Nepal-China talk to address problems faced by Nepali traders

China has approached the Nepali government to hold bilateral trade talks as soon as possible in order to ease the tariff and transit related barriers on quarantine and customs, among others, that Nepali businesspeople are facing for a long time.

“The Chinese team has come to have a preliminary meeting in order to fix the third meeting of Nepal-Tibet Trade Facilitation Committee (NTTFC),” Naindra Prasad Upadhyay, joint secretary of the Ministry of Commerce and Supply (MoCS), told Republica on Sunday.

However, the two sides have not yet finalized the date for bilateral talk which will be held in China this time. The last meeting was held in Kathmandu in May 2011.

According to Upadhyay, the agendas for the meeting have not been finalized yet. “We will start working on agendas once we set the date for meeting,” he said. “There are chances that we would get invitation from China within this week with a date of the meeting.”

Nepal and China, in the second meeting of NTTFC, had agreed to ease the quarantine and transit issues.

However, Nepali traders have allegedly said that the government has failed to raise the issues that have reduced Nepal´s export to China. “Nothing substantial has been done to help improve Nepal´s export to China after the second meeting of NTTFC in 2011,” Rajesh Kaji Shrestha, president of Nepal-China Chamber of Commerce (NCCI) said. “There would be no progress this time as well. I am not hopeful.”

Upadhyay, who is also looking after the Nepal-China trade in the MoCS, said that he had discussed all the transit and quarantine related problems that Nepali business people are facing in the preliminary meeting last week. “I have raised the issues that are affecting our export growth to China,” Upadhya said.

A recent study on Nepal-China Trade conducted by a regional think-tank, South Asia Watch on Trade, Economics and Environment (SAWTEE), with the assistance of United State Agency for International Development (USAID), has said Nepal´s trade agreement with China has failed to uphold national interest. “The letter of exchange (LoE) signed between Nepal and China in May 2010 has turned out to be a barrier itself for the export growth of Nepal,” the report says.

Shrestha, complaining the government inefficiency to have a better negotiation, said that the Nepali business people were facing multiple problems in the border areas. “China definitely is a huge market but we can´t tap it until the transit and quarantine related issues are addressed,” he said.

According to Trade and Export Promotion Center (TEPC), trade deficit with China shot up to Rs 38.2 billion during fiscal year 2009/10 from Rs 11 billion recorded in 2005/06.

Nepal is ranked in 50 in the CRI

The Change Readiness Index (CRI) has ranked Nepal in 50th position out of total 60 countries. The ranking on three bases, economic, governance and social gives shows the readiness of Nepal's leadership, bureaucracy and political parties. The CRI prepared by KPMG International and the Overseas Development Institute (ODI) provides insight into which countries are better prepared to cope with change and take advantage of the resulting opportunities. The CRI captures government capability and the capability of a country as a whole - including the private sector and civil society - to manage and respond effectively to change. 

FNCCI, TiE sign MoU to bolster entrepreneurship

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) on Sunday signed a Memorandum of Understanding (MoU) with The Indus Entrepreneurs (TiE) to bolster entrepreneurship in the country by encouraging foreign entrepreneurs to start business here.
The MoU will pave the way for tapping ideas from global entrepreneurs and to use the network of TiE for entrepreneurial development in Nepal, FNCCI President Suraj Baidhya said.
Baidhya and Nikesh Sinha, charter member of TiE, signed the MoU on behalf of their respective organizations.
TiE is a group of successful entrepreneurs, corporate executives and senior professionals with roots in the Indus region. Started in 1992, it currently has 13,000 members, including 2,500 charter members across 14 countries.
"Nepal can benefit from the global connect program of TiE," Sinha said after signing the MoU. "The recent positive political developments and success of constitution writing process will create a favorable environment for investment in Nepal."
Larraine Hariton, special representative for commerce and business affairs of US Department of State, was also present in the MoU signing ceremony.
"This MoU can help identify promising entrepreneurs in Nepal and attract more international investors here," Hariton said, adding: "Time has come for the government of Nepal and private sector to work together in order to boost the country´s economy."

Developed countries agree to address LDCs woes multilaterally

The developed countries have pledged to work together with the least developed countries (LDCs) under the multilateral approach to advance and halve the number of LDCs by 2020.
The developed countries expressed such a commitment during the 13th United Nations Conference on Trade and Development (UNCTAD), which concluded in Doha, Qatar on Friday. They made such announcement after the conference strongly flayed their approach to deal with LDCs bilaterally, something which has weakened multilateral initiatives in recent years.
"The bilateral approach is a bias one," the Conference has concluded and urged the developed country to switch back to multilateral approach, referring that difference in size and capacity largely disables LDCs from enjoying fair say in bilateral deals. "Only multilateral approach can address the problems that the world is facing now," the 6-day long conference declared at the end of the meeting.
The conference adopted an outcome document termed as Doha Mandate, which was prepared after lengthy intergovernmental negotiation for months, to guide the global leaders for the coming four years to address the multitude of challenges facing the world. There are around 13 multilateral including the UN and more than 50 bilateral donor agencies working in Nepal.
Shanker D Bairagi, permanent representative of Nepal to the United Nations and Other International Organizations in Geneva, in his address as the coordinator of the LDCs highlighted the role the UN can play to address the global problems. Nepal is the chair of the all 48 LDCs and around 70 million people live under the extreme poverty in these countries.
“The conference helped to identify the structural constraints and vulnerabilities, and garner international support for addressing those constraints in the LDCs,” Bairagi said at the closing plenary of the conference.
Referring to the last minute agreements on a number contentious issues, Bairagi stated that the consensus in Doha was the manifestation of the collective commitment of the international community to work for a better future for all.
Bairagi expressed the hope that the conference´s outcome will contribute meaningfully in the process of implementation of the Istanbul Program of Action for the LDCs -2010, which envisions enabling half of the LDCs to reach the level of graduation from the LDC category by 2020.

WTO urges effective use of EIF

World Trade Organization (WTO), which initiated Enhanced Integrated Framework (EIF) to advance the trade of least developed countries by removing supply-side constraints, has warned that LDCs themselves were responsible to use the EIF to better address their weaknesses and utilize strengths.
Pascal Lamy, director general of the WTO, has asked LDCs to work themselves to fully utilize the EIF process.
“They have to use the EIF as a platform to solidify trade within their national development plans and priorities,” Lamy said in high level meeting in Doha, Qatar last week. He urged LDCs to leverage additional Aid for Trade (AfT) support to consolidate current efforts. Government of Nepal is also one of the recipients of the EIF facility.
The EIF is about placing trade as an engine of growth, poverty reduction and employment by creating a platform where demand and supply of trade-related assistance can be expressed and bridged. In Nepal, the Ministry of Commerce and Supply (MoCS) is implementing the EIF program. 30 out of the 46 EIF beneficiary countries have accessed for Tier 1 project funds for institutional capacity building to support National Implementation arrangements. Furthermore, four Tier 2 projects have been approved and an additional ten Tier 1 and 26 Tier 2 projects are in the pipeline.
Nepal is implementing the Tier 1 and is preparing to access for Tier 2 of EIF, which provides increased, predictable and additional funding on a multi-year basis. It helps build strategy for the national development -- Nepal Trade Integrated Strategy (NTIS) -2010, a blueprint to boost the export of the country was prepared under the EIF process.
The EIF will undertake its mid-term review later this year. “This independent process will provide an assessment of how the EIF has been delivering on its mandate,” Lamy said. “For the EIF to continue to deliver; it will need continued commitment from the LDCs and commitment from development partners as well on the sustainability of funding.” He further requested developed countries to invest in trade capacity.
Lamy also urged UN, World Bank, IMF, and the WTO to support these processes and LDCs. “LDCs are an integral part of the WTO and they stand to lose more than any other member if the current stalemate in the Doha Development Agenda is not resolved,” Lamy said, pushing for the earliest resolution of the stalemate.

