Rental charge for factories within Simara GPZ to be reduced

The government is going to review the fee for factories within Garment Processing Zone (GPZ) in Simara as the manufacturers’ showed no interest to invest in the protected zone citing high rental charges.
The SEZ Authority has fixed the rental fee of Rs 20 per square feet per month for investors to establish factories within Simara GPZ. Since the investors seemed not interested in the current rate, the Ministry of Industry, Commerce and Supply (MoICS) has formed a rental fee fixation committee to revise rental rate inside the Simara GPZ.
According to joint secretary at the ministry Chandika Bhatta, who is also the former executive director of Special Economic Zone (SEZ) Authority, the government is going to reduce the rental fee as garment manufacturers have refused to invest – at the current rate – in Simara GPZ.
The SEZ Authority – six months ago in May – had asked for applications from interested garment manufacturers to invest within the GPZ. But not a single investor applied forcing the government to revisit the rate. The garment manufacturers, however, asked the government to reduce the rental fee at Simara GPZ to Rs 5 per square feet per month.
“The committee will soon determine a new rental fee rate to encourage garment manufacturers to invest in the Simara GPZ,” he said, adding that the investors did not express interest to invest within the GPZ, even after repeated notices stating the zone is open due to rental fee. “As the GPZ in Simara was developed to promote production and exports of garments, the government will give ear to the investors and encourage them to invest in the GPZ.”
Once the rental fee is competitive, garment manufacturers are expected to invest in the Simara GPZ, according to the Garment Association of Nepal (GAN).
The government – since long – is planning to start GPZ and SEZ – to promote export – offering the investors basic infrastructure, including internal road, electricity and water supply, sewage system, weighing bridge, waste water treatment plant, petrol pump, banks and insurance service.
After the US government extended zero tariff preference for 66 products – including apparels – into its market through the ‘Trade Facilitation and Trade Enforcement Act’ in February 2016, the government came up with the concept of GPZ expecting to bring down the production and export cost as Nepali garments are relatively higher compared to South Asian countries.
But the services and facilities, apart from rental fee in the GPZ has created dilemma. 
Likewise, the establishment of SEZ in Bhairahawa has already taken more than 18 years but it has not yet been operational hindering the government move to boost the export. 

Economy may grow above 6 per cent: ADB

The economic growth will remain strong at 6.3 per cent in the current fiscal year, according to the Asian Development Bank’s (ADB) Nepal Macroeconomic Update 2019 released today.
The strong growth, despite poor performance of the agriculture sector caused by late paddy transplantation, is though less than the government projection of 8.5 per cent.
The economy can expand further, if the execution of public capital expenditures, including at sub-national levels, improves substantially and private investment remains strong, according to the report.
“Near normal monsoon this fiscal year, efforts to accelerate the implementation of large infrastructure projects, and increase in tourist arrivals will support high growth,” said ADB country director for Nepal Mukhtor Khamudkhanov.
The floods in early July damaged paddy saplings in many parts of the country, which could lower agriculture growth compared with last fiscal year’s figures, the report reads, adding that the industry sector is expected to expand by 7.9 per cent in the current fiscal year, buoyed by improved electricity supply and efforts to improve investment, including in major infrastructure. “The services sector will likely grow by 6.9 per cent in the current fiscal year with the expansion of wholesale and retail trade, financial intermediation, and travel and tourism subsectors.
The Manila-based development bank – in its report – also said that the gross domestic product (GDP) expansion in the fiscal year 2018-19 that ended on July 16 exceeded the Asian Development Outlook 2019 forecast achieving a growth rate of 7.1 per cent, with growth in all sectors. Agriculture sector grew by 5 per cent on a favourable monsoon that brought a record 8.3 per cent increase in paddy production, it reads, adding that industry advanced by 8.1 per cent on increased electricity production, accelerated earthquake reconstruction, and strong consumer demand. “The services grew at 7.3 per cent as higher remittances supported retail trade and as higher tourist arrivals favoured hotels and restaurants.”
On the demand side, growth in private consumption markedly accelerated in the last fiscal year on higher remittances and agricultural income, contributing to two-thirds of GDP expansion, it reads, “Fixed investment moderated from a year earlier.”
Private investment spending, mostly in energy and services, grew by 27 per cent to account for 29 per cent of the GDP in the last fiscal year. Likewise, public investment increased by 5.5 per cent from the high level achieved in the last fiscal year, but the construction of national pride projects suffered delays, the report reads. “However, floods in early July 2019 delayed paddy planting, which probably means lower growth in agriculture this fiscal year but an increase by almost half in the current budget for capital expenditure promises to offset that shortfall, if realised in actual spending.”
Likewise, inflation slightly exceeded the 2018-19 projection as food inflation accelerated from 2.8 per cent in the fiscal year 2017-2018 to 3.1 per cent on account of flooding and landslides in July that affected some supply channels and a delay in food supply owing to strict tests along the India-Nepal border over concern about pesticides.
“Inflation will likely to rise in the current fiscal year, assuming a somewhat smaller harvest, a marked pickup in government expenditure, and a moderate rise in inflation in India, the main supplier,” the report reads, adding that the inflation is projected to rise to 5.5 per cent in the current fiscal year from 4.6 per cent in the last fiscal year.
However, the fiscal deficit moderated to 5.1 per cent of gross domestic product (GDP) in the last fiscal year, down from 6.7 per cent of GDP in the fiscal year 2017-18, on lower-than-planned capital expenditures. “Likewise, execution of capital expenditures at 75.9 per cent in the fiscal year 2018-99 was less than that of fiscal year 2017-18 at 81 per cent. “Bunching of capital expenditure continued in the last fiscal year 2018-19, undermining the quality of investment.”
The current account deficit, forecast to widen, narrowed substantially instead as implementing large national pride projects experienced delays and markedly curbed import growth. “Export growth exceeded expectations but earnings remained small, allowing the trade deficit to widen by 4.6 per cent.”
Nepal increasingly faces the risk of external sector instability due to large trade and current account deficits, the report reads, adding that the current account deficit moderated to 7.7 per cent of GDP, down from 8.2 per cent in the fiscal year 2017-18, on implementation delays of large national pride projects and markedly curbed import growth. “The current account deficit will slightly narrow to the equivalent of 7.6 per cent of GDP in the current fiscal year 2019-20 from 7.7 per cent of GDP in the fiscal year 2018-19.”
Likewise, merchandise export growth exceeded expectations, but with low export base, earnings remained small, widening the merchandise trade deficit by 4.4 per cent, whereas remittance has shown healthy growth, a substantial rise in the near future is unlikely to offset the rise in the trade deficit.
The growth in workers’ remittances was at 7.7 per cent in the last fiscal year, sufficient to keep the current account deficit stable at $2.3 billion. With financing inflows somewhat down from a year earlier, foreign exchange reserves fell by 5.8 per cent to $9.5 billion, the second year of decline nevertheless leaving import cover for 7.8 months.
The current account deficit is now forecast to be much narrower than projected in the last fiscal year as it continues to shrink in response to measures that curtail imports of low-priority goods, as well as higher hydroelectricity production, which will replace fuel imports for generators, and more workers going to high-income destinations like Japan, the report reads.
Downside risks to outlook in the current fiscal year 2019-20 centers on challenges to the smooth implementation of federalism. “Adequate human resources, mainly technical staff, and capacity in the relatively new sub-national governments coupled with necessary legislative frameworks are required for the smooth implementation of federalism,” it adds.
The theme chapter of this edition of ADB report sheds light on existing implementation challenges of Special Economic Zones (SEZs) in Nepal and suggests measures to overcome them. “SEZs can play a key role in developing economies like Nepal to expand exports, bridge the huge trade deficit and mitigate pressure on external stability,” it reads.

