Ncell pays Rs 4.5 billion in CGT

Ncell has started paying its outstanding capital gains tax (CGT), though in installment.
“Of Rs 22.6 billion pending CGT that the Large Taxpayers’ Office (LTO) has asked Ncell to pay, it has deposited Rs 4.5 billion at the tax office today,” the LTO confirmed, adding that the Ncell has also sought permission to pay the remaining outstanding CGT on installment. “Though Ncell has sought the facility of paying the remaining CGT in installments, the LTO is yet to take decision on it.”
According to the section 110 (A) of the Income Tax Act, the tax officer can provide the facility of paying outstanding tax on an installment basis, if the taxpayer makes a written request for such a facility before the tax office files a case in court against such taxpayer.
After a prolonged court battle, the Supreme Court (SC) had determined Rs 22.44 billion as the remaining CGT liability of Ncell. The LTO has thus given Ncell an ultimatum to pay Rs 22.6 billion – including interest – on December 23.
By depositing Rs 4.5 billion as CGT today, the telecom company has hinted at complying with the SC verdict and the LTO direction, the LTO claimed, adding that Ncell has though been concerned over CGT controversy, it has moved to an international tribunal, which recently ordered the government to halt CGT collection from Ncell.
The interim order issued by International Centre for Settlement of Investment Disputes – World Bank’s dispute settlement body on international investment – is obligatory for countries that are its members and the government’s move to collect the outstanding CGT from Ncell amid the International Centre for Settlement of Investment Dispute’s interim order, is contradictory. Ncell, along with Axiata (UK), which now owns Reynolds Holding, filed an application at the global investment settlement body, in April claiming that Nepal’s conduct in relation to capital gains tax imposed on the mobile company is against the Bilateral Investment Treaty between Nepal and the United Kingdom (UN).
Axiata Investments (UK) and Ncell moved the international dispute settlement court in April after LTO asked Ncell to foot the capital gains tax bill of Rs 62.63 billion on Ncell buyout deal.

Employees against splitting CAAN, Government committed to air safety

Though, the private airlines have been pushing the government to split Civil Aviation Authority of Nepal (CAAN) as soon as possible, the trade unions are against the government move to split the aviation sector regulatory body.
Speaking at the 21st anniversary programme of aviation sector regulator today, they warned of padlocking the office, if the decision to split CAAN to two entities is not rolled back. However, Ministry of Culture, Tourism and Civil Aviation (MoCTCA) has already decided to bifurcate CAAN into regulation and operational bodies.
Chair of CAAN Trade Union Shrawan Kumar Yadav, on the occasion, said that the union has already started second phase of protest against the ministry's decision. But minister for Culture, Tourism and Civil Aviation Yogesh Bhattarai, on the occasion, said that the government will go ahead with the CAAN restructuring plan. “The CAAN restructuring plan will not impact professional development of its employees,” he said assuring the CAAN staffers. “But government will come hard on staffers, who object to the decision.”
Restructuring the CAAN is one of the pre conditions to take Nepal out of European Union (EU) black list. The EU has back listed Nepali aircrafts to fly to European skies. Thus, the government is preparing to split CAAN to make the regulatory authority more effective according to the international aviation principles. The split will also prompt the EU remove Nepal from its air safety list, paving way for the Nepali airlines to fly in the European space.
The private airliners, on the occasion, however urged the government to split CAAN – into two entities to avoid hurting the aviation sector – as soon as possible. Its 9 years, the government has been struggling to split CAAN but the plan has not moved forward. Due to delays in passing the legislation, international aviation safety agencies have been slamming Nepal’s poor progress in ensuring air safety.
The government has prepared a draft Civil Aviation Bill that has already been submitted to the Legislative Committee of the cabinet seeking approval to register it in the Parliament. “The proposed law envisages integrating previous acts to eliminate conflicts and contradictions at the CAAN, which is currently functioning as both regulator and service provider, and there is no clear demarcation between its duties and organisational structure, according to the ministry.
The Civil Aviation Authority of Nepal (CAAN) was established as an independent regulatory body on December 31, 1998 as a result of the Civil Aviation Act of 1996. The new law is expected to replace two existing acts, the Civil Aviation Act 1959 and the Nepal Civil Aviation Authority Act 1996.
In December 2013, the European Commission imposed a blanket ban on all airlines from Nepal from flying into the 28-nation bloc after the September 2012 crash of Sita Air Flight 601 in the Manohara River that killed 19 people, including seven British citizens. Likewise, between 2008 and 2012, there were at least two air crashes annually.
“The ban has had a profound impact on Nepal’s aviation and tourism industry,” president of the Airline Operators Association of Nepal (AOAN) Rameshwor Thapa said, adding that travellers hesitate to visit the country, which has been questioned by the commission.
Likewise, tourism secretary Kedar Bahadur Adhikari, on the occasion, said that Nepal’s aviation safety has improved a lot, but there are many things to be done because improvement is a continuous process.