Chinese red tape negating zero-tariff facility: Report

For long officials beleived zero-tariff facility pledged by China for 4,000 Nepali goods would boost the country´s export to the northern trading partner, but a latest study has reckoned that letter of exchange (LoE) that Nepal signed with China in 2010 itself has turned out to be a major barrier to export growth.
"Under the LoE, Nepali exporters are required to stringently comply with all relevant domestic procedures if they want to export their goods under duty-free facility. This has subjected Nepali traders to a vast bureaucratic maze, constraining our exports growth," reads the report.
The report based on a study conducted by South Asia Watch on Trade, Economics and Environment (SAWTEE) says that under the Chinese rules, only goods having local value addition of 40 percent in manufacturing country (Nepal in this case) can enjoy zero-tariff facility.
"The existing list of duty-free exportable items included in the bilateral agreement includes only one-third of Nepal´s exportable items to China. And unfortunately, even they are facing trouble in getting the facility," says the report. The report even notes that the Chinese government, despite all promises of favorable trading environment, has been imposing multiple tariff and non-tariff barriers.
The report lists out a number of hassles faced by the Nepali exports. Of them, major barriers to export are lack of information sharing, lengthy procedures, multiple paper works, and the lack of recognition of the Nepali quarantine certificates by Chinese authorities.
The report, which analyses Nepal-China trade keeping it in a bigger framework of the Nepal´s international trade, says that Nepal´s performance on trade with China is far worse than the country´s overall international trade.
For instance, Nepal´s export to import ratio in 2003/04 was 39.7 percent, while China´s was 22.2 percent. But by 2010/11, these fell to 16.3 percent and 2 percent respectively.
The report also sheds light on the flip side of bilateral trade with China and says that import from China was also not healthy for the economy, raising question over the quality of Chinese products.
The trade balance with China is not in favor of Nepal as the government has not been able to work efficiently even when it comes to following up on implementation of bilateral agreements.
"Even though existing bilateral agreement on Mutual Recognition asks the Chinese authorities to recognize food and other goods quality certification issued by Nepali labs, China has largely overlooked this provision," says the report.
Interestingly, the report also highlights poor road conditions and transport syndicates as another major hurdle to giving impetus to exports to China. It urges the government to take immediate steps to scrap transport syndicates.
The report also asks the government to work out a formal payment modality for bilateral trade and push China to include more items of Nepal´s export interest in the facility list, among others.
The report has identified 20 goods possessing high export potential in the Chinese market. They include vegetable, iron and steel, tea, juice and lentils. The report has suggested to the private sector to make serious efforts toward tapping potential of those products.
It has suggested to the private sector to brand products and urged the government to construct dry ports along the northern customs points to facilitate bilateral trade.

Intellectual Property Day marked

Concerned stakeholders have expressed worry over the government´s inability to implement laws related to protecting the intellectual property rights (IPR) in the country.
Representatives from different sectors shared their knowledge about the laws related to intellectual property and their practice in Nepal at an interaction program organized by Nepal Copyright Register´s Office (NCRO) in association with Society of Economic Journalists to mark the World Intellectual Property Rights Day.
The participants, who represented different sectors such as music, publication and production companies, expressed grave concern over the government´s inability to implement the existing laws on protecting the IPR.
“There is a massive misuse of IPR in Nepal though the laws of the country treat such activities as a criminal act,” Bisu Kumar KC, registrar of the NCRO said at the interaction. “IPR is not just an issue of morality and ethics, it is also a major instrument to establish the economic rights of innovators and producers.”
While there are no authentic statistics available in our country showing the benefit of protecting IPR, developed countries have seen significant gain in their gross domestic productions resulting from IPR protection.
The IPR day was first celebrated in 1970. Since then it is observed all over the world each year to respect the economic rights of innovators.

Investment Board yet to get concrete shape

The government has failed to give the Investment Board -- a high-level agency entrusted the responsibility of carrying out the ambitious plan of attracting foreign investment for mega projects - a complete shape even though less than three months remain for the Investment Year 2012/13 to kick off.
The board even does not have a full-fledged office and adequate human resources to run its daily operations. Furthermore, he government has been failing to approve the Investment Board Regulation (IBR), a prerequisite to implement the Investment Board Act (IBA) 2011.
The delay in approval of the regulations has been reflected in the board´s daily works. The board cannot recruit staffers and expand its areas of operations without approval of the regulations.
The board of the IB, which is chaired by the Prime Minister, appointed Radesh Pant to the post of CEO about six months back. According to Pant, the board immediately needs 4-6 staffers.
The regulation, whose draft was prepared about one and half months ago, has yet to be approved. “The draft has been finalized. I think it will be approved within a week,” Pant said.
Interestingly, Pant had told the same thing to this scribe around three weeks ago. He, however, refrained from making comment when asked what is hindering the approval of the regulation.
Ironically, the board, which has the responsibility of formulating policies to create investment friendly business climate and selecting priority areas for investment, is failing to get its regulations approved by the government.
According to Pant, the board is working on institutional development, project management and investor services, resolving specific investors´ problems and making necessary preparations to start Investment Year from mid-July.
More than a dozen investors from countries like China, Japan, Germany and India have already approached the board in order to know about the prospects of making investment in Nepal.
Officials at the Prime Ministers´ Office say the board must have something in hand like a compilation of projects for which the government is looking for foreign investment. “The office and human resource in the board should be sound, modern and dynamic since this is the first door where all the investors come to knock first,” an official at the Prime Minister´s Office said, preferring anonymity.
The board plans to bring investment worth US$ 1 billion in the first six months of 2012/13.

Nepse hits 13-month high

Nepal Stock Exchange (Nepse) index hit 13-month high, gaining 21 points to close the day´s trading at 409 points on Wednesday, after investors showed more confidence in the market and put their money on shares of banks and hydropower companies.
The rejuvenation of the market, which grew by 5.43 percent, caused total market capitalization to jump to Rs 386.63 billion. The turnover at Nepse touched Rs 54.17 million on the day, when a total of 145,289 shares changed hands through 453 transactions.
Officials attributed the Nepse´s massive rebound to sharp rise in transactions of shares of banks, hydropower companies and development banks.
Index of banking sector, which commands lions share in the stock market, had risen by 30.96 points on the day, recording 8.34 percent growth over previous day´s closing and closed at 402.3 points on Wednesday.
Likewise, the hydropower sub-index rose by 40.69 points to close at 633.82 points. The sub-index of Development Bank too increased by 2.14 percent to end the day´s trading at 262.62 points.
Standard Charted Bank, Grand Bank Nepal, Bank of Kathmandu, Citizens Bank and Sunrise Bank were the top gainers of the day. Share prices of Standard Chartered Bank increased by 10 percent to Rs 2,178 on the day. Similarly, share values of Grand Bank also rose by 10 percent to Rs 231, while Bank of Kathmandu saw its share price jump by 9.98 percent to close at Rs 694 per unit.
Despite the rebound, the sub-index of finance company slid by 0.26 percent and closed at 260.91 points.

Nepal-India crafts festival from Friday

Nepal is hosting a week-long Nepal-India Crafts Festival (NICF) from Friday in order to enhance bilateral relationship between the two countries in the field of arts and crafts.
The festival will have more than 20 stalls from Nepal and India and will showcase the crafts and products which inherit the cultural and historical meaning of the two countries.
South Asia Foundation (SAF) in association with Embassy of India, state government of Goa and Nepal Tourism Board are jointly organizing the festival, according to Apoorva Srivastava, an official of the Indian Embassy in Kathmandu.
“The festival will open an opportunity for craft exchange program between Nepal and India,” Srivastava told a press meet in Kathmandu on Wednesday. “Nepal has a very rich crafts tradition and this festival will also provide a platform to the artisans from Nepal and India to exchange ideas and explore larger cooperation.”
According to a press release issued by the Embassy of India in Kathmandu, Goa will be the focus state of India for the festival. The festival will see 25 crafts persons from Goa.
The festival aims to tie up effective and comprehensive collaboration between Nepal and India for a larger participation in the field of arts and crafts.