Nepal is the number-one improver, though still mired within highest-risk category

Nepal has become the most improved country in Euromoney’s crowd-sourcing risk survey at the halfway mark this year, though it still is mired within highest risk category broadly equivalent to Madagascar, Belarus and Niger in risk terms, on a lowly score of just less than 32 from a maximum 100 points.
“Gaining more than five points to move 14 places higher in the global risk rankings since 2018, and a whopping 24 places during the past five years, the improvement seems nothing short of phenomenal,” the Euromoney reports.
“It puts Nepal above the Maldives, Ethiopia, the Gambia and other nations in the top-10 most improved countries so far this year,” according to economists and other risk experts, who were polled. The survey upgraded all 15 of Nepal’s political, economic and structural risk indicators this year, notably raising the score for government stability since the last legislative elections were held in 2017 and a solution was found to the political deadlock surrounding the senate electoral process delaying the government’s formation.
The survey analysts said that the rising country risk score is ‘primarily due to political stability, high economic growth for three consecutive years, low inflation and improvement in institutionalising federalism. This report also helps to explain why the score for government finances has been upgraded, noting the fact financial assistance was recently approved by the World Bank (WB) to support the reforms required to accomplish an ambitious and gradual transition to a federal state. Meanwhile, GDP has shown remarkable real-term strength during the past few years, growing by 7.9 per cent in fiscal year 2016-17 (to mid-July), and 6.3 per cent in the fiscal year 2017-18, the report reads, adding that it has been bolstered by buoyant domestic demand leaning heavily on infrastructure investments, fuelled by China and India’s weighty foreign direct investments (FDI) aiding the reconstruction effort after the earthquakes in 2015. But the report quotes, one of the survey expert Chandan Sapkota, that downside risks include security disturbances by a fringe communist party, which has attacked private businesses and public assets. “Other multilateral creditors, including the Asian Development Bank (ADB) and International Monetary Fund (IMF), are predicting further strength, with GDP growth exceeding 6 per cent in fiscal year 2018-19 and fiscal year 2019-20, though the FDI has seen a decline in the last fiscal year 2018-19. “Again, this has been bolstered by high activity in construction, services – including tourism fuelled by an influx of Chinese visitors – and manufacturing, which is now less hindered since electricity outages have been resolved, enabling more capacity utilisation. “Other notable developments, according to Sapkota, include ‘a stable government that has almost a two-thirds majority in parliament, progress in construction of major infrastructure projects, such as international airports and hydroelectricity, and amendments of major business-related regulations”.
These regulations include the Industrial Enterprises Act, Special Economic Zone Act, Public-Private Partnership and Investment Act, and Labour Act, among others, although, as they are yet to be implemented, it is impossible to gauge their effectiveness.
However, Nepal’s advancement must also be put into some context, with the country still mired within Euromoney’s highest-risk category, in 135th place, broadly equivalent to Madagascar, Belarus and Niger in risk terms, on a lowly score of just less than 32 from a maximum 100 points. This is likely equivalent to a red-warning, junk-status credit rating were Nepal to ever receive one. “Downside risks include security disturbances by a fringe communist party, which has attacked private businesses and public assets,” the report reads, highlighting the risks to business safety in a country where Maoist rebels are intent on violent left-wing extremism. Deteriorating governance, especially fiduciary risks when it comes to implementing public projects, and the fact the fiscal deficit has increased under the weight of public spending – with additional outlays on poorly managed social security schemes – are also mentioned.
Meanwhile, inflation pressure has increased in response to an agricultural supply shock caused by flooding in the region, with the headline rate climbing above 5 per cent in May. 

