Thursday, March 31, 2016

Nepal's per capita to reach $2,500

Nepal has projected a more than three-fold increase in gross national income (GNI) in the next one-and-a-half-decade.
Nepal, under its Sustainable Development Goals (SDGs), has projected a per capita GNI of $2,500 by 2030 from the current $772, according to the national preliminary report on Sustainable Development Goals 2016-2030, drafted by the National Planning Commission (NPC).
GNI measures income received by a country both domestically and from overseas, including the remittance earnings that migrant workers – living and working abroad – send back home. For many countries like Nepal, money coming in from remittances is an important source of national income, adding to their GNI.
The projection is also based on Nepal's plan to graduate to developing countries status by 2022 from the current least developed country (LDC) status, and middle income country status by 2030.
However, the government needs to invest – in the country – double of what it is investing currently and help grow the economy by 8 per cent every year, if it is to achieve the target of achieving almost four-fold income growth.
Raising the income level and eliminating absolute poverty is one of the key SDG targets, according to vice chairman of the National Planning Commission (NPC) Dr Yuba Raj Khatiwada. Though eliminating poverty is almost impossible, Nepal targets eliminating the under $1.5-per day absolute poverty, he said, adding that the population below the national poverty line could be brought down to 5 per cent in the next 15 years.
Ending absolute poverty in Nepal by 2030 is an ambitious target, particularly given the reversals caused by the recent devastating earthquakes. "In the next six months, the planning commission will calculate the cost and financing needs to achieve the SDGs goals, including poverty elimination and income growth," he said.
Currently, a quarter of the population – or some 24.8 per cent – in Nepal is under the absolute poverty line, according to NPC. The government will also start formulating budgets from the next fiscal year 2016-17, keeping in mind the need to meet the above targets.
"Resource generation from domestic and international sources, the implementation capacity and distribution mechanism have to be made robust," he added. "Rise in income and distribution along with social security are key to the SDGs."
The SDGs, a follow-up on MDGs that started from January 2016, is the blueprint of long-term development strategy with the socio-economic and environmental focus on 17 targets. "It also targets on increasing access, utility and quality of services," according to director general of the Central Bureau of Statistics (CBS) Suman Aryal.
The NPC has come up with long-term governance and rights-based visions to achieve the targets including ending all types of poverty, food security and sustainable agriculture development, quality education to all, gender equality, and women empowerment.
Among other priority areas are enhancing access to energy supply, change in consumption and production modality, fighting climate change and setting up effective, inclusive and accountable institutions for incorporating all in social upliftment.
The NPC has also developed indicators based on the country’s needs rather than adopting global indices. The Millennium Development Goals (MDGs) – 2000-2015 – had set targets at low levels, and as a result, maximum targets had been met. Although the country has witnessed a remarkable change in the people’s living standards under MDGs, qualitative growth is still a far cry. Stating the maternal mortality rate was reduced to almost half to 415 per 100,000 live births during the MDG period, the SDG plans to ensure proper health service to all.
The SGDs will focus on generating employment opportunities, justifiable distribution of social security schemes, education system up to secondary level, agricultural productivity and health services in particular. Some other goals include reducing inequality within and among countries, making cities inclusive, safe, resilient and sustainable, ensuring sustainable consumption and production patterns, and taking urgent action to combat climate change and its impacts.
These goals, which have to be achieved by 2030, have potential to change the face of the country as they focus on bridging inequality of all forms, raising access to basic public services, ensuring access to justice and sustainable economic development.
The SGDs have considered infrastructure development as a fundamental factor for sustainable development and have targeted increasing hydropower generation capacity to 10,000-MW by 2030 from 818-MW in 2014. It has also envisaged increasing the industry’s share in the GDP to 25 per cent from 15 per cent in 2014.
Meanwhile, Nepal has also started advocating for easier access to technology through Technology Bank. Lately, developed countries have reduced aid for LDCs, while copyright and patent issues have made it utterly difficult for countries like Nepal to gain access to technologies available in the developed nations. "It calls for better coordination and cooperation between LDcs and developed countries, so that all the SDGs can be met within the deadline," he added.

What is GNI
According to the World Bank, GNI is the sum of value added by all resident producers plus any product taxes – minus subsidies – not included in the valuation of output, plus the net receipts of primary income – compensation of employees and property income – from abroad.