Surya Nepal settles labor dispute

The long-running labor dispute at Surya Nepal - the largest tobacco manufacturer in the country - has come to an end after the management addressed the demands placed by the workers.
“We signed an agreement with the management on Monday,” Beni Prasad Timilsina, president of the Nepal Multinational Companies´ Workers Union (NMCWC) told Republica on Tuesday over phone.
According to Timilsina, the management has agreed to increase basic salary of workers by Rs 861 per month. The trade union was demanding for increment of Rs 2,000 in the basic salary.
Rabi KC, corporate vice-president of Surya Nepal, said the company lost around 60 percent of daily production during the protest period.
Workers of Surya Nepal had not shut operations of the factory completely. They returned to work for some hours every day.
The management has also decided to provide Rs 311 per month as inflation allowance. Similarly, it has also hiked gratuity amount to Rs 325,000. Earlier, the workers were getting Rs 180,000 as gratuity amount.
The trade union had initially placed 11-point demands with the management. However, it reduced the demands to seven points after Hetauda Appellate Court issued a stay order against the protest at the end of March.
“All our demands have not been addressed,” Timilsina said, adding: “We compromised on some issues and so did the management.”
The company has also agreed to provide up to Rs 300,000 to workers if they become ill while serving the company. Similarly, it has agreed to provide up to Rs 500,000 in case the workers suffer from incurable diseases like cancer, according to Timilsina.
The appellate court in the first week of April had ordered both the workers and the management to settle the dispute through dialogues. Now that the agreement has been signed, the management has assured us that it would withdraw the petition from the court, according to Timilsina.

Focus on getting assistance for trade and production: UN

At a time when Nepal has been expressing concerns over developed countries not fulfilling their pledge of supporting trade growth, experts from United Nation Conference on Trade and Development (UNCTAD) Tuesday suggested the government to utilize more overseas aid for the development of industry and trade.
Presently, foreign assistance makes around 26 percent of the government´s annual expenditure and officials at the Ministry of Commerce and Supplies complain that only a nominal portion of that is being used to support meaningful projects on trade growth.
Interestingly, statistics of Organization for Economic Co-operation and Development (OECD) says one third of total international assistance comes in Nepal as aid for trade.
Despite such contradiction, experts said Nepal must make efforts to win more assistance and use them more aggressively for the development of exportable products, industrial infrastructures and trade facilitating logistics services if the country is to leverage its share in the international trade.
But as such flow of resources in a particular sector is unlikely to happen unless it is given due priority and included in the National Development Strategy (NDS), UNCTAD representative Maneula Tortora urged the government to integrate trade as a central component of the strategy.
“No plans and strategies can generate effective growth and poverty reduction if they ignore trade that has served as engine of growth and development worldwide,” said Tortora.
Tortora said this while addressing the three-day long regional workshop on ´Integrating the Trade Dimension in the UN Development Assistance Framework´ that kicked off on Tuesday in Kathmandu.
Although OECD data shows high flow of aid for trade in Nepal, officials said the assistance pledged so far have come in the form of technical assistance to carry out various studies and those have largely failed to transform the trade´s reality.
“Aid for trade is important, but it must come in meaningful amount and for projects that make contribution on ground,” said Lal Mani Joshi, secretary of the Ministry of Commerce and Supply (MoCS).
He said the government has been attempting to mainstream trade since last few years, referring that Nepal Trade Integration Strategy (NTIS) formulated in 2010 was the first step toward that path.
The NTIS has identified 19 goods and services that can boost country´s exports in a sustainable manner. “NTIS has given us a ground to take steps for advancing trade and gain more share in the regional and international trade,” said Joshi, adding that government was working together with the development partners aiming to tap potentials of those products and achieve NTIS goals.
Other speakers stressed the need to garner more international assistance to create long-term growth and jobs in the domestic market. They urged the government to play a proactive role and asked the private sector to be more innovative in tapping global market potentials.

Additional Rs 300m sought for Ktm-Tarai fast track

The Ministry of Physical Panning and Works (MoPPW) has said it will need additional Rs 590 million to complete the land acquisition -- barring 8 km stretch in Khokana, Lalitpur -- for Kathmandu-Tarai Fast Track Project and has sought Rs 300 million from the Ministry of Finance to pay compensations to landowners during this fiscal year.
So far, the ministry has received Rs 550 million for paying compensatin to landowners in Bara, Makawanpur, Kathmandu and Lalitpur districts along the fast track.
"Though the actual funds requirement for completing the track opening is much higher, we have asked for additional Rs 300 million for this fiscal year," said Tulasi Prasad Sitaula, secretary at MoPPW.
He also told that acquisition of land along the stretch of 8 km in Khokna has become a tough job as locals are demanding huge compensations. Though MoPPW has not done the exact valuation, it has estimated that acquiring land for the 8-km stretch for the six-lane expressway could cost more than Rs 1 billion.
Given that the locals have refused to compromise on the compensation amount, MoPPW has already reported to the Prime Minister´s Office that it will not be able to open the track within the current fiscal year.
As for the fund disbursed so far, officials said MoPPW was using the amount to compensate landowners in Kathmandu and Lalitpur districts. "The initial plan was to distribute compensation to landowners in Makawanpur. But after they agreed on the terms of compensation they agreed to wait for some time so we decided to pay compensations to landowners in Kathmandu and Lalitpur first," said the source.
The government had allocated Rs 400 million for land acquisition in the 2011/12 budget. The Ministry of Finance had released additional Rs 150 million for the project a few weeks ago.
"I think MoF will provide us the amount we have sought," said Sitaula, referring to the prime minister´s commitment that the government would make sure national priority projects do not suffer from funds crunch.
The proposed Kathmandu-Tarai Fast Track is 76 km and so far MoPPW has opened 51 km.
The Ministry even initiated works to prepare the guidelines in order to screen investors in the project that will be developed under build-operate-own-transfer (BOOT) policy.
The Asian Development Bank that studied financial viability of the expressway in 2008 had estimated that the project would cost around Rs 67 billion.

Nepal asks developed world to remove domestic barriers

Nepal has requested developed countries to help overcome domestic barriers of least developed countries (LDCs) such as infrastructure bottlenecks, lack of knowledge, administrative and institutional shortfalls in order to advance the productive capacity.
Underlining the importance of trade as an engine of growth, Shanker D Bairagi, permanent resident of Nepal to the United Nations and other International Organizations in Geneva, reiterated that LDCs should get open access to the global market to ensure prosperity and growth.
Bairagi, speaking during a meeting of the UN Inter Agency Cluster on Trade and Productive Capacity in Doha, Qatar, under the ongoing meeting of United Nations Conference on Trade and Development (UNCTAD XIII), shared with other stakeholders about the country´s blueprint - Nepal Trade Integrated Strategy - 2010 and prospects it has for the future growth.
“Aid for trade should not divert resources away from other development priorities such as poverty eradication,” the release quoted Bairagi as saying during the meeting.
“The commitments made by the international community in the Istanbul Program of Action (IPoA) -2011 to provide enhanced financial and technical support to develop productive capacities in line with LDCs´ priorities are vital,” said Biragi. “International community should work on implementing the commitments made in Istanbul and respective works and program as envisaged in the IPoA.

