Dollar 5 month low against Rupee.

KATHMANDU, Oct 3, 2012

Nepali rupee has reclaimed Rs 7.74 against a US dollar, enjoying gain of well over 8 percent over the last three-and-a-half month, as India´s commitment to stick to fiscal reforms and improvement on global risk sentiment helped it rally against the greenback.

Such assessment was made after Nepal Rastra Bank (NRB) on Tuesday announced that rupee will value at 84.14 against a USD when trading opens on Wednesday. The exchange rate of USD had hit a record high of Rs 91.88 on June 23, 2012.

Though currency trading in India remained closed on Tuesday due to public holiday, officials of Foreign Exchange Dealers Association of Nepal (FEDAN) said the exchange rate of USD for Wednesday was lowered taking Monday´s closing rates in India into consideration.
“When we set the rate for Monday, the market in India was still open. Hence, it had not reflected the closing figures,” said an official of FEDAN. “Now, Wednesday´s rate will reflect the final rates.”

With the gain announced for Wednesday, rupee has hit almost five-and-a-half month high against the USD. Rupee was valued Rs 83.59 per USD on April 24, 2012.

The gain by rupee, which can be attributed to its peg with the Indian Currency (IC), has brought cheers to the importers as it lowers their import costs. As this benefit is expected to be eventually transferred in the market, consumers that so long braved the brunt of sharp devaluation of rupee too can afford to heave some sigh of relief.

It has also brought some respite to the government for it can now service the foreign debt by spending relatively lesser rupee.
However, the gain of rupee will badly impact remittance receivers as it will drag down their actual receipts prior to the Dashain festival. This clearly means, families of some 2 million Nepali workers, who send back additional money to enable their dear ones enjoy the festival in a grand way, will be hurt, said an NRB official.

Source: Republica

CDSCL revises tariff on share transaction

KATHMANDU, Oct 3, 2012

Central Depository System (CDS) and Clearing Limited, a state-owned company that provides automated service on trading, clearing and settlement of securities, is soon revising tariff rate on securities transaction that depository participants can slap on buyers and sellers of securities like shares and bonds.

The CDS and Clearing Limited has proposed that depository participants be allowed to collect no more than Rs 25 on every transaction of securities.

Depository participants are intermediaries that maintain accounts of securities investors and perform works such as transfer of securities on behalf of investors. So far, four companies - Civil Capital Market, Ace Capital, Stock Management and DP and Nabil Investment - have obtained license to work as depository participants.

As of now, these intermediaries are allowed to collect 0.25 percent of the total amount of securities changing hands or a minimum of Rs 20 from buyers and sellers of securities.

“We have already submitted the proposal to Sebon (Securities Board of Nepal),” Subodh Sharma Sigdel, CEO of CDS and Clearing Limited, told Republica. “We hope to hear from them soon.”

Although the CDS and Clearing Limited is yet to come into operation, many have called the company´s existing fee structure exorbitant that will force investors to fork out huge amount just to avail services from depository participants.

This was one of the reasons why the CDS and Clearing Limited decided to revise the tariff and introduce a flat rate, according to Sigdel.
“Besides, our IT system is capable of deducting the charge on percentage basis only on closing price of shares, which goes against the law, as the regulation allows depository participants to slap such charges on real time transaction of shares,” Sigdel said, clarifying, the IT system can, however, grab real time movement of transactions to perform works related to clearing and settlement.

The government has long been trying to automate the securities trading platform. Although this initiative gave birth to CDS and Clearing Limited, it has not yet come into operation due to technical problems.

Source: Republica

Russia ready to invest in Nepal

KATHMANDU. OCT 3, 2012

Nepal has failed to tap Russian investors, according to former president of Non-Resident Nepali Association (NRNA) Upendra Mahato.

Nepal can benefit more as Russian investors could bring in huge investments, Mahato said, while addressing Russian and Nepali business people in Kathmandu today.

“Russians have no political interest in the country, except for the security of their investments and profits, which any investor seeks while doing business,” said Mahato, adding that if the government here can assure security to their investments, then that will definitely help attract Russian investment in the country.

If Nepal can propose bigger projects, then Russian investors will be interested to bring their investment to the country, the former president of Non-Resident Nepali Association opined. “Though there have been talks with Russian investors in the past, they are looking for more concrete projects to invest in.”

