Maoist faction's protest puts SEZ law in limbo

Although Special Economic Zone (SEZ) has long been acknowledged as one of the major vehicle for luring foreign investment and giving boost to exports, efforts of the industry ministry to enact SEZ Bill have failed even though the same was endorsed by the cabinet three years ago.

Initially, the lack of clarity over social protection and objection of trade union on provisions like ´no extreme forms of strikes´ in the zone had prevented its ratification. Now that trade unions have softened their stance on the bill, MoI was hopeful of getting the bill endorsed by the parliament.

However, its bid to retable the bill in the parliament has hit yet another roadblock. A faction of ruling UCPN (Maoist) has strongly protested it, terming it as an ´anti-national´ document. Maoist Chief Whip Dev Gurung has even warned of stalling the parliament if the MoI tabled it.

“After gathering dust in the parliament for three long years, we had taken steps to reintroduce the bill in the parliament, hoping positive outcome due to changed political context,” said industry minister Anil Kumar Jha.

However, Jha has rolled back his initiative following such strong-worded reaction from Gurung.

The Maoist party´s resistance has come despite Prime Minister Baburam Bhattarai´s clear statement that the bill was crucial to lure some $1 billion worth of foreign investment that he has targeted to achieve in the Investment Year 2012/13. Bhattarai is also the vice-chairman of UCPN (Maoist).

Bhattarai has also cited its enactment as one of his priority works in the Immediate Action Plan (IAP) for Economic Growth and Prosperity. “The bill of SEZ will be immediately approved by the Parliament,” reads the IAP.

Jha said Gurung´s reaction was surprising, mainly as it contravenes with what his own party leader has said.

Gurung, however, said his party has different opinion about the bill. “First, it was prepared by the World Bank. Secondly, it damns labors´ rights and protection of natural resources. It is not acceptable to us,” Gurung stated.

He even ruled out the necessity of SEZ law, arguing that there were already multiple laws in the country to encourage inward flow of foreign investment and exports.
However, officials having knowledge on the contents of the bill, said Gurung´s reaction was based on his naivety. “Obviously he has not studied the bill. Otherwise, he would have known, the bill protects the labor rights and is sensitive to other issues as well. If that was not the case, trade unions won´t have agreed to it,” a senior official at industry ministry said.

Rameshwar Khanal, economic advisor to the PM, agreed with him. “The only difference is that the SEZ bill does not allow workers to halt productions while striking. Otherwise, the labor rights, including collective bargain, are all protected in the bill,” he added.

The latest objection by the UCPN (Maosit), meanwhile, has deferred yet again the chances of early operationalization of already built SEZ and infrastructures, including SEZ in Bhairahawa, for which the government has already spent millions of rupees. It has also put the fate of other proposed SEZs, including those in Birgunj, Panchkhal, Jhapa and Dhangadhi, among others in limbo.

If the government dragged feet on enacting the law, officials stated it would adversely impact the Investment Year as well. “Deferring the long-committed law that pledges minimum basic assurances to investors will only taint our image. In such a situation, how can we push our case strongly to lure foreign investment?” wondered the MoI official.

Nepal's trade policy discussed at WTO

Commerce secretary Lal Mani Joshi on Wednesday began detailed discussions on the country´s trade policy at the headquarters of the World Trade Organization (WTO) in Geneva.

“In Nepal´s first trade policy review meeting after joining WTO, secretary Joshi said Nepal has pursued structural reforms in all the sectors of economy and that the country has made considerable process in economic liberalization,” Shankar D Bairagi, Nepal´s permanent representative in Geneva told Republica over phone.

The review meeting kicked off on Tuesday. Nepal had joined WTO in 2004.

According to Bairagi, Joshi also answered to queries raised by representatives of Nepal´s major trading partners. “He will respond to the remaining queries on Thursday. Representatives of US, China and India, among others, are raising questions about Nepal´s investment environment and infrastructure development,” added Bairagi.

Bairagi further said major trading and development partners appreciated Nepal´s progress towards economic liberalization and strong commitment in compliance to the WTO norm.

According to a press release issued by Nepal´s permanent mission in Geneva, secretary Joshi told the meeting that Nepal had high-level Investment Board aiming to create investment friendly environment for both domestic and foreign investors.

“The Nepali delegation also pointed out number of challenges and constraints in Nepal´s efforts to promote international trade,” the release added.

Bairagi said Christine Hochstatter, alternate permanent representative of Germany, as the discussant, commented on reports of the Government of Nepal as well as of the WTO Secretariat and suggested measures for further reform of Nepal´s trade sector.

Ministry to address farmers' concerns

After almost a yearlong silence, Ministry of Agriculture and Cooperative (MoAC) is finally preparing to review a methodology adopted to draft a 20-year vision document Agriculture Development Strategy (ADS) 2015-2035 that will guide country´s agricultural sector once the existing Agriculture Perspective Plan (APP) ends in 2015.