भारतका पूर्वोत्तर राज्यसँग नेपालको आर्थिक साझेदारी

गान्तोक (सिक्किम)-नेपाल तथा भारतका पूर्वोत्तर राज्यबीच आर्थिक साझेदारी बढाउने संस्थागत प्रयास सुरु भएको छ । भारतका पूर्वोत्तर राज्यसँग नेपालको साझेदारी बढाउने सम्बन्धमा शुक्रबार आयोजित कार्यक्रममा दुवै मुलुकका विज्ञहरूले लगानीकर्ताबीच एकआपसमा विभिन्न तहमा सहकार्य गर्नुपर्ने धारणा राखेका छन् । उनीहरूले वस्तुको ओसारपसार तथा मानिसको सहज आवागमनका लागि हाल रहेका व्यवधानहरू हटाउन पहल गर्नुपर्ने एवं एक आपसमा नयाँ लगानीका अवसरहरू खोज्नुपर्ने धारणा राखे । शुक्रबार भारतको सिक्किम राज्यमा आयोजित गोष्ठीको उद्घाटन गर्दै सिक्किमका मुुख्यमन्त्री प्रेमसिंह तामाङले विस्तृत क्षेत्रीय साथै उपक्षेत्रीय आर्थिक सहयोग र सहकार्यका निम्ति संयुक्त पहलका अवसरहरूबारे आफ्नो भावी दृष्टिको विस्तृत जानकारी गराएका छन् । यसैगरी, भारतका लागि नेपाली राजदूत निलम्बर आचार्यले पर्यटन, कृषि एवं खाद्य प्रशोधन, ऊर्जा, पूर्वाधार, स्वास्थ्य स्याहार, शिक्षा, कौशल विकास तथा स्टार्टअप र सेवालगायतका क्षेत्रमा ‘पूर्वी सम्पर्क’को सक्रिय अनि उत्कृष्ट पहलमार्फत् विकासको अपेक्षित लक्ष्य हासिल गर्न भारत र नेपालबीच साझेदारीलाई अझ व्यापकता दिनसक्ने जनाए । लगानीका अवसरहरू खोज गर्दै भारतको पूर्वोत्तर राज्यहरू तथा नेपालको आर्थिक विकासमा सहभागी बन्न पीएचडीसीसीआईअन्तर्गत भारत नेपाल केन्द्र (आईएनसी) र राज्य विकास परिषद् (एसडीसी)द्वारा नेपाली राजदूतावास नयाँदिल्लीको सहयोगमा ‘भारत नेपाल आर्थिक साझेदारी शिखर सम्मेलन’ आयोजना भएको हो । सम्मेलनमा विभिन्न वक्ताहरूले पर्यटन, कृषि एवं खाद्य प्रशोधन, ऊर्जा, पूर्वाधार, स्वास्थ्य स्याहार, शिक्षा, कौशल विकास तथा स्टार्टअप र सेवा क्षेत्र लगायतका क्षेत्रमा ‘पूर्वी सम्पर्क’को सक्रिय अनि उत्कृष्ट पहलमार्फत् नेपालको आर्थिक विकासको अपेक्षित लक्ष्य हासिल गर्न भारत र नेपालबीच साझेदारीमाथि केन्द्रित हुनुपर्ने जनाए । यस क्षेत्रको नीति निर्णयमा महत्वपूर्ण प्रभाव राख्ने नीति निर्माताहरूको सक्रिय अन्तक्र्रियामा उनीहरूले लगानी तथा व्यापारका लागि बृहत् अनि प्रामाणिक सम्भावनाहरूबारे अवगत गराउँदै सिक्किम र नेपालबीच दुईतर्फी लगानीको अवसरको खाका पनि प्रस्तुत गरिएको थियो । उक्त अवसरमा सिक्किमका मुख्यसचिव आलोक श्रीवास्तले व्यापारका निम्ति सहायक अनि प्रगतिशील रहेको सिक्किमको विकासीय रूपरेखाको जानकारी दिए । अतिरिक्त सचिव तथा उद्योग एवं वाणिज्य विभागका सचिव थोमस चाण्डीले नेपाली उद्यमीहरूलाई स्वागत गर्दै विशेषगरी पर्यटन र जैविक खेतीको क्षेत्रमा सहकार्यको नयाँ अध्याय सुरु गर्न आह्वान गरे । जवाहरलाल नेहरू विश्वविद्यालयका प्रोफेसर तथा विघटिछ ईपीजी सदस्य प्रो. महेन्द्र पी. लामाले सिक्किम र नेपालबीच आर्थिक सहकार्य विस्तारको निम्ति महत्वपूर्ण ऐतिहासिक साथै समकालीन तथ्यहरूबारे प्रकाश पारे । नेपाल एसबीआई बैंकका सीईओ अनुकुल भटनागरले लगानीको निम्ति नेपालमा उपलब्ध वित्तीय सुविधाहरूबारे अवगत गराए । उनले नेपालमा लगानीको प्रशस्त सम्भावना रहेको भन्दै लगानीको लागि आह्वान पनि गरे । 

यसैगरी, कारोबार राष्ट्रिय आर्थिक दैनिक मिडिया पार्टनर रहेको उक्त गोष्ठीमा पीएचडीसीसीआई अन्तर्गतको भारत नेपाल केन्द्रका अध्यक्ष तथा नेपालको निम्ति भारतका पूर्वराजदूत केभी राजनले आर्थिक सहकार्यलाई गति प्रदान गर्न भारत र नेपालबीच सामाजिक सांस्कृतिक सद्भावलाई संस्थागत बनाउनुपर्ने आवश्यकतामाथि जोड दिए ।पूर्वराजदूत केभी राजनद्वारा अध्यक्षता गरिएको सम्मेलनको पहिलो प्राविधिक सत्रमा ‘नेपालमा औद्योगिक प्रवर्तनः द्विदेशीय कारोबार नीतिको पुनरावलोकन तथा उपक्षेत्रीय सहकार्यको विस्तार’ सत्रमा सीमा क्षेत्र विकास तथा बीबीआईएनमाथि छलफल भएको थियो । उक्त सत्रमा नेपाल राजदूतावासका आर्थिक सहचारी तीर्थ पौडेल, सिक्किमका पूर्व लोकसभा सांसद पीडी राई, सूचना एवं जनसम्पर्क विभागका सचिव श्रीमती शेराब सेंगा, आईसीएफएआई विश्वविद्यालय, सिक्किमका उपकुलपति डा. जगन्नाथ पटनायक, केन्द्रीय कृषि विश्वविद्यालयका उपकुलपति डा. पीपी डब्राल, सिक्किम विश्वविद्यालयका डीन त्रिलोक देवान, आन्ध्र प्रदेशका पूर्व मुख्यसचिव, जीटीएका सल्लाहकार एवं पूर्व प्रधान सचिव, दार्जीलिङका पूर्वविधायक, सिक्किम सरकारका पर्यटन सल्लाहकार राज बसुले सहभागिता जनाएका थिए । यसैगरी, ‘नीतिगत सुधार तथा नेपालमा कारोबार गर्न सहजता, नेपालमा क्षेत्रगत सम्भावनाः नेपाल तथा पूर्वोत्तरमा (सिक्किमको विशेष सन्दर्भमा) औद्योगिक विकासको निम्ति निवेशको प्रवाहीकरण’ विषयक दोस्रो सत्रको समन्वय भारत नेपाल केन्द्रका उपसचिव एवं समन्वयकर्ता अतुलकुमार ठाकुरले गरेका थिए । उक्त सत्रमा इन्टरस्टेट मल्टीमोडल ट्रान्सपोर्ट (प्रा.) लि अन्तर्गत फ्लिट लजिस्टिकका कार्यकारी निर्देशक विकास रौनियार, अन्तर्राष्ट्रिय कारोबार विशेषज्ञ डा. पानु पाजो, पूर्वाधारका सल्लाहकार कर्णल मणि गहतराज, शिक्षाविद् गायत्री राई, कृषि तथा खाद्य परिशोधन उद्यमी अभिमन्यु ढकालले नेपाल तथा उत्तर भारतीय राज्यको बीचमा कसरी लगानी तथा उद्यमशीलता विकास गर्ने भन्ने बारेमा छलफल गरेका थिए । यस्तै, कारोबार राष्ट्रिय आर्थिक दैनिकका सम्पादक कुबेर चालिसेले सम्मेलनको समापन गर्दै नेपाल भारत सीमामा संयुक्त विशेष आर्थिक क्षेत्र स्थापना गर्नुपर्ने तथा सीमामा व्यवस्थित हाटबजारको स्थापनाले दुुवै देशका लगानीकर्ताा तथा कृषकहरू लाभान्वित हुने बताए ।

