Monday, January 31, 2011

Travelling a costly affair

Travelling, be it surface or air, is going to be a costly affair.
No sooner the government hiked the public transport fare by nine per cent, the Airlines Operators Association of Nepal (AOAN) has also urged the government to hike airfare.
Though the transport entrepreneurs have been lobbying hard for the transport fare hike by 15 per cent, Minister for Labour and Transport Management Mohamed Aftab Alam approved the nine per cent hike today.
However, the Federation of Nepalese National Transport Entrepreneurs (FNNTE) that has been lobbying for at least 15 per cent fare hike, has not officially accepted the new rate, though ministry claims of scientific method for fare hike.
"We have applied scientific method to hike transport fare," Alam said, adding that all the factors associated with transportation are given reasonable weight in setting the new fare. The government has set eight parameters including fuel, spare parts and tax in calculating the new fare.
According to the new rate, people traveling in public vehicles have to pay at least Rs 10.90.Earlier on April 5, 2010, the government had fixed minimum of Rs 10 as the public transport fare but the public transport used to collect up to Rs 12 as minimum fare, which is expected to be further increased by the transporters after today's decision.
However, Alam said that the Department of Transport Management (DoTM) will monitor the fare from tomorrow and the public transportation means not abiding by the rule will be punished on spot.
Meanwhile, the consumer groups termed the fare hike -- that is in favour of the transporters -- anti-public. "It will increase burden to people already suffering from price hike of consumer goods due to high transportation cost," said Jajannath Mishra, secretary of Consumer Rights Protection Forum (CRPF).
The hike in transportation fare will also fuel the market prices of the goods and services, despite government's target of containing the inflation at seven per cent.
Similarly, the Airlines Operators Association of Nepal (AOAN) has also today urged the government to revise the airfare upward. "The airfare used to be revised in every two years, has not been revised for last five years," Sri Kanta Baral, scretary of AOAN said, adding that the Air Turbine Fuel (ATF), insurance, lease tax, VAT, renewal fee have been increased in the last five year, except the airfare.
On Februay 13, it will be five years that the airlines operators havenot revised their fare. The government has also agreed and formed a committee to revise the airfare on November 3, 2010, according to the AOAN.
The committee has submitted the report to the Ministry of Tourism and Civil Aviation one month ago, suggesting the the government to revise the airfare upward soon.

International agency chiefs call for attention to commodity price hike

Volatile and rising prices for basic farm produce, petroleum and raw industrial materials are a cause for concern, especially for the poor of the world, and steps are needed to calm historically turbulent commodities markets, the heads of several international agencies said.
UNCTAD’s second Global Commodities Forum (GCF) opened with addresses by the chiefs of four international agencies and the deputy executive secretary of a fifth. They said the theme of this year’s forum – 'Volatility in international commodity markets' – is timely as prices for such basic products are edging upward towards the limits reached during the 2008 food and energy crises.
UNCTAD secretary-general Supachai Panitchpakdi said that there are serious concerns about the way in which commodity markets have been evolving in recent years. "Since mid-2010, commodities have, for the second time in three years, been experiencing extremely high price volatility," he said, warning of 'speculative distortions that complicate the economic management of commodities production and trade,' and noted that natural events such as floods in Pakistan and fires in the Russian Federation, events which may be linked to global warming, have spurred upward pressure on prices for agricultural goods such as wheat and cotton.
Copper prices, he said, have risen by 35 per cent since the summer of 2010. These forces come on top of basic increases in demand fuelled by the fast-growing economies of such countries as China. "Such volatility has huge negative impacts on vulnerable groups, such as low-income households in developing countries, for whom food expenditure can account for up to 80 per cent of household budgets,” he added.
Panitchpakdi urged greater efforts to 'identify the policy levers that can rein in excessive volatility and maintain prices within a reasonable band'. He also urged commodity-dependent developing countries to continue efforts to diversify their economies so that they are less vulnerable to shifts in commodities markets.
Pascal Lamy, director-general of the World Trade Organisation (WTO), cautioned that '2011 will see the prices of most commodities rise, as the rise in global GDP bolsters demand, led by emerging economies. Global GDP is set to grow by four per cent this year.'" Over 70 per cent of the growth will come from commodity-intensive emerging markets. China, India and Latin America, in particular, will be acting as a ‘pull’ for global commodities," Lamy said, adding that that 'volatility is at its worst in tight and closed markets. It eases in open and, hence, deeper markets.
"Completion of the Doha Round of global trade talks could calm the picture, he added. "In fact, were this round to be completed, least developed countries (LDCs) would get almost entirely duty-free, quota-free access to developed world markets."
Hamadoun I Touré, secretary-general of the International Telecommunication Union (ITU), termed 'the timing of the forum especially important. "For billions of people, the cost of meeting daily food needs takes up a 'significant proportion' of family incomes," he said. "We must therefore work together to ensure the long-term sustainability of the production and marketing of commodities.
"Careful monitoring of these markets is vital, Touré said, and to that end ITU and UNCTAD had signed last year an agreement to set up and run a Natural Resources Information Exchange for African countries.
Ali Mchumo, managing director of the Common Fund for Commodities (CFC), said, "The recent developments in the commodity markets have been a subject of intense attention and discussion by the members of the CFC and all the stakeholders of commodities with whom we interact daily in our projects.
"The challenge, Mchumo said, is to find 'practical workable solutions to the perennial problems of the commodity economy.' He added, "There’s not much disagreement in the international community that commodity dependence is a development problem."
Andrey Vasilyev, deputy executive secretary of the United Nations Economic Commission for Europe (UNECE), said the world’s advanced economies are recovering only slowly from the global recession, with unemployment distressingly high.
Recent rises in commodity prices pose the possibility of contributing unwelcome inflationary pressure, and it is important to limit such prices to the forces of “supply and demand alone," Vasilyev said, and to reduce any influence coming from financial speculation in such goods.
UNECE’s internationally agreed standards for a number of agricultural products are applied in many cases worldwide and help to reduce trade barriers and improve the prospects of farmers in developing countries, he noted.
Opening the session was Luis Manuel Piantini Munnigh, president of UNCTAD’s Trade and Development Board, who told the gathering that the two-day conference is part of 'a search for better solutions for the chronic problems of the commodities economy'.
He said it is important 'to address these chronic problems in a manner that is both systemic and systematic, seeking the best ways to solve them'. The GCF will continue over the next two days with a series of discussions in three parallel 'streams'.
Topics to be covered include 'The state of energy markets: lower volatility and a new price zone for hydrocarbons?'

Sunday, January 30, 2011

Forex reserve declines, marginally

The gross foreign exchange reserves has declined by 2.2 per cent to Rs 262.90 billion in mid-December 2010 from a level of Rs 268.91 billion as of mid July 2010, according to the central bank.
Such reserves had decreased by 11.2 per cent to Rs 254.47 billion in the same period last fiscal year. However, on a monthly basis, foreign exchange reserve of Rs 1.46 billion increased in the month of mid-November to mid-December (the fifth month of the current fiscal year) from the level of the a month ago in this fiscal year.
"Out of total reserve, Nepal Rastra Bank's (NRB) reserves have declined marginally by 0.8 per cent to Rs 203.72 billion in the first five months of the current fiscal year from a level of Rs 205.37 billion as at mid-July 2010," it said, adding that the gross foreign exchange reserves in US dollar terms, has however, increased marginally by 1.6 per cent to $3.67 billion in mid-December 2010 from a level of $3.61 billion as at mid-July 2010. "Such reserves had decreased by 6.9 per cent in the same period last fiscal year."
Based on the trend of import during the five months of the current fiscal year, the current level of reserves is sufficient for financing merchandise imports of 8.7 months and merchandise and service imports of 7.4 months.
The central bank purchased Indian currency (IC) equivalent to Rs 74.45 billion through the sale of the $1.02 billion in the Indian money market.
Indian rupees equivalent to Rs 66.40 billion was purchased through the sale of $870 million in the same period of the last fiscal year, it added.

