NRB may reject proposal to stop auctioning of six ailing firms

The Nepal Rastra Bank (NRB), central monetary authority, can reject a proposal from the Ministry of Industry (MoI) to stop bank and financial institutions (BFIs) from auctioning the properties of six ailing industries that have long been defaulting loan.
The central bank source clarified that it was not in a position to prevent banks and financial institutions (BFIs) from auctioning the assets of the industries that have failed to make timely repayment of loan and stated that it would be against the existing laws.
NRB source stated that existing Bank and Financial Institution Act (BAFIA) doesn´t allow the monetary regulator to stop BFIs from auctioning the properties of those ailing industries until the government take decision for the special treatment of those industries regarding loan payment.
“NRB can´t direct any BFIs not to go ahead with auctioning the properties of debtors industries that have long been defaulting loan. Protection of industries from getting their properties auctioned is not possible unless government make special arrangement for those industries for their relief,” NRB source told Republica.
TheThe Ministry of Industry (MoI) had recently written to the NRB requesting to protect six struggling industries- Birat Leather Industries, Birat Shoes Company, Everest Floriculture, Nepal Boards- producers of wooden goods, Siris Herbal Company and Dolphin Manor Wildlife Resort. The letter had requested NRB to stop the auctioning of the assets of six industries for the next six months.
“NRB can prevent the auctioning of their properties only in the case if the government issues gazette provisioning that sick industries get such privilege,” the source added.
The government had formed a 8-member Sick-Industries Rehabilitation High-Level Task Force (SIRHLTF) led by Dipendra Bahadur Kshetry, vice-chairman of National Planning Commission (NPC) in a bid to seek measures to the ailing industries. However, the ministry, which has been assigned to identify actual sick industries in the country, has just started the study.
The government has already formed around a dozen committees over a decade to study the situation of the ailing industries and recommend measures to rejuvenate them. Though each of the panel suggested different measures, they never came up with a specific criteria to define sick industries.

Lack of full budget hit bridges, SEZ projects

Lack of full-fledged budget for 2012/13 has affected multiple high priority programs such as constructions of strategic bridges and feasibility study of special economic zones (SEZ) in different districts as concerned ministries are facing difficulties in starting the tender process.
"Owing to the limit of one-third budget, we could not invite bid for the development of strategic bridges," said Tulasi Prasad Sitaula, secretary at Ministry of Physical Planning, Works and Transport Management (MoPPWTM).
That is not all. He said the absence of full-fledged budget has also hit its periodic maintenance of roads. "This is certain to slow the maintenance works," he told Republica.
Technically, provisions under existing one-third budget do not restrict ministries from inviting tenders. However, such effort turns futile because in the absence of predicatbility of the continuity of the program and clear budget allocations, contractors simply cold shoulder the bid calls.
"We will have to wait till the full-fledged budget for starting those programs," said Sitaula.
The government was scheduled to implement the strategic bridge project from this year with financial support of US$ 60 million received from the World Bank. Under the project, agreement on which was signed in the last fiscal year, the government aims to develop 100 strategic bridges in different parts of the country.
But leave apart the construction of new bridges, Sitaula indicated that regular programs such as periodic maintenance of roads too could be postponed to the last quarter of the fiscal year owing to delay in tender call.
Similarly, officials at the Ministry of Industry (MoI) said they have faced a problem in awarding the tender for the feasibility study of the SEZ in three districts due to lack of full-fledged budget for the fiscal year.
The ministry had selected three contractors to carry out the feasibility study of the SEZ in the three districts -- Dhanusha, Siraha and Rauthat -- at the end of last fiscal year. But it had failed to strike agreements with them then.
"We requested the finance ministry officials to understand the situation and arrange budget so that we could seal the deals with the selected contractors," a high-ranking official at the MoI said. "Sadly, MoF refused to do so."
The source said the lack of full-fledged budget has also affected the construction of SEZ in other places such as Bharatpur, Jumla and Kapilbastu where feasibility study is going on.
"We just have Rs 10 million under the heading of SEZ and this is simply insufficient to complete constructions in Simara and Bhairahawa," the official said.

Instability, corruption continue to eat away competitiveness

Nepal continued to remain one of the least competitive countries in the globe, as frequent changes in government, burgeoning corruption and inefficient bureaucracy, among others, continued to add huge cost on businesses, says a latest report of World Economic Forum (WEF).
The Global Competitiveness Report 2012-13 that the WEF released on Wednesday has ranked Nepal at the 125th position out of total 144 countries wherein the competitiveness survey was carried out. Nepal had ranked in the same position last year as well.
“Instable government, corruption, inefficient bureaucracy, policy instability, restrictive labor regulations, inadequate supply of infrastructures, access to financing, poor work ethic in national labor force and inflation are the top most problematic factors for doing business in Nepal,” states the report.
The report that assesses the competitiveness landscapes of countries across the world has taken indices such as institutions, infrastructure, macroeconomic situation, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development among others for measuring the competitiveness.
Likewise, according to the report, technological readiness, market size, business sophistication and innovation has been used for measurement of the global competitiveness.
“Bangladesh, Pakistan and Nepal are lagging further and further behind in the Asia Pacific region as well,” reads the report.
According to the report, Bangladesh is ranked in 118th and Pakistan is in 124th. The report that has taken institution as the first index of the competitiveness highlights it as “the institutional environment is determined by the legal and administrative framework which individuals, firms and governments interact to generate wealth”.
However, Nepal has performed well in areas such as women in labor force ratio to men (13th rank), gross national saving (18th rank), and total tax rate (41th rank).

High-rise apartments vulnerable, lack risk-mitigation measures

Although country’s housing sector has gradually evolved into an organized business sector over the years, urban development experts and planners raised concerns over various housing products, particularly high-rise buildings, referring to them as prone to risks.
Speaking at an interaction on ‘High-Rise Apartments: Its Feasibility and Contextual Reality’, they raised concern over unplanned development of high-rise buildings and poor regulation and monitoring by the government, saying that such a laxness by the regulator has enabled the companies to escape even as they hand over risk prone products to the customers.
“High-rise apartments in Kathmandu are simply not feasible. The Valley can support only mid- and low-rise apartments,” Arun Dev Pant, architect at Design Cell, a private consultancy firm, said.
Pant disagreed with the views of developers and planners who have been saying that development of high-rises was one of the most reliable ways to manage limitations of land availability and population in the Kathmandu valley.
“Our present approach toward housing sector is wrong because we have not even made apartments affordable for middle-income groups,” Pant said, referring to the prices the developers are charging for the apartments.
Developers like Om Rajbhandary, the chairman and CEO of The Comfort Housing, and senior government officials agreed.
Rajbhandary said it was high time for the government and the private developers to examine whether the high-rise apartments are feasible in Kathmandu. “Everyone is developing high-rise apartments in Kathmandu. But we need to do a serious homework before jumping into it,” Rajbhandary said.
Tulsi Prasad Sitaula, secretary at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM) echoed experts’ concern over safety of the apartments built in the recent years.
“During an inspection of some apartments last year, we discovered negligence by developers on several fronts, including safety measures like lack of fire exits and other arrangements,” he stated.
He admitted weakness on the part of the regulator. “The government actually started monitoring the sector only recently. But that should not have been a reason for the developers to skip the basic safety measures that affect customers lives directly,” he said.
Sitaula attributed weak coordination among different government agencies responsible for regulation of housing for the problems in the sector. He, however, committed to set up mechanism to beef up coordination among different government agencies.

