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.