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R&D Economic Research & Business Development

Date: December 7, 2009

Highlights

The tragedy in Kailali on Friday could have been avoided had the Maoists played a sensible role as it was the Maoist-affiliated All Nepal Squatters´ Association (ANSA) which led the illegal encroachment of Dudejhari forest since November 25. Concluding that the country is moving towards political confrontation and crisis, Prime Minister Madhav Kumar Nepal and Maoist Chairman Pushpa Kamal Dahal on Sunday agreed in principle to end the current political deadlock and to resolve the issues surrounding the Dudejhari incident through dialogues. The person killed in the clash between squatters backed by Maoists and the police in Dudejhari of Kailali on Friday was a Maoist army combatant, the Home Ministry claimed in a statement on Sunday. Ram Chandra Poudel, the leader of the Nepali Congress Constituent Assembly delegation claims that unless and until the Maoists combatants staying in the cantonments are completely disarmed, the likelihood of consensus in Nepali politics was a distant affair if not impossible. Chief of Army Staff (CoAS) Chhatraman Singh Gurung is going on a weeklong visit to India on December 11 at the invitation of Indian Army chief Deepak Kapoor The United States of America has been pretty worried by the continuation of undemocratic acts on the part of the former rebel party, the Unified Maoists’ Party of Nepal. Richard Berry, the US Charge d’ affaires met with the Prime Minister Mr. Madhav Kumar Nepal December 5, 2009, and expressed his annoyance over the undemocratic acts of the Maoists’ Party. Nepal has fulfilled 10 commitments out of 31 in terms of implementing action plans for improving the performance of donor-funded projects within the deadline as of November end this year. The World Trade Organisation (WTO) and World Intellectual Property Organisation (WIPO) have pledged technical and monetary assistance worth Rs. 120 million for Nepal's capacity building. They made this commitment at a meeting with the Nepali delegation in Geneva. Nepal-India Consultative Group on Security Issues concluded the seventh round of talks on Sunday with New Delhi giving Kathmandu hope for nonlethal military hardware on concessional rates. The last round of talks, held in New Delhi in 2007, had concluded on a sour note, without issuing a joint statement as India then brought up political issues. Nepal is yet to receive any lethal military aid from India, discontinued since the royal takeover in 2005. The government is mulling over abandoning nearly two-decade long privatization policy of selling out state-owned assets to private parties and

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adopting a policy of gradual disinvestment of equity of Public Enterprises (PEs). Embassies of 12 countries entertaining inter-country adoptions from Nepal have jointly asked the government to ensure transparency and meet international standards while processing inter-country adoption cases. The visiting Tibetan military delegation on Sunday offered an integrated security, trade, and development support to Nepal, aiming to strengthen the bilateral ties between the two countries. Lumbini Bank has declared a profit of Rs 218 million before tax and staff bonus in the first quarter of the current fiscal year. The amount is a rise of 53 percent compared to the first quarter of the previous fiscal year, the bank said in a statement Sunday. Nirdhan Utthan Bank Limited (NUBL) has received formal recognition as a national level micro finance development bank from Nepal Rastra Bank, the central bank of Nepal and regulatory authority. The recognition came after NUBL fulfilled the minimum capital requirement of Rs 100 million as paid-up equity this November. Of the total of 35 vehicles belonging to the Melamchi Water Supply Project (MWSP), 13 vehicles have been kept by ministers, political leaders and government officials for personal use. The government has decided to allow sending agencies to collect Rs 50,000 as fee from industrial trainees to work in enterprises in Japan under the agreement with Japan International Training and Cooperation (JITCO). Ministers and lawmakers hailing from Dhanusha and Mahottari have decided to take initiatives to upgrade the Janakpur Airport to connect Gulf countries directly from the religious city lying in the southern part of the country. Gold price continued to go down for two straight days in domestic market, after hitting a record high of Rs 29,535 per 10 gram. The price of yellow metal dipped by Rs 685 per 10 gram on Sunday to Rs 28,295 per ten gram or Rs 33,000 per Tola (11.664 grams), compared to the price recorded on Friday.“ Nepal Stock Exchange (NEPSE) continued to go downhill as it plunged by 11.44 points to rest to 517.45 points last week. The capital market was so engulfed by bearish trend that not even a single group posted any gain. There was no trading of shares of trading, hotel and manufacturing groups while other groups had a decline in their respective indices. Rastriya Bima Sansthan (RBS) saw the highest average share price among the 12 insurance companies whose shares were traded in the Nepal Stock Exchange (NEPSE) between November 13 to December 13 People's attraction towards non-life insurance coverage has soared here in Pokhara since the government three months ago made it mandatory for the vehicle-owners to go for the third-party insurance coverage. The UCPN (Maoist)-called nationwide general strike brought life to a standstill across the country on Sunday. Maoist cadres imposed a ban on circulation of newspapers in Pokhara on Sunday. Distributors could not circulate the newspapers in the tourist town due to the Maoist diktat. 2


