Smart Telecom becomes the fastest growing telecom company

Smart Telecom (ST) has been reported as the fastest growing telecom service provider in the country, according to the recent report from the government.

The recent Economic Survey published by the Finance Ministry revealed that ‘Smart Cell’ – the brand of Smart Telecom – has increased its subscriber base by a whopping 85.23 per cent – the highest among all six existing telecom operators – in the eight months of the fiscal year 2012-13.

The survey revealed that the tele-density has touched 74 per cent with 19.61 million telephone subscribers and internet-density has touched 24 per cent with 6.27 million internet users.

Ncell has posted 28 per cent growth followed by Nepal Telecom (NT) with 14.27 per cent and UTL with 13.76 per cent increment in their subscribers’ base in the first eight months of the fiscal year 2012-13 compared to the same period of a fiscal year ago, the survey added.

“Smart Telecom has been able to gain three per cent market share making it the third largest telecom operator,” said Smart Telecom chief executive officer Abraham Smith.

“Smart has already invested more than Rs 3 billion in expanding its network and planning to continue with almost $300 million,” he added.

“Smart Telecom wants to be customer centric and service-oriented telecom provider with affordable price and best quality network,” Smith said, adding that when the telecom operator will be introduced across the country, customers will be like kings, as they will be able to enjoy choices and greater varieties of services.

As a good Nepali corporate citizen, Smart Telecom already realised a range of projects to support people and communities in need, according to the telecom service provider that has also been actively involved in the Social Corporate Responsibility like helping Kailali flood victims, Sulikot Ghyang Monastery in Sindhupalchowk, Setidevi Primary School in Sindhupalchowk and Garvasi Lower Secondary School in Nuwakot.

“The country will benefit from having Smart Telecom as a third nationwide operator, as with the strong commitment to a long-term investment it can bring a new positive changes to the industry and market where the price and quality will be in line with the people’s requirements,” Smith added.

Smart Telecom was licensed as a telecom operator by Nepal Telecom Authority on July 1, 2008. It has also been awarded unified licence on April 15, and the company is gearing up for nationwide rollout in near future.

Currently, the telecom service provider covers up 40 districts with 800,000 subscribers and is increasing. It provides both GSM and VSAT services.

Government to pay off closed Janakpur Cigarette Factory staff

The government finally seems to have come to terms with reality and is planning to pay off staff of the closed Janakpur Cigarette Factory (JCF).

"The government is bringing a pay off plan in the budget for next fiscal year 2013-14," according to senior economic adviser to the finance ministry Dr Chiranjivi Nepal.

The factory that was once the largest contributor to the government coffer has been closed for the last two years. However, the ministry had been paying around Rs 80 million annually as salary to employees without any output.

The inefficiency and indecisiveness of successive governments will not only cost the government Rs 3 billion to pay off all the staff -- Rs 4.5 million per head -- but is also against the liberal market economy. However, two committees formed to study the current status of the cigarette factory have stated that it has assets worth Rs 10 billion.

"The private sector is strong enough to operate industries," said Nepal, adding that the government's role is to facilitate the private sector and not to operate cigarette and alcohol industries.

All the public enterprises that have been adding liability to the government exchequer and cannot contribute to production has to be closed, Nepal added. The Public Enterprise Coordination Department has also suggested the government to close down unproductive public enterprises.

Established in 1962, Janakpur Cigarette Factory used to be the largest single contributor to the national exchequer with four per cent to revenues.

The government, fearing that it will cost a huge amount to pay off the 758 staff, has been unable to decide.

The ministry has already lent the closed factory Rs 56.6 million in the current fiscal year.

According to the Economic Survey 2012-13, in fiscal year 2010-11, some 21 public enterprises were running at a net profit, where as 14 were in net loss. "Likewise, the net profit of all the 37 public enterprises had also declined to Rs 6.68 billion in fiscal year 2010-11, compared to Rs 10.56 billion in the previous fiscal year 2009-10," it said, adding that in fiscal year 2009-10, the net fixed assets of 37 public enterprises amounted to Rs 139.36 billion, which had decreased to Rs 118.28 billion in fiscal year 2010-11. "Among the public enterprises under the industrial sector, Janakpur Cigarette Factory has incurred the heaviest loss of Rs 218.1 million."