'Excise duty on liquor unfairly high'

Liquor manufactuers have said the government decision to increase excise duty on liquors every year has directly affected the country´s liquor industry.
“The liquor industry is in a difficult situation due to the government´s haphazard way of slapping excise duty. Such is the situation that the manufacturers even don´t get excise duty sticker as per their demand,” Ravi KC, president of the Nepal Liquor Manufacturers´ Association (NELMA), said at a press meet organized on Friday.
Highlighting the contribution of liquor industry in revenue collection, KC said that the government should be supportive to make the industry respected and well managed. “The excise duty act, regulation and liquor act along with other laws are not supportive to the liquor industry,” KC said.
According to the association, there are 42 liquor industries and 5 breweries in the country and that the government collected Rs12 billion as revenue from the liquor industry in the previous fiscal year.
Liquor manufactures have urged the government to ban export of molasses from the country. “Molasses is being exported to India at a very low cost, whereas we have to import spirit from India at a high cost,” KC said.

Pokhara locals call off strike after minister's assurance

Tourism Minister Posta Bahadur Bogati on Thursday promised to take a concrete decision regarding the development of Pokhara regional international airport (PRIA) within two weeks, following which the local pressure group called off the strike.
The local stakeholders had announced two-day closure of Pokhara airport for Friday and Saturday in a bid to press the government to promptly move ahead the PRIA project, which remains uncertain after opposition by four different trade unions at Civil Aviation Authority of Nepal (CAAN), which termed the project as financially unsustainable after the cost mentioned by the lowest bidder was nearly double the CAAN estimate.
Although the Pokhara locals have welcomed the minister´s assurance, Republica has learnt that confusion over the project still exists between the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) and CAAN.
The ministry is positive about implementing the project but CAAN is unhappy with the Engineering Procurement and Construction (EPC) under which the project is being developed. Under EPC model, the contractor needs to carry out the entire development process of the project from designing to construction.
Tri Ratna Manandhar, director general of the CAAN said the problem with the project surfaced mainly as CAAN had no experience of developing projects under EPC model and did not anticipate huge variation in cost that China´s CAMC - the lowest bidder - quoted and CAAN estimated. CAMC had quoted US$ 305.13 million against CAAN estimate of US$ 305.13 million.
According to him, such variation arose mainly because CAMC proposed to develop a different sort of airport than what CAAN was looking for in the Pokhara. "The kind of airport that the Chinese company has proposed to develop in Pokhara is not economically viable. Otherwise we have no difference over the development of PRIA," Manandhar stated.
Contrary to CAAN´s version, a high-ranking official at MoCTCA, said, "We have to develop documents synchronizing them with the laws in order to develop this project since it is also significant for our bilateral relationship with China, northern neighbor - rapidly establishing itself in the global economy."
"PRIA is a project of national interest. The government will execute it at any cost," the official told Republica requesting anonymity. "The bidding process has been completed and we are at a point of no return. The government will ink an agreement with the Chinese government complying with all the pertinent national laws soon."
CAAN, which will be responsible to operate the airport after its completion, however, is not quite positive on the development of project through the EPC model.

MoI stops verification of 'sick' industries

The Ministry of Industry (MoI), which is entrusted to carry out a technical study of self-declared ´sick industries´, has shelved its fact-finding field study of those industries after Ministry of Finance (MoF) denied it necessary budget.
"The technical committee can´t go in the field to cross check the information provided by the industrialists," Ek Narayan Bhandari, section officer at the MoI, who is also a member of the technical committee, told Republica. "The committee has already completed off-site study of those industries. To assess their actual status, we were required to visit their sites."
The MoI had sought Rs 2.6 million to conduct the study for verifying claims made by 27 ´sick industries´. But the finance ministry, citing legal provisions of one-third budget, refused to provide the fund.
Though the government had incorporated a program to provide relief to the sick industries in 2011/12, it had not made any allocations under the heading. The government has no authority to allocate budget to any new program since the budget for this fiscal year is just one-third of the actual expenditure of the previous fiscal year, said Durgesh Pradhan, under secretary at the finance ministry.
The MoI officials, however, said they have a pressure to finish the field study and come up with the final list of sick industries as the prime minister has continued to push for the early implementation of the relief packages.
The government has prepared a report that suggests what sorts of relief packages should be provided to the sick industries to breathe new life into them. But it has not yet identified parameters to judge whether or not a given industry is sick.
Owing to the lack of such parameters and also the lack of budget, the MoI officials said they won´t be able to finalize the list of actual sick industries soon.

Dismal year of investment: Industrialists

When Babu Ram Bhhatarai assumed the office of Prime Minister on August 28, 2011, the country had just faced closure of Surya Nepal Garment - a billion rupee company that was employing 700 workers.
“It was a big setback,” Bhattarai had acknowledged and had vowed to prevent such happenings in the future, promising good climate to industries.
But just as Bhattarai is set to complete a year in the office on Tuesday, three benchmark global fast food chains - KFC, Pizza Hut and Cream Bell - have remained closed for two weeks, citing ´manhandling´ of its manager by workers. So much so, Devyani International, the operator of those food chains, has warned of permanent closure, citing lack of peace in the workplace.
“Despite commitments, PM during his year of reign simply failed to restore normal productions environment in the industrial sector,” said Pashupati Murarka, vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
That is not all. Nepal also suffered a whopping 30 percent drop in foreign direct investment (FDI) in 2011/12, as it received FDI commitment of just Rs 7.14 billion during the year, compared to Rs 10.05 billion of a year ago.
Worse still, manufacturing sector, which used to be the favorite sector for foreign investors, found few investment. The sector drew meager Rs 988 million worth of FDI in 2011/12, compared to the commitment of Rs 6.13 billion a year ago.
While this dampened the prospect of creation of jobs for semi and unskilled workers, something which the PM had promised while assuming the post, officials at Department of Industry (DoI) said the picture of domestic investment too remained the same during the year.
“Not just the foreign investors, local investors also shied away from injecting fresh investment during the year,” said Kush Kumar Joshi, former president of FNCCI. Leave fresh investment apart, private sector leaders claimed numerous small and medium scale industries pulled down their shutters during the year.
Though entrepreneurs like Joshi blamed the situation on long-running constrains like power crisis, increasing labor costs, labor disputes and political instability, others said situation of investment and industry would have been different had the government truly delivered on its promises.
On the face value, entrepreneurs rated the year of Bhattarai as PM as ´relatively fine´ because he took number of encouraging decisions and promised policy and legal reforms.
For instance, in September 2011, PM Bhattarai formed a special committee to deal with country´s thorny industrial relations and instructed labor offices to promptly step in whenever labor-management conflict arises in industries, particularly foreign investment ventures, to ensure timely addressing of grievances. Through this, the private sector believed the government could truly tackle the industries´ problems effectively.
A month later, the PM went a step further and inked Bilateral Investment Promotion and Protection Agreement (BIPPA) and Double Taxation Avoidance Agreement (DTAA) with India despite huge uproar in his own party. He even announced the signing of similar agreements with more than half a dozen countries, including China, Japan and USA within a year.
The government formed the Investment Board in November 2011 to speed up development of mega-projects in a fast-track mode to do away with country´s infrastructural and power constraints. The private sector and foreign investors hailed those steps.
In December, he adopted the FNCCI´s proposal and announced FY 2012/13 as the Investment Year, committing host of reforms to make the year successful. He said 50 bankable projects would be developed and offered to overseas investors during the year.
“We will bring in foreign investment US$ 1 billion in the first six months of the Investment Year,” PM Bhattarai said when he unveiled immediate action plan on prosperity and economic growth.
Going by his commitment of legislative reforms for investment friendly climate, Ministry of Industry even drafted new Industrial Enterprise Act (IEA), Foreign Direct Investment and One Window Policy, Special Economic Zone Act, and Safeguard, Anti-Dumping and Countervailing Act. Ministry of Law too was asked to make the labor law flexible.
But all those efforts fizzled out when the Constituent Assembly dissolved on May 28 and political impasse and constitutional confusions crept in. “If that had not happened, we would have had number of new policies and laws already in place,” said Anil Kumar Thakur, joint secretary at Ministry of Industry.
Sadly, however, political imbroglio that followed in recent months pushed new laws and policy reforms to uncertainties. The Investment Year has turned into a hoax. This along with the lack of full-fledged budget has caused the private sector to lose optimism.
“Sincerely speaking, the year of PM Bhattarai turned out to be waste” said Bhawani Rana, another vice president of FNCCI.