Wednesday, March 30, 2016

Slow reconstruction taking toll on economy, says ADB

Slow post-earthquake reconstruction and recovery, trade and transit disruption, and unfavorable monsoon-led agriculture growth slowdown will pull the economic growth for the current fiscal year down, according to Asian Development Bank (ADB).
Launching Asian Development Outlook 2016 here today, the multilateral development partner also projected a 1.5 per cent economic growth for the current Fiscal Year 2015-16, after a 3 per cent growth last fiscal year.
"However, the growth rate is expected to pick up to 4.8 per cent in the next fiscal year 2016-17, if the political climate stabilises, reconstruction works accelerates and normal monsoon favour agricultural growth," ADB country director for Nepal Kenichi Yokoyama, said launching the outlook.
ADB has also suggested an urgent need to accelerate reconstruction and implementation of development programmes to prevent a further slowdown in economic growth. "The economic growth is possible only through the speedy reconstruction drive and focusing on sectors of energy, tourism and agriculture," he said, adding that very low growth is seen in services, particularly in wholesale and retail trade, transport and communication, and tourism, which are worst affected by the supply disruptions.
The Ministry of Agricultural Development expects harvests of paddy to drop by 10 per cent and maize by 5 per cent, slowing agriculture growth to a projected 0.5 per cent. Likewise, industry is projected to see little or no growth owing to fuel shortages and the lack of raw materials for manufacturing and construction. Inflation has also looked up due to supply side constraints because of economic blockade by India.
"Nepal witnessed an inflation rate of 7.2 per cent in 2014-15, whereas it was significantly higher in January this year, standing at 12.1 per cent due to blockade," the report said, adding that inflation is projected to rise to 10.5 per cent, higher than the target of 8.5 per cent set by the central bank in its Monetary Policy. "Although lower global oil prices are being passed through to administered fuel prices – a policy adopted in September 2014 –average inflation in fiscal year 2015-16 will be elevated on the combined effects of a smaller harvest, acute shortages of fuel and other essential commodities, and higher transport costs during much of the year."
The flagship publication of ADB also noted that the devastating earthquakes challenged the growth and development prospects over the short to medium term. The disaster exacted a huge human toll, taking nearly 9,000 lives and destroying 750,000 homes, factories, and cultural heritage sites. It upended the livelihoods of 5.4 million, pushing an estimated 3 per cent of the population into poverty. The government's Post-disaster Needs Assessment (PDNA) estimated $5.2 billion in capital stock losses and another $1.9 billion in economic losses. The combined losses are estimated to equal one-third of GDP. The cost of recovery and rebuilding the lost capital stock is estimated at $6.7 billion.
Notwithstanding the significant cost of reconstruction and recovery, the key policy challenge is not a dearth of resources, it said, adding that Nepal's development partners pledged $4 billion in reconstruction aid during the International Conference on Nepal's Reconstruction (ICNR) that the government successfully organized in the aftermath of the earthquakes. "Further, in response to the earthquakes, the government presented an ambitious budget for the current fiscal year, which calls for total spending to increase to equal 32.1 per cent of GDP from 24.3 per cent in 2014-15, while capital expenditure is to more than double to 10 per cent of GDP. The $910 million allocation for reconstruction is nearly half of the capital budget," it added.
But more than 8 months into the fiscal year, only a small fraction of the reconstruction budget has actually been spent, reflecting institutional and procedural bottlenecks that constrain the timely execution of capital works.
ADB has also outlined key factors holding back rapid reconstruction including delay in establishing the National Reconstruction Authority (NRA), which particularly affected the speedy initiation of housing reconstruction; significant damage in vast rural areas with difficult access; the limited capacity of sector institutions that oversee private housing, schools, hospitals, roads, and other community infrastructure to assess damage, plan reconstruction, procure materials, and implementation reconstruction with quality control; and the limited availability of such human resources as masons, engineers, and social workers.

KATHMANDU: Asian Development Bank (ADB) has suggested that Nepal should grab the opportunities from neighboring China to achieve the targeted economic growth rate for the next two years. Launching Asian Development Outlook 2016 here today, ADB said Asia's leading economy China's structural change in imports can create immense opportunities for the border-sharing Nepal. "China's structural change is a golden chance for Nepal," ADB country director for Nepal Kenichi Yokoyama said. "Thus, it's perfect time to attract direct foreign investment from the northern neighbor to strengthen economy."

