R&D Economic Research & Business Development
Date: September 20, 2009
Highlights
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The three largest political parties, who had agreed to look for a common ground to end the ongoing deadlock in parliament earlier this week, have failed to make significant progress so far.
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A majority of Nepali Congress Central Working Committee (CWC) members have opposed the proposal of party president Girija Prasad Koirala to defer the Mahasamiti meeting till next year.
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The Nepali Congress and the Untied Marxist Leninists’ Party-ruling coalition partners, ridiculing the fresh scheme forwarded by the main opposition, the Unified Maoists’ Party, to amend the Interim Constitution in order to unlock the current political deadlock as a ‘highly immature proposition’.
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The United Marxist Leninist’s Chairman Mr. Jhala Nath Khanal has said that Nepal’s major political stakeholders must unlock the current political deadlock prior to the Dashain Festival begins.
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Maoist Chairman Pushpa Kamal Dahal on Saturday threatened a revolt with support from UN if the political parties treated his party like a toy.
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Rastriya Prajatantra Party Nepal (RPP-N) has submitted a memorandum to Constituent Assembly (CA) chairman Subash Chandra Nemwang demanding a referendum on the fate of monarchy and whether Nepal should be a Hindu state.
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Supreme Court (SC) has allowed eight Brigadier Generals of Nepal Army to withdraw the writ petition they filed on March 23 against the erstwhile government for not extending their term, Friday.
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Nepal’s Prime Minister Madhav Kumar Nepal is embarking upon a trip to the US to attend the 64th General Assembly of the United Nations. The Prime Minister is also scheduled to meet President Barrack Obama of the US and Prime Minister Gordan Brown of the UK.
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The government has claimed that people will have to face power cuts of up to 10 hours a day coming winter. Last year people had to put up with 20 hours of loadshedding a day during the driest season.
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The government is thinking of enforcing automatic pricing mechanism (APM) to bridge the import-sales price gap, which has started inflicting losses to state-owned Nepal Oil Corporation in its fuel trade from this month.
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The growing tendency to forge court-ruling documents and use fake official stamps and letterheads has made the government decide to introduce an esecurity system soon.
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Despite price volatility and central bank´s wariness, commercial banks´ lending in the housing and real estate business has more than tripled over the last two years. Banks loans in realty sector (Rs in billions) July 2007 July 2008 Residential construction 16.38 26.41 Real estate 2.48 10.73
July 2009 34.95 24.76
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Troubled Nepal Development Bank’s (NDB) depositors might be able to celebrate Dashain with an easy mind as Patan Appellate Court yesterday directed Nepal Rastra bank (NRB) to let them withdraw a minimum amount from their deposits.
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Nepal Bank Ltd (NBL) has resumed services from four branches, which are among the branches that were closed during decade-long Maoist insurgency, for the benefit of service seekers.
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Short supply of cash has hit the local businesses hard. According to shopkeepers, the business has gone down by up to 75 percent, affecting traders of garments, jewelry and grocery in particular.
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Finance Minister Surendra Pandey forwarded a proposal to create a separate legislation to deal with Public Enterprises (PEs), which are entrapped in financial crisis, thus becoming a huge burden on the national economy.
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Starting Thursday, Nepal Telecom (NT), the state-owned telecom service provider, will be reducing SMS rates by half for the period of the DashainTihar festive season. NT said the reduction will be valid on its GSM and CDMA mobiles services between September 24 and October 7.
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Nepal Airlines Corporation (NAC), the national flag carrier, has more often than not been marred by embezzlement and irregularities. The latest episode in the corporation only corroborates the fact the NAC continues to be dogged by gross financial irregularities.
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Teletalk Pvt Ltd, the sole authorized distributor for Spice Mobiles in Nepal, has launched Spice M-5252 handset under the Spice Mobile BIG series, which is one of its in the series of multi-SIM category sets.
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Dragonair Thursday announced new arrangement for its services to Dhaka and Kathmandu starting from October 1 which will offer passengers travelling to and from Nepal a greater number of flights per week to choose from.
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Almost five percent of Nepal's population has got life insurance coverage. Over one million Nepalis have got insurance coverage with 463,000 new policies issued last fiscal year 2008/09 alone.
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Even as the number of Nepali workers leaving the country for foreign employment has increased during last five months, the outflow between midAugust and mid-September declined by 8.70 percent to 22,636 from 24,795 last year.
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After a brief tumble, Nepali currency bounced back against the US dollar this week. The gain is attributed to a drop in the value of greenback against Indian currency, with which Nepali currency is pegged. Gold price reached a new record in the domestic market on Thursday, before falling down on Friday largely due to the appreciation of rupee.
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The gloom in the market faded slightly this week as investors´ confidence went up due mainly to improved valuations. As predicted last week, the Nepse index (+2.14%) took an upturn on the first three days of the week and then derailed Wednesday onwards to close at 627.97 points.
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Securities Board of Nepal (SEBON) -- the capital market regulator-- has prepared a draft regulation of Central Depository System (CDS) that would replace existing manual transactions and enable settlement of share transactions in a scientific and reliable way.
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The Securities Board of Nepal (SEBON) -- the capital market regulator-- has granted permission to Asian Life Insurance Company to issue 1.08 million units of public share with face value of Rs 100.
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The Dashain festival brings joys to many. But not for the schoolteachers working in the Gorkha schools. The teachers' plan to revel in this Dashain celebration has been dampened after cadres of Unified CPN-Maoist started collecting forceful donation recently.
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Minister for Information and Communications Shankar Pokharel said on Friday that the government was introducing a Cyber Act with a view to blocking children's unhindered access to sexually explicit materials on the internet.
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EXPRESSION: Consistent transparency in the trade policy of any country is a key factor for obtaining trade access in overseas markets.
POLITICS: Big 3 fail to make significant progress
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The three largest political parties, who had agreed to look for a common ground to end the ongoing deadlock in parliament earlier this week, have failed to make significant progress so far. After failing to resolve the long-standing impasse, the Nepali Congress (NC) and the CPN (Unified Marxist-Leninist) in a meeting held at the prime minister´s office Saturday morning have proposed to form a six-member core group to find a solution. Top NC leaders including Sushil Koirala, Bimalendra Nidhi and Krishna Prasad Sitaula and CPN-UML leaders Bharat Mohan Adhikari and Ishwar Pokharel, among others, were present in the meeting. Prime Minister Madhav Kumar Nepal also attended the meeting. “In the meeting, we proposed that a small team comprising two members each from the three largest political parties be formed to find a way out,” Adhikari told myrepublica.com. However, UCPN (Maoist) vice chairman Narayankaji Shrestha said that no one had formally informed the Maoist leaders about such a proposal until Saturday evening. In a three-party meeting earlier on Wednesday, the leaders had agreed to intensify bilateral talks between Maoist-NC, NC-UML and Maoist-UML to seek a common ground before holding a trilateral meeting. Maoist-UML leaders held a few round of formal and informal talks but there had been no dialogue between Maoist-NC on the matter until Friday, said Shrestha. “NC leaders have failed to spare time for talks as they remained busy in their party central committee meeting,” he said. Shrestha described talks with UML leaders as moving in a positive direction. “Yet, we have not succeeded to come up with a concrete solution. We need to hold more extensive dialogues before we take a stand,” he said. The UCPN (Maoist) lawmakers have been continuously obstructing the House proceedings demanding what they call civilian supremacy. Source: www.myrepublica.com Date: September 19, 2009 NC CWC in no mood to defer its Mahasamiti meeting A majority of Nepali Congress Central Working Committee (CWC) members have opposed the proposal of party president Girija Prasad Koirala to defer the Mahasamiti meeting till next year. During a CWC meeting held at party headquarters at Sanepa Saturday, they argued that the Mahasamiti meeting must be held on the stipulated dates of November 1-3 as there is a need to bring massive changes to the party´s statute and also develop the official view of the party on various issues, with reference to the new constitution.