Arun-III to ink financial closure

The SJVN Arun-III Power Development Company is soon signing financial closure.
The company has almost finalised the necessary documents for the financial closure, residential representative of SJVN Arun-III Power Development Company Hareram Subedi said, adding that the company has already forwarded the necessary documents to Investment Board Nepal (IBN) for its final approval. “After it gives a green signal, the company will ink the financial closure with IBN by February,”
SJVN – a subsidiary company of Satluj Jal Vidyut Nigam Ltd of India, which has been tasked with building the project – has however, completed around 30 per cent of construction work of 900-megawatt (MW) Arun-III hydroelectric project.
 Investment Board Nepal is meanwhile discussing with the central bank before granting approval. “
Arun-III – an export-based project, which will bring the largest-ever government-to-government level foreign direct investment (FDI) from India worth $1.2 billion – has signed investment pledge with Everest Bank (Rs 10.5 billion) and Nabil Bank (Rs 5 billion).
The SJVN Arun-III Power Development Company said that they have accelerated the civil, hydromechanical and electromechanical works simultaneously. It has awarded civil works to an Indian firm called JP Construction, which has already started executing the construction work.
The board and SJVN had signed an agreement in November 2014 for the power development agreement of Arun-III hydropower project that is supposed to start generating energy by 2020 according to earlier agreement. But the board and SJVN reached an agreement later to complete the construction of the project by 2023.
Nepal will get Rs 330 billion as royalty in a period of 20 years and the project will also provide 21.9 per cent of the generated energy free of cost, apart from shares to locals and free energy to the affected areas. The project will generate 400 million units of power every year.