India to settle DRP dues by March 2013

A month after terminating long-practiced duty-refund procedures (DRP), Nepal and India have agreed to close down all accounts and settle outstanding dues related with DRP by March 2013.
During the bilateral talk, which was led by Director General of Customs Department of the two countries, the two sides have decided to form a technical committee to ascertain and quantify the amount (of unpaid excise duty in bilateral trade) that India needs to refund to Nepal.
The talks were held earlier this week in Kathmandu on formally closing the DRP. Laxman Aryal, deputy director general of the Department of Customs (DoC) told Republica that the technical committee will be formed after having a letter of exchange between two countries.
"Its primary responsibility will be to calculate out the total outstanding duty amount that Nepal is yet to get from India," said Aryal, adding that the committee was being formed mainly to avoid any mismatch of refundable amount.
The committee will have representatives from Customs Department and Ministry of Finance from both the countries. "However, we have not yet finalized who exactly will be in the committee," said Aryal.
Nepal and India had put DRP mechanism in place in 1961 to facilitate import of excisable items from India. Under this mechanism, Nepali customs allowed Indian goods without charging any excise duty, and later claimed the due duty from the Indian government. The volume of claim depended on the basis of import volume and valuation.
But the two sides had agreed to scrap the mechanism while singing bilateral trade treaty in 2009 and terminated it on March 1 this year. The new arrangement has enabled Nepali importers to acquire the goods without paying any duty to the Indian government. It has also empowered the local customs to collect excise duty on all applicable Indian goods at import point.
Officials at DoC said India has not made any DRP refund to Nepal over the last two years. Given that the government used to get some Rs 3 billion in duty refund from India every year, they estimated that the outstanding DRP amount stands at well over Rs 6 billion.

Nepal seeks meaningful assistance for trade, development

Nepal has urged the developed countries - that have been dragging their feet to fulfill long overdue trade and development related promises - to provide special market opportunities and extend meaningful support for the development of trade to the least developed countries (LDCs) so that low income countries could enjoy poverty reduction and other benefits from global trade regime.
Commerce Minister Lekh Raj Bhatta made such a call to the developed countries while attending Investment Advisory Council (IAC) of United Nations Conference on Trade and Development (UNCTAD) in Doha, Qatar, on Saturday.
Speaking at the Council, which was convened to discuss raising investment and productive capacity of the LDCs, Bhatta said that low income countries have been facing diverse obstacles in integrating their trade with the competitive global economy. Even though developed countries have promised support to overcome those obstacles, he said they have failed to live up to their words so far.
“LDCs are constrained by poor infrastructure and other structural problems. Unless these constraints are overcome, we LDC´s will continue to attain meaningful integration into the global economy,” a press statement of Nepal´s Permanent Mission to the United Nations and Other International Organizations in Geneva quoted Bhatta as saying.
Bhatta mainly sought support on areas like enhancing LDCs´ resilience to external shocks, building critical physical infrastructure such as roads, energy, electricity, telecommunications, development of science and technology and social and human development.
“LDCs by virtue of their characters face resource scarcity and even the foreign investment barely flow to such constrained countries,” he said, and called on the development partners to adopt, expand and implement policies that encourage and promote their investors to invest in the LDCs.
IAC, as a joint initiative of UNCTAD and the International Chamber of Commerce (ICC), offers a platform for consultations between government leaders, heads of international organizations and CEOs of international companies.

Nepal offers stable investment opportunities to foreign investors: Minister

Commerce Minister Lekh Raj Bhatta, addressing the thirteenth United Nations Conference on Trade and Development (UNCTAD XIII), said that the country was ready to offer a stable investment environment to foreign investors with peace process gradually coming to a logical conclusion.
According to a press release issued on Thursday by the Permanent Mission of Nepal to the United Nations in Geneva, Bhatta said that despite visible constraints, Nepal offers very attractive and stable investment opportunities in hydroelectricity and tourism sectors.
The conference, which kicked off on Thursday in the Qatari capital of Doha, focuses on economic development and modernization of least developed countries (LDCs).
“Service sector is emerging as a vibrant component of Nepali economy in recent years and its share in the gross domestic production, employment generation and foreign exchange earnings is increasing,” the release quotes Bhatta as saying during the conference.
Underscoring multiple constraints LDCs like Nepal face in the development process of the service sector, including high transaction costs, supply-side problems, stringent market access conditions, inequalities, and formidable structural problems, Bhatta stressed that effective national efforts and adequate and appropriate international support are essential to overcome the deep-rooted challenges.
“Support measures should encompass special treatment for LDCs in the WTO negotiations on trade, and special priority should be accorded to modes and sectors of export interest to the LDCs,” says the statement.

Committees and reports unable to revive sick industries

The government formed around a dozen committees in last 10 years to study and revive sick-industries in the country. All of them recommended ways to revive them but none could precisely categorize which were sick-industries.
As a result, there has been no change in the situation of sick industries since 1994 when the first committee was formed.
Recently the government formed 8-member Sick-Industries Rehabilitation High-Level Task Force (SIRHLTF) under the leadership of Dipendra Bahadur Kshetry, vice-chairman of the National Planning Commission (NPC) to categorize sick-industries, their problems and find solutions. However, the 20-pages report does not clarify on definition of sick-industries.
"It has already been six months since the report was finalized," a ministry official said on condition of anonymity "Report says what facilities to give to the sick industries but does not say precisely which are the sick industries and that is the main reason for not getting anywhere."
“Six industries have applied for immediate relief at the Ministry of Industry,” the official said. “But we can´t proceed since there is no legal categorization of the sick-industries.”
SIRHLTF paves the way for sick industries to multiple facilities such as postponement of bank loan repayment, restructuring of loan, waiver of tax.
In the annex, the report has listed 26 companies that applied to be categorized as sick-industries . "These are the industries that applied for benefits that we have set for sick-industries," Kshetry said, "But, we are yet to make a technical committee which will fix criteria for sick-industries."
Contrary to the Keshtry´s claim, Umakant Jha, secretary of the MoI, said the ministry was preparing to submit the report to the cabinet for approval. The MoI has reserved the process of implementation saying that it doesn´t have any legal ground to execute them without cabinet´s approval.
Previously, a similar high level committee was formed in 2010 under the leadership of secretary of the MoI. The report however, was replaced by a new one of SIRHLTF. “But there is not much difference between two reports,” said a source at the MoI.
According to Anil Kumar Thakur, joint secretary of the MoI, preparations were ongoing to incorporate definition of sick-industries in the Industrial Enterprises Act (IEA) which is in final stages.

Meeting on Tarai Roads Project concludes

The fourth meeting of Project Steering Committee (PSC) for Tarai roads between officials of Nepal and India concluded in Kathmandu on Wednesday. The meeting decided to expedite the Tarai Roads Project.
The Indian government is assisting Nepal to build 1,400 km roads in the Tarai region. "Nearly 8.8 million people will benefit from this road project," the Embassy of India in Kathmandu said in a statement.
Ramesh Raj Bista, joint secretary of Nepal´s Ministry of Physical Planning and Works and Akhilesh Mishra, joint secretary of India´s Ministry of External Affairs had led delegation of their respective countries in the meeting.
"The Indian delegation also met Minister for Physical Planning and Works Hridayesh Tripathi and Tulsi Prasad Sitaula, secretary of the ministry," the release reads.
The Indian delegation comprises of officials from other agencies like Ministry of Finance and Ministry of Road Transportation. The delegation also visited different parts of Tarai region take stock of the project.
The two-day meeting also held discussions on other issues of transportation and roads in Nepal, according to the release.