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The Mahasamiti meeting, which is set to formulate the party´s strategies and a new course of action, has not sat even after colossal political changes in the country following the success of the democratic movement in April, 2006. Party president Koirala had suggested to the party´s senior leaders including acting president Sushil Koirala and the party´s parliamentary party leader Ram Chandra Poudel to defer the Mahasamiti for next year, saying that holding both the Mahasamiti meeting and the general convention in the same year would involve a huge cost. Koirala has been saying that the Mahasamiti meeting would not be necessary at a time when the general convention has already been called. The party´s 12th general convention is taking place in February, 2010. However, six CC members including Ram Sharan Mahat, Prakash Sharan Mahat, Krishna Sitaula, Gopal Pahadi, Bal Krishna Khand and Ananda Dhungana during Saturday´s meeting suggested holding consultations with the party president before taking a decision to hold the Mahasamiti meeting on the scheduled date. According to party spokesperson Arjun Narsingh KC, the CWC meeting decided to hold consultations with party president Koirala about holding the Mahasamiti meeting on the scheduled date after a majority of CWC members opposed the idea of deferring the meeting. Senior NC leaders including acting president Sushil Koirala are set to meet party president Koirala to brief him about the views of CWC members regarding holding the Mahasamiti meeting as scheduled. Party insiders say that Koirala´s suggestion to defer the Mahasamiti meeting was to thwart the party´s plan to adopt a multi-post system as it would foil his bid to secure the position of general secretary or vice president for his daughter Sujata Koirala. “It is almost difficult for him to secure Sujata any of these posts through elections,” said a CWC member, seeking anonymity. The Mahasamiti meeting scheduled to be held in November is set to embrace a collective leadership system in the party as proposed by the party´s statute drafting committee headed by Krishna Prasad Sitaula. The committee has suggested curtailing the powers of the party president. Party sources said that Koirala fears he will have to face strong protests at the Mahasamiti meeting over his decision to send his daughter Sujata to lead the party in the government. Koirala is also likely to face wrath from CWC members for seeking the post of deputy prime minister for her despite the parliamentary party and CWC of the party opposing the move. What party president Koirala would fear the most, according to a CWC member, is that protests at the Mahasamiti meeting could set a negative tone for him in the upcoming general convention, thereby taking the party leadership away from the influence of the Koirala family. Source: www.myrepublica.com Date: September 19, 2009
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Nepal Maoists’ amendment proposal immature: NC-UML The Nepali Congress and the Untied Marxist Leninists’ Party-ruling coalition partners, ridiculing the fresh scheme forwarded by the main opposition, the Unified Maoists’ Party, to amend the Interim Constitution in order to unlock the current political deadlock as a ‘highly immature proposition’. The Nepal Communist Party Unified Maoists’ Chief Pushpa Kamal Dahal after his return home from a mysterious trip to China administered Hong Kong, Thursday 17 September, 2009, forwarded the idea of Constitution amendment as an alternative to solve the current political dispute. The NC General Secretary Bimalendra Nidhi, talking to journalists after the meeting between the NC and UML leaders on Saturday September 19, 2009, that if the Maoists’ idea for Constitution amendment is intended to cut powers of the president then we have serious objections to their proposal. “The Maoists party is yet to formally propose the very idea to the parties concerned, it has come through the media as of now, which is highly unfortunate and immature as well”, Nidhi told reporters. Source: www.telegraphnepal.com
Nepal Army takeover likely if parties ignore consensus politics: Khanal The United Marxist Leninist’s Chairman Mr. Jhala Nath Khanal has said that Nepal’s major political stakeholders must unlock the current political deadlock prior to the Dashain Festival begins. He also maintained that during the festival period positive message must be imparted to the people as regards the unity and consensus between the political parties is concerned. “Lack of unity and consensus will only hurt the peace process and block the constitution drafting”, he added. He also claimed that local and foreign powers were trying to impede the peace process and halt the constitution drafting. Mr. Khanal was addressing a gathering of the UML cadres in Fikkal of Ilam District, September 19, 2009. Mr. Khanal also warned against the likelihood of the Army Rule if the Peace Process and Constitution drafting process suffer as a result of the continued political wrangling amongst the major political parties. He said that the counter revolutionaries have become excessively active in the recent days.
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Source: www.telegraphnepal.com
Dahal threatens UN-assisted revolt Maoist Chairman Pushpa Kamal Dahal on Saturday threatened a revolt with support from UN if the political parties treated his party like a toy. “If there is agreement by Dashain-Tihar festivals, a national government under the leadership of the Maoists will be formed,” said Dahal, addressing press meet organized by Maoist-friendly Revolutionary Journalists´ Association, Chitwan at Bharatpur. “If not, there will be a people´s revolt, which will be supported by the UN.” Dahal did not elaborate how or why the UN would support the “people´s revolt” that he mentioned. The UN Charter, claimed Dahal, allows for such revolt if there was no consensus among the political parties. He warned the Nepali Congress and the CPN-UML not to adopt a policy of “repression”. The new people´s revolt, he further said, would be launched from Chitwan and appealed to all to lend support to his party´s crusade for “civilian supremacy” and “national freedom”. The Maoists had launched their “people´s war” between 1996 and 2006 which resulted in the death of more than 13,000 people, most of them civilians. While saying that the NC and the UML had no choice but to address the Maoist agenda, Dahal said that if the parties agreed to discuss the jurisdiction of the president in the parliament, his party would come to an agreement. He added that discussions were being held with the NC and the UML to find a solution to end the political impasse. The Maoist chairman also rejected the charge that the party was not sincere toward writing the constitution within the given deadline and lukewarm to integration of Maoist combatants. Source: www.myrepublica.com Date: September 19, 2009
RPP-N demands referendum on monarchy and Hindu state Rastriya Prajatantra Party Nepal (RPP-N) has submitted a memorandum to Constituent Assembly (CA) chairman Subash Chandra Nemwang demanding a referendum on the fate of monarchy and whether Nepal should be a Hindu state with signatures it collected from various people in the country during a month-long campaign, Friday.