Nepal and North-Eastern Indian states plan economic partnership

Nepal and Northeastern states of India are planning to start economic cooperation institutionally.
During 'India-Nepal Economic Partnership Summit' organised at Gangtok in Sikkim today experts suggested to work on various level of cooperation to strengthen the ties to deepen regional and sub-regional economic cooperation. They also discussed on easing the current barriers in free flow of goods and people.
Nepal can meet desired development goal from the ‘Looking East’ policy of India, said Nepali ambassador to India Nilambar Acharya, addressing the programme 'India-Nepal Economic Partnership Summit' organised by Progress Harmony for Development Chamber of Commerce and Industry (PHDCCI) – under aegis of its India-Nepal Centre (INC) / State Development Council (SDC) in association with the Embassy of Nepal in New Delhi – today at Gangtok of Sikkim state of India.
He also pointed on the sectors where India-Nepal co-operation can be further boosted through proactive and sublime 'East Connection' to achieve the desired goals for economic development of various sectors.
Likewise, inaugurating the summit as chief guest, Chief Minister of Sikkim Prem Singh Tamang, on the occasion, shared his perspectives on the opportunities that are at place and about the need of having the collaborative efforts, for making a framework of comprehensive regional and sub-regional economic co-operation.
Economic Minister at the Embassy of Nepal in New Delhi Krishna Hari Pushkar urged the investors to Indian investors in Nepal, whereas the chief secretary of Sikkim Alok Srivastava, on the occasion, gave an overview of Sikkim’s developmental profile and policies which are progressive and supportive to the businesses. Similarly, additional chief secretary at the Department of Commerce and Industries, Government of Sikkim Thomas Chandy welcomed the Nepali entrepreneurs’ to engage with Sikkim and start a new chapter of collaboration in particularly two areas; Tourism and Organic Farming.
Likewise, Prof Mahendra P Lama, member of the EPG on Nepal-India Relations, touched on historical and contemporary facts that are crucial for further expansion of economic cooperation between Sikkim and Nepal.
Chairman at the India-Nepal Centre under PHDCCI and India’s former ambassador to Nepal K V Rajan shared his reflections on the need of institutionalising the socio-cultural goodwill and shared ties between India and Nepal for accelerating the economic cooperation, whereas MD and CEO of Nepal SBI Bank Anukool Bhatnagar, on the occasion, outlined on the financing facilities available in Nepal for doing business.
Charing the summit’s first Technical Session 'Promoting Industry in Nepal: Revisiting Bilateral Trade Policies, Expanding Sub-regional Cooperation, Border Area Development, MSMEs, Destination Sikkim, SAARC, BBIN’, ambassador K V Rajan explained the opportunity for both the countries. Likewise, economic counsellor at the Embassy of Nepal in New Delhi Tirtha Poudel, former MP at the Lok Sabha of Sikkim and Leader of SDF P D Rai, secretary at the Department of Information and Public Relations Sherap Shenga, vice chancellor at the ICFAI University of Sikkim Dr Jagganath Patnaik, Dean at the Central Agriculture University of Sikkim Dr P P Dabral, former chief secretary at the Andhra Pradesh and also former principal secretary and advisor of GTA, former MLA of Darjeeling Trilok Dewan and tourism advisor of Government of Sikkim Raj Basu took active part in the first session.
Likewise, the concluding session on 'Policy Reforms and Ease of Doing Business in Nepal: Sectoral Possibilities in Nepal, Channelising Investment (both-ways) for Industrial Development in Nepal and Northeast (with special reference to Sikkim)' moderated by deputy secretary and coordinator, SDC / India-Nepal Centre (PHDCCI) Atul K Thakur, witnessed executive director of Interstate Multi-Modal Transport (P) Ltd and Fleet Logistics (P) Ltd Bikas Rauniar, International Trade Expert Dr Panu Pazo, Consultant – Infrastructure Col Mani Gahatraj, educationist Gayatri Rai, agri and food processing entrepreneur Abhimanyu Dhakal.
Editor of Karobar National Economic Daily – the media partner of the summit – Kuber Chalise, on the occasion, summed up the session by proposing to establish a joint Special Economic Zone (SEZ) and a Haat Bazaar at the border so that the investors and farmers from across the border can take benefit.
The PHDCCI has been closely working with the Government of Nepal and the leading industry bodies of Nepal to promote bilateral economic development. The summit also focused on the sectors where India-Nepal co-operation can be further boosted through proactive and sublime 'East Connection' to achieve the desired goals for Nepal’s economic development. The summit – that aimed at exploring the trade and investment opportunities and to participate in the economic development of both India’s Northeast region and Nepal – hosted some of the key policy-makers, who significantly influence the decision-making of the region. It also hosted two-ways investment opportunities between Sikkim and Nepal through sensitising the industry captains and investors to come in term with the strong possibilities that both the places offer unwaveringly for businesses and investments.

