R&D Economic Research & Business Development
Date: August 10, 2009
Highlights
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Nepal’s Prime Minister Madhav Kumar Nepal met with the Indian ambassador Rakesh Sood on August 9, 2009. A report published in a vernacular weekly claimed that the Indian side has informally inquired about the possible role and status of the now sidelined King in the new constitution from the Nepal Prime Minister.
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Foreign Minister of the country, Mrs. Sujata Koirala-Jost is heading for New Delhi today, August 10, 2009. “My agenda is to discuss the possible ways to bring about a positive conclusion to the peace process”, she said adding, “India is closely monitoring the Nepali peace process…Indian advice and support in this regard would be very important”, Mrs. Koirala added.
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Maoists’ sources claim that Mr. Dahal will meet some leaders of the CCOMPOSA (Coordination Committee of Maoist Parties and Organizations of South Asia) and RIM (Revolutionary International Movement) in his bid to mend differences with ultra leftists’ organizations that have cropped of late after the Nepal Maoists entered into the mainstream politics of Nepal.
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The Communist Party of Nepal (Unified Marxist-Leninist) would back the candidate of Unified CPN (Maoist) for the chairperson of the Constitutional Committee of the Constituent Assembly (CA) provided the latter withdraws its agitation programs.
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CA Chairman Subas Nembang is planning to hold an election to choose the chairperson of the Constitutional Committee.
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Deputy Prime Minister Bijaya Kumar Gachhadar on Saturday charged that the Maoists are trying to impose communist rule in the country. Alluding to the communist system as practiced in China.
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The General Secretary of the Nepal Communist Party-United Marxists Leninists, Mr. Ishwor Pokharel, has warned that strong action could be taken against the Maoists if they initiate agitation.
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Chairman of Madhesi Janaadhikar Forum (MJF) Upendra Yadav today blamed the government for terrorising Tarai in the name of special security strategy.
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Politburo member of Unified CPN-Maoist Hisila Yami today claimed that Nepal could be the place from where the ‘Third World War’ could begin. “The US has already entered into India and China and therefore Nepal could be the place from where the world war could begin as the Second World War had begun from a small country,” Yami said.
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The main opposition party UCPN (Maoist) has underscored that the new constitution should adopt the provision to elect the President through direct election who will be the executive head of state and that there should be a “multi-member proportional direct electoral system”.
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Experts and industrialists on Friday said that Nepal’s gross domestic product (GDP) growth and revenue collection did not match, with the former growing slowly and the latter growing relatively faster. The country’s estimated GDP growth remained at 3.8 percent last year, whereas revenue growth was 32.14 percent.
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The Asian Development Bank (ADB) has increased its grant allocation to Nepal. The allocation, a blend of concessional loans and grants, will rise to US$ 538 million for 2009/10 from US$ 258 million during 2007/08.
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Despite having an impressive expansion of financial institutions in Nepal in recent years, their contribution in accelerating growth and lowering poverty has been minimal, a study conducted by Nepal Rastra Bank (NRB) concludes.
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Nepal Bangladesh Bank (NBB) is on the way to making a turnaround as it has intensified the recovery of bad loans. According to the financial report of the last quarter made public by the bank, its capital fund has become positive by 8.08 percent from its negative status of 8.16 percent in the third quarter of the last fiscal year 2008/09.
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The world financial crisis may have prompted many economists around the world to take a sledgehammer to the neo-liberal school of economics, but the multilateral donors here are bucking the trend: they have started asking the government to move ahead with the privatesating of state-owned enterprises (SOEs).
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The industrialists in Industrial Development Area Management Ltd, Balaju, have decided to shut industries due to lack of security and deteriorating industry-labour relations. "We have also unanimously decided not to pay any salaries, wages and perks for the period of closure, as the industries have suffered huge losses due to closure," said Jagat Bahadur Rayamajhi, president of the Balaju Industrial Development Association.
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Labour and Transport Management Minister Mohammed Aftab Alam today claimed that there is no demand for Nepali labourers in Poland and Ukraine. Due to the global economic crisis.
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Six Nepali Industrial trainees have successfully completed the Japanese Language and Culture training at Toyoma, Japan. They were felicitated on their return to Nepal. They had left for Japan on May 17.
