Parliament ratifies Kyoto convention, customs procedures will be simplified

The parliament today ratified International Convention on the Simplification and Harmonisation of Customs procedures or popularly known as revised Kyoto Convention.
The ratification means Nepal has become party to the convention that is one of the instruments of the World Customs Organisation (WCO). It is expected to help simplify the customs procedures for trade facilitation.
“Nepal, as a member country of World Customs Organisation, will be able to upgrade its customs procedures to the international standard thereby facilitating legitimate international trade while effecting customs controls, including the protection of customs revenue and society, after ratification of the international convention,” said deputy prime minister and finance minister Krishna Bahadur Mahara, addressing the parliamentarians.
The WCO – an intergovernmental organisation headquartered in Brussels – has created various instruments to achieve its goals like enhancing the efficiency and effectiveness of member customs administrations, thereby assisting them to contribute successfully to national development goals, particularly revenue collection, national security, trade facilitation, community protection, and collection of trade statistics.
The convention is also an international agreement that provides a set of comprehensive customs procedures to facilitate legitimate international trade while effecting customs controls, including the protection of customs revenue and society, according to the WCO.
"It deals with key principles of simplified and harmonised customs procedures like predictability, transparency, due process, maximum use of information technology, and modern customs techniques, including risk management, pre-arrival information and post-clearance audit," it added.
The revised Kyoto Convention comprises of several key governing principles, including transparency and predictability of customs controls, standardisation and simplification of the goods declaration and supporting documents, simplified procedures for authorised persons, maximum use of information technology, minimum necessary customs control to ensure compliance with regulations, use of risk management and audit based controls, coordinated interventions with other border agencies and a partnership with the trade.
"The ratification of the convention will help block revenue leakage by bringing transparency, reducing cost of international trade and help frame predictable and transparent legal provisions for trade," Mahara said, adding that Nepal and the Maldives are the only two countries in South Asia that are in the process of ratifying the convention that has 105 countries as its party. "It also promotes trade facilitation and effective controls through its legal provisions that detail the application of simple yet efficient procedures and also contains new and obligatory rules for its application."
As part of becoming the party to the convention, Nepal has already incorporated 97 indicators, out of 122, in the law. “We will make necessary amendments to include remaining 25 indicators in the law,” Mahara said, adding that the government has already prepared the drafts of the laws for amendment.
He also informed that the current Customs Acts needs to be amended as it needs to include various procedures, including customs declaration, authorisation of papers, sample collection at customs, physical test, provisions of lab, revenue payment system and bidding at the customs. He also said that such simplification of customs procedures will help facilitate the international trade.
The revised Kyoto Convention was adopted in 1999 and entered into force in February 2006. The contracting parties – or countries – that have ratified the convention cover at least 80 per cent of the value of globally traded goods.

Government has no plan to bring supplementary budget

Dispelling rumours that the government is planning to bring a supplementary budget, deputy prime minister and finance minister Krishna Bahadur Mahara today said that the government has no such plan.
Addressing a meeting of the parliamentary Finance Committee, he said that the government has not done any homework for bringing a supplementary budget and such budget cannot be brought without political consensus.
Mahara, however, said that he is trying to forge political consensus for bringing three-budget related finance bills that were thwarted by his party – Communist Party of Nepal (Maoist Centre) and the Nepali Congress – earlier this year.
In July, the parliament had rejected three finance bills – the Finance Bill 2016, the Bill to Mobilise Internal Loans, and the Loan and Guarantee Bill (21st amendment) – although the budget itself was passed, creating moral pressure on the then K P Sharma Oli government to resign.
"Since the bills cannot be tabled in the same session of the House, we have to take the opposition into cofidence to pass them as the government has to suspend some parliamentary provisions to allow tabling of the bills," he added.
Although the government can make spending following the passage of the budget earlier this year, the thwarting of the three finance bills has made it difficult for the government to mobilise revenues.
Finance Secretary Shanta Raj Subedi, speaking at the committee, said that the Finance Ministry is currently mobilising the revenue through Periodic Tax Recovery Act, 1955, since the finance bills were thwarted by parliament. "The Periodic Tax Recovery Act, 1955, allows the government to mobilise revenue for six months," he said, adding that the government will be in difficulty, if the finance bills are not passed from the House by November 30.
The Periodic Tax Recovery Act 1955 automatically came into effect after then finance minister Bishnu Prasad Poudel presented the budget for the fiscal year 2016-17 on June 28. However, some economists argue that the government cannot mobilise revenue (collect taxes) through the Periodic Tax Recovery Act, 1955 after rejection of the finance bills by the parliament.
The parliament had scheduled approval of the corollary bills on July 13 as it had already approved the Appropriations Bill, paving the way for the government to spend from the beginning of the new fiscal year. But the then Oli government was reduced to minority as one of the key coalition partners, CPN (Maoist Centre), withdrew its support on July 13 making the fate of the finance bills uncertain.
The Finance Ministry has started feeling pressure due to the lack of finance bills, Subedi added without elaborating.
Likewise, revenue secretary Rajan Khanal, on the occasion, said that there is no space for the incumbent government to either increase or decrease the tax, its a pathetic situation that the ministry has to mobilise revenue through Periodic Tax Recovery Act 1955, despite the House session has not been ended.
The earstwhile government led by Oli had brought an expansionary budget of Rs 1.048 trillion budget that is expected to fuel inflation.

