Govt allocates Rs 150m for land acquisition

The Ministry of Finance (MoF) has decided to release Rs 150 million for acquistion of land for the purpose of expanding and upgrading the country´s only existing railway line and building new railway track to connect Rani Sikiyahi and Biratnagar.

The government had floated a plan to upgrade the existing Janakpur-Jayanagar railway line linking Bardibas long ago. Recently, it had also laid plans to build a new railway line from Rani Sikiyahi to Biratnagar.

But Tulsi Prasad Sitaula, secretary at the Ministry of Physical Planning and Works (MoPPW), informed that the sum allocated by MoF was not enough to compensate the people for acquisition of their land.

"We need at least Rs 1.25 billion to acquire land for upgradation of the Janakpur-Bijulpura rail track and building new railway line from Rani Sikiyahi to Biratnagar," he said.

As of now, MoPPW has only been able to collect a total of Rs 390 million -- Rs 190 million from MoF and Rs 200 million from MoPPW.

The Indian government, which had agreed to build the railway track from Rani Sikiyahi to Biratnagar and upgrade the Janakpur-Bijulpura track, has been postponing the construction work citing failure of the Nepal government to arrange adequate land. As per the agreement between Nepal and India, the Indian government will have to bear construction expenses, while the Nepal government will have to allocate money for land acquisition.

The Indian government had agreed to upgrade the railway track from narrow gauge to broad gauge. "We need to acquire the land as soon as possible," secretary Sitaula said.

According to Sitaula, locals have been asked not to use their land for the last one year but the government has not been able to compensate them. He, however, expressed hope that the ministry may be able to start distributing compensation by next week. He also informed that the amount will be initially released to compensate land owners along the Janakpur- Bijulpura railway line. "After this we can request India to start upgrading the tracks," he said.

According to DoR, a total of 220 hectares of land is acquired to upgrade Janakpur-Bijulpura rail track to broad gauge. "Since land in Janakpur is expensive, the amount we have may not be enough," said a DoR official.

Interestingly, parliament´s Public Accounts Committee (PAC) had directed MoF to release the required amount to upgrade and expand the railway track last August.

"The released amount is not sufficient but it somehow is enough to get the work started," said Hridayesh Tripathi, minister for physical planning and works. "The good thing is that, we can at least compensate some of the land owners."

Govt endorses inception report on metro rail

The government has approved the preliminary inception report of metro rail in the Kathmandu Valley and has asked the consulting companies to start feasibility study for laying down a mass rapid transit system to ease traffic in the city.

Korea Transport Institution, Chungsuk Engineering Company, Kunwa Consulting and Engineering Company, Korea Rail Netwrk Authority and two local companies, BDANepal Private Limited and EMRC Private Ltd, that prepared the inception report will start the feasibility study soon, said a senior official at Ministry of Physical Planning and Works (MoPPW).

"They will submit the feasibility report of the Metro by coming October," said Tulsi Prasad Sitaula, secretary at the Ministry. The study will ascertain feasibility of laying railway tracks, types of technology, coaches and other details, and also assess the cost of its development.

As part of the feasibility study, the consulting firms plan to conduct trial run of metro rail in Kalanki and Satdobato area, according to Mahendra Thakur, deputy team leader of the consulting groups. "We have to do that in order to know how much it costs to build the foundation," Thakur said, adding that the trail will give technical inputs on whether it is possible to make underground rail track in the given places or not.

The inception report that the groups shared with experts and top MoPPW officials, inlcuding Minister Hridayesh Tripathi, on Thursday has proposed laying down 5 different lines and 31 stations.

Speaking about problems that might arise once the construction of rail while actually starting the construction of rail tracks in the Kathmandu Valley, Minister Tripathi said that the land pooling could emerge as a major problem.

"But Metro in Kathmandu is a highly prioritized program of the government and we will press ahead with full dedication to implement it," he stated. Tripathi also noted that the project would be completely handled by expert technicians, but he requested the consulting firms to focus on minimizing the need of land acquisition as far as possible.

Among others, the inception report explicitly cites that the system should have a dedicated power system of its own to ensure uninterrupted supply of electricity.
"I am hopeful that we will be able to make such arrangement in the near future," said Tripathi.

The study team members said that they will develop a complete design concept of the metro by the end of coming August. After that they will begin financial assessments.

"The cost developing metro will be known only after the completion of feasibility report," said Thakur.

Given the technical preciseness and other factors, Secretary Sitaula said that the government will develop the railway lines in different phases. "Therefore, I request the study team also to prioritize the lines," he said.

Department of Railway (DoR) also shared the preliminary report of detail project report (DPR) of Simara-Bardibas segment and Simara-Birgunj linkage of the proposed East-West Railway Line. Officials said the completed report of the DPR will come out in 10 months.

Maoist trade union threaten to shut down Surya Nepal from Monday

In a fresh case of worsening industrial relations in the country, Maoist-affiliated Nepal Multinational Companies´ Workers Union (NMCWU) at Surya Nepal has threatened to shut down the country´s largest tobacco manufacturing company from Monday, if the management did not fulfill its demands.

The union has submitted 11-point demand to the management. It announced the strike after majority of its members voted to go for the strike in case the management did not heed their demands.

“We have already informed our decision to the labor office and the company management,” said Devendra Sitaula, senior member of the workers´ union, who also took part in talks with the management.

He informed Republica that the workers were demanding the management to raise basic salary by Rs 2,500, double the life insurance cover to Rs 200,000 and pay Rs 1 million in gratuity at the time of retirement. The union has also demanded the management to deposit 2 percent of its annual profit in the workers welfare fund and provide permanent job to next of kin in case the workers died while working.

The union has also demanded with the management to allocate 50 percent of total vacant jobs to the offspring of workers, provide grant to the workers to construct houses and increase the retirement age to 58 from existing 55 years, among others.

Surya Nepal staff said that the workers and the management had sat for rounds of talks in the presence of representatives of local labor office. But the talks failed to settle the differences.

During the talks, the management had offered to pay them Rs 1,600 in addition to perks and benefits they were enjoying now. But union officials refused the offer.
“We want the management to address our demands in a package. We will not agree on a piecemeal deal,” said Sitaula.

Meanwhile, Surya Nepal has knocked on the doors of the Department of Labor as well as Federation of Nepalese Chambers of Commerce and Industry to settle the problem.

Man Bahadur BK, director general of the Department of Labor, said the department has taken up Surya Nepal´s request seriously. “We will forward the request to Labor Relations Improvement Committee and take immediate steps to avoid the looming shutdown,” he added.

Water transport for trade and commerce not feasible: Report

For years the government believed the country could make use of its rivers for water transportation. But a latest feasibility study conducted to assess such possibilities concluded that operating water transportation in three major rivers -- Koshi, Gandaki and Bheri was almost impossible due to their irratic flow pattern.

Two private consulting companies that presented preliminary report conducted under the terms of Ministry of Physical Planning and Works (MoPPW) said water transportation was not commercially viable in Nepal. However, the report notes that 11 out of 14 different sections of those rivers can be used for recreational purposes for tourism.

"River flow pattern that affect the operation of vessel vary greatly in those rivers. Though jet boats can be operated by constructing dams and other physical infrastructures, the cost involved in such development are so high, those make commercial operations of water transportation unviable," reads the report.

Officials who were sought to make comments on report said that this was a first step towards studying the potential of water transport in the country. "This report does not show any prospects of building water transport in these rivers. However, we are ready to do more study to see if there are still any chances of utilizing the rivers for transportation," said one of the senior officials of the ministry.

Ironically, the study team which was solely focused on finding the possibilities for water transportation couldn´t express the confidence in their own report. "Many aspects are yet to be studied though this is what we found," Padam Shahi, team leader of the study said, "Water transportation might be potential if we analyze it through the complementary perspectives but this is not comparing to other means of transportation."

