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R&D Economic Research & Business Development

Date: August 27, 2009

Highlights

Chairman of UCPN (Maoist) Pushpa Kamal Dahal has suggested Vice President Paramananda Jha to quit from his post rather than being drawn to controversy.

"I am ready to resign as per the verdict of the Supreme Court, "Vice President Jha is reported to have said on Wednesday when President Ram Baran Yadav reiterated his appeal to the vice president to take his oath of office in Nepali as per the Supreme Court verdict.

A meeting called by Prime Minister Madhav Kumar Nepal in Singha Durbar Wednesday to seek a consensus for the election of Constitutional Committee head has ended inconclusively after Nepali Congress and Unified CPN (Maoist) both claimed for the position of CC chairperson.

CPN-UML Chairman Jhalnath Khanal has claimed that the tasks of taking peace process to a logical conclusion and drafting a new constitution would be difficult without participation of the main opposition party, UCPN (Maoist).

The government has recommended President Dr Ram Baran Yadav to appoint Acting Chief of Army Staff Chattraman Singh Gurung to the post of CoAS of Nepal Army from September 11. The Cabinet also decided to extend the terms of Major Generals Krishna Sumsher Jung Bahadur Rana, Chet Man Singh Basnet and Brigadier General Bikash Bikram Shah.

European Commission (EC) has provided Rs 652 million (EURO 5.95 million) to Nepal for implementation of a project under the Nepal Peace Trust Fund (NPTF). The Ministry of Finance and the EC signed the agreement to this effect on Wednesday.

The World Bank (WB) has agreed to provide Rs 400 million to blacktop rural roads of various places of Kaski district. Some four roads linking the Pokhara valley and other rural areas of the district will be black topped with the financial aid of the bank.

The Nepal Government has decided to give Non-Resident Nepalese (NRN) a 10 year visa for staying in the country. According to Foreign Minister Sujata Koirala, the country's cabinet in its recent meeting adopted a regulation in this regard.

Nearly 15 years after its establishment, the National Human Rights Commission (NHRC) is likely to get legal authority to publicize the names and addresses of persons and institutions as human rights violators if they are

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found not implementing, abiding by and following its recommendations, decisions and directions. •

Minister for Peace and Reconstruction Rakam Chemjong on Wednesday flayed United Nations Mission in Nepal (UNMIN) for being unable to effectively monitor and supervise the Maoist arms and army as it has been mandated to do.

The number of telecom service subscribers has reached 6.3 million with the tele-density touching 22.94 percent as more Nepalis take to using the phone.

India has agreed to support in establishing Central Depository System (CDS) in Nepal.An agreement on technical support of IRs 92 million was signed during the recent visit of Prime Minister Madhav Kumar Nepal to India between Nepal and India’s Central Depository Services.

Kakkarbhitta, Traders and local political leaders here have demanded that the government scrap the recently introduced tax policy terming it as "unequal" for small hotel entrepreneurs.

Migration from Siraha and Saptari to Biratnagar is on the rise due to growing insecurity in the Tarai districts. As a result, the realty business in Biratnagar has increased with more houses being built.

It’s now two months that the per litre price of milk supplied by farmers has been increased on a provisional basis but they are still not satisfied and are demanding another hike.

Sugar prices have shot up in the market, as retailers are showing less interest to buy sugar distributed by state-owned Salt Trading Corporation (STC) and National Trading Ltd (NTL) citing nominal profit margin.

With the recession in the U.S. and the EU showing signs of slowing down, Nepali garment manufacturers have started to receive fresh inquires and orders from their overseas buyers.

The Non Resident Nepali Association (NRNA) has provided Rs 1.5 million for the expansion of the activities of Trade School. NRNA president Dr Upendra Mahato handed over the cheque for Rs 1.5 million to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Kush Kumar Joshi amid a function here today.

After a seven-day downhill run, the Nepal Stock Exchange (NEPSE) turned around with a 3.44 point gain on Wednesday. Among the 20 commercial banks listed on NEPSE, Nabil Bank posted the biggest growth with its stock rising by 240 points while Nepal Investment Bank lost the most on the trading floor by shedding 75 points.

Nepal Police is preparing necessary ground work to develop specialized wings within the organization. Once the proposed plan comes into effect, police 2


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personnel will have to work in a particular branch till they are promoted to the post of SSP. This is expected to enable them to develop expertise in the field they serve.