Nepali tea, lentils enjoy rise in global market share: Report

Nepal´s export share of tea and lentil in world market -- two agricultural products in which the country enjoys comparative advantage -- is steadily increasing for more than a decade.
A report shows that Nepal´s export share of lentil and tea hasbeen increasing since 1999.
“Nepal´s export share of lentil in 1999 was just 1.33 percent or 15,094 tons,” the report said, “It reached 56,768 tons in 2009 which was 3.32 percent of total global export consumption.
Similarly, Nepal´s share of tea in world market in 1999 was just 0.01 percent or 82 tons. In ten years, it reached 0.57 percent, which is 8,889 tons. The study conducted jointly by Ministry of Commerce and Supply (MoCS) and South Asia Watch on Trade, Environment and Economics (SAWTEE), argues that the country has ample scope to further raise its global market share, particularly as the demand for these products were going up.
In 1999, the total import of lentil in the world was 1.13 million tons. It reached to 1.71 million tons in 2009. The total global import of tea in 1999 was just 1.34 million tons, whereas it jumped to 1.56 million tons in 2009.
Tea and lentils are also enlisted in the Nepal Trade Integration Strategy (NTIS) -- a blueprint of the government to boost export of goods that have comparative advantage for the country. Jhapa, Ilam, Panchthar, Dhankuta and Terathum are the major tea producing districts whereas Sarlahi, Dang, Rautahat, Bara, Kailali, Bardiya, Parsa, Banke, Sunsari and Chitwan are major lentil producing districts.
However, the report, which was shared among stakeholders in a private-public dialogue on Tuesday was hugely questioned and criticized.
“The total volume of export of lentil from Nepal is more than the total amount of domestic production of it,” one of the participants from the government body questioned, “No one knows from where lentil comes.” Interestingly, the report does not include the data of domestic production.
The major destination markets of Nepali lentils are Bangladesh, Turkey, UAE, Sri lanka, Iran Egypt, UK, Sapin and Pakistan. Similarly, major consumer countries of Nepali tea are Germany, Russia, USA and Australia. Moreover, lentil has around 75 percent share in Nepal´s export to Bangladesh.

Investment climate improving in Nepal: Chinese investors

A visiting business delegation of Chinese private sector has expressed interest to investment in various areas in Nepal, ranging from electrical equipments production to hydroelectricity.
Cheng Huihong, chairman of International Enterprise Management and Investment Association (IEMIA), said Chinese investors were looking forward to invest in Nepal.
“Chinese investors having expertise in areas like hydropower, hotel, restaurant business, electrical equipment, medicine, food, art and Buddhism are eager to invest in Nepal," Huihong said at an interaction organized by Nepal-China Chamber of Commerce (NCCI) here on Monday.
Huihong is in Nepal leading a 15-member business delegation.
Rajesh Kaji Shrestha, president of NCCI, requested Chinese investors to come to Nepal with investment. “We are ready to support you from our part to protect your investment," Shrestha said.
According to a press release issued on Monday, Shrestha invited the Chinese investors to invest in hydropower, agriculture, tourism and banking sector. “I propose for joint venture investment approach of Nepali and Chinese business people,” the release quoted Shrestha as saying during the interaction.
Shrestha also assured Chinese business people that the NCCI would try its best to push for a favorable investment climate in the country.
"We are seeing the investment environment improving in Nepal,” the release quoted Huihong as saying. “This is the reason why we are interested to invest here.”
According to the release, NCCI and IEMIA will soon ink an agreement to make joint investment in areas like hydropower and banking.

Govt drafting new export import Act

In a bid to make the law governing country´s overseas trade more effective and incorporate service trade, the government has drafted new Export and Import Act (EIA) to replace the existing Export and Import Control Act (EICA) enacted in 1957.
“The first draft is ready, it has already been circulated among stakeholders and concerned officials for necessary consultation,” an official of the Ministry of Commerce and Supplies (MoCS) told Republica.
He told Republica that the need for a new Act was felt mainly as the previous Act, which has no provision for service trade, has become obsolete in present context. “The new law will have specific provisions for export and import of services,” the official said.
The government has identified seven services that have comparative advantage for export. The National Trade Integration Strategy (NTIS) -- a blueprint of the government to boost country´s export, identifies tourism, labor, information and technology, healthcare, education, engineering and hydroelectricity as service areas having export potential.
“Unlike the previous Act, the new draft aims to facilitate export and import,” the official, who is also reviewing the draft of the new Act, said. “The inclusion of the word ´control´ in the previous Act had started to give negative connotation in the present context of bilateral and multilateral trade.” The official, however, refused to divulge further details.
The existing Act was prepared at a time when Nepal´s trade volume was very low. It has not been amended after its ratification in February, 1957. Among others, the existing Act allows the government to open and prevent export and import of goods if it deems necessary.
“The draft proposes the government to play facilitator´s role in import/export trade,” the official disclosed. However, it will have a clause that allows the government to regulate trade of sensitive goods and services.
MoCS, which is pushing for early finalization of the draft Act, is also reviewing Foreign Direct Investment and One Window Policy in order to make it up-to-date. “This is also an effort to make all the Acts and policies coherent with each other,” the official said.

Govt seeks Rs 1b from Russia to retrofit Udayapur cement

The Ministry of Industry is seeking to get Rs 1 billion from the Russian government in the form of grant to replace the degraded machinery equipment at Udyapur Cement Factoy (UCF), the country´s largest state-owned cement factory.
The ministry is all set to make the request through the Ministry of Finance (MoF).
"We have finalized our homework to approach MoF in order to forward the request to the Russian government," Uma Kanta Jha, secretary of MoI, said. "We will request for grant assistance, if not soft loan would be okay with us."
The ministry has already asked grant for Janakpur Cigarette Factory (JCF) from the Russian government.
"The loan that we are looking for from Russian government is solely to replace machine equipment parts," Jha said. "That will help to upgrade production."
The machineries in the factory are 18 years old. The latest annual report on public enterprises has recommended changing the equipment of the factory, which was established in 1987.
"After this problem is solved we can think of other problems in the factory," Jha said.
The factory, which has 549 permanent employees, frequently faces labor-related problems. As per the annual report on public enterprises, the government has failed to address these problems.
"The factory is in the loss due to the problems related to money, machine and man (3M)," the annual report on public enterprises states. "Interference of trade union is high in the factory."
The factory, whose board members and chief are politically appointed, incurred loss of Rs 879.84 million in 2010/11 and has a cumulative loss of Rs 17.73 billion.
According to Jha, the government will work on addressing the labor related problems after injecting the fund that is anticipated to come from the Russian government. "We are trying to revitalize the public enterprises," Jha said. "The Russian government itself is interested in extending the grant in order to upgrade the situation of state-owned factories."
The factory has audited its financial report only till 2004/2005. According to statistics, the factory is yet to pay Rs 17.4 billion of principal amount and Rs 8.02 billion in interest to the government. "The factory needs other additional investment as well," Jha said. "Replacing machinery parts is a step toward it."
The factory also lacks proper management of human resources. "The factory lacks good governance," the government report itself says, "The chief of the enterprise even does not get the job description."
Moreover, the factory which is facing the shortage of power even does not have any back up support to offset problems created by load shedding.

New guidelines for betel nut export okayed

Ministry of Commerce and Supply (MoCS) has endorsed new guidelines on export of betel nut, aiming to control illegal re-export of nuts imported from third countries to India.
The guidelines, which the Ministry enforced last week through a minister-level decision, outlines a new process of issuing certificate of origin (CoO) to check its possible smuggling to India.
Under the new arrangement, MoCS now holds the right of making recommendation for issuing CoO to the traders, Lal Mani Joshi, secretary of the ministry told Republica.
"Federation of Nepalese Chamber of Commerce and Industries (FNCCI) and local chambers will also need to receive recommendation from farmers´ associations and cross-check local production and export data from Ministry of Agriculture and Cooperatives (MoAC), apart from MoCS´ recommendation for issuing the CoO," Joshi said.
So far, FNCCI and local chambers were issuing CoO based on recommendation of the MoAC.
The ministry took over the recommendation authority from MoAC after multiple cases disclosed MoAC of issuing recommendation letter under the influence of traders, thereby facilitating unauthorized trade. "We believe the new guidelines will help control illegal re-export of imported nuts imported to India," said Joshi.
However, sources said that the new guidelines too is not free from loopholes, something which leaves scope of possible manupulation and misuse of authroity by MoCS itself.
"For instance, the guideline has reserved the sole right of issuing recommendation for CoO at the MoCS. But does this provision mean MoCS officials will act fairly or will not fall under the influence of illicit traders?" questioned a source.
His opinion was that the guidelines should have incorporated check and balance mechanism to ensure control over possible abuse of authority. "But that is completely lacking," he stated.
The MoCS had drafted the guidelines as per the ministerial decision of January 1, 2012, in which it had decided to form a new mechanism to control growing unauthorized export of betel nut. The decision aimed at addressing Indian concerns, which for last few years had been constantly complaining of the rise in illegal re-export of betel nut by Nepali traders to India.
Apart from formulation of new guidelines on issue of CoO, MoCS have also requested Ministry of Finance (MoF) to hike the import tariff of betel nut from third countries. However, MoF has not paid heed to this call.
According to MoAC statistics, Nepal produced around 7,500 tons of betel nut mainly in Jhapa, Sunsari, Ilam and Morang in 2010/11. But in the same year, Nepal had imported more than 108,000 tons of beetle nuts from East Asian countries.
Though MoAC has no specific data on actual demand of betel nut in the country, officials ruled out demand being that high. "Imports remained huge mainly because large portions were easily finding their way into the Indian market," said the source.

