Still waiting for relief

Twenty-six sick industries that were expecting relief package from the government, particularly after the Prime Minister instructed Ministry of Industry (MoI) last week to announce the package, are going to be disappointed again.

Instead of coordinating with the concerned ministries that were involved in working out the relief package, the MoI has decided to implement the ´incentives´ only after incorporating a provision of ´sick industry´ in the new Industrial Enterprises Act (IEA) that it is drafting.

MoI officials say the ministry cannot implement the package, which includes slew of incentives like taxi waiver, loans restructuring and other procedural facilities for sick industries on its own.

“We will need to incorporate a provision of sick industries in upcoming act before implementing it,” Umakant Jha, secretary of MoI, said, indicating that the package will not be implemented anytime soon.

Jha said the ministry was preparing to get rid of legal hurdles so as to implement the package as directed by the Prime Minister´s Office.

An eight-member taskforce comprising representatives from different stakeholders, including National Planning Commission (NPC), Ministry of Finance (MoF) and Nepal Rastra Bank - had prepared and submitted a report on sick industries to the Ministry of Industry a couple of months ago.

The report has labeled 26 industries, including Maruti Cement in Dharan, Bhrikuti Pulp and Paper in Nawalparasi, Basulinga Sugar and General Industry in Kailali and Shree Tiger Tops in Chitwan as sick units.

The ministry, which is supposed to be coordinating with all the line agencies to provide relief to the sick industries as envisioned in the report, is preparing to form different committees and technical teams for implementing the report prepared by the team led by Dipendra Bahadur Kshetry, vice-chairperson of the NPC.

"We will first incorporate the provisions for sick industries in the upcoming act," Anil Kumar Thakur, joint-secretary of the ministry and chief of the Industrial Promotion Division at the ministry, said.

“We are also in the process of forming a high-level team of legal experts to eliminate legal hurdles for implementing the report.”

Thakur said the ministry will expedite the process of providing incentives to the industries only after the draft of the act is endorsed. The new act will replace the existing Industrial Enterprises Act 1992.

Nepal seeks clarity on Indian traders' demand for payment in USD

The Ministry of Commerce and Supplies (MoCS) has approached the Indian government to clarify new terms of payment laid down by Indian exporters, under which they are seeking Nepali importers to pay in US dollar if they are to get duty exemption - a move which has brought imports of excisable goods from India to a halt since last six days.

“We have formally approached the Indian counterpart for explanation through diplomatic channel,” said Lal Mani Joshi, secretary of MoCS.

The ministry took such a step after local importers officially lodged a complaint over the confusion they faced after Indian exporters asked them to make payment in US dollars.

The confusion over terms of payment had surfaced particularly after the scrapping of duty-refund procedure (DRP) system on March 1. Under the system, India used to collect duty on excisable items exported to Nepal and the government of Nepal that used to allow entry of those goods without charging excise duty used to get the due excise collection in the form of duty refund.

After the system is scrapped, the normal understanding between the two governments was that India will allow its exporters to supply goods to Nepal at ex-factory price (without excise duty) and the Nepali customs would charge the due excise duty.

However, traders said the Indian exporters are presently demanding Nepali traders to make payment in US dollars.

“They (exporters) say they have been notified by the Indian authority to supply goods at ex-factory price only if the payment is made on US dollars,” said Pashupati Murarka, vice-president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Murarka said Indian exporters are refusing to deal on ex-factory price when approached for payment in Indian currency.

As the DRP has been scrapped, traders won´t get payment of excise made to Indian supplier refunded.

“How can we pay excise in India and again in Nepali customs?” questioned Murarka. “We can´t pay in US dollars also because Nepal Rastra Bank (NRB) has opened US dollar payment facility for about 250 items.”

Interestingly, officials at the Indian Embassy said the term laid by the Indian exporters is not fair.

“Reserve Bank of India´s (RBI´s) guidelines has not been changed for Bhutan and Nepal. This means Indian traders cannot impose payment terms in USD to Nepali traders,” an Indian Embassy official in Kathmandu said, preferring anonymity. “If what the Nepali importers are saying is true, they should cite specific examples.”

Irrespective of what the officials said, Murarka said the stance of Indian exporters has created confusion among Nepali traders. “This has badly affected imports of cement, clinkers, textiles and vehicles, among others,” he stated.

Nepal Falls under Highly corrupted country

Nepal has been ranked as a highly corrupted country among 178 countries that were surveyed by Transparency International (TI). A report published by TI claims that Nepal's half of the total gross domestic product (GDP) is accumulated through corruption. 

MoCS pushes for tariff hike of beetle nut

Ministry of Commerce and Supply (MoCS) has pushed for a rise in tariff of beetle nut in order to curb its unauthorized re-export to India.