POLITICS: VP gets another quit call KATHMANDU, Aug 26 - Chairman of UCPN (Maoist) Pushpa Kamal Dahal has suggested Vice President Paramananda Jha to quit from his post rather than being drawn to controversy. Speaking at a press meet in Butwal, Rupandehi district, on Wednesday, Dahal said Jha should resign since he has been in the centre of controversy over the language he used while taking oath of office and secrecy. Stating that linguistic issue is quite sensitive, Dahal said Jha had to resign to preclude any kind of controversy over the issue. Maoist chairman spoke his mind over the issue at a time when President Dr. Ram Baran Yadav asked the veep to retake oath in Nepali and Madheshi parties urged him not to do so. "I tendered my resignation from the post of prime minister in the past. He also should follow my footsteps now," said the former prime minister. He, however, said his party was in favour of taking oath in mother tongue. Meanwhile, Joint Struggle Committee for Linguistic Rights suggested Jha to take fresh oath in Maithali. The Committee lambasted the Supreme Court (SC) order stating that it was a conspiracy of the Khas-speaking people against speakers of other national languages. "We have concluded that by reviving the one-year-old incident, the court is conspiring to impose monopoly of Khas language," read a statement issued by the Committee on Wednesday. The Committee also suggests the political parties to amend the Interim Constitution to allow oath-taking in the language of one's choice. www.kantipuronline.com

Nepali VP: Ready to quit as per verdict of Supreme Court KATHMANDU, Aug. 27 (Xinhua) -- Nepali Vice President Paramananda Jha said he is ready to resign as per the verdict of the Supreme Court, state-run daily The Rising Nepal reported on Thursday. "I am ready to resign as per the verdict of the Supreme Court, "Vice President Jha is reported to have said on Wednesday when President Ram Baran Yadav reiterated his 3


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appeal to the vice president to take his oath of office in Nepali as per the Supreme Court verdict. President Yadav called Jha to his office at Shital Niwas on Wednesday afternoon to discuss a way out of the current impasse following the verdict. Vice President Jha Wednesday at a meeting with representatives of a committee working on the rights of linguistic groups, also said he would rather resign than retake oath he took in Hindi following his election to the post. At a time when many parties in the ruling coalition are appealing Vice President Paramananda Jha to take oath in Nepali again, the leader of the main opposition and the single largest party, the Unified Communist Party of Nepal (Maoist) (UCPN-M) chairman, Prachanda on Wednesday suggested Jha to resign from the post. "I resigned from Prime Minister as I found it uneasy to hold the position following the president's move which created dual power. And now, the vice president is asked to take oath again, which he seems to be unwilling to do. There is no constitution provision for taking oath in one's own mother tongue. To be away from controversy, I would suggest the vice president to resign," Prachanda said on Wednesday. Nepali President Ram Baran Yadav Tuesday has advised Vice President Paramananda Jha to respect the Supreme Court order and retake oath in Nepali language. The Supreme Court of Nepal on Sunday ordered Paramananda Jha, the vice president, to take oath in Nepali within a week. If Jha failed to do so, he would no longer remain as vice president, the order ruled. A full bench of the Supreme Court (SC) of Nepal on Aug. 12 ordered Paramananda Jha to take his oath of office and secrecy in Nepali. On July 24, a two-member bench of the SC ruled that oath-taking in Hindi language could not be taken as constitutional and that if Jha wants to continue his office, he needs to take oath in Nepali. http://news.xinhuanet.com/english

Three-party meet on CC head inconclusive A meeting of three largest parties in the Constituent Assembly (CA) called by Prime Minister Madhav Kumar Nepal in Singha Durbar Wednesday to seek a consensus for the election of Constitutional Committee head has ended inconclusively. The meeting became inconclusive after Nepali Congress and Unified CPN (Maoist) both claimed for the position of CC chairperson. At the meeting, PM Nepal proposed the leaders of all three parties to seek a common solution to the CC head and Army Integration Special Committee (AISC) as a package.