Global trade finance gap reaches $1.6 trillion, SMEs hardest hit: ADB

The inability of financial institutions to provide $1.6 trillion in support to buyers and sellers of goods across countries resulted in forgone growth and job creation in 2015, according to an Asian Development Bank (ADB) Brief released today.
Developing Asia’s share of the global trade finance gap was $692 billion, including India and the People’s Republic of China.?
In its new study, '2016 Trade Finance Gaps, Growth, and Jobs Survey,' ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 337 banks in 114 countries and 791 firms in 96 countries. The annual survey is now in its fourth year.
"The growth of the trade finance gap in 2015 continues to be a drag on trade, and small- and medium-sized enterprises (SMEs) are the most affected,” said head of ADB’s Trade Finance Programme Steven Beck. "The survey shows that both globally and nationally, regulators and policymakers should increase support for trade finance through smarter banking regulations, more transparent and comprehensive credit ratings systems, and capacity building for local banks," he said, adding that ADB’s Trade Finance Programme stands ready to assist member countries and our client banks in all of these areas.
According to the brief, trade finance gaps persist in part due to the cost and complexity of compliance with banking regulations, with 90 per cent of surveyed banks citing anti-money laundering and know-your-client requirements as impediments to their ability to expand trade finance, especially for small businesses. Basel III banking regulations, which set liquidity requirements for bank finance, are also cited by 77 per cent of respondents as a major barrier to finance new trade.
The report notes small- and medium-sized enterprises (SMEs) face the greatest obstacles in accessing affordable trade financing.
Globally, 57 per cent of trade finance requests by SMEs are rejected, against just 10 per cent for multinational companies. High rejection rates lead many firms to turn to inefficient informal financing.
Financial technology (Fintech) can help bridge the financing gap for businesses left out of trade finance, according to the brief. But awareness of digital finance by small businesses remains low, with 70 per cent of responding companies indicating that they are unfamiliar with these tools. Among firms that were familiar with digital finance, peer-to-peer lending had the strongest uptake rates in developing countries.
Since 2009, ADB’s Trade Finance Programme has supported more than 8,200 SMEs across the region, with about 11,800 transactions valued at over $23.6 billion, in sectors ranging from commodities and capital goods, to medical supplies and consumer goods.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in Asia. It is owned by 67 members, 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.

