Poor women deprived of soft loan after budget freeze

Women who have nothing to pawn to get a bank loan but were looking forward to getting it from the government to start small enterprises on their own have been disappointed after Rs 10 million - which government had allocated to establish a National Woman Entrepreneurship Trust (NEWT) - was frozen in the previous fiscal year 2011/12.
The allocated budget was frozen after the Ministry of Finance (MoF) didn´t work to establish NWET on time. “Technically, the MoF had to coordinate with the Nepal Rastra Bank (NRB) to establish the NWET,” an official at the MoI said. “That has deprived women to get soft loan from the government to start their business.” (break)
The government had announced its intention to establish the NWET with a guideline to operate it. According to the guideline approved by the cabinet in fiscal year 2011/12, women would get up to Rs 300,000 at the 10 percent interest rate. “If they paid back the principle in time, there was a provision to waive off 40 percent of total interest.
The MoI, entrusted to carry out the program, had planned to distribute soft loans to 33 women from three districts each from Terai, hill and mountainous region. “The process should begin again after the budget was frozen in last fiscal year,” Yam Kumari Khatiwada, joint secretary at the MoI told Republica on Sunday.
The ministry was working on to establish the trust as per the provision in the Industrial Policy 2010, which envisages establishment of the NEWT. “The ministry had decided to issue unsecured loans to women following complaints from entrepreneurs who said their access to collateral-free credit was very limited,” Khatiwada said.
Additionally, the industry ministry had decided to mobilize commercial banks to distribute the loan. “In return, the government was planning to provide certain fees to the banks for extending the services,” Khatiwada added.
Khatiwada said many women had approached the ministry for loans. “Now we have asked for Rs 50 million from the MoF for the NWET,” she disclosed, “However, there should be a full-fledged budget in place to establish the trust again.” Unfortunately, the government has to repeat the whole process again to do that.
Similarly, Rs 5 million allocated to establish the Technology Development Fund (TDF) in the last fiscal year was also frozen. The MoI is just working on developing the guideline for TDF. “The money was frozen due to ministry´s inability to endorse a guideline in time,” Bishnu Dhakal, under secretary at the MoI said

Bangladesh to provide zero-tariff facility to Nepali agri products

Bangladesh - one of the few countries with which Nepal enjoys trade surplus -- has agreed to provide zero-tariff facility to Nepali agriculture products such as lentils and tomato.
According to Commerce Secretary Lal Mani Joshi, Bangladesh unilaterally announced to provide zero-tariff facility to Nepali agricultural products at a bilateral meeting held on Sunday.
“High-level Bangladeshi officials agreed to provide zero-tariff facility on Sunday. However, formal agreement to this effect will be signed on Monday,” Joshi said.
Nepal had been requesting for such a facility for more than a decade. It had been failing to secure the facility mainly Bangladesh was expecting similar treatment for Nepal. But it hadn´t materialized as bilateral treaty between Nepal and India bars Nepal from providing equal or more favorable tariff treatment to any third country.
“Bangladesh has finally understood our position and agreed to grant zero-tariff facility unilaterally,” Joshi said, adding, “It is a great achievement as it might help us fined a new market for our agricultural products.”
The Nepal Trade Integration Strategy (NTIS) - a blueprint to boost export - has identified Bangladesh as third major destination for ginger.
The meeting, however, could not reach to an agreement on operation modality for transit route. “We are close to forging an agreement on the issue. But we won´t sign it now,” Joshi said, adding, “We will hand over the draft agreement to a technical committee. That committee will pave the way for us to sign the pact.”
Nepal and Bangladesh had okayed the draft of the operation mechanism of transit route during the commerce secretary-level talks held in Dhaka in 2010. Once signed, it will pave the way for Nepal to use Mongla and Chittagong ports for international trade. It will also resolve problems faced by traders on the overland transit route of Kakarvitta-Fulbari-Banglaband.
However, traders doubt smooth operation of this land route as India has not improved the roads conditions and eased movement of transit traffic along the Kakarvitta-Fulbari and Fulbari-Banglaband segments of the route.
Meanwhile, officials also held discussions on problems faced by traders from both the countries.
Nepal´s exports to Bangladesh presently stand around Rs 3.3 billion, whereas imports from Bangladesh stand at around a billion rupees.

Investment Year over before it began

With political imbroglio deepening amid government trying to enact a new law to clear way for elections without political understanding, both the government officials and private sector has lost hope of implementation of much-touted Investment Year, which the government announced last year with an ambitious plan to bring US$ 1 billion foreign investment within the first half of 2012/13.
In fact, top government officials as well as leaders of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said the program was ´dead´ even before it came into being.
A few months ago Investment Board (IB), which is entrusted to implement the program, had informally announced that the program has been postponed for six months - meaning it planned to launch it from January 2013 - to keep the hope alive. But the status of the government, lack of parliament and the latest confusion over holding elections on November 22 has made even late implementation of the program doubtful.
“Worse part is that the government itself does not seem serious toward the Investment Year. Had it been, it would have taken steps to enact laws and policies that it promised to the investors, instead of elections bill,” said an IB official.
The private sector that was excited to work with the government to lure foreign investment expressed similar doubt. “We were hopeful the government would bring oppositions on board and clear the way for the Investment Year. But latest widening of differences has made us realize the Investment Year is over even before it has begun,” said Pashupati Murarka, vice-president of FNCCI.
The idea of Investment Year was conceived and floated by the FNCCI in 2011 and Finance Minister Barsha Man Pun readily adopted it. Prime Minister Baburam Bhattarai instantly announced that the government would mark 2012/13 as the investment year. He even committed numerous policy and legal reforms to attract FDI.
“No foreign investor can think of coming here to invest where even domestic investors are losing confidence,” said Murarka.
The government did hand over 14 mega projects such as West Seti Hydro Project and Kathmandu-Terai Fast Track to the IB for roping in foreign investors on May 26. But the situation suddenly turned unfavorable when the Constitution Assembly (CA) was dissolved on May 27.
“The dissolution of the CA was the first setback for the Investment Year,” an official at the Prime Minister´s Office said. Political differences have only deepened doubt over the implementation of the program.
The government has not taken a single initiative that demonstrates its willingness to welcome foreign investors, said Keshav Acharya, former senior economic advisor of the Ministry of Finance (MoF). “This indicates the government´s priorities have changed now. The investment year mission is over.”
IB officials do not completely agree with Acharya, but what they admit is the prime minister has neither held any meeting nor taken briefing from the board. “This has left us utterly confused whether we should continue with our ground works,” said the senior IB official.
As a result of this confusion, the board has slowed its works to identify the 50 seleable projects. It is also uncertain whether it should work out schedules and start preparations for the road show meant for promoting Nepal for investment.
“We have identified seven areas to offer to the investors. But the progress on short-listing the projects has remained slow,” the official said.

