Farmers complaining about low price of rice in the market will soon have
a reason to rejoice. The government is preparing to lift up the ban on
exports of rice imposed since 2008 owing to low production.
The Ministry of Agriculture Development (MoAD) has said it will allow
export of up to 100,000 tons of rice from the next fiscal year which
begins from mid-July.
The Ministry of Commerce and Supplies (MoCS) has said it will open up
two customs points -- Tatopani and Rasuwa -- for rice exports. But it
has yet to fix the exact quantity that would be allowed to be shipped
out of the country.
"Although the MoAD has okayed exports of 100,000 tons of rice, we are
planning to limit it to 50,000 tons for now," Lal Mani Joshi, secretary
at the MoCS, said. "The decision has to be approved by the Prime
Minister´s Office."
At present, the government has decided to open only two border points,
Tatopani and Rasuwa, for exports as these areas were hubs for illegal
exports of rice. "We hope this step will control smuggling of rice," the
official said, adding, “Opening up of customs points for legal exports
will also ensure that farmers will get higher returns for their
products.”
According to MoAD statistics, the country enjoyed food surplus of
443,000 tons in the fiscal year 2010/11. It has forecast a food surplus
of about 800,000 tons for this fiscal year, of which 300,000 tons will
comprise rice, the statistics show.
The preliminary estimation of crops production of MoAD shows that paddy
production reached 9.45 million tons this fiscal year, up 9.8 percent
compared to the last fiscal and 21.8 percent compared to the fiscal year
2009/10.
Despite surplus paddy production, the government is reluctant to open up
exports of rice from other customs points citing unethical behavior of
traders.
"There is a risk in opening rice exports from other customs points," an
official at the MoAD said. "Bangladesh has a huge demand of rice of
almost 1 million tons that might lead us to another trouble." The
official´s statement stems from the fear that Nepali traders re-export
rice imported from India to Bangladesh.
Investment Board (IB) that was assigned to develop procedures and select
investors for 14 mega projects has put six projects, including five
hydropower and Kathmandu Metro Railway (KMR) project, in its priority
list and has started informal talks with potential investors for their
earliest implementation.
It has also asked different government agencies that were looking after
those projects to forward it all the documents related with them. “We
have also invited the interested investors for informal discussions,”
said a senior IB official.
He told Republica that the IB has prioritized Tamakoshi III (650MW),
Upper Karnali (900MW), Upper Marsyangdi (600MW), Arun III (900MW), West
Seti (950MW) and KMR for immediate action. The government had handed
over 14 projects to the Board in May, asking it to speed up their
implementation in a fast track mode.
“All the 14 projects are national-pride projects and equally important
for us; we prioritized them just for the sake of convenience and to
remain focused,” said the source.
Under the fresh initiative, the IB is soon holding informal talks with
the Chinese hydropower developer - Three Gorges - to take forward the
West Seti Hydropower project. Similarly, it would also hold talks with
Satluj Jal Vidyut Nigam Ltd (SJVN) and GMR Ltd - the two Indian
developers that have expressed interest to invest in the remaining 4
hydropower projects.
“We had received their expression of interest after we endorsed a
template of new Power Development Agreement (PDA) few weeks back,” said
the source.
Both the Indian companies had expressed dissatisfaction over the PDA
that the government proposed earlier, and stopped works at their
respective projects. GMR has been developing Upper Karnali while Satluj
has been working on Arun III.
Confirming these developments, Radesh Pant, CEO of the IB, said the
board was dealing with the mega projects on project-to-project basis so
that it could make a substantial progress for their earliest
implementation.
“Investors are interested on those projects. Still, it will take a lot
of time and careful touch to make these projects happen.”
In order to consolidate its work, the IB has written to the Ministry of
Finance (MoF) to furnish it all the documents related to West Seti in
order to start a formal negotiation with Three Gorges.
“Presently, the discussion is being held informally,” the source said,
“The formal negotiation will start once we reach at a point from where
we can move forward positively. If everything moved well, we will be
able to sign a formal agreement on those projects by coming two months.”
Apart from the six prioritized projects, the IB is holding coordination
meetings with all the government agencies which were leading the
remaining eight projects, including 76-km Kathmandu-Tarai fast track,
Nijgadh international airport, and project to upgrade Tribhuvan
International Airport.
“The board is also closely working with all the concerned offices of the
government in order to know the current status of the projects and move
from those points,” said the official.
In a bid to promote exports of medicinal herbs in international
market, the government is preparing to seek assistance from Enhanced
Integrated Framework (EIF), an initiation of World Trade Organization
(WTO), for the collection of medicinal herbs and setting up herbs
processing center.
The Ministry of Commerce and Supply (MoCS), which is entrusted to carry
out the implementation of Nepal Trade Integration Strategy (NTIS) 2010
-- a blueprint to boost export -- is preparing to submit a proposal to
this effect to the EIF in order to get its assistance for improvement of
forward and backward linkages -- that establishes a mechanism to
trickle down the returns of the product.
“Medicinal herb is the third product, after ginger and pashmina, for
which we are seeking EIF assistance to develop backward and forward
linkages,” Toya Narayan Gayawali, joint secretary at the MoCS, told
Republica on Tuesday.
USA, France, Germany, Vietnam, Singapore, Japan, Italy, Russia, Belgium
and South Korea have been identified as major destination countries for
Nepali medicinal herbs.
According to Gyawali, the ministry is seeking EIF assistance to add more value to Nepali medicinal herbs.
The government has already received Rs 110 million from EIF to enhance
production and processing of ginger. Similarly, the government is
working on registering trademark of Nepali Pashmina in the international
market. “We will closely work with the Ministry of Forests and Soil
Conservation in order to implement the activities that we have planned
to promote exports of medicinal herbs,” added Gyawali.
According to the statistics of Trade and Export Promotion Centre (TEPC),
Nepal exported medicinal herbs worth Rs 710 million in fiscal year
2010/11.
The nation´s economy would grow at an average of 5.2 percent over the
next three fiscal years till 2015 even if the situation in the country
remained the same, Institute for Integrated Development Studies (IIDS)
-- a Kathmandu-based think tank -- forecasted on Monday.