Two-third majority government wastes yet another year, fails to boost economy

Despite being historically powerful and two-third majority government, KP Sharma Oil government wasted yet another year as economy failed to gather steam.
The past 12 months of the year 2019 have neither witnessed a remarkable achievement in economy nor in governance, despite the government has set an ambitious target of 8.5 per cent economic growth for the fiscal year 2019-20. Economic indicators are not so encouraging, though this is the second year of the incumbent government that has been making tall claims – of making Prosperous Nepal,  Happy Nepali – ever since it came to power.
First thing first, the budget implementation – as always – remains lethargic, policy implementation continued to be fragile and business environment not so impressive, and the most dangerous part is private sector is fast losing confidence.
Finance Minister Dr Yuba Raj Khatiwada had defended the slow economic growth in the last fiscal year 2018-19 citing that the government throughout the year was focused on developing regulatory framework in line with federalism and the needs of the business community. He has to, however, find another excuse for the current fiscal year for not being able to meet the ambitious growth target of 8.5 per cent, as the economy seems not moving in the right direction to achieve his own target despite his tall claims of focusing on effective budget implementation, development activities and economic growth.
As always, the government failed to accelerate capital budget spending, which will directly hit the capital formation in the coming years too. According to Financial Comptroller General Office (FCGO), the government has, as of today, been able to spend only a mere 10.24 per cent – of Rs 408 billion capital budget –allocated for the current fiscal year 2019-20.
Likewise, the national pride projects including Gautam Buddha International Airport, Upper Tamakoshi Hydropower Project and Melamchi Drinking Water Supply Project expected to be completed within 2019 are yet to be completed. However, it also offers a hope for the next year 2020 as they are nearing completion.
The lifeline of Nepali economy, remittance has also witnessed a slowdown – in the five months of the current fiscal year – as it has dropped compared to the remittance inflow in the last fiscal year. Though, the number of outbound migration of the Nepali workers increased, remittance witnessed a fall by 2.3 per cent to Rs 304.97 billion until mid-November against an increase of 36.4 per cent in the same period of the last fiscal year, according to the central bank data. However, Nepal is still one of the highest remittance recipients in the world with remittance inflow comprising almost equal to 30 per cent of GDP.
Though, the government claimed to have brought some reforms, Global Competitive Report 2019 published by the World Economic Forum in October has ranked Nepal 108th out of 141 economies as Nepal is the worst performer in South Asia in terms of competitiveness.
Likewise, the share market has also not been performing well since Oli appointed Dr Yuba Raj Khatiwada as the finance minister. The share market failed to boost the investors' confidence as the market is under bearish trend since last two years.
Yet another mainstay of Nepali economy, the tourism sector has also not been performing well. The tourist arrivals, though has seen improvement, the count could not surpass last year, which will hit the Visit Nepal Year 2020 also.
Despite gloomy picture, there are some ray of hopes in the late months of 2019 as the trade deficit narrowed – though it seems not sustainable – and Balance of Payments (BoP) position remained in surplus of Rs 27.29 billion till mid-November against a deficit of Rs 57.33 billion in the same period of the last fiscal year. “The total trade deficit narrowed down by 8.9 per cent to Rs 414.02 billion in the four months of current fiscal year 2019-20, though such deficit had expanded 37.8 per cent in the same period of last fiscal year,” according to the central bank data that reveals that merchandise exports increased by 23.9 per cent to Rs 36.28 billion compared to an increase of 11 per cent a year ago, while merchandise imports decreased by 6.9 per cent to Rs 450.3 billion against an increase of 35.8 per cent in the same period of the last fiscal year.
The government has claimed that it introduced many policies to improve the business environment in the country but investors are still suspicious over effective implementation of the policies apart from a number of contradictory policies on tax issues that have discouraged the business community. Though, Nepal improved its ranking by six positions to the 94th position – out of 190 economies across the world – in Doing Business Report 2020 against 110th position in 2019, the private sector is losing confidence due to government’s anti-private sector move. 
Despite the political stability – that the private sector craved for in last 3 decades – the two-third majority government is creating fear in the business community instead of instilling confidence by also using government machinery to seek ransom from private sector.
 The private sector is more hesitant and losing confidence gradually due to various restrictive policies of the government that have provisions of imprisonment even for minor mistakes, apart from ransom seeking attitude, one of the prominent business person said, adding that despite stable government and reliable supply of electricity, the business community has hold all the investment plans recently.
Likewise, the government has also failed to crack whip on inflation as the consumer price inflation (CPI) stood at 5.76 per cent in mid-November compared to 4.15 per cent during the same period in the last fiscal year.
The economy, however, grew by 7.1 per cent in the last fiscal year, the third continuous year that the economy has expanded by over 6 per cent. And the economy is poised to expand by around 6 per cent in the current fiscal year, according to projections of development partners including World Bank (WB), Asian Development Bank (ADB) and the International Monetary Fund (IMF).
Despite government’s effort to bring in notable amount of foreign investment, in the fiscal year 2018-19, Nepal received Rs 13.07 billion in FDI against the pledged Rs 24.99 billion. Likewise, as against FDI commitment of Rs 55.73 billion in the fiscal year 2017-18, Nepal was able to see only Rs 17.51 billion in actual investment. Nepal, however, received investment commitments worth Rs 10.76 billion in the first three months of the current fiscal year, up from Rs 4.8 billion during the same period last year.

