Boardroom battle hits Nepal Credit And Commerce Bank

Kathmandu, Dec 23

The power struggle between two promoter factions at Nepal Credit and Commerce Bank ( NCC ) has affected smooth operation of the financial institution.

The two warring factions—one representing the NB Group and the other led by Nirmal Pradhan—are doing their bit to establish their dominance.

A bank source said the group led by Pradhan, a prominent stock investor, is seeking to control the board at a time when NB Group has weakened its position.

Some key members of NB Group are on the wanted list of the police for financial crimes.

The two groups are also fighting for the control of

Flat rate or commodity-based rate recommended for export incentives

KATHMANDU, Nov 11-2012

In its latest exercise to enhance effectiveness of cash-incentive scheme put in place to promote third-country exports, Ministry of Commerce and Supplies (MoCS) has suggested the government to provide at least 2 percent cash incentives to all the exporters spinning convertible currency for the country.

“We have given two options to the government - either provide 2 percent cash incentive at a flat rate to all third country exporters or fix specific incentive rate for different products, setting 2 percent as minimum offer for any third country export items,” said a senior official at the MoCS.

The MoCS had come up with the two options after holding meetings with officials of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Nepal Chamber of Commerce (NCC) and Confederation of Nepalese Industries (CNI).

“We have already forwarded this proposal to the high-level committee formed to effectively implement the cash incentive scheme,” said the source. The committee is headed by the Vice Chairman of National Planning Commission, Deependra Bahadur Kshetry.

The MoCS mooted the fresh changes after exporters continued to lodge complaints over complicated process followed to distribute the export incentive. They have been pushing the government to simplify the process and make its implementation predictable so that exporters could remain assured of receiving their share of due incentive.

Under the incentive package, the government has promised cash incentive in a range of 2 to 4 percent (of total export earning) for all third country exports depending on their value addition. But complicated procedures devised to prove the level of value addition and red tapism has largely affected its implementation.

“The need to prove value addition and other procedural hassles will significantly go away if the government choses to give 2 percent cash incentive at a flat rate to all the exporters. Hence, our push to the government is to go for it,” said Uday Raj Pandey, central member of the FNCCI, who is also a member of the team that drafted the new proposal sent to the government.

He disclosed to Republica that the MoCS-private sector team that drafted the new proposal has also recommended the government to pledge cash incentive to the trading firms also if they export goods produced by other local companies.

“This has been proposed mainly considering that a large volume of third country exports are carried out by the trading firms, and not the producers themselves,” said Pandey.

So far, such trading firms are left out from the scheme.

MoCS officials believe that adoption of any of its two proposals would ease the process of distribution of cash incentive. So far, the government has already distributed over Rs 650 million worth of cash incentive to exporters.

But a major chunk of that has been received by the big business firms, whereas small and medium enterprises - the targeted beneficiaries - have been finding their claims for incentive largely unattended.

The government had put the cash incentive scheme in place two years ago in an attempt to boost exports to bring down the ballooning trade deficit.

Govt may end cash incentives on agro-based food commodities

The government is mulling to end the cash incentive to the exporters of agriculture food commodities amid food deficit and difficulties in calculation of value addition on those products.

A high level source said exporters of the products such as rice, edible oil, pulses and refined flour might not get the facility if the government implements the idea.

“Those commodities are essential within the country and their export promotion is not beneficial to the country. So, the government is contemplating to end the incentives for such products to ease supplies in domestic market,” the source added.

Source: Republica

Govt extends Rs 80m to Nepal Drugs Ltd

KATHMANDU, Dec 8, 2011

The government has agreed to provide a sum of around Rs 80 million to Nepal Drugs Limited (NDL) to clear the state-owned company´s debt at Nepal Credit and Commerce (NCC) Bank.

The decision to extend the amount will prevent the bank from auctioning off the pharmaceutical company´s property in Babar Mahal of Kathmandu.

The company had pawned 6 ropanis (3,052 square meters) of land located at the prime location of Babar Mahal more than five years ago to get a credit of more than Rs 70 million - most of which was used in covering its overhead expenses.

However, it started deferring installment payments from the beginning due to weak financial health - a result of inefficiency, lagging productivity, unnecessary government intervention and overstaffing. Then some three years ago it was forced to close down its operations by the Department of Drugs Administration (DDA) after it failed to comply with international drug manufacturing practices. Since that time the government had taken over the responsibility of repaying back the loan amount.

“The amount that we are extending this time is the final tranche which will clear the company´s debt at the NCC Bank,” Suresh Regmi, under secretary of the Ministry of Finance, told Republica.

The NDL is one of the troubled state-owned enterprises which had shut down its operations after the DDA prohibited it from manufacturing medicines citing it was not following Good Manufacturing Practice (GMP) recommended by the World Health Organization.

The GMP is a set of guidelines that among others outlines production aspects so that companies do not compromise on quality while manufacturing drugs. Since Nepal´s drugs regulator - the DDA - also uses WHO´s GMP to gauge the standard of drug companies´ production facilities, it had instructed the NDL to shut down its operation unless it upgraded its manufacturing unit.

So far, the recommendation of the DDA has not been followed, meaning the company is virtually closed and is not making any money. Yet the government has not removed the company´s staff from its payroll, adding financial burden of around Rs 4 million on the taxpayers every month.

The irony is that the government has not let them go despite knowing it can´t keep more than 70 percent of the workforce of 279 even if the company resumes operations after overhauling its production facilities. This is because they lack the required academic qualification to work at a GMP-compliant pharmaceutical company.

To send off these staff members under the voluntary retirement scheme, the company has asked for around Rs 570 million. “But the government is yet to decide on this,” Regmi said.

The company also needs another Rs 560 million to revamp its production facilities and infrastructure so as to meet the international standard - an amount which, according to a study conducted by the government, can be recouped within five years of resuming operation. But the government still has not taken any decision on whether to release this amount.

Source: Republica