Industry ministry to study status of 10 more firms

KATHMANDU, May 20: 

After recommending ´sick industry´ status to four firms, the Ministry of Industry (MoI) is all set to conduct field study of another 10 firms that have applied for ´sick´ industry status.

“Our technical committee is preparing to dispatch a team to conduct field study of those 10 firms," a member of the technical committee under the ministry´s Industrial Promotion Division (IPD), told Republica.

The technical committee, which has been assigned to find out actual situation of the firms that have applied for sick industry status, sends a team of officials after completing their due diligence auditing.

The ministry has outsourced a team of chartered accountants to do due diligence auditing of the firms.

The 10 firms where the team will conduct field study are: Kharel Wooden & Metal Furnitures, Nava Durga Khadya Udhyog, Shree Antu Tea Industry, Laxmi Banaspati Ghee Udhyog, Bhrikuti Pulp and Paper, Gita Cold Store, Momento Apparels, Shirish Herbal, Shree Distillery and Dolphin Manner.
"The due diligence auditing report of these firms is in line with the financial statements that these firms had submitted while applying for sick industry status," the official said. "Now, the team will study the reasons behind financial failure of those firms.”

The ministry has already submitted a proposal to the cabinet to declare four firms -- Birat Leather, Birat Shoes, Nepal Borders and Basulinga Pvt Ltd - as sick and recommended them financial and non-financial facilities.

Yam Kumari Khatiwada, joint secretary at MoI who leads the technical committee, told Republica that a total of 37 firms had applied for ´sick industry´ status. These firms filed applications at the ministry after the government announced a program to revive sick industries in the country in 2011.

Source: Republica

Banks see increased profits in 3rd quarter

KATHMANDU, MAY 20, 2013

Profits of commercial banks have almost increased by half as they have enjoyed fewer bad loans in the third quarter.

Class ‘A’ financial institutions have recorded profit growth of 45 per cent by the third quarter of the current fiscal year, according to the third quarter financials published by the banks. The cumulative profit of 32 banks amount to Rs 12.9 billion. They had recorded a profit of Rs 8.85 billion in the corresponding period last year.

Everest Bank, Nabil Bank, Nepal Investment Bank and Rastriya Banijya Bank were able to increase their profits to more than Rs one billion. Nabil is the biggest profit making bank in the third quarter with a profit of Rs 1.5 billion.

Machhapuchchhre Bank has increased its profit by 13 times in the third quarter as compared to the same period last fiscal year by generating a profit of Rs 98.3 million. Kist Bank has recorded a loss of Rs 55.01 million.

Along with increased profits, banks have also seen their non-performing assets (NPA) go down this quarter. The average NPA of the banks has come down to 2.26 per cent of the total loans in this quarter against an average of 3.02 per cent in the corresponding period last year.

The shrinking bad loans have contributed in increasing the profits of the banks. Since banks did not have to set aside a large chunk of its income to provision against bad loans, profits were less affected last quarter due to loans gone sour.

Nepal SBI Bank, Everest Bank, Sanima Bank, Janata Bank and Standard Chartered Bank are among those with NPA less than one per cent. However, Kist Bank has even overtaken the three government promoted banks in terms of highest NPA with 7.89 per cent bad loans, while Agriculture Development Bank, Nepal Bank Ltd and Rastriya Banijya Bank have reduced their non performing loans to 6.27 per cent, 5.19 per cent and 5.95 per cent, respectively.

The banks have recorded good profits this quarter as the amount of loans floated is more than deposit collection as reflected by the increased credit to deposit ratio this quarter. Their average CD ratio amounts to 76.16 in the third quarter which was less than 73 in the previous year. Even in the second quarter, the ratio stood at 75.5. The higher lending interest being charged for loans than being offered for deposits has increased the interest income of the banks further swelling their profits.

However, things might not be equally gleeful for banks as the tightening liquidity has already compelled a lot of them to increase deposit rates to attract deposits. The increased deposit rates have already pushed the base rate of 18 banks higher than what it was in the second quarter.

Source: THT

Gold price slides further; reaches Rs 49,100 per tola

KATHMANDU, MAY 20 - 2013

Gold price has continued to drop further, pushing up the demand in the local market.