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Food crisis looms large in various Far West districts, thanks to this year’s extended dry spell that has drastically affected crops.
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POLITICS: India may ask Nepal PM of ex-King’s status in new Charter Nepal’s Prime Minister Madhav Kumar Nepal met with the Indian ambassador Rakesh Sood on August 9, 2009. The Prime Minister’s press advisor Rajan Bhattarai told journalists after the meeting that the discussion mainly focused on the upcoming visit of the prime minister to India, August 18, 2009. Bhattarai stated that the PM is yet to finalize his agenda for the India trip. However, a report published in a vernacular weekly claimed that the Indian side has informally inquired about the possible role and status of the now sidelined King in the new constitution from the Nepal Prime Minister. The Prime Minister in his trip to New Delhi is supposed to provide answers to this somewhat hair-raising query likely to be posed by the Indian leadership. Upon being asked by the Indian leaders of the possible role of the King in the new constitution, the Prime Minister rushed to meet the Nepali Congress President Girija Prasad Koirala early last week. Pretty amazed Koirala remained tight lipped however, later talking to his inner coterie Koirala said that “Madhav Nepal has apparently got the Indian indications in this regard.” Analysts wish to listen as to how Nepal Prime Minister will answer the "unexpected" query, if an when, posed to him by the Indian leaders as regards the possible role of the former King of Nepal in the yet to be drafted new constitution. Politics is about to take a different swing, it appears. Source: www.telegraphnepal.com Date: 2009-08-10
Nepal FM Sujata to raise Open Border issue with India The illustrious daughter of the president of the Nepali Congress Party, Girija Prasad Koirala and the CA election defeated NC leader turned Foreign Minister of the country, Mrs. Sujata Koirala-Jost is heading for New Delhi today, August 10, 2009. Minister Sujata will be staying in New Delhi for five days.
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“My visit to India will provide a new dimension to the age-old relations between the two sovereign nations”, said Mrs. Koirala talking to a “select” group of Journalists on Sunday, August 9, 2009. “My agenda is to discuss the possible ways to bring about a positive conclusion to the peace process”, she said adding, “India is closely monitoring the Nepali peace process…Indian advice and support in this regard would be very important”, Mrs. Koirala added. “We will urge India to support Nepal in combating Climate change and conservation of the Bagmati River, that is suffering from pollution and encroachment”, said Koirala. Sujata forgets that the sacred River Ganga in India is in itself taken as one of the most polluted rivers in South Asia and the Indian government has so far failed in checking the increasing pollution in the said river. “Issues such as Koshi Embankment and Open Border will also surface during my stay in India”, Sujata added. During her stay in India, Sujata will meet the Indian Prime Minister Dr. Manmohan Singh, Foreign Minister S. M. Krishna, Finance Minister Pranab Mukherjee, President of the Congress-I, Mrs. Sonia Gandhi. Mrs. Koirala will return home on Friday, August 14, 2009, and again become a part of the Prime Minister Madhav Kumar Nepal delegation to India set for August 18, 2009. To recall, last year on August 18, the Koshi River went berserk and inundated hundreds of villages in Nepal and thousands of villages in India. Intelligent observers claim that Sujata's advanced trip to New Delhi is to bag sympathies for herself from the Indian leadership in order to keep the Nepali Congress under her grip upon the retirement of Girija Prasad Koirala who is currently heading the party. Father Koirala too wishes that the NC falls into his daughter's pocket after his retirement. Source: www.telegraphnepal.com Date: 2009-08-10 Nepal Maoists chief likely to meet RIM-CCOMPOSA leaders in UK Pushpa Kamal Dahal, accompanied by his consort Sita Dahal and his heir apparent Prakash Dahal landed in London, Britain Saturday August 8, 2009, at around 5:45 PM local time. The Maoists’ party mouth-piece, the Janadisha Daily claims that the Chairman family had gone to London for a week long private trip.