The MoCS, which blames huge difference between import duty in Nepal and India for the illicit trade, had decided to hike the tarrif in January and written to the Ministry of Finance (MoF) for further action.

According to the MoCS, Nepal presently imposes 25 percent duty on import of beetle nut, whereas India has set it at as high as 108 percent. This difference was creating strong incentives to the traders to re-direct the imported product to India in unauthorized manner.

“We had forwarded the ministerial level decision to the MoF, as the illicit trade is creating undue nuisance in bilateral trade,” said Secretary Purushottam Ojha, who was recently transferred to Prime Minister´s Office from MoCS.

However, Shanta Raj Subedi, joint secretary and chief of Revenue Division said he had not yet received the letter. "I also have no knowledge of any discussions on its (beetle nut´s) tariff rise," he said.

Along with tariff hike, MoCS had also taken five decisions to deal with complaints by Federation of Nepal Chamber of Commerce and Industries (FNCCI) against the illigal trade and pressure exerted to local chambers for issuing Certificate of Origin (CoO) by different political forces and government officials.

“Decisions focused on controlling illicit export of beetle nut to India,” said a source, elaborating that one major decision of the MoCS then was to seek actual data of domestic production and demand of beetle nut from Ministry of Agriculture and Cooperatives (MoAC). Other decision was to monitor the CoO issued by the chambers every month.

MoCS also pushed the local chambers to make submission of recommendation letter of District Agricultural Development Office (DADO) of the beetle nut producing district mandatory for issuing CoO.

As its push for tariff hike failed to draw MoF´s attention, officials at MoCS said they were coordinating with the MoF yet again for increasing its tariff.

Commerce Secretary Lal Mani Joshi said that MoCS would follow up on all the past decisions, as those were important decision to prevent illegal trade.

In a recent anomaly, Republica had disclosed Agriculture Minister Nandan Kumar Datta of exerting pressure on the Siddharthanagar Chamber of Commerce and Industry (SCCI) to issue CoO for 3000 tons of beetle nut and facilitating Excel Trading Concern based in Bhairwaha to export beetle nut which was not produced locally. The consignment held by the trading firm was estimated at Rs 900 million.

Minister Datta aids illegal betel nut export to India

• Minister for Agriculture and Cooperatives Nandan Kumar Datta has been found abetting a racket engaged in importing hefty amounts of betel nuts and exporting them to India through illegal channels, in contravention to a bilateral trade treaty signed between Nepal and India.
  
  The racket surfaced after Siddharthanagar Chamber of Commerce and Industry (SCCI), which received an order from the Ministry of Agriculture and Cooperatives (MoAC) to issue a certificate of origin (CoO), a mechanism that certifies that the goods in question are produced in Nepal, declined to comply.
  
  MoAC , allegedly under direct instructions from the minister, asked SCCI last month to issue a CoO for 3,000 tons of betel nut of unspecified origin and owned by the trading firm Excel Trading Concern (ETC). At the present market rate, the consignment’s value is estimated at Rs 900 million.
  
  “A trader approached us along with the letter from the ministry and sought a CoO, but we declined to comply as he failed to disclose the origin of the beetle nut,” Mahendra Kumar Shrestha, president of SCCI, told Republica over the phone.
  
  SCCI had sought clarity over the origin of the betel nut mainly in view of the fact that Rupandehi, where Siddarthanagar is located, is not a beetle nut producing district.
  
  Senior officials at MoAC, who are familiar with the development, acknowledged that the ministry had issued such a letter as per the instruction of Minister Datta.
  
  When Republica contacted him, Datta flatly denied having any links with the racket or assisting it in smuggling betel nut to India. But he did not deny that he had instructed officials to send a letter to SCCI urging it to issue a CoO to a private firm. “I sign more than 100 letters a day that come to me and I hardly get time to go through them,” he said.
  
  However, at the beginning of his conversation with this reporter, he declined to admit that he had issued any instructions in this regard to the officials concerned.
  
  “I believe officials at the ministry do things as per the established norms and laws,” he said when asked why he had bypassed the normal process for issuing the CoO.
  
  “After receiving the request from the private firm, I had just instructed the officials to take necessary action as per the established practice, which means that the officials were free to take a decision as per standard practice,” Datta said.
  
  Illicit outflow of imported betel nut from Nepal to India has been on the rise in recent years as India imposes customs duty of 108 percent on its import from Indonesia, the main exporting country, whereas the duty on betel nut imported from Nepal is just 25 percent.
  
  In Nepal betel nuts are produced only in the eastern districts, including Jhapa, Morang, Ilam and Sunsari. Statistics at MoAC show that total production of beetle nut in the country in 2010/11 was recorded at 7,247 tons, and in the same year Nepal had imported more than 108 thousand tons of beetle nut.
  
