FDI policy, IEA drafts uncertain

Reforming the policies and Acts to create a favorable environment and ultimately lure foreign as well as domestic investors with mega investment in the country has been badly affected due to the prolonging transitional politics and uncertainty of holding next election.
The government´s plan to endorse a new Foreign Direct Investment (FDI) policy replacing the existing FDI and One Window policy, 1992 and to enact new Industrial Enterprises Act (IEA) are unlikely to happen in the absence of parliament and full-fledged government in place.
“We are working on finalizing the draft of the FDI policy and IEA. However, it´s difficult to say what will be the fate of those drafts,” Anil Kumar Thakur, joint secretary at the Ministry of Industry (MoI) told Republica on Friday.
The ministry, which is preparing the drafts with the help of United Stated Agency for International Development (USAID), has circulated them to the stakeholders for further discussion. “Similarly, we have outsourced expertise to develop a draft of a new FDI policy,” Thakur said. “We will try to push for endorsing the IEA through ordinance and FDI policy from the cabinet.”
The government even formed a high-level team under the leadership of Dipendra Bahadur Kshetry, vice-chairperson of the National Planning Commission (NPC), assigning it to study what should be changed in the laws to make them consistent.
The dramatic change in the political situation of the country after May 27 - when the Constituent Assembly (CA) was dissolved - and uncertainty about holding another CA elections has posed a serious constraint on endorsing new laws and policies.
“It is better not to bring new laws and policies without winning the confidence of the opposition,” Semanta Dahal, lawyer specialized in International Economics, said. “Investors´ psychology does not let them to come here with investment when political situation is so chaotic even though the government keeps all the policies consistently.”
Meanwhile, the special economic zone (SEZ) bill, which the government was planning to bring through ordinance, is not in the priority anymore. According to a high-ranking official at the MoI, the SEZ bill has been at the bottom of the government´s to-do list.
“We are trying to push for it since it is important to improve the situation of industrial sector. But it has been sidelined lately,” said the official.

IB seeks proposal on feasibility study of Kathmandu Metro from NMPL

The Investment Board (IB), entrusted with the task of immediately executing works on 14 mega projects including West Seti Hydro Project and Nijgadh International Airport, has written to Nepal Metro Private Ltd (NMPL) asking it to submit a detailed proposal on conducting feasibility study and the construction of Kathmandu Metro Railway (KMR).
Previously, NMPL had expressed interest to conduct the feasibility study and carry out the construction of KMR, but on condition that the metro project is handed over to it forgoing the bidding process.
According to a government official privy with the KMR project, the IB had established contact with NMPL based on the offer made by the company. “The Investment Board will take a decision on whether to hand over the project to NMPL after going through its proposal,” said the official.
A high-ranking official who has the knowledge of the issue said the IB had accepted the offer of NMPL as it lacks human resources for preparing the bidding documents for projects like KMR.
The Ministry of Physical Planning, Works and Transport Management (MoPPWTM), which is currently conducting the feasibility study of the KMR, has raised no objection to the IB´s homework of extending construction license to the NMPL.
“We are currently holding discussions with the company (NMPL), though it´s in preliminary stage,” MoPPWTM Secretary Tulsi Prasad Sitaula told Republica on Thursday. “The company has said that it would bring in international investors mostly from Korea and Singapore.”
The government has currently outsourced the task of conducting KMR feasibility study to Korea Transport Institution, Chungsuk Engineering Company, Kunwa Consulting and Engineering Company, Korea Rail Network Authority and two local companies BDA Nepal Private Limited and EMRC Private Limited. Satisfied with the inception report prepared by the companies, the government paid Rs 60.5 million to the firms asking them to conduct a complete feasibility study.
Meanwhile, NMPL has said it would compensate the expenses incurred during feasibility study of the KMR if it secures the project.
But differences persist between the IB and MoPPWTM officials on whether to allow NMPL to conduct complete feasibility study of KMR.
“It´s better to let the companies that are currently working to finish the feasibility study,” Sitaula said. “We can negotiate with NMPL after getting the complete feasibility study report.”
IB CEO Radesh Pant refused to divulge details when asked about the negotiations.

Above 60 firms apply for rice export to China

More than 60 firms have registered expression of interest to export rice to China via Rasuwa and Tatopani customs after the government lifted ban on rice exports, allowing traders to export up to 5,000 tons from each customs points to the northern neighbor.
“The number of applicants is much higher than what we had expected,” said Narayan Prasad Bidari, director general of the Department of Commerce and Supply Management (DoCSM).
The cabinet meeting held a couple of weeks ago lifted ban on rice export. The government had banned rice exports in 2008. The government lifted the ban after the country started enjoying surplus of rice in the domestic market.
According to the Ministry of Agricultural Development, the country enjoyed food surplus of 443,000 tons in fiscal year 2010/11. It had forecast a food surplus of about 800,000 tons for previous 2011/12, of which 300,000 tons will comprise rice, the statistics show.
The preliminary estimation of crops production shows total paddy production was recorded at 9.45 million tons in 2011/12, up 9.8 percent compared to the previous fiscal year and 21.8 percent compared to 2009/10.
The DoCSM, which is entrusted to regulate the market and manage supply, has decided to give permission to all the applicants. According to Bidari, first 10 firms will get permission to export up to 200 tons. Similarly, another 20 firms will get permission for up to 100 tons and rest of the 6,000 tons will be divided among all the applicants.
“At present, we are screening the firms to ascertain whether they are eligible for cross border trade,” Bidari told Republica on Wednesday. According to him, the department will issue export permissions to firms by August 5.
Though the Ministry of Commerce and Supply (MoCS) had recommended allowing export up to 50,000 tons of rice, the cabinet has allowed exports of just 10,000 tons.