Government opens Simara GPZ for investment

The Special Economic Zone (SEZ) Authority Nepal has called for applications from interested parties to invest inside the Garment Processing Zone (GPZ) in Simara.
Publishing a notice, the SEZ Authority has asked firms to submit their applications within May 31 to set up their factories across 68 blocks inside the GPZ. It has also fixed rental fee of Rs 20 per square feet for investors to establish their factories inside the Simara GPZ.
According to executive director of SEZ Authority Nepal Chandika Bhatta, the authority will analyse the applications that it receives for Simara GPZ and soon award the blocks for investors to invest in.
The authority will provide necessary land to investors on lease for 30 years with the possibility of an extension, according to the notice of the SEZ Authority Nepal that is hopeful that all 68 blocks will be booked within the application submission deadline
Bhatta claimed that investors in the Simara GPZ will be assured of basic infrastructures including internal road, electricity and water supply, sewage system, weighing bridge, waste water treatment plant, petrol pump, banks and insurance service.
The government had came up with the concept of GPZ after the US extended zero tariff preference for 66 products, including apparels, into its market through the ‘Trade Facilitation and Trade Enforcement Act’ in February 2016. Construction of the GPZ is expected to bring down the production and export cost of garments, which is relatively higher compared to other nations in the South Asian region, apart from reducing the cost of production and exports. The GPZ is also expected to slash the high transport and shipment costs incurred by Nepali garment traders due to the country’s landlocked status, as the Simara GPZ is located near the country’s only rail-linked dry port in Birgunj.

Nepal should take benefit from BRI

Preoccupation with avoiding debt-trap has dominated the discourse on China’s Belt and Road Initiative (BRI) preventing Nepal from developing concrete plans, experts pointed out during a roundtable discussion organised by SAWTEE-Centre for Sustainable Development (CSD), here, today.
The event was organised to add to the discourse on how to align Nepal’s development plans with the China’s multi-regional connectivity initiative; the Belt and Road Initiative (BRI). The BRI basically is an infrastructure investment programme creating a web of transportation system including roads, railways, telecommunications, energy pipelines, and ports across regions.
Making a presentation on the BRI and its implication for Nepal, former vice chairman of National Planning Commission (NPC) Dr Shankar Prasad Sharma called attention to the ambiguities present in the project financing modality for the projects to be included in the BRI. "Whether the financial support will be in the form of loan or grant, if it is loan then what would be the interest rate and what would be the terms and period," Sharma asked, adding that the BRI is an evolving process, onus is on Nepal to negotiate terms that are beneficial to us.
Likewise, former under-secretary general at the United Nations (UN) and head of SAWTEE-CSD Gyan Chandra Acharya pointed out that it is evident that Nepal till date does not have clear vision on how best to proceed with the BRI, hence, discussions like these could be instrumental in shaping the future courses.
Chairman of South Asia Watch on Trade, Economics and Environment (SAWTEE) Dr Posh Raj Pandey, on the occasion, pointed out that much of the BRI discourse is only dominated by infrastructure issues, but there should also be focus on towards being integrated to Chinese value chain through investment.
Similarly, infrastructure expert Dr Surya Raj Acharya cautioned that Nepal is stuck in perpetual policy-trap that is preventing discourse on the BRI modality from gaining momentum.
Former ambassador to China Dr Mahesh Kumar Maskey said that instead of vying for viable projects like cross-border Special Economic Zones (SEZ), Nepal is more focused on dubious projects such as railways, which has become counterproductive.
The participants present in the discussion programme had a consensus view that Nepal should have a clear agenda for its national interest so as not to be swayed by peripheral issues. The round table brought together a cross-section of stakeholders, including policy makers, diplomats, scholars, and private-sector.