The agency, which has predicted the growth rate this year to remain at
4.6 percent, has attributed the higher growth to recent improvements in
spending of capital expenditure.
“Capital spending over the past few years has consistently grown by 8
percent annually. This will spur private investment and enable the
country enjoy an average growth of 5.2 till 2014/15,” reads a report
that IIDS unveiled on the day.
The report has estimated the agriculture and non-agriculture gross
domestic product (GDP) to average at 4.9 percent and 5.2 percent
respectively over the next three fiscal years. For this year, it has
projected agriculture sector to grow at 4.2 percent and non-agriculture
sector to expand by 4.5 percent.
“Considering the recent growth trend, we assume the capital expenditure
will reach 15 percent of the annual budget by the end of 2014/15,” the
report states.
IIDS has also predicted inflation to average at 6.3 percent over the
next three fiscal years. Though the forecast portrays better picture
than the existing situation, IIDS has suggested that the central bank
and the government to put in more serious effort to contain inflation.
“The inflation exerts pressure on common people´s daily lives. It should
be handled with due care,” said Dr Bhavani Dhungana, one of the experts
who released the forecast.
The report also sheds light on why key sectors of economy such as
agriculture, industry, international trade and services have been
performing weakly in recent period. “Input shortages, irrigation
deficiencies and low allocation of budget in the agriculture sector have
been adding woes to the sector,” the report said.
IIDS has urged the government to efficiently manage public resources and
fine tune the capital budget so that it could contribute for better
growth.
As for the declining contribution of manufacturing sector in the GDP,
the report suggests the government to do away with existing weaknesses
like low investment in the industrial sector, technological
backwardness, infrastructure shortage and slow growth of small and
medium scale industries, among others.
The Ministry of Industries (MoI) has set up a new unit to implement
recommendations made by a high-level taskforce formed to recommend
measures to give a new lease of life to sick industries.
According to a ministry official, the unit was formed after the cabinet
approved the report of the high-level taskforce formed by the government
about six months ago. The taskforce was led by Dipendra Bahadur
Kshetry, vice-chairman of National Planning Commission (NPC).
“The unit will focus on implementation of recommendations made by the taskforce,” the official said preferring anonymity.
The taskforce has recommended host of relief packages such as bank loan
restructuring, extension of the bank loan payment date, waiver of
interest among and tax, among others.
The government, however, has yet to name the industry eligible for the relief package.
“The unit will also come up with a certain criteria to identify sick industries,” the official said.
Approving the report of the taskforce, the cabinet had delegated the
authority to identify sick industries to a committee at the MoI.
Distribution of relief packages will begin after publishing the names of sick industries in Nepal Gazette, the official said.
The taskforce, in its report, has named 26 firms in the list of sick industries.
“The technical committee under the MoI will study whether or not those
firms meet the criteria of sick industries,” Anil Kumar Thakur, joint
secretary at the MoI said.
This means sick industries will not get any relief from the government in this fiscal year as well.
The government had first incorporated a specific program to revive sick
industries in the budget for fiscal year 1994/95.
The government had boasted it would help 50,000 youths create own jobs
over this fiscal year with Youth Self-Employment Program (YSEP).
However, records show the program has so far catered to only 3,343
youths with just 3 weeks left for the completion of the fiscal year .
Such mediocre achievement of the program, which was designed largely to
enable urban youth get jobs, indicates the program was a complete flop.
As a result, it fared badly in containing urban poverty, which contrary
to rural poverty, grew over this fiscal year.
According to data compiled by Ministry of Finance (MoF), the urban
poverty jumped by 5.91 percentage points since 2003/04 to 15.46 percent.
Rural poverty, on the other hand, has decreased by 7.19 percentage
points to 27.43 percent over this period.
“The drop in rural poverty is attributed to positive impact of
remittances inflow and relatively better performance of Poverty
Alleviation Fund (PAF) Nepal,” said a MoF source.
The report that MoF is incorporating as a part of the Economic Survey
for 2011/12 says the government has failed largely in addressing urban
poverty because it has failed to create jobs. “Performance of
government´s targeted YSEP remained dismal. And it also failed to
encourage private sector investments,” reads the report.
Records of YSEP Secretariat show, the government had approved Rs 2.89
billion in the fiscal year 2011/12 for the implementation of programs,
under which banks were assigned to issue collateral-free loans of up to
Rs 200,000 to each aspirant self-employee.
However, as of date, the secretariat released only Rs 785 million and
the banks supposed to use them to issue collateral-free loans have
invested only about Rs 335 million.
Referring to such cases, MoF admitted the government had failed to
address poverty largely because it lacked a clear policy framework and
well-designed and executable programs.
“The main reason behind high poverty is lack of opportunities in the job
market. And we have no policy that deals with job creations,” reads the
report. “The public sector has very limited jobs opportunities and
private sector too has not been able to expand to create jobs.”
According to the report, some 400,000 Nepalis enter into job market
every year. While some 300,000 of them eventually leave the country for
foreign employment, only a few thousands are absorbed in the formal
sectors. “Unemployment rate at present stands at 2.2 percent, but if we
look at the rate of under-employment, the number suddenly jumps to 30
percent,” said the MoF source.
Given the situation, the MoF report has stressed on the need to
formulate a clear policy on job creation and better design the targeted
self-employment schemes. “Our incentives to the industries and private
sector should be aligned as per the thrust of this policy if we are to
achieve the desired poverty reduction. Otherwise, we will continue to
fail,” said the source.
Under the ongoing Three-Year Development Plan, the government has
targeted to lower poverty incidence at 21 percent by the end of 2012/13.
Presently, the poverty incidence stands at 25 percent.
The government is preparing to enact Railway Bill through ordinance,
envisioning formation of an autonomous body to construct and manage the
railway, and provide fresh impetus to develop mass transportation.
The government has already assigned numerous firms to carry out
feasibility study for East-West railway system and develop underground
Metro train system in the Kathmandu Valley.
“We forwarded a draft of the bill to the Ministry of Law and Justice
(MoLJ) for its consent on Friday,” said a source at the Ministry of
Physical Planning and Works and Transport Management (MoPPWTM). “We will
submit it to the cabinet for enactment through ordinance as soon as we
get MoLJ´s consent,” the source told Republica.