Trans-Himalayan connectivity key for Nepal's development

The trans-Himalayan connectivity is key to Nepal's development and prosperity, according to deputy prime minister and defence minister Ishwor Pokharel.
Addressing one-day conference on ‘Friends of Silk Road Trans-Himalaya Connectivity Cooperation for Shared Prosperity’ organised by Trans- Himalaya Development Center in the Kathmandu, he said that connectivity along the trans-Himalayan region is crucial for Nepal's development.
Saying that adequate discussions were needed to ensure uniformity in understanding the connectivity before initiating any action, he said that the Belt and Road Initiative (BRI) is very relevant for Nepal’s development and Nepal should not get confused.
Referring to Chinese President Xi Jinping's remarks about helping Nepal transform to a land-linked country from a landlocked one by opening more customs points, Pokharel also argued that the trans-Himalayan connectivity will bring benefits not just to Nepal but to the whole trans-Himalayan region.
Saying that unprecedented interdependence among countries highlights the importance of connectivity, ambassador of China to Nepal Hou Yanqi said that better roads improve lives of the people. “Strengthening the connectivity in the Himalayan region, the most complicated topography in the world, is of great difficulty,” she said, adding that the challenge will however not stop them. “We made efforts with the hope to deepen the bilateral cooperation in the areas of trade, investment, cultural and people-to-people exchanges, and with the view to contribute to Nepal's development agenda that includes graduating from the LDC status at an early date.”
Former Foreign Minister Dr Prakash Sharan Mahat, on the occasion, also said that Nepal should be very serious to take maximum benefits from trans-Himalayan connectivity. While adding that identification of project was very crucial based on the expert opinions and the returns of investment, he argued that China could be a good source country for foreign investment to help Nepal generate employment at home and reduce the trade deficit with China.
Likewise, former Nepali ambassador to the US, Dr Shankar Sharma highlighted the need for carrying out more research in several key areas like the impact of railway project to the trade of Nepal and overall economy of Nepal, employment generation, improvement in people's day to day livelihoods and contribution of connectivity to the GDP.
Chair of Trans-Himalaya Development Centre Dr Kalyan Raj Sharma, on the occasion, said that a trans-Himalayan connectivity network will be the best option to end infrastructure gaps and development bottlenecks in the region.