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POLITICS:

Maoists could have averted squatter clash The tragedy in Kailali on Friday could have been avoided had the Maoists played a sensible role as it was the Maoist-affiliated All Nepal Squatters´ Association (ANSA) which led the illegal encroachment of Dudejhari forest since November 25. ANSA had erected six entrances to the encroached forest area. Banners placed at the entrances read ´No entry without permission´. Initially, the encroachers were scattered far apart in the forest. ANSA later set up six areas on the basis of the election constituencies the squatters hailed from, to effectively manage their growing numbers. Local ANSA activists say central Maoist leaders had assured them of full support in the encroachment. "You live there. We are here at the center to fight for your cause," an ANSA activist quoted a central-level Maoist leader as telling them Thursday. It was reported by media that the squatters were preparing to retaliate in case the local administration tried to evict them. "The number of people who have come to settle here has already reached 22,829. More are expected to come," a Maoist cadre said a few days ago. A large number of Maoist cadres from Kailali and Kanchanpur had been moving about in the encroached area. Youth squads carrying sticks were keeping an eye on those visiting the area. ANSA activists had also used log books at all six entrance gates to record the names and addresses of those visiting there. They even tried to restrict the movement of journalists. While the Maoist cadres were restricting the movement of outsiders, the squatters gathered inside were busy taking part in interaction programs and parades. "This is the daily routine here. Boys hold parades and play games. Else it will be difficult to pass the time," a youth engaged in constructing huts had told myrepublica.com. "There is a need to prepare for retaliation." This means the Maoist cadres knew the police would come to evict them sooner than later. Sources said Maoist combatants from the nearby Gorunge Camp, a satellite cantonment under the Seventh Division of the People´s Liberation Army (PLA), had come to help train the youths.

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According to eyewitnesses, most women, children and elderly people had already fled the forest when a large number of police reached there Friday to dismantle the illegally built huts. There were only youths left to retaliated against the police. Eyewitnesses said the squatter youths were accompanied by local Maoist cadres including the Maoist combatants while they targeted the police with bricks, stones and home-made weapons. They had surrounded the police personnel from all sides. Initially, the police used no force. Only police personnel were injured until 4:15 p.m. "There is no order from higher up to open fire. The encroachers cannot be chased away with sticks alone," a policeman on duty had complained Friday. "The Maoist combatants are found to have come to retaliate against us." Security officials said police opened fire after 31 police personnel on duty were injured by the youths accompanied by Maoist combatants. Police said the encroachers also opened fire on them. But this has not been independently verified as of Saturday evening. Apprehensive of the firing by the Maoist combatants, police, before they went into action, requested journalists, human rights activists and the Red Cross team to leave the area. A meeting in Dhangadhi of the police, the district administration and representatives of various political parties including the Maoists had decided to remove the encroachers from the forest on November 28. Maoist Kailali district in-charge Hari Gyawali had signed the decision. A meeting of the Chief District Officer (CDO), police and representatives of various political parties held Sunday had decided to first ask the squatters to leave the forest area and also asked the District Forest Office (DFO) to take action as per the law of the land if they ignored the request. Source: www.myrepublica.com Date: December 6, 2009 Parties to talk on Monday Concluding that the country is moving towards political confrontation and crisis, Prime Minister Madhav Kumar Nepal and Maoist Chairman Pushpa Kamal Dahal on Sunday agreed in principle to end the current political deadlock and to resolve the issues surrounding the Dudejhari incident through dialogues. The leaders also agreed to hold bilateral and trilateral meetings to end the impasse. According to Maoist vice chairman Narayankaji Shrestha, the 45-minute talks between the leaders centered on ending the whole political deadlock and the Dudejhari incident. "We told the prime minister that the country is taking a dangerous turn. There should be serious talks to sort out the problems," said Shrestha, who was present in the meeting at Naya Bazaar. During the meeting, the prime minister agreed to hold bilateral and trilateral meetings among the three largest political parties to find