The government has already lent a total of Rs 141.90 million to public enterprises in the current fiscal year.

Unpaid family member outnumber trade business

Unpaid family members are four times more than the number of paid workers in the wholesale and retail businesses in the country, said a survey.

"Out of 136,835 persons engaged in the trading business, only 27,506 are employed," said Distributive Trade Survey-2009, published by the Central Bureau of Statistics (CBS).

The survey also reveals that the number of female workers is more than 10 times less than the male workers. "Out of 27,506 employed, only 2,213 are women and the rest 25,293 are men," the survey said.

There are 58,816 registered wholesale and retail trading businesses across the country. More than half of the businesses at 37,545 are in the urban areas and the rest in the rural areas.

"Though the department had previously conducted a Trade Margin Survey that was meant to calculate contribution of internal trade to the GDP. This is the first time such an elaborate Distributive Trade Survey has been conducted," Shankar Lal Shrestha, director at the trade statistics department at the CBS said adding that it also gives a benchmark of internal trade.

The Trade Margin Survey -- that was conducted six years ago in 2003 -- is the basis of the CBS calculation of internal trade's contribution to GDP that is 13.97 per cent in 2009-10.

However, the Distributive Trade Survey has elaborate details of wholesale and retail trade and employment generated by both as well as capital formation and financial positioning that were not included in Trade Margin Survey.

The Distributive Trade Survey that took a year to complete has also provided quality data with more statistics and provided a new benchmark according to the new scenario.

Registered retail and wholesale entities in the country spend an average of Rs 3,750 per employee per month in pay and perks. "A retail and wholesale trading entity in the country spends Rs 94,000 annually in pay and perks in an average," the survey said.

Forex earnings drop

Foreign exchange earnings have dropped by 0.34 per cent to Rs 16.76 billion during the first eight months of 2009-10. Compared with the preceding year, foreign exchange earnings in the first eight months of 2009-10 was less than half. Foreign exchange earnings in 2008-09 had increased by 49.9 per cent to Rs 27.96 billion, compared with a year ago, according to the Economic Survey.
Asians topped the chart of tourists visitng Nepal at 56 per cent, the annual report of the government said adding that "Out of the total tourists arrivals during the calendar year 2008, eight per cent were from North America, 1.3 per cent from Central and South America, 27.7 per cent from Western Europe, 2.5 per cent from Eastern Europe, 0.2 per cent from Africa and 18.4 per cent from India, 3.5 per cent from Australia and Pacific Region, and 37.6 per cent from other countries."
The number of tourists visiting from the Central and South America, Eastern Europe and Africa has decreased while their number has increased from other parts of the world.
Similarly, the number of hotels and hotel beds in 2008 shows that the number of star-hotels reached to 97, while the number of non-star hotels has been 647 with the addition of 74 non-star hotels. "The number of hotel beds in hotels other than star-hotels increased by 2,381 reaching to 19,124 while beds in the star-hotel have reached 9,369 with additional 49 beds compared to a year ago.
The data reveals that the number of mountaineering teams has also increased by 73 to 235 by mid-March 2009. The number of mountaineers has reached to 1,519 with 510 more climbers. "The government collected a royalty of Rs 252.5 million, that was Rs 35.426 million a fiscal year ago," the report added.

Daily transaction amount drops to half

Nepal Stock Exchange Ltd (Nepse) registered a fall in daily transaction amount by almost half in the fiscal year (FY) 2009-10 from a fiscal year ago.

"Nepse saw Rs 42.4 million worth transaction daily in 2009-10, whereas a fiscal year ago, it used to transact Rs 92.6 million daily," according to the data.

Similarly, Nepse posted Rs 11.75 billion worth transaction during 2009-10 that is 45.80 per cent of the total transaction amount in 2008-09," the secondary market said adding that it had registered Rs 21.68 billion worth transaction during 2008-09.

The Nepse attributed its poor performance to various economic and non economic factors. "However, the over supply of shares, gloomy economic situation of the country and political uncertainty also pulled the Nepse down in 2009-10," it added.