Industrial Promotion Division facing budget crunch

The Industrial Promotion Division at the Ministry of Industry (MoI), which is entrusted to look after the entire industrial sector, has been reeling under severe fund crunch.
The government had allocated just Rs 4.2 million for the division in fiscal year 2011/12.
“That´s a very meager allocation,” a high-level official at the industry ministry told Republica.
The division, which is working to breathe a new life into sick industrial units, received just Rs 884,000 in the partial budget for 2012/13. “The division even couldn´t spend meager allocation of Rs 4.2 million in 2011/12. It spent just Rs 2.6 million - 63 percent of the total allocation during the year,” Bishnu Dhakal, under secretary at the MoI, said.
The division, which is working to finalize the draft of Industrial Enterprises Act (IEA), developing an action-plan to effectively implement Industrial Policy 2010 and preparing the draft of Technology Development Fund Regulation, does not have institutional capacity to perform these tasks.
“Leave alone developing infrastructures and facilitating industries, we don´t have budget for even small activities like carrying out study and holding consultation meetings,” said Dhakal.
The government´s indifference to the industrial sector is reflected in the country´s industrial growth. Growth rate of country´s manufacturing sector has been declining since 2002/03.
The division even doesn´t have budget to conduct technical study to finalize the list of sick industries. “We have sought the assistance of the finance ministry to conduct technical study,” Dhakal said, adding, “We have yet to hear from the ministry.”
Meanwhile, foreign ministry officials claim that the division is so incapacitated that it has failed to design new programs.

Bangladesh hints at zero-tariff facility to Nepali products

Bangladesh has indicated it could provide duty-free market access to Nepali agricultural produces such as tomatoes and lentils when top trade officials of the two countries meet in Kathmandu next week.
“Bangladeshi officials have informed us that they are positive at providing zero-tariff facility to selected Nepali products, which have competitive edges in Bangladeshi market,” said a reliable source at Ministry of Commerce and Supply (MoCS).
He informed Republica that they were expecting a concrete announcement to this effect from Bangladesh when Commerce Secretary of the two countries will sit for talks starting from July 29.
Nepal had been requesting special treatment to its products, particularly agro produces, since almost a decade. But it has failed to secure the facility mainly as Bangladesh is also asking for the similar facility from Nepal.
Such demand from Bangladesh had forced officials to step back because existing bilateral treaty between Nepal and India restricts Nepal from providing equal or more favorable tariff treatment to any third country.
“Thankfully, Bangladesh has finally understood our constraint. We are optimistic the upcoming bilateral trade talks will finally bear fruit,” said the source.
Commerce Secretary Lal Mani Joshi, who is leading the talks, however, refused to talk on the message received by the ministry. He confirmed the date of the meeting though.
“We have not been able to penetrate the market despite the huge demand for lentils and tomato in Bangladesh,” he stated. During the talks, he said he would continue to his push for the duty-free facility to the Nepali products in order to expand the bilateral trade.
The commerce secretaries of the two countries, who are holding talks after a gap of two years, are also scheduled to discuss issues such as additional infrastructure development along the bordering areas, identify problems faced by their respective traders and work out ways to solve them.
They would also discuss over signing a mechanism for operating the transit routes between the two countries and work for sorting out quarantine related hassles. “We will also review the status of implementation of agreements that we had reached during the previous meetings,” said Joshi.
Nepal and Bangladesh had agreed on the draft of the operation mechanism of transit route during the commerce secretary-level talks in Dhaka in 2010. Once signed, it will pave the way for Nepal to use Mongla and Chittagong ports for international trade.
Likewise, it will also sort out problems faced by traders on the overland transit route of Kakarbhitta-Fulbari-Banglaband. Despite that, officials doubted smooth operation of this land route as India has not improved the roads conditions and ease movement of transit traffic along the Kakarvitta-Fulbari and Fulbari-Banglabanda segments of the route.
Nonetheless, if Bangladesh provided duty free facility for agro-produces, private sector believes Nepal´s export to this South Asian neighbor would rise significantly.
Records show, Nepal´s exports to Bangladesh presently stands at around Rs 3.3 billion, whereas its imports from Bangladesh stand at around a billion rupee.

Govt opens rice export with quantitative restriction

The government has lifted a four-year-old ban on rice export paving the way for the country to export of upto 10,000 tons of rice from the two customs points - Rasuwa and Tatopani - to China.
Initially, Ministry of Commerce and Supplies and Ministry of Agriculture Development (MoAD) had proposed that export be opened for 50,000 tons of rice from those customs for this year. But the Office of the Prime Minister and Council of Ministers (OPMCM) lowered the export ceiling when it issued the final decision.
“Traders can now export 5,000 tons of rice from each of the two customs points,” commerce secretary Lal Mani Joshi told Republica on Tuesday. “Prime Minister Babu Ram Bhattarai declined to approve export of 50 thousand tons of rice, citing the rising price of food in the domestic market.”
Officials said the amount of export opened was too little for farmers to enjoy better price for their produces.
According to MoAD, 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 previous fiscal year 2011/12, of which 300,000 tons will comprise rice.
The preliminary estimation of crops production of MoAD shows that paddy reached 9.45 million tons in the fiscal year 2011/12, up 9.8 percent compared to the previous fiscal year and 21.8 percent compared to the fiscal year 2009/10.
“It might lead to unintended consequences,” Joshi said. “Opening export of rice in a large quantity might result in shortage of food in the domestic market.” The government´s decision to lift up the ban has been published in the gazette this week.
The Department of Commerce and Supply Management (DoCSM) is preparing to provide license to the traders. “Traders have to apply to get the license for export of rice and the DoCSM will make a decision to provide license with quota restriction for them to export,” Joshi said.