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However, with the Maoists party in agitation which began Friday August 7, 2009, Dahal’s trip to London is shrouded in mystery? Writes Janadisha that Chairman Dahal is expected to brief the Maoists’ cadres spread across Europe-converged in London about the fresh decisions taken by the Maoists’ central committee. On the other hand, Maoists’ sources claim that Mr. Dahal will meet some leaders of the CCOMPOSA (Coordination Committee of Maoist Parties and Organizations of South Asia) and RIM (Revolutionary International Movement) in his bid to mend differences with ultra leftists’ organizations that have cropped of late after the Nepal Maoists entered into the mainstream politics of Nepal. The CCOMPOSA and RIM coordination office is located in London. The CCOMPOSA, RIM and Nepal Maoists came into logger heads with the Nepal Maoists’ laid down weapons and joined the main stream politics. RIM has been blaming the Nepal Maoists for betraying the Global Communist Movement. Analysts believe here that Prachanda will in all likelihood mend his party's differences with the RIM and CCOMPOSA during his UK sojourn. Source: www.telegraphnepal.com Date: 2009-08-09
Maoists reject new UML offer The Communist Party of Nepal (Unified Marxist-Leninist) would back the candidate of Unified CPN (Maoist) for the chairperson of the Constitutional Committee of the Constituent Assembly (CA) provided the latter withdraws its agitation programs. The ruling CPN-UML is ready for conditional support for the Maoist candidate as chairperson of the Constitutional Committee that is lying vacant ever since then head of the committee Madhav Kumar Nepal was elected prime minister on May 23. As per the CA regulations the post should have been fulfilled within a month after the post became vacant. "We can support the Maoist candidate provided they withdraw the agitation and become ready to play a role of constructive opposition in the parliament and to give momentum to take the peace process to a logical conclusion," CPN-UML chief whip Bhim Prasad Acharya told myrepublica.com. But Maoist secretariat member Barsha Man Pun, who is also a member of the CC committee, flatly ruled out any possibility of such a deal. The Maoist party has officially announced Dr Baburam Bhattarai as its candidate for the post.
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The second largest party in the CA, Nepali Congress (NC), has also staked claim for the post. NC chief whip Laxman Ghimire said his party has a strong ground to stake claim for the post. "The UML has its chairman in the CA and the Maoists have vice-chair. Therefore, we should head at least one important committee in the CA," Ghimire said. Pun said the UML and NC should have instead requested a competent candidate like Dr Bhattarai without second thought to head the committee, just just like then Prime Minister Pushpa Kamal Dahal had requested Madhav Nepal to head it. "An NC leader is president, UML has the prime minister and CA chairman. Still they hesitate to support a candidate of the largest party in the CA to head an important CA committee," Pun said. He said the Maoist party is ready to choose the chairperson by consensus but not ready to withdraw the agitation as a bargaining chip to bag the post. Nembang plans election CA Chairman Subas Nembang is planning to hold an election to choose the chairperson of the CC. A highly-placed source at the CA secretariat said Nembang will announce the election date on Monday after consulting the chief whips of the major political parties earlier on the same day. Voting for the post will be held within a couple of days. Nembang came up with a conclusion to hold the election for CC chairperson after regular consultation with chief whips of the major parties yielded no output. He has decided to finalize the issue of CC chairperson no later than August 16, the source said. The committee has a crucial role in the constitution making. Unlike other committees, it has a dual role. Besides preparing a preliminary framework of the new constitution, it has to prepare the first draft of the constitution as per the recommendations and guidelines given by the CA by integrating all the preliminary drafts presented by 11 thematic committees. As a thematic committee, the CC will have to complete its preliminary draft report and submit that to the CA for deliberations no later than August 31. After completing deliberations, the CA will send all the thematic committees´ drafts to the CC by September 7 as per the amended CA calendar. After that the committee has to start work for integrating all the drafts Source: www.myrepublica.com Date: 08/10/2009
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Maoists trying to impose communist rule: DPM BIRATNAGAR, Aug 8 - Deputy Prime Minister Bijaya Kumar Gachhadar on Saturday charged that the Maoists are trying to impose communist rule in the country Alluding to the communist system as practiced in China which lies north to Nepal, the DPM said the Maoist agitation that overlooks the achievements of people's movement is an attempt to impose the “system north to the Mount Everest”. Gachhadar, who chairs the newly formed Madheshi Janadhikar Forum-Loktantrik (MJF-L), said the country has already been declared federal people's republic, and he did not understand what kind of governance the Maoists are looking for. "The time has come to understand as to what kind of governance Maoist Chairman Pushpa Kamal Dahal wants. Whether it is like that of northern neighbour China or India or may be some other distant neighbours." He said the Maoists, though have obliged to abide by democracy in the 12-point agreement, have not shown their commitment to democracy in practice. Gachhadar added that the liberal nature of the other two big parties—the CPN-UML and the Nepali Congress-- has prompted