Lack of coordination among line agencies hit infrastructure program

The program to provide basic infrastructure such as roads, electricity lines and drinking water to cement factories that are sourcing raw materials locally is not gaining momentum in the lack of coordination among line agencies.
The government has even failed to redesign the program as per the partial budget.
“The program is yet to get shape due to weak coordination among line agencies,” an official at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM), said.
As there has been low budgetary allocation for the program, different government agencies must work in tandem to introduce the program.
The MoPPWTM, Ministry of Energy and Ministry of Local Development are responsible for developing roads, expanding electricity lines and providing drinking water respectively to the project sites. Similarly, the monitoring part falls under the Ministry of Industry (MoI).
Hari Bhakta Shrestha, joint secretary at the MoPPWTM, has said the Department of Roads (DoR) is designing modus operandi to build roads to the project sites.
Meanwhile, the MoI, which is entrusted to carry out the monitoring part of the program, has expressed disappointment over slow work progress. “I don´t think the program will get pace in the first three months of fiscal year 2012/13,” a knowledgeable source at the ministry told Republica. “The program was also not properly implemented in 2011/12 as well.”
According to a review report of the industry ministry, the program achieved 40 percent of the target set for the period during 2011/12.
The government over the last four years constructed only one-third of the 32 km road it had promised to four cement factories.
“Though the government had released Rs 175 million for road construction, only 48 percent of the amount was spent in the last fiscal year,” said the official.

Govt to extend deadline for introduction of laminated cement sacks

The government is preparing to pledge additional time to the cement manufacturers to mandatorily package cement in laminated bags after they failed to arrange such bags and adjust their packaging system within 91-day deadline, ending on Wednesday.
The manufactures of the key construction ingredient had formally pleaded with the Ministry of Environment, Science and Technology (MoEST) for extension of its enforcement timeline last week.
In a bid to exert pressure on the government to extend the duration, they had even announced stopping supply of cement in the market from Wednesday.
“We are extending the deadline since the industrialists could not manage laminated sacks for packaging cement,” Krishna Gyawali, secretary at the MoEST told Republica. However, the Ministry is yet to decide on the duration of extension.
The MoEST took initiatives for the extension after Ministry of Industry (MoI) formally approached it for the change. “We will set the new enforcement deadline based on what MoI has mentioned in its letter and also what the manufacturers say,” said Gyawali.
Currently, cement marketed in Nepal are packaged in un-laminated sacks made of polymer. But MoEST in May said use of these sacks was sub-standard practice as it causes seepage and inflicts net loss to consumers. "The cement manufacturers, hence, are asked to mandatorily switch to laminated sacks within 91 days or halt supply of cement," its notice read.
But manufacturers said they found complying with the new rule impossible because there was no laminated sack manufacturing unit in the country. “Setting up the new laminated sack manufacturing industry and also adjusting our packaging system will take at least 15 to 18 months,” Atma Ram Murarka, president of Cement Manufacturers´ Association of Nepal (CMAN) said.
Some of the cement manufacturers and polymer sack producers had even tagged the government´s new rule as ´policy corruption´ done in favor of new investor. They claimed it will not serve consumers well, as use of laminated sacks will increase the cost of packaging, thereby making cement expensive by Rs 20 per sack.
Basu Dev Golyan, president of the Nepal Woven Fabric and Sacks Manufacturers´ Association (NWFSMA) too said that some Rs 1.2 billion per year will fly abroad since there is not even a single factory which can produce laminated sacks in the country. "It costs Rs 600 million to install the technology that produces laminated sacks,"”Golyan said.
Referring to the investment and time required to sufficiently produce laminated sacks locally, the cement and sacks manufactures have requested the government to extend the deadline by 3 years. "Hopefully, the government will respond to our request positively,"”said Murarka said.

NTCCI, ICC sign cooperation deal

Nepal Turkey Chamber of Commerce and Industry (NTCCI) and Istanbul Chamber of Commerce (ICC) signed a Protocol of Cooperation (PoC) on Friday, committing to work together for enhancing economic and commercial ties between the two countries.
Akhil Kumar Chapagain, president of the NTCCI and Murat Yalcintas, president of the ICC signed the PoC. Yalcintas is currently in Nepal leading a team of businessmen from Turkey.
The PoC promises to promot and support exchange of information bewteen private players of the two countries. "It has fundamentally paved the way for regular exchange of market information and investment environment between the private sector players," NTCCI said, issuing a press release.
The PoC also cites establishing a mechanism between the two institutions for periodic meetings and discussions. “We are very pleased to sign this agreement with the ICC, which is one of the five largest such organizations in the world. I am positive that this will be instrumental in helping us to further economic and commercial ties with Turkey,” Chapagain said.

65 firms get permission to export rice to China

The government has permitted 65 firms to export 10,000 tons of rice to China.
It decided to open rice exports to China keeping in view the impressive surplus of cereal crops in Nepal and growing demand for rice in the northern neighbor.
The Department of Commerce and Supply Management (DoSM) recently granted permission to those firms. They will export rice to China through Tatopani and Rasuwa customs.
“We granted permission to exporters on first-come, first-serve basis, laying down condition that export must be completed within six months,” Narayan Prasad Bidari, director general of DoSM said. “A total of 31 firms have been permitted to export 5,090 tons of rice through Tatopani customs, and another 34 have been permitted to export 4910 through Rasuwa customs.”
A total of 65 firms had registered expression of interest to export rice to China´s Tibet Autonomous Region through Rasuwa and Tatopani after the government lifted nearly four-year ban on rice exports a few months back.
The government had banned rice exports at the height of global food crisis 2008 after India imposed restriction on exports of non-Basmati rice.
The Ministry of Agricultural Development has estimated food surplus of about 880,000 tons, including 300,000 tons of rice, in 2011/12. The government had reported food surplus of 443,000 tons in 2010/11.
Though the Ministry of Commerce and Supplies (MoCS) had recommended the government to allow exports of up to 50,000 tons of rice, the cabinet had decided to limit exports at 10,000 tons.