NBF fails to meet the target: Govt officials

After almost two years of formation of Nepal Business Forum (NBF) - a common platform to conduct public-private dialogues to remove barriers for entrepreneurship - experts and government officials have questioned its ability to coordinate, orient and institutionalize itself to achieve the targeted goals.
“The NBF has been inefficient to coordinate between private and public sector, failed to orient different stakeholders and most importantly it has not yet institutionalized even after two years of full-fledged work,” Mahendra Gurung, joint secretary at the Office of the Prime Minister and Council of Ministers (OPMCM) said. “This is unfortunate.”
The NBF was formed in May 2010 through an executive order of the government aiming to harmonize the business environment in the country with the help of International Finance Cooperation (IFC). Speaking in a program organized by the NBF secretariat in Kathmandu on Tuesday Gurung said, “There are multiple reasons for the NBF´s slackness, one of the major reasons is that the private sector has not owned this platform.”
Briefing the government´s initiation to launch the e-licensing portal within a couple of weeks to ease the process of getting license for businesses, Gurung said the private sector should be more competitive and sound in its work. “Definitely private sector has the right to knock the government´s door for different facilities, but they should come up with strong basis and measured arguments,” he said.
Anil Kumar Thakur, joint secretary at the Ministry of Industry (MoI) said that the growth rate of industrial sector was declining continuously despite various efforts. “We have failed to achieve the goals that we had set while forming the NBF,” he said in his inaugural speech in the program.
Meanwhile the NBF secretariat has claimed that there have been multiple achievements in last two years. “Tax payment days have been reduced from 34 to 22 days which has resulted in over USD 4.38 million cost saving for the private sector, the export of Pashmina has increased by 50 percent after registration of Pashmina trademark in 41 countries, elimination of provision of Rs 100 million authorized capital for issuance per MW hydro power survey license are major achievements,” Gopal Prasad Tiwari, coordinator of the NBF shared at the program.
Similarly, he presented achievements such as allocation of Rs 10 million to establish a Women Entrepreneurship Development Fund, harmonization of customs hours between India and China to facilitate trade related procedures and transactions, elimination of illegal tax collection in Biratnagar resulting easy movement of trucks and public buses.
Interestingly, private sector representatives didn´t agree with the achievements shared by the NBF coordinator. “I wonder where these achievements were made,” Manish Agrawal, an official from the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said.
However, Surendra Bir Malakar, former president of Nepal Chamber of Commerce (NCC) blamed the political situation.

Fund crunch hits feasibility study of SEZs

The feasibility study for special economic zones (SEZs) in Dhanusha, Rautahat and Siraha is unlikely to happen this year even though the government has already finalized contractors for the study.
However, the industry ministry had failed to sign an agreement with contractors before the end of fiscal year 2011/12. As a result, the budget allocated for the project has frozen.
The government has not allocated budget for the project in the partial budget for the first four months of fiscal year 2012/13, according to an official at the industry ministry.
“The feasibility study for SEZs in those three districts is unlikely to happen,” Ministry for Industry Anil Kumar Jha said, confirming that there has been no budgetary allocation for the project in the partial budget.
The official said failure to ink deal with the contractors on time has affected the entire project.
Meanwhile, construction of SEZ in Bhairawa and Simara is going on in full swing. However, construction of SEZ in Bharatpur, Jumla and Kapilbastu is unlikely to begin anytime soon. Firms appointed by the ministry are currently conducting feasibility study of SEZ in these three places.
“Only Rs 10 million have been allocated for the SEZ project in the partial budget. The amount will be spent for SEZs in Simara and Bhairahawa,” the official said.
Though the ministry has already completed feasibility study for SEZ in Panchkhal and Kavre, construction works are unlikely to begin anytime soon owing to fund crunch.
The Ministry of Industry has decided to approach the Ministry of Finance (MoF) and National Planning Commission (NPC) for the allocation of funds for the feasibility of SEZs in Dhanusha, Rautahat and Siraha, according to the official.
However, Minister Jha maintained silence over the plan to seek funds for the feasibility study

FNCCI concerned over closure of Arghakhanchi cement factory

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has expressed serious concern over the closure of Arghakhanchi Cement factory due to the "locals´ irrational" activities.
According to a statement issued on Sunday, FNCCI called on the government to take immediate steps to create favorable environment for smooth operation of the factory. “The industry has done so much to protect the environment in the local area,” said the statement.
“We express grave concern over the locals´ irresponsibility such as violent attack on the factory staff,” the release states. “The government must take actions against those involved and punish them according to law.”
The industry with Rs 2.5 billion investment has provided jobs to 700 people. “We believe there can´t be any kind of foreign investment in the country until such attacks continue on domestic industries,” the statement said.
The factory has been closed since the last 9 months. “This is not tolerable to us. We ask the government to come up with a concrete plan to stop such activities,” the statement reads.