IC withdrawal from ATMs in India up significantly
KATHMANDU: Indian currency (IC) withdrawal from ATMs in India has increased, according to the central bank's board member Prof Dr Bishwembher Pyakurel. "In the first five months of current fiscal year Rs 19 billion worth nepali rupees is withdrawan from the ATMs in India," he said, adding that in the same period last fiscal year, the withdrawal stood at Rs 3 billion worth Nepali ripees only. The significant amount of IC withdrawal from India has forced the central bank to look into the matter seriously. A customer can get Rs 25,000 IC at once and not more than Rs 200,000 IC in a month from the bank prompting the withdrawal from ATMs.

Look outward policy can save real estate sector

Nepalis Direct Investment (NDI) and Foreign Direct Investment (FDI) can resurrect the domestic real estate business, according to a real estate entrepreneur.
"For those Non-resident Nepalis (NRNs), who want to create asset back home, the government can help them by making favourable policy,” said Om Rajbhandari, managing director of Comfort Housing.
“In the first phase, we need to attract the investment from the Nepalis living abroad,” he said, terming the NRNs Direct Investment as NDI -- the word coined by himself.
"From their hard earned money, the NRNs can create asset back home,” he said, adding that the Nepal Land and Housing Development Association (NLHDA) can organise Housing Exhibition for those NRNs abroad, who want to buy home back in Nepal.
He opined that Nepal can also attract Foreign Direct Investment (FDI) by giving expats ownership of apartments. "In each apartment project, 20 per cent to 30 per cent of the total units could be allowed for the expats,” he said, adding that those expats, who are more than 50 years of age can get retirement visa and own an apartment in Nepal.
Meanwhile, the increasing trend of constructing unmanaged residential buildings in the fertile land has forced the government to revise the National Building Code to manage and facilitate modern amenities to address increasingly unmanaged urbanisation and housings.
The decade long insurgency has forced the people to migrate to the urban areas for security reasons speeding up the urbanisation without proper planning and infrastructure.
Among government, private builders and individuals, culturally, the individuals are more inclined to construction of houses as traditionally house gives a sence of security in the society. But the individual construction has been more unmanaged and unplanned.
"The private developers can create a small city or satellite city with all the necessary infrastructures that could lead to planned development,” said Rajbhandari, one of the private developers. "The planned city will serve as the focal point of the multiple dimensions, providing a variety of attractions that promote public enjoyment and appreciation of the area, acting as the anchor of the nation and promoting decentralisation concept too.
"With mass employment opportunities, Multi Dimension Cities (MDCs) will surely be beneficial for people and generate huge revenue for the government too.
The government has also planned 10 new modern cities for business and residential purpose in the vicinity of Mid-hills Highway and North-South corridors. The budget for the current fiscal year has promised infrastructural mapping after the identification of the location and completion of their feasibility studies.
Though, the government has also been involved in the 'People’s Housing Programme' -- that is given continuity in this fiscal year's budget too -- that is extended to Chepang, Raute and Kusunda community’s settlement areas, the private builders are the key players in the sector.

Approach Paper
KATHMANDU: The finance ministry has formed an internal committee to prepare approach paper to loosen the real sector and allow expats to buy apartment. The committee is expetected to submit the approach paper on Monday, according to finance secretary Rameshwor Khanal. In a major policy shift, the government is planning to let the expats buy human-erected apartments.

Saturday, January 29, 2011

IMF to host conference on macro and growth policies

Conference on the theme 'Macro and Growth Policies in the wake of the crisis' will be held at the International Monetary Fund (IMF) in Washington DC on March 7-8. The conference will be hosted by four of the world’s most noted economists, including Nobel laureates Michael Spence (Stanford University) and Joseph Stiglitz (Columbia University), and Olivier Blanchard (Economic Counsellor and Director of Research at the IMF), and David Romer (University of California, Berkeley). The event will bring together leading policymakers and academics from both advanced and emerging countries.
The aim of the conference is to distill the policy lessons of the global financial crisis. Participants will focus on six key areas: monetary policy, fiscal policy, financial intermediation and regulation, capital account management, growth strategies, and international coordination and globalisation. They will also seek to make concrete policy recommendations for how to revive sustainable growth while safeguarding macroeconomic and financial stability.
"The crisis has clearly shown both the limits of markets and the limits of government intervention. It is time to take stock, and draw a first set of lessons,” Blanchard said, adding that given the IMF’s mandate to advise its 187 member countries on economic and financial policies, it needs to be at the forefront of this effort. "I look forward to this important conference."
The conference will be open to participation by the general public and media. A conference website, which will allow the proceedings to be webcast live will be launched shortly.

Friday, January 28, 2011

New investment policy

At least 27 countries introduced new national investment policy measures during October 1, 2010 to January 15, 2011, according to the Investment Policy Monitor.
At the international level, 58 economies concluded 32 new international investment agreements (IIAs), including 23 double taxation treaties (DTTs), five bilateral investment treaties (BIT), and four other IIAs, said the fourth Investment Policy Monitor published by the UNCTAD today.
The Monitor finds there is an ongoing trend towards rebalancing the rights and obligations of private investors with those of the State. This is apparent in stronger regulation of individual industries and an increase in State ownership or control in areas of strategic importance. State influence has also grown in the aftermath of the financial crisis.
At November’s G-20 Seoul Summit, political leaders confirmed their commitment to resisting investment protectionism with a view to generating strong, sustainable, and balanced growth. Effective investment policy making is even more important in light of today’s global investment trends, the Monitor said.
Industrial production and trade have recovered to the pre-crisis levels, but foreign direct investment (FDI) and employment are lagging behind. The Monitor says policy makers need to identify ways and means to encourage private investment to sustain the economic recovery.

Real estate entrepreneurs discuss with finance ministry

The finance ministry and Nepal Land and Housing Developers Association today discussed on the proposed-draft to let the expats buy apartments in Nepal.
"We discussed with the finance ministry officials today on the positive and negative aspects of the proposed policy that is expected to give a boost to the construction sector," one of the participants said.
In a major policy shift, the government is loosening its policy on real estate and letting foreigners buy apartments -- human-erected property -- aiming at giving momentum to the construction sector, one of the growth sectors in the recent times.
"Opening the sector for foreigners ‘to buy apartments’ is one of the ways that can make the construction sector dynamic," according to the association.
As per existing laws, a foreigner is not allowed to buy land, house or apartments in Nepal as citizenship is a must to buy such immoveable property.
Though, the market last year witnessed a boom in the construction sector in the wake of increased demand for housing and apartments, this year it has witnessed a sluggish growth. The stagnation that proves that last year’s boom was more speculative than intrinsic demand has hurt the growth of the sector that is one of the sectors with competitive advantage with the potential to create more jobs and contribution to economic growth.
Though there is rising domestic demand, according to the association, the low purchasing capacity and no option for financing has slowed down the sector's growth this year.
According to 2001 data the urban population of Nepal totaled 15 per cent and expected to reach 18 per cent by 2015 and 30 per cent by 2030.
According to the revised Housing Policy, based on the population rise, the Urban Housing shortage is expected to rise by 215,357 units every year between 2063 and 2077 (3,015,000 units total) and 1,000,000 units needs repair maintenance. "In Kathmandu valley alone, by 2020, demand of 40,300 units per year is expected," the data reveals.
Similarly, around 87.6 per cent of the total population of Nepal has their own homes, according to the Nepal Rastra Bank's Survey-2008. "Of the total urban population, 88.5 per cent have their own homes while 10 per cent live in rented homes and 1.5 per cent lives without paying rent," it said, adding that in urban areas, 36.1 per cent live in nuclear units, 59.4 per cent live in joint units and 4.3 per cent live in commercial units.
"In urban areas, 60 per cent homes are Concrete, 23.4 per cent homes are mix design and 16.6 per cent are kachhi," the Survey added.
Residential area in 'Greater Kathmandu' has increased from 13.7 per cent in 1971 to 30.6 per cent in 1981 to 46 per cent in 1991-92.
However, until the purchasing capacity of the Nepalis strengthens, the sector needs fresh capital injection to keep its momentum and allowing foreigners to buy apartments could keep the sector alive and kicking, the association added.
Construction industry has recorded 5.7 per cent growth rate in 2008-09 which is notable as compared to other sub sectors. The Central Bureau of Statistics has also predicted construction sector’s increased contribution at 6.62 per cent to the gross domestic product (GDP) in the fiscal year 2009-10.