NMPL proposes to build Ktm metro for $3b

The Investment Board (IB), entrusted to carry out 14 mega projects including West Seti Hydroelectricity Project and upgradation of the Tribhuvan International Airport (TIA), has received a proposal from Nepal Metro Private Limited (NMPL) to build Kathmandu Metro Railway (KMR) at a cost of US$3 billion.
“The company has submitted a proposal to the IB in this regard,” an official at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM), said.
Radesh Pant, CEO of the IB, also acknowledged submission of the proposal. "A detailed study is yet to be done,” Pant told Republica on Friday, referring to the proposal which was submitted voluntarily by NMPL. He, however, said the Board will not make any decision without carrying out an extensive study, as "the KMR project is a huge".
The IB, which received the authority to execute the metro project last May, is currently working to hire experts who can go over NMPL´s proposal rigorously. "We don´t know if the cost proposed is genuine or not," Pant said. "Additionally, we also have to study the international practice of developing metro in a metropolitan city."
NMPL´s proposal comes at a time when the MoPPWTM has outsourced the work of conducting feasibility study on the project to Korea Transport Institution, Chungsuk Engineering Company, Kunwa Consulting and Engineering Company, Korea Rail Network Authority, and two local companies BDA Nepal Private Limited and EMRC Private Limited. The government has paid Rs 60.5 million to the firms to complete the feasibility study.
“NMPL has promised to compensate Rs 60.5 million if it secures the project,” Pant said. “The company has also said it would bear the cost of preparing detailed project report.”
According to an official at the Office of the Prime Minister and Council of Ministers (OPMCM), the IB had accepted the proposal from NMPL as it lacks human resources to prepare bidding documents for projects like KMR.
But officials of the MoPPWTM have asked the concerned authorities not to make any decision in haste. "Companies that have been paid to carry out feasibility study should be allowed to finish their task," Tulsi Prasad Sitaula, secretary at the MoPPWTM, said. “Negotiations can be done with NMPL after getting a complete report from Korean and Nepali companies involved in the study.”
"We are receiving updates from the firms and they have pledged to submit the report on time," Sitaula said. The companies have about two months left to submit their reports.

Cement supply to stop from next week

The domestic market will see face acute shortage of cement beginning next week as manufacturers of the key construction ingredient have expressed inability to comply with the government´s mandatory provision on packaging cement in laminated sacks.
This is expected to put jobs of 12,000 people at stake.
Currently, unlaminated sacks made of polymer is being used to package cement. Calling these sacks of inferior quality, the government had earlier given 91 days to cement manufacturers to use laminated sacks or halt supply of cement. The deadline expires Sunday.
"The government took the decision without conducting in-depth research,” Atma Ram Murarka, the president of Cement Manufacturers´ Association of Nepal (CMAN), said. "We will stop supply of cement in the market from next week if the government fails to take back its decision.”
According to CMAN statistics, around 10,000 people are employed in the country´s cement industry and an additional 2,000 in sack manufacturing units. "The government´s immature and haphazard decision will affect huge investment that has gone into the sector and will put question mark on livelihood of thousands of workers," Murarka said.
The industry, which has attracted Rs 50 billion worth of investment in a total of 40 cement factories across the country, has found it quite improbable to comply with the government´s instruction, as it takes "at least 15 to 18 months even to lay down the infrastructure in the factory to start producing laminated sacks," Murarka told mediapersons.
"So far, no factory in the country can produce laminated sacks,” he said. "At least, the Ministry of Industry (MoI) and the Ministry of Environment, Science and Technology (MoEST) should have consulted us before taking such a major decision."
Meanwhile, Nepal Woven Fabric and Sacks Manufacturers´ Association (NWFSMA) has also condemned the government decision.
"We can´t produce laminated sacks as we don´t have the technology," Basu Dev Golyan, the president of the NWFSMA, said at an interaction. "It costs additional Rs 600 million to install the technology capable of producing laminated sacks."
According to Golyan, the use of laminated sacks for cement packing will increase the cost by Rs 20 per sack, which will ultimately have to be borne by consumers.
"Since we can´t produce laminated sacks, Rs 1.2 billion will fly abroad to import laminated sacks," Golyan said. "Besides, it takes around 6 months to import sacks from abroad."
Citing examples in other countries, Golyan said, even China and India have not enforced any law on use of laminated sacks.

FDI commitment in manufacturing sector down

The manufacturing sector, one of the most lucrative sectors for foreign investors, has recorded a dramatic fall in foreign direct investment (FDI) commitment in 2011/12 due to factors such as power crisis, increasing labor costs, frequent labor disputes, eroding competitiveness of the Nepali products in the international market and political instability in the country.
Statistics show that the FDI commitment in the manufacturing sector fell by whopping 83 percent during the fiscal year 2011/12 compared to the figure a year earlier. The manufacturing sector, which has stagnated to 6.2 percent of Gross Domestic Product (GDP) for two consecutive fiscal years 2010/11 and 2011/12, got commitment for just Rs 988 million during the fiscal year 2011/12.
The sharp decline in the FDI commitment in the manufacturing sector has resulted in a loss of 1,541 jobs in the domestic market. According to statistics compiled by Department of Industry (DoI), the FDI inflow in the manufacturing sector had created 3,312 jobs in the country during the fiscal year 2010/11.

“Load-shedding, eroding competitiveness of the Nepali products in the international market, increasing labor costs, frequent labor disputes and political instability are the reasons for this fall of FDI in the manufacturing sector,” Kush Kumar Joshi, former president of the Nepalese Chambers of Commerce and Industry (FNCCI) said.
The manufacturing sector, which comprises industries such as food, beverage and tobacco, textiles and readymade garment, chemical and plastic products, mining products, among others, had receive Rs 6.13 billion FDI commitment in fiscal year 2010/11.
“Organized international business houses have lost faith in the government and its commitment to ensure the investment climate in the country,” Joshi said, highlighting the investment psychology of the foreign investors.
The FDI commitment in the manufacturing sector was increasing at a rapid pace since fiscal year 2008/09. The FDI commitment increased by 156 percent during the fiscal year 2009/10 compared to the fiscal year 2008/09 and reached Rs 3.75 billion. Likewise, the increase was 67 percent during the fiscal year 2009/10 and reached Rs 6.13 billion.
Underlining the importance of smooth and service orientated bureaucracy, Bhawani Rana, vice president of the FNCCI said that the international investors were losing interest to come to Nepal with investment due to rampant bureaucratic hassles to register and start a business in the country.
“Political instability is just a small reason. Labor disputes and heavily politicized trade unions and their irrational behavior are major barriers that the international investors are facing in Nepal,” Rana told Republica. “There are policies and frameworks but their enforcement is very weak.”
The FDI commitment has declined by 30 percent in aggregate during the fiscal year 2011/12 compared to a year earlier. According to statistics, the fall in FDI commitment is highest compared to other sectors such as agriculture, energy and mineral based industries.

