Japan signals support to private sector development

Japan, a major development partner of Nepal, has hinted at the introduction of assistance for private sector development in Nepal through its official development assistance (ODA).
“We want private sectors of both Nepal and Japan to work together and series of meetings have already been held so far to seek areas of cooperation for the development of Nepal´s private sector. We are also interested to support private sector in Nepal through ODA,” said Kunio Takahashi, ambassador of Japan for Nepal.
In a meeting with the private sector leaders on Sunday, Takahashi said that the Japanese government has been evaluating the effectiveness of existing ODA for Nepal.
Ambassador Takahashi also revealed that Professor Ryokichi Hirono of Seikei University of Japan was carrying out the evaluation of the ODA.
The Japanese embassy had initiated process of establishing a forum of private sector of the two countries few months back. However, the process couldn´t go ahead after abrupt political change in Nepal following the dissolution of Constituent Assembly in May.
“We are again working on establishing a forum for private sectors of the two countries,” Takahashi said.
A meeting held among Takahashi, Prog Hirono and Suraj Vaidya, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) focused on the role of private sector and prospects of investment in the country.
On the occasion, Professor Hirono, called for increased saving at people level to increase investment source within the country as evidenced in Japan,Singapore and Thailand.
“There should be saving in people´s side and that should come as a sustainable investment source in the country,” Hirono said.
He categorically identified five core areas-- political stability, investment in human capital development, saving of the people, policy consistency in the government and collaboration among stakeholders of development as the crucial sector for development.
He also stressed on the need for collaboration among five major stakeholders such as government, business people, labor unions, consumers and academics to successfully implement the development efforts.
Vaidya, said the government should bring a full-fledged budget irrespective of any political situation in the country to ensure the proper utilization of foreign assistance.
Prof Hirono also suggested that the government issues national bond in order to utilize the remittance that the country receives from overseas workers.
“Issuing national bond could be a better instrument to streamline the remittance money in the productive sector of the country,” Hirono said.
Japan government, through Japan International Cooperation Agency (JICA) has been assisting Nepal in areas such as infrastructure development, power generation, water supply, improving public administration, education and health among others.
According to Ministry of Finance, Japan extended cooperation worth Rs 30 billion during 2001 to 2010 in three sectors-to support transport infrastructure, power generation and water supply in Nepal

26th CACCI conference to kick off on Wednesday

The 26th annual conference of Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) is scheduled to start in Kathmandu from Wednesday. Around 300 business people and government officials from the Asia-Pacific region are expected to take part in the conference.
The conference, a common platform to discuss and share ideas for economic development, with a theme ´A Vision for Shared Prosperity´ will focus on how Asian governments and private sectors can work together to achieve sustainable development.
According to a press release issued on Sunday by Federation of Nepalese Chambers of Commerce and Industry (FNCCI), which will be hosting the conference, it will also be a platform to have business to business meeting among private sectors of different countries.
“The conference aims to provide a platform for CACCI members to share their ideas on how they can help their respective countries, and the Asia-Pacific region as a whole, in strengthening and spreading the benefits of regional cooperation,” said the release.
Additionally, interested member chambers will also have the opportunity to sign memorandum of understanding (MOU) with FNCCI and other CACCI members defining possible areas of cooperation during the conference period. “There will be time allocated for MOU signing during the two-day event,” the statement said.
CACCI is a regional grouping of apex national chambers of commerce and industry, business associations and business enterprises in Asia and the Western Pacific.

Jute factories get 70% discount on electricity for another year

The government has decided to continue providing 70 percent discount on electricity tarrif to the jute producers - one of the largest foreign currency spinner industries in the country.
The government had provided 70 percent off on total electricity bill to the jute industries in 2008/09 in order to support the industry, which provides jobs to around 20,000 people, saying that the facility will hold good for for three years.
As the term of the facility was expiring soon, the Cabient decided to continue the facility last week, said a senior Ministry of Industry (MoI) official. "The facility has been extended for a year," Bishnu Dhakal, under secretary at the MoI told Republica.
The government´s decision will benefit nine jute factories operating in the country at present, enabling them to reduce the cost of production.
The MoI, entrusted to work with the private sector and industrialists to uplift the country´s industrial sector, has said that it was working on providing five percent cash incentives to jute producers who export to India. So far, such incentive is arranged for the third country exports only.
"The jute producers have demanded for five percent cash incentive in ratio of export even to India," Dhakal said. "However, no decision has been made so far to this effect but we are considering their proposal positively."
MoI officials view that extending cash incentive to third country exports, but excluding exports to India makes no sense, especially given that their earnings have been enabling the country to manage the Indian currency needs.
"It is true, chances of leakage of this facility is high. As a state, we must have the confidence that we will be able to plug its leakage," said another MoI official.
Beside, he argued that earning of Indian currency (IC) was no different than USD earning, particularly as the Nepal Rastra Bank (NRB) has been fulfilling IC supply by buying it against USD.
Data of NRB show, Nepal exported jute products worth Rs 4.06 billion to India in fiscal year 2011/12.
Prime Minister Babu Ram Bhattarai in May had said he was positive toward providing cash incentive on exports made to India by the industries employing a large number of workers. He had even assured of providing four percent cash incentive to jute factories through the new budget of 2012/13.
However, the government has failed to live up to the commitment as it failed to announce full-fledged annual budget due to deepening political rift.