Govt renews consultations with farmers for developing ADS

The government has started fresh consultations with local farmers and farmer´s groups in the mid- and far-western regions in order to collect their inputs for Agriculture Development Strategy (ADS), a long-term vision document that will chart the course of country´s agriculture sector for the next two decades.
Ministry of Agriculture Development (MoAD) started the consultations afresh after the government restructured the steering committee, incorporating farmers´ representatives, and decided to adopt field-based feedback approach to develop the ADS, scrapping the previous assessment report.
“The new steering committee, which was formed after intense protest from different farmers associations and civil society leaders, has completed consultations for fresh assessment in the two regions,” an official from the Ministry of Agriculture Development (MOAD) told Republica.
The committee would hold similar consultations with farmers in the other regions of the country soon, said Prabhakar Pathak, joint secretary at the MoAD.
Through the consultations, the committee is fundamentally generating farmers´ perspectives on areas wherein the government failed while implementing Agriculture Perspective Plan (APP): 1995-2015.
The APP, much-regarded as a reform-oriented vision document, had among others scrapped the government subsidy and promised reforms in supply chain of agricultural inputs and technology so that farmers could access quality fertilizers, seeds and equipments easily.
As concerned officials admit, APP remained a total failure in transforming the agriculture sector and farmers´ lives. Through the fresh consultations the committee hopes to generate new programs and inputs for future policy guidelines.
“We are raising issues such as land-reform, agriculture revolution and demands of farmers in the new consultation meetings,” said Prem Dhangal, general secretary of the Nepal Peasants Federation (NPF).
Meanwhile, referring to the complete restart of the ADS process and fresh consultations being held at different regional level, the MoAD has said that the budget allocated for the ADS will now be insufficient. The government had allocated US$ 2 million (about Rs 160 million) for developing ADS.
“The consultations also has raised the cost by Rs 2 million. Hence, we have requested the government to provide us with the additional sum that was not included in the previously planned budget,” said Pathak.
The government has received assistance from various donors, including Asian Development Bank, World Bank and United State Agency for International Development (USAID), among others, for developing the ADS.
The ADS, which will replace the APP, will deal on cross-cutting issues like irrigation, agriculture inputs and other crucial sub-sectors of the agriculture. “The APP failed to address the core problems of the farmers. We want to make sure ADS does not repeat the same history,” Dhangal said, referring to perennial scarcity of seeds and fertilizers in the country.

Nepal fails to report country policy updates at WTO in time

The government has dragged its feet to timely report the country´s policy updates to the fellow World Trade Organization (WTO) members even as Nepal´s commitment at the Organization required it to report them by April, 2012.
Though submission of such report, under which Nepal needs to clearly inform the changes and update it effects in trade and other national policies, is not a binding obligations, its compliance is considered crucial in sending a message that the country is investment and trade friendly.
“Submitting policy briefs on time builds a good image of the country among the other member in the WTO regime. Sadly, apathy to adhere to this moral obligation have repeatedly portrayed our image negatively,” said Dr Posh Raj Pandey, former member of the National Planning Commission (NPC), who was also engaged in the process of country´s accession to the WTO.
Officials at the Ministry of Commerce and Supplies (MoCS) supposed to carry out this task admitted of the adverse impact. But they failed to give convincing reasons behind the delay.
“We have already started the preparations and are trying to forward the policy updates at the earliest,” said Ravi Bhattarai, under secretary of MoCS. Though he too remained silent on the reason behind Nepal consistently failing to comply with the obligations, knowledgeable sources said lack of zeal and dedications of the concerned staff themselves were the main reason.
“The reality is that maintaining a good working relationship with the multilateral trading partners is simply not in the priority of the Ministry. Hence, not even the top MoCS care whether the ministry carried out tasks as committed at the WTO,” said the source.
This is not the first time the country missed complying with the WTO commitments since it joined the multilateral trading regime in 2004.
Records of the MoCS shows the country had failed to enact competition and other laws and update trade and other policies on time in the initial years of membership. Though the country has presently fulfilled almost all binding commitments, it has always been dragging its feet to comply with commitments that are not compulsory, but exist as moral obligations.
“Very recently, the Ministry had missed the deadline to submit trade policy review as well,” said Dr Pandey. Although the WTO commitment schedule had sought Nepal to submit the trade policy review in December, 2011, the MoCS did so only in February 2012.
Under the WTO norms, all WTO members need to submit their policy updates to the organization so that other member countries can clearly know the status of tariff lines, rules and regulations related with goods and services they trade on.
Such transparency is considered crucial in maintaining effectiveness of the multilateral trading.

Soil test for metro railway complete

Following the government´s endorsement of the preliminary inception report of the metro railway in Kathmandu Valley, the consulting companies have completed the soil test, which shows how the rail track should be laid -- underground, on the surface or overhead -- in major areas including Ratnapark, Kalanki and Sinamangal. Traffic survey in major junctions inside the Valley, meanwhile, is in progress.

The companies, however, haven´t submitted the soil test results. “The consulting companies have only submitted interim report of the feasibility study,” an official at the Department of Railways (DoR) told Republica on Thursday. 

“Soil test report and traffic survey report will come together.”

Korea Transport Institution, Chungsuk Engineering Company, Kunwa Consulting and Engineering Company, Korea Rail Network Authority and two local companies BDA Nepal Private Limited and EMRC Private Limited are conducting feasibility study of the project.

“The companies have to submit two interim reports before submitting the draft report of the feasibility study,” Rajeshwar Man Singh, superintendent engineer at the DoR said, confirming the progress. “They submitted the first interim report.” 

According to Singh, the first interim report, however, doesn´t provide any conclusive result. “It is a kind of a progress report,” Singh said. “The second interim report gives the result of the soil test and statistics on traffic survey.” 

The metro railway connects various locations in the valley via a 66-km track with 5 lines and 31 stations. A complete feasibility study report of the project is expected within the next six months. “Once the feasibility study report is ready then we can estimate the total cost of the metro railway,” Singh said.

The government has paid Rs 60.5 million to the firms to conduct the feasibility study. The government had approved the inception report last March and cleared the way to conduct the feasibility study for the companies. 

The project requires technical precision and dedicated power system to ensure uninterrupted power supply and has been listed in the national pride project by the government.

The government last May handed over the project along with 13 other mega projects to the Investment Board.

SAARC commerce secys agree to expedite tariff liberalization

Commerce secretaries of SAARC countries have agreed to speed up the process of tariff liberalization and integration of the region through harmonization of communication, transport, capital market and movement of people.