The feasibility report which even failed to estimate the total cost of water transportation in three rivers has recommended making some short term plan to experiment the viability of the water transportation. Moreover, the study report proposed only two sections of the Bheri river for transport namely, Kamalpur to Bhtechaur and Ghatgaun to Taranga.

The report studied five sections of the Koshi, six sections of the Gandaki and three sections of the Bheri. "Some of the sections are already used for recreation and transport purpose," Shahi said, presenting the study report on Wednesday, "Even in those sections, locally manufactured boats are in use, this can´t be called as sound water transportation."

"This report has an indication that we can´t develop water transportation as substitutes to road transportation," senior official at the ministry said, "We had assigned companies to do the feasibility study in those rivers which were anticipated to be useful for the water transportation. After this report, I don´t think we would be able to develop water transportation in other rivers."

However, Dolalghat to Chatara and Chatara to Tribeni sections of Koshi River, Devghat to Ramdi and Mugling to Fishlin sections of Gandaki river are in use for recreational purpose already.

India to resume exports to Nepal against IC

After almost a month-long silence, India has finally acknowledged that its ambiguous notification issued while scrapping duty refund procedures (DRP) created confusions among Indian exporters, prompting them to seek payments in US dollar to make excise duty-free supply.

Indian Finance Ministry on Monday issued a fresh notification, clarifying to exporters that they can accept payments in Indian currency as well. It has notified that their supply made against Indian currency will still be regarded as exports, and exporters will not be charged excise duty on such exports.

“It is clarified that exports to Nepal will continue to be permissible irrespective of whether the payments are made in Indian currency or foreign convertible currency as long as they are in accordance with applicable Reserve Bank of India (RBI) guidelines,” reads the new notification that India´s Department of Revenue issued to its customs official.

Contrary to latest preciseness, India in its previous notification issued on January 13 had said that ´abolishment of DRP puts export to Nepal at par with exports to other countries except Bhutan´.

Following such notification, Indian exporters since the scrapping of DRP on March 1, had been demanding Nepali importers to make payments in US dollar and brought imports of excisable goods, which largely includes industrial raw material and vehicles, to a grinding halt for two weeks. Nepal Rastra Bank (NRB) allows payments in dollar for only 250 items.

Later, some Indian exporters started accepting payments in Indian currency but forced Nepali importers to pledge additional 10 percent payments as collateral to make sure the goods reached Nepal. This arrangement compelled the importers to pay more in excise duty at the customs.

Such confusion caused many Aerated drinks manufacturers like Barun Beverages, beer manufacturers and many other companies to incur additional cost. Industries like cement factories were on the verge of closure as they could not import raw materials and fuel were fast running out of stocks.

“We are hopeful the notification will make imports smooth and thankfully it came before we ran out of our stock of raw materials,” said Pashupati Murarka, vice president of federation of Nepal Chamber of Commerce and Industries (FNCCI).

The new notification, even considering the possible obstacles to the trade between two countries, has appealed the concerned traders to approach the Indian government for further clarification if they faced any difficulties in this connection.

Officials at the Indian Embassy, who were approached by the Nepali importers, said their finance ministry issued the new notification after Jayant Prasad, ambassador of India for Nepal, himself communicated with New Delhi.

Korean delegation studying investment prospects in Nepal

A delegation of Korean private sector has expressed interest to invest in Nepal´s hydropower and infrastructure projects.
The four-member delegation, which is in Kathmandu to study the prospects of investment in Nepal, met with the officials of Federation of Nepalese Chamber of Commerce and Industries (FNCCI).
“Yon Yong Suk, chief executive of Office of ILIJIN International Company Ltd, Korea and Bhaskar Raj Rajkarnikar, vice president of FNCCI lead the discussions between two parties,” reads a statement of FNCCI.
According to the release, Suk said the Korean investors are interested to invest in Nepal´s hydro sector. "I am hopeful that this discussion will pave the way forward for to us to invest in Nepal,” the release quoted Suk as saying in the meeting.
Sharing the vision of Investment Year 2012/13 among the Korean delegates, Rajkarnikar requested Korean investors to come to Nepal.
“The government is also formulating policies that are friendly for both domestic and international investors. This is why I request you to come here with investment,” Rajkarnikar told the Korean delegates.

Govt belatedly assigns West Seti to Investment Board

Following controversy surrounding the signing of a memorandum of understanding (MoU) with the Chinese power developer Three Gorges on the 750 MW West Seti Hydropower Project, the government on Monday asked the Investment Board to take up the project enabling the latter to take further decisions on its development.
Although officials did not explicitly explain how it could impact the deal that Minister of Energy Post Bahadur Bogati inked with Three Gorges, sources said the Prime Minister´s Office has entrusted the board to take all required decisions on the project. This means it can review and even revoke it if it deems appropriate.
Legally, the whole deal of West Seti should have been handled by the board since the very beginning, as its Act clearly entrusts the board to handle the large projects, including hydropower projects of over 500 MW. “Ignoring the board while signing the MoU was a mistake in itself,” a senior official at Prime Minister´s Office told Republica.
Now that the board has been assigned to take up and steer the project´s development, he said the board will have all the authority to decide on the project.
Following the government´s signal, the board on Monday began assessing every communication made in the past between the governments of Nepal and China, and also China Three Gorges Corporation. “We are also studying the MoU in order to figure out how to move forward,” said a source at the Board.
However, as the board was unaware of interest of the Chinese government, particularly how it would react if Nepal government wanted to make some changes or scrap the MoU. “We don´t want to hurt China´s sentiment for we are still eyeing the soft loans from the Chinese Exim Bank for developing the project. MoU has complicated matters for us,” said the source.
During the bilateral communications, Investment Board is also planning to request China to resume negotiations on a soft loan of US$ 1.6 billion -- the identified project cost of West Seti for which Ministry of Finance was negotiating till recently.
“We are still discussing what will be the best model for West Seti development. Nonetheless, we are making request for resumption of talks for soft loans because we want to keep all the options open,” said the source.
"Our whole efforts at present aim at two things; one is to make the project happen, and the other is to maximize the benefits for country," he told Republica, adding how the board will steer the project will become clear only after it talks with Chinese officials, mainly those based in Kathmandu.
Meanwhile, the board on Monday wrote to the sub-committee formed by the parliament´s Committee on Natural Resources and Means to probe West Seti MoU that the board was ready to take up the project with high priority if it is brought under the board´s jurisdiction after requisite amendment and revision.

Indian Investment in Nepal

No matter what goes wrong, Indian investors will come to Nepal. One reason for business men is definitely to make profit. But that is not the only one. Indian business men who have complete support of government wants to explore the volume of business in Nepal in order to know the dynamism of Nepal's private sector. Interestingly, an economic national daily from India has a report about Indian incs in Nepal. However, the report is well compilation of information and sentiment of Indian investors but substantial information about their areas of interest to make investment and volume of money that will flow into Nepal in the upcoming days. 

Raw materials, fuel crises hit cement factories

Supreme Cement that has been producing 400 tons of cement and 200 tons of clinker every day is on the verge closure. It is not because of power shortage or labor problems, but because the company will soon run out of raw material and fuel as Indian exporters have declined to supply them in Indian currency after the scrapping of duty refund procedure (DRP) on March 1.

The company had been using firebricks imported from Dalmia Refractories and petroleum coal from Reliance in India. But both the Indian companies are now demanding Supreme Cement to pay for its purchases in US dollar if it wants to maintain supply.

"It is already 24 days since we have operated with reserve stocks and that will run out soon. Once that happens we will be forced to shut down the factory,” said Pashupati Murarka, promoter of the company and vice president of Federation of Nepalese Chamber of Commerce and Industries (FNCCI).