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However, the Maoist leaders refused the PM’s proposal. The election to the CC chairperson that was scheduled for August 17 was postponed for August 28 after the three parties requested CA chairperson Subash Chandra Nemwang to do so in order to forge a consensus for the post. Source: www.nepalnews.com Date: August 26, 2009

UML chief: Maoists key players DHANGDI, Aug 26 - CPN-UML Chairman Jhalnath Khanal has claimed that the tasks of taking peace process to a logical conclusion and drafting a new constitution would be difficult without participation of the main opposition party, UCPN (Maoist). "The Maoist party is an important part in the constitution-drafting process. It should not be bypassed," he said, while addressing party activists at Dhangadi in Kailali district on Wednesday. Stating that some political forces are trying to sideline the Maoists from the constitution- writing process, Khanal said the country would plunge into conflict and the regressive elements would gain ground if the Maoist party is discarded. "As for UML, running the government alone is not enough," he said, "the party must take initiatives for forging a national unity government with the participation of the UCPN (Maoist)." Khanal said writing the new constitution will not be possible if the Maoists continue to see Nepali Congress (NC) as its arch-rival. "It's a flaw on their side not to see NC as a progressive political force," he said. He told party cadres that like the aim of all communist parties worldwide, the longterm aim of the CPN-UML is also to establish communism through the path socialism. Khanal also said that the party stands against autocracy, regressive forces and status quoism. www.kantipuronline.com

Cabinet recommends acting CoAS Gurung for top Army post, makes number of other appointments The government has recommended President Dr Ram Baran Yadav to appoint Acting Chief of Army Staff Chattraman Singh Gurung to the post of CoAS of Nepal Army from September 11. 5


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A meeting of the Cabinet held Wednesday reached the decision to this effect. The current CoAS Rookmangud Katawal is on a customary month-long leave prior to retirement on September 9. The Cabinet also decided to extend the terms of Major Generals Krishna Sumsher Jung Bahadur Rana, Chet Man Singh Basnet and Brigadier General Bikash Bikram Shah. Meanwhile, the Defence Ministry is learnt to have suspended the recommendation for promotion of Brig. Gen. Raju Pratap K.C to the post of major general. The ministry took the decision after some disgruntled senior Army officials filed a complaint against the recommendation, according to the Kathmandu Post. They maintain that the decision to promote K.C. bypasses senior brigadier generals who deserve the post. Chief of the Army Staff Rookmangud Katawal had recommended K.C's appointment as head of Financial and Administrative Department. Similarly, the Cabinet has also made a number of other decisions. According to Minister for Information and Communication and government spokesperson Shankar Pokharel, the Cabinet has decided to appoint Dr Kedar Chandra Sharma as advisor of the Ministry of Environment; Tribhuvan University Vice-chancellor Madhav Sharma as a member of the committee formed to recommend the members of the Teachers Service Commission in the vacant positions; and Dr Ram Chandra Adhikari as chairman of Singha Durbar Baidhya Khana Development Board. Likewise, the Cabinet decided to form Foreign Employment Promotion Board. The Cabinet also instructed concerned ministries to introduce relief programs for the people displaced by the floods and landslides in various districts in eastern Nepal. Similarly, in order to review the governments 100 days work performance, the Cabinet also directed all the ministries to submit the reports of the work they have done till now, spokesperson Pokharel said. Source: www.nepalnews.com Date: August 26, 2009

POLICY: EC provides Rs 652 m for peace project European Commission (EC) has provided Rs 652 million (EURO 5.95 million) to Nepal for implementation of a project under the Nepal Peace Trust Fund (NPTF).

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The Ministry of Finance and the EC signed the agreement to this effect on Wednesday. The assistance is provided under the European Commission's 'Instrument for Stability' launched in 2007 with the objective to assist third countries in the area of conflict prevention, crisis management and peace. "The overall objective of the present intervention of the European Commission is to contribute to the consolidation of the peace process in Nepal by supporting through the NPTF the successful implementation of the Comprehensive Peace Accord (CPA) of November 2006 aimed at sustainable peace in complement to other peace building proposals," EC said in a statement. The NPTF, led by the Ministry of Peace and Reconstruction, is a multi-donor fund set up by the Government of Nepal to put into place a collective mechanism in support to the peace process. Source: www.nepalnews.com Date: August 26, 2009

WB pledges Rs 400 million to blacktop rural roads The World Bank (WB) has agreed to provide Rs 400 million to blacktop rural roads of various places of Kaski district. Some four roads linking the Pokhara valley and other rural areas of the district will be black topped with the financial aid of the bank. According to Rabindra Adhikari, Constituent Assembly (CA) member, the roads streching from Pokhara to Bharatpokhari, Kanhukhola to Siklesh, Sarangkot to Naudanda and Dobilla to Bagmara will get a face-lift as per the proposed plan. Similarly, some 7 million of the aid will be used for constructing five suspension bridges in various parts of Kaski apart from preserving the Fewa lake. Source: www.nepalnews.com Date: August 26, 2009

10 year visa for Non-Resident Nepalese in Nepal Kathmandu: The Nepal Government has decided to give Non-Resident Nepalese (NRN) a 10 year visa for staying in the country. According to Foreign Minister Sujata Koirala, the country's cabinet in its recent meeting adopted a regulation in this regard.