MoI proposal to check reality of sick industries face hurdle

The proposal of Ministry of Industry (MoI) to cross-check reality and genuineness of self-declared ´sick industries´ - which have pushed for relief packages from the government - has hit a snag after Ministry of Finance (MoF) refused to pledge budget necessary for the study.
The MoI, which is entrusted to implement the sick industry rehabilitation program, had asked for Rs 2.6 million to conduct the field study to verify claims made by 27 ´sick industries´. But the officials at the MoF said the program was new one, and MoF was not in a position to allocate a portion of one-third budget to the MoI.
Though the government started program to provide ´relief program to the sick industries´ in 2011/12, no allocations were made for the program in the last fiscal year. “We received the MoI´s letter only after the new fiscal year began,” said Durgesh Pradhan, under secretary at the MoF. "And the ministry has not been able to decide whether to allocate budget, for it is entirely a new program," he told Republica.
The government has no authority to allocate budget to any new program since the budget for this fiscal year is just one third of the actual expenditure of the previous fiscal year 2011/12. “We have already started a preliminary study of the 27 industries, which have applied at the ministry to be treated as sick industries, on the basis of information they have provided to us,” Surya Kant Jha, under secretary at the MoI said. “We need budget to go in the field in order to authenticate the information they have provided to us.”
The ministry has a pressure to finish the field study and come up with the final list of names of the sick industries in order to provide them relief packages. The government has prepared a report that suggests what sorts of relief packages should be provided to the sick industries to revive them.
The Nepal Rastra Bank (NRB) central monetary authority, meanwhile, has also declined to ask bank and financial institutions to stop auctioning the property of the six industries - Birat Leather Industries, Birat Shoes Company, Everest Floriculture, Nepal Boards- producers of wooden goods, Siris Herbal Company and Dolphin Manor Wildlife Resort.
The MoI had requested NRB to process to save six industries from bank actions. NRB source had disclosed to Republica that the Bank and Financial Institution Act doesn´t allow it to ask any bank and financial institutions not to auction the property of defaulter.
“The process of identifying actual sick industries might not take place due to the budget crunch in the Ministry,” the official at the MoI said.

FNCCI woos Turkish investors

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has requested Turkish private sector to invest in Nepal´s hydroelectricity, tourism, agriculture and health sector.
FNCCI President Suraj Vaidya requested members of Turkish business delegation that is currently in Nepal to invest in Nepal saying that the government is working on to create environment conducive for investment, a statement issued by FNCCI on Tuesday said.
“The meeting between the leaders of private sectors from the two countries focused on investment prospects in Nepal,” reads the statement.
Participants of the meeting also held discussions on establishing flight connectivity between Kathmandu and Istanbul.
Speaking on the occasion, Dr Murat Yalcintas, president of the Istanbul Chamber of Commerce (ICC), said Turkish business people were eager to invest in Nepal. “I will encourage Turkish investors to put their money in Nepal,” Yalcintas said, according to the statement.

Program to promote entrepreneurship in the offing

With the objective of promoting entrepreneurship, two organizations -- Biruwa Ventures and Saadhya -- have announced a business plan competition named Udhyami Seed Fund Challenge 2012.
Speaking at a media briefing in the capital on Monday, the organizers said they were offering one month mentorship for the short-listed business ideas and providing financing of Rs 500,000 each to top three winners.
During the mentorship period, the organizers will provide the proposed company a mentor. They will also organize workshops on finance, legal, public relations and ideas for execution of the business ideas.
According to the organizers, the program targets to help brainstorm the business idea and develop business plan for execution. “Though fresh graduates and college students are the target groups of this program, anyone interested in entrepreneurship development and also those who have initially started entrepreneurship can participate, said Abhinab Basnyat, founding partner of Biruawa Ventures.
To participate in the program, interested participants should fill up the form which will be available online from Wednesday onwards.
Saurabh Rijal, director of Saadhya, said the existing problem for new entrants was lack of fund and proper environment to execute their plan. “We plan to create a proper eco-system so that the winners can set example and encourage others to develop entrepreneurship,” he added.
According to the organizers, application deadline is till September and mentoring period is scheduled to begin from October 6. This will be followed by final presentation of selected participants on November 17.
“With the help of Udhyami Seed Fund Challenge, potential entrepreneurs will get mentoring and networking support,” Vidhan Rana, another found partner of Biruwa Ventures.
“We are funding the winner with no collateral and will also provide them legal advice and marketing support,” he added.

Govt to harmonize internal trade with supply system

The government is preparing final draft of Internal Trade Policy (ITP) that envisages boosting local trade activities by harmonizing with the existing Supply Policy.
The proposed policy is largely aimed at better serving the interests of consumers through development of well-managed local markets along with unhindered supply system.
Narayan Prasad Bidari, director general of the Department of Commerce and Supplies Management, said the department has prepared the draft in line with the Supply Policy 2012.
“We have incorporated the norms of supply policy in the draft. We will forward it to the Ministry of Law and Justice through the Ministry of Commerce and Supplies within a couple of weeks,” Bidari told Republica on Sunday.
The draft was worked out by South Asia Watch on Trade, Economics and Environment (SAWTEE) - a Kathmandu-based research organization - on behalf of the department.
The draft envisages improving supplies and facilitating development of wholesale and retails markets of essential goods by strengthening transport connectivity among others.
“We have prepared the draft in such a way that it helps effective implementation of existing supply policy,” said Bidari.
The government has already formulated Trade Policy 2009 that aims at boosting the country´s international trade.
Officials said Internal Trade Policy is crucial at a time when the international markets are becoming increasingly volatile hurting the prospects of Nepal´s foreign trade.
“It is high time we strengthened and managed our internal trade system so as to minimize the impact of changing international market phenomenon,” he added.
Trade experts involved in the preparation of the draft opined that internal trade policy was necessary to boost domestic trading activities as the country´s trade deficit is mounting due to slowing exports.
Nepal´s trade deficit ballooned to Rs 419 billion during fiscal year 2011/12, up from Rs 333 billion recorded in the previous fiscal year.
“The formulation of internal trade policy will be a step forward in drawing attention of the government toward expanding the volume of domestic trade though development of market infrastructure and other facilities,” said an expert.
He said Nepal should learn the importance of domestic market from China which boosted internal consumption in the wake of slowdown in international trade that has been dragging down exports of the world´s second largest economy.

Govt to distribute ID cards to the poor in 4 months

A high-level government body formed to manage the task of distributing identity cards (IDs) to the poor will conduct surveys in 25 districts, such as Achham, Kailali, Mugu and Jajarkot in the first phase to identify poor households.
The study, being carried out by the Poor Household Identification and ID Card Management and Distribution Coordination Board, will formally begin on Sept 17 when the Board will start setting up offices in identified districts.
Other districts that will be covered by the survey include Rolpa, Kapilvastu, Gorkha, Rautahat, Bhojpur, Bajhang, Jumla, Dolpa, Bardiya, Puthyan, Tanahu, Ramechhap, Siraha, Bajura, Humla, Kalikot, Rukum, Arghakhachi, Baglung, Sindhuli and Khotang.
The government has set a target of distributing ID cards to poor households in these districts within the next four months, following which surveys will be conducted in other districts.
"We have already devised a mechanism which will be deployed in central to district and village development committee (VDC) levels to identify poor households," Janak Raj Joshi, vice-chairperson of the Poverty Alleviation Fund (PAF), who is also the chairman of the Board, told mediapersons on Tuesday. The ID cards will be distributed after processing and verifying the data collected during the survey.
According to Joshi, poor households that will get ID cards will be categorized into groups of ´A´, ´B´ and ´C´. "Poor households that can manage to sustain with their production for nine months will be included in category ´A´, those who can manage for six months will classified as category ´B´ and those that can manage with their production for only three months will be placed in category ´C´," Joshi said.
The government hopes the distribution of ID cards will be a base to design programs for the poor and ensure such programs reach targeted groups. The Board, however, will reserve the exclusive right over distribution of the card to any household.
"The ID card will be distributed depending on the information compiled by the team conducting the survey," Joshi said. "But those unhappy with any survey team´s decision can file complaints at district-level committees."
Currently, the government has categorized any individual earning less than Rs 19,345 per year as the poor.

