Govt launches info portal to lure foreign investors

The government has launched a new information portal ´Invest Nepal´ in a bid to attract and facilitate potential foreign investors to put their money in Nepal.
The portal which was launched last week has information on government´s policies, country´s investment climate and features of major projects in different areas such as hydropower, mining, tourism and agriculture.
The government in partnership with the Confederation of Nepalese Industries (CNI) has showcased eight sectors -- hydropower, tourism, manufacturing, agriculture, mines and minerals, information technology and infrastructure development -- through the portal (www.investnepal.gov.np) aiming to lure foreign investment in these areas.
Highlighting the major policies, the portal also provides information on government´s priorities on the development front. "The Invest Nepal portal serves as a single authorized source of information on government´s policies governing foreign direct investment (FDI) and other business related information," Krishna Gayawali, secretary at the Ministry of Industry (MoI) said. "We believe this portal will be useful, particularly in the context of the Investment Year."
The portal provides detailed information on investment procedures, visa process, policies, laws and acts including different survey results and treaties and agreements signed by Nepal with other countries.
According to a highly placed official, MoI developed the portal with assistance from the United States Agency for International Development (USAID)´s NEAT program. "The CNI is currently hosting the help desk of Invest Nepal portal," reads the press statement issued by CNI after formal launching of the portal.
"The help desk will provide information about features of certain projects as well," an official at CNI said. "Foreign investors won´t have to travel all the way to Nepal just to know the basic pre-investment environment and policies." Potential investors can also ask for specific information about Nepal from the help desk.
The newly launched portal also aims to provide information on FDI, sector specific information and play the role of a facilitator among investors, government and the private sector.The portal is also expected to be helpful in attracting foreign investment as it will go online ahead of the launch of the much-touted Investment Year.
Despite the government´s multiple efforts, the commitment for FDI inflow in the country has gone down by 30 percent during the fiscal year 2012/13 compared to a year earlier.

Govt failed to get Rs 5.5b reimbursed from donors

The government has failed to secure reimbursement of expenditure worth Rs 5.5 billion from different donors as it did not mention the contribution of external assistance in the overall cost of some ongoing projects in the budget over the past few years.
“We won´t be getting reimbursement amounting to Rs 5.5 billion from different donor agencies as the finance ministry failed to clarify the exact contribution of donors in the projects that are being implemented for the past few years,” Narayan Niroula, under secretary at the Financial Comptroller General´s Office (FCGO), said.
According to Niroula, the situation emanated as the government drafted budget for projects in the fiscal plans of different years in the past without matching it with the agreements that it had inked with the donors. “Most of the projects in which the government is losing the reimbursement are in education and health sectors,” he added.
The government had prepared budget for some of the projects in those sectors without matching the commitment of the donors for the fund to implement them. “It´s a cumulative figure inherited over the past few years," Niroula said.
According to Niroula, the government is losing Rs 500 million as it failed to request concerned donor for reimbursement in time.
Most of the donors from whom the government failed to secure reimbursement are in the ´pool fund´ of the World Bank, he said.
Meanwhile, Public Expenditure and Financial Accountability (PEFA) Secretariat under the FCGO has alleged that the government was performing poorly in management of public expenditure.
"The government is losing fund from donors due to its inefficient management of income and expenditure as per the agreement with donors,” Mahesh Prasad Dahal, joint financial comptroller general, said at an interaction organized by Society of Economic Journalists-Nepal (SEJON) on Sunday.
“It is high time the government work seriously toward ensuring the effective handling of external assistance."