Monday, March 28, 2016

Double GDP, investment key to Nepal's graduation

Nepal has to grow at the rate of 7 to 8 per cent – double from the current growth rate – annually not only to graduate to the league of developing countries by 2022 but also to graduate to medium income country by 2030 from the current low-income country status, according to economists.
Speaking at a day-long seminar on 'Envisioning Nepal 2030' organised by National Planning Commission (NPC) and Asian Development Bank (ADB) in Kathmandu today, they also stressed the need to focus on key competitive and comparative advantage sectors for structural transformation and acceleration of economic growth for the graduation.
Addressing the seminar, prime minister Khadga Prasad Sharma Oli said that Nepal needed a long-term strategic development plans and policies to graduate to the status of a developing country from the current least developed country (LDC) status.
Stressing on implementation of those mechanisms to achieve Sustainable Development Goals (SDGs) by 2030, he said that the country has to double annual investment, and build essential infrastructures like strategic road and railway networks, communication, and electricity. "We have shifted our attention and efforts and are gearing toward economic development and prosperity after promulgation of the new constitution," he said, adding that Nepal's unique geographical locations, abundant natural resources, biodiversity and landscapes that widen connectivity across the borders toward a self-reliant economy has been able to reduce poverty, achieve most of the Millennium Development Goals (MDGs) and make significant social development particularly in health and education.
After the promulgation of Constitution, the main task before Nepal is to empower the people through implementation of economic and social agenda enshrined in the Constitution, he said, adding that it would only be possible through structural transformation of existing economic and social institutions, production relations, and social values. "However, focus must be on addressing the crippling energy crises that hold key to unleash rapid growth of many industries, as well as on connectivity to reach all Nepali villages within the country, and the vast markets of the neighbouring countries."
The seminar provided a platform for all stakeholders to contribute and work for climate change, sustainable development activities and renewable energy resources.
Speaking at the seminar, ADB vice president Wencai Zhang hailed Nepal's intent to graduate from LDC status by 2022, and become a middle-income country by 2030, while achieving the sustainable development goals. "However, this calls for a credible vision and a strategy to achieve it by setting out policies, prioritising public expenditure and investments to build physical and human capital, improving governance and the business environment, building a competitive industrial base and enhancing regional cooperation and integration," he said.
Welcoming the guests in the seminar, vice chairman of the National Planning Commission (NPC) Dr Yuba Raj Khatiwada said that Nepal needs higher economic growth to reduce poverty by 2030. "We have to learn how to accelerate the growth from our neighbours," he said, adding that the government will formulate Development Strategy 2030 by incorporating inputs from the seminar.
"Nepal must step-up and sustain a growth in the range of 6 to 8 per cent per year to make meaningful headway in uplifting the living standard of people,” he said, adding, "To achieve this growth rate, we must ramp up capital expenditure and make sure public investment equivalent to 8.5 per cent of the gross domestic product is made every year to bridge the infrastructure deficit."
At the programme, participants and panelists suggested the government to chalk out a national development strategy on the basis of Nepal's competitive and comparative advantages. They also said that Nepal has been trapped in poverty also due to lack of diversification from subsistence agriculture to commercialisation. "The government should provide first movers incentive to encourage entrepreneurs to venture in new areas that can provide impetus to economic growth and create employment," they suggested.
On the occasion, finance minister Bishnu Poudel accepted that the government has a challenge to develop sufficient infrastructures that could propel economic growth.
The seminar is expected to chalk out a blueprint that will basically chart out strategies and action plans to raise Nepal’s per capita income by more than three folds to $2,500 by the next one-and-a-half decades, eradicate poverty and rapidly improve other major socio-economic indicators by ensuring social justice.
The National Planning Commission (NPC) will incorporate recommendations and feedback collected from the conference – where renowned domestic and international economists, policymakers and development experts including Bibek Debroy, Justin Yifu Lin, Joon-Kyung Kim, Ajay Chibber, Nagesh Kumar, Bindu Nath Lohani, Shankar Sharma and Swarnim
Wagle took active part – in preparing the final Vision 2030 document.