PDA with Upper Trishuli soon: Energy Minister Sharma

The government is preparing to sign Project Development Agreement (PDA) with the promoters of the 216 MW Upper Trishuli-1 hydroelectricity project, according to energy minister Janardan Sharma.
Speaking at a forum 'Foreign Direct Investment in Hydropower' jointly organised by International Finance Corporation (IFC), Independent Power Producers’ Association of Nepal (IPPAN) and Nepal Water and Energy Development Company (NWEDC), in the capital today, Sharma said that the PDA for Upper Trishuli-1 will be signed soon.
According to a Energy Ministry, PDA negotiations between the ministry and NWEDC have reached final stages and that the agreement will be signed soon.
NWEDC is a joint venture company with stakes of three Korean companies – Korea South East Power Company (KOSEP), Daelim Industrial Corporation and Kyeryong Construction Industrial Corporation – the IFC and Bikesh Pradhanang, a Nepali investor. The run-of-river type project will generate 216MW electricity through three turbines of 72MW capacity each.
The hydropower project is expected to generate 1456.4 Gigawatt hours of net electricity per year, of which 1149.7 Gigawatt hours would be generated in the wet season and 306.7 Gigawatt hours would be generated in the dry season. The project site is near Dhunche, the headquarters of Rasuwa district.
It is high time for Nepal to attract FDI to exploit its rich water resources, Sharma said, adding that Nepal has both natural and human resources. "What we do not have is enough investment. Therefore, the importance for FDI is very high for Nepal."
Stating that Nepal has already signed a Power Trade Agreement (PTA) with India, a huge market for Nepal’s hydroelectricity, minister Sharma said this agreement is going to encourage FDI in Nepal’s hydropower sector.
Sharma went on to say that it takes years for hydropower promoters to get license and sign Power Purchase Agreement (PPA) and Power Development Agreement (PDA). "This does not encourage the foreign investors,” he added.
Similarly, director general of the Department of Industry Maheshwor Neupane, on the occasion, said that the government has a policy of prioritising the hydro sector for FDI. "FDI in hydropower sector has been increasing, though slowly," he added.
Stating that the Korean government has built fundamental industries and developed Korea’s economy through foreign loans and foreign direct investment, Korean ambassador to Nepal Choe Yong Jin said, “Nepal has one of the largest potentials in generating hydropower. "But such a great potential can only be materialised into reality through investment only," he said, "And this investment is possible through discussions with all the stakeholders and decisiveness and strong will of the leaders."
Envoy Jin expressed hope that the Upper Trishuli-1 Project, which is being developed by the international consortium NWEDC in collaboration with Korea South-East Power (KOSEP) and IFC, will make significant contribution to increasing total hydropower generation of Nepal.
Likewise, on the occasion, chief executive of KOSEP Heo Yup shared Korea’s FDI-funded development story. "Realising that borrowing foreign funds and inviting FDI were essential for infrastructure development, Korean government took various measures to protect foreign capital and, as a result, it attracted large amounts of foreign capital," he said, adding, "As a result, Korea was able to build a base for a sharp economic growth that surprised the whole world."
After 30 years of receiving FDI, he said, Korea became one of the top 10 exporting countries in the world, with its export volume of $2,000 billion. "Now, it is Korea who makes FDI in other countries."
Speaking at the programme, president of Independent Power Producers’ Association Nepal (IPPAN) Khadga Bahadur Bisht said that the policy makers of Nepal should seriously dwell on the FDI. "We have been seeking FDI since 1981. But there have been only a few hydro projects funded through FDI," he said, adding that Nepal hasn’t done well in terms of attracting FDI. "Nepal’s policy makers have to give priority to FDI."
A panel discussion was also held in the second session of the programme. The panel discussion chaired and moderated by former member of National Planning Commission (NPC) Dr Swarnim Wagle included energy secretary Suman Prasad Sharma, IPPAN president Khadga Bahadur Bisht, project manager of PPIB of Pakistan Iqbal Munawar, principal investment officer of IFC Kamal Dorabawila, USAID's energy policy and strategy advisor Michael Boyd as the panelist.

ADB appoints Ingrid van Wees as new vice president

The Asian Development Bank (ADB) has appointed Ingrid van Wees as vice president for Finance and Risk Management.
van Wees will be responsible for the overall management of the operations of the Office of Risk Management, the Controller’s Department, and the Treasury Department. She succeeds Thierry de Longuemar, according to a press note issued by the ADB today. van Wees is a senior official in the German Investment and Development Corporation (DEG) where her current portfolio covers debt, equity, and fund investments in Europe, the Middle East, and Asia, reads the note. "She also has treasury experience in developmental investment banking."
Before she moved to DEG in 2004, van Wees held management positions in corporate finance and business development with private corporations.
She holds a Masters degree in Business Administration from INSEAD and Mechanical Engineering from Delft University of Technology in the Netherlands.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members, 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including co-financing of $10.7 billion.