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consensus to resolve the problems. "We are holding a bilateral meeting at 3 p.m. on Monday," said Shrestha. Home Minister Bhim Rawal was also present in the meeting. During the meeting, the Maoist leaders expressed strong objection to the government for blaming the Maoists for Dudejhari incident. "You were blaming the Maoists for the Dudejhari incident, but why did not you take initiative to solve the problem through talks with us before the killing?" the Maoist leaders asked Rawal. On Monday, the Maoists plan to ask the government to form a panel to investigate the Dudejhari incident, declare the deceased martyrs, compensate the kin of the deceased, make alternative arrangement to settle the landless and bring the guilty to book. Source: www.myrepublica.com Date: December 6, 2009

Dead squatter a PLA man: Govt At least one of the persons killed in the clash between squatters backed by Maoists and the police in Dudejhari of Kailali on Friday was a Maoist army combatant, the Home Ministry claimed in a statement on Sunday. But the Maoists refuted the claim that the deceased, Narendra BK, was a Maoist combatant from a cantonment monitored by the United Nations Mission in Nepal (UNMIN). Citing registration number 3682 and photo number DSC 00796 in the the Identity Card recovered from BK´s body, the Home Ministry claimed he was a member of the People´s Liberation Army (PLA). The ministry, however, did not state which cantonment he belonged to. Maoists termed the government´s claim an "utter nonsense and an attempt to cover up the killing of innocent landless people." Maoist Standing Committee member Barsaman Pun admitted that Narendra BK was not a cantoned PLA member. "He was a former member of the People´s Liberation Army," Pun told myrepublica.com. "UNMIN must have denied by now that he was a member of the PLA," he said. UNMIN spokesperson Kosmos Bishwokarma said, "UNMIN is still investigating. Preliminary report show that there are several people of that name [Narendra BK], but no one has the same registration number in UNMIN´s record on registration and verification of Maoist combatants." According to PLA´s seventh division acting commander Jivan, BK was a resident of Tatopani VDC-3 and a former Maoist combatant, but he was automatically disqualified after he did not come to the cantonement to stay after the signing of the Comprehensive Peace Agreement. 5


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Pun said the government cannot ignore the plight of some 25,000 landless people, and his party will continue struggle for the rights of the landless people. "The government should state clearly if they are not Nepali citizens," Pun said. He said the Maoists will intensify protest sunless the government declares the deceased as martyrs, compensate the families of the killed, provide free treatment to the injured and provide land to them. Meanwhile, the Maoist-affiliated All Nepal Squatters´ Association (ANSA) announced on Sunday that it would encroach upon the forest again on Monday. Organizing a press conference, it claimed that the authorities have disappeared over 250 of its members from the clash site. Source: www.myrepublica.com Date: December 6, 2009

Poudel blames Nepal Maoists want Instability and Anarchy Ram Chandra Poudel, the leader of the Nepali Congress Constituent Assembly delegation claims that unless and until the Maoists combatants staying in the cantonments are completely disarmed, the likelihood of consensus in Nepali politics was a distant affair if not impossible. He also claimed that the weapons in the cantonments must also be seized by the government if we are to see timely drafting of the Constitution. Mr. Poudel made these remarks while addressing a program in Kawasoti of Nawalparasi District, December 5, 2009. Poudel also said that on the one hand the Maoists’ have been seizing the public properties and on the other fighting for the restoration of Civilian supremacy. “The declaration of Autonomous Federal states by the Maoists’ Party will invite instability and anarchy in the country,” Poudel warned. Source: www.telegraphnepal.com Date: 2009-12-06 CoAS Gurung to visit India Chief of Army Staff (CoAS) Chhatraman Singh Gurung is going on a week-long visit to India on December 11 at the invitation of Indian Army chief Deepak Kapoor, Annapurna post reported. Indian President Pratibha Patil will award CoAS Gurung the title of honorary general of the Indian Army on December 14. The same day, Gurung will receive a guard of honor from the Indian Army.