Friday, March 25, 2016

Last trimester sees surge in spending, despite ceiling

The government spends more than half the development budget of any given fiscal year in the last four months of the fiscal year, and almost 40 per cent of it in the very last month.
The average development spending in the last four months over the last three fiscal years has been 'not surprisingly' 57.42 per cent on an average, according to data from the Financial Comptroller General's Office (FCGO).
While the government's eroding capacity to spend and lack of coordination among the key stakeholders have been largely blamed for the low level of development spending, it is more a case of 'political failure', according to former chief advisor to the Finance Ministry, Keshav Acharya.
The last month of the fiscal year sees around 40 per cent of the development spending despite the ceiling, he said, adding that lack of coordination among the prime minister, the vice-chairman of the National Planning Commission (NPC), the finance minister and the ministers at the implementing ministries has been a major problem in expediting the use of the development budget, he said, adding that the spending has been particularly low when a coalition government is in power.
According to FCGO data, successive governments have been able to spend only 6.33 per cent of the development budget on an average in the first four months, whereas the second four-month period sees an average of 15.26 per cent development spending. The spending all of a sudden surges to an average of 57.42 per cent in the last trimester, the data shows. Within the last trimester also, the very last month witnesses the spending of around 40 per cent of the development budget, Acharya added.
FCGO data also shows that the total average development spending in the last three fiscal years has stood at 78.96 per cent.
Joint Financial Comptroller General Kewal Prasad Bhandari attributes the low development spending to lack of seriousness in the bureaucracy and the absence of adequate budget law. "There is no schedule for budget spending," he said, adding that the lack of a carrot and stick policy has also left the officials responsible not in any hurry to spend.
The story is going to be repeated in the current fiscal year, 2015-16 too.
According to FCGO, the government has been able to spend only 13.83 per cent of the total development budget as of yesterday. "The remaining four months will as usual see a spike in the spending," Acharya said, adding that the government, meanwhile, has the convenient excuse of the earthquake and the Indian economic blockade for not being able to spend adequately.
The government now has a challenging task of spending Rs 1.66 billion out of the development budget every single day, if it is to meet the expenditure target for the current fiscal year.
According to FCGO data, the government has been able to spend only Rs 28.88 billion, or just 13.83 per cent, of the development budget so far as of March 24. Only 108 days remain in the current fiscal year, which ends in mid-July, and the government still has to spend Rs 179.99 billion development budget. The arithmetic means the government will have to spend Rs 1.66 billion ever day to meet the target for development spending.
Dr Ram Sharan Mahat, who was finance minister in the last government, had allocated Rs 208.87 billion for development spending for the current fiscal year. However, the post-earthquake situation and the fuel shortage caused by the Indian blockade following the promulgation of the new constitution on September 20, 2015, rendered the government simply unable to spend its development funds.
Mahat last July 14 had presented a budget of Rs 819.47 billion for the current fiscal year, and the incumbent government has been able to spend only Rs 274.55 billion, or 33.50 per cent, of the total budget, according to FCGO.
The budget allocated Rs 484.27 billion for recurrent expenditures such as salary payments for civil servants, grants to local bodies and interest payment; Rs 208.88 billion for capital expenditure such as spending on civil works, purchase of land, building construction, procurement of furniture, vehicles, plants and machinery; and Rs 126.32 billion for the financing provision, which includes lending to state-owned enterprises and repayment of principal.
According to FCGO data, the government has been able to spend Rs 201.50 billion, or 41.61 per cent, under the recurrent budget, and Rs 44.15 billion or 34.95 per cent under the financing provision.
The budget has also allocated Rs 91 billion for the reconstruction of structures damaged by devastating earthquakes in April and May. But the incumbent government and the National Reconstruction Authority (NRA) are in no hurry to provide shelter to the homeless despite their plight in the winter that is going to be worse in rainy season in a month. They have already announced that the reconstruction work will only start after April 25, which will mark the first anniversary of the devastating earthquake.