BoP deficit stands at Rs 3.35 billion

The overall Balance of Payment (BoP) deficit has come down to Rs 3.35 billion during the five months of the current fiscal year 2010-11 compared to a deficit of Rs 14.55 billion in the same period last year, according to the central bank.
"The current account also registered a deficit of Rs 4.61 billion compared to a deficit of Rs 20.63 billion in the same period last year," the Current Macroeconomic Situation based on the five months' data of the fiscal year 2010-11, said, contributing the current account deficit narrowing to decline in trade deficit and an improvement in the growth rate of transfer income, particularly grants and remittances.
The Freight on Board (FoB)-based merchandise trade deficit dropped marginally by 1.4 per cent to Rs 122.66 billion during the five months of the current fiscal year as against 52.8 per cent in the same period last year.
The net service account deficit hs also declined significantly by 24.8 per cent to Rs 4.75 billion compared to a decline by only 3.4 per cent to Rs 6.31 billion in the same period last year.
The export import gap has not seen any sign of bridging. "Merchandise exports increased by 8.5 per cent to Rs 27.25 billion in the first five months of the current fiscal year compared to a decline by 17.8 per cent to Rs 25.12 billion in the same period last year, whereas imports grew marginally by 0.6 per cent to Rs 154.27 billion against a growth of 32.2 per cent to Rs 153.39 billion in the same period last year," the central bank added.
Exports to India increased by 11.7 per cent -- mainly due to increase in the exports of thread, jute goods, wire, cardamom, plastic utensil and MS pipe -- during the five months of 2010-11 in contrast to a drop of 12.3 per cent in the same period last year. Likewise, exports to other countries increased by 3.2 per cent -- due to the rise in the export of pulses, woolen carpet, tanned skin, pashmina, readymade leather and tea -- against a plunge of 25.5 per cent in the same period last year.
Total trade deficit during the five months of 2010-11 declined marginally by one per cent to Rs 127.02 billion against a rise of 50.1 per cent in the same period last year. Trade deficit with India rose by 30.7 per cent during the period compared to a growth of 51.2 per cent in the same period last year. On the contrary, trade deficit with other countries declined by 35.2 per cent compared to a growth of 48.9 per cent in the same period a year ago. The improvement in exports coupled with deceleration in import growth contributed to an increase in the ratio of export to import to 17.7 per cent from the ratio of 16.4 per cent a year ago.
However, the net transfer account registered a growth of 13.1 per cent to Rs 120.08 billion compared to a year ago. "Under the transfers, grants increased by 24 per cent to Rs 10.67 billion, while pension receipts rose by 11.5 per cent to Rs 13.61 billion and remittances increased by 11.3 per cent to Rs 96.59 billion," the central bank report said.
Likewise, under the financial account, foreign direct investment (FDI) of Rs 3.58 billion was recorded.

Inflation moderates
KATHMANDU: The y-o-y inflation as measured by the consumer price index moderated to 9.6 per cent in mid-December from 10.2 per cent in the same period last fiscal year. Region-wise, the price index increased highest in Kathmandu Valley by 14 per cent followed by 9.3 per cent in Hills and 6.6 per cent in Terai against 9.2 per cent, 10.9 per cent and 10.6 per cent in the same period last year.

Thursday, January 27, 2011

Gold price rises by 29 per cent

The gold price rose by 29 per cent in 2010, according to the World Gold Council (WGC).
The gold price rose for the tenth consecutive year driven by recovery in key sectors of demand and continued global economic uncertainty. Not only was gold’s performance strong, but its volatility remained low, providing a foundation for a well diversified portfolio.
By comparison the S&P Goldman Sachs Commodities Index (S&P GSCI) rose by 20 per cent, the S&P 500 rose by 13 per centm, the MSCI World ex-US Index increased by six per cent in US dollar terms, and the Barclays US Treasuries Aggregate Index rose only by six per cent over the year, the digest said.
Gold price witnessed 16 per cent volatility on an annualised basis in 2010 and remained consistent with its long-term trend. By comparison, volatility on the S&P Goldman Sachs Commodity Index was 21 per cent during the year, based on daily returns.
The precious yellow metal benefited from the continued contagion from European sovereign debt problems as investors’ hedge their currency risk, it said, adding that it was evidenced by strong gold buying in ETFs, bars, coins and other investment vehicles in Europe and other parts of the world.
The investors bought 361 tonnes of gold in the ETFs, the WGC monitors in 2010, bringing total holdings to a new high of 2,167 tonnes, worth $98 billion. "It represents the second largest yearly inflow on record, after the 617 tonnes of net inflows experienced in 2009," according to the digest.
During the first nine months of 2010, global jewellery demand totalled 1,468 tonnes, increasing by 18 per cent from the same period during 2009. Gold demand for technological and industrial applications continued to recover during the first nine months of 2010, registering a 19 per cent increase over the same period in 2009, said the report.
Central banks became slight net buyers of gold for the full-year, after two decades as a steady source of supply to the market. The IMF successfully completed its gold sales programme of 403.3 tonnes without disruption to the market. The IMF sold 200 tonnes to the Reserve Bank of India, 10 tonnes to Sri Lanka, 10 tonnes to Bangladesh and 2 tonnes to Mauritius, all in off-market transactions executed at market prices. The remaining sales were conducted through on-market sales within the ceiling set by the third Central Bank Gold Agreement (CBGA3).

Domestic market
KATHMANDU: Due to surge in the international price, the domestic market has also witnessed a record high gold price in 2010. On December 7, the
precious yellow metal crossed Rs 40,000 and was traded for Rs 40,398 per tola (11.66 gram) but the price has cooled down a little and has been trading between Rs 39,000 to Rs 40,000 per tola lately.

Insecurity forces Surya Nepal to start new plant in hilly west

Surya Nepal Pvt Ltd -- one of the largest tax payers in the country -- is in expansion mode as it is planning a new manufacturing plant in Kharenitar VDC-7 of Tanahun district.
After continued strikes and bandhs in Simara -- the Terai region -- where Surya Nepal's another manufacturing plant has been established some 22 years, the factory decided to start another plant in the hilly west.
The new manufacturing plant -- at Rs 240 million investment -- has a production capacity of three million stick cigarette per annum and will start its production within a year.
Though, it will create employment at a time when the economy is sailing through rough waters due to over-politicisation, it is also an indication that the Southern plains is growing more insecure for the industries.
"The industries in Terai are facing security problems due to mushrooming armed outfits after the end of a decade-long insurgency that has bleed the industries with extortion, abduction and violence blue," said Federation of Nepalese Chambers of Commerce and Industry president Kush Kumar Joshi.
One of the country's largest private sector enterprise with a turnover of over $100 million started its operations in 1986 with a single tobacco manufacturing factory in Simara of Bara district on the Nepal-India border as the Terai was the most preferred region for industries then.
To tackle the insecurity, the entrepreneurs have urged the government to set up Industrial Security Force. "The government had earlier agreed to set up Industrial Security Force, but it brought the new policy through the budget," he added.
However, the growing insecurity has forced the government to provide security to the industries, though Joshi claimed that the government's move is inadequate.
The government has in its budget for the current fiscal year announced to arrange a police post of five police personnel equipped with weapons to any manufacturing industry that offers employment for more than 500 Nepalis.
"However, Ministry of Industry is still working out on the draft of modality on providing security in line with budget," said the captain of the umbrella organisation of the private sector.
Surya Nepal that produces five brands of cigarettes was the second largest tax payer to the government in the last fiscal year.
Initially established as Surya Tobacco, the company has transformed itself as Surya Nepal in 2004 to diversify into garments manufacturing with its state-of-the-art plant in Biratnagar that produces John Player brand of clothing.

