to be guided through their political affiliation rather than economic sense, according to the bankers.

Sunday, March 13, 2011

NOC hikes petrol price by 10 per cent

The state-oil Monopoly has, finally, hiked the price of petrol by 10 per cent to Rs 9 to reduce its losses.
"The price of a litre of petraol has been hiked to Rs 97 per litre from Rs 88," said managing director of the Nepal Oil Corporation Digamber Jha.
The NOC has also hiked the duty-paid Air Turbine Fuel (ATF) to Rs 90 per litre from Rs 80 per litre for domestic airlines. "The international aviation fuel (bonded ATF) is increased by $130 to $1075 per 1,000 litres," he added.
"It has, however, not hiked the prices of cooking gas, diesel and kerosene prices," he said, adding that the NOC is compelled to hike the price of petrol as it has been incurring a huge loss after the price hike in the international market.
"After today's price adjustment, the NOC still will incur Rs 0.09 loss in a litre of petrol and Rs 14.27 in a litre of diesel," he said, adding that a litre of kerosene still incurs Rs 4.90 loss and a cylinder of cooking gas incurs Rs 254.84 loss.
However, the NOC makes Rs 15 per litre profit in the ATF.
After the upward price adjustment, the total loss of the state -oil monopoly has come down to Rs 1.14 billion from Rs 1.33 billion, Jha said, adding that the government has released Rs 600 million -- of the total loan amount of Rs 1.13 billion, it has promised.
Last year in 2010, the NOC had hiked the petroleum prices five times. On December 6, it had increased the per litre petrol price to Rs 88, diesel and kerosene price to Rs 68 and cooking gas Rs 1,325 per cylinder. Earlier, the NOC had hiked the price of cooking gas to Rs 1,250 on January 1, 2010 from Rs 1,125 per cylinder.
Despite enormous sources, electricity and renewal energy occupy only 1.80 per cent and 0.5 per cent in energy pie.
The country has imported Rs 53.25 billion worth petroleum products from India in the fiscal year 2009-10 that is 12.39 per cent higher than a fiscal ago.

Upward Price Adjustment
Date -- Petrol price revision
February 17, 2010 -- Rs 77.5
March 14, 2010 -- Rs 80
April 23, 2010 -- Rs 82
July 6, 2010 -- Rs 85
December 6, 2010 -- Rs 88
March 13, 2011 -- Rs 97

Thursday, March 10, 2011

Young Global Leaders honour to Tiwari

Ashutosh Tiwari, Country Representative of WaterAid in Kathmandu has received Young Global Leaders (YGLs) honours for 2011 presented by the World Economic Forum.
Tiwari, the only one from Nepal to receive this honour this year opined that the award has recognised his organisational capacity.
Nepal received this honour after three years. Aashmi Rana was honoured as a Young Global Leader from Nepal in 2008.
The World Economic Forum honours with Young Global Leaders (YGLs) every year in recognition and acknowledgment of up to 200 outstanding young leaders from around the world for their professional accomplishments, commitment to society and potential to contribute to shaping the future of the world.
For 2011, the Forum has selected 190 Young Global Leaders from 65 countries and all stakeholders of society -- business, civil society, social entrepreneurs, politics and government, arts and culture, and opinion and media.
The new class represents all regions from East Asia (50) to South Asia (18), Europe (42) and Middle East and North Africa (13), sub-Saharan Africa (14), North America (37) and Latin America (16). "This year’s selection has more gender parity than ever, with 44 per cent women," said the World Economic Forum.
"The challenges faced by the next generation of leaders are more daunting and intractable than ever and cannot be mastered with the current set of strategies, institutions, standards and attitudes," said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.
"To address these challenges in a meaningful and sustainable way requires fresh thinking, multi stakeholder engagement and dynamic new ways of collaborating to develop innovative solutions that are truly global, I created the foremost platform for young leaders to engage in global affairs to shape a more positive, peaceful and prosperous society," he said, adding, "within the World Economic Forum community, the Young Global Leaders represent the voice for the future and the hopes of the next generation."
Drawn from a pool of almost 5,000 candidates, the Young Global Leaders 2011 were chosen by a selection committee, chaired by Queen Rania Al Abdullah of the Hashemite Kingdom of Jordan.
The Young Global Leaders 2011 reflect different kinds of leadership in different parts of the world and different parts of society.
The 2011 honourees will become part of the broader Forum of Young Global Leaders community that currently comprises 668 outstanding individuals. The YGLs convene at an annual summit which this year will be held in Dalian, People’s Republic of China, on September 12-16.