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Before, this CoAS Gurung will attend a passing out ceremony of Indian army cadets at Indian Military Academy in Dehradun on December 12, where he has been invited as a special guest. Gurung will also meet high level army officials and national security advisor of India during his visit. Before returning to Kathmandu, CoAS Gurung will host a dinner in honor of Indian army chief Kapoor at the Nepali Embassy in New Delhi, on December 16. Source: www.nepalnews.com Date: December 6, 2009

POLICY:

US annoyed over Nepal-Maoists’ undemocratic acts The United States of America has been pretty worried by the continuation of undemocratic acts on the part of the former rebel party, the Unified Maoists’ Party of Nepal. Richard Berry, the US Charge d’ affaires met with the Prime Minister Mr. Madhav Kumar Nepal December 5, 2009, and expressed his annoyance over the undemocratic acts of the Maoists’ Party. During the meeting with the Prime Minister, the US envoy also mentioned that there had been a big gap between the verbal commitments made by the Maoists’ and their real acts. “Their words and deeds differ sharply”, said Berry. “The Maoists’ have time and again expressed their commitments to the observance of “rule of law” and democratic processes however, the attention of the US government has been drawn towards the continuation of the undemocratic acts of the Maoists, such as, to block the Parliamentary proceedings, declare Autonomous Federal States and illegal capture of Food Products and Lands”, a statement released by the US embassy in Kathmandu quotes Mr. Berry as saying upon meeting the Prime Minister. The US statement also mentions that the activities of the Maoists’ have been seriously retarding the Democratic exercise. “There is no alternative to consensus in between the government and the political parties”, the US statement also says. Says PM’s press advisor Bisnhu Rijal that during the meeting with the US official the Prime Minister assured that the Government was totally committed to unlock the

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current political deadlock and making serious efforts to convince the Maoists to end the dispute through dialogue. Source: www.telegraphnepal Date: 2009-12-06

Nepal meets part of commitments Nepal has fulfilled 10 commitments out of 31 in terms of implementing action plans for improving the performance of donor-funded projects within the deadline as of November end this year. The remaining commitments are, however, under process of completion and work in some commitments has been halted, according to the Nepal Portfolio Performance Review (NPPR). The government during the last NPPR meeting had promised donor agencies to materialise the uncompleted project by fixing a new timeframe. Most of the criteria are related to monitoring and evaluation system, result-based management, transparent financial management and procurement management to achieve the desired results for timely complention of projects. The government failed to make capacity building frameworks for internalisation of the result-based management (outcome oriented) by the government agencies due to the delay in getting technical assistance, according to a review document. Due to the same reason, the government failed to develop a framework and implement plan for the result-based management. It also failed to prepare a concept note for advancing the time for work programme and budget discussion to ensure that they are approved prior to budgeting for new fiscal year. The government has made it clear that the sudden change in the administration also caused the delay in this regard although it had planned to present budget for the current fiscal year in June. The important completed ones, as claimed by the government, are study of the cause of effects of collusion, coercion and intimidation in the bidding process, issuance of standard bidding documents and non-transfer of account staff prematurely in the Financial Comptroller General Office (FCGO). This has been the major concerns of donors. Source: www.ekantipur.com Date: December 6, 2009 WTO, WIPO pledge support The World Trade Organisation (WTO) and World Intellectual Property Organisation (WIPO) have pledged technical and monetary assistance worth Rs. 120 million for 8


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Nepal's capacity building. They made this commitment at a meeting with the Nepali delegation in Geneva. "If utilised effectively, the assistance will be vital for the capacity development of Nepal," said Kush Kumar Joshi, President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Nepal is getting US$ 1.5 million (around Rs. 100 million) under Enhanced Integrated Framework (EIF) of the WTO. "This amount will be used for the identification of the products having export potential in the first phase," said Joshi. "Export potential assessment will be done in the second phase." The government is currently doing Nepal Trade Integration Strategy (NTIS) that will ascertain the country's export capacity and prescribe actions for giving new impetus for exports growth. A similar study was carried out in 2003 with the help of EIF. International Trade Centre (ITC) is supporting part of that study. A delegation of Nepal's private sector had held discussion with the ITC in Geneva. According to Jibraj Koirala, Under-Secretary at the Ministry of Commerce and Supplies, WIPO has given assurance for assistance for the capacity building of Nepal. "WIPO has made commitment for US$ 200,000 in assistance," said Joshi. "It will help the capacity building of the Department of Industry." "Since we've not been able to engage in branding exercise abroad, we've lagged behind," said Joshi. "Under the new assistance, we will establish a centre to study intellectual property within the FNCCI." The Nepali delegation led by Commerce Minister Rajendra Mahato also met with the United Nations Conference on Trade and Development Secretary General Supachai Panitch-pakdi in Geneva. Minister Mahato was in Geneva to attend the ministerial meeting of the WTO. Trade and commerce ministers from 153 nations addressed the meeting that concluded on Dec. 2. Almost all ministers asked for an early implementation of the Doha Development Agenda (DDA). The efforts for the implementation of the DDA - which is crucial both for the developing and least developed countries - hasn't been successful for the last eight years. If implemented, it would help Nepal expand her trade with the developed countries, including the U.S., giving duty free access to the Nepali products. Source: www.ekantipur.com Date: December 6, 2009 Nepal-India security talks : Little headway Nepal-India Consultative Group on Security Issues concluded the seventh round of talks on Sunday with New Delhi giving Kathmandu hope for non-lethal military hardware on concessional rates. The last round of talks, held in New Delhi in 2007, had concluded on a sour note, without issuing a joint statement as India then brought