Supreme is not the only company that is facing this problem. All cement factories are fast running out of raw materials, particularly firebricks and petroleum coal. "Unfortunate for us, we can not pay the supplier in US dollars as Nepal Rastra Bank (NRB) has opened payment in dollar for only 250 items and items we import are not included in that list,” said Murarka.

Given the situation, all cement factories could shut down in the near future, he said.

Then there are new problems. Nepali firms that recieved supplies against IC payment too have been compelled to pay more as Indian exporters have forced them to pledge 10 percent collateral on the total value of the consignments.

Their condition is that they will refund the collateral once the importing party furnish them customs document proving the supplies crossed the border. They are refunding the money too. “But the problem is our customs officials do not accept the collateral is refundable amount and are charging excise duty on that amount too,” said Murarka.

Aerated drinks manufacturers like Barun Beverages, beer manufacturers and many other companies are currently facing this problem.

“The nature and extent of problem is different. But lack of India and Indian exporters´ support in the wake of termination of DRP has affected all the Nepali firms importing excisable items,” said another official of FNCCI.

Govt deaf to private sector´s plea
Despite such problems that fundamentally goes against bilateral deals agreed by the two governments and the central banks, the private sector is unable to find people in Ministry of Commerce and Supplies to support their cause.

"We are constantly asking government officials what could be the reason behind this problem? Sadly, they have nothing to say to us,” said Murarka.

That is not all. Following government´s silence, the business community even approached the Embassy of India in Nepal, seeking explanations behind rejection of Indian exporters to supply goods against IC. But even that has not been of any help.

“Officials in both MoCS and Embassy say the governments have changed nothing in the procedures and practice, hence, there should be no problem. But our reality is something else,” said Murarka.

On being queried why the government has not taken over the industries´ complaint, officials like Commerce Secretary Lal Mani Joshi said they were not aware of reasons behind the problem. Just like a week ago, he reiterated that he had approached the Indian counterpart seeking explanations but have not heard anything so far. Surprisingly, Joshi even said there were no problems any more.

The problem on import of excisable items surfaced after Indian exporters demanded Nepali traders to make payment in USD following the scrapping of DRP arrangement on March 1. That brought import of such items to a grinding halt for about two week.

Though some exporters have started supplying goods against IC, entrepreneurs said their demand for collateral had created new problem.

"Exporters from Indian states including Gujrat and Maharastra are still asking us to make payment in dollar,” said Murarka. Those supplying against IC too have inflated the cost for them.

'Nepal has underutilized trade opportunities with India'

Despite enjoying zero tariff entry facility on most of the goods to India, which has a huge market potential, Nepal has largely underutilized the opportunities it holds in penetrating market and expanding exports to the next-door neighbor in the south, shows a latest report.

For instance, the total import demand for iron and steel in India in 2010 was close to $8 billion.

But Nepal´s share of that was only 1.22 percent. Similarly, Nepal´s share of exports in India´s total imports of other exportable items on which Nepal has comparative advantage, including edible vegetables, copper articles, edible fruits and nuts among others, is below 2 percent.

According to the report unveiled in Kathmandu on Friday, the reason behind low exploitation of available market potential in India is due to supply side constraints such as infrastructure, human capital, access to finance and technology, and labor issues. Touching upon the debate over the pegged exchange rate with India, the report notes that there is no decisive evidence to change the peg despite real exchange rate appearing to be revalued.

"Devaluation is helpful if constraints like weak economic fundamentals, institutional and political fluidity and weak industrial and tradable sector is taken care of," reads the report.

The report that is totally focused on Nepal-India trade has outlined that Nepal has a highest degree of trade intensity with India after Bhutan. "Nepal´s export basket is heavy with low-value products like ferrous metals, chemicals, crops and food products," states the report. The report prepared by South Asia Watch on Trade, Environment and Economics (SAWTEE) with the help of United States Agency for International Development (USAID) argues that Nepal has not been diversifying its production to increase the volume of export.

According to the report, the non-tariff barriers that are hindering Nepal´s export to India are quarantine related issues, rules of origin, transport hassles, technical barriers to trade, quantitative restriction, domestic production and transit state permit. "Quarantine related issues have 39 percent of share in obstructing export to India," reads the report.

Moreover, the report argues that Nepal should ratify the Special Economic Zone bill as soon as possible. "There are issues that should be addressed in domestic level and by India as well," the report states, adding: "The Inter-governmental Committee meeting between Nepal and India should address the issues like transporters´ accessibility and transit issues."

The report also argues that the article III of Treaty on Control of Unauthorized Trade between Nepal and India should be reviewed and it should be open for the items that are imported for use in agriculture, manufacturing and service sector.

66-km network, 5 lines, 31 stations

KATHMANDU VALLEY METRO INCEPTION REPORT

The preliminary inception report on the much-awaited Metro Railway in Kathmandu that was submitted to the Department of Railways (DoR) by consulting companies this week has outlined five lines for the network -- four inside the Ring Road and one that will travel along the Ring Road.

The proposed 66.1-km network comprises 31 stations in total -- including transfer and ordinary stations. The main terminal of the metro will be located at Ratnapark, says the report, which is yet to be approved by DoR.

According to the report, the 27.35-km Line 1--which follows the Ring Road--will connect different locations between Kalanki, Satdobato, Chabhil and back to Kalanki.

The Line comprises 18 stations including transfer points at Kalanki, Balkhu, Satdobato, Koteshore, Tinkune, Sinamangal, Chabhil, Narayan Gopal Chowk and Gongabu, from where passengers can change trains. Line 1 will have pick-up and drop stations at Ekantakuna, Dhobighat, Sitapaila Chowk, Swoyabhu, Balaju, Machhapokhari, Tilangatar, Dhumbarahi and Gwarko.

Those who want to go from Kalanki to Sinamangal can take trains on Line 2. This Line will have six stations in places ranging from Kalanki and Sanogaucharan to Sinamangal. The Line will pass through the main terminal.

The preliminary report shows that Line 3 will link Koteshwore and Gongabu. It will have eight stations in places like New Baneshwore, Singha Durbar and Thamel and will pass through the main terminal.

Similarly, Line 4, which is 11.5-km long, will connect Satdobato and Narayan Gopal Chwok, while Line 5 -- the shortest at 8.4 kilometers -- will link Balkhu and Chabhil.

According to Rajeshwar Man Singh, superintendent engineer at DoR, the Metro Railway will travel above ground in some places, underground in some areas and on the surface in selected places.

“But how it travels in each specific area will be decided after the complete feasibility report is prepared,” Singh said.

DoR has given the consulting companies until November to prepare the complete feasibility report.

The feasibility report of the project -- which will be based on the preliminary inception report -- will be prepared by Korea Transport Institution, Chungsuk Engineering Company, Kunwa Cunsulting and Engineering Company, Korea Rail Network Authority and two local companies-- BDAnepal Private Limited and ERMC Private Limited. These companies were also involved in preparation of the preliminary inception report.

“We have paid around Rs 60.5 million (to the companies) to prepare the preliminary report and conduct the feasibility study,” Singh said.

IMF appreciates India's fiscal budget for 2012/13

International Monetary Fund (IMF), a global institution which develops the routes to connect and maintain the global economy has appreciated the steps that India took while framing the fiscal policy for 2012/13. Christine Lagarde, Managing Director of the IMF, who is in New Delhi and having discussion with high profile politicians, ministers along with senior government officials, appreciated the budgetary allocation of India.

Guidelines for selection criteria of investors on cards

The government will soon form a set of guidelines on selection criteria of investors who will participate in the bidding for construction of the much-awaited Kathmandu-Tarai Fast Track road project.

