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.

Exports grow double-digit driven by garment, carpet rebound

Though labor unrest continues to trouble major industries, Nepali readymade garment and woolen carpet exporters managed to post more than 44 percent rise in exports. The healthy rise in garment and woolen carpet exports also made country´s total exports to grow by 11.2 percent over the first six months of the current fiscal year.
Nepal´s total exports over the first half of 2011/12 jumped to about Rs 36 billion, says a latest report of Nepal Rastra Bank. It was Rs 32.29 billion in the same period last year.  Although government officials tag readymade garment as a ´dying industry´, its exports to the third country markets soared by 44.5 percent and touched Rs 2.48 billion during the review period.
Exports of garment have increased to the European countries - mainly Spain, Germany, UK and France, according to Udaya Raj Pandey, president of Garment Association of Nepal (GAN). "We have got no new costumers, but our old clients are placing more demand," he told Republica.
As EU countries have provided zero tariff facility to Nepali products, exports of garment in the European market has increased in recent months. However, no such sign is visible in the US, which previously used to be the largest buyer of the product.
Despite such a healthy export growth, garment remained the country´s second largest export during the review period. Nepal´s largest export during the period was hand-knotted woolen carpet.
According to NRB statistics, exports of woolen carpet during the first six months of 2011/12 stood at Rs 3.36 billion, which was 44.2 percent higher as compared to export figures of same period of last year.
Pashmina - another prime export products - was the country´s third largest exports during the period. Nepal exported pashina products worth Rs 1.52 billion, a rise of 63.5 percent recorded in the same period last year.
Entrepreneurs like Kabindra Nath Thakur, president of Nepal Carpet Exporters Association, however, caution that present rise (in value terms) could be faulty because the central bank figure does not acknowledge some 8 percent rise in value of third country exports has come from depreciation of Nepali currency. "The actual growth in exports is lesser than what the NRB says," Thakur stated.
Irrespective of the situation, the rise in their exports income enabled the country to enjoy 6 percent rise in exports to overseas markets over the first six months. Exports to those markets had declined by a percent in the same period last year.
Likewise, rise in exports of products like zinc sheet (Rs 2.95 billion), textiles (Rs 2.37 billion), jute goods (Rs 2 billion) and polyester yarn (Rs 1.91 billion) helped the country expand its exports to India by almost 14 percent.
Despite encouraging export growth, NRB data shows the total export income for the period did not even suffice to finance import of petroleum products. According to NRB, Nepal imported petroleum products worth Rs 40.60 billion during the period. Gold (Rs 11.61 billion) was the country´s second largest import during the review period, flowed by vehicles and spare parts (Rs 9.45 billion), MS Billet (Rs 8.50 billion) and medicines (Rs 4.98 billion).
Thanks to their increased consumption - country´s imports increased by 16 percent and touched Rs 216.68 billion during the review period. Such higher rise in imports, meanwhile, widened the country´s trade deficit by about 18 percent to Rs 180.76 billion.