the Maoists to pose themselves against the republic. He charged that the Maoists should first look at themselves before charging that the government is unconstitutional and was formed on the basis of foreign effort. The beleaguered leader, who registered a new party after after having irrevocable differences with the mother party chairman over joining the UML-led government, said Dahal's claim to topple the government within 45 days failed. He said the Maoists have tried to stir things by raising the issue of civilian supremacy and added that the President's role in reinstating the "sacked" Army Chief was not unconstitutional. It was on behalf of the nation, claimed he. In another context, he said he does not strive for post but for ideology and added that NC President Girija Prasad Koirala is not only his ideal but also is a fatherly figure. He further claimed that he fought an ideological battle with the NC President. Source: www.kantipuronline.com Date: 2009-08-08
Stringent action against Nepal Maoists: Ishwor Pokharel The General Secretary of the Nepal Communist Party-United Marxists Leninists, Mr. Ishwor Pokharel, has warned that strong action could be taken against the Maoists if they initiate agitation. “We will forcefully retaliate if they resort to violence”, said Mr. Pokharel.
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Mr. Pokharel claimed that the Maoists hullabaloo over the Military supremacy and their agitation to restore Civilian Supremacy in the country has neither any logic nor any meaning. Mr. Pokharel was addressing a journalist meet organized by Press Chautari in Dhankuta, Saturday August 8, 2009. The Press Chautari is a UML affiliated journalists’ organization. “The Maoists continue to disregard the 12-Point Agreement and the broader peace pact signed with the State in the past”, clamed Mr. Pokharel. “Think positive” said Mr. Pokharel when asked by the journalists if the Constitution drafting process will be completed in the stipulated time period. However, he also warned that the country may have to face yet another political upheaval if the constitution drafting process is not completed on the stipulated time. Source: www.telegraphnepal.com Date: 2009-08-09
Security strategy to finish Madhes, claims Yadav Chairman of Madhesi Janaadhikar Forum (MJF) Upendra Yadav today blamed the government for terrorising Tarai in the name of special security strategy. Speaking at a press conference organised by the Banke chapter of Madhesi Journalists Society here, he said, “The strategy has been implemented without forging consensus.” “The suppressive act of the government will not maintain law and order; instead, it’ll deteriorate the security situation,” he said, fearing that the government’s strategy would kill innocent people in the Tarai. He also took potshot on the government saying that the strategy was launched with the view to finish Madhes. “We don’t need the any strategy that kills people. It should be scrapped at the earliest.” “Hundreds of youths are being recruited in the police force unnecessarily to suppress the Madhes,” he charged. “As Nepali Congress and CPN-UML have lost people’s support in the eastern Tarai, they caused split in MJF to improve their status.” Underscoring the need of forming national government to prevent civil war in the nation, he said, “Otherwise, instability might threat the existence of the country and her people. Source: The Himalayan Times Date: 08/10/2009
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Maoists begin street protests Politburo member of Unified CPN-Maoist Hisila Yami today claimed that Nepal could be the place from where the ‘Third World War’ could begin. “The US has already entered into India and China and therefore Nepal could be the place from where the world war could begin as the Second World War had begun from a small country,” Yami said while addressing the mass meet organised following a demonstration at Ratna Park of the Capital this evening. She said unlike its previous image of land of peace, Nepal could become dynamite now. Former minister Yami claimed that the parties fearing of Maoists chose to “grab the tails of army chief Katawal” fearing that the Nepali Army could also go in favour of the Maoists. Yami also criticised the unnecessary number of ministers and division of ministries which could have long term negative impacts. Central committee member and secretary of Newa State Committee of the UCPNMaoist, Narayan Dahal, said the demonstration could be the beginning of the third people’s movement. Dahal warned that the people trained to use arms for 10 long years would fire back if the government tried to suppress the movement using American or Indian guns. Hundreds of people marched from Ratna Park with black flags and shouting antigovernment slogans, and demanding civilian supremacy. The rally went through Bagbazaar, Putalisadak, Exhibition Road and Sahid Gate, before converging into the mass meet at Ratna Park. Source: The Himalayan Times Date: 08/10/2009
Maoists for directly elected executive president The main opposition party UCPN (Maoist) has underscored that the new constitution should adopt the provision to elect the President through direct election who will be the executive head of state and that there should be a “multi-member proportional direct electoral system”. Saying that the new concept is the party central committee meeting decision, the Maoists floated the proposal at the meeting of the Constituent Assembly committee on determination of forms of the governance of state. Maoist leader Dev Kumar Gurung asserted that the Maoists cannot be blamed for changing its stand as the party’s central committee decision is the official stand. The committee on determining the forms of governance of state has been in confusion after the Maoists floated three different concepts on executive head in a month.