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up political issues. Nepal is yet to receive any lethal military aid from India, discontinued since the royal takeover in 2005. “At least that kind of situation did not erupt this time around” Foreign Secretary Madan Kumar Bhattrai told the Post. “Some sood signs have started with this meeting.” Some, however, said the meeting had just succeeded in maintaining what they called the ‘status quo’. This time also, the situation was not so much favourable for both sides. According to them, the Indian side raised the issue of Nepal failing to pay the long overdue outstanding worth Rs 70 million pertaining to military assistance. “We requested India to write-off the amount but New Delhi did not agree, saying that the Indian private sector was involved in the business of supplying the military equipment,” an official said. After the unpaid amount dominated the floor, senior officials of the Nepal Army agreed to take up the issue with the highest political authority to write-off the unpaid bills, the official said. The Indian side had asked for the details, including the cost of construction of the proposed airstrip at Surkhet. The Indians did not make any commitment, but said that they will assess the Nepali proposal. “Cooperation of the Airbase at Surkhet also figured in the meeting,” a foreign ministry release said. “We said that the NA needs vehicluar spare parts in sizeable quantity and other logistic goods,” the official said. India said it would consider the request and take the decision.” The Indian side is said to have rejected the Nepali request to provide some MBBS quota, but offered to provide some seats for military doctors to pursue MD,” the official said. Source: www.ekanitpur.com Date: December 6, 2009

Nepali gov't mulls over revision in privatization policy Nepali government is mulling over abandoning nearly two-decade long privatization policy of selling out state-owned assets to private parties and adopting a policy of gradual disinvestment of equity of Public Enterprises (PEs), local media reported on Monday. An official at the Ministry of Finance told myrepublica.com that the cabinet meeting held recently formed a high-level committee led by the Finance Minister to recommend new policy to liquidate non-functioning state-owned businesses.

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Five ministers representing ministries of Commerce and Supplies, Forest and Soil Conservation, Law and Justice, Industry and Agriculture and Cooperatives are the members of the committee that is expected to submit its final report by mid-January. The government has reached the conclusion that the present policy of privatization is not workable given that fact that privatization is not politically popular among all the major political parties. In addition, the poor performances of the PEs that were privatized during first-half of the 1990s also greatly weakened the pro-privatization arguments, said the officials. The committee that will have finance secretary as the member secretary will first thoroughly review the present status of 36 government enterprises to find out how many of them can be brought into operation by enhancing their competitiveness. "The committee will then find out the PEs that the state should run even if they are financially not profitable from among the Pes that can be brought into operation," the official added. "The committee will recommend the government to initiate the process of dissolving and deregistering of the PEs falling into the category by settling all outstanding financial liabilities," the official added. Source: news.xinhuanet.com Date: December 6, 2009 Embassies push for transparency in adoptions Embassies of 12 countries entertaining inter-country adoptions from Nepal have jointly asked the government to ensure transparency and meet international standards while processing inter-country adoption cases. The embassies passed their concerns in the form of a note verbale (a diplomatic memorandum) to the government via the Ministry of Foreign Affairs on November 24 after they found that the "inter-country adoptions from Nepal were not meeting international standards and practices determined by the Hague Convention". The convention says that adoption should take place in the best interest of the children. "The group offers its support and urges the Government of Nepal to strengthen the beneficial cooperation with the Hague Conference [Hague Convention], e.g. to ensure that internationally recognized standards and practices," reads the note verbale possessed by myrepublica.com from its sources at the Ministry of Foreign Affairs. Submitted by the German Embassy on behalf of the countries on inter-country adoption, the note verbale was initially issued by Belgium, Denmark, Germany, Norway, Switzerland and the United Kingdom. Later, France, Italy and Spain also signed on it. Australia, Canada and the US have also supported it. 11