Among others, the bill envisages a Railway Board (RB) to look after all
the development and management of the railway in the country. It
proposes that that board will be chaired by the Minister for Physical
Planning Works and Transport Management.
The board will be executing the national-pride projects such as
east-west railway, Jayanagar-Bijulpura railway and Kathmandu-Pokhara
railway and Kathmandu Metro Railway (KMR). “These are the projects that
government has already planned,” the official said.
The board can expand and add other projects in the future, if it deems necessary and feasible.
As per the act that has been sent to the MoLJ, the seven member board
comprises secretary of the MoPPWTM, finance secretary, commerce
secretary, home secretary and two railway experts, .
“The enactment of bill will lead to the dissolution of Department of
Railway (DoR) and Nepal Railway Company Ltd,” one of the officials at
the MoPPWTM said. As the DoR was established without any legal
provision, it can be dissolved through cabinet decision.
Tulsi Prasad Sitaula, secretary at the MoPPWTM has confirmed that the
ministry has pushed for the enactment of railway Bill through ordinance.
“This act is necessary to carry out the railway projects. Though we
have Railway Act 1961, it has become obsolete,” he said.
According to the draft bill, the government will also set up a special
fund to support the operations of the RB. It hopes the RB to be
self-dependent in the long run.
Central Carpet Industries Association (CCIA) -- the umbrella body of
carpet producers -- has requested the government to treat it carpet
industry as a ´sick industry´ and provide facilities accordingly.
According to a press release issued on Friday, CCIA has sought the
support of Federation of Nepalese Chambers of Commerce and Industry
(FNCCI), an apex body of the private sector, to lobby with the
government in this regard.
“Carpet industry has been hit hard by the shortage of skilled workforce,
diminishing international market and weak promotional activities,”
Lanka Man Roka, president of the CCIA, said in the release.
The CCIA officials, who reached FNCCI office on the day, also requested
FNCCI to help them establish the brand of Nepali carpet in the
international market.
“The industry, which was one of the largest foreign currency earner in
the country, has lost its market potentiality. There should be specific
measures to revive the industry," Roka said in an interaction with FNCCI
officials, according to the release.
The withdraw of two oil companies from Nepal has posed questions which might put the country in a difficult position. The warning of the companies with an international arbitration will definitely lead Nepal government to a tough path. Despite the consequences of legal process and expenses, the much-touted project of exploring the prospects of producing petroleum products within the country has been dropped for a seemingly near future.
The government is formulating an Internal Trade Policy (ITP) to better
manage and develop local markets and boost local trading activities.
The larger interest of the policy is to better serve the interest of
consumers, said an official at Department of Commerce and Supply
Management (DoCSM).
“Its goal is to facilitate the establishment and
development of value chain, raise employment and income opportunities
through expansion of commerce and ultimately attain poverty reduction,”
Narayan Prasad Bidari, director general of the DoCSM told Republica.
The department has outsourced the task of preparing the ITP to South
Asia Watch on Trade, Economics and Environment (SAWTEE), a
Katmandu-based regional think tank.
If the government came up with the policy, it will be the first of its
kind on internal trade. So far, the government has policy on foreign
trade only. Supply policy too was formulated only recently.
“We expect SAWTEE to submit the draft within a week,” said Bidari,
adding that the department will widely circulate it and incorporate all
the feedbacks before finalizing it.
SAWTEE officials drafting the policy said the ITP will aim to promote
domestic trade by enhancing the backward and forward linkage that
directly support the farmers to get returns from their productions in
the longer term.
Dr Ratnakar Adhikari, general secretary of SAWTEE said the formulation
of ITP was important as the government has so far been given less
attention towards increasing the size of domestic trade.
"We must have a substantial size of domestic trade even while giving
special emphasis on promoting exports. Only this balanced approach will
help us develop a sustainable economy," said Adhikari.
In fact, its (ITP´s) importance has grown in the wake of global economic
slowdown. After slowdown affecting exports, countries such as China
have proven that it can continue to give momentum to economic growth by
focusing on internal trade. "The strong size of the domestic trade
boosts the confidence of the country even in times of global crisis,"
said Adhikari.
Officials said the ITP will broadly be an integrated framework to
promote the domestic productions and increase manufacturing sector´s
contribution in the economy.
Fundamentally, it will encourage productions for domestic consumptions,
create new job opportunities and anticipates this rise in income in turn
will boost consumption and help develop markets in all regions of the
country.
“The new policy will also focus on smoothening food distribution,
improve supplies and facilitate the development of wholesale and retail
markets of essential goods by improving connectivity, among others,”
said Bidari.
The group of experts (GoE) meeting on South Asia Trade in Services
(SATIS) has ended without any breakthrough as participating countries
refrained from making clear commitments on services that will open for regional trade.
Officials from the eight member countries of South Asia Association for
Regional Cooperation (SAARC) who met in Kathmandu couldn´t make any
commitment from their respective countries regarding liberalization of
services that is aimed at boosting regional trade.
“Apart from Bhutan and India, it seemed that other countries attended
the meeting without doing any exercise at home to make their commitment
to facilitate regional trade liberalization,” said an official attending
the meeting.
The two-day meeting, which concluded in Kathmandu on Wednesday, was
supposed to garner commitments from all eight member countries to boost
regional service trade under the South Asia Free Trade Agreement (SAFTA)
pact.
“The meeting ended with a decision to meet in Kathmandu again in
September with the hope to garner concrete commitments from member
countries,” the official told Republica.
The SAFTA ministerial council meeting held in Dhaka in April 2006 had
assigned to a panel of experts to furnish a report on viability of
incorporating the service sector into the regional trade framework.
“Member countries have already liberalized their service sector to a
certain extent under the General Agreement on Trade in Services in the
World Trade Organization (WTO). Further commitments are forthcoming
under the regional framework,” reads a study report published by CUTS
International, an India-based organization working in the sector of
consumer unity and trust.
According to the official, the meeting also decided to submit proposals
and requests to SAARC Secretariat for further liberalization in service
trade by August. “The proposed meeting in September will discuss on the
proposals and requests made by member countries,” the official added.