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Pushpa Bhusal, a member of the committee, opined that the Maoist decision to go for election on the basis of ethnic groups would not be suitable to Nepal. Likewise, she said that the Maoist proposal to run the government on the basis of consensuses would not be necessary after the promulgation of new constitution though it is need for now. The UCPN (Maoist) have changed its view on the president’s role three times after the CA election. Source: www.kantipuronline.com Date: 2009-08-09
POLICY:
Revenue, GDP growth don’t match Experts and industrialists on Friday said that Nepal’s gross domestic product (GDP) growth and revenue collection did not match, with the former growing slowly and the latter growing relatively faster. The country’s estimated GDP growth remained at 3.8 percent last year, whereas revenue growth was 32.14 percent. Industrialist Jagadish Prasad Agrawal said growth in GDP failed to indicate substantial growth in revenue collection. At the post-budget discussion organised by Management Association of Nepal on Friday, he said unless the country’s agricultural and manufacturing sectors grow, its import-oriented economy will not achieve double-digit growth. Finance Minister Surendra Pandey said the government was working to prepare a mechanism to distribute subsidised fertilisers to small farmers. “Although 400,000 tonnes of fertilisers are consumed in the country every year, we are subsidising only 100,000 tonnes,” he said. Regarding the price hike, he said the government was studying the real reason behind it and was concerned whether the hike was due to cartelling, black marketing or bandas. The country’s inflation remained as high as 12.3 percent in 11 months of the last fiscal year. The government aims to bring it down to 7 percent this year. Although he was confident about meeting the revenue target, he admitted there were challenges in increasing capital expenditure. “That’s why the main stress of the budget is political consensus,” he said.
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Presenting another paper, Devendra Prasad Shrestha, chief of the Central Department of Economics at Tribhuvan University, praised the government’s social security plan. He stressed the need to spend more on infrastructure development. Source: www.kantipuronline.com Date: 2009-08-08
BANKING: ADB ups grant to Nepal The Asian Development Bank (ADB) has increased its grant allocation to Nepal. The allocation, a blend of concessional loans and grants, will rise to US$ 538 million for 2009/10 from US$ 258 million during 2007/08. This was revealed by Zhao Xiaoyu, ADB's vice president of operations, at the end his four-day visit to Nepal. "This scaling up of ADB's assistance to Nepal testifies to ADB's strong commitment to Nepal's development and poverty reduction efforts," said Zhao. Sustaining this level of assistance in the future will largely depend on Nepal's performance in the areas of macroeconomic management, governance and portfolio management, states an ADB press release. During his four-days visit, Zhao met with Prime Minister Madhav Kumar Nepal, the deputy prime minister, the finance minister, the vice chairperson of the National Planning Commission and other senior government officials. He also participated in the foundation laying ceremony of the diversion tunnel of the Melamchi Water Supply Project and visited other ADB-assisted project sites. The trip was the first by the vice president to Nepal. The vice president also signed a grant agreement with the Government of Nepal for ADB's emergency support for the country. The US$ 25.6 million Emergency Flood Damage Rehabilitation Project will help restore economic activity in eastern and far western Nepal that was devastated by last year's floods. Source: www.kantipuronline.com Date: 2009-08-06 Financial sector's contribution to growth nominal: NRB Despite having an impressive expansion of financial institutions in Nepal in recent years, their contribution in accelerating growth and lowering poverty has been minimal, a study conducted by Nepal Rastra Bank (NRB) concludes.