NRNA, domestic investors save the government

Non Resident Nepalis Association (NRNA) and domestic private sector saved the government as the mega projects illuded the investment summit that has showcased 77 projects for the foreign investors.
The government today signed some 15 memorandums of understanding (MoUs) – most of which is with the domestic private sector and NRNA – of the 17 applications, at the conclusion of the two-day Nepal Investment Summit 2019 in Kathmandu.
The summit witnessed investment agreements on 15 projects between investors themselves and also between the government and investors, according to the Investment Board of Nepal (IBN) that has extended the deadline to submit their applications for the showcased projects till April 20 due to low turnout.
Of the 15 projects that were signed, Chaudhary Group (CG) – owned by Forbes-listed only Nepali billionair Binod Chaudhary – alone signed 4 joint venture agreement with Indian investors, whereas some of the projects earlier said to bring in foreign direct investment (FDI) also signed agreement for financing with the local banks – giving a new definition to the FDI, though the experts claimed it to be a government 'face saver' for the government. A FDI project signing financing agreement with domestic banks is going to not only change the definition of FDI but also create liquidity crunch and hit macroeconomic stability in the country, though the amount seems not huge.
The projects include a joint venture agreement on development of a multi-model logistic park between CG and Sharaf Group, JV agreement to develop the 600-megawatt utility-scale solar photovoltaic project between CG and Skypower, JV agreement between CG and Turkcell for 5G mobile network service, solar photovoltaic energy between Chief Ministers’ Office of Province 2 and CG Infrastructure, according to the board. 
The summit also witnessed agreement on development of the 164MW Kaligandaki Gorge Hydropower Project between Yunnan Xinhua Water Conservancy and Hydropower Investment, Hydro Solutions Group and Shanghai Investigation, Design and Research Institute.
The event also witnessed commitment letter for financing the 900MW Arun-III Hydropower Project – though the Indian developer was supposed to bring in the FDI to develop hydel project – between Nabil Bank, Everest Bank, State Bank of India and SJVN Arun-III Power Development Company. The Indian SBI Bank has made a commitment to provide Rs 65.6 billion while Everest Bank Ltd (Rs 8.13 billion) and Nabil Bank Ltd (Rs 4.88 billion) will also contribute to the project estimated to cost  Rs 112.28 billion.
Muthoot Finance of India also officially announced its investment of Rs 399 million in United Finance, though Muthoot had already agreed to inject money in C-class financial institution in Nepal. United Finance is also a part of Chaudhary Group (CG).
The summit also witnessed an agreement for development of Himalaya Boutique Village Resort in Banepa, setting up a Rs 10 billion fund by Non-Resident Nepali Association (NRNA) and construction of a grain warehouse and infrastructure development cooperation. NRNA and Ministry of Industry signed the agreement. NRNA presiden Bhaban Bhatta informed that an agreement is signed with the government to set up a basket fund worth Rs 10 billion to support the government’s agenda of economic prosperity.
Likewise, Investment Board Nepal (IBN), International Finance Corporation (IFC) and Special Economic Zone (SEZ) Authority for development of Simara SEZ as per public-private-partnership (PPP) modality. Also notable were the announcement of financial investment confirmation of $650 million for the 216-MW Upper Trishuli Hydropower Company by a Korean company.
The IBN has also claimed that it will set up a robust follow-up mechanism on agreements that had been signed and those that would be signed in the next few weeks.
But the investors seemed not convinced with the two-third majority 'communist' government due to their schooling and unpredictable behavior.
The second Nepal Investment Summit held in 2017 saw the commitment of around Rs 14 trillion and its implementation progress is nearly 25 per cent. The country had organised the summit for the first time in 2048 BS following the restoration of democracy. The investors attending the summit had pledged investment of approximately $100 million, but only around 25 per cent was realised, government data show.
This time the investment could go up in the extended deadline.
Addressing the concluding ceremony, former prime minister and co-chair of Nepal Communist Party (NCP) Pushpa Kamal Dahal said it was the right time for investors to inject investment in Nepal as the country’s sole priority was economic prosperity and development.
Finance Minister Dr Yubaraj Khatiwada said the investment summit had successfully promoted Nepal as a favourable destination for doing business and expressed his commitment to support investors through all means.
A total of 735 delegates from 40 countries representing 300 companies, in addition to 600 domestic participants from over 100 companies, took part in the summit, according to the board.

Investment Board to showcase 63 projects in investment summit

The Investment Board-Nepal (IBN) today approved 63 projects – ranging from 340 million to Rs 340 billion – to be showcased at the Nepal Investment Summit scheduled for March 29-30.
The 35th board meeting chaired by Prime Minister KP Sharma Oli today has approved the projects prepared by the board to be showcased before investors – both the foreign and domestic – at the investment summit that is expected to see some 400 participants.
The projects related to transportation, tourism, agriculture, education and health sectors will be showcased before the investors, board chief executive officer Maha Prasad Adhikari said, adding that the approved projects include Kathmandu Bus Rapid Transit, Ramgram-Tilaurakot Bus Rapid Transit, West Seti Hydel Project, Second International Airport in Nijgadh, Warehouse and Processing Centres, Sunkoshi-2 and Sunkoshi-3 Hydel Projects, Madhya Kaligandak Hydel Project, Special Economic Zone (Simara), Hetauda Smart City, Waste Management Project (Butwal), Dhulikhel Medicity and Pokhara Technical School. "The board will present the projects with all their features, including financial analysis at the summit."
The board has also selected the projects keeping in the federal setup in the mind with priority projects of different provinces, he added. Among those on the list are seven projects in road and air transport, including three new projects Kathmandu Bus Rapid Transit, Ramgram-Tilaurakot Bus Rapid Transit and Sudurpashchim Sarbajanik Yatayat. The latter two projects are of Province 5 and Sudurpaschim Province respectively.
There are also five projects in tourism infrastructure, including at local and provincial levels. Likewise, the board has prepared 13 projects in hydro-power including six in the private sector, to present at the summit.
Likewise, two educational and health sector projects and three in industrial infrastructure are also ready to showcase. Three urban infrastructures have also made it to the list apart from two cement factories and three cable car projects, Adhikari added. "Some 400 delegates have confirmed their participation in the summit and most of them are from China and India."
Prime Minister during the meeting also directed the government agencies for security arrangements.
Earlier, the board that had exhibited eight projects at the first Investment Summit in 2017 has left out three projects – Tamakoshi III, Integrated Solid Waste Management Project and Kathmandu Hetauda Tunnel Highway – for the second summit.
Tamakoshi III is already taken up by a private party and the solid waste project is now in the implementation phase. The tunnel highway is also signing contract with Chinese investors this week after the special annual general meeting called on March 23.

Nepal Infrastructure Bank gets operating licence

Nepal Infrastructure Bank has today received operating license as a National Level Infrastructure Development Bank from the central bank.
Nepal Infrastructure Bank has received operating license to conduct financial transaction as per the Banking and Financial Institution Act, 2073 clause 107, the bank said in a press note. "The bank is established in joint effort and investment by government along with various commercial banks, insurance companies, microfinance, private companies and group of business entrepreneurs of Nepal," it reads, adding that the bank – registered in the Office of Company Registrar on June 8, 2018 – has received operating licence from the Governor of Nepal Rastra Bank Dr Chiranjibi Nepal, as a national level Infrastructure Development Bank today.
The bank with authorised capital of Rs 40 billion, issued capital of Rs 20 billion and paid up capital Rs 12 billion has 10 per cent government share and 90 per cent share from private sector.
The prime objective of the bank is to play vital role in the infrastructure development of the nation more specifically in the area of construction and development of transportation, agriculture, energy, tourism, SEZ, advanced urbanisation infrastructure, information technology (IT) along with other areas of infrastructure, the press note reads, adding that the bank shall strive to bringing everyone together – public as well as private – in order to achieve its core objectives including infrastructure financing; sourcing of long term funds from international and domestic capital market; and investing on shares of the companies operating in Infrastructure development and other services offered by the bank.