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RPP-N has claimed more than two million persons have signed the memorandum. Hundreds of royal supporters rallied from Kathmandu's heart Basantapur to the CA building in Baneshwar before submitting the memorandum. Receiving the memorandum, CA chairman Nemwang said he would present the memorandum before the CA.
RPP-N organised a corner meet after submitting the memorandum. Addressing the corner meet RPP-N chairman Kamal Thapa said, no one has the right to decide on issues of public importance without 'asking' the people. We want a public referendum to decide on the fate of the monarchy and whether Nepal should be a Hindu state before the new constitution is completed, said Thapa. Nepal had transformed itself to a secular republican state from a Hindu kingdom after the CA polls last year. Source: www.nepalnews.com
SC allows eight army generals to withdraw petition Supreme Court (SC) has allowed eight Brigadier Generals of Nepal Army to withdraw the writ petition they filed on March 23 against the erstwhile government for not extending their term, Friday. A division bench of justices Krishna Prasad Upadhyaya and Prem Sharma allowed the generals to withdraw the petition as per the generals’ request. The generals had jointly filed an application at the SC Tuesday requesting to withdraw the petition saying their demand had already been met after the present government extended their terms. Brigadier Generals Nara Bahadur Kandel, Nara Bahadur Rawal, Kumar Budhathoki, Pawan Bahadur Pandey, Pradip Bikram Rana, Shiva Kumar Poudel, Ramesh Bista and Raju Pratap KC had jointly filed a petition on March 23 challenging the Maoist government´s March 18 decision to retire them. Source: www.nepalnews.com
Nepal PM towards US, to meet Obama and Gordan Brown in New York Nepal’s Prime Minister Madhav Kumar Nepal is embarking upon a trip to the US to attend the 64th General Assembly of the United Nations, today, September 20, 2009. The Prime Minister is leading a 23 member delegation to New York.
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His 23-member entourage comprise of his political aides, Foreign Minister Sujata Koirala, foreign Secretary Gyan Chandra Acharya and some party mouth piece journalists. PM Nepal is scheduled to address the UN General Assembly on Saturday 26 September, 2009. PM’s official secretariat reveals that the PM’s speech will mainly focus on, among others, Nepal’s Current Political Situation and Climate Change and its impact on Nepal and beyond. The Prime Minister is also scheduled to meet President Barrack Obama of the US and Prime Minister Gordan Brown of the UK. It is expected that the US President Obama is likely to pressurize Mr. Nepal to buy the US manufactured Boeing Aircrafts for the state owned Nepal Airlines-formerly known as Royal Nepal Airlines. The Government of Nepal is planning to buy wide body aircrafts for tourism year 2011. While in New York, the Prime Minister will also participate at a program organized by the World Health Organization. On Saturday, the Prime Minister called on Dr. Ram Baran Yadav to brief the President of his visit to New York. The meeting took place at the President’s official secretariat Shital Niwas in Kathmandu. The Prime Minister on Saturday, September 19, 2009, also held discussions with the heads of the government security organs and took note of the security situation prevailing in the country. “The meeting with the security heads, Nepal Army chief, Armed Police Chief and General Police chief, concentrated mostly on the issue of Prime Minister’s likely meet with President Barrack Obama while in the US” say reports. Defense Minister Bidya Bhandari and Home Minister Bhim Rawal were also present at the meeting. It was earlier reported that the US takes Nepal seriously as regards its effort to combat terrorism in South Asia was concerned. Robert Scher, the US Assistant Secretary of Defense for South and East Asia who was in town for a two day routine visit, in his meeting with the Chief of the Nepal Army Mr. Chatra man Gurung and Home Minister Bhim Rawal had opined that Nepal’s role was significant in combating terrorism in South Asia Source: www.telegraphnepal.com
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POLICY: Winter power cut of only 10 hrs daily likely The government has claimed that people will have to face power cuts of up to 10 hours a day coming winter. Last year people had to put up with 20 hours of loadshedding a day during the driest season. Nepal Electricity Authority (NEA) had imposed 20 hours a day power cuts even when the public utility officially announced just 18 hours daily outage. “We will try and bring down the power cuts to 8-10 hours a day this winter,” Minister for Energy Dr Prakash Sharan Mahat claimed, adding, “This will be possible through upgrading and maintenance of our existing projects and thermal plants, 50-60 MW additional power import from India and generation of a further 50-100 MW through the establishment of another thermal plant with a German grant, among other options.” Source: www.myrepublica.com Date: September 20, 2009
Govt mulls new pricing policy for petroleum products The government is thinking of enforcing automatic pricing mechanism (APM) to bridge the import-sales price gap, which has started inflicting losses to state-owned Nepal Oil Corporation in its fuel trade from this month. If the mechanism is implemented, consumers could face a hike in the prices of major petroleum products after Dashain and Tihar festivals. “We will soon adopt automatic pricing policy and mechanism in the petroleum sector, and will start adjusting prices in line with the international trend as soon as the festive season ends,” said Minister for Commerce and Supplies Rajendra Mahato. The plan is still under discussion. It is also yet to be approved by all the parties in the government. Despite recognizing the importance of APM, political leaders—have always shied away from its implementation because of the resistance from the parties in the opposition. Officials, however, said they are left with no other choice. The ministry has pushed for the enforcement of mechanism, citing huge losses the country suffered over the last four years and subsequent fuel crisis that gripped the nation. It argues that APM is necessary to avoid re-emergence of similar situation. Owing to poor commitment of the government and petty political interests of parties in the opposition, Nepal has suffered a net loss of over Rs 20 billion in petroleum trade so far. When the state-owned Nepal failed to pay the dues to the Indian Oil
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Corporation, people were forced to queue up at pet—ol pumps for days to get a few liters of the fuel in the past. “If the current price trend stays for long and parties continue to act insensibly, nobody will be able to prevent another petroleum crisis from arising soon. We must let go the state control on fuel price,” said Mahato, trying to convince the lawmakers at the Public Accounts Committee of the parliament. Earlier, the government had principally agreed to adjust the prices in line with the import price trend after the oil prices dropped from $146 a barrel in July 2008 to $36 a barrel in January 2009. But the decision came without adopting a proper ´pricing formula´ and ´price band´ -something experts think is very necessary to end the state monopoly and induct private players into petroleum business. As a result, Nepal Oil Corporation (NOC) complied with the decision till the import prices receded. Once the prices started to go up, it stopped adjusting the prices and again turned to the government to take the decision. “We had authority to slash prices only. When the import prices rally, the government keeps mum to our hike proposal. Hiking petroleum prices is still a political decision,” a senior NOC official told myrepublica.com. However, Mahato said the government was serious about enforcing the APM this time round. Source: www.myrepublica.com Date: September 19, 2009