Top ten tax payers in the fiscal year 2009-10
1. Nepal Telecom -- Rs 9.66 billion
2. Surya Nepal -- Rs 5.93 billion
3. Gorkha Brewery -- Rs 3.09 billion
4. Spice Nepal -- Rs 2.07 billion
5. Nepal Investment Bank Ltd -- Rs 778.00 million
6. Nabil Bank Ltd -- Rs 747.44 million
7. Standard Chartered Bank Nepal Ltd -- Rs 655.67 million
8. Rastriya Banijya Bank Ltd -- Rs 611.95 million
9. Rastriya Beema Sansthan -- Rs 542.33 million
10. Everest Bank Ltd -- Rs 535.00 million

Girl child labourers outnumber boys

According to a report, one million fewer children are working in Nepal than a decade ago.
However, the number of girl child labourers are working in dangerous conditions than boys, according to the International Labour Organisation (ILO) report that has documented the country’s sizeable population of child labourers. The report is going to be released soon.
Nearly 24 per cent of girls nationwide (around 911,000), compared to 17.5 per cent of boys (around 688,000), perform work that qualifies them as labourers, according to the report. "Girls are 50 per cent more likely to be involved in hazardous work -- 373,000 girls, compared to 248,000 boys -- exposing them to 'significant' physical and psychological dangers."
The traditional attitudes favour educating boys as they are seen as a family’s future breadwinners and taken more care than the boys.
The ILO estimates that there are 7.7 million children aged 5-17 in Nepal. The decade-long insurgancy forced rural families to send their children to the safety of urban areas where they subsequently worked to support themselves and in many cases to their families.
Some 1.6 million of them perform work that qualifies them as child labourers by international legal standards - one million fewer than in 1999.
While girls bear the brunt of labour, there has been a marked decline in 'kamlari' that is outlawed in 2006, where parents send their girl child -- especially in the Tharu community -- as indentured workers to pay off a family debt.
Rights groups have tried to discourage the practice by giving poor families grants, and the government has pledged financial assistance.
"Aggravating the problem is the fact that most children do not receive an education beyond primary school, and lax law enforcement allows factories to employ many of them despite a national ban," the ILO said, adding that, however, the Labour Act prohibits the use of children below 16 years in hazardous activities.
According to another report of Child Workers in Nepal (CWIN), there are around 2.6 million child workers in Nepal involved in various activities.
Of them, about 56,000 children are believed to working as domestic helpers. The report shows that about 46,000 children are working as porters, 40,000 bonded labourers, 59,000 working in brick kilns, 72,000 in tea shops, 15,000 in mechanical areas, 2,200 in transportation sector, more than 4,000 are rag pickers. Similalry, of the total rag pickers, 88 per cent are boys.
Child workers are vulnerable to internal and cross-border trafficking too.
The conflict coupled with various domestic problems like large family social disintegration force children to flee home and work under exploitative conditions.

Wednesday, January 26, 2011

Women migrant workers not willing to return to foreign employment

Couple of years ago, when she was at home, Ashamaya Gurung has never dreamt of earning as much as she could earn in a foreign land.
Lack of employment opportunity back home forced her to search greener pasture in foreign land far from her family members but the situation has reversed in last couple of years.
Currently, she is earning as much as she used to earn in Lebanon, where she worked for some years and returned.
After Gurung returned home around one year ago, she started fishery. Currently, she is not only earning as much as she used to earn in Lebanon but has also created employment for her family members too.
"I have two small ponds -- where I have 1,300 fish -- on a leased land," Limbu said proudly, adding that she doesnot want to return to Lebanon now. She pays Rs 7,000 per year for the land.
Given the alternatives to income, majority of the women migrant workers want to stay back with their family, according to a survey that is going to be published soon.
"Some 99 per cent of the returnees wanted to go back to foreign land for employment in 2006 when the survey started but the situation has reversed in last four years, given the alternatives to income, some 94 per cent of returnees want to stay back with their family," revealed the survey conducted by Nepal Institute of Developement Studies (NIDS) and UN Women (earlier UNIFEM) that have conducted and completed various activities including a baseline survey of more than 900 families.
The entrepreneurship of the returnees has made use of remittance in the productive sector. "Not only that it has also to be seen as a family integration," said Sharu Joshi Shrestha, Programme Manager for Migration, UN Women.
"However, they need to be trained," she said, adding that they have to be provided with option, if the government discourages women migrant workers from going to Gulf countries for employment.
Despite government ban, they have been going through illegal route exposing themselves to more risk and vulnarability. "The government bodies are not focusing on supporting the returnee women migrant workers,' she said, adding that they should also be given need-based training and encouraged to start their own business using the money and skill they have brought in.
Economic Security of Women Migrant Workers (ESWMW), an IFAD / UNIFEM supported project, has been implemented by NIDS and Pourakhi to generate necessary resource, voice and visibility among WMWs and the members of their families to engage and influence the policies on remittance and reintegration.
To help such returnee WMWs, Ministry of Labour and Transport management, NIDS and Paurakhi has jointly organised some 25 eight-day and two-day Economic Security Programme since 2009 December.
In a year, 489 women migrant workers took the training and of them 441 started their own small businesses like poultry farming, basic hotel management, beauty parlor, tailoring, dhaka clothes weaving, mobile restaurant, vegetable and mushroom farming, shop, and food processing.
Of the total, some 45 per cent utilised the remittance they brought in and currently are earning as much as they used to get in Gulf countries.
Women Migrant Workers (WMWs) remittance comprises 11 per cent of the total remittance inflow in the country that has received Rs 231.72 billion remittance in the fiscal year 2009-10.
Studies have indicated that most of the remittances earned by WMWs are used to pay off debt, school fee of children, household consumption; hence it is not invested for long term livelihood security.

Wi-Fi keeps growing in popularity

The popularity of Wi-Fi knows no end.
Some describe it as the 'true 4G standard'. This has an intuitive logic: we want to be rid of cords and over the long term everything will be wireless; mobile networks are increasingly shared by too many subscribers; and fibre needs to be brought as close as possible to every home, business and other location.
In short, Wi-Fi forms the unmissable link between fibre -- which is expensive to roll out to every location -- and mobile -- a 'shared' netwerk that potentially is used by too many subscribers.
It's not surprising then that Wi-Fi has a growing number of applications like Draadloos Groningen, a muniwifi project, is attempting a restart. A consortium of Orange France, the SNCF, Eutelsat, Alsthom and Capgemini are deploying wireless internet in TGVs, at speeds up to 320kph. Wi-Fi is offered on-board, with backhaul via satellite.
The BT has developed an iPad app allowing broadband subscribers free access to two million British hotspots.
It's also going well in a corporate sense like Boingo Wireless, which manages more 200,000 hotspots worldwide, is planning a stockmarket listing.
BSkyB is reportedly planning a bid to acquire The Cloud, which operates 22,000 hotspots in Europe.
The question remains how to earn money with the service. The BT is going in a clear direction, in line with companies such as New York's Cablevision and Telenet -- which has dropped plans to participate in the Belgian spectrum auction in order to focus on cable and Wi-Fi, free hotspot access for broadband subscribers.
The necessity of ubiquitous access will only increase in the coming years, as underlined by the TGV initiative.
In the race for subscribers there is still room for creating a distinctive asset, as there can never be enough hotspots. If you can collect revenues from it, all the better, but the subscriber won't see it that way: they want to pay just once for access.
It makes hotspot access a classic loss leader, that indirectly increases the value of a broadband subscription.