SAARC members had agreed to enhance regional trade under free trade
agreement in 2004 before enforcing the SAFTA regime in 2006 with the
main objective of creating jobs and reducing poverty through trade
integration and liberalization of service sector for investment.
A crucial meeting of Working
Group of eight South Asian countries, which was supposed to slash the
existing long list of sensitive items - on which they have refused to
trade at zero tariffs, ended Tuesday without any headway.
The meeting ended inconclusively after the members of South Asian
Association for Regional Cooperation (SAARC) remained divided over the
modality for downsizing the list.
“India, Pakistan, Bhutan and the Maldives wanted all the members to
downsize the items in sensitive list to just 100 products. We could not
agree to it,” one of the officials, who participated in the meeting,
told Republica.
Contrary to their proposal, officials from other SAARC countries,
including Bangladesh, Afghanistan and Sri Lanka, proposed that the list
be gradually reduced by 30 percent over the span of next 5 years. Nepal
that opposed the former modality, however, maintained its silence on the
latter proposal as well.
“We did not express commitment of any sort because we are still to
implement the previous commitments on tariff liberalization,” said the
source.
The eight-member bloc of SAARC had agreed to trade under free trade
agreement in 2004, and enforced the SAFTA regime in 2006, eying to
create jobs and reduce poverty through trade integration.
However, the intra-regional trade has not yet made significant headway
largely due to the long sensitive list. Presently, the sensitive list
has as much as 20 percent of total regional tradable items. Worse is
that each member countries have largely included items of others exports
interest in the list.
Realizing this constraint, the SAARC leaders during the last Summit
asked the Working Group to further downsize the items in the sensitive
list so that the members in the region could trade more freely and
meaningfully. The meeting in Kathmandu was held as a part of this
negotiation.
“Around 3 to 4 modalities for further reduction of sensitive list were
tabled during the meeting. But nothing concrete could be decided,” said
Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and
Supply (MoCS).
Given the difference and failure to come up with any concrete plan for
further reduction of sensitive list, the Working Group on Reduction of
Sensitive List (WGRSL) ended the meeting, deciding to meet again in
September.
Officials said all the SAARC members have expressed commitments to
further open up their markets. “Hopefully, we will reach to some
conclusion when we discuss on the new proposals in the next meeting,”
said the official.
As for the separate meeting on South Asia Trade in Services (SATIS),
which began on Tuesday, officials said member countries are still
negotiating and proposing sectors that they will open for service trade.
“Negotiations are still on in very basic issues,” Upadhaya made a very short comment.
Private sector of Nepal and Pakistan have stressed the need to increase
connectivity between the two countries in order to increase bilateral trade.
According to a press release issued on Tuesday, trade representatives
from Rawalpindi Chamber of Commerce and Industry on the day held
discussion on trade and connectivity with officials of Federation of
Nepalese Chambers of Commerce and Industry.
Nepal Trade Integration Strategy (NTIS) 2010 - a blueprint of the
government to boost export - has identified Pakistan as a destination
country for four goods - cardamom, ginger, lentils and tea.
“Officials of the two trade organizations underlined the need to
decrease airfare between Nepal and Pakistan. They also held discussions
on the ´3rd Made in Pakistan Fair´ being held in Kathmandu from June 20
to 26.
Pashupati Murarka, vice-president of the FNCCI and Ajar Man Shrestha,
president of Lalitpur Chamber of Commerce and Industry (LCCI) were also
present in the meeting.
According to statistics of Trade and Export Promotion Centre (TEPC),
Nepal suffered trade deficit of Rs 20.2 million with Pakistan in fiscal
year 2009/10. Nepal mainly exports cardamom, ginger, lentils and tea to
Pakistan.
The government has kicked off preparation to arrange land acquisition
for construction of a 8-lanes ring road from Kalanki to Koteshwore to be
developed with assistance of Chinese government, after the completion
of preliminary design of the project.
According to a high level official at the Ministry of Physical Planning
Works and Transport Management (MoPPWTM), the Chinese company carrying
out the survey and design of the project submitted the construction
design to the ministry.
“We are studying the design that was prepared by The Third Railway
Survey and Design Institute Group Corporation (TTRSDIGC),” Ramesh Raj
Bishta, joint secretary at the MoPPWTM said, “We might have some comment
on the design but if we don´t we will okay it.” He further added that
the contract for detail project report (DPR) and construction would
start after finalizing the design.
The government and China had signed the letter of exchange (LoE) for the
project in Feb 2011. “The project will be completed within three years
of its commencement,” Bista said, “The cost of construction is yet to be
estimated. However, the rough estimation is Rs 5 billion.”
According to Bista, the government has to arrange the land for the
construction of road. “It requires 62 meters of width for the
construction of 8-lane road,” he said, “There is sufficient open land
for the construction of road.” The government has anticipated that the
construction will begin at the end of this year or from the beginning of
2013.
The government should have a matching fund for the project. “However,
it´s not been finalized how much matching fund the government will
arrange for this project,” Bista told Republica on Sunday.
The design that the TTRSDIGC has submitted outlines the map of road from
Kalanki to Koteshwore, which geos through Ekantakuna, Satdobato and
Guwarko. “There will be different lanes for motorized vehicles and
non-motorized vehicles,” Bista said.
According to an official at the MoPPWTM, the construction of the road
also will be awarded to the Chinese companies. “We will just have to
coordinate with them,” the official told Republica.
The government is preparing to enact special economic zone (SEZ) bill --
which was long shelved in parliament due to differences among the
political parties over some of its provisions -- through an ordinance.
“We have forwarded the bill to the Ministry of Law and Justice (MoLJ),
seeking its clearance,” said Umakant Jha, secretary at the Ministry of
Industry (MoI). “Once the MoLJ gives its consent, we will instantly
forward it to the cabinet for approval and enact the bill through
ordinance,” he told Republica.
The SEZ bill was already endorsed by the government in 2009. However, it
failed to get endorsed in parliament as some of the trade unions,
particularly the one associated with UCPN (Maoist), criticized the bill
for not have provisions to protect the rights of laborers. A faction of
the UCPN(Maoist) is still against enactment of the bill.