MoI for implementing sick industries revival measures

Ministry of Industry (MoI), which was instructed two months ago to implement recommendations of a high-level taskforce to revive sick industries, is soon forwarding the stimulation package that the taskforce proposed to the cabinet to get formal authority from the government to implement it.
The ministry is seeking a formal nod from the cabinet to implement the taskforce´s suggestions as it has recommended the government to provide facilities like soft loans, waiver of tax and outstanding loans, something which the ministry has no authority to execute.
And as the Prime Minister´s Office (PMO) instruction to implement the report´s suggestions had come through verbal order, it had lacked legal status and thus, prevented the ministry from taking concrete steps to implement them.
“We are soon forwarding the report, including its suggestions, to the cabinet to get it owned by the government and secure legality to implement it,” Uma Kant Jha, secretary of the MoI told Republica.
The high-level task force on rehabilitation of sick industries, comprising eight members from different stakeholder institutions like National Planning Commission (NPC), Ministry of Finance (MoF) and Nepal Rastra Bank (NRB) had handed over its suggestions to the PMO in September, 2011.
The PMO had instantly endorsed the report and later forwarded it to MoI for implementation.
“We have the verbal instruction to implement it from PMO. But still we will need formal approval from the Cabinet to implement its recommendations,” Jha said.
He disclosed that the ministry has already formed a committee and is working out modalities to implement the report. “We are forwarding the modalities of report implementation to the cabinet as well so that we could get government´s consent on it,” Jha stated.
The ministry feels such a consent is very necessary as the implementation of the report requires better coordination between numerous stakeholders, including banks and other institutions and also various ministries.
Clearly, without the cabinet´s nod, the ministry cannot approach MoF to waive off taxes or request NRB to facilitate loans restructuring or arrange other facilities for the sick industries, as suggested by the taskforce.
“The approval of the cabinet, hence, is crucial for us to communicate with other stakeholders to get the sick industry revival measures implemented,” said Jha. Once the cabinet´s nod comes, he said the ministry would instantly start functioning as coordinating agency on behalf of the sick industries for the execution of revival packages.
However, knowledgeable officials said that implementation of sick industry revival measures will not be as easy because the report that pushed numerous recommendations has not categorically defined or categorized the sick industries.
“What this means is; we still have no criteria to genuinely identify which industry is sick, and what sort of facilities it is entitled to. Without it, the ministry simply cannot make its offer,” said a source.
The high-level taskforce during its study received applications from 26 firms claiming that they are sick industries. “However, we have not taken any decision on whether they are really sick industries,” Jha said.

Govt to start ADS drafting afresh

The government is preparing to start drafting 20-year long vision document of Agriculture Development Strategy (ADS) afresh after newly inducted representatives from farmers associations refused to accept previous team´s assessment of Agricultural Perspective Plan (APP).

Though a steering committee entrusted to draft the ADS, which will replace APP once it ends in 2015, had already completed the assessment of the APP and also developed vision of ADS, newly inducted Prem Dangal, general secretary of the All Nepal Peasants Federation said the whole process needs rework because the evaluations done by the previous team were faulty.

“APP was a complete failure, but their assessment does not reflect that. If we accept it, we will stand on faulty premises and that will misguide the new vision, plan and strategy,” said Dangal, adding that the government has already given nod to restart the whole exercise afresh.

However, sources said the government has not taken any concrete decision on the matter particularly as the exercises carried out so far was funded by multilateral and bilateral donors and outright rejection of report prepared by experts they assigned could ´hurt their sentiment´.

Finance Secretary Krishna Hari Baskota, who chaired a meeting of ADS stakeholders this week, said that they reached an conclusion to rethink the assessment and vision report of previous team as farmers representatives strongly expressed dissatisfaction.

“But we will take a concrete decision only after discussions with concerned ministers,” he told Republica, adding that a meeting between Ministry of Agriculture and Cooperatives (MoAC) and Ministry of Finace (MoF) will be held soon to decide on the matter.

Nonetheless, he added that there was no meaning of continuing the draft process when farmers are completely against it.

A meeting held last Monday had asked the ADS steering committee to stop working till the government makes concrete decision whether to own the work that has been completed so far.

The government had initiated process to develop ADS in 2011 and had formed a committee under the leadership of Francesco Goletti, a policy and institutional specialist and president of Agrifood Consulting International - New York University. The team included former bureaucrats and foreign consultants.

The document was being prepared with technical assistance from the Asian development Bank, the World Bank and USAID, among other 7 donors. The government has allocated US$ 2 million (about Rs 160 million) for developing ADS.

Farmers´ Organizations had been strongly protesting the approach the government adopted for preparing such a crucial document, saying that vision document prepared in the absence of farmers´ representatives might not address their concerns and agricultural reality of the country.

Chinese investors interested on mega projects, travel trade industry

A delegation of Chinese investors, comprising businessmen from different provinces of China, has approached Investment Board showing its interest to invest in Nepal in a range of areas from restaurant business to mega projects like hydroelectricity.

According to officials, the delegation inlcuding Cheng Huihong, chairman of International Enterprise Management and Investment Association, Ji Kaiping, president of Beijing Kaiping Real Estate and Tourism Investment Group, Cui Hao, board in chief of Hong Kong Hua Xia Er NV Investment Group also met with Prime Minister Babu Ram Bhattrai on Wednesday and discussed investment prospects in Nepal.

"The 15-member delegation from China is pretty eager to invest in Nepal," said Radhesh Pant, CEO of the Investment Board. He added during his discussion with the team, the Chinese investors expressed interest to invest in Lumbini in order to develop it as a major tourist destination.

During discussions, the Chinese investors said they had own priority areas of intvestment. Besides big projects, they showed interest to invest in hotels, food productions, tea trading, cement factory, pharmaceutical industry and restaurants.

"They also explored the possibility of making investments in food production industries and exporting the products to India," Pant told Republica.

The delegation during the discussions had projected themselves as a group of serious investors from China. They are even leaving for Lumbini on Friday to get the first hand information on the prospect of investment there.

The Chinese delegates also expressed happiness on the recent political development. "They are very positive in terms of bringing investment in Nepal," said Pant.

Leadership of central bank of Nepal is shaky

A leading business journalist Prem Khanal agues that the Nepal Rastra Bank and its leadership was successful to meet the target it set while assuming the post in 2010. However, he leaves the space open for people to make their own decision whether to celebrate it or not. The discussion over Nepal’s open border with a fast growing Indian economy and the pegged exchange rate with it are always hit by pressure, mostly from policy level officials. Dr Yuba Raj Khatiwada, governor of the central bank, in his meeting with business journalists from different media houses in Kathmandu, had explicitly said that it was quite necessary to change the ‘exchange system’ with India. Ironically, he, without any hesitation of public shame, later, denied to admit that he said that.

With all the due respect to his expertise and position, I doubt his guts to speak the truth with public. I have reached in this conclusion after listening to him in mid-term budget review of fiscal year 2011/12 few months back. Denouncing the fact that the growth of agricultural sector purely because of timely monsoon, he said that it was all government’s effort to maintain the growth.