Big cement factories plan full-fledged production

Four large clinker-based cement factories that were facing difficulty in carrying out production in full capacity have announced that they are planning to commence full-fledged production within three to six months.
“Technical reasons like monsoon and other factors have forced us to slow production. But those difficulties will be overcome soon,” said Pashupati Murarka, promoter of Arghakhachi Cement Industry.
He said all the four factories -- Gorahi, Sonapur, Shibham and Arghakhachi Cement -- would start full-fledged production in the next few months.
The factories claim that they would easily be able fulfill the annual national demand of 3 million tons once they start full-fledged production.
"This will prevent outflow of Rs 12 billion a year to countries like India and Bhutan,” said Murarka, who is also the vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
Currently, local cement factories are fulfilling only around 40 percent of total domestic demand, while remaining 60 percent is fulfilled through imports from India and Bhutan.
According to Cement Producers Association, of the total imports, 40 percent of the imports include raw materials. Some 30 factories that do not have capacity to produce clinkers locally source raw materials to produce cement.
Likewise, remaining 20 percent of import is recorded in the form of final product -- packaged cement.
As the four new clinker-based cement industries have the capacity of 4,850 tons of clinkers a day, Murarka said their full-fledged productions will enable the country to be self-reliant on cement.
“Owing to such huge clinker producing capacity, we would also be able to supply the raw material to 30 factories dependent on imported clinkers for production,” he stated.
According to FNCCI, Arghakhachi Cement Industry has the capacity of producing 1100 tons of clinkers per day. While capacity of Gorahi cement is still higher, Sonapur and Shibam too can produce 750 tons and 1,200 tons of clinker every day respectively.
The cement industry had lured investment of around Rs 11 billion in last fiscal year.

FNCCI officials leave for Europe to lure investors

A team of business leaders left for European countries, including France, Italy and Switzerland, on Sunday with the aim of bringing in investment for highly prioritized projects such as chemical fertilizer plant, international airports in different regions and food processing centre in Kathmandu, among others.
“We will have various business to business meetings with private sector representatives from those countries,” Bhawani Rana, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said. “We will request them to invest in different projects.”
Rana, who is leading a 29-member team of business leaders on a two-week tour, said that meetings with different business groups in those countries would be solely focused on promoting the Investment Year and seeking investors for different projects.
The FNCCI, which coined the idea of celebrating the Investment Year, has started visiting different countries in order to lure foreign investors in the country. “This is a step toward promoting the Investment Year and encouraging international investors to come here with investment,” Rana told mediapersons before departing for Europe. “We will try to spread the message that the investment environment has not been disturbed even though the political situation is fragile and uncertain.”
According to Rana, the visiting team will hold meetings with officials of Paris Chamber of Commerce and Industry (PCCI) and International Chambers of Commerce (ICC), and non-resident Nepalis in Paris, brief them about the actual situation in Nepal and request them to invest in different projects ranging from tourism to infrastructure.
Additionally, the team will ask investors from France to invest in the country´s food processing centre and tourism sector. “I think investors from France will be interested to invest in the food processing centre,” Rana expressed hope.
“There are many areas in which we need foreign investment and we are working on spreading a message that the government of Nepal is ready to ensure a basic environment for investment,” she said.
The visiting team will also propose European investors to invest in the hydropower sector of the country. “We will ask investors from the private sector of the European countries to make investment in projects such as Arun III and Upper Karnali,” Rana said. “Additionally, we will also seek investment for Kathmandu-Terai fast track.”

Decision to include RMG in NTIS draws flak

The government´s decision to include readymade garment (RMG) in the Nepal Trade Integration Strategy (NTIS) 2010 has drawn strong criticism from experts as RMG does not comply with basic eligibility criteria.
The methodology that the government endorsed then for selecting a product clearly states that the product must post a consistent rise in exports for three consecutive years to be included in NTIS. It also needs to satisfy other indices that measure its current demand in the international market, domestic supply capacity and also its potential socioeconomic impact in Nepal.
“But RMG had failed in all these parameters. And it still does not fit well on the indices,” said Dr Posh Raj Pandey, trade expert and former member of the National Planning Commission.
He flayed the ad-hoc inclusion decision, saying that it would only affect and dilute the priorities that NTIS has set to give impetus to the country´s ailing outbound trade.
The High-Level Business Forum (HLBF) chaired by the prime minister under the Nepal Business Forum (NBF) -- a public-private platform working to improve investment climate -- had decided to include RMG in NTIS on Thursday.
On being queried over the decision, Anil Kumar Thakur, joint secretary at the Ministry of Industry and coordinator of the working group that pushed for the decision, said the group suggested for RMG´s inclusion as per the recommendation from the Ministry of Commerce and Supply (MoCS).
Interestingly, MoCS officials said they made the recommendations not on the basis of the merit of the product, but under pressure from RMG producers.
“We recommended inclusion of RMG in NTIS as pressure from the garment producers was immense,” Lal Mani Joshi, commerce secretary, told Republica.
“Besides, there is no denying that RMG was once the largest export of the country and its export still stands at over Rs 4 billion, making it the second largest export item,” he added.
Inclusion of RMG in NTIS would entitle it to special treatment and support from the government, such as budget for product development and promotional incentives.
But as RMG industry is completely dependent on imported raw materials and its market is highly volatile due to political influence exerted by a strong lobby of global producers and importers, experts say using the state-fund and support to such ´undependable´ product would be meaningless.
NTIS 2010 has included 19 products, including goods such as cardamom, ginger, honey, lentil, tea, instant noodles and handmade paper, and seven services like tourism and healthcare in its list.