E-security against fake documents, official stamps The growing tendency to forge court-ruling documents and use fake official stamps and letterheads has made the government decide to introduce an e-security system soon. A cabinet meeting recently took the decision to this effect in a bid to check government documents including court rulings, government stamps, letterheads, official translations and other documents for authenticity. Following the cabinet decision, the Ministry of Law and Justice has started work on developing such a system. "An authenticity checker (electronically developed esecurity card) will tally and check documents to see if they are authentic, Law and Justice Minister Prem Bahadur Singh said, adding, "The tool will be provided to offices concerned and one can instantly carry out checking in case of any doubt." Taking up a proposal of the Ministry of Law and Justice, the cabinet has also formed a task force to make necessary preparations for implementing such a system. The
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cabinet instructed the law ministry to implement the e-security system as soon as possible through a reliable mechanism. An investigation team at the law ministry had earlier found several cases of courtruling documents being faked, the use of fake official stamps and also a tendency to use duplicate letterheads and forged translations. The team had recommended to the government to take necessary steps to curb such tendencies through the introduction of an e-security system. Such a system will be in use mainly at public offices concerned such as land revenue, transport and management, immigration, district administration offices and village development committee offices. The authenticity checker will read the documents and find out instantly whether suspicious documents are original or duplicated. "Conventional government office stamps can be copied," Minister Singh said, adding, "But such stamps, letterheads, documents and court rulings cannot be copied, modified or duplicated once they are checked by an electronic card." Minister Singh said the authenticity checker (e-security card) will be easily accessible to all the offices concerned. The electronic card will read hidden letters and symbols in the documents. It will also check stamps to see whether they are original or duplicates. "There will be no chance of any business forging stamps and letterheads" Singh told myrepublica.com. If any court-ruling document is found to be suspect, the card will read the copy of that document and instantly determine if it is original. Similarly, the e-security card can read other documents found to be. Source: www.myrepublica.com Date: September 20, 2009
BANKING: Banks' loans in realty triple in two years Despite price volatility and central bank´s wariness, commercial banks´ lending in the housing and real estate business has more than tripled over the last two years. Latest statistics of Nepal Rastra Bank (NRB) shows that commercial banks´ loans to residential construction and real estate sector have jumped to Rs 59.72 billion in July 2009. The figure was Rs 37.14 billion in July last year and Rs 18.87 billion in July 2007.
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The figure soared most sharply in the last fiscal year and despite NRB´s warning to the banks to refrain from investing on the sector, given the unnatural rise in the prices of land and houses. Realty prices have more than doubled during the period. Of the total loans, commercial banks have pumped in a total of Rs 34.95 billion in the construction of residential houses, issuing fresh loans of well over Rs 8.50 billion in 2008/09 fiscal year alone. Investment growth in the real estate business too matches well with the boom the sector went through during the period. The figure of investment jumped to almost Rs 25 billion as of July 2009. With more than two dozen housing companies unveiling stand-alone houses and apartments, investment in real estate crossed over Rs 14 billion in the last fiscal year alone. Total loans going in real estate sector was just around Rs 2.5 billion till July 2007. Officials at Department of Land Reforms and Management attributed the growth to rapid migration and also to the change in lifestyle of growing high-end and middle income groups. While migration and preference to live in highly opportune and secure Kathmandu valley soared residential constructions, sharp growth of professionals and high-end middle income groups, who preferred developed houses and apartments over self constructed buildings, caused the boom of real estate. "There is a distinct dichotomy in the way the sector boomed. First it is the forced migration and secondly, preferred migration and shift in lifestyle by choice of the able and better-earning segment of the society," said Raju Basnet, planning officer at the Department. While the former is creating unorganized residential clusters, latter is giving rise to organized modern-amenities equipped residential areas and apartments. This is set to dramatically change the landscape of Kathmandu in the next five to 10 years. The demand for loans has opened a strong investment avenue for the banks and financial institutions. Besides, they argue that the investment in the sector remains well within their lending limits. Thanks to this change in living standard and also soaring spending capacity of the people, the commercial banks have found yet another lucrative avenue to invest: malls and departmental stores. The NRB report states that commercial banks have invested well about Rs 7 billion in non-residential constructions, including modern shopping buildings and malls as of the end of the last fiscal year. This figure too is three-fold rise in investment over the span of two years, just as in case of investment growth on housing and real estate. Commercial banks had invested just about Rs 2 billion in non-residential construction till July 2007.
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Banks loans in realty sector (Rs in billions) July 2007 July 2008 Residential construction 16.38 26.41 Real estate 2.48 10.73
July 2009 34.95 24.76
Source: www.myrepublica.com Date: September 20, 2009
Relief for strapped NDB depositors Troubled Nepal Development Bank’s (NDB) depositors might be able to celebrate Dashain with an easy mind as Patan Appellate Court yesterday directed Nepal Rastra bank (NRB) to let them withdraw a minimum amount from their deposits. The court has asked NRB to let worried depositors withdraw Rs 50,000 — 50 per cent of their deposit — if their deposit is Rs 1,00,000. “In case of more than Rs 1,00,000 deposit, they can still withdraw 50 per cent but not those with above Rs 2,00,000 deposit,” said Nepal Bikash Bank Peedit Sangh president Kirti Madan Joshi. “The letter wil reach NRB on Sunday and it will decide when to let us withdraw our deposits,” an elated Joshi said adding that the NRB governor might decide their fate on Sunday. “If NRB permits us to withdraw, depositors with savings accounts and fixed — whose account has already matured — can withdraw according to the court directive,” he added. The court has heard the case after Investigation Officer T R Upadhyaya submitted his report on Wednesday. Upadhayay has recommended the revival of NDB as the Badri Bhattarai-Nabin Pun group has given bank guarantees equivalent to Rs 340 million — Rs 240 million and Rs 100 million each. He has also argued that the liquidation of the NDB might hit the economy and encourage capital flight. Though he has asked the court to clarify the definition of small depositors the court is silent on it and in turn has asked NRB to make arrangements for the withdrawal of deposits before Dashain. The court has also asked the central bank to release the NDB employees’ salaries and their Dashain bonus. There are around 30 employees including those in NDB’s Pokhara branch office and the head office at Kamaladi of Kathmandu.