In this regard, the Ministry of Physical Planning and Works (MoPPW), which has undertaken the responsibility of building the six-lane 76-km track that links Kathmandu and Nijgad, has formed a six-member high-level committee under Birendra Bahadur Deuja, former director general of the Department of Roads (DoR).

The committee also comprises two external experts Ram Ayodhya and Hari Prasad Dhakal, both former division engineers of DoR, and Rajendra Nepal, director general of the DoR.

“We have informed the cabinet about the formation of the committee,” Tulsi Prasad Sitaula, secretary of MoPPW, told Republica on Wednesday. “We hope the cabinet will endorse it within a few days.”

The committee will be entrusted with the task of criteria for selection of investors for the project. According to Asian Development Bank´s 2008 estimate, the project will cost Rs 67 billion.

Sitaula, however, refused to disclose whether the committee will have the authority to select eligible investors.

Kathmandu-Tarai Fast Track is one of the prioritized projects of the government. Track opening works on 51 km of the 76-km expressway has already been completed. The government is planning to develop the project on build-operate-own-transfer (BOOT) model.

Nepal for stronger global partnership for LDCs development

Nepal has urged the developed countries to fulfill their commitments and support trade and development of least developed countries (LDCs).
Speaking at a 25th special session of UNCTAD in Geneva, Shankar Bairagi, permanent representative of Nepal in Geneva said Nepal, like all LDCs would like to graduate from LDC status, and for this the support of the developed nations as well as UN bodies was important. He also urged for renewal of global partnership in order to uplift the situation of LDCs.
According to a press release, Bairagi said the UN had more special responsibilities to advance the lives of millions of people living under extreme poverty and hunger. Around more than 700 million people in 48 LDCs live under the poverty and minimum standards of basic facilities.
“International community can´t afford to remain silent when a large chunk of humanity is still grappling with dehumanizing condition of poverty and hunger,” the release quotes Bairagi as saying.
He viewed the upcoming thirteenth conference on trade and development of UNCTAD in Doha on April 21 to 26 could contribute towards renewed realization of strengthened global partnership for the development of LDCs.
“LDCs are not asking for the best of affluence; they are seeking to meet the minimum developmental standards of their people and UNCTAD has a special responsibility to assist LDCs in their development process,” he argued.

Entrepreneurs to utilize zero-duty facility

Trade and Export promotion Centre (TEPC) and Nepal Freight Forwarders´ Association (NEFFA) have agreed to develop programs to utilize the duty-free market access facility provided by European Union to the least-developed countries.
At a program organized in the capital on Tuesday, representatives from TEPC and NEFFA agreed to hold discussions for tapping the trade opportunity in the EU countries.
In the context of the Doha Development Agenda, participants stressed the need to ensure better economic integration between developing and developed countries through improved access to the markets of developed countries, NEFFA said in a press release.
The participants also urged the developed countries to simply rules of origin so that LDCs could benefit from exports trade

SEZ bill through ordinance: Minister Jha

Minister for Industry Anil Kumar Jha on Monday said the government will enact the Special Economic Zone (SEZ) bill through ordinance before the upcoming session of parliament to address investors´ concerns and promote industries.
“I have already discussed the possibility of enacting SEZ bill through ordinance before the next session of parliament with the prime minister,” said Jha.
Speaking at a program organized to discuss on draft Industrial Enterprise Act (IEA), Jha said the government was prepared to enact the law through ordinance as opposition from a faction of UCPN Maoist forced him to withdraw the bill from regular agenda during the last session of the parliament.
“SEZ bill was the top agenda of the first parliament meeting of last session. But we had to withdraw it after Chief Whip of Maoist Dev Gurung warned his party would protest it strongly and even disrupt proceeding if the bill was added in the official business list of the house,” said Jha.
Jha said the government was holding talks with major political parties to put in place SEZ Act through ordinance. “I am also planning to approach President Ram Baran Yadav in this regard.”
SEZ bill was tabled in the parliament three years ago. Initially, labor unions protested saying it does not protect labor rights. But after trade unions softened their stance, resistance from a faction of Maoist emerged.
Gurung said the bill was against the national interest and would exploit natural resources and labor rights.
Industrialists, meanwhile, requested the government to implement the IEA through ordinance. “As the next session of parliament will begin only after few months, chances of IEA being ratified do not appear anytime soon. It might also face similar dilly dallying,” said Lawmaker and President of Confederation Nepalese Industries Binod Chaudhari said.
He also urged the government to provide all the facilities promised in the new Industrial Policy through upcoming budget for fiscal year 2012/13.
Commenting on the draft IEA which Ministry of Industry circulated for wider consultation, industrialists urged the government to list major manufacturing industries in the Act itself so there were confusion over facilities and incentives they should get.
“The draft should also incorporate a provision for forming Investment Promotion Trust and Technology Development Fund, which are incorporated in the Industrial Policy,” said Hari Bhakta Sharma, vice president of CNI.
In addition to that, entrepreneurs also demanded the government to clearly define small, medium and large scale industries and make the provisions of incentives more specific for them.

ICC Nepal team meets PM Bhattarai

A delegation of International Chamber of Commerce (ICC) Nepal led by its president Rajesh Kaji Shrestha on Sunday met Prime Minister Dr Baburam Bhattarai and requested him to ensure representation of ICC Nepal in government agencies.
Issuing a press release, ICC said the delegation requested PM Bhattarai to amend necessary laws in line with the ICC standards.
“The delegation briefed the PM about the standards set by ICC on issues like protection of intellectual property rights, arbitration and anti-dumping law,” reads the release.
Moreover, the delegation also informed PM that ICC Nepal was planning to lunch various programs in order to raise awareness about the importance and practicality of ICC.
Responding to the delegation, PM Bhattarai said the government was always ready to join hands with the private sector. Bhattarai also appreciated the efforts of ICC Nepal in raising awareness about international standards of intellectual property rights, arbitration and anti-dumping laws.

Nepali traders continue to face problems

Officials from India and Nepal are yet to address problems that have surfaced after scrapping of the duty refundable procedure (DRP) on March 1. The delay has added financial burden on traders who are importing goods like industrial raw material and vehicles from India.
Scrapping of the DRP paved the way for Nepali traders to receive goods at ex-factory rate (devoid of excise duty) and government to collect excise duty at customs points. But soon after the new arrangement was made Indian exporters said Nepali importers should make payment in the US currency if they are to get the supply on ex-factory rates. The problem was settled and Nepali traders are importing good in Indian currency.
But less than three weeks after the new arrangement came into place, traders are faced with yet other problems.
First, Nepali customs officers are imposing 10 percent extra valuation on goods imported from India instead of making the valuation of consignments at ex-factory rate. And second, Indian exporters have been asked by the customs office to dispatch consignments to Nepal only after keeping a collateral of 10 percent of the value of goods.
Shiv Shankar, an Indian customs officer, said the collateral amount has to be arranged by Nepali traders to ensure goods enter Nepal. "The money will be refunded to the Nepali importers later," he said.
To settle the problem, Nepali traders had approached the Indian embassy in the first week of March. But so far Indian officials haven´t communicated with Nepal´s Ministry of Commerce and Supply (MoCS).
"We haven´t heard anything from the Indian side," Naindra Prasad Upadhaya, MoCS joint secretary told Republica on Saturday. However, he said that he had received information from different customs points that imports of excisable goods, like industrial raw material and automobiles, have normalized in the last few days.
"But problems in valuation of imported goods at Nepali customs office remain intact," Pashupati Murarka, vice president of the Nepal Chamber of Commerce and Industries (FNCCI) told Republica on Saturday. This has forced traders to pay extra customs duty since goods worth, say, Rs 100 are being taxed at the rate of Rs 110.
After much problems and hindrance in import of excisable goods, Morang Chamber of Commerce and Industries (MCCI) organized a program in Biratnagar, where customs officials from India and Nepal including Shankar and Binod Kunwar, cusotms chief of Rani Custom´s office of Nepal were present.
"Importers have problems while importing industrial raw materials after scrapping of DRP system," Dinesh Golchha, president of Morang Industry Association (MIA), said during the discussion.
Abhinash Bohara, president of Morang Merchants´ Association (MMA) said: "Customs offices from Nepal and India should work efficiently to clear the confusion that created hurdles in import of excisable goods after scrapping DRP."
(With contribution from Ajit Tiwari in Biratnagar)