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The study -- entitled Financial Sector Development and Economic Growth in Nepal: FY 1975 - FY 2007 -- has recommended the government to develop a financial sector master plan (FSMP) in view of medium and long term perspective, pointing to where the nation´s financial system should move so as to achieve broader national interests The soon-to-be-published report urges the government to review the existing linkage between financial sector and economic growth by reviewing current strategies and policies. "In order to enhance the efficiency and effectiveness of the financial markets, the government should seriously think on existing financial environment in terms of determining the measures that have direct linkages on economic activities," the report underlines. “A clear message that can be drawn from this result is the need to enhance tie between financial sector and economic growth by reviewing current strategies and policies. The report blames weak financial health, especially high Non-performing Assets (NPAs) of Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB), country´s two largest banks in terms of deposits, for the country´s weak financial market. "The increasing share of NPAs, in general, indicates that the borrowers were not able to pay back the loan because of the losses in their respective business. The loss in the business having investment in productive sector would mean a marginal or even negative contribution to national output and hence to per-capita output," states the report. As a result of liberal banking policy that the government adopted after the financial crisis that hit the country in mid 80s, the total number of financial institutions in the country has recorded a dramatic surge to 236. Of the total financial institutions, 26 are commercial banks, while 61 development banks have acquired operating licenses from the NRB. Likewise, the central bank has granted permission to 78 finance companies and 13 micro-finance institutions for banking transactions. The empirical results suggest that the government should pay more attention to foster and get maximum benefit from foreign trade. “The economic liberalization in terms of increasing volume of trade showed both positive and significant impact on growth -one percent increase in total trade to GDP ratio has a nearly 0.14 percent increase in per-capita growth," the report states. Similarly, the report further reveals that the negative impact of population growth has indicated the need to enhance quality of human resource and effectiveness of population control measures. "The short term measure for this would be to effectively handle the population growth measures. But in long term, the government should find the way to enhance the quality of human resource and make the environment feasible to absorb them within the nation," the report states. Source: www.myrepublica.com Date: 08/10/2009
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NB Bank well set on road to recovery Prithvi Man Shrestha Nepal Bangladesh Bank (NBB) is on the way to making a turnaround as it has intensified the recovery of bad loans. According to the financial report of the last quarter made public by the bank, its capital fund has become positive by 8.08 percent from its negative status of 8.16 percent in the third quarter of the last fiscal year 2008/09. The capital fund against risk weighted asset must be positive by 10 percent as per Nepal Rastra Bank (NRB) directives. The bank's capital fund was negative by 14.22 percent in the beginning of the last fiscal year. The bank which is still under the central bank's control has also reduced its nonperforming loans (NPL) from 29.90 percent in the third quarter to 19.30 percent in the final quarter of last year. An NRB official said that the bank was in the process of improvement. "But it is yet to meet the objective of NRB," he said. Acting general manager of NB Bank Govinda Babu Tiwari said that the recovery of loans from the NB Group, which remained the highest, contributed mainly to the revival of the bank. Despite being a promoter of the bank, the NB Group had taken loans from the bank against banking norms. According to Tiwari, the bank recovered Rs. 1.3 billion from the NB Group over the last fiscal year. The bank has recovered Rs. 2.09 billion from the group after NRB took over the bank in November 2006 The bank needs to recover just Rs. 140 million more from the group which is not a big amount for the bank, Tiwari said. "We didn't give any concession to the group as it was connected with governance questions," he said. "The group was not given an interest waiver and the interest rate was also kept relatively higher than that for other borrowers." The group's share in the bank has also declined to around 10 percent as the group was forced to renounce its shares and other shareholders of the bank increased their share through holding right shares, according to NRB. On the other hand, other big borrowers also have started to pay back loans to the bank. Momento Apparel owned by former president of the Federation of Nepalese Chambers of Commerce and Industry Chandi Dhakal also paid Rs. 30 million in July, according to the bank. Likewise, Space Time Network also paid Rs. 20 million to the consortium of NBB and Rastriya Banijya Bank in July. They are yet to pay hefty amounts back to the bank.