The market capitalisation that was at Rs 5.12 trillion at the end of 2008-09 also plummeted to Rs 3.76 trillion at the end of 2009-10. "But the current market capitalisation is almost 28.59 per cent equal to the gross domestic product (GDP).

The Nepse data reveals that in 2009-10, Nepse listed 18 more companies for the secondary market transaction. "Among 18 companies, Nepse listed 11 development banks, two finance companies, two commercial banks, one hydropower and two insurance companies for the transaction in 2009-10," it said adding that the total listed companies now reach 176 companies that was only 159 a fiscal year ago.

"Two listed companies Narayani Finance and National Finance merged to form a company," according to the Nepse that has also listed Rs 19.92 billion worth ordinary shares including primary, rights, and bonus shares, Rs 227.7 million worth corporate debentures and Rs 9.80 billion worth government bonds.

However, the increasing number of securities -- in the secondary market -- coupled by low investors' confidence pulled the Nepse down to 477.73 points from a fiscal year ago's 749.10 points.

Though the secondary market has signed an agreement with CDSL India to establish the CDS, it failed to establish it within the targtted time frame. The budget for the fisca lyear 2009-10 has aimed to establish the CDS -- the scripless securities trading system -- within October.

"Nepse signed an agreement on January 15 with CDSL India for the establishment of the CDS system," according to the Nepse. Managing director of Nepse Shanker Man Singh and acting director of CDSL India P S Reddy signed the agreement on behalf of their respective organisations on January 15.

The Kathmandu-centric secondary market expanded to Biratnagar, Birgunj, Narayangath and Butwal in 2009-10, though the transaction outside the valley is not yet very encouraging. The Nepse still has many challenges like boosting the investors' confidence, making the OTC market functional, starting the bond trade, listing of more manufacturing industries to reduce the dominance of financial sector and increasing the number of brokers.

Economic Survey paints bleak picture

Contrary to the projection of 5.5 per cent Gross Domestic Product (GDP) growth, the Economic Survey -- likely to be presented on July 8 -- puts forth a grim reality.
The Survey expects the GDP to expand by almost the half – by only 3.5 per cent – from the government’s projection due to low yield in the agriculture -- especially the major crops like maize and paddy -- and non-agriculture sector's low output than expected.
Similarly, the inflation also stands at 10.7 per cent against the projection of seven per cent, according to the Economic Survey.
The Survey also maintains that double digit price hike and slower growth have had an adverse effect on the consumers' purchasing power, posing a serious threat to the financial management.
Tradition has it that the Survey is presented a day ahead of the budget for the fiscal year but this year as the possibility of forming a new government seems still far, the caretaker government of Madhav Kumar Nepal is preparing to present the Finance Bill on July 9 a day after it is presenting the Economic Survey.
“We are planning to present Economic Survey on July 8,” said Keshav Acharya, senior economic advisor at the Finance Ministry.
Finance minister of the caretaker government Surendra Pandey is likely to present Financial Bill on July 9 that can give the government right to spend a quarter of this fiscal year’s expenditure. Though, delay in presenting budget will not hit the revenue collection as the Income Tax Act 2012 BS has given the government right to collect revenue not exceeding this fiscal year’s rates, it will definitely hit the development activities.
Since last three years, the successive governments have failed to spend on development activities as they failed to present the full-fledged budget on time due to political instability. In 2008, the then finance minister Dr Ram Sharan Mahat presented special budget only for four months and the next year in 2009, it took four months to pass the budget though the budget was presented on time. Such political instability has taken toll on the Nepal’s ranking in the economic freedom.
According to the 2010 Index published by Heritage Foundation and Wall Street Journal Nepal ranked 130th scoring 0.5 point lower than last year, reflecting declines in five of the 10 economic freedoms due to political instability.
It has hampered the development activities as the successive governments have not been able to spend properly on development activities. Due to balloning trade deficit and slowdown in growth rate of remittance -- that is hovering around 10 per cent -- the Balance of Payment (BoP) has also registered deficit. The whopping imports that is over six times the exports has also hurt the forex reserve that has been depleting.