Addressing the visiting Russian business delegation led by deputy director of the International Cooperation Department of the Russian Federation’s Chamber of Commerce and Industry Tatiana V Legchilina, industry minister Anil Jha assured them of security to their investment.

“Despite political instability, investment is a primary concern that is key to peace and prosperity,” he said, assuring the business fraternity of investment facilitation.

Similarly, vice president of Nepal-Russia Chambers of Commerce Naresh Shrestha said that Nepal still provides scope for investment though there are challenges. “After Russian airlines, Aeroflot, stopped its flights to Kathmandu, the flow of Russian tourists has slowed down,” he said, urging it to start flights again.

Russian ambassador to Nepal Sergey V Velichkin was of the view that Russian investment in India and China has been increasing and Nepal — that is placed between the two big markets — should also take advantage and attract more Russian investment.

“International trade is all about shaping destinies of the world,” Mahato said, adding that trade between the two countries must be attached with value and moral.

“Nepal and Russia both believe in trade with value, but the understanding of the opportunities that Russia can offer is very poor in Nepal despite many commonalities.”

Source: THT

Govt opens fair price shops

KATHMANDU, Oct 3, 2012

The government on Tuesday opened fair price shops in different places in the capital to provide essential commodities to general public at reasonable prices during the upcoming major festivals.

Four state-owned enterprises -- National Trading Ltd (NTL), Salt Trading Corporation (STC), Nepal Food Corporation (NFC) and Dairy Development Corporation (DDC) -- have been mobilized to open commodity outlets in different parts of the capital.

STC is operating three fair price shops -- at its head office in Kalimati and branch offices in Koteshwar and Bizhal Bazar, Pulchowk. Similarly, NTL has opened shops at its head office in Teku and sales office in Bhadrakali. NFC has opened fair price shop at its godown in Thapathali.

These state undertakings are selling daily commodities like salt, sugar, ghee and rice along with home appliances, machineries, electrical appliances and liquors, among others, at discounted price from their outlets.

STC is selling salt, sugar, oil, lentils, flour, cooking gas and gas regulator, among others. It is providing discount of Rs 2 per kg on salt and Rs 5 per kg on sugar to sell at Rs 13 per kg and Rs 71 per kg, respectively.

"We won´t provide discount on other commodities as their prices are already lower compared to existing market price,” said Urmila Shrestha, general manager of STC.

Likewise, NFC is providing discount of Rs 2 per kg on six different varieties of rice. Under the discount offer, customers can get Basmati rice at Rs 65 per kg, Sona Mansuli at Rs 34 per kg, Jeera Masino at Rs 46 per kg, Makwanpure rice at Rs 30 per kg, Japanese rice at Rs 40 per kg and American rice at Rs 46 per kg.

“We have offered discount on all varieties of rice so as to give relief to general public during the coming festivals," said Hari Narayan Shah, general manager of NFC.

DDC, another state undertaking, is also selling 42 varieties of dairy items from its outlets. “We will provide discount of Rs 10 per kg on ghee. Other items will be sold at the existing rates,” said Siyaram Prasad Singh, general manager of DDC.

Similarly, NTL is providing 10 to 40 percent discount on machineries, electrical equipment, home appliances and liquors. Parmila Kumari Yadav, general manager of NTL, said it was providing 20 percent discount on machineries, except generators, 40 percent discount on spare parts, 20 percent on home appliances, 25 percent on electrical appliances and 10 to 25 percent on liquors.

NTL is also providing discount on its products from its branch offices in six districts outside the capital. Other state undertakings NFC and STC are offering discounts on commodities from its branch offices in 22 and 21 districts, respectively. Besides, STC has also started two fair price mobile shops in the capital.

Inaugurating the integrated fair price shop at Bhadrakali on Tuesday, Lalmani Joshi, Secretary of Ministry of Commerce and Supplies, said the size of fair price shop is smaller this year as public enterprises dealing on food commodities are facing financial problems. “Though we have fixed maximum retail price of some food commodities, we are not against the free market policy,” he added.

Source: Republica

Standard Operating Procedure to cut red tape for migrant workers

KATHMANDU, OCT 03 - 2012

The Ministry of Labour and Employment ( MoLE ) is getting ready to issue a Standard Operating Procedure ( SOP ) to regulate the foreign employment sector in a bid to end exploitation of migrant workers and ease the terrible conditions they have to endure abroad.