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Among other benefits, NRN will now be able to purchase land and houses within the country up to specific amount besides doing business, Sujata said. The government has also decided to issue Identity Cards to the NRNs for their identification. Besides, the new regulation allows them to invest in business and claim the profits they make. This provision will encourage Non-resident Nepalese to make investment in the country, she said. The Association of the Non-Resident Nepalese (NRN) has demanded visa, investment and other facilities for them. However, their demand of dual citizenship has not been fulfilled by the government. The association will hold its fourth Global Conference in Kathmandu from October 13 to 15. http://www.zeenews.com

New Act to give more teeth to NHRC Nearly 15 years after its establishment, the National Human Rights Commission (NHRC) is likely to get legal authority to publicize the names and addresses of persons and institutions as human rights violators if they are found not implementing, abiding by and following its recommendations, decisions and directions. A newly-drafted Act of the NHRC-2066, submitted to the parliament two days ago by the Ministry of Law and Justice, comes at a time when NHRC´s several recommendations and directions have gone largely unheeded. The new provision aims at facilitating implementation of NHRC´s recommendations in the days to come. The NHRC would, however, only be allowed to publicize the names of the human rights violator/s after receiving his/her clarifications on the matter concerned. The NHRC will first ask the violator to furnish clarifications within 15 days for defying NHRC´s order and directions. "If the clarifications are not furnished within the stipulated time," the Act states, "or if the clarification does not satisfy the NHRC, his/her name and also the name of institutions would be publicized as a human rights violator." The Act also empowers the NHRC to recommend to the government not to accept human rights violators for public positions. "If he/she is supposed to be appointed or promoted for any public position by the government, the record of the NHRC would be seriously taken as an assessment," the act states. The NHRC maintained that the newly-drafted Act reflects its spirit and objectives. "The new Act will help to implement our recommendations and decisions," Kedar Nath Upadhyay, chief of the NHRC, told myrepublica.com. The new Act has additionally mandated the NHRC to directly recommend to the government for departmental action against human rights violators.

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As per the new provision, the NHRC would also recommend the government to compensate the victims. Depending on the nature of human rights violation, the victims would be paid a compensation of up to Rs 300,000. Source: www.myrepublica.com Date: 08/27/2009

Peace Minister criticises UNMIN for not doing its work Minister for Peace and Reconstruction Rakam Chemjong on Wednesday flayed United Nations Mission in Nepal (UNMIN) for being unable to effectively monitor and supervise the Maoist arms and army as it has been mandated to do. "Because UNMIN hasn't been effectively monitoring the cantonments, the acts of Maoist combatants venturing out of the cantonments has increased," he said, and cited Maoist combatants leaving their cantonment in Kapilvastu on Monday with weapons. UNMIN has already expressed serious concern at the Kapilvastu incident and said that the act violated the Agreement on Monitoring of the Management of Arms and Armies. Minister Chemjong, who was speaking at an interaction program organized at Reporters Club in the capital city, said that this kind of act of Maoist combatants is clearly in a breach of the Comprehensive Peace Accord (CPA) and all the agreements thereafter. "If the Maoists continue to violate the peace treaty, then all the agreements and understandings reached with it can also be considered null and void," Minister Chemjong warned. He said that the government stands by its belief that the Maoist combatants should stay inside the UN-monitored cantonments respecting the CPA and said that he will talk with UNMIN chief Karen Landgren regarding this issue. On Monday, police had detained 19 PLA combatants of Krishna Sen Memorial Brigade along with nine UNMIN registered weapons from the Jitpur section of the East-West Highway in Kapilvastu. UNMIN said it was continuing with its investigation of the incident. Source: www.nepalnews.com Date: August 26, 2009