Agriculture minister agrees to review ADS draft team

Following strong criticism and protests from farmers and civil society members, Ministry of Agriculture and Cooperative (MoAC) has decided to review the structure and modus operandi of technical assistance team that is drafting a new 20-year agriculture vision document -- Agriculture Development Strategy (2015-2035).
The ministry has also formed a committee to investigate why farmers were not represented in the team, which was formed last year.
"Points raised by farmers about the way the government is developing the Agriculture Development Strategy (ADS) are pretty valid. It was wrong not to ensure farmers´ participation in such a crucial task," said Nandan Kumar Datta, minister for agriculture and cooperatives.
Datta, who on Thursday held talks with representatives of farmers´ organizations and related civil society organizations in the presence of senior ministry officials and members of technical team drafting ADS, said that he would work to review the team.
"I have directed senior ministry officials to work to accommodate the farmers´ concerns," Datta told Republica. "I also want to know why farmers were excluded, so a committee has been formed to find out the reason," he added.
During the talks, Minister Datta assured the farmers and civil society members that the reviewed team would have maximum possible representation of farmers and organizations working to protect farmers´ interests.
The government had initiated process to develop ADS -- a document that will replace the Agriculture Perspective Plan 1995-2015 -- in 2011 and had formed a 33-member technical team by including former bureaucrats and foreign consultants about a year ago to draft it.
The document is being prepared with technical assistance from the Asian Development Bank, World Bank and USAID, among others. The government has allocated US$ 2 million (about Rs 160 million) for developing ADS.
However, representatives of farmers´ organizations as well as civil society groups during Thursday´s meeting with Minister Datta said the whole idea of getting 20-year agricultural vision document prepared by technocrats and foreign consultants, who have little idea of farmers´ needs and concerns, was wrong.
"We informed the minister that our farmers have already suffered a lot because of implementation of similarly drafted APP. We cannot afford to compromise this time -- as ADS will affect the whole agricultural sector for decades till 2035," said Prem Dangal, general secretary of the All Nepal Peasants Federation (ANPF), who was present at the meeting.
Farmers´ representatives strongly protested the approach of preparing such a crucial document behind closed doors, saying that vision document prepared by "so called agro-experts and foreign experts" might not address farmers´ concerns and agricultural reality of the country.

Nepal requests support for enhancing productivity, quality

Nepal on Thursday requested the trading and development partners to support it in setting up quality laboratories and testing facilities in order to help the country meet and certify that its products meet international standards.
Commerce Secretary Lal Mani Joshi made such a request while speaking at the concluding session of Nepal´s trade policy review (TPR) at the head office of World Trade Organization (WTO) in Geneva.
According to a press release issued by the office of permanent mission in Geneva, Joshi emphasized that Nepal has accorded high priority to improve trade facilitation measures and taken concrete steps toward reducing transaction costs by simplifying the trade and transit related procedures. The TPR meeting of Nepal had begun from Tuesday.
During the TPR, a number of delegations from USA, Japan, India and China among others had raised a number of questions related to Nepal´s compliance with WTO commitments, trade and investments. "Joshi responded to those questions and thanked the WTO members for their appreciation of Nepal´s efforts in liberalizing trade and investment," reads the release.
Joshi, who highlighted Nepal´s efforts at promoting investments such as formation of high-level Investment Board, also expressed commitment that Nepal would continue its efforts to promote international trade by reforming investment regime. "We are trying our best to attract investment in infrastructure, particularly hydro-electricity and transport connectivity, and in other priority sectors such as tourism and agriculture," the release quoted Joshi as saying.
He also requested all the trading and development partners to enhance and scale up their support to Nepal in terms of market access and enhancing productivity.
As the Chair of the TPR body, Ambassador Eduardo Munoz of Colombia stated that the first-ever TPR of Nepal has given a better understanding of development in Nepal, particularly its trade and related policies and practices. Nepal joined WTO in 2004.

Finnish delegation commits support to women entrepreneurs

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and a visiting delegation from Finland on Thursday discussed enhancing the capacity of Nepali women in order to empower them and foster entrepreneurship.
FNCCI President Suraj Vaidya and Helena Arlander, investment director of Finnfund, led their respective institutions during the meeting attended by FNCCI members and parliamentarians and bankers from Finland.
The Finnish team is in Nepal to assess the situation of Nepali women entrepreneurs and to identify the areas wherein they need assistance, reads a FNCCI statement.
“The FNCCI officials and visiting Finnish delegation discussed challenges faced by Nepali women entrepreneurs, like poor access to loan, higher interest rates, weak access to market and low level of skills,” reads the statement. Women entrepreneurs, who were present at the meeting, also shared the challenges they are facing at present.
In his welcome remarks, Vaidya highlighted initiatives taken by the FNCCI in order to develop entrepreneurship among women and promote women entrepreneurs, such as the ´one district, one product´ program and different trainings and capacity-building workshops at different levels.
He also requested the Finnish delegation to support Nepali women entrepreneurs by transferring new technologies in the remote areas and running programs that enhance the quality of their productions.
In response, Arlander expressed commitment to provide all possible support to Nepali women entrepreneurs in areas they deemed important.

'Be alert while transacting with BFIs'

Financial sector experts who gathered at a function organized to mark the World Consumer Rights Day-2012 on Thursday urged consumers to be aware and read every details carefully while transacting with banks and financial institutions (BFIs) and while using ATMs and e-banking services.

They said service providers in Nepal are generally not sensitive to consumers´ rights.

"Consumers should be careful since many of the policies that are supposed to protect consumers´ rights have not been properly implemented," said Sanjeev Subba, CEO of the National Banking Training Institute (NBTI). At the same time, he also requested the banks to be more responsible toward consumers interests and serve them in fair manner.

The theme for this year´s consumers rights day was ´our money, our choice: campaigning for real choices in financial services´. Kalyani Shah, president of the SEWA Nepal even accused the financial sector players of exploiting consumers.

“We have to raise voice against those who exploit consumers,” she said.

On the occasion, Advocate Baburam Aryal presented a paper on safety procedures that consumers should follow while transacting with banks and financial institutions. “Banking consumers who use ATM should only use it where they feel comfortable and safe,” Aryal said.

He further added that consumers should keep the slips that they receive from ATMs after withdrawing money as a record since that could be used as proof if there is any problem with transaction and suggested to customers to cross-check the slip´s details with bank statements.

Maoist faction's protest puts SEZ law in limbo

Although Special Economic Zone (SEZ) has long been acknowledged as one of the major vehicle for luring foreign investment and giving boost to exports, efforts of the industry ministry to enact SEZ Bill have failed even though the same was endorsed by the cabinet three years ago.

Initially, the lack of clarity over social protection and objection of trade union on provisions like ´no extreme forms of strikes´ in the zone had prevented its ratification. Now that trade unions have softened their stance on the bill, MoI was hopeful of getting the bill endorsed by the parliament.

However, its bid to retable the bill in the parliament has hit yet another roadblock. A faction of ruling UCPN (Maoist) has strongly protested it, terming it as an ´anti-national´ document. Maoist Chief Whip Dev Gurung has even warned of stalling the parliament if the MoI tabled it.

“After gathering dust in the parliament for three long years, we had taken steps to reintroduce the bill in the parliament, hoping positive outcome due to changed political context,” said industry minister Anil Kumar Jha.