Tourism ministers of four foreign nations to attend VNY inauguration

Contrary to the ministry’s expectations, tourism ministers from only four countries are expected to take part in the inaugural ceremony of Visit Nepal year 2020 (VNY2020) to be held at Dasharath Stadium on January 1.
Tourism ministers of India, China, Myanmar and Jamaica, along with delegations from seven countries, will attend the inauguration ceremony, according to the Ministry of Culture, Tourism and Civil Aviation. The minister for Culture, Tourism and Civil Aviation Yogesh Bhattarai had earlier said that tourism ministers from 40 countries will be invited for the inauguration ceremony.
“The participation of 20 delegations from tourism bodies of different countries has also been confirmed,” the ministry confirmed, at a press briefing organised in Kathmandu today. “The ministers from India and China will arrive tomorrow, whereas some delegates including high-level government representatives from Qatar, Bhutan and Cambodia have already arrived,”  it said, adding that the government is also set to inaugurate the year-long campaign in seven provinces simultaneously. “The inauguration ceremony will take place at Biratnagar of Province 1, Janaki Temple of Province 2, Sauraha of Province 3, Pokhara of Gandaki Province, Bardiya of Province 5, Surkhet of Karnali Province and Dhangadhi of Sudurpashchim Province.”
The inauguration ceremony in Kathmandu will have cultural performance of different ethnic groups and indigenous nationalities, the ministry said, adding that Nepal Army, Nepal Police and Armed Police Force apart from Nepali artistes will also perform on the occasion that is expected to be participated by some 20,000.
Informing the press, national programme coordinator for the VNY 2020 Suraj Vaidya, said that all preparations for the inauguration ceremony have been completed. “The VNY 2020 will be inaugurated by President Bidhya Devi Bhandari, while Prime Minister Khadga Prasad Oli will make a special address,” he said, adding that the inauguration ceremony will see participation of Vice President, former prime ministers, leaders of different political parties, ministers from provincial governments, members of parliament, and chief of constitutional bodies.
The preparation for the campaign formally kicked off with the setting up of a campaign secretariat in November of 2018, under the coordination of Vaidya. The campaign secretariat also decided to establish promotional centres at all Nepali embassies across the world to promote the campaign jointly with NRNA. “The logo and banners of VNY 2020 were posted on local buses, subways and rail stations in Canada and the UK,” he said, adding that the international celebrities have also been appointed as ambassadors to promote the campaign in different countries. “Around 40 media from across the world are also taking part in the inaugural ceremony of VNY 2020 in Kathmandu.”
He also said that the visit of renowned international personalities in 2019 is also going to play a significant role in 2020. The visit of President of China Xi Jinping and President of Bangladesh Mohammad Abdul Hamid in 2019 is expected to attract more number of tourists from China and Bangladesh in 2020, he added.
Likewise, Civil Aviation Authority of Nepal (CAAN) organised the 56th Director Generals of Civil Aviation conference in 2019, which saw the participation of around 400 foreign guests from 46 countries. It has also witnessed representatives from 14 different international organisations associated with International Civil Aviation Organisation, including European Union, Boeing, Airbus and International Air Transport Association, who has taken the message of VNY back home.
Similarly, Nepal has just hosted the South Asian Games 2019, where a large number of international players visited Nepal. The successful SAG has also raised hopes of establishing Nepal as a sports tourism hub in the future
Though, there have been some issues like fake rescue scam, the mountaineering sector is also expected to attract more trekkers and mountaineers. The Department of Tourism (DoT) had issued expedition permits to a total of 868 climbers for 30 different peaks in 2019. Of them, some 381 members from 48 countries had received expedition permits to scale Mt Everest and among them 14 members were from Nepal,” the department informed, adding that nine climbers died while scaling Mt Everest from the Nepal side during the spring season, with the congestion largely blamed for the deaths.
In autumn season, the department issued expedition permits to a total of 1,210 climbers for 51 peaks. Expeditions to five virgin peaks of above 6,000 metres – Panpoche I, Panpoche II, Hunku Chuli, Hongu and Linku Chuli – were also successfully completed in the autumn season, attracting more mountaineers to Nepal.
Apart from the mountaineering, the travel and tourism entrepreneurs have been planning to develop new packages to attract tourists. “Visit Nepal 2020 will give government an opportunity to announce that cities like Pokhara, Kathmandu, Bhaktapur, Lalitpur and Bhairahawa remain open 24/7,” according to them. The Thamel, Tangal, King’s Way and Jhamsikhel in Kathmandu Valley can be developed as nightlife hubs, they said, adding that it is also right time to rebrand Nepal in the international market.

IBN approves Rs 85 billion investment for three hydro projects

The government today approved foreign investment worth almost Rs 85 billion for three hydropower projects.
The 42nd meeting of Investment Board Nepal (IBN) today – chaired by Prime Minister KP Sharma Oli – has approved foreign direct investment (FDI) for 216-megawatt (MW) Upper Trishuli 1, 50 MW Marshyangdi Besi and 37 MW Upper Trishuli-3B, confirmed IBN chief executive officer Maha Prasad Adhikari.
“While the IBN has approved Rs 65 billion investment for Upper Trishuli 1, Rs 11.77 billion has been approved for Marshyangdi Besi and Rs 8.22 billion for Upper Trishuli-3B,” he said, adding that the meeting has also extended the term of compensation dispute committee of the 900 MW Arun-III hydropower project that is looking into various issues and asked it to resolve them within two months.