SAARC commerce secys agree to expedite tariff liberalization

Commerce secretaries of SAARC countries have agreed to speed up the process of tariff liberalization and integration of the region through harmonization of communication, transport, capital market and movement of people.

The 15th meeting of Committee on Economic Cooperation (CEC) under South Asian Association for Regional Cooperation (SAARC) held in the Maldives this week also held discussion issues of least developed countries (LDCs) and non-LDCs. 

“The meeting was fruitful toward making the regional market more integrated,” Naindra Prasad Upadhaya, joint secretary at the Ministry of Commerce and Supply (MoCS), who was also present in the meeting, told Republica on Wednesday. “The officials from the region have agreed to harmonize customs operation that will lead to the smooth movement of goods and cargos in the region.”

Officials from the LDCs of the region including Nepal and Bangladesh urged officials of non-LDCs to remove items that are export interest of LDCs from their sensitive list, said Upadhyaya.

The meeting also reviewed the of status sensitive list and agreed to work together to shorten it in the near future. 

SAARC member countries have included products that they do not want to trade at zero tariff under South Asia Free Trade Agreement (SAFTA) pact in the sensitive list. The working group of SAFTA that met in Kathmandu last month to shorten the list had failed to make any headway after the countries remained divided over the modalities of shortening the list. 

The two-day meeting also touched on issues related to connectivity, communication and movement of people in the region.

Private sector to meet UP chief minister over herb export row

A delegation from Nepali private sector is meeting Akhilesh Yadav, chief minister of the Indian state of Uttar Pradesh in a bid to discuss issues related to trade and transit between the two countries including the trade of medicinal herbs that has come to grinding halt since the last three months from the Nepalgunj customs.

“The meeting will focus mainly on connectivity and quarantine,” Bhawani Rana, vice president of Federation of Nepali Chambers of Commerce and Industry (FNCCI) told Republica on Tuesday. “However, we will raise the acts of state-government of UP which has prevented export of herbs from Nepalgunj customs since three months against the spirit of bilateral trade treaty.” 

The medicinal herbs worth around Rs 350 million has been stuck in the Nepalgunj customs after UP introduced a new law contravening the bilateral trade treaty between the two countries. 

According to Rana, who will lead the team, the meeting is aimed at resolving the problems Nepali exporters face in different areas of border between Nepal and India. “We will also raise the issues created by different laws of state-government of UP,” Rana said. 

For instance, export of medicinal herbs is at a standstill following the UP government´s introduction of new law compelling exporters to get license from Department of Forest (DoF) of state government to export medicinal herbs. 

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 export has not resumed even after the exporters knock the door of the India embassy in Kathmandu. Embassy officials had said that the export would resumed by Monday after the exporters appealed for facilitation last week. According to Thapa, 7,000 to 7,500 tons of medicinal herbs are exported from the Nepalgunj customs point to India.

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.

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.