Nepal offers stable investment opportunities to foreign investors: Minister

Commerce Minister Lekh Raj Bhatta, addressing the thirteenth United Nations Conference on Trade and Development (UNCTAD XIII), said that the country was ready to offer a stable investment environment to foreign investors with peace process gradually coming to a logical conclusion.
According to a press release issued on Thursday by the Permanent Mission of Nepal to the United Nations in Geneva, Bhatta said that despite visible constraints, Nepal offers very attractive and stable investment opportunities in hydroelectricity and tourism sectors.
The conference, which kicked off on Thursday in the Qatari capital of Doha, focuses on economic development and modernization of least developed countries (LDCs).
“Service sector is emerging as a vibrant component of Nepali economy in recent years and its share in the gross domestic production, employment generation and foreign exchange earnings is increasing,” the release quotes Bhatta as saying during the conference.
Underscoring multiple constraints LDCs like Nepal face in the development process of the service sector, including high transaction costs, supply-side problems, stringent market access conditions, inequalities, and formidable structural problems, Bhatta stressed that effective national efforts and adequate and appropriate international support are essential to overcome the deep-rooted challenges.
“Support measures should encompass special treatment for LDCs in the WTO negotiations on trade, and special priority should be accorded to modes and sectors of export interest to the LDCs,” says the statement.

Committees and reports unable to revive sick industries

The government formed around a dozen committees in last 10 years to study and revive sick-industries in the country. All of them recommended ways to revive them but none could precisely categorize which were sick-industries.
As a result, there has been no change in the situation of sick industries since 1994 when the first committee was formed.
Recently the government formed 8-member Sick-Industries Rehabilitation High-Level Task Force (SIRHLTF) under the leadership of Dipendra Bahadur Kshetry, vice-chairman of the National Planning Commission (NPC) to categorize sick-industries, their problems and find solutions. However, the 20-pages report does not clarify on definition of sick-industries.
"It has already been six months since the report was finalized," a ministry official said on condition of anonymity "Report says what facilities to give to the sick industries but does not say precisely which are the sick industries and that is the main reason for not getting anywhere."
“Six industries have applied for immediate relief at the Ministry of Industry,” the official said. “But we can´t proceed since there is no legal categorization of the sick-industries.”
SIRHLTF paves the way for sick industries to multiple facilities such as postponement of bank loan repayment, restructuring of loan, waiver of tax.
In the annex, the report has listed 26 companies that applied to be categorized as sick-industries . "These are the industries that applied for benefits that we have set for sick-industries," Kshetry said, "But, we are yet to make a technical committee which will fix criteria for sick-industries."
Contrary to the Keshtry´s claim, Umakant Jha, secretary of the MoI, said the ministry was preparing to submit the report to the cabinet for approval. The MoI has reserved the process of implementation saying that it doesn´t have any legal ground to execute them without cabinet´s approval.
Previously, a similar high level committee was formed in 2010 under the leadership of secretary of the MoI. The report however, was replaced by a new one of SIRHLTF. “But there is not much difference between two reports,” said a source at the MoI.
According to Anil Kumar Thakur, joint secretary of the MoI, preparations were ongoing to incorporate definition of sick-industries in the Industrial Enterprises Act (IEA) which is in final stages.

Meeting on Tarai Roads Project concludes

The fourth meeting of Project Steering Committee (PSC) for Tarai roads between officials of Nepal and India concluded in Kathmandu on Wednesday. The meeting decided to expedite the Tarai Roads Project.
The Indian government is assisting Nepal to build 1,400 km roads in the Tarai region. "Nearly 8.8 million people will benefit from this road project," the Embassy of India in Kathmandu said in a statement.
Ramesh Raj Bista, joint secretary of Nepal´s Ministry of Physical Planning and Works and Akhilesh Mishra, joint secretary of India´s Ministry of External Affairs had led delegation of their respective countries in the meeting.
"The Indian delegation also met Minister for Physical Planning and Works Hridayesh Tripathi and Tulsi Prasad Sitaula, secretary of the ministry," the release reads.
The Indian delegation comprises of officials from other agencies like Ministry of Finance and Ministry of Road Transportation. The delegation also visited different parts of Tarai region take stock of the project.
The two-day meeting also held discussions on other issues of transportation and roads in Nepal, according to the release.

Nepali tea, lentils enjoy rise in global market share: Report

Nepal´s export share of tea and lentil in world market -- two agricultural products in which the country enjoys comparative advantage -- is steadily increasing for more than a decade.
A report shows that Nepal´s export share of lentil and tea hasbeen increasing since 1999.
“Nepal´s export share of lentil in 1999 was just 1.33 percent or 15,094 tons,” the report said, “It reached 56,768 tons in 2009 which was 3.32 percent of total global export consumption.
Similarly, Nepal´s share of tea in world market in 1999 was just 0.01 percent or 82 tons. In ten years, it reached 0.57 percent, which is 8,889 tons. The study conducted jointly by Ministry of Commerce and Supply (MoCS) and South Asia Watch on Trade, Environment and Economics (SAWTEE), argues that the country has ample scope to further raise its global market share, particularly as the demand for these products were going up.
In 1999, the total import of lentil in the world was 1.13 million tons. It reached to 1.71 million tons in 2009. The total global import of tea in 1999 was just 1.34 million tons, whereas it jumped to 1.56 million tons in 2009.
Tea and lentils are also enlisted in the Nepal Trade Integration Strategy (NTIS) -- a blueprint of the government to boost export of goods that have comparative advantage for the country. Jhapa, Ilam, Panchthar, Dhankuta and Terathum are the major tea producing districts whereas Sarlahi, Dang, Rautahat, Bara, Kailali, Bardiya, Parsa, Banke, Sunsari and Chitwan are major lentil producing districts.
However, the report, which was shared among stakeholders in a private-public dialogue on Tuesday was hugely questioned and criticized.
“The total volume of export of lentil from Nepal is more than the total amount of domestic production of it,” one of the participants from the government body questioned, “No one knows from where lentil comes.” Interestingly, the report does not include the data of domestic production.
The major destination markets of Nepali lentils are Bangladesh, Turkey, UAE, Sri lanka, Iran Egypt, UK, Sapin and Pakistan. Similarly, major consumer countries of Nepali tea are Germany, Russia, USA and Australia. Moreover, lentil has around 75 percent share in Nepal´s export to Bangladesh.

