Central bank's new inflation data might reflect real market price hike from next month

The central bank inflation data might reflect the real market price hike from next month as Nepal Rastra Bank (NRB) has 'almost-finalised' the revision of Consumer Pricer Index (CPI) -- the main gauge of inflation.

Due to change in the pattern of spending on consumer goods has changed dramatically over the last one decade, the CPI needed revision. "The NRB will bring in practice the revised CPI from next month," said a highly placed source at the central bank. "It has reviewed the present basket of 301 goods and services that is an indicator of price hike," it said adding that the basket -- of goods and services used to calculate the price hike -- failed to reflect the present market price hike..

"The number of goods and services in the basket has been increased but it will again be revised as the prices of all the commodities could not be available from all the market centres," acording to the source.

The CPI is a measure of the average price of consumer goods and services purchased by households. It is an index determined by measuring the price of a standard group of goods meant to represent the typical market basket that includes 301 goods and services and applied to the typical consumer. The per cent change in the CPI is a measure of inflation. The CPI can be used to index -- adjust for the effects of inflation -- wages, salaries, pensions or regulated or contracted prices.

The price data are collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times. The weight data are estimates of the shares of the different types of expenditure as fractions of the total expenditure covered by the index. These weights are usually based upon expenditure data obtained for sampled periods from a sample of households.

Currently, the prices are collected from 33 market centres across the country from hills, to plains and Valley. The number of market centres is not going to be increased.

The central bank publishes the inflation rate every month. The first eleven months' inflation rate stands at 9.7 per cent. But it doesnot reflect the current market price as the market price has continued to go up.

Since the current CPI was brought into practice, the spending pattern of Nepali consumers had changed drastically. CPI is one of the most closely watched national economic statistics that is published every month by the Research Department of central bank.

Jyoti Bikas Bank to float ordinary shares

Jyoti Bikas Bank is floating 2.92 million-unit of ordinary shares to public at the face value of Rs 100 per unit from August 16.
The development bank that has Rs 740 million authorised capital will also have Rs 740 million issued capital after this Initial Public Offerings (IPOs) worth Rs 292 million. "The promoters have already paid their shares of Rs 448 million," said the bank that has projected Rs 16.50 million profit in the fiscal year 2009-10.
According to the issue manager, Ace Development Bank, the issue will close on August 19 at the earliest, if the shares are oversubscribed. After the allotement of these ordinary shares, it will be listed at the secondary market.
Currently, 40 development banks' 88.49 million-unit of shares worth Rs 8.84 billion -- except promoters shares -- are listed at the Nespe. Similarly, Nepse has listed 325.16 million-unit shares of 23 commercial banks, 116.73 million-unit shares of 62 finance companies worth Rs 11,673.25 million and 30.49 million-unit of 19 insurance companies worth Rs 3049.27 million.
Development Banks' group is one of the key market propeller in the secondary market that is dominated by the financial institutions including commercial banks, development banks and finance companies apart from the insurance companies. Their trading contributes above 85 per cent of the total shares trading at the Nepse.
Meanwhile, led by banking and others groups, the Nepse gained 1.42 points to 459.83 points on the first day of the trading at the domestic market. The bankins group surged by 1.46 points to 434.98 points and others group gained 5.87 points to 552.22 points due to Nepal Telecom (NT) that witnessed Rs 5 gain in its per unit shares today.
Encouraged by 30 per cent cash and 30 per cent stock didivend Everest Bank gained Rs 60 per unit of its shares, whereas Standard Chartered Bank Nepal also gained Rs 55 per unit share to push the banking sector upwards.

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.

Stand Up for global unity against poverty

UN Millennium Campaign will partner with Nepal Tourism Board (NTB) to launch a joint movement during Stand Up 2010 on September 18.

Networks of both the Millennium Development Goals (MDG) campaign and NTB will come together to form a strong, and effective movement that will galvanise efforts to meet the needs of the world’s poorest through various actions of the stakeholders — partners of both parties — and the government, said the UN press release.

"It will be promoted through a carnival in Kathmandu at Tundikhel on September 18," it said adding that the two will work under the joint slogan — Tourism for Livelihood Opportunities for Poverty Alleviation.