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Based on the recommendations by Upadhyaya, the court will decide whether to revive the bank or send it into liquidation after Dashain. The recommendation has said that in case of revival, the institutional depositors like Nepal Army and Employment Provident Fund will get their money back in three years. According to Upadhayay’s recommendation, the settlement of Non-Performing Assets (NPA) and Non-Banking Assets (NBA) with extra capital injection can revive the bank. “The bank can be revived with internal resources (Rs 274.64 million) and Rs 320 million capital injection from the Bhattarai-Pun Group,” he said. Bhattarai — the current promoter — has given a Rs 240 million bank guarantee through Kumari Bank. Pun — the son of ‘controversial’ former NDB chairman Uttam Pun — has given a Rs 100 million bank guarantee through Kist Bank.However, NDB has also to settle its NPA — Rs 110 million with Holyland School, Rs 90 million with Nepal Cooperatives Ltd and Rs 80 million with Gurkha Hydropower for its revival. The first development bank of Nepal has 19,865 shareholders and around 4,000 depositors. Patan Appellate Court appointed Upadhyaya as investigation officer on July 29 as per the Insolvency Act 2007. This is the first of its kind of case in the financial history of Nepal in which NRB sought the court’s approval to sent a bank into liquidation. Source: The Himalayan Times Date: 2009-09-19 NBL reinstates four branches Nepal Bank Ltd (NBL) has resumed services from four branches, which are among the branches that were closed during decade-long Maoist insurgency, for the benefit of service seekers. The branches in Surunga and Gauradaha of Jhapa district, Barahathawa of Sarlahi and Jitpur of Bara district were inaugurated separately on Thursday. The bank also launched ATM service at its Biratnagar city office. Dr Pushpa Raj Rajkarnikar, coordinator of the bank management committee, inaugurated Surunga and Gauradaha branches as well as ATM service. Ramesh Prasad Sharma, member of bank management committee, opened Barahathawa and Jitpur branches. The bank has stated that it is planning to open ATM services through 21 more branches before the bank´s 73rd anniversary that falls on November 15 this year. The country´s oldest bank has been providing service through its 105 branches. Source: www.myrepublica.com Date: September 19, 2009 Businesses nosedive amid cash shortages
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DOLAKHA, Sep 20 - Short supply of cash has hit the local businesses hard. According to shopkeepers, the business has gone down by up to 75 percent, affecting traders of garments, jewelry and grocery in particular. The market used to remain crowded 15 days before Ghatasthapana (first day of Dashain festival). "But, the shops saw thin crowd till the day of Ghatasthapana on Saturday," said Govinda Shrestha, proprietor of Pashupati fancy. Nepal Bank Limited (NBL) has stopped making payment for cheques with amount above Rs. 5,000 for a week. About 4,000 civil servants, teachers, army men and police working in the districts have failed even to receive their salary. Some of them have relocated the place to receive salary at their home town/villages. People have failed to get back their deposited money in the banks. "The government employees used to spend their money for Dashain shopping in Dolakha," said Rameshwor Manandhar, president of Dolakha Chambers of Commerce and Industry. "Millions of rupees that used to be spent here were not spent this year." People also gave up ordering for new jewelry as they failed to receive money from their banks. Deepak Dhanuke, secretary of Nepal Gold and Silver Association, Dolakha, said they have been able to sell jewelry less than 30 percent against the figure of last Dashain. The shortage of money in the banks has hit hard the sewing business as well. Nabin Nepali, proprietor of Nabin Tailor, said he was not feeling if Dashain was approaching near as he has not received any big order for stitching. Manager of NBL at Charikot Sundar Shrestha blamed the NRB for not supplying notes to the bank. "We have no option except to listen to the complaints of customers given the NRB's failure to supply notes in time, “he said. Source: www.kantipuronline.com Date: September 20, 2009
BUSINESS & ECONOMY: FM proposes separate legal mechanism for PEs Finance Minister Surendra Pandey forwarded a proposal to create a separate legislation to deal with Public Enterprises (PEs), which are entrapped in financial crisis, thus becoming a huge burden on the national economy. FM Pandey reportedly came up with this proposition while responding to the lawmakers' concern over the alarming financial health of PEs at the meeting Public Accounts Committee (PAC) of the legislature-parliament. PEs are reeling under severely ineffective management and swelling liabilities.
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FM Pandey also pointed out the need to bring PEs under a single umbrella to inject fresh life into them. Even though the government has invested a great deal amount to streamline the modus operandi of PEs, there have not been any tangible results. Minister Pandey also urged lawmakers to chalk out clear-cut guidelines to govern the PEs fruitfully. The government has so far invested Rs 166 billion in the form of shares and loans in 36 PEs. But, depressingly, only 14 out of them are making profit. Source: www.nepalnews.com
NT cuts SMS rates for festive season Starting Thursday, Nepal Telecom (NT), the state-owned telecom service provider, will be reducing SMS rates by half for the period of the Dashain-Tihar festive season. NT said the reduction will be valid on its GSM and CDMA mobiles services between September 24 and October 7. "We will provide the 50 percent festival discount on charges for SMS between NT´s mobile phone services. The charges for SMS to other service providers´ phone numbers will remain as it is now," NT spokesperson Surendra Thike said. The reduction is valid for both the pre-paid and post-paid lines in NT´s GSM and CDMA services. The regular charges on NT´s SMS stands at Rs 1 for each SMS, excluding taxes. The charge for each SMS goes up to Rs 1.25 after including VAT. During this the period of the offer, mobile users will be charged Rs 0.62, including all other charges per SMS, NT said. Source: www.myrepublica.com Date: September 18, 2009
Irregularities continue to mar NAC Nepal Airlines Corporation (NAC), the national flag carrier, has more often than not been marred by embezzlement and irregularities. The latest episode in the corporation only corroborates the fact the NAC continues to be dogged by gross financial irregularities. Internal audit of this government-owned entity has lately unearthed the trend of corruption in the procurement of spare parts and other technical equipments.