  Dr Hari Dahal, joint secretary at MoAC, said, “There is no data available showing the amount of domestic betel nut consumption.” He further added, “When we don’t know the amount of domestic consumption, we can’t say how much of the total import is consumed in the country.”
  
  India has constantly raised the issue of illicit export of beetle nut from Nepal at Inter-Governmental Committee (IGC) meetings. India had claimed at an IGC meeting held in 2010 that Nepal exported 165 thousand tons of beetle nut in 2008/009.
  
  Moreover, India had requested Nepal at an IGC meeting held in Delhi in March 2011 to increase the tariff rate on betel nut imports.
  Indonesia, Thailand, Malaysia and Turkey are the main countries from where Nepali traders import beetle nut.

Sugam gets govt nod to resume op

The Ministry of Industry (MoI) has allowed Sugam Gas -- a notorious gas company that circulated liquefied petroleum gas (LPG) in tampered cylinders -- to resume operations even as it is yet to be tried under Consumer´s Rights Protection Act on charges of exposing consumers´ lives to grave risk.

Officials of Department of Industry (DoI) that issued a letter to this connection to the LPG bottler on Monday said they decided to let the company resume LPG bottling and sales as it served the suspension period and paid fine slapped by the MoI.

MoI had slapped a fine of Rs 500,000 on Sugam Gas and suspended its operations for six months as punishment.

“The company has already paid the fine slapped by the ministry. The suspension period also ended last week,” said Dhurba Lal Rajbansi, director general of the DoI.
Shiva Prasad Ghimire, proprietor of Sugam Gas, also told Republica that he received a letter on resuming operations on Tuesday and that his company would resume LPG bottling immediately.

“I have already filed an application at the Nepal Oil Corporation (NOC), requesting it to supply gas to my company,” he stated.

However, both Ghimire and Rajbanshi refused to talk about the case filed against the company by the Office of Cottage and Small Industry (OoCSI) -- the local market inspector -- in Sunsari.

The office had filed the case after its inspection found the company of illegally amassing cylinders of other bottlers and refitting Sugam´s foot rings and neck rings on them.

As such tampering works erodes pressure bearing capacity of cylinders, making them vulnerable to leakages and explosion, OoCSI and consumers rights protection bodies had assessed that the company had put consumers´ lives at risk by circulating tampered cylinders in the market.

Meanwhile, consumers´ rights activists have flayed the decision. “This is a wrong decision; we urge the government to revoke it,” said Ram Chandra Simkhada, secretary of the Consumers Right Protection Forum (CRPF). He even accused the ministry officials of working hand in glove with the company.

No progress in Govt. plan to lessen food insecurity

Ministry of Agriculture and Cooperatives (MoAC) has not been able to work substantially towards implementing provisions of the Three Years Interim Plan 2007/08 - 2009/2010 on food security in the country. The Interim Plan envisioned a Food Security Division in the MoAC to effectively to monitor and identify problems of food security in the country.

“We don´t have any data that specifically shows how many people are under food insecurity,” said Dr Hari Dahal, joint secretary and spokesperson of the ministry. “Though we have food surplus this year, the situation is unlikely to improve because we don´t have mechanism in place to distribute food to the needy.”

According to the World Food Program (WFP), 3.5 million people were under food insecurity in the country. Explaining the necessity of Food Security Division, Dahal said, “It would have been easier if we had actual data, forecast and overall coordination required to improve food security situation."

Due to the timely monsoon, Nepal has around 400,000 tons of food surplus in the country this year. “I think, if there was existence of Food Security Division in the ministry, there would of course be discussions on how we could distribute the surplus food.”

Moreover, the Interim Plan had another provision to provide at least 100 days employment to the families that are food insecure. To get this done, ministry must have data that show which families were under food insecurity in the country.

The Interim Plan, a blueprint to upgrade the national mechanism and infrastructure with sound planning, admitted 35 per cent of the total population were facing food shortages. “Adequate attention is not paid to food insecurity at the national level,” Interim Plan acknowledges.

According to Dahal, many districts in mid and far western regions remain under food insecurity this year as well. “There are some efforts from different agencies, but nothing at the national level to address the problem of food security in those regions.”

The Interim Plan 2007/2008 - 2009/2010, which was replaced by Three Year Plan 2010/11 - 2012/13, also has a vision to establish an Information Centre in the Ministry of Local Development (MoLD).

However, Dipendra Bahadur Kshetry, vice-chairperson of the National Planning Commission (NPC), said some efforts had been made to establish Food Security Division in the MoAC. “I think, work is in progress to establish a division in the ministry with the help of Food and Agriculture Organization of the United Nation.”