In 2009, two million Nepalis showed solidarity and participated in the campaign. Last year, President Dr Ram Baran Yadav read a Stand Up Pledge with members of the Constituent Assembly that was followed by a concert in Tundikhel, where the pledge was read by eight Constituent Assembly members amid a variety of musical offerings like rock satsang and dohori songs.

When world leaders gather at the UN for the MDG Review Summit in September, the voices of their citizens will follow them, telling them, loudly and clearly, "We will no longer stay seated or silent in the face of poverty and broken promises to end it!"

At the Millennium Summit in 2000, world leaders agreed to achieve the eight MDGs in order to eradicate extreme poverty and its root causes by the year 2015. The demands and expectations of citizens around the world that they deliver on these commitments, made visible and audible throughout 2010, will culminate in the 'Stand Up 2010' mobilisation.

"Holding Stand Up the weekend before the Summit will allow us to drive our activities towards a high-profile Stand Up mobilisation with a direct link to and with the specific intention of impacting on the proceedings at the Summit itself," said the UN.

SEZ key to create more jobs, economic development

Experts opined that Nepal needs Special Economic Zones (SEZs) to maximise creation of new jobs, kick start economic development through investment by foreign and domestic investors, maximise foreign exchange earnings and return on investment to economy.

However, not-regulated and haphazard planning, low industrial base, poor industrial infrastructure, lack of appropriate legislation. limited Foreign Direct Investment (FDI) and unfavourable investment climate are the challenges that need to be dealt with for the development of SEZ, said senior economist Dr Pitamber Rawal, at an interaction on 'SEZs-Global experience and Prospects for Nepal' here in the valley today.

Post 1990, Nepal entered into a liberal economic era giving enough room for the private sector in the development of the country. "In the last two decades, we have not yet completed one SEZ," he said adding that the Bhairahawa SEZ will be the first one to be completed in a couple of years.

Dr Rawal blamed too many projects and not demand driven but politically biased decisions for the SEZs taken such a long time to come to operations.

Apart from the nearly completed Bhairahawa SEZ, the feasibility study for two SEZs -- in Panchkhal and Dhangadi -- and pre-fesibility study for five SEZs -- in Jhapa, Kapilvastu, Janakpur, Nuwakot and Jumla -- are underway.

Currently, land acquisition has been a common problem in developing the SEZ, he said.

"The Panchkhal SEZ is affected by the land acquisition problem," secretary at the Ministry of Industry Pratap Pathak. "However, the Finance Ministry has agreed to provide Rs 200 million to expedite the Panchkhal SEZ," he said adding that land acquisition is difficult, especially in areas where many private landowners own small parcels of land.

"Opening of the SEZ to the private sector to invest under Public-Private-Partnership (PPP) model, alongwith developing national SEZ strategy, rigorous SEZ feasibility and site selection and linking SEZ planning to national infrastructure and social planning could help realise the SEZ," suggested Investment Climate Programme Manager of IFC Irina Niederberger.

"Private sector involvement would be the best practice as the government alone can not cough up the massive investment for SEZ construction and operation," said IFC Programme Manager for SEZ, Bangladesh Investment Climate Fund Martin Norman sharing the experiences of bangladesh and Philippines.

Around 60 million jobs have been created by 3,000 SEZs across the globe. They have $200 billion investment. "But SEZs are not the panancea to be used to solve all problems, many have also failed," said IFC's Lead Investment Policy Officer Gokhan Akinci. "But with better physical features, development approach supported by policy framework, it could work miracle in Nepal."

Deposit and Credit Guarantee Corporation brings deposit guarantee scheme

Deposit and Credit Guarantee Corporation (DCGC) has increased its paid-up capital and is planning to start a deposit guarantee scheme for the first time in the country of 'small depositors'. DCGC has been providing guarantee to credit earlier. It begins deposit guarantee from the current fiscal year.

"To guarantee the deposits of small depositors up to Rs 200,000 of all the financial institutions, we need a huge capital base," said Bhaskar Mani Gyawali, chairman of the DCGC here today. "However, we have started to guarantee the deposits of upto Rs 200,000 of Class-D financial institutions from July 17."

There is around Rs 2 billion in deposits from small depositors that is below Rs 200,000 in the Calss-D micro-credit institutions, according to the Nepal Rastra Bank (NRB) figures.