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While repaying the loans, Momento has also proposed a revival plan for Momento to the bank demanding concessions in the repayment schedule. "We are studying the proposal and will decide on it soon," Tiwari said. Momento, which was the biggest readymade garment exporter of the country once, collapsed as result of the scrapping of the quota system on apparels among other reasons. Tiwari said that the bank was focusing on three areas -- maintaining capital adequacy, good governance and reducing NPL. He promised that the bank would reduce its NPL to below 5 percent by mid-January 2010. "We will manage the required capital fund of 10 percent positive capital fund within a month," he said. Source: www.kantipuronline.com Date: 2009-08-06
BUSINESS & ECONOMY:
Privatise SOEs, govt told Prithvi Man Shrestha The world financial crisis may have prompted many economists around the world to take a sledgehammer to the neo-liberal school of economics, but the multilateral donors here are bucking the trend: they have started asking the government to move ahead with the privatesating of state-owned enterprises (SOEs). Vice Chairman of National Planning Commission Yubaraj Khatiwada said that 'most of the multilateral agencies' were asking the government to resume the privatisation of SOEs, a process that has stalled over the last few years. “They are asking why the government is backtracking from the process,� Khatiwada said. There are three multilateral donors operating in Nepal--the World Bank, the International Monetary Fund and the Asian Development Bank; and it's only them who have been on a privatisation drive. Bilateral donors have not made the same demands so far, according to Khatiwada. He said that the government had, however, made it clear to the donors that it would not opt for privatisation at least until the next fiscal year. In any case, say finance ministry officials, the privatisation committee headed by the finance minister has remained inactive for three years, ever since the peace process began. And the government has not included the privatisation issue in the current fiscal year's budget.
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Nepal's past experience with privatisation, carried out in two phases in the 1990s, didn't go down all that well with the government, and the privatisation attempts didn't do the country's economy much good either. Senior economist Bishwambher Pyakuryal said the privatisation attempts in the past did not yield the desired results: the SOEs' assets ended up getting undervalued. He said the other problems were there was no transparencies about how the money raised from the sales of public enterprises were used and that most of the SOEs became non-functional after they got privatised. The government had privatised 18 public enterprises, and 12 others were either liquidated or dissolved. So far, the government still owes a liability, estimated at Rs. 3.86 billion, for privatised and liquidated public enterprises--the liability is mostly made up of outstanding payments to employees, according to the finance ministry. The government is facing a dilemma because the existing SOEs are not performing all that well. Out of a total 36 public enterprises, 19 were running on loss, and only 17 showed profits in the fiscal year 2007/08. So one way to go would be to privatise, but the problem is multilateral donors agencies don’t have a great track record as far as privatisation goes. Pyakuryal said the people would question the morality of the donors if they pressured Nepal to opt for privatisation, especially given the donors' alleged silence over the developed countries’ actions on bail outs. “This is not the time to privatise SOEs, but to strengthen the capacity of public enterprises to deliver goods and service better,” said Pyakuryal, who nevertheless claims to be a proponent of privatisation. A senior government official says that the donors are championing privatisation mainly because they have been schooled in neoliberal theories and the mindset they've developed cannot be broken out of easily. Source: www.kantipuronline.com Date: 2009-08-09
Management shuts Balaju Ind area At a time when Prime Minister Madhav Kumar Nepal is set to visit India seeking more investment, the industrialists in Industrial Development Area Management Ltd, Balaju, have decided to shut industries due to lack of security and deteriorating industry-labour relations. A labour union had forced the closure of the industries on August 3 after a dispute with the management. "We have also unanimously decided not to pay any salaries, wages and perks for the period of closure, as the industries have suffered huge losses due to closure," said Jagat Bahadur Rayamajhi, president of the Balaju Industrial Development Association.