The 15th meeting of Committee on Economic Cooperation (CEC) under South Asian Association for Regional Cooperation (SAARC) held in the Maldives this week also held discussion issues of least developed countries (LDCs) and non-LDCs. 

“The meeting was fruitful toward making the regional market more integrated,” Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and Supply (MoCS), who was also present in the meeting, told Republica on Wednesday. “The officials from the region have agreed to harmonize customs operation that will lead to the smooth movement of goods and cargos in the region.”

Officials from the LDCs of the region including Nepal and Bangladesh urged officials of non-LDCs to remove items that are export interest of LDCs from their sensitive list, said Upadhyaya.

The meeting also reviewed the of status sensitive list and agreed to work together to shorten it in the near future. 

SAARC member countries have included products that they do not want to trade at zero tariff under South Asia Free Trade Agreement (SAFTA) pact in the sensitive list. The working group of SAFTA that met in Kathmandu last month to shorten the list had failed to make any headway after the countries remained divided over the modalities of shortening the list. 

The two-day meeting also touched on issues related to connectivity, communication and movement of people in the region.

Private sector to meet UP chief minister over herb export row

A delegation from Nepali private sector is meeting Akhilesh Yadav, chief minister of the Indian state of Uttar Pradesh in a bid to discuss issues related to trade and transit between the two countries including the trade of medicinal herbs that has come to grinding halt since the last three months from the Nepalgunj customs.

“The meeting will focus mainly on connectivity and quarantine,” Bhawani Rana, vice president of Federation of Nepali Chambers of Commerce and Industry (FNCCI) told Republica on Tuesday. “However, we will raise the acts of state-government of UP which has prevented export of herbs from Nepalgunj customs since three months against the spirit of bilateral trade treaty.” 

The medicinal herbs worth around Rs 350 million has been stuck in the Nepalgunj customs after UP introduced a new law contravening the bilateral trade treaty between the two countries. 

According to Rana, who will lead the team, the meeting is aimed at resolving the problems Nepali exporters face in different areas of border between Nepal and India. “We will also raise the issues created by different laws of state-government of UP,” Rana said. 

For instance, export of medicinal herbs is at a standstill following the UP government´s introduction of new law compelling exporters to get license from Department of Forest (DoF) of state government to export medicinal herbs. 

Such a provision was introduced against the spirit of bilateral trade treaty between Nepal and India that ensures free movement of all goods of Indian or Nepali origin in each other´s territory, without subjecting them to any quantitative restrictions, licensing or permit systems.

The export has not resumed even after the exporters knock the door of the India embassy in Kathmandu. Embassy officials had said that the export would resumed by Monday after the exporters appealed for facilitation last week. According to Thapa, 7,000 to 7,500 tons of medicinal herbs are exported from the Nepalgunj customs point to India.

Don't put assets of sick industries under the hammer, NRB told

In a bid to protect sick industries, the government has requested Nepal Rastra Bank (NRB) to not allow commercial banks to auction off assets and collaterals pledged by them.

According to a high-level official at the Ministry of Industry (MoI), the ministry sent a letter to this connection to the central bank a couple of days ago. In the letter, the ministry has requested NRB to not let commercial banks auction off assets of sick industries until the government implement special packages promised to them.

“We are in the process of identifying sick industries,” the official said, adding, “We have requested NRB to stop auctioning off of their property as per the request of those industries.”

The official said the ministry sent a letter to the central bank following strong pressure from some industrialists. He, however, refused to disclose the name of the industrialists.

The industry ministry, which is entrusted to implement programs to revive sick industries, has formed a technical committee to study and finalize the actual number of sick industries in the country.

“The technical committee issued a public notice last week, asking all the industries to register if they term themselves ´sick´,” the official told Republica.

The industries have to register their names by the end of this month. The committee will then study the actual situation of those industries. 

According to the official, the ministry formed sick industries unit and the technical committee after the cabinet approved the report of the high-level task force that was formed to revive and rehabilitate sick-industries about seven months back. 

Meanwhile, the ministry has requested Rs 2.6 million from the finance ministry for the technical committee. 

The government has announced slew of relief measures for sick industries like tax waiver, extension of bank loan repayment date, bank loan restructuring and interest amount waiver among others. Industrialists have been pressing the government for early implementation of relief measures.

“We hope banks won´t auction off assets of any industry until we finalize the list of sick industries and publish their names in the gazette,” the official said.

CNI, HCI join hands for green economy

The Confederation of Nepalese Industries (CNI) and Himalayan Climate Initiative (HCI), a civil society organization working in the field of climate change, on Sunday signed a memorandum of understanding (MoU) to work together for green economy and less carbon emission. 

According to a press release issued on Sunday, the agreement between the two organizations will be a step forward to work in the area of climate change and functioning. 

“Government and all sectors should come together to create incentives through practical plans to help the Nepalese industries at this formative stage when they are struggling to move towards a greener path,” the release quoted Binod Chaudhary, president of CNI, as saying in the MoU signing ceremony.

According to release, the MoU would help build the capacity of CNI members on issues related to climate change and climate financing with the purpose of putting the private sector in the leadership role.

Prashant Singh, CEO of the HCI, highlighted the benefits of going green for the Nepalese industries. “This partnership will bring concrete results in a relatively short span of time,” the release quoted Singh as saying.

Manufacturing sector stagnates

The manufacturing sector remained stagnant in 2011/12 as protracted power cuts, dismal flow of fresh investment and frequent political and labor unrest badly affected the sector that employees mostly unskilled and semi-skilled workers.

As a result, the sector grew by meager 1.28 percent said the Economic Survey 2012. 

 

The sector had grown by 2.29 percent in 2010/11contributing 6.2 percent of the gross domestic product (GDP). The contribution of manufacturing sector has been continuously decreasing over the last decade. It was recorded at impressinve 8.2 percent in the fiscal year 2002/03. 