Stakeholders welcome amendments in SEZ Act

Stakeholders today opined that the recent amendments in the Special Economic Zones (SEZ) Act will encourage investors towards injecting investments in the SEZs.
Addressing a roundtable discussion on ‘Problems faced by industries inside the Bhairahawa SEZ', organised by the Society of Economic Journalists of Nepal (Sejon) in the capital today, they said that the government’s decision to reduce the compulsory export provision for industries inside SEZ to 60 per cent from existing 75 per cent is investment-friendly. "It will encourage the private sector towards investing in such protected zones," they added.
With various amendments intended to lighten up the export provisions for industries inside SEZ and assure further tax incentives, the cabinet had endorsed the SEZ Bill last week. The SEZ Bill has been tabled at the Parliament for the final nod.
Along with reducing the mandatory export provision for industries operating within the SEZ to 60 per cent of their production, the new SEZ Bill also assures 100 per cent income tax waiver for such industries for the first five years and 50 per cent income tax waiver thereafter. Likewise, the Bill has also reduced the rental fee for industries within SEZ to Rs 20 per square meter per month from Rs 150 per square meter month.
Furthermore, the SEZ Bill has also reduced the minimum investment ceiling for industries inside SEZ to Rs 20 million from Rs 50 million.
"The SEZ Act has been amended keeping in priority to boost the morale of investors inside the SEZ," executive director of SEZ Authority Nepal Chandika Bhatta said. "If necessary, we can be further flexible in the export provision for such industries in future,” he said, adding that the new SEZ Bill has also incorporated a provision whereby industries inside SEZ get all assured tax waiver facilities under the recommendation of SEZ Authority itself.
Speaking at the discussion programme, former vice-chairman of the National Planning Commission (NPC) Dr Shankar Sharma said that though the SEZ Bill has attempted to promote investment inside the SEZs, the government should now focus on effective implementation of the SEZ Bill. "The new SEZ Bill has addressed some of the key issues raised by investors inside the SEZ," he said, adding that it, however, is crucial that the government implements the law properly through enhanced cooperation between the government agencies.
Likewise, director general at the Department of Customs Toyam Raya said that available laws of the government are contradictory resulting to difficulty in their effective implementation. "Thus, the government should ensure that any laws should not contradict with one another while bringing them,” said Raya.
On the occasion, deputy managing director at the Nepal Electricity Authority (NEA) Hara Raj Neupane assured that the authority is serious in providing necessary power supply in the industrial sector, including the Bhairahawa SEZ.
Meanwhile, former commerce secretary Purshottam Ojha said that the government should focus on implementing the one-door policy for industries inside SEZs. 

Cabinet agrees to form IEDI in all provinces

The government is setting up an Industrial Enterprise Development Institute (IEDI) in each of the seven provinces.
The cabinet meeting today approved the proposal of Ministry of Industry, Commerce and Supplies (MoICS) to establish such institute in all provinces, according to industry minister Matrika Prasad Yadav. "The IEDI is aimed at strengthening the industrial and entrepreneurship sector," he added.
The government had established IEDI – under the Industry Ministry – in 1996, under the Industrial Enterprise Development Institute Act 1996, to develop human and knowledge resources for entrepreneurship and business promotion in Nepal.
The Industrial Enterprise Development Institute Board, chaired by industry minister Yadav, has proposed to expand IEDIs to the provincial level to promote business in the country through entrepreneurship development.
Since its inception, IEDI has been engaged in running various impact-generating quality tools including training, research, consultancy, enterprise education and management development programmes. The institute is also running various short-term and long-term training programmes targeting intermediary organisations as well as potential and existing entrepreneurs.
"Formation of such institutes in all provinces will help entrepreneurship to grow across the country and promote business,” industry secretary Yam Kumari Khatiwada said, adding that IEDI already has its local offices in Provinces 1, 3, 4 and 5, which will now be handed over to the provincial governments.
She also informed that the cabinet has also decided to keep Special Economic Zone (SEZ) Authority at the central level only.

Can economist Mahat resurrect economy?

When he entered Finance Ministry today afternoon as finance minister for the fifth time, everyone is expecting that Dr Ram Sharan Mahat has a magic wand that can work magic.

But the situation that he has been appointed as the finance minister this time is different in every way that he was in the ministry earlier.

The ballooning trade deficit – that stands at Rs 288.76 billion as of six months of the current fiscal year – rising inflation – that stands at around double digit – energy deficit – the country is reeling under 12 hours of scheduled power cut – and low development expenses have made the economy costilier and lives of the people more difficult, and fuelled unemployment.

As of the seven months of the current fiscal year, the government has been able to spend only 18 per cent of the capital budget with a swelling treasury of Rs 65 billion, and another Rs 50 billion excess liquidity in the banking sector due to low appetite of the private sector that has lost faith on political parties and successive governments.

Six years ago, when he was the finance minister for the fourth time, the situation was different, the CPN-Maoist – currently UCPN-Maoist – had just joined the mainstream politics shunning violence. He was free to work in his style. But now he has to balance the aspirations of coalition partners.

Mahat may find it easy to work with coalition as they also have vowed to give priority to economy in their election manifesto, says senior economist Prof Dr Bishwhambher Pyakuryal, who was once Mahat's classmate.

Though all the political parties – especially the partner CPN-UML – have voiced seriousness in the economic agenda and shown willingness to work for prosperous future, it still has to be tested.

Apartfrom the coalition partners, Mahat might also find difficult to balance between his party's ideological legacy as democratic socialism and his own liberal economic views for which he has still been blamed for selling state utilities for penny.

Post-1990 movement, when Mahat was assigned as the vice chair of National Planning Commission (NPC), he started economic reforms and brought the liberal economic policies opening the health, education, sky, and a lot of sectors for private sector. Over the years the private sector has become an engine for economic growth, though it has also deviated here and there, which has made Mahat's task more difficult. On one hand he needs to correct the private sector and encourage it to play according to liberal economic market policy rules and on the other, start second tire economic reforms.