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A report in Nepal Samacharpatra says the NAC is being duped by way of artificial doubling of the actual costs of spare parts and other goods. A letter prepared by the Internal Auditing Department of the NAC mentions," The price of main tire with the original cost of US $ 780 per piece has been inflated to US $ 1,475 and the US$ 575 nose tire swelled to US$ 1,010. This exposes financial embezzlement in the Corporation." This letter was forwarded to the Engineering Department within the Corporation. The letter has asked the Department to furnish justification regarding lack of required number of signatures of concerned officials while preparing the purchase order for equipments. Similarly, the Engineering Department has also been strictly quizzed about its decision to buy the tires from the new Hong Kong-based company Top Cast instead of the regular one, among other consistencies. According to sources, there has been no information about the spare parts worth US$ 27,800 the Engineering Department had sent to China a year ago for maintenance. Sources also claim that the malpractices on the part of its own unscrupulous officers are further bleeding the already anemic NAC. Source: www.nepalnews.com
Spice launches new set Teletalk Pvt Ltd, the sole authorized distributor for Spice Mobiles in Nepal, has launched Spice M-5252 handset under the Spice Mobile BIG series, which is one of its in the series of multi-SIM category sets. A press release issued on Saturday states that M-5252 is double packed with big features, including reasonable price with advantage of two GSM connections in the same phone. Some of the features of the set are One-Key access with two inch TFT big screen, motion music, motion sensor and motion wallpaper besides wireless FM and WAP feature. Other features of M-5252 include Big Battery, Big 8 GB expandable memory and One touch Dual LED torch among others. Source: www.myrepublica.com Date: September 19, 2009 Ktm-Hong Kong flights to increase HONG KONG: Dragonair Thursday announced new arrangement for its services to Dhaka and Kathmandu starting from October 1 which will offer passengers travelling
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to and from Nepal a greater number of flights per week to choose from. The night flight to Kathmandu from Hong Kong and the return same midnight flight from Kathmandu will both operate via Dhaka. The new arrangement will bring improved service benefits to passengers travelling between Hong Kong and Kathmandu with frequency increasing to five times a week from the existing thrice-weekly service. Moreover, the flight will be operated using an A330 aircraft which offers greater capacity for both passengers and cargo. "We are excited to announce the increased frequency for our flights to Kathmandu, which will mean more convenience as well as better service quality for passengers travelling to and from Nepal," says Dragonair Chief Executive Officer Kenny Tang. “The increased capacity will definitely play a part in helping to meet the Nepal Tourism Board's target of one million tourists visiting in 2011. The airline will also help increase the number of inbound tours to Nepal via Hong Kong using the extensive worldwide network offered by both Dragonair and sister airline Cathay Pacific,� Mr Tang added. Source: The Himalayan Times Date: 2009-07-23 Number of migrant workers declines Even as the number of Nepali workers leaving the country for foreign employment has increased during last five months, the outflow between mid-August and midSeptember declined by 8.70 percent to 22,636 from 24,795 last year. According to the Department of Foreign Employment (DoFE), 17,702 persons left for job through foreign employment agencies in various 17 labour destinations. Similarly, 4,934 individuals left for job by their own personal contacts during the period in 34 countries worldwide. Last year in the same period, a total of 24,795 individuals including 4,886 (by their personal contacts) had gone for foreign employment. "Compared to last year, the total number has decreased," said Uma Shankar Joshi, a director at the DoFE. "But the numbers of outbound workers have increased in recent months because of weakening financial crisis and increasing unemployment in the country." Affected by the global financial crisis, the number of workers leaving for foreign employment through the agencies had decreased to 7,819 individuals during midApril to mid-May. After maintaining the upward trend the total outbound number reached 15,541 in mid-July to mid August. According to the country wise data compiled by the DoFE, Saudi Arabia absorbed the highest 7,316 individuals during mid-August to mid-September. Similarly, Malaysia, Qatar, the United Arab Emirate and Lebanon took 5,155, 2,482, 1,737 and 554 individuals through Nepali foreign employment agencies respectively.
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Foreign employment entrepreneurs said that the monthly departure number would further increase in future because of the significant rise in labour demands from major destinations such as Malaysia and Saudi Arabia. "The demand has been increasing from Malaysia after weakening of recession and waiver of levy," said Som Lal Bataju, vice-president of Nepal Association of Foreign Employment Agencies. "Demands from new destinations like Libya, Romania and Algeria will also prop up the outbound workers." Source: www.kantipuronline.com Date: September 20, 2009 About 5% Nepalis have insurance coverage Almost five percent of Nepal's population has got life insurance coverage. Over one million Nepalis have got insurance coverage with 463,000 new policies issued last fiscal year 2008/09 alone. Chairman of Insurance Board (IB) Phatta Bahadur K.C. said over four percent of the population has already got life insurance coverage. Eight out of nine operating life insurance companies raised premium as high as Rs. 1.99 billion through new insurance policies in the last fiscal year 2008/09, marking an increase of 138 percent against the figure of the previous year. These companies had collected Rs. 836.68 in the previous fiscal year 2007/08. The government-owned Rastriya Beema Sansthan has however not submitted its financial results to the IB as it has not had its transactions audited for the last several years. "The increase in the premium is an encouraging trend," said K.C. "It is an indication that there are still enough room for further insurance coverage in the market."Insurance companies say the business grew after they expanded their services to the rural areas. Ramesh Kumar Bhattarai, managing director of Asian Life Insurance Company, said the insurance coverage in the villages made up nearly 70 percent of the businesses. The insurance companies have intensified their campaign in the villages, according to him. "We have already reached 70 districts," he said. The companies have intensified their activities in rural areas targeting the remittance the villagers are receiving. Chief Executive Officer of Nepal Life Insurance Company (NLIC) Manoj Bhattarai said the remittance economy of villages has motivated companies to expand their businesses there. Asian performed the best in terms of collection of premium last year. It collected Rs. 434.6m through the sales of 136,000 policies last year. The NLIC stood second with collection of premium at Rs. 414.2 million through the sales of 74,000 policies. Likewise, the companies raised Rs. 5.73b in premium through the renewal of policies. American Life Insurance Company topped in terms of collecting premium through the renewal. It collected Rs. 1.28 billion last year.