Monday, March 21, 2016

Nepal-China transit treaty to shift geo-political balance

In a major geo-political shift, Nepal has signed a transit and transportation treaty with China today that will give the land-locked Nepal access to sea from China.
Currently, Nepal has the access to sea, which is vital for third country trade, only through India, the southern neighbour. India and Bangladesh are the only two other countries with whom Nepal has signed transit treaties. But the transit treaty with Bangladesh is based on India, as Nepal and Bangladesh do not share border, and thus has not been implemented fully.
However, today's treaty will give Nepal access to a Chinese port for its third country trade, which is expected to reduce Nepal's dependency on India for trade and transit.
Despite historic and socio-cultural integration between India and Nepal, India's imposition of economic blockade for almost five months generated widespread disenchantment in Nepal, forcing Nepal to seek trade alliances beyond the southern neighbour. Though Tianjin Port, the nearest Chinese port is 3,300 km away from the Nepal border – as against the closest Indian port of Kolkata which is only 1,000 km – the treaty is also expected to shift the geo-political power balance in the region.
The agreement on transit and transport with the People's Republic of China could be a psychological shift for the future, according to senior economist Bishwhambher Pyakuryal. "The agreement is going to have a huge psychological shift in otherwise India-locked Nepal as the country will now have an option for international trade," he said, adding that the implementation of treaty is but a herculean task.
Likewise, trade expert and former commerce secretary Purushottam Ojha also opines that the treaty is a milestone, but Nepal needs to invest its huge resources and efforts on road infrastructure to benefit from the treaty. "Nepal must increase road and railway connectivity to take advantage from the transit treaty and increase economic integration with China," he added.
Apart from widening of Rasuwagadi customs point, and upgrading Korala and Kimathanka customs points and access roads, Nepal also has to work hard to simplify trade-related issues, including visa, currency and language, to make the treaty work in its favour, Ojha said.
Likewise, Nepal has to exchange a protocol with China, which will define the procedures that need to be followed. Nepal also have to have railway connectivity to take advantage from the agreement, which will be automatically reviewed every 10 years, as ferrying goods via road through Tibet may not always be cost-effective and convenient.
The visiting prime minister Khadga Prasad Sharma Oli and his Chinese counterpart Li Keqiang today witnessed the signing of the 10-point bilateral agreement and memorandum of understandings (MoU), including landmark transit and trade deal, in Beijing's Great Hall of the People, according to a press communiqué issued by the Nepali Embassy in Beijing after the signing ceremony.
To increase the connectivity, China has also agreed to construct a strategic railway link between the two countries through Tibet. The railway link, which is expected to link Kathmandu and Tibet, is also likely to be expanded to Pokhara and Lumbini.
According to officials in the meeting, Oli's visit has raised the possibility of the construction of two rail lines connecting three of Nepal's most important cities. China has already expanded its railway service to Shigatse, in Tibet, which is around 450 km from Kerung. Kerung lies at a distance of around 26 km from Rasuwagadi in Nepal. China plans to extend its railway service to Kerung by 2020, and also a longer term plan of extending railway lines from Kerung to Kathmandu depending on geographic and technical conditions, as well as financing, according to the officials.
But, Nepal will have to enter into a separate deal with Beijing to make use of the Chinese railway service for trade purpose.
The high profile visit also witnessed signing of Memorandum of Understanding (MoU) between the Ministry of Commerce of the People's Republic of China and the Ministry of Commerce of Nepal for launching the Joint Feasibility Study of China-Nepal Free Trade Agreement (FTA). Based on the findings of the feasibility study, both the governments will decide whether to sign the FTA.
The FTA is, however, not going to benefit Nepali products, which have lost their competitive advantage against the Chinese products. "Nepal should have pushed for preferential trade agreement with China," Ojha said, "As Nepali products cannot compete with that of China's."
China has already given duty free access to over 8,000 Nepali products. Of the total trade, Nepal's exports to China stand at just 2 per cent, whereas Nepal's imports from China stand at 12 per cent, widening Nepal's trade deficit with China. "FTA will only further widen the trade gap," according to Ojha.
Trade between China and Nepal has been governed by Trade and Payment Agreement signed for the first time in 1974.
According to the press communiqué the two countries also signed agreement on concessional loan for a new airport in Nepal's Pokhara and a feasibility study for oil and gas survey projects, though the much-anticipated agreement on commercial import of petroleum products from China was cancelled at the last moment.
Likewise, China has also agreed to distribute solar panels in Nepal’s rural areas by tapping its Climate Fund, and build, manage and maintain Xiarwa Boundary River Bridge at Hilsa, Humla, apart from signing MoU to strengthen intellectual property system in both the countries, and extend cooperation and exchange information on banking regulation.