Depressing performance of this sector has led to nominal creation of jobs within the country.The private sector, which is the key player in the employment generation, says hardly 50 percent of the total industrial capacity has been utilized. 

Meanwhile, the Survey showed that cement factories have utilized 56 percent of their production capacity. Similarly sugar, jute, cigarette, beer and matches factories are operating at 32 percent, 67 percent, 92 percent, 80 percent and 58 percent of total capacity respectively. 

“Utilizing production capacity of the industrial sector is a major challenge,” read the survey. "The growth target for manufacturing sector has not been achieved due to the ever-prolonging political transition, deepening power shortage and hosts of other problems such as labor disputes." 

According to the survey, 2,148 manufacturing industries were registered at the Department of Industry (DoI), generating employment opportunties to 250,406 people until the end of fiscal year 2010/11. The industries with foreign direct investment generated 155,432 jobs during the year. "However, manufacturing sector contributed only 33.8 percent of the jobs created during the period," the survey said. 

Amid bleak performance of industrial sector , the government is working to endorse new special economic zones (SEZs) bill, Industrial Enterprises Act (IEA), Foreign Direct Investment and One Window Policy to facilitate more investment. Establishment of SEZs in 10 different places of the country such as Bhairawa, Biratnagar, Bara, Gorkha, Siraha is on the cards. 

In a bid to lure foreign investment in the industrial sector, the government has declared investment year 2012/13. Additionally, the government has already signed the Bilateral Investment Promotion and protection Agreement (BIPPA) and Double taxation Avoidance Agreement (DTAA) with Indian government to boost investment.

Govt to finalize plan for separate electricity transmission company

The government has decided to finalize details for commencing the registration of a separate Electricity Transmission Company within a week.

"A decision to this connection was taken on Thursday. We will have a concrete plan regarding the registration of the new institution within a week," said Energy Secretary Hari Ram Koirala.

Once established, he disclosed the new institution will handle all transmission related activities, freeing Nepal Electricity Authority (NEA) from the transmission function. Koirala disclosed the government´s latest endeavor to expedite power sector reform when he interacted with the businessmen on existing power woes at Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

The private sector has been pushing the government to establish separate agencies to handle production, transmission and distribution of electricity in the country. So far, the NEA has been carrying out all these functions“ "NEA has been inefficient and consumers shouldn´t be the victim," Kush Kumar Joshi, former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said.

Apart from the private sector, development partners such as India, the World Bank and the Asian Development Bank that have been assisting Nepal on the power sector too have been pushing for the structural reforms in the power sector. Their assessment is such reforms were crucial if the government was to end the country´s power woe and efficiently utilize the transmission lines being laid within and across the border.

So far, the World Bank has already extended its assistance for a Nepal-India cross-border transmission line project in a bid facilitate the power trading between the two countries. The government has further requested the Indian government for additional support to develop the second cross-border transmission line.

"Ministry of Energy has already sent a request letter to the Indian government through Ministry of Foreign Affairs (MoFA), seeking support for the second cross-border transmission line," said Koirala.

Koirala also noted that the government was pushing for signing a power trade agreement (PTA) with India at the earliest. "I have talked with Prime Minister Baburam Bhattarai in this regard. We might ink the PTA with India with the next six months," Koirala said.

In a bid to tackle the power crisis, the government has also sought Indian assistance of RS 300 million. "I have written a letter to the Indian government seeking financial assistance as the medium-term support for stepping up the power supply," he informed the business community.

He further said that the government was working on to import 70 to 80 MW electricity from Indian in the upcoming fiscal year 2012/13. "So that we could meet the power shortage in industrial sector of eastern part," Koirala said.

Industrialists have been requesting the government to address the power shortage. "We are under pressure to operate factories though the government is not supplying electricity to the industrial sector and slapping double price for diesel bought for industrial purpose," Suraj Vaidya, president of the FNCCI said during the interaction program.

FNCCI requests Thai envoy to support Investment Year

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has requested Thai Embassy in Kathmandu to help Nepal bring Thai investment in Investment Year 2012/13.

Issuing a press statement on Friday, FNCCI said its president Suraj Baidya on the day met with Thai ambassador Kanthong Unakul and requested the Thai mission to help bring investments from Thailand.

"Vaidya requested the Thai envoy to facilitate Thai investors interested to invest in Nepal through diplomatic channel," the statement said.

Responding to Vaidya, ambassador Unakul said Thai investors might be interested to invest in Nepal´s agriculture, tourism and packaging industry.

The government has announced to celebrate fiscal year 2012/12 as Investment Year hoping to bring foreign investment worth US $ 1 billion.

The statement further added that FNCCI has decided to organize a promotional program in Thailand in the upcoming fiscal year.

Herbs exports from Nepalgunj to resume in 3 days

The Indian government has indicated that exports of medicinal herbs that came to a grinding halt few months back following introduction of a new law by the state-government of Uttar Pradesh (UP), contravening the bilateral trade treaty, will resume in a few days.

Officials at the Indian Embassy in Kathmandu Thursday assured Nepali traders that exports of their consignments will resume within three days, following the government´s diplomatic initiation to resolve the problem.“

"The embassy officials said we would be able to export medicinal herbs worth of Rs 300 million stuck at Nepalgunj customs point two months ago within three day”," Madhukar Thapa, president of the Jadi Buti Association of Nepal (JBAN), told Republica. Exporters on Thursday held a meeting with embassy officials during which request to take immediate steps to prevent their products from decaying was placed.

In this regard, the embassy has asked for a list of names of products so that it can communicate with the concerned agency in the central government and state-government back in India“ "We are pursuing the issue so that exports of medicinal herbs can resume as soon as possible,”one of the embassy officials said preferring anonymity“ "However, it will take a bit longer to change the law that has been imposed by the UP government."

The exports of medicinal herbs from mid- and far-western regions came to a grinding halt after the UP government made it mandatory for Nepali exporters to acquire a license from UP´s Department of Forest to continue exports.