However, Jha has rolled back his initiative following such strong-worded reaction from Gurung.

The Maoist party´s resistance has come despite Prime Minister Baburam Bhattarai´s clear statement that the bill was crucial to lure some $1 billion worth of foreign investment that he has targeted to achieve in the Investment Year 2012/13. Bhattarai is also the vice-chairman of UCPN (Maoist).

Bhattarai has also cited its enactment as one of his priority works in the Immediate Action Plan (IAP) for Economic Growth and Prosperity. “The bill of SEZ will be immediately approved by the Parliament,” reads the IAP.

Jha said Gurung´s reaction was surprising, mainly as it contravenes with what his own party leader has said.

Gurung, however, said his party has different opinion about the bill. “First, it was prepared by the World Bank. Secondly, it damns labors´ rights and protection of natural resources. It is not acceptable to us,” Gurung stated.

He even ruled out the necessity of SEZ law, arguing that there were already multiple laws in the country to encourage inward flow of foreign investment and exports.
However, officials having knowledge on the contents of the bill, said Gurung´s reaction was based on his naivety. “Obviously he has not studied the bill. Otherwise, he would have known, the bill protects the labor rights and is sensitive to other issues as well. If that was not the case, trade unions won´t have agreed to it,” a senior official at industry ministry said.

Rameshwar Khanal, economic advisor to the PM, agreed with him. “The only difference is that the SEZ bill does not allow workers to halt productions while striking. Otherwise, the labor rights, including collective bargain, are all protected in the bill,” he added.

The latest objection by the UCPN (Maosit), meanwhile, has deferred yet again the chances of early operationalization of already built SEZ and infrastructures, including SEZ in Bhairahawa, for which the government has already spent millions of rupees. It has also put the fate of other proposed SEZs, including those in Birgunj, Panchkhal, Jhapa and Dhangadhi, among others in limbo.

If the government dragged feet on enacting the law, officials stated it would adversely impact the Investment Year as well. “Deferring the long-committed law that pledges minimum basic assurances to investors will only taint our image. In such a situation, how can we push our case strongly to lure foreign investment?” wondered the MoI official.

Nepal's trade policy discussed at WTO

Commerce secretary Lal Mani Joshi on Wednesday began detailed discussions on the country´s trade policy at the headquarters of the World Trade Organization (WTO) in Geneva.

“In Nepal´s first trade policy review meeting after joining WTO, secretary Joshi said Nepal has pursued structural reforms in all the sectors of economy and that the country has made considerable process in economic liberalization,” Shankar D Bairagi, Nepal´s permanent representative in Geneva told Republica over phone.

The review meeting kicked off on Tuesday. Nepal had joined WTO in 2004.

According to Bairagi, Joshi also answered to queries raised by representatives of Nepal´s major trading partners. “He will respond to the remaining queries on Thursday. Representatives of US, China and India, among others, are raising questions about Nepal´s investment environment and infrastructure development,” added Bairagi.

Bairagi further said major trading and development partners appreciated Nepal´s progress towards economic liberalization and strong commitment in compliance to the WTO norm.

According to a press release issued by Nepal´s permanent mission in Geneva, secretary Joshi told the meeting that Nepal had high-level Investment Board aiming to create investment friendly environment for both domestic and foreign investors.

“The Nepali delegation also pointed out number of challenges and constraints in Nepal´s efforts to promote international trade,” the release added.

Bairagi said Christine Hochstatter, alternate permanent representative of Germany, as the discussant, commented on reports of the Government of Nepal as well as of the WTO Secretariat and suggested measures for further reform of Nepal´s trade sector.

Ministry to address farmers' concerns

After almost a yearlong silence, Ministry of Agriculture and Cooperative (MoAC) is finally preparing to review a methodology adopted to draft a 20-year vision document Agriculture Development Strategy (ADS) 2015-2035 that will guide country´s agricultural sector once the existing Agriculture Perspective Plan (APP) ends in 2015.

So far, the ministry had assigned a 33-member technical assistance team, one-third of which are foreign consultants, to draft the document. However, such a closed-door approach had drawn flak from various farmers associations as well as MoAC officials themselves.

"We might have to rethink the way the team has been formed and the way it functions, particularly as it might later pose problem in owning the document," Dr Hari Dahal, joint-secretary and spokesperson of the MoAC, told Republica on Tuesday.

The Ministry has even called a consultation meeting of the stakeholders on March 15 to review the whole approach of drafting ADS.

Various farmers´ groups had protested the approach, mainly expressing fear that close-door preparation of such a crucial document by ´so called agro-experts and foreign experts´ might not address their concerns.

"The methodology used in preparing ADS is almost similar to that of APP. As APP was totally a failure, adoption of same method has raised question over ADS being a better document," said Prem Dangal, general secretary of the All Nepal Peasants Federation (ANPF).

Some of the MoAC officials too had challenged the approach, saying that it might lead to lack of ownership by various ministries.

"The 20-year vision document will deal on multi-sectors like irrigation, agricultural inputs, and other crucial sub-sectors. It is always appropriate to let the respective ministries formulate the related set of strategies, instead of preparing them by MoAC," said an official at MoAC.

Dahal agreed with the official and even admitted that APP failed because it was not fully owned by the line ministries and agencies supposed to implement the action plan. Also reduction in budgetary allocations on the sector had hit its implementation.

"We are having a meeting with farmers and other stakeholders to hear their voices," Dahal said, "We will consider their concerns seriously."

The government is preparing the ADS with the technical assistance of various donor agencies, including Asian Development Bank, World Bank and United State Agency for International Development (USAID), among others.

Two-thirds of the members in the drafting committee led by Francesco Goletti, a policy and institutional specialist and president of Agrifood Consulting International- New York University, are former government officials.

"Our concern is the team has no representation from farmers´ organization and civil society groups working in the agriculture sector," stated Dangal.

MoAC officials said the government has allocated $2 million (around Rs 160 million) to prepare the ADS and the team has been asked to submit it within two years.

Govt to provide collateral-free loan to women

Women who don´t have anything to pawn to get a bank loan and start a business should not worry too much now. The Ministry of Industry (MoI) is soon coming to their aid.

Yam Kumari Khatiwada, joint-secretary of the MoI, said the ministry has formally asked the Ministry of Finance to release Rs 10 million for establishment of the National Women Entrepreneurs Trust (NWET).

The ministry has asked for the fund as per the provision in the Industrial Policy 2010, which envisages establishment of the NWET.

"This amount will be used in providing loans to women who want to start businesses," she said.

The ministry had decided to issue unsecured loans to women following complaints from women entrepreneurs who said their access to collateral-free credit was very limited.

Initially, the ministry has decided to give away a credit of Rs 100,000 to 300,000 to every candidate. These candidates will be selected by a committee comprising representatives of different agencies including the industry ministry, the Federation of Nepalese Chambers of Commerce and Industries (FNCCI) and Federation of Women Entrepreneurs Associations of Nepal (FWEAN).

According to Khatiwada, women who get the credit will have to pay back the principle amount and interest within two years of getting the loan.

These loans will come with an annual 10 percent interest. "But those who repay the interest in time will get a 4-percentage-point rebate on the amount," Khatiwada said, adding, that the amount accumulated through interest payment would go back to the trust.

The industry ministry has decided to mobilize commercial banks to disburse the loan amount. "In return, the government will provide certain fees to the banks for extending the service," Khatiwada said.

However, it is yet to decide on districts in which the program would be extended.

"Probably, we will focus only in two districts in the beginning," Khatiwada said.

Government wakes up to uphold consumer rights

In a bid to better protect consumers rights, the government has decided to make necessary amendments to the Consumer Protection Act 1998 and approve the Market Monitoring Regulation (MMR) through cabinet within this week.