Indian firm Sutlej lands Arun III contract

The government has finally decided to award the 900 MW Arun III Hydropower Project to the Sutlej Jal Vidyut Nigam Ltd (SJVN), India´s state-owned power producer, after the company demonstrated financial capability to bring in Rs 82.5 billion for the development of the project.

A meeting of the Investment Board (IB) on Friday took the decision, approving the investment of the SJVN, a senior official of the board informed Republica.

The board chaired by the prime minister has been empowered to implement mega infrastructure projects and hydropower projects such as Arun III and 750 MW West Seti.

Arun III is a run-of-the-river project based in Sankhuwasava district and SJVN was selected to prepare its detailed project report (DPR) and develop the project through a global bidding in 2008. “The final approval means it can now start the necessary construction works,” the source added.

SJVN has demonstrated how it would invest Rs 81 billion as fixed capital and Rs 1.5 billion for variable cost. It has also outlined its plan for laying transmission lines to connect the project with the national grid.

The board meeting also approved the environment impact assessment (EIA) report of the 900 MW Upper Karnali Hydropower Project submitted by GMR, another Indian power developer.

“The board has decided to ask the Ministry of Environment, Science and Technology (MoEST) to speed up the process of approving EIA report of GMR,” the source revealed.

During the meeting, Prime Minister Baburam Bhattarai expressed his concern over the board´s failure to launch any concrete plan to kickstart the Nepal Investment Year 2012/13 campaign announced by the government to bring in US$ 1 billion in foreign investment.

The prime minister also directed the Ministry of Finance to arrange budget necessary for the board to launch the campaign.

Though constrained by the one-third budget, Finance Minister Barsha Man Pun, who was also present at the meeting committed that he would try his best to manage the budget for the board.

Reconfirming Friday´s decisions and directives, a PMO source said that the board meeting also took decisions on forming a study team to manage Ratna Mandir in Pokhara in order to use it for revenue generation purpose and hiring new staffs for IB office within three months, among other things. A three-member committee comprising board´s CEO Radesh Pant, and joint secretaries from the finance minister and the prime minister´s office has been formed for hiring staff in the board within three months,” the source said.

Mongolia embraces reforms after 2008/09 shock of global downturn

Mongolia’s mineral rich economy was hit hard when the global downturn 2008/09 started. It was extremely hard for Mongolia to manage its mineral backed wealth during the period. Consequently, Mongolia had to sought for help from World Bank and International Monetary Fund (IMF). With that assistance, it initiated for a south-south exchange, especially with Chile, another copper producing country.

Mainly Mongolia had discussed with Chile on following issues in 2009:

• Role of the Congress in the budget process; legal environment; role and responsibility of Congress for improving fiscal sustainability environment.

• Fiscal rules and budget and fiscal sustainability laws.

• Fiscal audit process.

• Intergovernmental fiscal regulations and related law and procedures.

• Features of budgeting in case of natural force majeure and others, including in the economic crisis.

• Copper price estimation and Chilean Copper Stabilization

  Fund.

• Pension reforms and Chilean pension fund.

• General review of budget procedures: budget expenditure ceilings, how enforced for different spending units, and violations.

• Program budgeting: (i) types of budget classification— if program classification is used in budget process and how it is used in making appropriations and controlling expenditures; (ii) nonfinancial indicators and how they are used for funding different levels of line ministries, how collected, and by whom; and (iii) how performance management works.

• Investment budgeting.

• Medium-term budgeting and macroeconomic and fiscal projections: how are macroeconomic and fiscal projections estimated?

• Budget execution controls.