So far, the ministry had assigned a 33-member technical assistance team, one-third of which are foreign consultants, to draft the document. However, such a closed-door approach had drawn flak from various farmers associations as well as MoAC officials themselves.

"We might have to rethink the way the team has been formed and the way it functions, particularly as it might later pose problem in owning the document," Dr Hari Dahal, joint-secretary and spokesperson of the MoAC, told Republica on Tuesday.

The Ministry has even called a consultation meeting of the stakeholders on March 15 to review the whole approach of drafting ADS.

Various farmers´ groups had protested the approach, mainly expressing fear that close-door preparation of such a crucial document by ´so called agro-experts and foreign experts´ might not address their concerns.

"The methodology used in preparing ADS is almost similar to that of APP. As APP was totally a failure, adoption of same method has raised question over ADS being a better document," said Prem Dangal, general secretary of the All Nepal Peasants Federation (ANPF).

Some of the MoAC officials too had challenged the approach, saying that it might lead to lack of ownership by various ministries.

"The 20-year vision document will deal on multi-sectors like irrigation, agricultural inputs, and other crucial sub-sectors. It is always appropriate to let the respective ministries formulate the related set of strategies, instead of preparing them by MoAC," said an official at MoAC.

Dahal agreed with the official and even admitted that APP failed because it was not fully owned by the line ministries and agencies supposed to implement the action plan. Also reduction in budgetary allocations on the sector had hit its implementation.

"We are having a meeting with farmers and other stakeholders to hear their voices," Dahal said, "We will consider their concerns seriously."

The government is preparing the ADS with the technical assistance of various donor agencies, including Asian Development Bank, World Bank and United State Agency for International Development (USAID), among others.

Two-thirds of the members in the drafting committee led by Francesco Goletti, a policy and institutional specialist and president of Agrifood Consulting International- New York University, are former government officials.

"Our concern is the team has no representation from farmers´ organization and civil society groups working in the agriculture sector," stated Dangal.

MoAC officials said the government has allocated $2 million (around Rs 160 million) to prepare the ADS and the team has been asked to submit it within two years.

Govt to provide collateral-free loan to women

Women who don´t have anything to pawn to get a bank loan and start a business should not worry too much now. The Ministry of Industry (MoI) is soon coming to their aid.

Yam Kumari Khatiwada, joint-secretary of the MoI, said the ministry has formally asked the Ministry of Finance to release Rs 10 million for establishment of the National Women Entrepreneurs Trust (NWET).

The ministry has asked for the fund as per the provision in the Industrial Policy 2010, which envisages establishment of the NWET.

"This amount will be used in providing loans to women who want to start businesses," she said.

The ministry had decided to issue unsecured loans to women following complaints from women entrepreneurs who said their access to collateral-free credit was very limited.

Initially, the ministry has decided to give away a credit of Rs 100,000 to 300,000 to every candidate. These candidates will be selected by a committee comprising representatives of different agencies including the industry ministry, the Federation of Nepalese Chambers of Commerce and Industries (FNCCI) and Federation of Women Entrepreneurs Associations of Nepal (FWEAN).

According to Khatiwada, women who get the credit will have to pay back the principle amount and interest within two years of getting the loan.

These loans will come with an annual 10 percent interest. "But those who repay the interest in time will get a 4-percentage-point rebate on the amount," Khatiwada said, adding, that the amount accumulated through interest payment would go back to the trust.

The industry ministry has decided to mobilize commercial banks to disburse the loan amount. "In return, the government will provide certain fees to the banks for extending the service," Khatiwada said.

However, it is yet to decide on districts in which the program would be extended.

"Probably, we will focus only in two districts in the beginning," Khatiwada said.

Government wakes up to uphold consumer rights

In a bid to better protect consumers rights, the government has decided to make necessary amendments to the Consumer Protection Act 1998 and approve the Market Monitoring Regulation (MMR) through cabinet within this week.

The decisions were taken during a meeting held at the Prime Minister’s Office on Sunday. “The meeting has decided to complete these tasks within March 15,” one of the participants of the meeting told Republica.

The meeting, chaired by Chief Secretary Madhav Prasad Ghimire, was attended Home Secretary Sushil JB Rana, Commerce Secretary Lal Mani Joshi and Joyti Baniya, president of Consumers Rights Protection Forum (CRPF), among others.

“The meeting has also decided to monitor the market effectively,” Baniya said after the meeting, adding, “The decisions made on Sunday are in favor of consumers. We are looking forward to seeing the effective implementation of the decisions.”