The decisions were taken during a meeting held at the Prime Minister’s Office on Sunday. “The meeting has decided to complete these tasks within March 15,” one of the participants of the meeting told Republica.

The meeting, chaired by Chief Secretary Madhav Prasad Ghimire, was attended Home Secretary Sushil JB Rana, Commerce Secretary Lal Mani Joshi and Joyti Baniya, president of Consumers Rights Protection Forum (CRPF), among others.

“The meeting has also decided to monitor the market effectively,” Baniya said after the meeting, adding, “The decisions made on Sunday are in favor of consumers. We are looking forward to seeing the effective implementation of the decisions.”

According to Baniya, the endorsement of the act will also pave the way for establishment of Consumers Protection Trust (CPT) and Consumer Court (CC). The establishment of these bodies is expected to uphold consumers rights

The meeting also decided to enhance human resources capacity and other physical infrastructures, including vehicles, at the Department of Commerce, Nepal Bureau of Standards and Metrology, and the Department of Food Technology and Quality Control.

It also decided to give more power to market monitoring officers in districts so that they can take prompt actions against unscrupulous traders.

As per existing laws, market monitoring officers can only seal the shops found involved in black-marketing. They can take action against unscrupulous traders on the spot once the act is amended.

Consumers have hailed the government initiative to uphold consumers rights make market monitoring more effective.

“The government has finally taken the initiative to establish consumer court. It will uphold consumers rights and punish traders fleecing consumers in market,” Baniya added.

Two importers get supply against IC

After nine-day deadlock, when imports of excisable goods from India came to a grinding halt, some of the Indian traders have started exporting goods to Nepal against Indian Currency (IC).

Two Nepali importers, including United Spirits, finally received their respective consignments, one from Bhairawaha and another from Biratnagar customs, on Friday, said Pashupati Murarka, vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

However, he said the Indian exporters dispatched consignments only after the importers pledged collateral (of additional payment). “They have promised to refund the collateral as soon as the confusion is cleared,” said Murarka.

FNCCI officials said they have no clue as to what led the two companies to supply goods against IC payment. “But we hope other exporters will resume normal exports against IC soon,” said Murarka, adding that most of the factories, which depend on imported raw materials from India are on the verge of closure due to shortage of necessary materials.

The import of excisable items have come to a halt particularly after Indian exporters laid new condition of payment since March 1, when duty-refund procedure (DRP) was scrapped.

Scrapping of DRP paved the way for Nepali traders to receive goods at ex-factory rate (devoid of excise duty) and government to collect excise duty at customs points, but Indian exporters said Nepali importers should make payment in US Dollar if they are to get supply on ex-factory rates.

“If paid in IC, our (Indian) government considers the supply as local sales, and seeks us to pay excise,” they had argued.

Importers could not oblige though as Nepal Rastra Bank has opened USD payment facility for about 250 items only. If they accepted exporters´ condition (while paying in IC), they were required to pay excise twice -- in India as well as in Nepal.

The confusion, meanwhile, has brought imports of industrial raw materials and other goods on which excise duty is applicable like cement, clinker, textiles and vehicles, among others, to a grinding halt.

Talking to Republica, he disclosed that a delegation of FNCCI had recently approached the Indian Embassy in Kathmandu to settle their problem. “The Indian officials conveyed us that India has neither changed payment terms nor should we deal in USD,” said Murarka.

An official of the Embassy said, Indian Ambassador to Nepal Jayant Prasad too has communicated to the Indian Ministry of Finance conveying concerns of Nepali importers. But he did not disclose how the ministry responded.

Ministry of Commerce and Supplies (MoCS) on Wednesday formally approached his Indian counterpart to clarify why Indian exporters have not been trading against IC. However, the Indian ministry is yet to respond.

Document on protecting local seeds varieties gets nowhere

A parliamentary committee has put an important report on seed sovereignty in the backburner, further delaying process to draft legislation to protect seed sovereignty and discourage import and use of hybrid products.

The report was sought by Committee on Natural Resources and Means (CNRM) from the Agriculture Ministry following uproar over attempts to import Monsanto hybrid maize seeds through a program of United State Agency for International Development (USAID) for distribution to farmers last September.

CNRM chairperson Shanta Chaudhari said her committee had not discussed the report due to time constraint. "We are aware of the situation but many other important tasks remain to be completed," Chaudhari said. "We are hoping to call another meeting in this regard within few weeks."

Agriculture Ministry, which was allegedly involved in agreement with Monsanto and USAID to import hybrid seed, was summoned by the committee in January to clarify its position on seed sovereignty of the country.

Officials at the ministry said the report had recommended measures to save the seed sovereignty by discouraging import of hybrid seed from other countries. “We are waiting for another meeting of CNRM and further direction on the issue from them,” Dr Hari Dahal, joint secretary and spokesperson of the ministry said.

“The government won´t give subsidy to farmers while buying hybrid seed that are not domestic,” reads the report prepared by the ministry. “The government will also not compensate for the losses that may occur due to unregulated import of hybrid seed ”

Nepal imports more than 200 types of hybrid seeds from 30 international companies through 13 domestic importers.

The report also draws a clear line regarding hybrid, genetically modified organism (GMO) and seed sovereignty.

The paper strongly says GMO should be banned in the country and only domestic hybrid seed should be promoted, a sharp contrast to the Agricultural Policy - 2004 which says the GMO should be regulated and hybrid is promoted.

Still waiting for relief

Twenty-six sick industries that were expecting relief package from the government, particularly after the Prime Minister instructed Ministry of Industry (MoI) last week to announce the package, are going to be disappointed again.

Instead of coordinating with the concerned ministries that were involved in working out the relief package, the MoI has decided to implement the ´incentives´ only after incorporating a provision of ´sick industry´ in the new Industrial Enterprises Act (IEA) that it is drafting.

MoI officials say the ministry cannot implement the package, which includes slew of incentives like taxi waiver, loans restructuring and other procedural facilities for sick industries on its own.

“We will need to incorporate a provision of sick industries in upcoming act before implementing it,” Umakant Jha, secretary of MoI, said, indicating that the package will not be implemented anytime soon.

Jha said the ministry was preparing to get rid of legal hurdles so as to implement the package as directed by the Prime Minister´s Office.

An eight-member taskforce comprising representatives from different stakeholders, including National Planning Commission (NPC), Ministry of Finance (MoF) and Nepal Rastra Bank - had prepared and submitted a report on sick industries to the Ministry of Industry a couple of months ago.

The report has labeled 26 industries, including Maruti Cement in Dharan, Bhrikuti Pulp and Paper in Nawalparasi, Basulinga Sugar and General Industry in Kailali and Shree Tiger Tops in Chitwan as sick units.

The ministry, which is supposed to be coordinating with all the line agencies to provide relief to the sick industries as envisioned in the report, is preparing to form different committees and technical teams for implementing the report prepared by the team led by Dipendra Bahadur Kshetry, vice-chairperson of the NPC.

"We will first incorporate the provisions for sick industries in the upcoming act," Anil Kumar Thakur, joint-secretary of the ministry and chief of the Industrial Promotion Division at the ministry, said.

“We are also in the process of forming a high-level team of legal experts to eliminate legal hurdles for implementing the report.”

Thakur said the ministry will expedite the process of providing incentives to the industries only after the draft of the act is endorsed. The new act will replace the existing Industrial Enterprises Act 1992.

Nepal seeks clarity on Indian traders' demand for payment in USD

The Ministry of Commerce and Supplies (MoCS) has approached the Indian government to clarify new terms of payment laid down by Indian exporters, under which they are seeking Nepali importers to pay in US dollar if they are to get duty exemption - a move which has brought imports of excisable goods from India to a halt since last six days.