Commodity prices to remain high

The World Economic Outlook 2011 published on Tuesday by the International Monetary Fund (IMF) claims that commodity prices will remain high, and inflation is rising in some emerging economies.
Prices for both oil and non-oil commodities rose considerably in 2010, in response to strong global demand but also to supply shocks for selected commodities. Upward pressure on prices is expected to persist in 2011, due to continued robust demand and a sluggish supply response to tightening market conditions. As a result, the IMF’s baseline petroleum price projection for 2011 is now $90 per barrel, up from $79 per barrel in the October 2010 World Economic Outlook (WEO).
As for non-oil commodities, weather-related crop damage was greater than expected in late 2010, and price effects are expected to unwind only after the 2011 crop season. As a result, non-oil commodity prices are expected to increase by 11 per cent in 2011. Near-term risks are now to the upside for most commodity classes.
The uptick in consumer price inflation in emerging economies in 2010 was attributable partly to rising food prices. But the recent bout of high food price inflation has been quite persistent, straining the budgets of low-income households and beginning to feed into overall price inflation in a number of economies.
More important, rapid growth in emerging and developing economies has narrowed or in some cases closed output gaps in these economies. Accordingly, overheating pressures are starting to materialise in some cases. Consumer prices in these economies are projected to rise by six per cent this year, an upward revision of 0.75 percentage point relative to the October 2010 World Economic Outlook (WEO). Signs of overheating are also becoming apparent in some countries via rapid credit growth or rising asset prices.
The picture is quite different in advanced economies, where still-ample economic slack and well-anchored inflation expectations will generally keep inflation pressures subdued. Inflation is expected to remain at 1.5 per cent this year, unchanged from 2010 and a slight upward revision from the October 2010 WEO.

Tuesday, January 25, 2011

IMF team in Kathmandu to discuss ECF, petro-price adjustment

A four-member International Monetary Fund (IMF) team led by deputy director John Nelems arrived here in Kathmandu today to discuss mainly Extended Credit Facility (ECF) that Nepal has been negotiating since some time.
The team is also expected to hold discussion with the finance ministry and central bank on Rapid Credit Facility (RCF) that it had provided Nepal recently, adjustment of petroleum prices and regular budget.
The adjustment of petroleum prices has always been a key issue that the IMF has been pushing.Similarly, Nepal has been negotiating with IMF for ECF to achieve long-term favourable Balance of Payment (BoP) that has been witnessing deficit since last fiscal year.IMF provides financial assistance to the member countries on affordable terms to meet their BoP needs, especially when they can not meet their international payment obligations.As per ECF, IMF will provide loans equivalent to 300 per cent to 450 per cent of the allocated quota for Nepal depending on negotiation.
In the last fiscal year, Nepal's BoP remained deficit forcing the country to take IMF assistance to meet the obligation.
The IMF board had discussed about Nepal on May 28, 2010 on the report presented by the team that visited Nepal last June for Article IV Consultation and request for disbursement under the Rapid Credit Facility (RCF).
The IMF has mentioned that Nepal is experiencing a significant decline in exports, a sharp slowdown in remittances and a worsening of economic confidence, which has contributed to a large deterioration in the current account balance and a decline in international reserves as well as a liquidity crunch in the banking sector. The RCF for Nepal was aimed at addressing external and financial risks and helping catalyse possible donor support.
The IMF board has opined that the arrangement under the RCF could be helpful in cushioning the shock from the global crisis and boosting confidence. It has also hoped that the RCF would serve as a bridge to a programme addressing Nepal’s structural challenges that could be supported by an arrangement under the Extended Credit Facility (ECF).
Though, financing under the RCF carries a zero interest rate, has a grace period of five-and-a-half years, and a final maturity of 10 years, ECF comes with conditions. "If the BoP deficit is structural, IMF will implement structural adjustment process in order to eliminate any chances of future deficit," according to the central bank.
Meanwhile, the IMF board has also approved Resolution of Quota and Reform doubling the quotas to approximately SDR 476.8 billion along with a major realignment of quota shares among members.
According to the decision, Nepal’s allocated quota has been increased to SDR 1.56 million from SDR 71.3 million. Each IMF member country is assigned a quota, based broadly on its relative position in the global economy.
During it lst review the IMF said that the Nepal Rastra Bank (NRB) has taken steps to tighten monetary policy through, inter alia, raising the Standing Liquidity Facility rate.
It had also praised the authorities move to introduce macro prudential measures to limit banks’ liquidity risk and exposure to the real estate sector, imposing a partial bank licensing moratorium.

IMF projects 5.5pc Sub-saharan Africa growth

Most countries in sub-Saharan Africa have recovered quickly from the global financial crisis, with the region projected to grow by 5.5 per cent in 2011. But the pace of the recovery has varied within the region.
"Output growth in most oil exporters and low-income countries (LICs) is now close to precrisis highs," according to the 2011 World Economic Outlook (WEO) published by the International Monetary Fund (IMF). "The recovery in South Africa and its neighbours, however, has been more subdued, reflecting the more severe impact of the collapse in world trade and elevated unemployment levels that are proving difficult to reduce."
The report said that prior to the recent global crisis, sub-Saharan Africa enjoyed a period of strong growth. Growth in the region’s 29 LICs was particularly impressive at more than six per cent during 2004–08, second only to developing Asia. This reflected the improved political environment, favorable external conditions, and sound macroeconomic management.
The strong initial conditions helped most countries in the region weather the worst effects of the food and fuel price hikes of 2007–08 and the subsequent global financial crisis, it said, adding that many countries supported output by injecting fiscal stimulus and lowering interest rates. As a result, LICs in the region continued to grow at nearly five per cent in 2009, although output fell in the region’s middle-income countries — a grouping dominated by South Africa.
In most of the oil-exporting countries growth slowed, with the notable exception of Nigeria.
Most countries in the region have now returned to precrisis growth rates. In 2011, LICs are projected to grow by 6.5 per cent, it said. "Domestic demand is being supported by automatic stabilisers, expansion in public investment and social support programs, and continued monetary accommodation."
Growing trade ties with Asia are also playing a role in the region’s recovery, primarily through commodity markets. Output growth has rebounded in South Africa, but high unemployment and subdued confidence are expected to continue to dampen the pace of recovery, restricting growth to about 3.5 per cent in 2011.
Risks remain weighted to the downside, however. The pace of recovery in Europe, the dominant trade partner for most non-oil-exporting countries in sub-Saharan Africa, is modest and uncertain. More immediately, the sharp pickup in fuel and food prices stands to make a significant impact on many non-oil-exporting countries.
Rising food prices are likely to affect the urban poor in particular, given the high share of food in their consumption baskets. In response, governments will need to consider targeted social safety nets, with attendant fiscal costs. Managing these pressures, particularly against the backdrop of elevated fiscal deficits and narrowing output gaps, will be an important challenge for the region in 2011— a year with a busy political calendar, including perhaps 17 national elections.
With recovery at hand in most countries in the region, the emphasis of macroeconomic policies needs to shift to countercyclical fiscal policy helped support output growth during the crisis, but has resulted in wider fiscal deficits across the board. With growth in most countries now approaching potential, the consistency of these wider deficits with financing and medium-term debt sustainability considerations should be reviewed. To promote growth and poverty reduction, attention also needs to be given to the appropriateness of the composition of government spending and revenue sources.
Similarly, inflation remains in check in most countries, and the monetary stance seems appropriate. But policymakers should remain alert to potential pressure from rising commodity prices — particularly with growth approaching potential levels.
Other policy areas requiring sustained attention include more intensive monitoring and sounder regulation of the financial sector, continuing policy improvements targeted at the business environment, and robust public financing mechanisms to plan and control government spending, including infrastructure investment.