According to Baniya, the endorsement of the act will also pave the way for establishment of Consumers Protection Trust (CPT) and Consumer Court (CC). The establishment of these bodies is expected to uphold consumers rights

The meeting also decided to enhance human resources capacity and other physical infrastructures, including vehicles, at the Department of Commerce, Nepal Bureau of Standards and Metrology, and the Department of Food Technology and Quality Control.

It also decided to give more power to market monitoring officers in districts so that they can take prompt actions against unscrupulous traders.

As per existing laws, market monitoring officers can only seal the shops found involved in black-marketing. They can take action against unscrupulous traders on the spot once the act is amended.

Consumers have hailed the government initiative to uphold consumers rights make market monitoring more effective.

“The government has finally taken the initiative to establish consumer court. It will uphold consumers rights and punish traders fleecing consumers in market,” Baniya added.

Two importers get supply against IC

After nine-day deadlock, when imports of excisable goods from India came to a grinding halt, some of the Indian traders have started exporting goods to Nepal against Indian Currency (IC).

Two Nepali importers, including United Spirits, finally received their respective consignments, one from Bhairawaha and another from Biratnagar customs, on Friday, said Pashupati Murarka, vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

However, he said the Indian exporters dispatched consignments only after the importers pledged collateral (of additional payment). “They have promised to refund the collateral as soon as the confusion is cleared,” said Murarka.

FNCCI officials said they have no clue as to what led the two companies to supply goods against IC payment. “But we hope other exporters will resume normal exports against IC soon,” said Murarka, adding that most of the factories, which depend on imported raw materials from India are on the verge of closure due to shortage of necessary materials.

The import of excisable items have come to a halt particularly after Indian exporters laid new condition of payment since March 1, when duty-refund procedure (DRP) was scrapped.

Scrapping of DRP paved the way for Nepali traders to receive goods at ex-factory rate (devoid of excise duty) and government to collect excise duty at customs points, but Indian exporters said Nepali importers should make payment in US Dollar if they are to get supply on ex-factory rates.

“If paid in IC, our (Indian) government considers the supply as local sales, and seeks us to pay excise,” they had argued.

Importers could not oblige though as Nepal Rastra Bank has opened USD payment facility for about 250 items only. If they accepted exporters´ condition (while paying in IC), they were required to pay excise twice -- in India as well as in Nepal.

The confusion, meanwhile, has brought imports of industrial raw materials and other goods on which excise duty is applicable like cement, clinker, textiles and vehicles, among others, to a grinding halt.

Talking to Republica, he disclosed that a delegation of FNCCI had recently approached the Indian Embassy in Kathmandu to settle their problem. “The Indian officials conveyed us that India has neither changed payment terms nor should we deal in USD,” said Murarka.

An official of the Embassy said, Indian Ambassador to Nepal Jayant Prasad too has communicated to the Indian Ministry of Finance conveying concerns of Nepali importers. But he did not disclose how the ministry responded.

Ministry of Commerce and Supplies (MoCS) on Wednesday formally approached his Indian counterpart to clarify why Indian exporters have not been trading against IC. However, the Indian ministry is yet to respond.

Document on protecting local seeds varieties gets nowhere

A parliamentary committee has put an important report on seed sovereignty in the backburner, further delaying process to draft legislation to protect seed sovereignty and discourage import and use of hybrid products.

The report was sought by Committee on Natural Resources and Means (CNRM) from the Agriculture Ministry following uproar over attempts to import Monsanto hybrid maize seeds through a program of United State Agency for International Development (USAID) for distribution to farmers last September.

CNRM chairperson Shanta Chaudhari said her committee had not discussed the report due to time constraint. "We are aware of the situation but many other important tasks remain to be completed," Chaudhari said. "We are hoping to call another meeting in this regard within few weeks."

Agriculture Ministry, which was allegedly involved in agreement with Monsanto and USAID to import hybrid seed, was summoned by the committee in January to clarify its position on seed sovereignty of the country.

Officials at the ministry said the report had recommended measures to save the seed sovereignty by discouraging import of hybrid seed from other countries. “We are waiting for another meeting of CNRM and further direction on the issue from them,” Dr Hari Dahal, joint secretary and spokesperson of the ministry said.

“The government won´t give subsidy to farmers while buying hybrid seed that are not domestic,” reads the report prepared by the ministry. “The government will also not compensate for the losses that may occur due to unregulated import of hybrid seed ”

Nepal imports more than 200 types of hybrid seeds from 30 international companies through 13 domestic importers.

The report also draws a clear line regarding hybrid, genetically modified organism (GMO) and seed sovereignty.

The paper strongly says GMO should be banned in the country and only domestic hybrid seed should be promoted, a sharp contrast to the Agricultural Policy - 2004 which says the GMO should be regulated and hybrid is promoted.