The SOP , which is planned to be enforced in one month, will free migrant workers from the hassle of dealing with multiple stakeholders in the foreign employment sector. The SOP has assigned specific responsibilities to different entities.

According to MoLE spokesperson Buddhi Bahadur Khadka, the SOP aims to set up a standard work operation. He said that the new procedure would cover the purview of all the stakeholders including the Department of Foreign Employment (DoFE), the Ministry of Foreign Affairs (MoFA), Nepali missions in the destination countries, the Department of Immigration (DoI), the Labour Desk at Tribhuvan International Airport and recruiting agencies.

“We have realised that workers are facing problems as they are required to submit unnecessary documents and visit many offices to complete a single requirement,” said Khadka. “The SOP will remove needless paperwork by assigning particular functions to the concerned bodies. It will enhance the speed, quality and volume of service we provide to aspiring migrant workers,” said Khadka.

Due to the involvement of various ministries in foreign employment, most workers have to wait for many days for a single procedure to be completed. A large number of workers are exploited by government officials at the DoFE and the DoI and by their employment companies and agents. Ambiguous and conflicting regulations have resulted in overlapping authority of diverse stakeholders and burdened workers with superfluous paperwork.

MoLE officials said that discussions were still continuing with the concerned stakeholders to make the new mechanism more effective. DoFE director general Purna Chandra Bhattarai said that their main objective was to ensure freedom from exploitation for workers. “Service seekers are suffering due to too many stakeholders and requirements. Our main objective is to specify procedures for workers and the concerned offices,” said Bhattarai.

The procedures, he said, would particularly specify the requirements for pre-approval and final approval and the responsibilities of other offices like the labour desk, the DoI and the Nepali embassies.

Chairman of the Nepal Association of Foreign Employment Agencies Bal Bahadur Tamang said that the new procedure could be helpful in regulating the foreign employment sector. “Our workers often face various problems at TIA immigration despite holding legal documents. The procedures should regulate all the stakeholders and protect workers from exploitation at every step,” said Tamang.

Source: The Kathmandu Post

MoCS pushes for finalization of LoEs for operating five new transit routes

KATHMANDU, Oct 3, 2012

The Ministry of Commerce and Supplies (MoCS) has started consultations with the Ministry of Finance (MoF) to finalize the drafts of letter of exchange (LoEs) which it plans to forward to the southern neighbor soon for the early utilization of the five new transit routes.

“The Ministry of Law and Justice (MoLJ) last week gave its clearance on the draft LoEs. Now we are awaiting consent of the MoF. Once okayed, we will send them to India through the Ministry of Foreign Affairs (MoFA),” Lal Mani Joshi, secretary at the MoCS told Republica.
If every thing went well, the MoCS officials said the government will send those drafts to India within a week.

“We will move on to sign those LoEs once the cabinet of both the countries endorse the contents enshrined on them,” said Joshi.
Though India and Nepal exchanged initial drafts of LoEs last year, the two sides have acted slowly in getting the deals signed, which is crucial for operationalization of the new transit routes.

India in February 2011 had given its nod to open land routes between Vishakapatnam sea port and four major customs, rail route between Birgunj dry port and Vishakapatnam and also Rohanpur (Bangladesh)-Singhabad (India)-Jogbani (India) and Phulbari-Banglabanda in order to facilitate Nepal´s foreign trade.

However, sources at the MoFA said the whole process of finalizing the LoEs moved slowly because Foreign Minister and Deputy Prime Minister Narayan Kaji Shrestha is not positive about signing the pact fearing that the provision of additional lock envisioned in them could invite criticisms from his opponents.

MoCS officials, on the other hand, said the proposed extra system was already supported by experts and business community.

“There is no need to fear the additional lock on container along the transit routes as even the traders and experts are positive toward it, stating that it will lessen the hassles to ship the goods along those routes,” said a source at the MoCS. India has already introduced additional lock system on Kolkata-Nepal route from August 2011.

Sarad Bikram Rana, executive director of Nepal Intermodal Transport Development Committee, said the government shouldn´t delay for signing the LoEs with India as the agreed trade routes were crucial for boosting Nepal´s trade with India, Bangladesh and overseas countries.

“We will be relieved from the monopoly of Kolkata port if we operationalize Vishakapatnam port and operate through new routes. Traders will get more choice along with better facilities and transparent process of cargo handling on those routes,” said Rana.