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The number of policies the companies issued increased by 218 percent last year against the figure of previous year. The eight companies issued 463,000 policies last year against the figure of just 145,000 the previous year. Life insurance of those who go for foreign employment covered more than 50 percent of total new policies. "That's why, foreign employment has become very important sector for insurance business in Nepal," said Bhattarai of Asian. Source: www.kantipuronline.com Date: September 20, 2009
MARKET:
Gold price recedes as rupee gains After a brief tumble, Nepali currency bounced back against the US dollar this week. The gain is attributed to a drop in the value of greenback against Indian currency, with which Nepali currency is pegged. Gold price reached a new record in the domestic market on Thursday, before falling down on Friday largely due to the appreciation of rupee. Currency Nepali currency appreciated by 75 paisa against a US dollar, rendering imports cheaper but slashing income earning for exporters and remittance receivers over this week. A dollar was exchanged at Rs 77.22 on Friday. Nepal Rastra Bank had fixed the exchange rate of a dollar at Rs 77.97 on Sunday. As demand for dollar went through rapid upheavals in India, rupee gained marginally on Monday, but slipped to as low as Rs 78.32 per dollar on Tuesday. It gradually bounced back over the remaining days, gaining Rs 1.10 against a dollar on Friday, as compared with Tuesday. Rupee, however, weakened against euro by 4 paisa, but recorded a whopping gain of Rs 2.53 against a pound sterling during the period. On Friday, a euro was exchanged at Rs 113.89, while a pound sterling was valued at Rs 127.70. Bullion Gold price eased on Friday after creating a new record on Thursday. The fall on Friday is due mainly to fall in international price and fall in exchange rate of dollar on Friday. Domestic bullion market closed on Friday with gold price at Rs 25,505 per ten grams. Gold became dearer only by Rs 40 per 10 grams over the week. Gold dealers had opened the market at Rs 25,465 per 10 grams on Sunday. As rupee slipped, gold price soared to Rs 25,550 per 10 grams on Wednesday and Rs 25,600 on
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Thursday. But it fell by Rs 95 per 10 grams overnight on Friday amid appreciation of Nepali currency vis-à-vis dollar. The price of silver, however, continued to soar and touched a record high of Rs 437 per 10 grams on Friday. As Nepal meets domestic bullion requirements through imports, any fluctuation in international prices directly impacts the domestic prices. Source: www.myrepublica.com Date: September 18, 2009 Improved calculations and high dividends draw attention The gloom in the market faded slightly this week as investors´ confidence went up due mainly to improved valuations. As predicted last week, the Nepse index (+2.14%) took an upturn on the first three days of the week and then derailed Wednesday onwards to close at 627.97 points. This is the first weekly gain since the last week of July. However, the recovery is weak in view of the transaction volume (Rs 438,113,100) which dropped by 13.30 percent as compared with the previous week´s transactions. The announcements of Global Bank (+Rs 75) to allot 2:1 right shares and Laxmi Bank (- Rs.110) to issue 7 percent bonus shares and 5:2 right shares boosted the Commercial Banking sector (+3.62%). Additionally, Development Credit Bank (+Rs 4), which declared 5% bonus shares, and Citizens Bank International (+Rs.53), which announced 10% cash dividend and 1:1 rights shares, also supported the gains in the sector. Everest Finance (+Rs 65) topped the gainers´ chart along with Kaski Finance (+Rs.31) but the Finance sector (-0.45%) still observed a fall. Similarly, Clean Energy Development Bank (+Rs 111) posted a big gain but the loss in the values of Business Development Bank (- Rs 343) and Ace Development Bank (-Rs 37), which declared 5.5% cash dividend, denied a rise in the Development Banks´ index (-2.02%). The decline in the price of shares of Butwal Hydropower (-Rs.19) brought down the Hydropower sector´s index down by 0.21%. Insurance sector (-3.11%) witnessed the biggest slump due to the readjustment in the share price of Rastriya Beema Sansthan (-Rs 342). The demand for Nepal Telecom (+ Rs 11) shares rose this week bringing the ´Others´ index by 2% up. Among other developments in the market in this week, Securities Board of Nepal (SEBON) has called for suggestions from the public to formulate regulations pertaining to Investment Management. Apart from the companies above, Prabhu Finance (+ Rs 6) declared 10.53% cash dividend, United Finance (-Rs.36) declared 12.5% bonus share and 0.65% cash dividend, Reliable Finance (+Rs.103) declared 20% bonus shares and 10% cash dividend and Gorkha Finance (-Rs 14) is offloading 4,500 units of its promoter shares.
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In the banking sector, Everest Bank (+Rs 60) is distributing 7% dividend warrant on its Preference shares and Prime Commercial Bank has allotted its IPO share certificates. Annapurna Bikas Bank (+Rs 21) declared 15% cash dividend. Market activities are expected to be low next week as the festival holiday sets in. However, technical analysis tools indicate that the overall price movements have now stabilized. Source: www.myrepublica.com Date: September 19, 2009 SEBON prepares draft of CDS regulations Securities Board of Nepal (SEBON) -- the capital market regulator-- has prepared a draft regulation of Central Depository System (CDS) that would replace existing manual transactions and enable settlement of share transactions in a scientific and reliable way. “We have sent the draft to India´s Central Depository Service Ltd and Securities Board of India -- India´s share market regulator-- for feedback and comments. We are also in the process of collecting suggestions from experts and stakeholders within the country,” said Surbir Paudel, chairman of SEBON. SEBON has prepared the draft regulation as per the existing Securities Exchange Regulations 2006 in a bid to facilitate opening CDS Company in the country. CDS is aimed at introducing a paperless share transactions and settlement of shares´ ownership through online technology, which would make transactions faster.Under the existing system, investors have to wait at least two weeks to get ownership of shares transferred. The modern technology in share transaction will enable online security transactions and settlements, online keeping of share accounts of investors, online deposits and transfer of shares, distribution of electronic version of certificates of deposits, among others. The draft includes the provision such as opening of separate accounts of investors on the basis of agreement, keeping record of share transactions both online and manually. The draft has provisioned at least five years of working experience, Chartered Accountant or post graduate to become the Chief Executive of the CDS Company and except in a case of permission from Nepal government, CEO of the company would be a Nepali citizen and elected by the board of directors that comprise nine members of which three would be independent. Under the regulation the CDS Company can appoint Depository Participants (DPs) accept deposits of securities including government bonds, share certificates, shares.
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However, such DPs must be listed in the securities market, not included in the black list of Credit Information Bureau, submit audit report for last consecutive three years and have branches in all five development regions. In the CDS Company, Nepal Stock Exchange (Nepse) will be major promoter with 50 percent share where as Citizen Investment Trust and different commercial banks including Himalayan Bank, Nepal Investment Bank, Bank of Kathmandu, Kumari Bank and NIC Bank will have 25 percent stake each. In addition to the government´s investment, India has agreed to provide Rs 140 million to implement the CDS through a public limited company to systematize the security trading in Nepal´s stock market. The government has, in the current fiscal´s budget, announced to introduce CDS by the mid-October 2009. In the beginning, the total paid-up capital of the company would be Rs 300 million. Source: www.myrepublica.com Date: September 19, 2009
Asian Life Insurance to issue public shares The Securities Board of Nepal (SEBON) -- the capital market regulator-- has granted permission to Asian Life Insurance Company to issue 1.08 million units of public share with face value of Rs 100. The company has total paid-up capital worth Rs 360 million, of which 70 percent has been invested by its promoters, said a press release issued by the company on Friday. NIDC Capital Market has been appointed as the issue manager of the company´s Initial Public Offering (IPO). The company said the process for issuing share will be initiated after Dashain festival. Source: www.myrepublica.com Date: September 18, 2009
GENERAL: Maoists ask 25 pc bonus from teachers GORKHA: The Dashain festival brings joys to many. But not for the schoolteachers working in the Gorkha schools. The teachers' plan to revel in this Dashain celebration has been dampened after cadres of Unified CPN-Maoist started collecting forceful donation recently. The Maoists have also issued threats saying that the teachers who failed to comply with their diktat would face their "action".