Among others, the bill mainly upholds three broader principles:
incentives to industries, one-spot service and labor flexibility in the
zones, which are being developed to give impetus to the country´s export
trade.
It also cites that SEZ will be treated as a land wherein other domestic
laws related to labor and industries would not be applicable. The bill
allows workers to unite and practice collective bargaining, but
prohibits them from undertaking activities that affect production and
normal operations of industries.
“The workers of industries established in SEZ are not allowed to carry
out any activities that would have a negative impact on the industry and
its production,” reads the draft of the bill.
In order to address workers´ concerns, the bill provisions better
facilities for workers in SEZ than what workers receive outside of the
zone. “Autonomous SEZ Authority that will be formed to oversee the
zone´s operations and SEZ regulations will determine the extent of
workers pay scale, medical and insurance facilities, among others,”
reads the bill.
A source at MoI disclosed that the bill also allows entrepreneurs to hire workers on a contract basis.
In order to lure investors in SEZ, the bill promises them with
facilities such as duty-free import of raw materials, value added tax
(VAT) exemption and waiver of excise duty and other local taxes.
The industries in SEZ have also been offered income tax holiday for five
years. “After five years also, they will continue to enjoy 50 percent
discount on income tax,” said the source. In order to safeguard
investors´ interests, the bill says the industries established at
present would continue to enjoy all the facilities, even if later
amendments changed the structure and extent of facilities.
MoI proposes basket fund for developing SEZs
The Ministry of Industry (MoI) has proposed setting up a Basket Fund
for developing special economic zone (SEZ) in the budget for the
upcoming fiscal year 2012/13.
“We have proposed creation of basket fund so that the state could
prioritize, raise allocations and speed up constructions for developing
SEZ in different parts of the country,” a high level official at the MoI
told Republica.
The MoI pushed for the special fund mainly as the governments so far
have been allocating only around a few hundred millions for developing
SEZ. For instance, the government in 2011/12 has allocated just Rs 140
million for the purpose, and according to the officials the amount was
too less to execute its plan to build such zones in different parts of
the country including Panchkhaal, Simara, Jhapa, Kapilvastu, Jumla and
Biratnagar, among others.
“The basket fund will be used to construct SEZ,” the official said.
However, officials at the Ministry of Finance refused to comment as to
how it would resond to MoI´s proposal.
Officials from eight South Asian countries are convening in the capital
next week to shorten the existing list of ´sensitive items´ on which
they have refused to trade at zero tariff so that regional economic
integration could gain momentum, generate more trade and job
opportunities to the people in the region.
Likewise, another working group of technical officials from South Asian
Association for Regional Cooperation (SAARC) is also meeting in the
capital to work out a framework for opening services trade in the
region.
“We will have separate back-to-back meeting of two different groups
under South Asia Free Trade Area, starting from Monday,” said Naindra
Prasad Upadhaya, joint secretary at the Ministry of Commerce and
Supplies (MoCS).
The first - Working Group on Reduction of Sensitive List (WGRSL) - will
negotiate on Monday for downsizing the existing negative list of trading
items by 20 percent, as mandated by the SAARC Summit. The second team -
Group of Experts - meeting on Tuesday will hold discussions to evolve
out a frame work of South Asia Trade in Services (SATIS).
Upadhyaya refused to elaborate, but sources at the MoCS said all member
countries have respected the mandate of the Summit to further open up
their markets for intra-regional trade and proposed a revised sensitive
list, downsizing it from existing long list.
Although SAARC members, including Nepal, India, Bangladesh, Bhutan,
Pakistan Sri Lanka, Maldives and Afghanistan, started to trade without
tariff barriers from 2006, the intra-regional trade has not yet made
significant headway largely due to the long sensitive list. Presently,
the sensitive list has as much as 20 percent of total regional tradable
items, and worse still, each member countries have largely included
items of others exports interest in the list.
“The commitment is there from all members to further open up their
markets, but we are still to see how sincerely they will present
themselves in this endeavor,” said the source, adding that WGRSL will
discuss a new lists that the member countries will table.
So far, countries have not disclosed what exactly they will reduce from
the list. “We ourselves are still preparing the list of the items that
can be removed from the existing list,” he told Republica.
If the Working Groups finalizes the cuts, officials said member
countries will immediately open their trading under zero tariff
facility. If Nepal cuts the list, it will still have 998 items in
sensitive list for the least developed countries (LDCs) and 1,086 items
for the non LDCs.
Presently, Bangaladesh has 1,233 products in the sensitive list for the
LDCs and 1,241 for the non-LDCs. Similarly, India has 480 items in list
for the LDCs and 868 for the non-LDCs, Maldives has 681 for all seven
SAFTA nations, and Pakistan has 936 items, Srilanka has 1,042 and
Afghanistan has 1,072 items on the list.
As for the meeting on SATIS, officials said member countries are still
to propose sectors that they will open for service trade. “Negotiations
were still on in very basic issues. Hence, the meeting will largely
focus on nitty-gritty of the framework accord for trade in services,”
said the source.
Governor of the Nepal Rasta Bank Dr Yuba Raj Khatiwada on Friday asked
NIDC Bank -- a financial institution that was established with a motive
to promote industrial sector -- to increase its capital so that it could
invest more and facilitate growth of productive industries.
"We safeguarded NIDC over the past five decades with a sole motive to
lend and facilitate the development of mega industrial projects. It must
live up to this expectation," said Dr Khatiwada.
Dr Khatiwada, who was speaking at the 54th annual general meeting of the
NIDC Bank, promised all possible support from the central bank´s side.
Chairperson of NIDC Shanta Bahadur Shrestha expressed concerns over the
institution´s bad loan. "Recovering the bad loans has become a major
challenge for the bank, but it must overcome this challenge, if it is to
create opportunities for itself and do better in the highly competitive
banking sector," he stated.
Issuing a press release on the occasion, NIDC Bank has announced that it
is aiming to earn profit of Rs 300 million in the current fiscal year.
In a major development, the Investment Board (IB) on Thursday approved a
format for power development agreements (PDA) that it is to adopt while
awarding hydroelectricity projects of above 500 MW capacity to international investors.