Such a provision was introduced against the spirit of bilateral trade treaty between Nepal and India that ensures free movement of all goods of Indian or Nepali origin in each other´s territory, without subjecting them to any quantitative restrictions, licensing or permit systems.

The exporters had last week met Prime Minister Dr Baburam Bhattarai and asked him to take initiatives to solve the problem.

According to Thapa, 7,000 to 7,500 tons of medicinal herbs are exported from the Nepalgunj customs point to India. "We have been reassured that the medicinal herbs which are now lying at the customs point won´t decay due to the procedural hurdles that were created by the UP government," Thapa said, after the meeting at the embassy.

Political will must to check anti-competitive practices: Experts

Though the government has stepped up consultations for endorsing the Competition Promotion and Market Protection (CPMP) Guideline, experts say mere issuance of another policy guideline will not promote competition in the market unless the political leadership showed willingness and acted firmly to crack down syndicate, cartel and other anti-competitive practices.

“There already exist laws that clearly cite transporters syndicate as illegal, and black marketeering and cartel as grave crime against consumers. If the government is dragging its feet to enforce those laws, how will CPMP guideline ensure competition in the market?” wondered former deputy attorney general Narendra Prasad Pathak. 

Pathak noted that the law in itself was nothing unless there were commitments to enforce them and effective mechanism to implement them. “There should also be strong coordination between inspection officers and government attorneys if we are to implement CPMP Act effectively,” he stated.

Speaking at a program that South Asia Watch on Trade Economics and Environment (SAWTEE) organized to share the guideline that it drafted among concerned stakeholders, commerce secretary Lal Mani Joshi agreed to what experts said. “It is true that we lack the will to implement policies and acts that we formulated to protect consumers´ rights and promote competition in the market,” said Joshi.

Though the government enacted Consumers´ Rights Protection Act in 1998 and CPMP Act in 2006 along with CPMP Regulations in 2009, Joshi admitted their implementations have remained weak. He blamed weak state machinery, insufficient manpower and poor technical know-how of concerned offices for their poor implementation. 

“Despite that, we decided to formulate the guidelines, as it will at least make operations at the office level easier,” Joshi said. 

The government with the assistance of United State Agency for International Development (USAID) had outsourced the task of drafting the guideline to SAWTEE. 

The draft of the guideline that SAWTEE shared among the concerned stakeholders, however, did not feature how general consumers can take steps from their side to uphold their rights.

However, Apurba Khatiwada of SAWTEE, who presented the guideline, said the guideline would ease works for the implementing agencies. “Establishing clear cut activities to check anti-competitive practices becomes difficult at times. Hence, it is important to have a clear guideline on hand,” he stated.

Govt mulls new measures to safeguard local factories

The government is mulling over imposing quota restriction or additional customs duty on imported goods in case it found overseas exporters of supplying those goods at unjustifiably low prices, thereby hurting the Nepali industries unfairly.

The government has even incorporated such provision in a draft of new law - Safeguards, Anti Dumping and Countervailing (SADC) Act - which the Ministry of Commerce and Supplies (MoCS) finalized recently. 

“The draft of the SADC Act has been finalized and we have forwarded it to Ministry of Law and Justice (MoLJ), among others, for approval,” said the source. 

Once MoLJ approves it, the MoCS plans to forward it to the cabinet for its enactment.

MoCS has been drafting the SADC Act since a couple of years in a bid to safeguard the domestic industries from possible loss that they might incur in sales as well as market share due to inflow of excessively cheaper foreign goods. The draft Act also incorporates a provision whereby any industry facing losses due to ´dumping´ by overseas exporters can formally file a case against it, seeking compensation for the loss.

“However, the industry filing the case should have production amounting equal to or more than 25 percent of the total import of that particular product,” said the source.

Apart from responding to the case filed by any industry, the government too can impose additional customs duty on the imported goods in case it found them of being harmful to the domestic industries. 

“However, the government has to produce sufficient proofs before imposing additional customs duty,” the draft reads. 

Under the safeguard measure, the government can also impose higher customs duty or quota restriction on the import of any good if it finds such import of affecting the balance of payment of the country and foreign exchange reserve.

The draft Act envisages two types of safeguard measures -- interim and permanent. The interim safeguards can be lifted after certain span, while permanent will last for longer period.

Moreover, SADC Act puts the responsibility of showing proof on the shoulder of the overseas exporter. This means any overseas firms facing a case will need to prove that it is not dumping the product in Nepal. 

“The government will remove the additional customs duty and safeguards measures if the firm provides sufficient documents which demonstrate that the prices of goods were fair - not subsidized or kept lower than what it is priced in the exporting country,” said the source.

Industrial infrastructure program in limbo

When the government announced infrastructural support to cement factories utilizing local raw materials in 2008/09, the program had drawn praises from the private sector. Four years down the line, the priority program has completely lost steam. “

"This is sad. The program meant a lot to the private sector," said Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). 

Under the program, the government had promised to construct roads, drinking water facility and lay electricity lines to the factory sites. This, the government had claimed would encourage investors to make use of country´s huge limestone reserves, thereby saving billions of rupees spent on imports of clinker.

The private sector had welcomed the government´s announcement because the program had committed to relieve investors of the need for spending huge money in constructing basic infrastructures. 

However, the government over the last four years has constructed only one third of the total 32 km road it had promised to the four cement factories -- Ghorahi, Sonapur, Dang and Rolpa. Though the government had released Rs 175 million for road construction, only 48 percent of the amount has been spent so far. “

"The progress in laying electricity lines and setting up drinking water facili”y," Bishnu Prasad Dhakal, under secretary at the Ministry of Industry told Republica.

Promoters of the cement factories accuse MoI for the poor implementation of the program. MoI officials, on the other hand, passed the buck on other ministries. 

"It is true that MoI is the executing authority, but we rely on Ministry of Physical Planning and Works for the construction of roads, Ministry of Energy (MoE) for laying electricity lines and Ministry of Local Development (MoLD) for installing drinking water facility," said Yam Kumari Khatiwada, joint secretary at MoI.