India had long been putting pressure on Nepali officials to agree on the additional lock system before the renewal of the transit treaty, which expires on 5 January 2013, citing security concerns and cases of transshipment of goods destined to Nepal in India.

China - Nepal´s second largest trade partner - has also been practicing additional lock system on cargos entering the country through Tatopani customs.

Source: Republica

Govt may allow IFIs to issue local currency bond

KATHMANDU, Oct 2, 2012

The government has agreed in principle to allow international financial institutions (IFIs) having a strong credit rating to issue bonds in Nepal in local currency in a bid to mobilize locally available resources for financing big industrial and development projects through the private sector.

The positive response from the government to open local currency bond came when International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, held meeting with the senior Ministry of Finance (MoF) officials last week.
“IFC´s proposal was to allow credible IFIs, including IFC, to issue local currency bond targeting the banks and financial institutions, among others. The IFIs will then lend the fund mobilized to the private sector for executing economically viable projects in various sectors,” said a senior MoF official.

Under the concept, which has not yet been practiced in the country, the bonds will be backed by the issuer IFIs, ensuring that the investments made by the BFIs among others remained safe. As the issue will be made in local currency, the issuer too will find itself free from the possible risks of foreign currency volatility.

“Apart from the IFC, the Asian Development Bank - one of the leading multilateral donor - too has shown interest to issue local currency bond,” the source told Republica.

The source disclosed that the MoF had received ADB´s expression of interest on local currency bond years ago -- long before the IFC approached it.

Though the ADB´s initiatives then did not gather any momentum, Juan Miranda, director-general of ADB´s South Asia Department, said a vice president of ADB was visiting Nepal soon to hold discussion with the government on the matter.

If things moved ahead smoothly, ADB officials said they would also issue local currency bonds in a bid to finance projects here.
Finance Secretary Krishna Hari Baskota said the government was positive about issuing local currency bond. “Though we are still discussing on its technical aspects, the talks are going on with the IFC in a positive manner,” said Baskota.

In the last week´s meeting, IFC officials had announced that IFC would jump into the business promptly, mobilize the resources locally offering a sound return to the investors, and invest the collections in turn to the private sector to execute highly feasible projects.

“The degree of feasibility of the project in such cases will be scrutinized and decided by the bond issuer,” said the source.

The IFC officials had also made a presentation on similar issue and investments that it has carried out in a number of countries in Africa and other developing countries.

Nepali officials believe that the local currency bond can be one good window to help Nepali private parties that have competence, but lack finances to implement hydropower and other infrastructure projects.

Most importantly, this scheme can help us implement built-own-operate-and-transfer (BOOT) model, which we promoted since long but are yet to see it materialize, said the source.

However, officials are skeptic over immediate implementation of such plan. “That is because we will need to effect numerous changes in the existing law and may even need to formulate new one to implement it,” said the source.

The changes in the laws are needed mainly because Nepali law still does not allow investors to repatriate income made through locally mobilized resources.

“Overseas investors that put their money in the country can repatriate their income, dividend and everything. But in this case we are talking about locally mobilized money. We need a clear policy decision to allow IFIs repatriate income they made from locally mobilized and invested fund,” said the source.

Apart from that, law will also be needed to enable local investors to dispose their bond holding through the secondary market. “This is a crucial cushion,” said the source, adding that a clear law will be needed also to guide the IFIs as some of them might not prefer secondary market transactions for their bonds.

Given such situation, the MoF has suggested IFC to come up with yet another proposal on how it plans to operate its bond in Nepal, and also how IFIs in general can be facilitated to issue local currency bond.

Source: Republica

IB stirs into action to sign PDAs for Upper Karnali and Arun 3

KATHMANDU, OCT 02 - 2012

The Investment Board ( IB ) has stirred into action to sign power development agreements (PDA) with two Indian companies, GMR Energy and Satluj Jalvidyut Nigam, to develop the Upper Karnali and Arun 3 projects respectively.

The two projects have lain in limbo for the last three years due to the government’s indecisiveness and lack of an appropriate PDA model in the country.

An IB meeting chaired by Prime Minister Baburam Bhattarai on Friday decided to begin negotiations with the two companies on the double in order to sign the PDA. “As the companies have been waiting for a long time to develop these mega hydro projects in Nepal, negotiations for the PDA will be begun soon,” said a high level IB source.