The format, which will be applied while developing Tamakoshi III (650
MW), Upper Karnali (900 MW), Upper Marsyangdi (600 MW) and Arun III (900
MW) under build-own-operate-transfer (BOOT) arrangements, assures a 30
year concession period for the developers. It also sets the condition
that the projects developed should last 100 years.
What this means is, the developers will be allowed to own and operate
mega hydropower projects for 30 years, and once the contract ends, the
government will reclaim the ownership. But developers will still be able
to operate the projects for the next 70 years. "This will protect the
interests of both the people of Nepal and the power developers," said a
senior IB official.
The PDA template equips the government with guidelines for negotiating
sound hydropower deals. It aims to ensure maximum benefits in terms of
revenue, spending, industrial employment benefits and electricity.
"The PDA ensures fair returns to the developers, enabling them to get
financing at competitive costs. This agreement is bankable," said Radesh
Pant, CEO of IB.
Among other things, the PDA template commmits to putting in place a
timely mechanism for approval from the government and also promises that
the government will fulfill its commitments. It seeks developers to
follow the best-practice international environmental and social
standards, ensures packages that benefit local communities and commits
itself to fair resettlement and rehabilitation, Pant told Republica
after the board endorsed the template on Thursday.
Prime Minister Dr Babu Ram Bhattarai, who chairs the IB, stated that the
government will assure investors work on their projects will proceed
unhindered.
The PDA is just an agreement template though. The IB will negotiate and
tailor individual agreements for different projects based on project
circumstances and economics, local community needs and aspirations.
The template clearly cites the roles and obligations of the government
and power developers. In the event of disagreements, it assures
impartial processes for quick resolutions.
It also deals at length with dam safety, appropriate design and
maintenance and handover provisions. "Issues such as protection against
basin silting are also covered so that these hydro assets continue to
benefit the country for many decades after the investors hand them back
to the government," Pant told Republica.
The PDA template furthermore provisions for full financial disclosure so
that the government understands how it will benefit from projects.
"Shareholder agreements -- yet to be drafted -- will ensure profit and
dividends and other policies and procedures to protect the government´s
equity interest over the 30 year term," reads the template.
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has
urged the government to forge national consensus among all political
parties and bring a full-fledged budget to give continuity to
development and pump in new life to businesses.
“We strongly request the government to agree on common minimum economic
agendas,” Bhawani Rana, acting president of the FNCCI, said. She also
urged political parties to form a national consensus government at the
earliest and end uncertainty.
“The failure to bring full-fledged budget for the upcoming fiscal year
will have a negative impact in the economy,” Rana told media persons on
Wednesday.
The apex body of Nepali private sector has also requested government to
extend the deadline for bank loan repayment and provide compensation to
the private sector for losses they incurred during bandas and strike in
the last week of May. “We request the government to waive off interest
amount for the month of May extend loan repayment date by three months,”
she added.
FNCCI also lambasted the government for pushing for revenue mobilization
without creating environment conducive for businesses. “Unfortunately,
the government is pushing for revenue growth at a time when private
sector has lost confidence due to factors like strikes, power shortage
and labor unrest,” Rana added. “The government should make banda
organizers compensate for the loss incurred by businessmen during bandas
and strikes.
The federation has also requested the government to ensure security for
businesses so that the business sector can operate without any fear. “It
is becoming extremely difficult for the private sector to run their
business enterprises due to fear of extortion,” Rana said, informing
that former Maoist combatants have been collecting cash from businessmen
in Makawanpur district.
FNCCI concerned about Narayanghat incident
FNCCI has voiced concerns over recent attack on members of revenue investigation team by Narayanghat-based businessmen.
“We denounce violence. But the modus operandi of Department of
Investigation (DRI) in that particular case was not practical,” Bhawani
Rana, acting president of FNCCI, said. “The entire business community
has lost confidence due to the Narayanghat incident.”
DRI has decided to freeze assets and bank accounts of the proprietors of
Laxmi Narayan Bastralaya and Bhagawat Bastralaya. These two apparel
stores have been found evading revenue worth millions of rupees.
Businessmen had attacked team members and torched their vehicle after
they sealed the stores, suspecting them of evading taxes.
Nepal Trade Integration Strategy (NTIS), a national document developed
with objectives to give new impetus to faltering exports, has largely
remained unimplemented even though two years have elapsed since it came into being.
Under the strategy, the government had identified 19 key products in
which Nepal enjoys competitive edge and can bank on for sustainable
trade growth, promised to support development of those products and
services, apart from providing infrastructural support for their trade.
However, leave aside making concrete support for the product
development, the strategy has not even managed to get enough allocations
to deliver the promises of infrastructure development. “Unfortunately,
Ministry of Commerce and Supplies (MoCS) - the implementing agency - has
not even been able to spend even that meager allocations,” said a
source.
According to MoCS, the government had allocated Rs 30 million in 2010/11
and pledged Rs 50 million in 2011/12 for the implementation of NTIS.
“But the implementing institutions are so weak they even cannot make
their periodic publications, forget about implementing the action-plans
that NTIS has,” former commerce secretary Purushottam Ojha told
Republica.
No wonder, the much-desired export growth of most of the products listed
in the NTIS has not gone up over these years. Rather, some of the
products that were identified as highly potential items have suffered a
drop in exports.
For instance, ginger exports went down by 38 percent in 2010/11, lentils
and handicraft too suffered drop in exports by well over 10 percent
each during the year. The NTIS has enlisted cardamom, tea, instant
noodles, medicinal herbs and essential oils, germs and jewelry, iron and
steel, wool products and pashmina, as products through which Nepal can
fulfill its dream to expand exports.
Some, however, argue that two years is too short a span for realizing
any visible change. “NTIS´s objectives are to establish backward and
forward linkages, so that farmers could enjoy substantial positive
changes in their lives. Now you do not expect that to happen in two
years,” said a MoCS official.
However, knowledgeable people like Ojha said the strategy has suffered
mainly because the political leaderships at the ministry have not owned
it seriously. “They (ministers) have so much interest in Nepal Oil
Corporation, I haven´t seen any political leadership being sincere about
the NTIS document in last two years,” said Ojha.