"In the beginning, we will have no problem as with increased paid-up capital of Rs 210 million, it will be enough for the deposit guarantee of below Rs 200,000 deposits of Class-D financial institions," Gyawali said adding DCGC is in talks with the government and Nepal Bankers' Association (NBA) to increase the paid-up capital to Rs 2 billion.

"If the government provides us with a seed money of Rs 500 million or NBA comes to join with us as a shareholder, it will be easier for us to increase our paid-up capital to Rs 2 billion," he said adding that there is around Rs 80 billion including commercial banks, development banks, finance companies and micro-credit institutions that has to be guaranteed.

"We charge Rs 0.20 per Rs 100 as guarantee fee," said the chairman of the corporation that has prepared a Regulation for the credit guarantee of less than Rs 200,000 of financial institutions. The Regulation has come into effect from July 17.

According to the Regulation, in case of bankruptcy of a financial institution, a small depositor (natural person), who has a deposit up to Rs 200,000 will get the total deposit amount and interest within 90 days from the date the institution goes under liquidation.
The commercial banks can be share holders in DCGC according to the ratio of small deposits in their institutions, according to the Regulation.

In Nepali society, there is a wrong perception that banks do not go bankrupt.

"The central bank takes guarantee of all the deposits," Gyawali, who is also executive director in the central bank, said, "But without deposit guarantee it would be not possible."

After Nepal Development Bank was sent to liquidation by the central bank due to its bad-financial health, the small depositors were worried and the government has brought a deposit insurance scheme for the small depositors in the budget for the fiscal year 2009-10, but it could not be implemented.

Tourists arrival soar in July

Encouraging Chinese and South Asian tourists arrival propels overall visitors arrivals by air in July.

China recorded a growth of 104.2 per cent, whereas South Asian arrivals posted 19.9 per cent increase in the month of July.

"Visitor arrivals this July -- compared to the same month last year -- have increased by 26.1 per cent to 29,338," according to the figures released by Immigration Office,Tribhuvan International Airport (TIA) here today.

The arrivals from South Asian region have gained overall positive growth of 31.3 per cent with Bangladesh (88.9 per cent), India (26.5 per cent), Pakistan (10.3 per cent), and Sri Lanka (48.7 per cent) registering positive growth, the data reveals.

Increase in visitor arrivals from India shows sustained growth this year, except for the soft decline in the month of April, said the Nepal Tourism Board (NTB).

Visitor arrivals from Asia -- except South Asian region -- have also recorded double digit growth of 19.9 per cent. China -- another major source market -- recorded phenomenal growth of 104.2 per cent.

Visitor arrivals from Japan (10.7 per cent), Malaysia (98.9 per cent), and Singapore (24.7 per cent) have registered positive growths. "However arrivals from South Korea andThailand have registered negative growths of 2.1 per cent and 45 per cent respectively.

From long-haul markets, Europe registered overall positive growth of 24.6 per cent with major source markets showing positive trend in terms of visitor arrivals.

Arrivals from Austria, Belgium, Denmark, France, Germany, Italy, the Netherlands, Russia, Switzerland, Spain, Sweden UK, up by 8.5 per cent, 13.8 per cent, 56.7 per cent, 29.9 per cent, 94.8 per cent, 57.8 per cent, 32.4 per cent, 67.9 per cent, 42.7 per cent, 22.8 per cent, 52.5 per cent and 3.8 per cent respectively.

Likewise, arrivals from Canada and the United States of America also registered positive growth of 24.9 per cent and 12.8 per cent respectively. Australia showed marginal increase in arrival figure by 0.9 per cent while New Zealand posted negative growth of 31.1 per cent.

In addition, arrival by land till June totaled 60,877, up by 6.2 per cent compared to the same period last year. March remained the strongest of the first six months of 2010 with total 18,620 arrivals, ahead of February (15,823) and January (7,492) on a month-by-month basis.

Bhairahawa border recorded 10 per cent of positive growth with total 42,190 tourists coming in followed by Kodari and Kakarvitta with 13,630 and 3,376 arrivals respectively in the first six months of 2010.

Aggregate visitor arrivals continue to rise by 15 per cent to 257,196 for the period between January-June -- both by air and land -- compared to the same month last year, according to the NTB. "Almost all the markets have exhibited positive results."

A total of 31,103 foreign tourists departed from TIA in July, whereas the number of Nepalis arrivals stood at 50,309 and 64,972 Nepalis departed from TIA in July.