Saturday, March 19, 2016

Kathmandu third most polluted city in the world

Kathmandu is the third most polluted city in the world, according to Pollution Index 2016.
The annual report published by Serbia-based research website has ranked Nepal’s capital city at the third position with a score of 96.66. Last year, Kathmandu was ranked at the fifth position on the index in the beginning of 2015. Kathmandu has slipped two places to third in the middle of last year.
The rankings are based on visitors’ perceptions to the website that also include some relevant data from the World Health Organisation (WHO) and other institutions, the reads, adding that the index is an estimation of the overall pollution in the city with the biggest weight given to air and water pollution.
According to the report, Tetovo city of Macedonia is the most polluted city, followed by Egyptian capital Cairo, whereas Philippines’ capital Manila, Noida and Delhi of India, Guangzhou of China, Ho Chi Minh City of Vietnam and Egypt’s Alexandria complete the list of the 10 most polluted cities.
Likewise, Nepal is ranked 17th on the Pollution Index for Country 2016, with Egypt being the world’s most polluted country.

Friday, March 18, 2016

Wheat production set to drop by 20.5 per cent

Nepal's wheat production is estimated to drop by 20.5 percent in the current fiscal year.
Wheat production forecast for 2015-16 is 1,570 metric tons, a 20.5 per cent decrease compared to the production level of 1,975 metric tons in 2014-15, according to CCAFS Regional Agricultural Forecasting Toolbox (CRAFT).
The first advance estimate of 2015-16 wheat production in Nepal, which has been conducted using CRAFT, has also forecast that the current fiscal year's figure is a 16 per cent decline from average production over the last five years.
The significant drop in production is attributed to an estimated five percent decrease in wheat cultivation area nationwide as compared to the 2014-15 season. "Wheat grown area decreased because of two main reasons – severe shortage of fuel for irrigation and land preparation, and limited availability and use of fertilizers – both of which were caused by the political crisis in the Tarai and restricted cross-border trade with India from September 2015 to February 2016," the study report says.
In addition, according to the International Centre for Integrated Mountain Development, cumulative rainfall during this winter season – from November 2015 to January 2016 – was far below the 30-year average.
Official reports from the Department of Hydrology and Meteorology, however, are yet to be published. "Because of inadequate soil moisture due to delayed and poor rains and limited irrigation due to the shortage of fuel, it was assumed in the CRAFT model run that the irrigated area decreased by 25 per cent and wheat plantation was late by 10 days," the report further added.
The preliminary estimate, which will be revised with updated data as the season progresses, has been jointly produced by the Ministry of Agricultural Development (MoAD), World Food Programme (WFP), and the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) as part of the Nepal Food Security Monitoring System (NeKSAP).
CRAFT incorporates a crop simulation model (DSSAT), weather and seasonal forecast module (CPT) and a GIS mapping module, and it provides the support for spatial input data, spatial crop simulations, integration of seasonal climate forecasts, spatial aggregation, probabilistic analysis of forecast uncertainty, and calibration of model predictions from historical agricultural statistics, analysis and visualization that increase the authenticity of the estimation and correctness of the forecast.
"The tool helps to provide advance information to farmers, extension agents and policy makers allowing them to manage within-season climate risks to agriculture," the report said, adding that the model has been used in Nepal for a pilot study and is being currently used in Bangladesh, Sri Lanka and India as well.