However, the government´s plan to consolidate all the foreign assistance
that comes as aid for trade through this strategy has somehow been
addressed. For instance, the bilateral and multilateral donor agencies
now have to go through the document.
“We refer NTIS document while the negotiation goes on with different
agencies,” Jib Raj Koirala, under secretary at the MoCS said,
“Comparatively, it has been useful to negotiate with the bilateral and
multilateral donor agencies.”
The NTIS has specifically highlighted its four basic objectives such as
strengthening trade negotiations (especially bilateral), strengthen the
technical capacity of domestic non-tariff barriers/other business
supportive institutions, and strengthen the export capacity of inclusive
export potential goods and manage the aid for trade.
The government has failed to hold bilateral trade talks with Bangladesh,
China, Bhutan and the US, citing reasons like political instability.
Confederation of Nepali Industries (CNI) and Alternative Energy
Promotion Centre (AEPC) have signed a memorandum of understanding (MoU)
to promote renewable energy.
They have agreed to enter into an institutional collaboration for
implementation of renewable and alternative energy technologies along
with promotion and development of renewable energy in the country.
The MoU envisions certain terms and principles that
guide, coordinate, lobby and harmonize the relationship and work on a
private-public partnership modality for alternate energy promotion.
Binod Chaudhary, president of the CNI, and Krishna Gayawali, secretary
of the Ministry of Environment, Science and Technology (MoEST), signed
the MoU on behalf of their respective organizations, according to a
statement issued on Tuesday.
"The two institutions´ services will focus on rural areas with the
objective of enhancing energy access and employment while reducing
poverty through public private partnership to foster growth of
industrial sector," Chaudhary said at the signing ceremony.
The CNI and AEPC have also agreed to work with community based
organizations, private sector, non-governmental organizations and other
institutions for maintaining energy systems at affordable level, meeting
basic quality standards, and maximizing use of energy for income
generation activities.
Federation of Handicraft Association of Nepal (FHAN) in coordination
with the Ministry of Commerce and Supplies (MoCS) and Trade and Export
Promotion Centre (TEPC) is organizing handicraft trade fair from November 22 to 26.
According to a press statement issued by FHAN on Thursday, the event
will also be supported by Federation of Nepalese Chambers of Commerce
and Industry (FNCCI), Federation of Nepal Cottage and Small Industries
(FNCSI), Micro Enterprises Development Program (MEDP), district
handicraft associations, among others.
"The event is expected to develop as business hub for the SAARC region´s
handicraft entrepreneurs as there will be participation from India,
Bangladesh and Pakistan," reads the statement, "There will be 20
participants from Bangladesh and 15 each from India and Pakistan." FHAN
is trying to arrange participation of Maldives, Bhutan and Sri Lanka in
the event, according to the statement.
"There will 250 stalls of handicraft and 12 pavilions and others
individual handicraft booths of pashmina along with Nepali handmade
paper, leather products, natural fiber products, wood products, ceramics
and many more other handicraft," read the statement.
FHAN has estimated that the fair would draw more than 300,000 visitors.
"A turnover of Rs 50 million is expected during the event," read the
statement.
The government has dropped its
much-hyped plan to bring US$ 1 billion worth of foreign investment in
the first six months of Investment Year 2012/13. Instead, it now says
the first half of the next fiscal year will be ´preparatory period´
following which it will aim to bring in the targeted USD 1 billion
foreign investment in the country.
The government readjusted its plan for the Investment Year, starting
from mid-July 2012 after political deadlock pushed the program into
jeopardy.
The Investment Board (IB), assigned to realize the government´s
ambitious plan said it would completely change the timing of the
Investment Year. "Unlike the past announcements, the IB will now use the
first six months (of 2012/13) to complete all necessary preparations,
including enactment of various investment friendly laws and policies," a
source at the Prime Minister´s Office (PMO) told Republica.
"There are internal discussions going on to change the timing to
kick-start the Investment Year 2012/13," said the source. The board is
yet to make an official decision in this regard though.
If the source comments are anything to go by the Investment Year will
now begin from January 2013 and not from mid July, 2012 as earlier
announced.
While launching the Investment Year, Prime Minister Babu Ram Bhattarai
had said the government would bring in foreign investment worth US$ 1
billion within the first six months. To achieve the target, he had also
promised amendment and formulation of various Acts and policies to make
the country´s investment regime more investor friendly. "But the whole
plan has been affected due to the political sitution since May 27," said
the source.
Radesh Pant, CEO of the IB confirmed that the time to unveil the
Investment Year 2012/13 has been readjusted. "The readjustment will be
more practical given the country´s political situation," he told
Republica.
The Investment Year, which was launched on the basis of calculation that
constitution will be endorsed on time, might not get investors as hoped
for after the political situation took an opposite turn after May 27.
"Certainly, the investors might have doubts and fears to come here with
their investment," said the source, "We have seen very clear indications
of this."
For instance, according to a different source close to the PMO,
investors from South Korea who were looking to invest in the
hydroelectricity development project have shown reluctance to move
forward in the changed political situation.
IFC, DFID, Japan to assist IB
Three leading multilateral and bilateral development partners have
extended their commitments to provide technical assistance to the
Investment Board (IB).
International Finance Corporation (IFC), Department for International
Development (DFID) and Embassy of Japan have shown interest to provide
technical assistance to the IB, as per a source at the Prime Minister´s
Office (PMO).
"IFC basically, has approached IB office to provide technical assistance
to identify the potential projects," said an official of the IB office,
"DFID also has shown same kind of interest." According to the official,
"the board has already moved forward to work with IFC in a bid to
identify the projects that can be of importance."
The government, which has been
inefficient to address the supply side barriers in the manufacturing
sector such as labor problems and power-shortage has also been dragging
its feet to hold bilateral trade talks with around half a dozen of
countries to fix the problems that Nepali businesses are facing.
For instance, bilateral trade talks with the United States, Bangladesh,
Bhutan and China among others, have not been held in time. “Technically,
some of the bilateral trade talks have been postponed by respective
countries,” an official at the Ministry of Commerce and Supply (MoCS)
said preferring anonymity, “But, in reality all this is happening due to
our weak communication, coordination and logistical arrangements.”