Sutlej seeks survey term extension

Sutlej Jal Vidyut Nigam, Indian state-owned hydropower developer, has applied for the renewal of survey license of the 900 MW Arun III hydroelectricity project. The Indian firm had secured survey license in March 2008 on condition to complete the survey within five years.
"Sutlej has applied for the renewal of survey license for another one year to the Investment Board of Nepal (IBN)," a source privy to the issue told Republica. The validity of the survey license issued to Sutlej will expire on November 19.
According to the source, Sutlej, which has submitted the environmental impact assessment (EIA) report to the Ministry of Environment, Science and Technology (MoEST) for approval, has to get its survey license renewed.
Sutlej which had disclosed Rs 82.5 billion worth of financial investment for the project in last September, has just six more months to go as per the memorandum of understanding (MoU) with the government signed in 2008.
"Indian developer has applied for renewal by another one year. The IBN is mulling over whether to extend the survey license term as per the demands of the company or not,” said the source.
The government provides survey license to any power developer for five years as per the Electricity Regulation 1993.
The run-of-the-river project is based in Sankhuwasava district. Sutlej was picked through global bidding to develop the project preparing its detailed project report (DPR).
"The developer has to apply for generation license once it completes the process of survey," the source disclosed.
Meantime, Sutlej which is opposing the government´s newly introduced template of project development agreement (PDA) has been waiting to get approval for its EIA.
"The IBN has requested MoEST to speed up the process of approving EIA of Arun III," a source close to Office of the Prime Minister and Council of Ministers (OPMCM) said. Additionally, Sutlej has already disclosed financial plan in September on how it is going to invest Rs 81 billion as fixed capital and Rs 1.5 billion for variable cost.
It had also presented its plan for laying transmission lines to connect project with the national power grid. The Indian power developer, has agreed to supply just 21 percent of its total production to the Nepal Electricity Authority.

Panel to study industrial estates mgmt after complaints

The government has formed a committee to study major constraints that are holding back performance of country´s 11 industrial estates, which house more than 600 factories and firms, including leading multinational companies and major export industries.
"The committee formed by the Ministry of Industry (MoI) will basically identify the existing constraints and recommend ways to enhance the performance of those industrial estates," said an MoI official. "Based on its recommendations, the ministry would mull over changes in the management of and operations at the industrial estates aiming to enhance efficiency," the source told Republica.
These estates, which house over Rs 13 billion of private investment and provide employment to 11,109 people, were primarily set up so as to make efficient use of available resources and extend better services and facilities to factories there.
As of now, the Industrial Estates Management Limited (IEML) is responsible for the management, but factories in those estates have been highly criticizing IEML for its "inefficiency and ineffective management".
"The government´s step to rethink over the management of the industrial estates stems from complaints received from the entrepreneurs who operate their firms within the industrial estates," the official said.
The firms operating inside the industrial estates had filed a complaint to the ministry a few weeks back urging the government to change management of the industrial estates. "The government too is not happy with the performance of IEML," the official said.
According to the source, the industrial promotion division at the MoI will conduct studies at different industrial estates mainly concentrating on the ways for better management of the industrial estates which cover 5,128 ropanies of land in different places such as Balaju, Patan, Hetauda, Dhanusha, Nepalgunj, Pokhara, Butwal, Bhaktapur, Biratnagar, Dhankuta and Saptari.
"IEML has largely been inefficient to manage the resources that these estates own," Shailendra Lal Pradahn, president of the Federation of Industries in Nepal Industrial Estates (FINIE), who is also a former executive member of the Federation of Nepalese Chambers of Commerce and Industry said. "We want the government to revisit the past and make changes in the management of estates or hand over the asset to the private sector for better utilization of it."
IEML, which is government entity entrusted to carry out management of the industrial estates, has been criticized by the entrepreneurs who are running their business inside them.
"The industrial estates do not have any load-shedding schedule let alone adequate supply of power to operate machines. So we don´t know when power comes and goes," Pradhan said. "There is also no security of the property."

Govt revives 'sick-industries' talk

The government has once again called on industries to submit applications to get relief package under the Sick Industries Relief Program (SIRP). The annoucement was made at a time when the government is yet to process applications of 30 firms that have already applied to get the status of ´sick industry´.
"We have opened up the application process for industries to register themselves if they want relief package from the government under SIRP," Surya Kant Jha, under secretary at the Ministry of Industry (MoI), said.
The MoI which is entrusted to carry out the program to rehabilitate sick industries has formally issued the new notice aiming to receive applications from industries that want to be listed as ´sick´. "We have reissued the notice after we got some complaints that the industries which were actually sick couldn´t apply last time when government had called for applications," Jha said.
The government has again opened up the process of registering applications for industries which think they deserve to get relief package from the government´s program to revive sick industries. "The evaluation process of firms which have already applied will keep going," Jha said
However, the ministry responsible to finish the task of identifying actual sick industries has not been able complete cross verification of the information that the firms have submitted in almost one year period. "The ministry hasn´t finish assessing the applications of the firms which already have applied," Jha said. "However, we have completed field study of eight firms out of total 30 that have applied."
According to Jha, the industries which could get the government´s relief package can apply till the end of this month (November). "The firms have to demonstrate sufficient reasons why they became sick despite the well management of resources," Jha said.
The government through a recommendation report that was prepared last year under the leadership of Dipendra Bahadur Kshetry, vice-chairperson of National Planning Commission (NPC) has identified slew of relief measures for sick industries like tax waiver, extension of loan repayment date, loan restructuring and interest amount waiver among others.
Meanwhile, entrepreneurs who are seeking relief from the government to revive the situation of their industries have expressed low confidence due to unresponsive mechanism in the bureaucracy.
"It´s been more than a year that we have not got any response from the government on whether we fall under government´s criteria to get relief package or not, let alone getting anything tangible," an entrepreneur said in condition of anonymity since he has been looking for relief from the government.