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BUSINESS & ECONOMY: 6.3m Nepalis now have phones KATHMANDU, Aug 26 - The number of telecom service subscribers has reached 6.3 million with the tele-density touching 22.94 percent as more Nepalis take to using the phone. According to the Nepal Telecommunications Authority's (NTA) recent management information system report based on the last fiscal year 2008/09, Nepal Telecom (NT) subscribers number 4.28 million including users of mobile, CDMA, 3G and PSTN fixed telephone services. Spice Nepal, operator of Mero Mobile, counts 1.87 million subscribers and United Telecom Limited (UTL) has 144,062 subscribers. The total number of landline subscribers has surged to 806,480, mobile subscribers reached 5.42 million and subscribers to other telecom services (limited mobility, GMPCS and 3G) climbed to 78,278. The penetration rate of mobile, landline and other telecom services is 19.73 percent, 2.93 percent and 0.28 percent respectively. Currently there are six telecom companies, namely NT, Spice Nepal, UTL, STM Telecom, Nepal Satellite and Smart Telecom, that have received licenses from the NTA to operate telecom services in the country. According to telecom giant NT, its mobile phone users soared by 74.5 percent to 3 million from 1.71 million in the fiscal year 2007/08. All three telecom majors have ambitious plan for expansion in the current fiscal year. NTC alone will be adding 2.72 million lines. NT spokesperson Surendra Prasad Thike said that the company had set a target of increasing the number of mobile users by 2.2 million, CDMA by 450,000 and fixed line by 50,000 to 70,000 within the current fiscal year 2009/10. "We aim to cover all the village development committees (VDC) within this fiscal year," said Thike. He said that NT's telecom service had reached 3,331 VDCs till date. There are still 380 VDCs in the country which do not have phones. An official at Spice Nepal said that the company would widen its network coverage to all 75 district by the end of 2009. The subscribers of Spice Nepal have increased to 1.9 million from 1.4 million last year. Similarly, UTL plans to expand its coverage to 35 districts within the current fiscal year. Similarly, Smart Tele-com, which received its license from the NTA in July last year, is working to provide two telephone lines to 318 VDCs in remote areas of the western, mid-western, far western and central regions. Currently, the company is working on the installation of VSAT (very small aperture terminal).

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As of the end of the last fiscal year, the total number of internet service subscribers had reached 515,952 of which 102,444 are of NT, 19,220 of UTL, 332,428 of Spice Nepal and 61,500 of private internet service providers. www.kantipuronline.com

India to provide support for CDS India has agreed to support in establishing Central Depository System (CDS) in Nepal. An agreement on technical support of IRs 92 million was signed during the recent visit of Prime Minister Madhav Kumar Nepal to India between Nepal and India’s Central Depository Services. After the implementation of Central Depository System, the Nepali capital market will be more transparent and discrepancy rates will be significantly reduced, Nepal Stock Exchange Ltd (Nepse) said. According to Nepse, the implementation of Central Depository System will also increase two-fold the volume of transactions and touch Rs 43.36 billion within six months. “In five years, transactions will have increased to Rs 433.62 billion,” Nepse said adding that the market capitalisation will also reach Rs 44.31 trillion by that time, if the Central Depository System (CDS) were to come into operation. Source: The Himalayan Times Date: 08/27/2009

Hoteliers condemn ‘unequal’ taxes KAKKARBHITTA, Aug 26 - Traders and local political leaders here have demanded that the government scrap the recently introduced tax policy terming it as "unequal" for small hotel entrepreneurs. Speaking at a meeting organised by the Hotel Entrepreneurs Association, Regional Committee, Kakka-rbhitta on Wednesday, the participants said that the policy was against the welfare of small hoteliers. They claimed that the government had been collecting millions in taxes under various headings but not providing any facilities to the entrepreneurs. The entrepreneurs also said that the government had not been able to do anything about the demand for donations and threats being issued to entrepreneurs.