The price of the precious yellow metal dropped by Rs 650 to reach Rs 49,100 per tola (11.664 gm) on Sunday. The metal was traded at Rs 49,750 per tola on Friday. The local price set by the Federation of Nepal Gold and Silvers Dealers Association (Fenegosida) is based on Friday’s closing price of $1,360 per ounce in the international market.

As an impact of the sharp fall of Rs 6,300 in two days, the gold price had declined to Rs 49,500 per tola on April 16. Last Sunday, the yellow metal was traded at Rs 51,900 per tola. The price of silver has also declined by Rs 5 to Rs 855 per tola.

Gold dealers said the price continued to fall with investors in international market diverting their interest from gold and the dealers expect the price to go further down for a few more days. “The price in the local market is in downward momentum due to the impact of decline in international market price,” said Manik Ratna Shakya, general secretary of Fenegosida.

With the price going down, the demand of the precious metal has increased in local market. Normally, when the price goes down, customers throng to jewellery stores to buy gold items.  However, with high demand and low supply, black marketing is thriving in the domestic market, traders said. The seizure

of 16 kg gold by the police last week is an example.

The demand is further fueled by the ongoing wedding season. The demand has gone up to around 50 kg a day from normal

30 kg per day.

After gold dealers demanded the government to increase the daily quota amid increasing demand, the Nepal Rastra Bank (NRB) last week increased the quota to 20 kg per day from earlier 15 kg. However, Shakya said the increased quota of gold is yet to arrive in the market.

Gold price in international market, that generally guides the price trend in the domestic market, fell for the seventh straight session on Friday as the dollar strengthened and investors cut exposure to the metal, sending holdings in exchange-traded funds to their lowest in four years, according to reports. Gold is less than $50 away from the two-year low hit in mid-April when the price declined to $1320 per ounce.

CIAA seeks clarification from NRB on gold shortage

The Commission for Investigation of Abuse of Authority (CIAA) on Sunday sought clarification from the NRB on the shortage of gold being faced in the local market. It has directed the central bank to give reason why customers are not being able to buy gold at the reduced price in line with international market, and a solution to the shortage within the next three days. The anti-graft body has also directed the Nepal Bureau of Standards and Metrology to come up with measures to make the quality and weighing of gold reliable. The move has come after a government monitoring team last month found three jewellery shops in the Kathmandu valley cheating on customers in quality and weight in gold and silver jewelleries.

Source: The Kathmandu Post

Nepal Telecom cuts internet rates

KATHMANDU, MAY 18, 2013

Nepal Telecom has cut internet tariff rates effective from Friday on World Telecommunication and Information Society Day. The tariff has been slashed to ensure public access to internet. According to the company, people can enjoy unlimited dial-up internet at a monthly installment of Rs 200. Night surfing of the service is available at Rs 100. The unlimited dial-up in 128 kbps is available for Rs 400. NT is offering 40 per cent bonus data in volume-based ADSL and WiMax internet on the purchase of services for three months or more. Similarly, the EVDO service rate has been slashed from Rs 0.10 for 100 KB to Rs 0.50 for 1MB. NT is also planning to reduce rates of GPRS and 3G data service to the same levels as that of the EVDO data. It has almost halved its lease internet connectivity that is targeted towards the corporate sector. The new tariff for connection by optical fibre or copper wire has rates between Rs 2,500 to Rs 7,500 per month. The lease connectivity is around 256kbps to 100mbps.

Source: THT

Rupee continues to weaken against dollar

KATHMANDU, May 18, 2013

Nepali rupee weakened by 40 paisa against US dollar this week as the Indian currency, with which rupee is pegged, weakened. Despite depreciation of local currency, gold became cheaper by Rs 1,840 per 10 grams over the week.

Currency

Currency trading opened this week with exchange rate of US dollar fixed at Rs 87.55 on Sunday. The local currency shed 42 paisa to close at Rs 87.97 on Monday after Indian currency weakened following increased demand for the greenback from importers in India. Rupee continued its losing streak on Tuesday as well as the local currency shed 24 paisa to settle at Rs 88.21. Though rupee bounced back gaining 36 paisa on Wednesday, it lost 9 paisa to close at Rs 87.94 on Thursday. Rupee lost another 1 paisa to close at Rs 87.95 on Friday - the last trading day of the week.