Deependra Bahadur Kshetri, vice-chairman of the National Planning Commission (NPC), said the meeting had decided to negotiate with the Indian investors and finalize the date for the PDA. He added that the IB would process the environmental impact assessment (EIA) submitted by GMR Energy. The company had presented its EIA report to the board a month ago.

The IB had prepared the PDA template and sent it to GMR and Satluj at the end of June. “As the PDA format has tried to get the maximum benefit for Nepal, the Indian investors have complained that it is not so bankable,” said the official. These issues will be sorted out during the negotiations, he added.

The IB has studied the documents submitted by these two Indian companies including their financial model. Since these documents are at a matured stage, the IB can rush through discussions and sign the PDA without much delay.

Investors seek a government assurance through the PDA that helps avert any possible social, economic or policy-level uncertainties during construction. Generally, issues related to taxes, licence period, free energy, royalty, repatriation rights and parties’ obligations are included in the PDA. Delays in preparing the text of the agreement have been preventing the government from concluding deals with power developers so far. The delay has prevented developers from going into the construction phase.

On May 25, Prime Minister Bhattarai had asked the board to develop five mega hydro projects including the 650 MW West Seti, 900 MW Upper Karnali, 600 MW Upper Marsyangdi, 900 MW Arun III and 880 MW Tama Koshi III in line with the IB Act that states that any hydro power project with a capacity of more than 500 MW will come under the purview of the board.

On April 21, Prime Minister Bhattarai had directed the Ministry of Energy (MoE) to ask the IB to draft the PDA as it was taking too long. The PDA the MoE has been working on is for export-oriented projects, and the IB has focused on a PDA for projects which will be developed for local consumption including the West Seti Hydropower Project.

The PDA signing process with seven hydro projects was initially postponed in September 2010 after the UCPN (Maoist) asked the government to shelve projects being developed by Indian companies.

A power tussle between the then energy minister Prakash Sharan Mahat and energy secretary Shankar Koirala further delayed the process. “Once the PDA for Upper Karnali and Arun 3 is signed, preparations will be begun to sign similar agreement with other projects,” said the official.

Source: The Kathmandu Post

Nepal to get Chinese assistance in five key agri sectors

KATHMANDU, Oct 2, 2012

China has agreed to support Nepal in five major sectors of agriculture, including fisheries, crops and livestock, to speed up farm commercialization in the country.

The northern neighbor pledged the support during the secretary-level Nepal-China Agriculture Assistance Meeting on Monday.

The Chinese side has also agreed to enhance capacity of Nepal in seed production, horticulture and hill livestock such as sheep farming.
Ganesh Raj Joshi, secretary at the Ministry of Agriculture Development (MoAD) and Niu Dun, Chinese Vice Minister for Agriculture had led their respective delegations at the biennial meeting.

“China has agreed to support us in five sectors that are crucial for our country´s agriculture development,” Dr Prabhakar Pathak, spokesperson of the MoAD, told Republica.

Pathak said the northern neighbor agreed to help Nepal in the development of hybrid rice and maize seeds, commercialization of fisheries and sheep farming as well as pasture development under the proposed crop and livestock development program.
China has also agreed to assist joint programs aimed at conducting research for germplasm required for the production of hybrid seeds of paddy and maize, horticulture development, pig farming and poultry.

The Chinese delegation has also expressed commitment to support consolidation and expansion of livestock and food quarantine programs to promote production and trade facilitation of plants, livestock and other agriculture products produced in Nepal.

China has also pledged to support Nepal for the prevention and control of trans-boundary diseases and pests that have been inflicting livestock and crops in both the countries. It has also agreed to help Nepal in development of human resources by increasing training quota for Nepali farm technicians, agriculture officials and farmers.

In an effort to ensure timely initiation of implementation of agreed programs, the two sides have agreed to form a five-member taskforce to be led by a joint secretary at the MoAD.

“The team will finalize detail work plan before June 2013 to execute the programs to be implemented under Chinese assistance .We are hopeful the proposed support from will make significant contribution to enhance Nepal´s capacity in farm production,” Pathak told Republica.

He also said that both the sides have also agreed to support frequent exchange of exposure visits and interaction among entrepreneurs of both countries so as to encourage them to invest in agriculture sector.

The 4th bi-lateral meeting is scheduled to be held in Beijing in 2014.