However, Pyakuryal thinks, Mahat is capable to turn the tide not only as a disciple of Keynesian school of thought but also as an experienced economist-cum-finance minister. "Mahat was a great lover of books and used to study a lot," Pyakuryal says, remembering their college days. "The economy currently needs a shot in arms as it has structural problems," he adds. "It is necessary to find out structural problems of priority sectors like hydropower, agriculture and tourism, and address them."

Mahat as an experienced economist himself, knows the cure for the aliment, Pyakuryal opines.

The private sector is, however, happy to get him back in the Finance Ministry due to his pro-market image, and experience hoping that the economist will be able complete the economic reforms that has been left incomplete since he left the office in 2008, when the economy grew at 5.6 per cent, the highest in last seven years.

Not only the private sector, the bilateral and multilateral development partners of the country also trust him as a man of integrity and believer of probity and transparency in public life.

Mahat had twice voluntarily resigned as finance minister. When the opposition raised question about his foreign exchange accounts in a New York Bank in 1997, he resigned voluntarily to facilitate judicial investigation. He was acquitted and subsequently reinstated. Likewise, the second time he resigned in 2002 protesting the then Prime Minister Sher Bahadur Deuba's unexpected mid-night dissolution of the parliament without consulting his cabinet fellows including himself.

But can Mahat work his charm to bring the economy back on track or not is still a billion dollar question as in the past too, he has been forced to backtrack his policy on subsidy despite being strongly against the subsidy on petrol that is mostly consumed by the urban populace.

Challenges that stare at Mahat's face:

1.     Expediting government spending.

2.     Containing inflation under eight per cent.

3.     Better utilising excess liquidity in the banking sector by building confidence of the private sector.

4.     Start second tier economic reforms
5. Some 22 proposed Acts – including Special Economic Zone (SEZ) Act, Labour Act, new Insurance Act, Banking Act – are in Parliament for approval that could he cleared sooner to encourage private sector and create investment-friendly climate.

Incumbent government focused on economic agenda

The incumbent government was, though formed to manage political transition, it has also focused on economic agenda, according to finance minister Shankar Prasad Koirala.

Addressing a meeting of newly elected members of Morang Trade Association here in Biratnagar today, he said that the new government that will be formed in a couple of weeks cannot backtrack from the economic agenda.

Many proposed Acts including Industrial Act and Special Economic Zone (SEZ) Act – that are related to business and economic sectors – have been gathering dust in the cabinet. "This government is handing over the power to the elected government and that new government will take over the responsibility of approving them," he said, adding that the short-term and limited mandate of the incumbent government halted from bringing these Acts that could have help boost private sector's confidence.

"The incumbent government also has no legal teeth to solve the issue of mismatch," he added. "Though the government had brought an ordinance for six months to solve the issue, the private sector failed to take advantage of the deadline and the ordinance has expired leaving no room for the government to do anything."

The government is private sector friendly but the private sector also has to do business morally, the minister advised.

The newly elected president of the association Shiva Shankar Agrawal, on the occasion, urged the government to help Biratnagar to help gain its past glory as the industrial city of the east.

Five per cent of the population has to come under tax for healthy economy

At least five per cent of the population has to come under the tax net for a healthy economy, according to finance minister.

Addressing an interaction held here today, finance minister Shankar Prasad Koirala asked the private sector to take advantage of the government's policy of bringing people under tax net and utilise the time frame that it provided to adjust tax mismatch. "The government had extended the time frame for the adjustment of tax mismatch on the private sector's request," he said, asking them to take advantage and settle their dues. "Otherwise, the government will be forced to take action, after December 16."

The government has given December 16 deadline to pay Rs 4,000 fine and settle the tax mismatch dues. After, the deadline, they have to pay at least Rs 100,000 as the revenue administration is going to be strict on it.

The government is also planning to tighten noose on professionals like lawyers, doctors, media houses and engineers and bring them under the tax net. There are some 10,000 lawyers, mushrooming media houses that have been not complying the tax law.

Likewise, the traders who are undervaluating while importing goods will also be under the scanner.

He also confessed of being unable to improve the industrial sector as the election government had no right to bring any ordinance of long-term impact.

"The Industrial Act is in the Cabinet due to the incumbent government's limited responsibility," Koirala said, adding that his ministry tried to simplify the revenue administration and prioritised the capacity building of the taxpayers. "Taxpayers are the ones, who provide resources for the government and the government has also tried to polish the policy, legal framework and bureaucratic hurdles."

The government has taken the blame for the private sector but the result has not been encouraging," he complained. "The government is ready to help the industrialists but the domestic production has to be increased for import substitution to bridge the widening trade deficit gap."

If the private sector is ready to take ownership of the special economic zones (SEZs) that the government is planning in Bhairahawa, Panchkhal, Biratnagar and Simara, he said the government is ready share responsibility.

Though, the government is fulfilling its commitment, the private sector has not been able to walk the talk, complained finance secretary Shanta Raj Subedi, on the occasion. "The tax break plan is brought on request of the entrepreneurs and traders, but only 500 took the advantage, instead of 30,000," he said, adding that only 700 have come under the tax net out of the total 46,000 in the tax mismatch case. "The International Monetary Fund (IMF) has asked the central bank to direct banks to follow the tax administration, while lending, which will make it difficult for those, who are submitting different papers to the bank – while borrowing – and the tax administration – to pay tax, he informed," Subedi said, asking the private sector to follow the law as the noose is tightening for the frauds.

Those, who do not take advantage of the government's legal pardoning, they will be taken action according to the law, said Department of Money Laundering director general Chudamani Sharma.

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) vice president Pradeep Jung Pandey, on the occasion, asked for the conducive environment for the business instead of benefits from the government.

Likewise, the FNCCI president Suraj Vaidya, on the occasion, hailed the incumbent government for working with the private sector.

The private sector representatives across the country, asked the government to simplify the bureaucratic hurdles, legal provision, and bring an integrated policy as the different ministries have been creating different hurdles for them. They also asked the government to become sensitive towards the private sector and not only concentrate on revenue mobilisation.