According to news agencies, dealers have attributed Indian rupee´s fall to dollar gains against the Euro and Yen overseas but a higher opening in the domestic stock market capped the fall.

Nepali rupee however gained 88 paisa against Euro, and Rs 1.22 against British Pound this week. On Friday, Euro was exchanged at Rs 113.12 while British Pound was valued Rs 133.88.

Bullion

Gold became cheaper by Rs 1,840 per 10 grams over the week, thanks to drop in prices in the international bullion market. The yellow metal was traded at Rs 42,655 per 10 grams on Friday.

Bullion trading had opened this week with gold priced at Rs 44,495 per 10 grams on Sunday. Gold price dropped by Rs 255 on Monday to Rs 44240 per 10 grams. But the price went up by Rs 85 per 10 grams to Rs 44,325 per 10 grams on Tuesday. Gold dropped Rs 430 per 10 grams a day later to close at Rs 43,895 on Wednesday. They yellow metal became cheaper by a whopping Rs 1,025 per 10 grams on Thursday.

According to Federation of Nepal Gold and Silver Dealers Associations, gold price dropped in the local market mainly due to the improvement in the US economy and the global share market and increase in bank interest rates in countries like Australia, Japan, and European states.
On Friday also, gold price went down by Rs 215 per 10 grams to close the week´s trading at Rs 42,655 per 10 grams.

The price of silver also recorded a drop of Rs 38.5 per 10 grams over the week. On Friday, silver was traded at Rs 733 per 10 grams.

Source: Republica

Country should attract FDI in priority sectors

KATHMANDU, MAY 18, 2013

Experts today suggested the government to seek foreign direct investment (FDI) in sectors that the country needs for its development.

“The country must prepare a foreign direct investment policy according to the needs of the country, and based on what benefits it needs to take from which country,” they suggested, adding that the country should accept FDI in those sectors that will generate employment.

“Since the country needs to generate massive employment — to check youth leaving for foreign employment — Nepal should accept foreign direct investment in hydropower, agriculture and tourism.”

Addressing the Public Private Dialogue on ‘Foreign Direct Investment Policy Draft 2013,’ here today, finance minister Shankar Koirala, who is also minister for Commerce and Industry, agreed with the experts and the private sector.

“The country is getting foreign direct investment in sectors that are not prioritised by the government,” he said, adding that the country must learn lessons from its past experiences. “However, we need to reform the legal and policy level hurdles to attract foreign direct investment.”

The Foreign Direct Investment Policy Draft 2013 has also opened up investments abroad by domestic business people, though it had been banned by the budget a couple of years back to check the outflow of foreign reserves. “However, we have to thoroughly discuss on its advantages and disadvantages before implementing it,” the minister said, urging for a study on foreign direct investment policies of neighbouring countries and adopting the best practices from global experiences.

“Otherwise, policy alone cannot help boost investment, if there is no protection of investment.”

Trade secretary Krishna Gyawali, on the occasion, said that the country has been able to frame credible policies but has failed to implement them. “Unified Industrial Information Centre could help increase coordination among government agencies,” he said.

The foreign direct investment policy draft has noted geographical condition, political instability, poor security management, lack of skilled manpower, unnecessary demands by locals and lack of implementation of one-window policy as major reasons for the country not being able to attract foreign direct investment.

The draft policy has suggested active economic diplomacy and transparency of FDI to attract more foreign direct investment in the country.

Similarly, it has also prioritised hydropower, infrastructure development, agriculture and herbs processing, tourism, mines and minerals related industries for foreign direct investment. Fast track, railway, tunnel way, cable car, metro, flyover and international airports have been identified under infrastructure heading for foreign direct investment.

The draft has also fixed a minimum ceiling of $200,000 for foreign direct investment, whereas a minimum of 30MW of hydropower can also attract foreign direct investment.

Speaking on the draft policy, vice president of Federation of Nepalese Chambers of Commerce and Industry Bhawani Rana said that attracting foreign direct investment is a challenge at a time when industrialists are closing down their businesses due to bandhs and strikes.

Likewise, president of the Confederation of Nepalese Industries Narendra Basnyat complained that labour and economy has been defined separately, which has become a problem.

Some private sector players suggested the government to take the private sector into confidence for the fruitful implementation of the policy.

Source: THT