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"Collection of forced donations is still rising," said Arjun Rai, president of the Hotel Entrepreneurs Associa-tion, Regional Comm-ittee. "But the government is busy imposing taxes on entrepreneurs." The hotel owners said that the government's policy of collecting taxes from small hotels on a par with big star hotels was unlawful. They also urged the government to expand the tax net instead of increasing the rate. Chandra Jit Rai of the UCPN (Maoist), Prem Samwahamphey of the Nepali Congress, Laxmi Prasad Upreti of the UML, Badri Upreti of the ML and other participants at the meeting also opposed the tax policy. The hotel entrepreneurs here have launched a protest with a 10-point demand which includes continuing the 50 percent license fee waiver for selling liquor outside the Kathmandu Valley, collecting the house rent tax from the landlords instead of the entrepreneurs and scrapping the hike in income tax and excise duty. www.kantipuronline.com

Housing booms in Biratnagar BIRATNAGAR, Aug 26 - Migration from Siraha and Saptari to Biratnagar is on the rise due to growing insecurity in the Tarai districts. As a result, the realty business in Biratnagar has increased with more houses being built. Biratnagar, Itahari and Damak are the choices of those who are migrating from Siraha and Saptari. Biratnagar sub-metropolitan city saw transactions of 4,200 plots of land in the last fiscal year. The figure for the fiscal year 2007/08 was 3,700 plots. A total of 1,174 new houses were built in Biratnagar in the last fiscal year. According to Ram Kumar Kamat, nayab subba of the sub-metropolitan city, the number of building designs approved has increased compared to the previous year with 1,008 designs being passed in the fiscal year 2007/08 compared to 1,174 in 2008/09. Consequently, revenue too has been going up. Biratnagar collected Rs. 1.8 million more from design approvals last year compared to 2007/08 www.kantipuronline.com

Milk price hike dispute lingers It’s now two months that the per litre price of milk supplied by farmers has been increased on a provisional basis but they are still not satisfied and are demanding another hike. However, Dairy Development Corporation (DDC) has reasoned that there is no point in increasing the per litre price of milk by Rs 2.76 again. According to DDC spokesperson Siya Ram Prasad Singh, it’s been only a few months that DDC gave an increment in the per litre raw milk price and that varies from place

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to place from Rs 0.50 paisa to Rs 2. “Only recently there has been a hike of Rs 2 per litre in milk price for consumers, so there is no point in increasing the raw milk price for farmers by Rs 2.76 per litre,” said Singh. DDC recently made an increment of Rs 2 per litre in the market price of milk supplied. With an increment of Rs 2 per litre, milk that cost Rs 34 per litre is now priced at Rs 36 per litre. “After more than a year we renewed the milk price in the market whereas the hike in the price of per litre raw milk was made before any hike in the market price of milk, “ Singh said. A disgruntled Central Dairy Cooperative Association Ltd Nepal (CDCAN) has been protesting since a week and demanding the implementation of the Ministry of Agriculture ad Cooperatives’ decision to hike milk price for the farmers. The ministry decided to increase milk by Rs 4 per litre, dividing benefits between farmers and dairy industries. However, DDC made an increment of only Rs 2 per litre of milk. “Talks were held between us and DDC representatives at the ministry but to no avail. DDC is ready to make an increment of Rs 1.26 per litre and we do not agree to that. We need a hike of Rs 2.76 in the price that farmers get,” said CDCAN chairman Dhaka Ram Aryal. He added that the association would go on with its protest programmes. According to DDC, there has been a hike in the rpice of milk products and the hike varies according to the product from 4-5 per cent. In some instances, there is even 10 per cent price increase in some other dairy products. Around 200,000 farmers are employed in the milk production sector. The total consumption of liquid milk per day is 150,000 litres. “The milk and dairy product distribution is going on well without any disturbance, though some of the chilling centres at some places have been padlocked. We are hopeful the dispute will be settled soon,” said Singh. After DDC expressed reluctance to implement the new rate fixed by the ministry, the dairy cooperatives association started protests since August 18. CDCAN has also demanded its representation in the DDC board and a mandatory contribution of Rs 0.5 per litre in Dairy Development Fund. Source: The Himalayan Times Date: 08/27/2009

No buyers for sugar distributed by state-owned firms Sugar prices have shot up in the market, as retailers are showing less interest to buy sugar distributed by state-owned Salt Trading Corporation (STC) and National Trading Ltd (NTL) citing nominal profit margin. Few months before, NTL and STC had agreed to sell sugar to retailers at Rs 51.75 per kg, setting condition that the latter have to sell sugar to consumers for Rs 53 per kg. However, NTL and STC later raised the selling price to Rs 52 per kg which further dampened retailers´ interest. 13