The bilateral agreement between Nepal and Bangladesh on Operating
Modalities for Transit Cargos (OMTC), which is crucial to ease the
transportation hassles between Nepal and Bangladesh, is in the action
plan of the MoCS but it has not happened. “We have plans, and it takes
time to hold bilateral talks as conducive environment is a prerequisite
for that to happen” said Naindra Prasad Upadhya, joint secretary of the
MoCS.
Similarly, annual meeting between Nepal and USA, which had to happen in
April as per the agreement between the two countries, has been postponed
to September. Technically, the meeting was postponed by USA. However,
government has failed to seek a reason behind the postponement. “The
Trade and Investment Framework Agreement (TIFA) will provide a forum for
bilateral talks to enhance trade and investment, discuss specific trade
issues, and promote comprehensive trade agreements,” reads the
statement made by US government after signing the TIFA in 2011.
Additionally, the third meeting of Nepal-Tibet Trade Facilitation
Committee (NTTFC) which had to happen in May has not taken place. MoCS
couldn´t participate in the meeting in the last week of May citing
political uncertainty in the country.
“We have proposed first week of July as the new date for meeting, but it
is yet to be finalized” joint secretary Upadhaya said. The preferential
treatment agreement between Nepal and Bhutan is also long pending even
though the Bhutan government itself has been showing interest to ink an
agreement for some eight years.
“All this is due to political instability in the country,” Lal Mani
Joshi, secretary of the MoCS said, “Unfortunately, some of the countries
cite security as a reason for postponement.”
Trade statistics show that the countries such as China, Bhutan,
Bangladesh and the USA are Nepal´s major trade partners. “We have failed
to capitalize the resources and opportunities we have due to
government´s slackness to handle the bilateral negotiation,” one of the
businessmen said in the condition of anonymity.
The government has expressed confidence on achieving the target of revenue collection in the current fiscal year 2011/12.
According to a press release issued from Ministry of Finance (MoF),
Krishna Hari Baskota, secretary of the Ministry said that the country
was successful in collecting Rs 190.8 billion in the first ten months of
the current fiscal year. “We have successfully collected 98.7 percent
of the total target of revenue collection,” reads the release.
Baskota, who collected statistics from the major customs point of the
country over the phone, claimed those points had performed well to meet
the target. “Excise duty, VAT and income tax are the major contributors
to achieve the target,” press release said.
The ministry projects that the contribution of revenue will be 16
percent in the gross domestic product (GDP) this fiscal year, up 0.7
percent point from last year. “We have set a target to make this 20
percent of the GDP within 3 to 5 years,” said secretary Baskota.
Nepal has proposed holding bilateral trade talks with China in the first
week of July to hammer out all outstanding issues on tariff and
transit-related barriers.
"Preparations are under way to hold the third meeting of Nepal-Tibet
Trade Facilitation Committee (NTTFC) in the first week of July," Naindra
Prasad Upadhyaya, joint secretary at the Ministry of Commerce and
Supplies (MoCS) told Republica on Thursday.
The talks, scheduled for last week, were postponed after uncertainty
loomed due to series of bandas called by various groups prior to the May
27 dissolution of the Constituent Assembly.
The joint-secretary level meeting, which will be held in China this
year, is an annual function. MoCS is looking forward to discussing
problems faced by the Nepali business sector during the meeting.
However, Nepali businessmen are not optimistic about the talks yielding positive results.
"The trade talks between the two countries have not been able to address
our problems," Rajesh Kaji Shrestha, president of the Nepal-China
Chamber of Commerce (NCC), said.
Interestingly, a recent study carried out by the South Asia Watch on
Trade, Economics and Environment (SAWTEE), with the assistance of the
United States Agency for International Development (USAID), has claimed
Nepal´s trade agreement with China has failed to uphold the national
interest.
"The letter of exchange signed between Nepal and China in May 2010 has
turned out to be a barrier for the export growth of Nepal," the study
states.
However, MoCS officials refuted such claims. "Definitely, the agreement
might not have been as supportive, as domestic value addition on goods
exported to China should be at least 40%," one of the officials said on
condition of anonymity, adding, "The report was mostly based on survey
with businessmen."
According to the Trade and Export Promotion Centre (TEPC), trade deficit
with China shot up to Rs 45 billion during the fiscal year 2010/11 from
Rs 11 billion in 2005/06.
In a bid to protect consumers from inflationary pressure and irregular
market price of 12 essential commodities, the government has prepared an
action plan that includes some 16 short-term and another 16 long-term measures.
A nine-member committee, tasked with the job of preparing a concrete
action plan on controlling prices of essential goods and strengthening
market regulations listed rice, maize, wheat, salt, sugar, fruits,
vegetable, milk, pulses, edible oil and petroleum products as essential
commodities.
The action plan envisioned steps to control rising prices. "This is also
to ensure reliable supply of essential goods," read the 43-page-long
action-plan. The team used statistics available from related agencies
and prevailing market price as base to build the action plan and is per
the cabinet decision of mid-April.
The government, under the short-term measures, has planned to provide
incentives in customs duty in some selected essential goods, establish
fair-price shops in all the municipalities and various places of
Katmandu and print maximum retail price in packages of all the essential
goods.
Similarly, the government also plans to effectively implement existing
laws and rules to control price and regulate market. "There will be
effective implementation of Consumers Protection Act 1998," the action
plan said. "All the wholesale and retail shops must demonstrate a price
list of all the essential goods."
In addition, the government will have to publish details of production,
import and wholesale price every three months. Also, permanent bodies
from centre to local levels would be established to regulate the market.
The action plan that was availed to Republica, says "The government
will issue ration cards to support poor people to get essential goods at
reasonable prices within six months."
Similarly, the action plan has also suggested opening up import and sale
of petroleum products to the private sector, doubling the investment in
the agricultural sector, raising food production in rural areas,
establishing consumer courts in all zones, and incentives to fruits and
vegetable transporters among others.
In addition, the report recommends establishing the Supply Board so that
there would be an independent and functional body to strengthen supply
mechanisms.
"There should be market information centres in the districts as well," the action plan said.