Thursday, March 17, 2016

Nepal happier than India

Nepal is a happier country than India, according to a global report.
The World Happiness Report 2016 Update – which was released in Rome yesterday, ahead of UN World Happiness Day – has ranked Nepal ahead of India, Bangladesh and Sri Lanka in South Asia. UN World Happiness Day is celebrated on March 20.
The study that ranks countries by their happiness level, has listed Nepal at the 107th ranks among 156 countries with a score of 4.793. Bangladesh is in the 110th position with a score of 4.643, Sri Lanka (4.415) is 117th, and India with a score of 4.404 is in 118th position. Similarly, Afghanistan is at the 154th position with a score of 3.360.
However, Bhutan and Pakistan are happier than Nepal, according to the report that has ranked Bhutan at 84th position with a score of 5.196 and Pakistan at 92nd position with a score of 5.132.
The fourth World Happiness Report reflects growing global interest in using happiness and subjective well-being as primary indicators of the quality of human development. It also reflects results of subjective well-being research, and is expected to enable policies that support better lives.
This year, for the first time, the World Happiness Report gives a special role to the measurement and consequences of inequality in the distribution of well-being among countries and regions. The report states that people are happier living in societies where there is less inequality of happiness. "They also find that happiness inequality has increased significantly – comparing 2012-2015 to 2005-2011 – in most countries, in almost all global regions, and for the population of the world as a whole," it added.
According to the report, Denmark is the world' happiest country followed by Switzerland, Iceland, Norway and Finland. Likewise, Burundi is least happy, followed by Syria, Togo, Afghanistan and Benin. Denmark overtook Switzerland as the world’s happiest place, according to a report that urged nations regardless of wealth to tackle inequality and the environment. The United States came in at 13, the United Kingdom at 23, France at 32, and Italy at 50.
The report, prepared by the Sustainable Development Solutions Network (SDSN) and the Earth Institute at Columbia University, showed Syria, Afghanistan and eight sub-Saharan countries as the 10 least happy places on earth to live.
The rankings, which are based on surveys in 156 countries conducted over three years (2013-2015), reveal an average score of 5.1, out of 10. Seven key variables explain three-quarters of the variation in annual national average scores over time and among countries: real GDP per capita, healthy life expectancy, having someone to count on, perceived freedom to make life choices, freedom from corruption, and generosity, stated the report 

Wednesday, March 16, 2016

'Nepal needs to boost competitiveness of its exportable items'

The US has asked Nepal to identify its needs for boosting competitiveness of exportable items so that Nepali products could stay competitive even after the expiry of trade preference programme.
"We will be taking Nepal government's input on what type of technical assistance it needs to stay competitive for longer time, even after the expiry of the trade preference programme by the end of 2025," deputy assistant US Trade Representative (USTR) for India and Nepal Dawn M Shackleford said.
The Nepal programme is authorised for ten years and is designed to help Nepal's economic recovery.
In addition to the duty-free tariff benefits from the trade preference programme, there is also a trade capacity building programme outlined in the legislation, focused on helping Nepal implement the World Trade Organisation's (WTO) Trade Facilitation Agreement (TFA), she added. "Thus, the US is ready to assist Nepal in trade facilitation under its technical assistance (TA)," Shackleford said without elaborating how much the assistance is worth.
Referring to her discussions with the Nepali authorities and private sector, she said that Nepal can take maximum advantage from the Trade Facilitation and Trade Enforcement Act. "Especially handicrafts can take advantage from the trade preference program," she added.
With a view to facilitating economic growth through trade, the US is establishing a new stand-alone trade preference program for Nepal. On February 24, US President Obama signed the Trade Facilitation and Trade Enforcement Act of 2015. The Act allowed the President to authorise special tariff preferences for Nepal to help support the country's economic recovery following the devastating earthquakes of 2015.
Under the Act, the US President will have the authority to grant duty-free tariff benefits for several products not currently eligible for benefits under existing trade agreements, including certain kinds of carpets, headgear, shawls and scarves, handbag, and suitcases. The exports of Nepali goods covered by the Act totaled $8 million in 2015.
However, she said that for the new preference program to go into effect, certain administrative steps need to be completed in the US. "First, the US President must certify that Nepal meets the country criteria and eligibility requirements of the programme which are the same as those for countries that participate in the GSP Programme and the African Growth and Opportunity Act," Shackleford, who is currently in Nepal to finalise the date for second TIFA meeting, said, adding that it might take few months. "In the first phase, the US looks at status of rule of law, anti corruption measures and human rights violation, and in the second the US administration is also required to request a review by the US International Trade Commission of the products covered by the preference programme to ensure that an increase in imports of these products into the US market will not negatively affect the US economy," she said, adding that these statutorily-required reviews will take several months to complete, but the administration is making efforts to complete the processes as soon as possible.
In 2015, total trade between Nepal and the US was worth $123 million. During the year, Nepal exported goods worth $87 million to the US. Of the exports, Nepal enjoyed access to duty-free treatment for eligible products under the Generalised System of Preferences (GSP) of approximately $5.8 million.