Birgunj Finance, Himchuli Bikas Bank to merge

This is the season of merger.
Two more financial institutions -- Kathmandu-based Birgunj Finance Ltd and Pokhara-based Himchuli Bikas Bank -- announced their proposed merger become a national level development bank.
"We are merging the two finance companies in line with the central bank's vision of consolidating the financial institutions," said executive chairman of Birgunj Finance Bijay Kumar Sarabagi, after signing the Merger Memorandum of Understanding (MoU) here in the Valley today.
The central bank and the government both encouraged the banks and financial institutions for merger in their monetary policy and fiscal policy.
"The merger is supposed to facilitate the capital requirement of the financial institutions and reduce their operational costs as well creating space in the crowded financial institutions," according to the Monetary Policy for the current fiscal year 2010-11.
Similarly, the budget for the fiscal year 2010-11 has also encouraged the merger of the banks and financial institutions by providing them incentives, though some banks and financial institutions are less inclined to mergers due to less incentives, according to them.
"In the present cut-throat competition merger will help increase area of operation too," according to chairman of Himchuli Bikas Bank Sushil Raj Parajuli.
"After the proposed merger of two financial institutions, the total paid up capital will be Rs 900 million," they said, adding that their total deposit will also be Rs 5.14 billion and lending will touch Rs 4.97 billion. "The total branch network will also be 24.
"However, they still have to get the approval from the Nepal Rastra Bank (NRB) and company registrar's office.Earlier, some of the financial institutions took wrong advantage by announcing the merger. They never get merged but unethically increased their share price by announcement of their merger forcing Nepal Stock Exchange to halt their trading.

Monday, January 24, 2011

Government to open apartments for expats

There is some good news for the expat community living in Nepal if the government consolidates its preliminary plan to loosen its policy on real estate. The government is planning to ‘let foreigners buy apartments’ in Nepal.
“The plan is in its preliminary phase,” said Finance Secretary Rameshwor Khanal. “The government has floated an idea of letting the foreigners buy human-erected property.”
The move is aimed at giving momentum to the construction sector, one of the growth sectors in recent times. “However, the government is conscious about socio-cultural fabric and potential market collapse in case of mass selling and exit of foreigners,” said Khanal, adding, opening the sector for foreigners ‘to buy apartments’ is one of the ways that can make the construction sector dynamic.
As per existing laws, a foreigner is not allowed to buy land, house or apartments in Nepal as citizenship is a must to buy such immoveable property. Though, the market last year witnessed a boom in the construction sector in the wake of increased demand for housing and apartments, this year it has seen a sluggish growth. “The stagnation proves that last year’s boom was more speculative than intrinsic demand,” added Khanal.
However, construction is one of the sectors with competitive advantage with the potential to create more jobs, and it also contributes to economic growth.
The Central Bureau of Statistics has also predicted construction sector’s increased contribution, 6.62 per cent, to the gross domestic product (GDP) in the last fiscal, compared to a previous fiscal year, due to increase of construction activities by both the government and private sector. For Nepalis, housing traditionally is a social security and a basic need.
“There is no exact data of demand for apartments, though, there is still a growing demand for housing,” said Om Rajbhandary, Managing Director of Comfort Housing. “About 279,000 housing units will be required in next 10 years,” said Rajbhandary, adding, the Kathmandu Valley alone requires around 40,300 units ever year, apart from one million houses that need maintenance.
The need of housing is more in the urban areas. Due to various reasons, the urban area is expanding by 5.6 per cent annually. The Kathmandu Valley alone has 54.5 per cent of the urban population while that of Nepal stands at 15 per cent.
But the class that is in need of housing units the most lacks the purchasing power. “Until that class strengthens its purchasing power, the sector needs fresh capital injection to keep its momentum,” said Khanal. “Allowing foreigners to buy apartments could keep the sector alive and kicking.”
The private developers are major players in the construction sector, and the government has also tried to fulfil the demand through announcing Janata Awas (people’s housing) in its last fiscal budget.

ILO projects a global unemployment rate of 6.1 per cent

With global unemployment, as officially measured, at record highs for the third straight year since the start of the economic crisis, the International Labour Office (ILO) warned that weak recovery in jobs is likely to continue in 2011, especially in developed economies.
Despite a sharp rebound in economic growth in many countries, official global unemployment stood at 205 million in 2010, essentially unchanged from 2009, and 27.6 million more than in 2007 -- the eve of the global economic crisis.
In 2011 the ILO projects a global unemployment rate of 6.1 per cent, equivalent to 203.3 million unemployed. 'Global Employment Trends 2011: The challenge of a jobs recovery,' the ILO's annual employment trends survey, points to a highly differentiated recovery in labour markets with persistently high levels of unemployment and growing discouragement in developed countries, and employment growth coupled with continuing high levels of vulnerable employment and working poverty in developing regions.
These trends make a stark contrast with the recovery seen in several key macroeconomic indicators: global gross domestic product (GDP), private consumption, investment, and international trade and equity markets all recovered in 2010, surpassing pre-crisis levels./In South Asia, rapid economic growth has resumed and the region's unemployment rate has been fairly stable, running between 4.3 per cent and 4.5 per cent between 2007 and 2010.
But the report cautions that 'unemployment is not the main labour market challenge in the region, employment growth does not automatically equate to positive labour market trends', highlighting the issue of youth unemployment -- young people are 3.5 times as likely to be unemployed as adults -- and gender-based inequalities, such as the disproportionate number of women in low productivity or vulnerable employment.
"In spite of a highly differentiated recovery in labour markets across the world the tremendous human costs of the recession are still with us," said ILO director-general Juan Somavia.In Asia and the Pacific, while rapid economic growth has resumed in many economies, regional unemployment is expected to see little change in 2011 and overall the employment outlook is uncertain, with youth unemployment, vulnerable employment, working poverty and a lack of social protection among concerns facing policy-makers.In East Asia economic growth rebounded strongly, at an estimated 9.8 per cent in 2010 it was the highest of any region in the world. Overall, regional unemployment declined to 4.1 per cent in 2010 -- although it is still higher than in 2007 -- with the services' sector as the main driver. But youth unemployment remains a major challenge; regionally young people are 2.5 times as likely as adults to be unemployed, in Hong Kong they are 4.4 times as likely.
"As some countries' phase out crisis response measures, there is a need to refocus on inequity and on labour market policies that can support structural change and increased consumption," the report said.In South-East Asia and the Pacific the crisis affected the quality of employment more than the quantity in some economies.
Although unemployment is now below or at pre-crisis levels in some countries, regional unemployment has only edged down slightly, from 5.2 per cent in 2009 to 5.1 per cent in 2010, and is expected to show little change in 2011. Vulnerable employment has increased and youth unemployment is an issue.
The region faces two key challenges, the report said. Firstly employment growth has not matched economic growth and full and productive employment needs to become a core macroeconomic policy goal; secondly, more attention needs to be paid to job quality, in particular creating a stronger link between productivity growth and wage growth.
The report also cautions that the huge inflow of foreign capital to the region is a key challenge to both growth and jobs, bringing dangers such as asset bubbles and inflation.Speaking on the eve of the World Economic Forum in Davos, Somavia added, "There is one common challenge; we need to rethink our standard macroeconomic policy mixes and make quality job creation and decent work a central target of macroeconomic policies, alongside high growth, low inflation and balanced public budgets. We must not forget that for people the quality of work defines the quality of a society".

Youth unemployment up
KATHMANDU: Worldwide, 78 million young people (aged 15-24) were unemployed in 2010, well above the 2007 pre-crisis level of 73.5 million but down from 80 million in 2009. The global youth unemployment rate was 12.6 per cent in 2010, 2.6 times the adult unemployment rate. In South-East Asia and the Pacific it was 1.42 per cent, in South Asia 9.5 per cent and East Asia 8.3 per cent. However, the ILO also warned that, among the 56 countries for which there was available data, there were 1.7 million fewer youth in the labour market than were expected from pre-crisis trends, and that such discouraged workers are not counted as unemployed because they are not actively seeking work.