Top MoI officials claimed they have always been exerting pressure on the ministries to implement the progra“. "Sadly, they have never given the program a priority," stated an MoI official.

However, top officials at MoPPWTM have their own explanations. "It´s not that this program is not in our priority," said Tulsi Prasad Sitaula, secretary at MoPPWT. "But how can we achieve results without any prior consultation and proper homework?"

Industrialists, meanwhile, expressed disappointment at the lack of progress in implementation of the program.

"If there is lack of coordination between the ministries, it is up to the government to sort them o”t," said a promoter of a cement factory.

Govt takes up herbs export issue with India

 The government has taken diplomatic initiative to resolve the problems in exporting medicinal herbs to India following the introduction of new rules in contravention to the spirit of bi-lateral trade treaty by India´s Uttar Pradesh (UP) state-government. 

The Ministry of Commerce and Supplies (MoCS) approached Indian embassy officials in Kathmandu in a bid to resolve the problem that has left Nepali medicinal herbs worth Rs 250 million stuck at Nepal Customs office for the last couple of months. 

“We spoke to the officials at the Indian Embassy in Kathmandu in an effort to settle the problem that has affected the exports of medicinal herb from our country to India. The embassy officials have assured that they would communicate the matter to the Ministry of Finance of India as soon as possible,” Lal Mani Joshi, secretary at the MoCS, told Republica on Sunday.

Traders had met Prime Minister Baburam Bhattarai last Friday and urged him to take immediate actions to resolve the problem.

The exports of medicinal herbs from mid-western and far-western regions have come to a grinding halt after the UP state-government of India made it mandatory for even the Nepali exporters to acquire a license from its Department of Forest to continue the exports.

Officials at the Indian embassy were maintaining ignorance about the problem. 

“As per the existing bi-lateral treaty, this problem shouldn´t have occurred. However, the state governments are not acting as per the treaty´s spirit,” said Joshi, quoting an embassy official.

UP state government had imposed the similar rule in 2000 prompting Nepali traders to file a petition at the Supreme Court of India. The Indian Supreme Court had issued a stay order asking the UP government not to disrupt the imports of Nepali medicinal herbs. 

But this time the UP state government imposed a new rule after the SC passed a verdict clarifying that the Ministry of Forest has the authority to deal with the issue. 

“We are trying to get a response from the Indian central government as soon as possible,” Joshi said. 

The bilateral trade treaty between Nepal and India clearly mentions that all goods of Indian or Nepalese origin shall be allowed to move unhampered to Nepal or India respectively without being subjected to any quantitative restrictions, licensing or permit systems.

China removes hurdles in citrus export

Nepal and China have signed a memorandum of understanding (MoU) in order to address the issues related to quality standard of Nepali agricultural products exported to China. The MoU was signed at the third meeting of the Nepal Tibet Trade Facilitation Committee (NTTFC), which concluded on Thursday in Tibet.

“We have signed an MoU with China so that our citrus products can have access to the Chinese market,” said Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and Supplies (MoCS). “Quarantine related issues are the major obstacles to increasing our export to China. This is a step towards further improvement.” 

The meeting that basically discussed problems related to tariff and non-tariff barriers has been successful in terms of removing barriers, Upadhaya said, “China has assured us that it would further support Nepal to upgrade the quality and capacity of Nepali laboratories at different customs points.”

The meeting that was led by Mei Yubao, deputy secretary general of the government of Tibet Autonomous Region China from the Chinese side had complained about Nepal´s certificate of origin (CoO). “Chinese side was expressing concerns over the Nepali CoO. Basically, they were saying that the CoO issued were not technically sound.” In response, the Nepali side has assured that the weaknesses would be improved. 

Additionally, China has agreed to construct parking yard on the border points so that the problem of congestion can be removed. “The meeting has been successful in developing a mechanism in order to resolve the day-to-day problems that the traders from both the countries face,” Upadhaya said. “There will be focal persons from both the countries in the border area to facilitate traders.” 

China has provided the preferential treatment to 4,721 Nepali products. However, Nepal has failed to tap the potential market of China and boost trade. 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.

Different studies on Nepal-China trade reveal that the China has been negating the preferential treatment it has provided to the Nepali products. “China brings up different issues such as quarantine and language,” said Dr Ratnakar Adhikari, presenting a paper in a seminar organized by Institute for Foreign Affairs, on Friday in Kathmandu .

Locals for speedy development of Budi Gandaki project

Locals from Gorkha and Dhading have urged the government to speed up the implementation of the 600MW Budi Gandaki project and promptly commence processes for carrying out the feasibility study of the reservoir-based hydroelectricity project. 

The locals pushed for the early implementation of the project during their meeting with Prime Minister Baburam Bhattarai on Saturday. On the occasion, they expressed concerns over government´s reluctance in calling bid for the feasibility study. 

“We expressed our concerns with the prime minister and urged him to take immediate action to speed up the work of the project,” said Ram Chandra Poudel, a local who was also present at the meeting with PM. 

Responding to the locals, PM Bhattarai said the project was very important for the socio-economic development of the country and the government was committed to executing the project. 

“We have already included it among the national-pride projects. We will soon take necessary steps to develop it,” Poudel quoted PM as saying at the meeting. 

Budi Gandaki is one of the mega hydropower projects of the country which was identified almost 30 years ago in 1983. But the government had not taken any initiatives for developing the project as construction as well as resettlement and rehabilitation of people living in 23 VDCs in Gorkha and Dhading required a huge fund. 

Nonetheless, Budi Gandaki had received applications from 24 firms for conducting feasibility study of the project.

"Of them, we have shortlisted six companies, inlcuding firms from the US, Germany, Italy, France and Australia for carrying out the task," said Lila Nath Bhattarai, director of the project. 

The project office has already forwarded the list of short-listed firms to the government, requesting it to select one of them for the task.“"We hope the government will soon take a decision,” he added.