Source: Republica

BoP surplus falls owing to widening trade deficit

KATHMANDU, OCt 1, 2012

The balance of payment (BoP) surplus fell in the first month of the current fiscal year as the country´s trade deficit widened.
The overall BoP, the country´s transaction with other nations, hit a surplus of Rs 3.85 billion in the one-month period through Aug 16, which was lower than the surplus of Rs 8.10 billion recorded in the same period last fiscal year.

“The low level of surplus is primarily due to a substantial rise in the merchandise import in the review period,” the latest macroeconomic report published by Nepal Rastra Bank on Sunday shows.

Although the pressure created by hike in imports was cushioned by 54.6 percent hike in workers´ remittances, it was not enough to retain the surplus of the last fiscal year.

In the first month of the current fiscal year, Nepalis working abroad sent Rs 33.81 billion to the country. In terms of US dollar, workers´ remittances increased by 24.4 percent to $381 million. Likewise, foreign direct investment of Rs 457 million was also recorded in the review period, which helped to post a BoP surplus despite widening trade deficit.

Nepal´s trade deficit surged by 49.4 percent to Rs 39.78 billion in the first month of the current fiscal year, as the country´s imports of merchandise goods exceeded those of exports. Total trade deficit had risen by a marginal 4.9 percent in the same period last fiscal year.
The latest macroeconomic report of Nepal Rastra Bank shows that the country´s trade deficit with India increased by 58.9 percent in the one-month period through August 16 as against the decline of 8.5 percent recorded in the same period last year. Trade deficit with other countries, on the other hand, increased by 36.3 percent in the first month of the current fiscal year.

In the one-month period, the country´s merchandise imports reported a growth of 43.7 percent to Rs 46.98 billion, as against the growth of 7.1 percent in the same period last fiscal year. “The total imports increased in the review period primarily due to a sharp increase in imports from both India and other countries,” the report says.

Imports from India, for instance, went up by 48.1 percent in the first month, in contrast to a decline of 4.3 percent recorded in the same period last fiscal year. Among goods that were shipped in from India, imports of chemical fertilizers shot up by 610 percent in the first month, while that of cement surged by 183.2 percent. Likewise, imports of baby food cum milk products, hot-rolled sheet in coil and plastic utensils surged by 334.1 percent, 371.3 percent and 299.5 percent, respectively.

Among imports from other countries, edible oil, petroleum products and readymade garments went up by 962.1 percent, 568.7 percent and 569.4 percent, respectively. Hike in imports of merchandise goods pushed up total imports from third countries by 37.2 percent in the one-month period.

In contrast to the rise in imports of these goods, the country´s merchandise exports in the first month of the current fiscal year rose by mere 18.5 percent to Rs 7.20 billion. Exports had increased by 18.4 percent to Rs 6.07 billion in the same period last year.
The Rastra Bank report shows that exports to India marked a growth of 5.7 percent in the first month, compared to an increase of 17.1 percent in the same period last year.

“Slow growth of export to India is attributed to the decline in the export of thread, MS pipe and zinc sheets, among others, although exports of GI pipe, jute sackings, polyester yarn, textiles and cardamom, among others went up during the period,” the report shows.
Exports to other countries, meanwhile, grew by 42.1 percent in the first month as against the increment of 20.9 percent in the same period last fiscal year. These consignments mainly comprised pulses, tanned skin and readymade leather goods, among others.


Forex reserve swells

The gross foreign exchange reserve increased by 1.9 percent to Rs 447.86 billion in mid-Aug from Rs 439.46 billion as of mid-July. Such reserve had increased by 4.2 percent to Rs 283.72 billion in the same period of the last fiscal year. The current level of reserve is sufficient to finance merchandise imports of 9.8 months and merchandise and service imports of 8.3 months.

Source: Republica

Inflation hits three-year high of 11.9 percent

KATHMANDU, OCT 01 - 2012

Inflation hit a three-year high of 11.9 percent in the first month of the current fiscal year, with the prices of both food and non-food items soaring. The figure was a little higher at 12 percent in June 2009.

Although the inflation rate remained in single digit for the first 11 months of the last fiscal year, it jumped to double digits in the last month, reaching 11.5 percent. The figure has been continuously ascending since April, 2011.

A senior NRB official predicted that inflation would remain higher until December when new harvest begins.

Inflation in both food and non food items stood in double digits—12.2 percent and 11.6 percent respectively—in the first month, according to a Nepal Rastra Bank (NRB) report on the country’s macro economy released on Sunday.