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A diplomatic source told myrepublica.com that the embassies are particularly concerned over lack of a central authority with responsibility to ensure that intercountry adoptions met international standards and the lack of laws on a par with the convention. "We also agree [with the countries] that the inter-country adoptions are not taking place as per the international standards. There should be a central authority to see the inter-country adoption," said advocate Upendra Keshari Neupane, who is also an executive committee member of Child NGO Federation. The embassies have also asked the government to make public the number of adoptable children, their age and sex and the organizations they are staying in. They have also sought information on the status of adoptable children -- voluntarily waived or orphans. The countries entertaining inter-country adoption from Nepal, diplomatic sources said, are concerned over the rise in the number of adoptable children after the resumption of the inter-country adoption in 2009. "The number of adoptable children dropped when adoption was suspended in 2007. But we have noticed a sudden rise in the number of such children in child homes and orphanages after the inter-country adoption was resumed in January 2009. How such children´s homes and orphanages see decrease in the number of children when the adoption was stopped and rise when the adoption was resumed?" the source asked. The countries are also concerned over the representation of the Child NGO Federation in the Recommendation, Investigation and Monitoring Committee at the Ministry of Social Affairs that is responsible for investigating the facts about any children before granting approval for adoption. "International standards require that there should be no representation of a federation of child NGO that also represents children´s homes and orphanages involved in intercountry adoption," said another diplomatic source. But advocate Neupane, who represents the federation in the committee, said, "Only the individual who is not involved in inter-country adoption is sent to represent the Child NGO Federation in the committee." In the note verbale, the embassies have also questioned the existence of two different committees to match a foreign family for any adoptable child. Advocate Neupane agreed that the works of the matching committee have not been transparent. Similarly, the countries are also doubtful that the paper works on the situation of adoptable children might be fake. They have also expressed concern over deprival of foster care, kinship and domestic adoption to children at child homes and orphanages. "To encourage domestic adoption, the existing laws should be amended," said Neupane, who is also the President of Democratic Lawyers´ Association. Source: www.myrepublica.com Date: December 6, 2009

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China offers support package The visiting Tibetan military delegation on Sunday offered an integrated security, trade, and development support to Nepal, aiming to strengthen the bilateral ties between Nepal and China During its separate meetings with Deputy Prime Minister and Foreign Minister Sujata Koirala and Defence Minister Bidhya Bhandari, the Tibetan delegation led by Lt. Gen. Shu Yutai announced the assistance package to Nepal. "The Tibetan side conveyed that they will come up with an integrated approach that could be developed jointly to execute such assistance. Defence Minister Bhandari hailed the idea and reaffirmed Nepal's support for One-China policy during the meeting," said Subash Devkota, press advisor to the minister. The proposal primarily deals with security support to the Nepal Army and executing development works jointly along the Nepal-China border areas, he added. They will soon forward the proposal in this connection, said Devkota. The delegation also reaffirmed China's regular military assistance to the Nepal Army. During the meeting, the Tibetan side appreciated Nepal's effort to contain anti-China activities on its soil and ongoing preparations to deploy security personnel along the Nepal-China border. "We want to strengthen ties with China," said Minister Bhandari. During the meeting with Foreign Minister Koirala, the Tibetan delegation discussed similar issues. The courtesy call, according to the Ministry of Foreign Affairs, dwelt on bolstering the bilateral ties and finding new areas of cooperation between the two countries. Source: www.myrepublica.com Date: December 6, 2009

BANKING: Lumbini Bank profit up 53 pc Lumbini Bank has declared a profit of Rs 218 million before tax and staff bonus in the first quarter of the current fiscal year. The amount is a rise of 53 percent compared to the first quarter of the previous fiscal year, the bank said in a statement Sunday. Similarly, the bank´s net profits for the quarter increased to Rs 165.40 million from the Rs 107.5 million of the corresponding period of the previous fiscal year. The bank also said that its capital fund in the first quarter had increased to 22.37 percent.