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Such a "donation drive", which was commonplace during the Dashain in insurgency period, is yet to be shunned by the Maoists although their party already joined the mainstream politics. According to the victimised teachers, the Maoists have asked them to cough up as much as 25 per cent of their Dashain allowance. Other teachers appointed in relief quota and from local resources have also been asked to pay some amount "voluntarily". "The Maoist cadres are threatening the teachers who deny submitting the donation," a teacher said. "So much so, some of our colleagues have also been asked to leave the school or village as they protested against the extortion drive." "The Maoist had threatened to leave the school within 15 days," a teacher who arrived in the district headquarters said. "As we told them that we were yet to get our salary and bonus due to the cash shortage in banks, the Maoists are instead handing over the party's receipt on condition that we give them the money later," a teacher said. The teachers aligned to the Maoist's techers' body -- All Nepal Revolutionary Teachers' Organisation -- are helping the Maoists collect the sum. The teachers said the Maoists imposed the same rule of donation as they are collecting from the teachers affiliated with them. The teachers of the Maoists' body have been submitting a levy equal to 25 per cent of Dashain allowance. The Maoist district secretary Chudamani Khadka 'Prakash' admitted the collection of donation from teachers. "We've asked for financial and physical support from teachers to help in our agitation," he said. He, however, denied any "forceful donation". There are 1,554 permanent teachers in primary level, 276 in lower secondary and 238 in secondary level in the Gorkha schools. Source: The Himalayan Times Date: 2009-09-19 Cyber act for children Minister for Information and Communications Shankar Pokharel said on Friday that the government was introducing a Cyber Act with a view to blocking children's unhindered access to sexually explicit materials on the internet. Pokharel said this at a programme in the Capital to make public the findings of a study conducted by the Child Workers in Nepal Concerned Centre (CWIN-Nepal). Over 82 percent of the surveyed children said they were internet users, according to the study. Of them, 66.4 percent were private school students, while 32.6 percent were from public schools. Ninty percent of the surveyed children conceded to viewing sexually explicit materials occasionally, while 18.9 percent were regular viewers of such materials. A whopping 91.5 percent of the surveyed children said they had heard of bad experiences on the internet. "These findings point to an increment in the abuse and crimes among the children. Therefore, there is an urgent need to take
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measures to protect children from harm," said Sumnima Tuladhar, executive coordinator of the CWIN-Nepal. Public awareness campaign, information on online safety and monitoring and regulation of cyber cafes are the key, said Tuladhar. Referring to increasing crimes and abuses among children in cyber cafes in Kathmandu, Nawa Raj Silwal, Chief of the Metropolitan Police Range Hanumandhoka, said they had set up a separate desk at the police range to deal with women and children-related crimes on the internet. Source: www.kantipuronline.com Date: September 20, 2009
EXPRESSION: The accession protocol Consistent transparency in the trade policy of any country is a key factor for obtaining trade access in overseas markets. The accession protocol is Nepal’s trading constitution. As a result, Nepal cannot turn away from the terms agreed upon which enhance transparency and stability in the legal, policy and administrative system. The accession protocol was a benchmark in maintaining a balance in Nepal’s obligations arising from multilateral environmental agreements and those arising from WTO membership. Nepal will not allow trade in flora and fauna that are restricted by CITES. Nepal had negotiated from the position that it would impose trade restrictions to fulfill obligations arising from different multilateral environmental agreements to which Nepal is a party. Another standard of Nepal’s accession protocol is that the commitments apply only to the obligatory provisions of the WTO. This is the minimum requirement for any country that wants to become a member of the WTO. The entire negotiation process was passed based on personal efforts and the knowledge and information of the negotiators, excepting a few limited studies regarding Nepal’s position on negotiations. There seemed to be a lack of objective research and studies which would have provided justification to negotiate exemptions and provide feedback facilities that could help Nepal during the negotiations. Nepal’s negotiations on WTO membership were carried out by a team that was liable for the entire activities, including preparation of the necessary documents, collection of information, answering approach for information, fact finding and preparation of Nepal’s situation. The conditions of the initial negotiating rights could appear as a weakness. The accession protocol has bound Nepal to use balance of payments measures and an export-import control act to protect Nepal’s trade interests only as they are regular with GATT 1994. Nepal could not go beyond the commitments agreed in the goods schedules for about 2,000 products with India. The original members were not liable to make these types
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of commitments. Nepal agreed to accept a conditional basis to open 11 service sectors and 75 sub-sectors although this was not required in the context of GATS. Even the EU had accepted limited opening for only three service sectors. Most original WTO members have not opened the service sector as Nepal has been required to do. Some of the service sectors like leasing and video tape rental services were opened to trade off the interests of the negotiating countries. Nepal had to face a limitation on its rights by the agreement on agriculture. The agreement on agriculture confirms that least developed country members are not required to undertake any reduction commitments. Despite such arrangements, Nepal had to undertake a reduction commitment relating to the agriculture development charge and is required to remove it within two to 10 years. Similarly, Nepal had to make commitments regarding domestic and export subsidies in the agriculture sector at the current level. Such provisions during the accession negotiations tend to concentrate the rights of Nepal under the concerned article of the agreement on agriculture. The private sector in Nepal could not adequately help in the accession negotiations by producing detailed research and studies. If there had been adequate support from the private sector, the negotiation process could have been more effective in preserving concession benefits for Nepal. The negotiators had argued for a 60 percent average limit tariff rate on farm products, but that could not be reasonable due to various reasons including lack of research-based data and information of support from the private sector. Concerns related to UPOV show that the negotiating team was diplomatically expressing lack of knowledge about the core and the implications for Nepal while Nepal’s private sector was assertive in showing negative implications relating to the protection of new types of plants. The accession negotiations and protocol missed a context that could include the concerns discussed at the Third UN conference on the LDCs held in Brussels, Belgium in may 2001. The Brussels Declaration stated that the developed countries would aim to improve preferential market access to the LDCs by working towards the objective of duty-free and quota-free market access for all LDC products in the developed countries’ markets. This has been accepted as a base for promoting trade interests of the LDCs. Though Nepal raised the main concerns, they could not be incorporated in the accession protocol. The accession proposal did not incorporate any provision that special and additional differential treatment should be enjoyed by Nepal. Similarly, the accession proposal failed to outline areas where Nepal enjoyed special and differential treatment. The negotiation process for Nepal was very lengthy, bulky and taxing as it was accomplished in about one and a half decades. Implementation of the WTO commitments covered a wide range of areas in the economic and trade system, legal regime for adjudication, transparency, competitive service sectors, strengthened fair and efficient administrative mechanisms, and encouragement of FDI and technology transfer for quality production.
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Implementation of these wider areas of government and governance requires a steady belief and strong commitment to the multilateral trade regime as a medium of growth and development and readiness for change. Likely, the implementation process demands commitments in terms of both time and money. Some of the major consequences of implementing WTO commitments are remarkable. Nepal has opened and liberalized its economy since the 1990s and the commitments in the accession proposal are proof of further liberalization which requires accepting the norms of transparency, forecasting, governance, rules, fair, just, reasonable and efficient state mechanism and a disciplined policy regime. Due to various weaknesses in the system of governance, the possibility of system friction is likely between the demands of the WTO and the delivery of public services related to trade in Nepal. Building the strength of the responsible agencies and institutions are matters for implementation of the commitments being undertaken by Nepal. Therefore, it is necessary to enhance the capacity of such agencies and institutions. Capacity building requires HRD, skill and know-how, logistics support, knowledge development and information data bank, research and studies and coordination between different agencies and institutions. Source: www.kantipuronline.com Date: September 19, 2009
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