Investment climate improving in Nepal: Chinese investors

A visiting business delegation of Chinese private sector has expressed interest to investment in various areas in Nepal, ranging from electrical equipments production to hydroelectricity.
Cheng Huihong, chairman of International Enterprise Management and Investment Association (IEMIA), said Chinese investors were looking forward to invest in Nepal.
“Chinese investors having expertise in areas like hydropower, hotel, restaurant business, electrical equipment, medicine, food, art and Buddhism are eager to invest in Nepal," Huihong said at an interaction organized by Nepal-China Chamber of Commerce (NCCI) here on Monday.
Huihong is in Nepal leading a 15-member business delegation.
Rajesh Kaji Shrestha, president of NCCI, requested Chinese investors to come to Nepal with investment. “We are ready to support you from our part to protect your investment," Shrestha said.
According to a press release issued on Monday, Shrestha invited the Chinese investors to invest in hydropower, agriculture, tourism and banking sector. “I propose for joint venture investment approach of Nepali and Chinese business people,” the release quoted Shrestha as saying during the interaction.
Shrestha also assured Chinese business people that the NCCI would try its best to push for a favorable investment climate in the country.
"We are seeing the investment environment improving in Nepal,” the release quoted Huihong as saying. “This is the reason why we are interested to invest here.”
According to the release, NCCI and IEMIA will soon ink an agreement to make joint investment in areas like hydropower and banking.

Govt drafting new export import Act

In a bid to make the law governing country´s overseas trade more effective and incorporate service trade, the government has drafted new Export and Import Act (EIA) to replace the existing Export and Import Control Act (EICA) enacted in 1957.
“The first draft is ready, it has already been circulated among stakeholders and concerned officials for necessary consultation,” an official of the Ministry of Commerce and Supplies (MoCS) told Republica.
He told Republica that the need for a new Act was felt mainly as the previous Act, which has no provision for service trade, has become obsolete in present context. “The new law will have specific provisions for export and import of services,” the official said.
The government has identified seven services that have comparative advantage for export. The National Trade Integration Strategy (NTIS) -- a blueprint of the government to boost country´s export, identifies tourism, labor, information and technology, healthcare, education, engineering and hydroelectricity as service areas having export potential.
“Unlike the previous Act, the new draft aims to facilitate export and import,” the official, who is also reviewing the draft of the new Act, said. “The inclusion of the word ´control´ in the previous Act had started to give negative connotation in the present context of bilateral and multilateral trade.” The official, however, refused to divulge further details.
The existing Act was prepared at a time when Nepal´s trade volume was very low. It has not been amended after its ratification in February, 1957. Among others, the existing Act allows the government to open and prevent export and import of goods if it deems necessary.
“The draft proposes the government to play facilitator´s role in import/export trade,” the official disclosed. However, it will have a clause that allows the government to regulate trade of sensitive goods and services.
MoCS, which is pushing for early finalization of the draft Act, is also reviewing Foreign Direct Investment and One Window Policy in order to make it up-to-date. “This is also an effort to make all the Acts and policies coherent with each other,” the official said.

Govt seeks Rs 1b from Russia to retrofit Udayapur cement

The Ministry of Industry is seeking to get Rs 1 billion from the Russian government in the form of grant to replace the degraded machinery equipment at Udyapur Cement Factoy (UCF), the country´s largest state-owned cement factory.
The ministry is all set to make the request through the Ministry of Finance (MoF).
"We have finalized our homework to approach MoF in order to forward the request to the Russian government," Uma Kanta Jha, secretary of MoI, said. "We will request for grant assistance, if not soft loan would be okay with us."
The ministry has already asked grant for Janakpur Cigarette Factory (JCF) from the Russian government.
"The loan that we are looking for from Russian government is solely to replace machine equipment parts," Jha said. "That will help to upgrade production."
The machineries in the factory are 18 years old. The latest annual report on public enterprises has recommended changing the equipment of the factory, which was established in 1987.
"After this problem is solved we can think of other problems in the factory," Jha said.
The factory, which has 549 permanent employees, frequently faces labor-related problems. As per the annual report on public enterprises, the government has failed to address these problems.
"The factory is in the loss due to the problems related to money, machine and man (3M)," the annual report on public enterprises states. "Interference of trade union is high in the factory."
The factory, whose board members and chief are politically appointed, incurred loss of Rs 879.84 million in 2010/11 and has a cumulative loss of Rs 17.73 billion.
According to Jha, the government will work on addressing the labor related problems after injecting the fund that is anticipated to come from the Russian government. "We are trying to revitalize the public enterprises," Jha said. "The Russian government itself is interested in extending the grant in order to upgrade the situation of state-owned factories."
The factory has audited its financial report only till 2004/2005. According to statistics, the factory is yet to pay Rs 17.4 billion of principal amount and Rs 8.02 billion in interest to the government. "The factory needs other additional investment as well," Jha said. "Replacing machinery parts is a step toward it."
The factory also lacks proper management of human resources. "The factory lacks good governance," the government report itself says, "The chief of the enterprise even does not get the job description."
Moreover, the factory which is facing the shortage of power even does not have any back up support to offset problems created by load shedding.