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“This makes Lumbini Bank probably the bank with the largest capital fund among 26 commercial banks,” it said. Its capital fund in the first quarter of fiscal year 2008/09 was 8.54 percent. Source: www.myrepublica.com Date: December 6, 2009

NUBL acquires national level finance status KATHMANDU: Nirdhan Utthan Bank Limited (NUBL) has received formal recognition as a national level micro finance development bank from Nepal Rastra Bank, the central bank of Nepal and regulatory authority. The recognition came after NUBL fulfilled the minimum capital requirement of Rs 100 million as paid-up equity this November. NUBL is the first microfinance bank of Nepal to be recognized as a national level micro finance bank. Being a national level micro finance bank, it can now expand its services all over the country by establishing its branch network in all 75 districts of Nepal. The arduous journey of NUBL started with the inception of “Nirdhan” as an NGO in 1993 with the establishment of a project office in Siktohan VDC of Rupandehi district in the Tarai region of Nepal. Later, NUBL evolved as a limited company to operate micro finance activities under the Development Bank Act of Nepal . Now, operating under Bank and Financial Institution Act, Nirdhan Utthan Bank Limited operates in 24 districts with a 75branch network. Source: www.thehimalayantimes.com Date: December 6, 2009

BUSINESS & ECONOMY:

Ministers, officials misuse Melamchi vehicles A bunch of influential political leaders have long been misusing expensive vehicles belonging to the Melamchi Water Supply Project (MWSP), forcing its essential field work to crawl at a snail´s pace. Former Prime Ministers Girija Prasad Koirala and Surya Bahadur Thapa have taken away MWSP´s vehicles for their personal use. Koirala has grabbed a Toyota Turbo

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Jeep (Ba 4 cha 6661) since 2005, while Thapa has been using a Land Cruiser (Ba 1 Jha 6607) for the last six years. “Koirala and Thapa took these vehicles when they were the executive heads of the country,” sources at MWSP told myrepublica.com. Thapa has even illegally changed the vehicle´s white (government) registration plate to red (private) with a new number (Ba 4 cha 8875). He has turned a deaf ear to MWSP´s persistent requests to return the vehicle. Not only the minister, state minister and secretaries at the Ministry of Physical Planning but some officials from other government offices have also been using vehicles owned by MWSP. Minister Bijaya Kumar Gachchhadar and State Minister Sanjay Kumar Shah have taken away three vehicles each. Of the total of 35 vehicles belonging to MWSP, 13 vehicles have been kept by ministers, political leaders and government officials for personal use. According to sources at MWSP, the Ministry of Physical Planning and Works has caught a fancy on two more expensive vehicles owned by MWSP. “It is justified to an extent that those leaders and officials who head the Ministry of Physical Planning use our vehicles,” Gajendra Thakur, executive director of MWSP, says. “But, even those officials who have nothing to do with Melamchi project are using our vehicles for years.” Sources say even personal assistants of ministers have been overtly using Melamchi vehicles at the donors-funded project´s expenses. They fill up fuels and submit bills for payment at MWSP. Worse still, they also bring the vehicles at MWSP for repair works. A few days ago, Melamchi employees seized a vehicle used by an aide of state minister Shah when he sent it to MWSP office for repair works. “He wanted to take it back after getting it repaired at the project´s expense,” Uddhav Raj Aryal, president of Melamchi Water Supply Project Employees´ Union, said. “But, he had to return empty handed after all of us protested the misuse of vehicles.” As the misuse of Melamchi vehicles continue, MWSP has hired two vehicles for about Rs 0.3 million a month for its consultants. At a time when there is huge public outcry over the consultants´ over-paid salaries, MWSP continues to spend more money for their costly vehicles. Source: www.myrepublica.com Date: December 6, 2009 Agencies told to collect Rs 50,000 per worker The government has decided to allow sending agencies to collect Rs 50,000 as fee from industrial trainees to work in enterprises in Japan under the agreement with Japan International Training and Cooperation (JITCO).