Minimising societal risk key for hydropower development

The societal risks of alienating local people in areas where hydropower projects are constructed are nearly as important to consider as climate risk, according to a new study. The study – conducted by International Centre for Integrated Mountain Development (ICIMOD) and FutureWater – is based on the study of glaciers across the Hindu Kush Himalayan region, which was presented during Stockholm World Water Week.
According to the study that is conducted to understand the impacts of climate change in the mountains and the possible downstream consequences, these hydropower projects are mostly in mountain areas, and local people often perceive that the benefits accrue to people in the plains, who get electricity, while people in the mountains bear the environmental and social costs.
“Hydropower companies need to provide direct and tangible benefits to local communities to manage this risk,” reads a media release issued today by ICIMOD.
According to theme leader for water and air at ICIMOD Aditi Mukherji, successful benefit sharing mechanisms in Nepal and India has been discussed to come to a conclusion that good and responsible governance at the local level is needed to ensure that local communities derive commensurate benefits from hydropower projects.
The Hindu Kush Himalayan region has nearly 500 GW hydropower potential but only a fraction of it has been developed. As countries in the region gear up for increased hydropower production to alleviate energy poverty, they find themselves grappling with increasing climatic and social risks.
The seminar convened by ICIMOD, Stockholm International Water Institute (SIWI), FutureWater, and Statkraft at Stockholm World Water Week yesterday discussed these risks and the way forward, the release further reads.
"There is a need to manage risks so that the mountains and the plains derive sustainable benefits from the region’s rich hydropower potential,” the release has quoted director general of ICIMOD David Molden as saying. He also stressed on the importance of the Hindu Kush Himalayan region as a global asset.
The hydropower sector is facing major challenges as a result of climate change-induced glacier melt. Glaciers across the region are retreating, leading to changes in future hydrological regimes. At the same time, the risk of glacial lake outburst floods and landslides is increasing, putting both existing and planned hydropower plants at risk.
“Changes in hydrological regimes means that there will be more water in the near future as glaciers melt, but it will decline after 2100,” said Arthur Lutz from FutureWater, a water management research organisation, according to the release.
Martin Honsberg from the hydropower company Statkraft, added that the only feasible way to manage this risk is to be better informed about the impacts of climate change on glaciers and river regimes, which can be done by setting up long-term monitoring systems.
At World Water Week this year, ICIMOD convened various seminars and hosted a booth to draw attention to a range of water-related issues and their impact on the ecosystems and people of the Hindu Kush Himalayan region, the release adds.

Cooking gas price slashed by Rs 50 per cylinder

Nepal Oil Corporation (NOC) has reduced the price of cooking gas by Rs 50 per cylinder effective from today midnight. The meeting of NOC management today afternoon took the decision to reduce the price of the Liquefied Petroleum Gas (LPG) – popularly known as cooking gas – price by Rs 50 per cylinder, according to the spokesperson of the NOC Bhanubhakta Khanal.
A cylinder of cooking gas will cost Rs 1,325 in the domestic market – after the downward adjustment of the price – from earlier Rs 1,375.
Even after reducing price, the NOC is making a profit of Rs 61.70 per cylinder, as the state oil monopoly has been earning a profit of Rs 111.70 per cylinder, while selling at Rs 1,375 a cylinder earlier. In addition to profit, NOC collects Rs 69.33 on every cylinder as infrastructure development tariff to build its infrastructure, which means that even after revising the price, NOC will still generate profit worth Rs 131.03 on sales of a cylinder.
Likewise, NOC makes a profit of Rs 10.65 per liter of petrol, 5.38 per liter diesel and 16.88 per liter kerosene but the state fuel monopoly has not revised the prices of petrol, diesel and kerosene though the price list of its sole supplier Indian Oil Corporation (IOC) – of September 1 – has increased the price of other petroleum products.
"Since the major festivals are around the corner, we have decided not to increase the price of other petroleum products,” Khanal said, adding that the NOC has reduced the price of cooking gas as per the direction of Supplies Ministry to give relief to consumers ahead of festive season, he added.
The NOC receives new price list as per the international market rates – every fortnight – on the first and 16th day of every Gregorian calendar from its supplier IOC.
Based on the supplier's price list, which is based on the international market rates, the state oil monopoly has introduced automatic pricing mechanism to make adjustments – upward or downward according to price movement – to the prices of petroleum products on September 29, 2014, though the NOC has been reluctant in regularly following the mechanism, and implement it effectively.
In what is seen as a consumer-friendly decision on Sunday, the Supplies Ministry had announced the sale of essentials including cooking gas, lentils, rice, ghee, oil, sugar, paneer and goat at subsidised rates throughout the coming festive season.
The government has announced a festive season discount of Rs 5 per kg for 15 varieties of rice sold by Nepal Food Corporation (NFC), Rs 5 per kg for a kg of sugar and Rs 2 per kg for salt sold by Salt Trading Corporation (STC), and a Rs 10 per kg festive subsidy for ghee sold by the Dairy Development Corporation (DDC).