Shackleford also suggested Nepal to publicise its economic reform efforts to attract foreign investments. "There are investment opportunities in Nepal, but the investors should be made aware of the opportunities it offer," she said, adding that foreign investors should know what reforms have Nepal made to ease doing business in Nepal. "Based on the new Trade Policy and comparative advantage in growing ICT, tourism and service sector, Nepal should exploit its opportunity," she added.

Thursday, March 10, 2016

Government damaging business environment

•    The government, which has allowed Birat Petroleum to sell petrol at Rs 130 per liter -- Rs 31 higher than the price fixed by Nepal Oil Corporation (NOC) -- is arresting drugs manufacturers on charge of promoting black-market.
•    A single-engine aircraft of Air Kasthamandap crashed on February 26. The government, without any further investigation, banned operation of single-engine aircraft across the country. Why and how was single-engine aircraft permitted, and why has it been banned with the ministerial decision?
•    Government agencies are confiscating Surya cigarette, stating that it was not carrying health warning message on 90 per cent of the packet, though the Act to Control and Monitor Tobacco, 2068 BS states the warning pictures should cover 75 per cent of the packet.

These are some of the examples that show how the government is destroying investment climate in the country. On one hand, the government claims that private sector is the engine of economic growth, and on the other it is discouraging and harassing the private sector, and promoting 'black economy'.
The decision to allow Birat Petroleum to sell petrol at Rs 130 per liter when NOC is selling it at Rs 99 per liter is an act of promoting black-market, according to consumer rights activists Jyoti Baniya. "The government itself is promoting the informal economy," he added.
The government is, in a planned way, harassing industrialists and encouraging black economy which will in turn send negative message to investors. President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pashupati Murarka said that recent incidents aimed at harassing private sector will send negative message to potential investors. "Industrialists are not criminals," he said, adding that the government was treating investors as criminals.
Prime Minister Khadga Prasad Sharma Oli and his cabinet members – from ultra-right to ultra-left politicians – repeatedly preach about promoting private sector and liberal economy. But in action, they are completely against the liberal economy and the private sector. Rather they are promoting crony capitalism, an industrialist said preferring anonymity. “The government is promoting market-distorting practices and crony capitalism in the name of encouraging private sector,” he said, adding that industrialists were only milking cow for them.
According to Advocate Jagdish Dahal, Nepali legal system is not development and economic prosperity-friendly. "Unstable governments and arbitrary decision of ministries are inflicting more damage on our efforts for economic development,” he added.
Any investor – be it domestic or foreign – invests in a country where there is policy stability, Dahal said, adding that the investors can be assured of their business age on the basis of policy. "However, instability in Nepal has been a headache for investors as the instable policy, including law, has damaged country's investment environment."
Industrialists also are surprised at the way policy keeps changing in Nepal. Vice president of Surya Nepal Ravi KC says that the government has every right to update policy according to time. He, however, says it must involve stakeholders concerned in discussions before changing laws, adding that one policy change can impact thousands of employees and billions of revenue to the government. "Likewise, frequent changes in policy will increase risks in business," Dahal said, adding, "Neither domestic nor foreign investors will invest in Nepal in such scenario."
The government has been eroding its capacity to spend development expenditure, and failing to create employment in the country, pushing thousands of youth to Gulf and Malaysia every year. It has not been able to amend acts and policies that have hampered development works, but is quick in amending acts and policies that discourage investors.
The government move is pushing industrialists to become traders as they do not want to take any risk by investing in industries, according to industrialists. They say that the government is to be blamed for shrinking contribution of the manufacturing sector to the economy. According to the Central Bureau of Statistics (CBS), the manufacturing sector is expected to grow by 2.35 per cent in 2015-16 compared to 2014-15.
Dahal attributes the government's moody policy-making for declining growth of manufacturing sector. "The current legal system is not development-friendly," he said, adding that the delay in courts have been a major deterrent to economic growth and private sector.
Likewise, the Doing Business Report of the World Bank has also revealed that Nepal's investment climate is not encouraging for doing business. In the Doing Business Report 2016, Nepal fell five notches to 99 due to weakness in regulatory and reform process.