Govt stops processing visa applications of foreign workers

The government has stopped processing visa applications of foreign workers and providing them work permits for an indefinite period of time after evidences showed some of the applicants had ulterior motives.
The Ministry of Industry (MoI) has said it would resume the process only after a new integrated standard for issuance of work permits is put in place.
"No foreign workers will be able to process visa application or obtain work permit for the next few weeks till the integrated standard is launched," a MoI official said.
Anil Kumar Thakur, joint secretary at MoI, also confirmed the news. "All applications that the ministry received were returned to the Department of Industry (DoI)," Thakur said. "Applicants have to re-apply as per the government´s new standard to obtain work permit for foreign workers."
Although the government´s new integrated standard is expected to provide one-window system for visa processing by easing work permit application process for foreign workers, the latest halt is expected to hurt companies such as Unilever Nepal and Ncell whose foreign workers are waiting to be eligible to work in Nepal.
"Unilever Nepal has applied to obtain work permit for an international staff who comes from Bangladesh and Ncell has filed applications on behalf of 28 staff who come from the Netherlands," the source revealed.
The source further revealed that these companies had filed applications on behalf of their foreign staff members around five months ago. However, they could not be processed due to inadequate documents.
Unilever Nepal and Ncell denied to comment on the issue despite repeated attempts of Republica.
"With the latest decision, they (the companies) will have to wait until integrated standard is put in place," the source said.
The government believes that the introduction of integrated standard will help it identify ´genuine´ workers coming to the country, Thakur said.
Currently, Industrial Promotion Division (IPD), entrusted with the task of encouraging and facilitating domestic and foreign investors to invest in the country, has started consultations with other concerned ministries and government agencies to develop an integrated standard for visa processing.
So far, foreign workers had to get approval from the labor department and the Ministry of Home (MoH) to be eligible to work in Nepal. The MoI and the DoI coordinates with the MoH and labor department to expedite visa application processing.

IMF warns Nepal to manage spillover effects from Indian economy

International Monetary Fund has warned that the Nepal's economic outlook in fiscal year 2012/13 will be more challenging compared to previous fiscal year 2011/12. The report prepared by IMF after completing the Article IV consultation in Nepal has highlighted the challenges that the economy will be facing in the current fiscal year. As it highlights that the gross domestic product (GDP) growth is estimated to go down at 38 percent in this fiscal year which was maintained at 4.6 percent in the fiscal year 2011/12.

Here are the major challenges that the IMF has showcased for Nepali economy in the current fiscal year

• The real GDP growth is projected to decline to 3.8 percent, reflecting a weaker monsoon and slower services activity as remittance growth may slow.
• Spillover effects from declining growth in India (through lower export demand, weaker inward investment and possibly less remittance) and the dampening effect of continued political uncertainty will also present further challenges to growth in Nepal.
• Inflation is also in rise, and upward pressure on prices may increase in line with projected developments in India over the next few months.

The 2012 article IV consultation has focused on managing the downside macroeconomic risks and financial sector vulnerabilities. The IMF has suggested various recommendations to the government of Nepal to take. The recommendations of the IMF are as follows:

• To secure macroeconomic stability and to foster sustainability and inclusive growth, IMF emphasized continued commitment to sound policies and structural reforms, particularly in the financial sector.
• There should be continued fiscal prudence, consistent with the objective of keeping public debt roughly constant over the medium term.
• Act expeditiously to pass a full-year budget for 2012/13 and to strengthen public financial management to ensure full execution of the capital budget.
• Address the quasi-fiscal liabilities arising from financial losses at Nepal Oil Corporation and Nepal Electricity Authority.
• Need for targeted and well sequenced acceleration of financial sector reforms, including the amendment of Nepal Rastra Bank Act to improve the governance of the financial sector and broadened prompt corrective action framework.