Fishtail Air rescues french trekker

A lone French trekker Dominique Alvernhe, who was marooned at Chola Pass Glacier for about two days has been rescued by the Fishtail Air.
After two days, he could contact his parents back home, who quickly relayed the incident to the French Embassy in Nepal and the embassy immediately asked the Airlines for the rescue, said the Fishtail.
Alvernhe had fractured his arm and a leg while on his way at Chola Pass (5420m) on January 20.
"The veteran pilots Captain Deepak J B Rana and Captain Ashish Sherchan took off some Sherpa guides from Kathmandu on January 21 as soon as the location of Dominique was relayed," it said, adding that the 9N-AJI (AS 350 B3) chopper carried out a reconnaissance over head the location. Though, they located Dominique, due to very strong winds, they gave up the mission on January 21 and Sunday early morning, Dominique was eventually was rescued and flown to Kathmandu.
The whole dramatic operation was conducted in co-ordination with the French Embassy in Nepal and Dominique Alvernhe’s parents.
Similarly, a team of 14 -- including 10 Everest summiters -- who became stranded due to bad weather after carrying Nepal's tourism torch to a lesser peak, has also begun to be rescued.
Ten Everest heroes, who had created a record, stranded in Lukla, a mountainous region in north considered the gateway to the Himalayan peaks, since January 17.
They included Temba Tsheri Sherpa, who at 16 had been the youngest climber to summit Mt Everest in 2001, and Pemba Dorje Sherpa, who holds the record for the fastest ascent at 8hour 10 minutes.
They were part of the 14-member team, including three tourism officials and Zimba Zangbu Sherpa, president of Nepal Mountaineering Association (NMA), which had headed towards Mt Ama Dablam earlier this month.

Meet to focus on volatility of mineral, agricultuire markets

Government ministers, heads of international agencies, and experts in the fields of energy, minerals, and agriculture will meet to discuss persistent volatility in commodity markets as energy and food prices have been rising again – food commodity prices have now surpassed the level during the global food crisis two years ago.
UNCTAD’s second Global Commodities Forum (GCF) will feature a packed series of meetings on January 31 and February 1, with sessions occurring simultaneously in separate conference rooms at the Palais des Nations.
The main subjects for discussion are the instability of mineral and agricultural markets and their interconnectedness, the effectiveness of commodity policies for achieving the sustainable production and use of commodities, and ensuring energy and food security, the role of innovation and early warning systems in the commodities sector and Commodity finance, risk management and logistics.
Exports of basic farm products and raw industrial materials such as petroleum, ores and minerals are vital for many developing-country economies. But such commodities have long been subject to sharp rises and falls in prices and demand. The volatility hinders sustainable economic growth and development in poor commodity-producing countries and greatly complicates the investment process, government and corporate planning, and decision-making.
Among high-level officials, participants in GCF 2011 panel discussions will include the deputy Prime Minister for Energy Affairs of Iraq, the minister of Petroleum and Mineral Resources of Saudi Arabia, the minister for Mineral Resources and Energy of Mongolia, the minister of Agriculture, Food Security and Cooperatives of the United Republic of Tanzania, the vice-minister of Economy of Peru; the commissioner of Commodity Futures Trading Commission of the United States, the deputy assistant foreign minister for International Economic Relations of Egypt and the acting chief director of the Ministry of Lands and Natural Resources of Ghana.
Corporate leaders participating as moderators and speakers at the Forum include the heads of leading commodity exchanges, representatives of major banks and commodity-producing and trading companies, and providers of commodity trade support services, such as insurance, logistics and advisory services.
The opening session of the Forum will feature addresses by UNCTAD secretary-general Supachai Panitchpakdi, World Trade Organisation director-general Pascal Lamy and International Telecommunication Union secretary-general Hamadoun I Touré.Also speaking will be Luis Manuel Piantini Munnigh, president of the UNCTAD Trade and Development Board, Mohamed Ibn Chambas, secretary-general of the African Caribbean Pacific Group of States Secretariat, Ali Mchumo, managing director of the Common Fund for Commodities and Andrey Vasilyev, deputy executive secretary, United Nations Economic Commission for Europe.
Topics to be discussed in plenary – led by panels of high-level government officials, business leaders and academics – include 'the state of agricultural markets: the drivers of increased volatility', 'commodity markets and their interconnectedness', 'trade and other policy options for modernising agriculture in developing countries' and 'overcoming excessive market volatility through better regulation, data, and transparency'.

Nepse staff threaten to halt trading

At a time, when the investors are losing confidence on stock market due to poor performance, the agitating Nepse staff threatened to halt trading from tomorrow.
"The Board of Directors didnot implement the agreement we entered last time forcing us to halt trading," said Bhesraj Khanal, president of the Employees Association at Nepal Stock Exchange (Nespe).
The association and Nepse board had reached an agreement on December 5 on increasing the professional standards of the employees, pay and perks, and reviewing the internal regulation.
"However, the agreement has not been implemented," Khanal blamed, adding that including general manager and the chairman, there are three representatives from the Finance Ministry. "But they are not sincere to their commitment."
However, the brokers are hopeful that they could trade tomorrow. "If the staff shut down the server, how can we trade," said president of the Nepal Stock Brokers Association Nanda Kishor Mundada.
"We have requested the regulatory authority of the capital market, Securities Board of Nepal (Sebon) and the Nespe to solve the problem at the earliest," he said, adding that the investors' confidence on the market will further plunge if the trading is halted.
However, this is not the first time in Nepal that the secondary market has been halted. Last year, the secondary market was closed twice to protest and it will be the third time.

Sunday, January 23, 2011

Prime Minister shows weakness over syndicate, power outage

The entrepreneurs today asked the care-taker Prime Minister Madhav Kumar Nepal to order the home ministry to ban syndicate from today, ban multiple tax collected by the Village Development Committee (VDC) and District Development Committee (DDC), provide industries enough electricity for their smooth operation, let the crusher industry that has Rs 40 billion invested in them operate and end the dispute over the Certificate of Origin (CoO) as soon as possible.
"We want immediate ban of syndicate," said president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi at a meeting with the Prime Minister at the National Planning Commission (NPC) here today afternoon.
"Not only the people but also the transport entrepreneurs are suffering from the syndicate, he said, adding that the local administration is hesistent in taken action against the syndicate has discouraged the geninun entrepreneurs in in Kailali, Dhangadi, Siraha and Solu.
However, the premier showed his weakness over not being able to take action against the syndicate, though, he promised to order home ministry to investigate.
"We have approached the local administration repeatedly after taking those involved in syndicate under control but the local administration has not been taking the matter seriously," complained Joshi.
Similarly, the prime minister could not give any assurance to provide the regular electricity supply to the industries, instead he urged -- as usual -- the entrepreneurs to come up with a detailed plan on how to solve the ever increasing load-shedding.
"The successive governments have been asking the private sector to come up with the detailed plan on how to end load-shedding, but they donot take our suggestions seriously pushing the country to more power crisis," said an irrate industrialist after the meeting with the Prime Minister at the NPC hall .
"Rather the prime minister promised to hold a work-shop that is childish," he said, adding that the government of Madhav Kumar Nepal two years ago formed a separate Energy Ministry to look after the energy crisis, "but the ministry could not be able to add single megawatt (MW) of electricity in last two years, neither is it ready to increase the rate of Power Purchase Agreement (PPA) nor has it been able to bring any programme to encourage the domestic power producers. "This shows the government is not serious on solving the chronic power outage problem, and taking it lightly," said another industrialist after the meeting. "Power is the engine that could propel the economic growth but government apathy has left the whole country under power crisis."
The Prime Minister also could not come clear on chrusher industry. He preached the industrialists on nature conservation. "But the illegal crusher industries are operating openly in the country and the government has banned the legal industries," according to the industrialists.However, Nepal promised to separate the locations where crusher industry can be operated and where they should not be allowed to operate.
On the proposal of the umbrella organisation of the private sector on Certificate of Origin (CoO), Nepal suggested the industrialists to work unitedly and not make it a prestige issue.
Confederation of Industries (CBI) and FNCCI has been fighting over the right to issue CoO. "But the transparent division of the fees could solve the problem," the Prime Minister suggested.