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STC and NTL have been selling sugar for the last few months to intervene the market by importing sugar at reduced customs rate of 10 percent, down from 25 percent. Retailers, however, maintain that they are getting high profit margin by selling sugar purchased from open market. "Private sugar producers have been providing sugar at Rs 54 per kg and retailers are selling for Rs 56-60 per kg, depending upon transportation cost,� said Pabitra Bajracharya, president of Nepal Retailers Association. “But retailers get profit margin of only a rupee per kg, excluding transpiration and other cost, by selling sugar distributed by the state-owned entities.� He also said there was a possibility of big dealers hoarding sugar bought from state-owned entities. Urmila Shrestha, general manager of STC, said the STC had increased commission to Re 1 per kg from 25 paisa per kg last year, in a bid to attract more retailers. Shrestha also ruled out the possibility of hoarding, saying that sugar is being distributed by studying the past sales records of concerned dealers. SCT is providing 3 to 10 tons of sugar per month to retailers and dealers, depending on their selling capacity. STC and NTL had imported 30,000 tons and 10,000 tons of sugar respectively as per the government plan to tame the skyrocketing price of sugar in the market. To shore up the supply during Dashain and Tihar, the Ministry of Commerce and Supplies (MoCS) has instructed the STC and NTL to import 30,000 tons and 20,000 tons of sugar respectively. Shrestha said the STC would import the required quantity of sugar by October. Local traders said price of sugar increased in the market because of declining supplies due to fall in sugar production. Though Indian sugar barely enters Nepali market, impact of sugar prices in Indian market has also been felt here. Price of sugar in India has shot up to INRs 32-34 per kg as compared to INRs 26-28 per kg about a fortnight ago. Sugar prices have also increased from $420 to $560 per quintal in international market. According to Sugar Mills Association, India, which imports two million tons of sugar annually, saw a decline in sugar production -- down to 25 million tons in 2008/09 fiscal year from 26.5 million tons in the preceding year. Source: www.myrepublica.com Date: 08/27/2009

Garment industry sees recovery KATHMANDU, Aug 26 - With the recession in the U.S. and the EU showing signs of slowing down, Nepali garment manufacturers have started to receive fresh inquires and orders from their overseas buyers. The new inquires from the U.S. mean a lot to Nepal's garment industry since it is the largest market for Nepali readymade garments. Inquires from India are also starting to trickle in.

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"We've been getting inquires from U.S. buyers of late," said Prashant Pokhrel, president of the Garment Association of Nepal (GAN). The easing of the recession and the tabling of a bill at the U.S. Senate to allow preferential entry for Nepali garments are the reasons for the sudden increase in inquires, said garment manufacturers. However, garment manufacturers aren't too excited despite the surge in inquires and orders. "First, these inquires should be confirmed; and we should be in a state to fill the orders by the stipulated time," said Pokhrel. Buyers and manufacturers both are still reluctant to make a deal. "The importers are still hesitant to place orders and we manufacturers are also unsure because of the political situation in the country," said Udayraj Pandey, vice president of GAN. Pandey added that they had been getting more inquiries than orders. Even the orders they have received are for small quantities which are not enough to keep the factories running round the year. "Without bulk orders, we can't reopen our factories," said Pandey. As of now, only seven to eight garment factories are in operation. However, garment manufacturers say that around three dozen garment factories can resume production at short notice if bulk orders start flowing in. Garment exports to the U.S. declined by 56 percent in the first seven months of 2009. The latest statistics of GAN shows that Nepal shipped readymade garments worth US$ 4.1 million during the period against US$ 9.4 million last year. However, there was a jump of 8 percent in July after a continuous double-digit decline for eight consecutive months. Garment manufacturers are also hoping exports to India will pick up if India removes the 4 percent additional special duty as a result of the talks held by Prime Minister Madhav Kumar Nepal during his recent visit. "The Indian commerce secretary has assured our commerce secretary regarding this," said Pokhrel. For the last three years, India has emerged as one of the largest buyers of Nepali garments with exports almost matching those to the U.S. Nepal exported readymade garments worth Rs. 667.6 million in the last fiscal year against Rs. 478.1 million in the fiscal year 2007/08. According to Pandey, Nepal and Bangladesh are competing in the Indian market, and the removal of the 4 percent additional duty will make Nepali garments equally cheap for Indian buyers. www.kantipuronline.com