“We have formally approached the Indian counterpart for explanation through diplomatic channel,” said Lal Mani Joshi, secretary of MoCS.

The ministry took such a step after local importers officially lodged a complaint over the confusion they faced after Indian exporters asked them to make payment in US dollars.

The confusion over terms of payment had surfaced particularly after the scrapping of duty-refund procedure (DRP) system on March 1. Under the system, India used to collect duty on excisable items exported to Nepal and the government of Nepal that used to allow entry of those goods without charging excise duty used to get the due excise collection in the form of duty refund.

After the system is scrapped, the normal understanding between the two governments was that India will allow its exporters to supply goods to Nepal at ex-factory price (without excise duty) and the Nepali customs would charge the due excise duty.

However, traders said the Indian exporters are presently demanding Nepali traders to make payment in US dollars.

“They (exporters) say they have been notified by the Indian authority to supply goods at ex-factory price only if the payment is made on US dollars,” said Pashupati Murarka, vice-president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Murarka said Indian exporters are refusing to deal on ex-factory price when approached for payment in Indian currency.

As the DRP has been scrapped, traders won´t get payment of excise made to Indian supplier refunded.

“How can we pay excise in India and again in Nepali customs?” questioned Murarka. “We can´t pay in US dollars also because Nepal Rastra Bank (NRB) has opened US dollar payment facility for about 250 items.”

Interestingly, officials at the Indian Embassy said the term laid by the Indian exporters is not fair.

“Reserve Bank of India´s (RBI´s) guidelines has not been changed for Bhutan and Nepal. This means Indian traders cannot impose payment terms in USD to Nepali traders,” an Indian Embassy official in Kathmandu said, preferring anonymity. “If what the Nepali importers are saying is true, they should cite specific examples.”

Irrespective of what the officials said, Murarka said the stance of Indian exporters has created confusion among Nepali traders. “This has badly affected imports of cement, clinkers, textiles and vehicles, among others,” he stated.

Nepal Falls under Highly corrupted country

Nepal has been ranked as a highly corrupted country among 178 countries that were surveyed by Transparency International (TI). A report published by TI claims that Nepal's half of the total gross domestic product (GDP) is accumulated through corruption. 

MoCS pushes for tariff hike of beetle nut

Ministry of Commerce and Supply (MoCS) has pushed for a rise in tariff of beetle nut in order to curb its unauthorized re-export to India.

The MoCS, which blames huge difference between import duty in Nepal and India for the illicit trade, had decided to hike the tarrif in January and written to the Ministry of Finance (MoF) for further action.

According to the MoCS, Nepal presently imposes 25 percent duty on import of beetle nut, whereas India has set it at as high as 108 percent. This difference was creating strong incentives to the traders to re-direct the imported product to India in unauthorized manner.

“We had forwarded the ministerial level decision to the MoF, as the illicit trade is creating undue nuisance in bilateral trade,” said Secretary Purushottam Ojha, who was recently transferred to Prime Minister´s Office from MoCS.

However, Shanta Raj Subedi, joint secretary and chief of Revenue Division said he had not yet received the letter. "I also have no knowledge of any discussions on its (beetle nut´s) tariff rise," he said.

Along with tariff hike, MoCS had also taken five decisions to deal with complaints by Federation of Nepal Chamber of Commerce and Industries (FNCCI) against the illigal trade and pressure exerted to local chambers for issuing Certificate of Origin (CoO) by different political forces and government officials.

“Decisions focused on controlling illicit export of beetle nut to India,” said a source, elaborating that one major decision of the MoCS then was to seek actual data of domestic production and demand of beetle nut from Ministry of Agriculture and Cooperatives (MoAC). Other decision was to monitor the CoO issued by the chambers every month.

MoCS also pushed the local chambers to make submission of recommendation letter of District Agricultural Development Office (DADO) of the beetle nut producing district mandatory for issuing CoO.

As its push for tariff hike failed to draw MoF´s attention, officials at MoCS said they were coordinating with the MoF yet again for increasing its tariff.

Commerce Secretary Lal Mani Joshi said that MoCS would follow up on all the past decisions, as those were important decision to prevent illegal trade.

In a recent anomaly, Republica had disclosed Agriculture Minister Nandan Kumar Datta of exerting pressure on the Siddharthanagar Chamber of Commerce and Industry (SCCI) to issue CoO for 3000 tons of beetle nut and facilitating Excel Trading Concern based in Bhairwaha to export beetle nut which was not produced locally. The consignment held by the trading firm was estimated at Rs 900 million.

Minister Datta aids illegal betel nut export to India

• Minister for Agriculture and Cooperatives Nandan Kumar Datta has been found abetting a racket engaged in importing hefty amounts of betel nuts and exporting them to India through illegal channels, in contravention to a bilateral trade treaty signed between Nepal and India.
  
  The racket surfaced after Siddharthanagar Chamber of Commerce and Industry (SCCI), which received an order from the Ministry of Agriculture and Cooperatives (MoAC) to issue a certificate of origin (CoO), a mechanism that certifies that the goods in question are produced in Nepal, declined to comply.
  
  MoAC , allegedly under direct instructions from the minister, asked SCCI last month to issue a CoO for 3,000 tons of betel nut of unspecified origin and owned by the trading firm Excel Trading Concern (ETC). At the present market rate, the consignment’s value is estimated at Rs 900 million.
  
  “A trader approached us along with the letter from the ministry and sought a CoO, but we declined to comply as he failed to disclose the origin of the beetle nut,” Mahendra Kumar Shrestha, president of SCCI, told Republica over the phone.
  
  SCCI had sought clarity over the origin of the betel nut mainly in view of the fact that Rupandehi, where Siddarthanagar is located, is not a beetle nut producing district.
  
  Senior officials at MoAC, who are familiar with the development, acknowledged that the ministry had issued such a letter as per the instruction of Minister Datta.
  
  When Republica contacted him, Datta flatly denied having any links with the racket or assisting it in smuggling betel nut to India. But he did not deny that he had instructed officials to send a letter to SCCI urging it to issue a CoO to a private firm. “I sign more than 100 letters a day that come to me and I hardly get time to go through them,” he said.
  
  However, at the beginning of his conversation with this reporter, he declined to admit that he had issued any instructions in this regard to the officials concerned.
  
  “I believe officials at the ministry do things as per the established norms and laws,” he said when asked why he had bypassed the normal process for issuing the CoO.
  
  “After receiving the request from the private firm, I had just instructed the officials to take necessary action as per the established practice, which means that the officials were free to take a decision as per standard practice,” Datta said.
  
  Illicit outflow of imported betel nut from Nepal to India has been on the rise in recent years as India imposes customs duty of 108 percent on its import from Indonesia, the main exporting country, whereas the duty on betel nut imported from Nepal is just 25 percent.
  
  In Nepal betel nuts are produced only in the eastern districts, including Jhapa, Morang, Ilam and Sunsari. Statistics at MoAC show that total production of beetle nut in the country in 2010/11 was recorded at 7,247 tons, and in the same year Nepal had imported more than 108 thousand tons of beetle nut.
  
  Dr Hari Dahal, joint secretary at MoAC, said, “There is no data available showing the amount of domestic betel nut consumption.” He further added, “When we don’t know the amount of domestic consumption, we can’t say how much of the total import is consumed in the country.”
  
  India has constantly raised the issue of illicit export of beetle nut from Nepal at Inter-Governmental Committee (IGC) meetings. India had claimed at an IGC meeting held in 2010 that Nepal exported 165 thousand tons of beetle nut in 2008/009.
  
  Moreover, India had requested Nepal at an IGC meeting held in Delhi in March 2011 to increase the tariff rate on betel nut imports.
  Indonesia, Thailand, Malaysia and Turkey are the main countries from where Nepali traders import beetle nut.