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According to Rayamajhi, they have also submitted three-point memorandum to IDM. The industries have also sought compensation for industrial infrastructure damaged by vandals during closure. "We will also not pay electricity and other additional charges for the closed period," he said, adding that they will hold a meeting at the Labour Department tomorrow. "A team of representatives from BIDA will hold discussion at the Labour Department on industrial closure. If nothing positive comes up, we will completely shut the industries inside the IDM," Rayamajhi said. He added that political instability and militant trade unions had hit the industries hard. Though, State Minister for Home Affairs Rizwan Ansari and Minister for Industries Mahendra Ray Yadav are hopeful that the industries will reopen with mutual understanding, chances of that happening are slim. On one hand the government is trying to lure foreign investment while on the other labour disputes and security problems have bled the industries white, hitting the national economy. The dispute started when members of one of the trade unions misbehaved with the general manager of the IDM, Giriraj Pokhrel. Some of the representatives of the militant trade union were arrested, leading others to force the closure of the Balaju IDM on August 3. The industrial area has seen incidents of forcible seizure of equipment, halt in production, destruction of factory equipment, strikes and bandhs, leading the management to announce complete closure of the industrial area. Rayamajhi said the industrial area has been politicised, affecting labour efficiency. Source: The Himalayan Times Date: 08/10/2009
Nepali labourers not wanted, says minister Labour and Transport Management Minister Mohammed Aftab Alam today claimed that there is no demand for Nepali labourers in Poland and Ukraine. “Due to the global economic crisis there is no demand for Nepali labourers in Poland,” Alam said adding that Nepal is still investigating the labour demand from Ukraine as the companies that had asked for Nepali labourers are reportedly closed. According to him, a number of Nepali youths migrate as labourers to foreign lands for employment opportunities. “But due to irregularities they are cheated and exploited,” he adding that the ministry is investigating the demands of foreign employment agencies. In the fiscal year 2008-09, a total of 2,19,965 Nepali migrant workers — including 2,801 for South Korea under EPS — left for various labour destinations. However, the
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number of migrant workers declined after the major labour receiving destination countries were hit by global financial crisis last September. In the first quarter — till August-September — of the last fiscal year the number of outbound labourers was encouraging but it slowed down in the second quarter and the demand dropped further in the third quarter. However, Gulf countries — especially Qatar and Saudi Arabia — were in the top two positions on hiring Nepali blue-collar jobseekers in the last fiscal year. According to Department of Foreign Employment (DoFE) data, Qatar and Saudi Arabia hired 57.52 per cent of the total Nepali migrant workers abroad. Qatar and Saudi Arabia respectively hired 76,175 and 48,749 Nepalis last year. Other popular destinations are Malaysia that hired 35,070, the UAE that hired 31,688 and Bahrain that hired 6,360 Nepali blue-colour job seekers. The top five destination countries have covered 91.19 per cent of the 1,98,042 Nepali migrant workers. Sensing the drop in the demand since September, the government has started exploring new labour destinations like Poland and Cuba. “The ministry has been trying to expand the Nepali labourers’ market,” Alam claimed. However, not a single Nepali blue-colour job-seeker has left for any new destination so far. Industrial trainees back from Japan KATHMANDU: Six Nepali Industrial trainees have successfully completed the Japanese Language and Culture training at Toyoma, Japan. They were felicitated on their return to Nepal. They had left for Japan on May 17. Toyoma City managing director Enada expressed his pleasure at the participation of Nepali trainees in the programme and hoped for better utilisation of the training. Meanwhile, Kumiaya Company also expressed a wish to admit Nepali trainees among the 1,500 trainees that they receive annually from across the world Source: The Himalayan Times Date: 08/10/2009
Food crisis looms large Chitranga Thapa MAHENDRANAGAR, Aug 8 - Food crisis looms large in various Far West districts, thanks to this year’s extended dry spell that has drastically affected crops. Districts like Bajhang, Bajura, Achham, Darchula, Doti, Baitadi and Dadeldhura that produced barely enough crops to last three months during normal season are in for worse days as this year’s drought has greatly reduced their harvest.
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Agriculture Develop-ment Office, Bajura, has projected that the district is likely to see 70 percent decline in produce this year. The other districts have also made a grim prognosis about this year’s harvest with the decline ranging between 50 and 70 percent. “Most hilly districts in the Far West still rely on government-provided food ration. With dramatic slump in this year’s produce, these districts will have to ask the government to raise the food quota for this year,” said Dr. Rabindra Nath Chaube of Bajura District Agriculture Development Office. Source: www.kantipuronline.com Date: 2009-08-08
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