NRB Spokesperson Bhaskar Mani Gnawali said increased petroleum prices and transport fares and the strengthening of the US dollar fuelled the price rise.

According to the central bank report, vegetable prices witnessed the highest rise of 30.4 percent in first month of this fiscal year, pushing up the overall food prices. Within the non-food group, prices of footwear items posted the highest rise of 15.1 percent.

Economist Bishwambhar Pyakuryal said the rise in Indian inflation, of late, is playing a crucial role in fuelling price rise in Nepal. “Although internal factors were more responsible for the price rise in the past, the rise in Indian inflation, which is close to double digits, is now equally responsible for the price rise here,” he said.

Nepal’s trade with India accounts for two-thirds of the country’s total trade.

In a bid to curb price hike, the government recently fixed maximum retail prices of 15 commodities, including rice and oil, among others. However, given the absence a proper monitoring mechanism, Pyakuryal says the provision would encourage hoarding.

According the central bank report, exports to India increased by 5.7 percent compared to a rise of 17.1 percent during the same period last year. The decline in the exports of threads, MS pipes and zinc sheets, among others, contributed to slow export growth. Imports from India, however, surged by 48.1 percent due to the increased import of petroleum products.

Exports to countries other than India increased by 42.1 percent, contributed by the rise in the export of pulse, tanned skin and readymade leather goods, among others. Imports from third countries (other than India) increased by 37.2 percent.

The overall balance of payments (BoP) recorded a surplus of Rs 3.85 billion in the first month of this fiscal year—down from Rs 8.1 billion during the same period last year.

Remittance surged by 43.8 percent to Rs 37.61 billion. Foreign exchange reserves reached the highest level of Rs 447.86 billion.

China proposes to help Nepal in farm research, development

KATHMANDU, OCT 1, 2012

In a bid to speed up farm commercialization in the country, China has proposed to support Nepal in applying modern technology in livestock farming, fisheries and hill agriculture development, among others.

The Chinese proposal comes ahead of the agriculture secretary level meeting between the countries scheduled to be held in Kathmandu on Monday. Secretary at the Ministry of Agriculture Development (MoAD) Dr Ganesh Raj Joshi and Niu Dun, Chinese Vice-minister for Agriculture, are leading their respective countries in the bi-lateral talks.

A source at the MoAD told Republica that Chinese officials have already proposed to Nepal in promoting animal husbandry to boost production of animal products such as milk, meat and wool in Nepal. Nepal has been spending millions of rupees a year to import those products.

Similarly, the Chinese side is also interested in supporting Nepal to expanding fish farming, which is still not widely commercialized despite having huge potentiality.

“The northern neighbor is also eager to support us to promote horticulture, cultivation of cereal crops and other farm activities in hilly areas. Besides, Chinese officials are also ready to support us in other potential areas of agriculture,” the source said.
The source said Nepal will request Chinese officials to help ease quarantine process at customs points while exporting Nepali agro-products.

“As visiting Chinese officials are not dealing with quarantine issues, we will informally request them for their support in simplifying quarantine process,” the source said.

Nepali traders are frequently facing problems in supplying meat products due to strict rule imposed at customs points by the Chinese side.
During the day-long meeting, Nepali officials will also seek Chinese cooperation for strengthening Nepal´s capacity in food quality testing, production of livestock vaccines and increasing mechanization in farming. Human resource development in agriculture sector is also among the agenda to be discussed during the meeting.

The Nepali side will also seek Chinese investment in a 100MW hydropower project to run the proposed chemical fertilizers factory in Nepal.
Though MoAD and Ministry of Entergy have already signed an agreement to execute a 100MW project to power the proposed chemical fertilizer plant in Nepal, it is not clear from where investment for the project will come.

“We are also floating options to Chinese official to invest in small hydropower projects that can be utilized to run small scale fertilizers here,” the source added. Given the lengthy process to procure chemical fertilizers from overseas market, Nepal will also seek Chinese firms to supply chemical fertilizers to Nepal for immediate purpose.

During the meeting, the Nepali side will also seek Chinese support to expand hybrid seeds production technology by helping Nepal build necessary infrastructure.

The Chinese delegation is scheduled to visit Nepal Agriculture Research Council in Khumaltar to discuss about possible technical assistance in farm research.

Source: Republica

Control revenue leakage: Pun

KATHMANDU, OCT 1: 

The Central Revenue Leakages Control Committee, led by finance minister Barshaman Pun, today, directed all revenue leakages control committees at the district level, led by the chief district officer, to develop an immediate strategy to control revenue leakage.