Donors shying away from supporting industrial development

If the trend of resources mobilized in foreign aid for capital financing is anything to go by, the government has fared badly to live up to its promise of reducing poverty by mainstreaming industry and trade.
Statistics compiled by the Ministry of Finance (MoF) shows the government in 2011/12 mobilized a total of Rs 107.56 billion in foreign assistance, but only 1.6 percent of that or Rs 1.74 billion, was garnered for the purpose of industrial promotion.
During the year, the government signed assistance agreements with 12 bilateral and 5 multilateral donors for 49 different development projects, but only one bilateral donor - the United Kingdom - pledged assistance to support the industrial sector.
The UK´s assistance came in the form of grant of Rs 1.74 billion and officials said it would be used for the industrial promotion project named Nepal Market Development Program (NMDP).
“In a country that relies heavily on foreign aid for developing basic infrastructure, products and their promotion, the extent of resources that the government garnered for the industrial sector sheds lights on priority of the sector. Analysis of the extent of fund funneled in the industrial sector clearly shows the sector is neither mainstreamed nor is getting any priority,” Keshav Acharya, former senior economic advisor at the MoF, told Republica.
He attributed such situation to the lack of focus of the government as well donors in the development of industries in Nepal.
Under the Enhanced Integrated Framework initiative, the government has since 2004 recognized trade as crucial development agenda for poverty reduction. As development of industries and enhancement of supply capacity are integral parts of trade development, it had also promised strong initiatives for industrial development
But the number of programs and fund received by the Ministry of Industry suggests huge gap between commitment and delivery, said Acharya.
“Unfortunately, even donors who eagerly contribute fund in crucial sectors don´t have much interest in the industrial sector,” he added.
This was not the case prior to 1990 though. Establishment of multiple industries, like Udaypur Cement Fatory, Birgunj Sugar Mills, Bansbari Leather Shoe Factory, Hetauda Textile Factory and Bhrikuti Pulp and Paper Factory with the assistance of bilateral donors sheds light on that history, said senior MoI official. But since 1990, donors have shifted their priority largely to social sectors.
“In a present liberal economic regime that respects private sector´s leadership role in country´s growth, we do not expect the government to seek aid to set up industries. But it should have a number of programs on industrial infrastructure, product development, supply capacity improvement, and branding and market promotion, among others,” said Acharya. “But such programs are barely visible,” he added.
MoF officials who coordinate with the donors say they can could approach the donors for aid in the industrial sector. “But we never receive a clear business plan and strong proposal from the MoI. In such a situation, how can we drive donors toward industrial sector?” a senior MoF official wondered.
Acharya agreed with the MoF official. “The responsibility of identifying the needs of the sector and building a strong case for support rests on the MoI. But affairs suggest MoI simply lack such capacity,” he stated.
Officials at the MoI too admit what Acharya said. “We have industrial promotion division at the ministry, but it lacks capacity and lagged behind to spend even mediocre allocations of Rs 4.2 million last year,” said a senior MoI official.
But despite admitting its weakness, the MoI officials say they are failing to come up with strong business plan because of a number of reasons like poor industrial relations, party-based unionism, power crisis and political instability.
Although fresh Industrial Policy as well as Commerce Policy promises to end those problems by improving labor law, prioritizing key industries, laying down crucial industrial infrastructure and providing incentives for product development and industrial growth, the MoI officials argue those commitments have barely reflected in the annual fiscal programs.
“Unless MoF itself translate those policies into actions in annual budgets, we cannot say the government has mainstreamed and given high priority to the industrial sector,” said the MoI official, volleying the reasons behind its inability toward MoF.

Govt to include garment in NTIS

The government has decided to include readymade garment (RMG) in the Nepal Trade Integration Strategy (NTIS), which, once done, will formally place it among the highly potential exportable products in which the country enjoys special comparative advantage.
The NTIS 2010 had so far tagged 19 products, including 12 goods such as cardamom, ginger, honey, lentil, tea, instant noodles and hand-made paper, and 7 services like tourism and healthcare as sectors in which the country possess comparative advantage.
Though Nepali entrepreneurs strongly pushed for the inclusion of RMG and woolen carpet in the list, experts had dropped them, saying that those products are ´not dependable´ for attaining sustainable export growth.
But now the government is preparing to include RMG in the NTIS product list after the High-Level Business Forum (HLBF) chaired by the Prime Minister under Nepal Business Forum (NBF) - a public-private forum working for improving the investment climate - decided to include it in the NTIS on Thursday.
"The decision was taken after holding intense discussions at different levels and in various working groups," reads a statement of NBF.
RMG, which is exported mainly to the US and the European countries, was one of the largest exportable items till the new millennium. In 1999/00, its export had stood at around Rs 12 billion. But after the elimination of quota regime in apparel trading in 2005, special facility by the US to African Sub-Saharan competitors and labor stirs at home affected RMG exports over the past decade.
Despite dismal scenario of the industry, Nepal still managed to earn foreign currency worth Rs 4 billion from its export in 2011/12.
“The HLBF has also decided to implement the concept of a single trade union by holding elections among workers in industries," says the statement. The Forum has also decided to set up Technology Development Fund of Rs 10 million, establish a second tier institution to regulate savings and credit cooperatives and open stock market to foreign institutional investors.
Additionally, the meeting also decided to form a high-level committee under the leadership of Vice Chairperson of the National Planning Commission (NPC) to ensure fair and speedy distribution of export cash incentive.
The government had launched the incentive two years ago, but the Ministry of Industry (MoI) has failed to implement it efficiently. “The proposed committee will work on making cash incentive program more effective,” the statement said.

Implementation of new programs to start: Govt

Despite persisting political uncertainty and absence of full-fledged budget for this fiscal year, the government has continued the process to implement the donor-funded projects to construct strategic bridges and roads.
The Ministry of Finance (MoF) and Ministry of Physical Planning, Works and Transport Management (MoPPWTM) have already agreed to implement the projects funded by the World Bank (WB) and the Asian Development Bank (ADB).
The WB has agreed to extend support worth Rs US$ 60 million to construct the bridges along the strategically significance roads that includes highways and feeder roads. Similarly, the ADB has pledged to provide an assistance of US$ 75 million for strategic roads.
The MoPPWTM, the implementing ministry, has started preparation for tender process for the projects after it received a nod from the MoF few weeks back.
“Given the absence of full-fleged budget, the MoF has given us its consent for the projects in line with the government´s policy not to disturb the implementation of the programs to be run under foreign assistance,” Tulsi Prasad Sitaula, secretary at the MoPPWTM told Republica on Wednesday.
The MoF, National Planning Commission (NPC) and MoPPWTM jointly have reached in an understanding that the donor funded projects should not be disrupted despite the limitation of one-third budget.
As per the pact with the WB last year, the government is obliged to begin the bridge project from the current fiscal year.
Under the strategic bridge project, the government is constructing 100 bridges along different strategic road networks. "Our ministry has already started preparation for tender process. However, we are not in a position to disclose the names of the bridges selected under the project as we will face political pressure to construct the bridges on the roads that are not on project´s purview," said Sitaula.
A joint team from WB and MoPPWTM will finalise the list of 100 bridges to be implemented under the project.
However, the government is still to ink the deal with ADB for the proposed road construction project. “However, we can initiate the implementation of road construction project even without signing agreement under the ´Retro Active Financing´ - a provision that recepient country to lauch the project without signing formal pact on the technical ground,"Sitaula said.
Uner the strategic road project, the government is constructing 600-km long roads which include Sunsari - Chatara - Kanchanpur, Hilepani - Diktel and Diktel - Bhojpur roads. As per the understanding, the ADB will reimburse the amount spent by the governemnt in the construction of roads once the formal pact is signed.

Be aware of changes happening in India: IMF

International Monetary Fund (IMF) has cautioned the government to remain aware of possible risks that the country might face due to vulnerabilities seen in India.
Todd T Schneider, chief of Article IV mission of IMF, issued such warning note when he meet with Finance Secretary Krishna Hari Baskota on Friday.
During the meeting, Schneider and Baskota shared current status of the economy and changes happening across the globe, particularly neighboring countries, MoF said issuing a statement.
The growth rate of India has declined to a nine-year low of 5.3 percent due to slowdown of the manufacturing sector in the April-June quarter of 2012.
“Even though the government has not been able to announce full-fledged budget, macro-economic indicators of the country are quite positive and the government has laid focus on creating favorable investment environment and channeling invest in the productive sector,” Baskota stated.
Additionally, Baskota informed the mission team that the government is continuously working towards reducing the custom duty rates in order to facilitate international trade.