Govt intervenes in Surya Nepal dispute

In the run up to the official launch of the Investment Year in mid-July, the government has intervened in the labor dispute at Surya Nepal, a multinational company, and asked both the management and trade unions to resolve the tension through dialogue.
The instruction was given during a tripartite meeting called by the Department of Labor (DoL) on Tuesday, which was also participated by representatives of the Federation of Nepalese Chamber of Commerce and Industries (FNCCI), the largest umbrella body of the private sector.
Although the meeting comprised government officials, members of the management of Surya Nepal and trade union leaders, it failed to put an end to the dispute, which has been affecting 66 percent of company´s production since the last few days.
However, the DoL-led meeting managed to ask both the parties to sit for another dialogue soon. It also took a decision to take production and dialogue at the factory side by side.
Industrial relations at Surya Nepal has gone into a tailspin after Nepal Multinational Workers´ Union, a Maoist-affiliated trade union, threatened to shut down the factory if its 11-point demand was not fulfilled. Seeking legal remedy, the company moved the court last month.
The Hetauda Appellate Court also gave verdict in favor of Surya Nepal and issued a stay order against workers´ strike. The court gave continuity to the order during another hearing on April 5.
Since the stay order was issued against the strike, the trade union has brought down demands from 11 to 7 points.
According to Beni Prasad Timilsina, president of the NMCWU, next meeting, as recommended by the DoL, would be held in Surya Nepal´s factory in Simara. "We are ready for talks with the management though our demands are still the same," he said.
Rabi KC, corporate vice president of the company said, "I am hopeful that we will have a fruitful dialogue in the factory." But he quickly added the workers´ demands should be logical. He also said the company can only provide benefits and perks to workers if they do not put a question mark on the sustainability of the company.
In case, the next meeting at the factory is unable to resolve the dispute, a committee comprising two persons each from trade unions and management will be formed to hold the final talk.
Surya Nepal´s production down 66pc
The daily production at Surya Nepal has gone down by 66 percent despite a court order that clearly instructed workers not to disturb day-to-day work at the factory, according to Rabi KC, corporate vice president of the company.
However, trade union leaders rejected KC´s claim. "We are working with full efficiency everyday," Devendra Sitaula, senior member of the Nepal Multinational Company´s Workers´ Union said.
According to KC, the factory has capacity of producing 3 million sticks of cigarette per day in normal time.

Govt slashes first installment for contractors to control misuse

Construction companies that secure government projects through bidding process will now see the first installment amount, which they receive from the state, slashed to half, as the the Ministry of Physical Planning and Works (MoPPW) clamps down on growing practice of misusing funds for personal purpose.

The ministry introduced the measure after detecting multiple cases of misuse of financial resources by construction companies, especially in the roads sector.

According to Shyam Kharel, head of the Kathmandu Valley Road Improvement Project (KVRIP), contractors who win government projects through tender will get only 10 percent of the total cost of the project in first installment. Previously, government used to provide 20 percent of the total cost to companies just after they secured the project.

"We will distribute remaining amount only after the contractor shows satisfactory performance,” Kharel said. "This will help us expedite project implementation." Initially, this measure will apply for road projects in Kathmandu valley. KVRIP, which is handling 6 road projects within the valley, had consulted with the MoPPW before introducing the measure.

The ministry approved the KVRIP´s proposal. "Many of the construction companies misuse the money they get after winning tenders to buy land or invest in the real estate sector," Tulsi Prasad Sitaula, secretary of the ministry, said. "We believe that after taking this measure, there would be proper utilization of government resources in the particular project."

Secretary Sitaula said the measure was taken mainly for two reasons, one for proper utilization of budget and second for effective implementation. "We have come to know few contractors involved in misusing the money allocated by government for their personal purpose," he said. However, Sitaula declined to disclose the names of the contractors who were found misusing the resources.

According to the Public Procurement Act 2007, the government can allocate up to 20 percent of the total cost of the project to the winning party. "However, from now on we will allocate only 10 percent of total cost to establish the required logistics," Kharel said. The construction companies who win tenders will have to submit the work progress report and financial documents in order to get the further allocation of budget.

Importantly, according to Sitaula, this measure will also help increase capital expenditure. "Once we tighten budget allocation, construction companies have to work in a satisfactory pace since they get money only after accomplishing the certain target of work," he said.

KVRIP, which has the responsibility of implementing six projects including Dillibazar to Maharajgunj, Kalikasthan and Araniko Highway, is the first agency of government to take the measure. "This rule definitely helps us to reduce the rate of corruption and mismanagement of resources," Kharel claimed.

Surya Nepal injects Rs 4b

Surya Nepal is all set to add 250 jobs in the domestic labor market, as the subsidiary of the Indian tobacco major ITC Ltd has injected additional investment of Rs 4 billon to establish a new tobacco factory in Tanahu, a hilly region of the country.

The company, which has been going through a rough phase due to labor-related problems, has already started construction of the factory in 130 ropanis of land in Tanahu.

"We have the same business plan as we have for our existing factory in Simara," Rabi KC, corporate vice-president of the company, shared with Republica on Sunday.

Surya Nepal, one of the largest enterprises in the country, which started its operation in 1986, annually pays around Rs 7 billion in taxes and is one of the largest tax-payers.

Surya Nepal, which closed down its garment factory last year -- leaving around 700 workers jobless -- will create job opportunity for 250 people after production kicks off in the new factory.

"We will not reduce production ," KC said, "But we will not need a huge manpower strength due to high-tech equipment in the new factory."

The factory, while hiring the workers will focus on quality.

However, locals will be in a priority list if they are qualified enough and meet the company´s standard. The existing factory in Simara has around 350 workers.  

Surya Nepal has a plan to make this factory, which is under construction, a number one production factory in terms of environmental aspects. "We have a plan to use an environment friendly technology that gives us recognition worldwide," KC said with vigor.

The new factory will be a backup for the existing factory in Simara. "Now, the factory produces 3 million sticks of cigarette per day," KC said, "After the new factory starts production, we will halve the production in Simara and move it to Tanahu for the time being. In the long-run, we are planning to run all the units in full phase."

"There would be completely new labor force," KC said when asked whether the company would hire those who lost jobs after the closure of garment factory in Biratnagar. "We have already cleared our deal with workers in the garment factory."

According to KC, the company has granted Rs 1.3 billion to upgrade the physical infrastructure of a school in the locality. "We will start production within the next 14 months," KC said.

Surya Nepal, which produces four brands of cigarette, however, has no plans to introduce a new brand.

It is time to invest in Nepal: CII CEO Mission

A visiting top official of Confederation of Indian Industry (CII) on Saturday said that Nepal’s business climate is fast improving and it is high time that Indian investors started exploring opportunities for investments in the country.

B Mathuraman, president of CII and vice-chairman of Tata Steel Ltd, who was in Kathmandu with a six-member team, made such a remark after interacting with officials of Federation of Nepalese Chamber of Commerce and Industries (FNCCI) and CEOs of Indian ventures in Nepal.

“I am happy with what I saw and heard. I will encourage Indian investors to visit Nepal and look for avenues of investment,” Mathuraman told the press before leaving Kathmandu on Saturday.

Mathuraman tagged consistent policies and political stability as two major factors Indian investors consider while taking decisions about investment. He expressed satisfaction over recent political development in Nepal and the government’s endeavor to reframe policies such as Industrial Enterprises Act (IEA) and Foreign Direct Investment (FDI) policy.

“There exists some problems in the industrial sector, but overall situation is improving. Nepal has definitely created opportunities to attract investments,” Mathuraman stated.
Mathuraman’s team, which included CEOs of some Indian companies, met with President Ram Baran Yadav, Prime Minister Baburam Bhattarai, Industry minister Anil Kumar Jha and senior government officials. All members of the visiting delegation expressed same zeal and were positive about Nepal’s condition.