After an intense discussion with Chile Mongolia started making reforms that could be supportive to its economy.

Key reforms:

• a landmark Fiscal Stability Law (FSL) was passed by a bipartisan majority of Parliament in June 2010.

• Parliament passed the Integrated Budget Law (IBL) in December 2011.

• Public Procurement Law of Mongolia (PPLM) was passed in January 2011.

• The Social Welfare Law in January 2012.

However, Mongolian officials have said that it was a daunting task to implement those new policy reforms.

Govt requests India to initiate tender process for Janakpur-Bardibas railway project

The government has finally requested the Indian government to initiate the tender process for the upgradation of Janakpur-Bijulpura railway and extension of the link to Bardibas, a major junction along the East-West Highway.

Previously, the Indian government had cancelled the tender process twice after the government could not provide land for the project. The Indian government had allocated Rs 600 million in the previous fiscal year for the purpose.

The government, which has repeatedly failed to allocate funds for land acquisition, has now written a letter to the Indian government to start the bidding process to select a contractor.

"The ministry requested the Indian government to begin the tender process as we have almost acquired land for the project," an official at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM) told Republica on Tuesday.

The Indian government had agreed to upgrade the 51-km railway project during the official visit of President Dr Ram Baran Yadav to India in February 2010. However, the project was continuously delayed due to the government´s inability to acquire land for the project.

"The government has started compensating the land owners in the project area," Ram Prasad Lamsal, director general of the Department of Railways (DoR), said. "The land acquisition process will complete by mid-November." DoR has estimated that land acquisition in the Bijulpura-Bardibas area would cost the government Rs 1.25 billion. Similarly, it needs to acquire a total of 220 hectares of land in Janakpur and Bijulpura to upgrade the existing railway track.

In a separate development, the Indian government has awarded the contract for construction of the 13-km Jogbani-Biratnagar railway line to an Indian company, Lamsal disclosed. "We have been informed that the Indian government has signed an agreement with an Indian contractor to develop the railway (Jogbani-Biratnagar) track," Lamsal said.

Likewise, the government has initiated the process to select a consultant to carry out a detailed survey -- a part of feasibility study -- of the Pathalaiya-Lumbini railway project.

Govt decision puts Fast Track project in jeopardy: Experts

Experts and bureaucrats have warned that the government´s recent decision to make a common alignment for Kathmandu-Terai Fast Track and Kathmandu-Hetauda Tunnel Highway in the Khokana area might create problem in implementing the one of the highly prioritized projects.
Saroj Man Shrestha, former project chief of the fast track project said the decision to merge the alignment of the two different infrastructures, made jointly by National Planning Commission (NPC) and Ministry of Physical Planning, Works and Transport Management (MoPPWTM) was a major setback for the implementation of the proposed expressway.
“These are completely two different projects having different nature and investors. Making common alignment for both the projects is not practical in any sense,” Shrestha told Republica on Sunday.
The government recently took the decision arguing that the proposed alignment would bring down the cost of land acquisition in Khokana area for the both project.
Kishore Nath Gongal, project chief of the fast track project, however, expressed ignorance about the government´s decision about the common alignment.
“I have no idea about the decision as I have not been formally informed about it. I only came to know about it from the media. Lately, few potential investors who have already bought expression of interest (EoI) to develop the Fast Track have also voiced concern over the decision,” said Gongal.
The proposed 76 km fast track will connect Kathmandu with central Tarai while 50-km Tunnel Highway will link Kathmandu with Hetauda.
After the government´s decision both the road projects will share common alignment of 15 kilometers in Khokana which is most expensive of the lands to be acquired for the implementation of those infrastructures.
Officials at the MoPPWTM also have expressed worry about the government´s decision as it might put the much-hyped fast track at risk.
“The decision by the concerned officials at the NPC and the ministry without studying the problems while sharing the project sites in 15 km long stretch given that both are going to be implemented under Built Operate Own and Transfer (BOOT) modality of Public Private Partnership,” said the source.
The government had handed over the Tunnel Highway project to the Nepal Purvadhar Bikas Company (NPBC) under the BOOT act in May to complete the project in four years.
Similarly, the government has called for Expression of Interest (EoI) from the investors for the fast track.
Meanwhile, Dipendra Bahadur Kshetry, vice-chairperson of the NPC also said common alignment for two mega projects would be cost effective in the long-term. “Though the concept of common alignment is cost effective, we need to work hard to ensure the effective implementation of this idea in these projects which are different in nature,” said.