The meeting, which was held at the Finance Ministry, also directed security agencies and customs offices to accelerate their initiative to control revenue leakage during the festive season.

Concluding that the smuggling of goods will rise in the festive season, the committee asked the concerned agencies to tighten the inspection of vehicles and verify customs declaration forms to ensure genuine transportation of cargo.

The meeting also concluded that customs offices across the country should tighten its vigil to control revenue leakage.

The Department of Customs should check consignment evaluation daily and put its effort in maintaining the price structure of essential commodities.

It also directed the Inland Revenue Department to check whether or not big departmental stores were issuing invoices. Similarly, the meeting directed the Department of Revenue Investigation to identify and carry out raids in warehouses where suspected goods are stored.

The meeting also directed concerned agencies to tighten the customs point at Tribhuwan International Airport. It also asked the Armed Police Force to formulate a Standard Operating Procedure within 15 days to increase revenue-control patrols and ensure the security of industries.

The meeting decided to provide equipment and logistics to the security forces so that they are able to carry out their duties in an effective manner.

The finance minister directed officials at the ministry to study the smuggling trend of the previous Dashain and improve customs valuation system to increase revenue mobilisation.

The finance minister also asked all the concerned departments and representatives of security agencies

to take stringent action against those found guilty of revenue leakage.

Source: THT

Finance companies propose MFDB

KATHMANDU, OCT 1: 

Nepal Finance Companies Association has proposed a Rs 200 million to Rs 250 million worth Microfinance Development Bank (MFDB) that will not only help deprived borrowers get access to finance, but which will also provide technical consultation and orientation programmes, coupled with project financing for returnee migrants.

“Central bank is positive about the proposal,” said

the association’s president Rajendra Shakya, after discussions with central bank officials today.

However, Nepal Finance Companies Association is only a facilitator, he said, adding that the association has proposed a 60 per cent equity participant from commercial banks, development banks and finance companies. “Experts and technicians can also have a 10 percent equity partnership in the proposed Microfinance Development Bank that will provide both wholesale and retail lending,” added Shakya.

“Concentration of the proposed institution will be on livestock, animal husbandry and dairy, as demand for farm, livestock and dairy products has been rising lately but the country has to import most products.”

Central bank governor Dr Yubaraj Khatiwada is also enthusiastic on the proposed institution as the central bank has been encouraging banks and finance companies to go to rural areas to help in agriculture and livestock, he said, adding central bank has to, however, bring in project finance, as it currently has no such provision.

Source: THT

NRB circulates Rs 1.5b worth of new notes in east

BIRATNAGAR, OCT 1: 

Keeping in view the demand for new notes during the upcoming Dashain festival, the Biratnagar-based Eastern Regional Office of Nepal Rastra Bank (NRB) circulated new bank notes worth Rs 1.5 billion through different banks and financial institutions on Sunday alone.

Officials of the regional office said the new notes circulated on Sunday were of Rs 5, Rs 10, Rs 20, Rs 50 and Rs 100 denominations. They told Republica that the central bank was preparing to send another Rs 500 million worth of new bank notes to the eastern regional office.

Nara Bahadur Thapa, chief manager of NRB´s Eastern Regional Office, said bank notes of Rs 5 denomination worth Rs 9.25 million, Rs 10 denomination worth Rs 105 million and Rs 20 denomination notes worth Rs 183 million were circulated through different banks and financial institutions on Sunday. Similarly, the office also brought bank notes of Rs 50 domination amounting to Rs 295.5 million and Rs 100 denomination worth Rs 418.5 million into circulation on the day.

“We will circulate new bank notes for the Tarai region until Tuesday,” Thapa said, adding, “We will start issuing fresh notes for hilly districts in the eastern region only from Wednesday.”

Thapa also said the central bank would necessary arrangement so that people can exchange new banknotes banks and financial institutions without any trouble.

NRB is planning to circulate new notes through 87 banks and financial institutions in the eastern region. Last year, it had circulated Rs 1.4 billion worth of new notes in eastern Nepal during Dashain.

Meanwhile, the regional office has set up a separate counter in its premises for the convenience of general public.
“We hope people won´t have to face any inconvenience this year,” said Thapa.

Source: Republica

Japan signals support to private sector development

KATHMANDU, OCT 1

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

Source: Republica