Private sector development policy in the offing

The government is mulling over introducing a Private Sector Development Policy (PSDP) in a bid to foster and deepen the capacity of the private sector after more than two decades of adopting open market economy.
"We have started consultation meetings with umbrella organizations of the private sector such as Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Confederation of Nepalese Industries (CNI) to prepare a draft of the policy," Anil Kumar Thakur, joint secretary at the industry ministry, told Republica.
The government´s preparation to formulate the policy stems from the realization of the importance of the private sector in strengthening the industrial sector and ultimately achieving sustainable economic growth. "The initiative has been taken based on a concept note that the World Bank prepared for us in 2010 for private sector development in the country," Thakur added.
Under the new policy, the government plans to formally recognize the importance of the private sector, give emphasis and pledge support for the capacity development of the private sector. It will also cite responsibility and accountability of the private sector apart from incorporating aspects in which the government and private sector can work together for country´s development.
"Presently, we have asked both FNCCI and CNI to submit their ideas and action plans so that they could be referred as bases for drafting the new policy," Thakur said.
Referring to the slowdown of the industrial sector and its contribution in the gross domestic product (GDP), Thakur said that the government is working to identify the ways for reviving the industrial sector.
According to the statistics compiled by the Ministry of Finance (MoF), the contribution of industrial sector was limited to just 6.2 percent in the fiscal year 2011/12. The contribution of industrial sector in the GDP is constantly decreasing from fiscal year 2001/02.
"Fresh investment is declining from domestic as well foreign investors," Thakur said. "We are hopeful that the new policy we are working on will give new direction to private sector growth and strengthen their capacity to contribute more to the national economy.”
According to Thakur, the policy will incorporate provisions to protect private sector and also pledge necessary incentives in order to make it more vibrant. However, it has yet to be clear what sort of incentives will be incorporated in the policy. "The incentives will be worked out once we receive proposals from the private sector," said Thakur.
The Ministry of Industry has received assistance from International Finance Corporation (IFC) - a private sector lending arm of the World Bank - to prepare the draft.

Nepal seeks cooperation to overcome development bottlenecks

The government has urged the international community for their support to address the special needs and problems that a landlocked country faces on the way of excelling in trade and development.
Dipendra Bahadur Kshetry, vice-chairperson of the National Planning Commission (NPC) made such an appealed to the global partners while addressing the 4th Ministerial Meeting of Trade Ministers of Landlocked Developing Countries (LLDCs) in Kazakhstan on Wednesday.
According to press release, Kshetry pushed mainly for the removal of development bottlenecks such as lack of access to and from sea, and limited transport-transit infrastructure that Nepal faces due to its geographical position.
"The LLDCs have been historically marginalized in terms of international trade and utilizing the potential of global market. Weak export bases and cumbersome transit procedures have rendered the exports from the LLDCs, which is also adding high costs on their competitiveness," the release quoted Kshetry as saying.
He shared the initiatives taken by the government of Nepal such as new Trade Policy 2009 and Nepal Trade Integration Strategy 2010 to boost export and ultimately achieve the goal of poverty reduction.“I request all the trade partners to assist Nepal towards achieving its goal,” Kshetry stated.
The 4th Ministerial meeting of LLDCs had focused on advancing the trade of LLDCs, reviewing aid for trade and taking measures to enhance the role of LLDc in the international trade.

MoI gets budget to cross-verify sick industries

After much fuss, the government has provided Rs 800,000 to the Ministry of Industry (MoI) to conduct a field study of industries that claimed themselves as being ´sick´ and filed applications for relief package.
The technical team that has been formed at the MoI to study the actual status of the industries and check the authenticity of the information provided by more than two dozens such industries will soon begin the field study of those industries.
“We have received a portion of budget that we sought for from the Ministry of Finance (MoF),” Anil Kumar Thakur, joint secretary at the MoI, told Republica. The MoI which is entrusted to carry out the ´relief program to sick industries´ had requested Rs 2.6 million from the MoF to conduct the field study of the self-declared sick industries.
According to Thakur, around 30 firms have applied at the ministry to get relief package that the government is set to provide after identifying their status.
The MoF had expressed reluctance to allocate budget to the MoI referring to the existing one-third budget and constrains it faced in providing budget to new programs. But it released the budget after Finance Minister Barsha Man Pun through ministerial decision instructed the budget division to release the funds, considering the importance of the MoI´s program.
The government had been promising relief package to the sick industries since 2011/12, but the program has not yet been implemented due to a lack of clear definition and parameters to judge the genuine sick industries.
Last year, the government prepared an extensive report suggesting different types of relief packages to the sick industries to revive them. The MoI is presently working to finalizing the list of actual sick industries.

Workers shut down Shikhar Shoes

Shikhar Shoes Industries - one of the leading footwear manufacturers in the country - has remained closed since Friday after workers halted production, putting forth 17-point demand that, among others, include 50 percent hike in basis salary.
“The workers have brought production to a complete halt,” Ram Krishna Prasai, managing director of the company, told Republica.
The workers also attacked Prasai´s residence on Saturday.
Workers affiliated to All Nepal Industrial Trade Union (Revolutionary) had submitted the demands to the management. They have also demanded that the management pay school fee of workers´ children.
Meanwhile, Federation of Nepalese Chambers of Commerce and Industries (FNCCI) has condemned the violent activities of workers. “It is unethical on the part of workers to enter the residence of the company´s managing director and threaten him,” FNCCI said in a statement on Sunday.
The company, which employs 250 people, has said it was ready to settle the differences between the management and workers through talks. “We are ready to show maximum flexibility to address the demands,” said Prasai.
FNCCI, which is trying to facilitate the dialogue between the workers and the management, has said this kind of activities will eventually disturb investment environment in the country.

Draft of ADS envisages achieving 5 pc annual growth

The proposed Agriculture Development Strategy (ADS) -- a long-term vision document that will chart the course of country´s agriculture sector for next two years -- has envisaged intensifying commercialization to increase farm productivity and enhance competitiveness of Nepali farmers to eventually achieve five percent growth in the sector.
The government with the assistance of 12 development partners, including the Asian Development Bank (ADB), World Bank, and United State Agency for International Development (USAID), has formed a technical team involving officials of the Ministry of Agriculture Development (MoAD), experts and stakeholders to prepare draft of the ADS.
The draft, once approved by the government, will replace the Agriculture Perspective Plan (APP) 1995-2015, which has also incorporated an ambitious program for the development of the country´s agriculture.
Before finalizing the draft, the team conducted an interaction with stakeholders on Sunday.
The draft targets achieving annual growth of 5 percent by the end of 2035 by increasing arable land and adopting massive commercialization to increase farm productivity. It has identified frequent changes in government policies and leaderships, and weak implementation the major impediments in agriculture development.
“There must be consistent policies and effective implementation of the government policies in order to achieve a higher agricultural growth rate,” reads the draft.
Similarly, the draft has emphasized efficient use of natural resources and timely availability of agriculture inputs, among others, to boost agriculture productivity.
Underlining the need to ensure proper use of arable land and expanded irrigation facilities, the draft has identified fragmentation of land, tenancy practice and haphazard plotting of fertile land as major factors limiting the farm productivity.
The drafting team has also concluded that the much-hyped APP failed to yield targeted results due to weak implementation of policies owing to ineffective governance system.
Similarly, agricultural commercialization has been identified in the draft as a tool to connect the farmers with the market. The draft has identified agricultural roads -- connecting farms with market -- and establishment of product value chains as keys to farm commercialization.
In a bid to achieve long term goal to transform agriculture into vibrant sector of economy, the draft has proposed enhancing competitiveness of this sector by improving market structure, assuring market for farm products and increasing market access.
The ADS draft also envisages making agriculture sector competitive, sustainable, and inclusive to eventually make it a driving force for accelerating economic growth.