Century Commercial Bank becomes 31st commercial bank in the country

The central bank has awarded Century Commercial Bank with the operating licence today making it the 31st commercial bank in the country.
"The bank has Rs 5 billion authorised capital and Rs 2 billion paid up capital," said Pradeep Man Baidhya, chairman of the bank that has 538 promoters.
"The promoters has 54 per cent shares and is planning to float 46 per cent shares to the public," he said, adding that it had, earlier, planned to float 30 per cent shares to the public according to the central bank's directives.
After some problem with the promoters, the youngest commercial bank has changed its capital structure.
Headquatered in Kathmandu, the bank has Ganesh Kumar Shrestha as its chief executive officer.
Though, the central bank has temporarily halted the licencing for the commercial banks claiming that it needs revision on the banks licencing policy, there are couple of development banks that have applied for the up gradation to the Class-A commercial banks.
But the central bank is, unlike earlier, not speeding up their upgradation as it has changed the policy of awarding licence on the basis of paid up capital only.
According to the central bank, it is revisiting its policies according to the recent development in the financial sector. "Nepal Rastra Bank (NRB) is not putting the curb on opening new banks but trying to revisit the current licencing policy to make the banking industry more competent,” according to central bank.
The Monetary Policy for the fiscal year 2010-11 has also spelled out the Merger and Acquition (M&A) proposition for the banks and financial institutions (BFIs) saying that the economy needs strong but few BFIs not more and weak ones.
There are 245 banks and financial institutions in the country licenced by the central bank including Class-A (31 commercial banks), Class-B (80 Development Banks), Class-C (79 Finance Companies) and Class D (25 microfinance institutions) and some NGOs with limited banking facilities.

China Southern Airlines increases Kathmandu-Guangzhou flight frequency

China Southern Airline -- a SkyTeam member airlines -- increased its flight frequency to six flights a week on Kathmandu-Guangzhou route from today.
"It will fly everyday, except Tuesdays, on the route from today," the airlines said.Earlier, China Southern Airline was operating only three flight -- Mondays, Wednesdays and Fridays -- in a week on Kathmandu-Guangzhou route.
"As Nepal is celebrating Nepal Tourism Year 2011, the addition of the flight frequency will help the airlines to bring more Chinese tourists to Nepal," the airlines, said, adding that except China the airlines has very good connecting to all over the world via Guangzhou.
There are over two dozen international airlines flying to Nepal, which broungt record number of tourists -- some 448,769 in 2010 by air that is 18.5 per cent higher compared to 2009.From China alone, December registered a robust growth of 24.4 per cent in visitor arrivals by air.
"Not only Chinese, tourists, China Southern Airline brought many Korean and Japanese tourists to Nepal last year," it claimed.
"The airlines is operating 115-seater Airbus 319 on Kathmandu-Guangzhou route," the Chinese airlines said, adding that from last November it has introduced Premium economy class with 23 seats capacity. It now has eight business class, 23 premium class and 84 economy class on the route.
Currently, China Southern Airlines operated 400 modern Boeing 777, 747, 757, 737 and Airbus A330, 321, 320, 319 and 300 jet aircrafts that is ranked sixth in the world serving destinations to 884 cities in 169 countries -- forming an extensive network with Guangzhou as its hubs, covering all of China, radiating throughout Asia and linking Europe, America, Australia and Africa with convenient connections to all main cities in the world via close cooperation with all the SkyTeam member airlines.

Friday, January 21, 2011

Mt Everest to replace King

The central bank is going to withdraw Rs 28.22 billion currency notes with former king’s portrait that is in circulation from the market and replace them with the currency notes that has a portrait of Mt Everest.
"Under the central bank's Clean Note Policy, it is withdrawing the old currency notes by mid-March but not demonitising it,” said central bank governor Dr Yubraj Khatiwada.
Besides realising the republican sentiments, the move of central bank will help in bringing the cash – that is presently being hoarded currently – into the banking channel.
“Those people, who are choosing to stack the bundles of cash in their own homes – due to various reasons – to depositing it, will have no choice but come to banks to replace it,” he said, adding that eventually they will need to use those currency notes, which will have limited acceptance after the cut-out date of mid-March.
"Some designated commercial banks’ branches will accept these notes with the portrait of former kings and replace them," he said, adding that the currency will not be demonetised and the intrinsic value of the currency notes will be intact.
Sashin Joshi, president Nepal Bankers' Association (NBA) opined that it might take longer than planned time period to withdraw all the notes with former kings' portraits from the circulation. "The public has to understand that these currency notes are not being demonetised, only taken out of circulation,” he said, adding that the central bank should create awareness among the public to prevent the situation of panic that might arise due to misinterpretation.
The move, though, was politically motivated to completely remove the presence of former sovereign on Nepali currency notes in circulation, may also ease the liquidity crunch, though it’s premature to speculate.
The central bank regularly replaces old currency notes with the new ones as an average age of a note ranges from one year to one and a half year. “After that the security features of the currency notes get compromised so that it becomes difficult to identify whether the note is counterfeit or real," Ashwini Kumar Thakur, chief of Currency Management Department of the central bank, said.
“Though, the central bank has been trying to replace the old currency notes with the new ones this is the right time to phase out the old currency notes as the central bank has enough currency notes in the stock to replace the old ones,” the governor said, adding that the central bank should have started the move long while back but was unable, partly due to negligence and partly due to insufficient stock of fresh currency notes needed for replacement.
Moreover, due to last year's liquidity crunch also those currency notes that had already been recalled had to be again released in the market by the central bank.

The circulation
currency in circulation: Rs 159.31
Currency notes in circulation with Mt Everest image: Rs 111.96
Currency withdrawn with king's portrait: Rs 18.73 billion
Currency in circulation in market with king's portrait: Rs 28.22 billion

Construction boom boost to cement industries

The construction boom in the country has prompted the industrialists to open new cement industries in the country as around three dozen cement ic industries cannot fulfill the growing market demand and the country has to import around 40 per cent cement to meet the domestic demand.
"Some 29 already established big cement industries with installed capacity of around 12,700-tonne per day can supply only around 60 per cent of the demand," said Jayandra Chudal, executive director of the Bishal Cement that is a Rs 500 million close-circuit plant planning to start production by this April.
Last year, when the country witnessed a construction boom, cement industry emerged as a new investment avenue.
The Central Bureau of Statistics has predicted an increase of the constribution of construction sector to 6.62 per cent to the gross domestic product (GDP) in the last fiscal year -- compared to a fiscal year ago -- due to increase in construction materials, government and private sector construction activities."However, there is a slow down this year," he said, adding that the companies in production now are also operating in half of their installed capacity due to slowdown in the construction business.
"If all the companies that are under construction, come into operation the total production capacity will reach above 16,000 tonne per day, excluding the industries that have 100 tonne and less capacity," Chudal said.Of the 29, seven are mine-based cement industries, including government owned Hetauda Cement and Udayapur Cement, and others include Maruti Cement, Butwal Cement, Supreme Cement, and Dynasty Cement that have Integrated Unit (IU).
Some new industries like Shivam Cement, Ghorahi Cement, Sonapur Cement, Rolpa Cement that are under construction are also mine-based that use the lime stone mines to produce clinker for the cement.
Due to more mine based industries, the contribution of mines to the GDP is also predicted to be 4.23 per cent from a fiscal year ago.
The government in its budget for the fiscal year has announced to give higher priority to the completion of road construction and electricity transmission lines extension works to facilitate the establishment and the construction of the cement industries in Udayapur, Makawanpur, Dhading, Rolpa, and Dang.
However, the cement industries are upbeat. "The local cement industries' could be encouraged, if only the local housing and hydropower companies start using local cement, apart from the government's incentives," according to Chudal.
The government has also promised to provide benefit of direct purchase of diesel form the Nepal Oil Corporation at dealer’s price, in quantity exceeding at least one tanker at a time, for industrial and commercial uses for the manufacturing industries due to regular power outage that has hurt the industries. "But consumer awareness about the quality of cement is as important as power supply," he added.