NRNA aid for Trade School The Non Resident Nepali Association (NRNA) has provided Rs 1.5 million for the expansion of the activities of Trade School. 15


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NRNA president Dr Upendra Mahato handed over the cheque for Rs 1.5 million to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Kush Kumar Joshi amid a function here today. FNCCI has been operating the school in partnership with the government to train workers for Nepali industries.Federation of Nepalese Chambers of Commerce and Industry is running trade schools in eight zones and planning to expand in three more zones in future. This support will help expand training for youth, Joshi said. He added that hoped NRNA’s support would continue for this sector in future.“We are providing the best training to support youth in finding jobs in the domestic and international markets,” he said. NRNA president Mahato said his organisation was pleased to support the trade school. FNCCI vice-president duo Krishna Prasad Tamrakar and Pradip Jung Pandey along with Azad Shrestha, Dr Jugal Bhurtel, director general of Federation of Nepalese Chambers of Commerce and Industry Megh Nath Neupane and FNCCI-NRNA Cell coordinator Dr Hemant Dawadi also attended the function. Source: The Himalayan Times Date: 08/27/2009

MARKET: NEPSE pulls out of dive KATHMANDU, Aug 26 - After a seven-day downhill run, the Nepal Stock Exchange (NEPSE) turned around with a 3.44 point gain on Wednesday. The secondary market went up after Security Board of Nepal (SEBON) failed to pass the proposal on conversion of 19 percent promoter shares to ordinary shares. The board meeting of SEBON was supposed to discuss this proposal on Tuesday but the meeting was cancelled due to protest. "This won't be decided immediately," said Surbir Poudel, chairman of SEBON. "We'll move ahead after discussing it with Nepal Rastra Bank in due course of time." There was apprehension among the investors that conversion of promoter shares to ordinary shares would trigger a huge flow of shares in the secondary market, which in turn would push the price further down. The sub-indices on NEPSE showed a mixed result as three of them gained while two lost on Wednesday. Among the sub-indices, the banking sector was the highest gainer by increasing 3.44 point followed by the development bank and finance sectors which gained 0.15 and 0.41 point respectively. The share market witnessed a total turnover of Rs. 114.77 million with 150,247 shares being traded.

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Among the 20 commercial banks listed on NEPSE, Nabil Bank posted the biggest growth with its stock rising by 240 points while Nepal Investment Bank lost the most on the trading floor by shedding 75 points. Among the 16 development banks whose shares were traded on NEPSE on Wednesday, Pashupati Development Bank witnessed the highest increase of 33 points while Annapurna Bikas Bank dropped 23 points. Similarly among the 12 finance companies on NEPSE, Kuber Merchant Bittiya Sanstha was the highest gainer with an increase of 14 points in its share price. Lumbini Finance lost 10 points. www.kantipuronline.com

GENERAL: Nepal Police plans specialized wings Nepal Police is preparing necessary ground work to develop specialized wings within the organization. Once the proposed plan comes into effect, police personnel will have to work in a particular branch till they are promoted to the post of SSP. This is expected to enable them to develop expertise in the field they serve. Nepal Police spokesperson Binod Singh said the police organization was preparing to develop specialized branches, wherein police personnel will be able to develop expertise in a particular field. “This will provide boost to efficiency and performance of police personnel,” he added. According to senior police officials, specialized branches on crime investigation, traffic policing, security and technical branches, among others, would be formed. “We are currently conducting feasibility study as this requires additional human resources and budget,” said Singh. Nepal Police has been providing security to airports and vital government establishments, besides providing Personal Security Officers (PSOs) to VIP and VVIPs. Civil Aviation Authority of Nepal (CAAN) has already asked Nepal Police to develop specialized aviation security wing to provide security to airports across the country. Though Nepal Police has separate wings such as traffic and crime division, police personnel are not deployed there for long. Police personnel deputed in these wings are normally transferred after a year or so. If things go as planned, a police personnel recruited for a certain wing will serve there till he is promoted to SSP level. Currently, SSP level police officer heads specialized wings such as crime and traffic division. Police officials complain that the lack of specialized wings in the police organization has significantly affected crime investigation, as criminals have gone highly 17


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professional. “A police officer gains certain expertise on crime investigation after serving there for sometime,” a senior official said, adding, “A new officer has to start from the scratch when he assumes new responsibilities. This makes us jack for all but master of none Source: www.myrepublica.com Date: 08/27/2009

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