“Political situation seems a bit tough now, but this will pass away once the constitution is written,” Rajiv Kaul, former president of CII and chairman of Nicco Corporation Ltd said.
Pointing out the areas in which Indian businessmen would like to invest, Mathuraman said, “Hydroelectricity, agro-processing and infrastructure development are the areas that can lure Indian investment.” He added that CII team members accompanying him will also share their views with other Indian investors and motivate them to visit Nepal to explore areas for investment.

The delegation during its meeting with PM Bhattarai had raised concerns about labor tensions in multinational companies, particularly Indian ventures in Nepal.

“In our brief discussion with Prime Minister Bhattarai we discussed labor problem in Nepal like the one that led to the closure of Surya Nepal Garment Factory and the strike threats faced by Surya Nepal Tobacco Factory,” said a member of the team.   

“The meeting concluded on a positive note. He has assured us that the government will put all basic requisites in place in order to build investors’ confidence,” said Kaul.

Court continues stay order against Surya Nepal strike

The Appellate Court, Hetauda on Thursday continued the stay order it had issued a week ago against labor strike at Surya Nepal, after hearing demands of laborers of the country´s largest multinational tobacco company.

The court decision to continue the stay order has prevented the company´s closure for indefinite period.

“The court has ordered us to resolve the problems through dialogue,” Rabi KC, corporate vice-president of Surya Nepal informed Republica Thursday evening.

The Maoist-affiliated Nepal Multinational Companies´ Workers Union (NMCWC) had threatened to close down the company from last Monday if its 11-point demand was not fulfilled. Surya Nepal had challenged the union´s move at court and the court had issued the stay order on March 29.

According to KC, the court´s decision to continue the stay order and recommend dialogue for resolving the dispute has paved the way for resumption of talks between management and the trade union.

Trade union officials however termed Thursday´s court order as unfair. “We are not happy with the court decision,” Beni Prasad Timilsina, president of NMCWC said. “We will meet Friday to decide our future strategy.”

According to Timilsina, the court has again summoned both management and trade union officials on May 2 for another hearing.

After the court´s March 29 stay order, the management, which had raised the basic salary of workers a few months ago by Rs 1,165, has agreed to further increase it by another Rs 400 and allowance by Rs 500.

It has also proposed raising gratuity amount by Rs 20,000 for those who serve the company for 20 years and by Rs 120,000 for those serving for 25 years, from existing Rs 180,000. It has also expressed readiness to increase medical expenses from Rs 300,000 to Rs 400,000 for those workers who suffer from cancer.

The trade union also maintained flexibility and has reduced the number of demands to 7 from 11. “But we are firm on other demands like raising basic salary by Rs 2,000, allowance by Rs 1,000 and increasing gratuity paid at the time of retirement to Rs 500,000,” said Timilsina.

The union has also refused to relinquish its demand for job guarantee for offsprings of staffers in case they die while working, while dropping demands like raise in medical insurance and residential quarters for workers.

International Trade Fair to kick off Thursday

Exhibitors from different countries including China, India, Bangladesh, Bhutan and Pakistan have booked more than 350 stalls for Nepal International Trade Fair 2012, which is set to kick off from Thursday in Kathmandu.

Bhaskar Raj Rajkarnikar, vice president of the Federation of Nepalese Chamber of Commerce and Industries (FNCCI) -- the lead organizer of the fair -- said around 200,000 people were expected to visit the five-day event which will be inaugurated by President Ram Baran Yadav.

“We are trying to transform this fair into a forum for those who want to invest in sectors ranging from agriculture to hydroelectricity in the country,” Rajkarnikar said.

Moreover, the government of Nepal has also supported this fair in order to promote domestic products with comparative advantage, which include 19 products listed in Nepal Trade Integration Strategy.

According to Rajkarnikar, six stalls have been booked by Indians, 30 by Chinese, seven by Bangladesh and two by Bhutan so far.

However, some of the exhibitors, like China Sichuan Pavilion, will start showcasing their products only from Friday.

“This trade fair will push itself a bit far from just a fair of goods to a showcase forum of whole nation, products and features,” Rajkarnikar said, “We have planned to arrange one-to-one meeting for domestic and foreign investors in order to lure foreign investment.” He claimed that the fair will be helpful in promoting features of Nepal´s different sectors in order to attract investment during the Investment Year 2012/13.

The Federation of Nepal Cottage and Small Industries (FNCSI), Federation of Nepal Handicrafts Associtaions´ (FNHA) and Nepal China Executive Council (NCEC) are among other organizers of the fair. “The fair will showcase products from east to west Nepal such as tea, coffee, herbs, honey and handmade carpet,” Rajkarnikar informed on the eve of the trade fair.

Moreover, the fair will also showcase readymade garment, electrical equipment, organic and leather products, among others. “We will also award best buyers during the fair,” Rajkarnikar said. He further added that there would be interactions and meetings between national and international investors and businessmen.

According to Rajkarnikar, Nepal Telecom is chief organizer whereas Surya Nepal is orgnizer and Shikhar Shoes is co-organizer.

Govt prepares guidelines for betel nut export

Ministry of Commerce and Supply has prepared a new guideline on export of betel nut to check illegal re-export of nuts imported from third countries to India.

"Its draft has already been prepared and has been circulated among a close group of private sector and Ministry of Agriculture and Cooperatives (MoAC) for finalizing it," said a source at the Ministry. He told Republica that Commerce Minister Lekh Raj Bhatta is holding up the final decision.

The guideline was drafted as per the ministerial decision of January 1, and sources disclosed that traders who were reaping handsome returns through its illicit trade are now trying to influence the guideline.

Though officials refused to disclose the contents of the guideline, sources said it would allow local chambers to issue certificate of origin (CoO) only after the recommendation of Betel Nut Producers´ Association (BNPA) and MoAC. MoAC, in turn, would issue such recommendation based on its data of dometic production.

“Verification from MoAC is being provisioned mainly to ensure that volume of exports do not exceed the domestic production," said the source, adding that enforcement of guidelines would control the illicit export of betel nut to India.

The Ministry took the decision to enforce the guidelines after traders influenced local officials to issue CoO even when source of betel nut were unknown.

According to statistics, Nepal produced around 7,500 tons of betel nut mainly in Jhapa, Sunsari, Ilam and Morang in 2010/11. But in the same year, Nepal imported more than 108,000 tons of beetle nuts.

Though MoAC has no specific data on actual demand of betel nut in the country, officials ruled out demand was so high as import suggested. "Imports remained huge mainly because large portions were easily finding its way into the Indian market," said the source.

India, has constantly raised the issue of illicit export of beetle nut, and urged Nepal to take concrete steps to check it.

Govt forms committee to prepare guidelines for select investors

The Cabinet has approved formation of a high-level committee, as recommended by Ministry of Physical Planning and Works (MoPPW), to prepare guidelines for selecting investors for Kathmandu-Tarai Fast Track, a national priority project.

Ministry, which was entrusted to open the six-lane 76 km road linking Kathmandu and Nijghad, had recommended the cabinet to form a six-member high level committee to prepare basic documents needed for inviting bids and selecting investors few weeks back.

"The Cabinet endorsed our proposal last week. The committee will start its function immediately," Hariom Srivastav, joint secretary at MoPPW told Republica. The government´s plan is to build the fast track under build-own-operate-and-transfer (BOOT) mechanism.

The high-level committee, which is assigned to prepare the guidelines for selection of investors, is led by by Birendra Bahadur Deuja, former director general of the Department of Road (DoR).

"Ram Ayodhya and Hari Prasad Dhakal, both are former division engineers of DoR, Dinkar Shamara, director general of the DoR and representatives from MoPPW and Ministry of Finance (MoF) are other members of the committee," said Srivastav.

According to Srivastav, the ministry has provided three months to prepare the guideline“. "Ministry will proceed to get expression of interests from different investors after the committee finalizes the guidelines," he said. However, the committee won´t have any authority to screen the final investors.

Ministry has allocated Rs 1.9 million for the committe. "The money will be used as remuneration for members of the committee," Srivastav shared. According to Asian Development Bank´s 2008 estimate, the project will cost Rs 67 billion.

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.