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The Ministry of Labor and Transport Management (MoLTM) Sunday finalized the guidelines for Nepalese industrial trainees under Industrial Training Program (ITP) or Technical Internship Program (TIP). As per the guidelines, the sending agencies can collect Rs 50,000 as promotional fee that includes health check, pre-departure training, language and culture training, insurance premium, monitoring of workers and market management cost for job opportunities in Japan. Sending institutions will have to maintain transparency on income and expenditure incurred while sending workers to Japan. Workers, however, will have to contribute to the Foreign Employment Welfare Fund on their own. There is a stringent provision of punishing both the sending agencies and the workers if they are found to be collecting more than the prescribed amount as fee. The sending agencies will have to appoint their agents in Japan subject to permission of MoLTM. The Ministry, however, can determine the number of agents on the basis of workers and the places where they are employed. According to the guidelines, the agents will have to facilitate workers, deal with problems that they might face in Japan, inform Nepali Embassy if workers violate job contract and promote Nepal as a source country for Japanese job market. Only the workers who can speak and understand Japanese language, have information about Japanese culture and have undergone through pre-departure training are qualified to go to Japan. According to officials, a high-level committee led by Labor Minister will be formed to monitor the sending process. The guidelines have also made it mandatory for receiving Japanese enterprises to submit periodical report about the condition of Nepali workers to Nepali Embassy and also inform the Nepali mission about commission and other facilities provided to sending agencies. The Nepali embassy will have to play the role of a facilitator to forge proper coordination among Japanese enterprises and certify the demands placed by them. Similarly, the government can call back the workers if they are found to have submitted fake documents and slap them a fine equivalent to the expenses incurred while sending the workers to Japan. The workers will have to make written commitment before the government that they would return back after completing their internship period in Japanese firms. Those overstaying in Japan will be punished as per the Foreign Employment Act. According to the guidelines, Nepali enterprises recommending their workers to Japan would be slapped a fine equivalent to total expenses incurred in the sending process, if they failed to reemploy workers after internship in Japan. Workers between the age of 18 and 40 having two years of work experience in industrial enterprises, factories, agriculture firms, cooperatives, community-based institutions, hotels and tourism enterprises, among others, are qualified to work as industrial trainees in Japan. The government has designated a total of 172 agencies to send workers to Japan under the JITCO program. They have been authorized to send workers to Japan under 16


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JITCO for a period of one year, subject to renewal within 30 days of the expiry period. JITCO has already signed such agreement with 15 countries. Source: www.myrepublica.com Date: December 6, 2009

Janakpur Airport to be upgraded Ministers and lawmakers hailing from Dhanusha and Mahottari have decided to take initiatives to upgrade the Janakpur Airport to connect Gulf countries directly from the religious city lying in the southern part of the country. Residents of Janakpur are elated with the decision to develop Janakpur Airport as an International Airport. A meeting of the ministers and lawmakers hailing from the region held at Janakpur Airport on Sunday made a plan to this effect. A large number of youths from the region fly to Gulf countries for employment. Minister for Tourism and Civil Aviation Sharat Singh Bhandari said the plan was made as part of the first phase to develop Janakpur as a town with religious and tourism significance. He said Janakpur can be developed as a tourist hotspot. Bhandari hails from Mahottari district. CPN (Maoist) lawmaker Matrika Yadav, Nepali Congress General Secretary Bimalendra Nidhi, State Minister for Physical Planning and Works Saroj Yadav, among others, were present in the meeting. They reached Janakpur Airport at 11 am and flew back to Kathmandu at 3 pm. Janakpur Airport has been operating flights to and from Kathmandu for the last 49 years. Bhandari said the government plans to extend the airport´s existing 1300-meter runway to 1,600 meters. Stating that the the government has already initiated the process to acquire necessary land for the purpose, he said, “We are in the process to award contract for constructing terminal building.” Bhandari informed that they also plan to operate direct flights between Janakpur and Muktinath in Mustang district. Source: www.myrepublica.com Date: December 6, 2009 Gold price down to Rs 33,000 per Tola Gold price continued to go down for two straight days in domestic market, after hitting a record high of Rs 29,535 per 10 gram.

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The price of yellow metal dipped by Rs 685 per 10 gram on Sunday to Rs 28,295 per ten gram or Rs 33,000 per Tola (11.664 grams), compared to the price recorded on Friday.“ "The price of gold has begun to go down as major currencies such as Euro, Yen and Pound Sterling are weakening against US dollar for a couple of d�ys," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association. Shakya also said reports about the troubled Dubai World holding company also brought negative impact in the international bullion market. Skyrocketing gold prices had forced customers to dig deep into their pockets budget during this wedding season. According to traders, Dashain, Tihar and wedding seasons account for more than 30 percent of total annual sales of gold in the country. Silver price also dropped to Rs 465 per ten gram on Sunday after touching a record Rs 480 per ten gram last week. Spurred by recent purchase of 200 tons of gold by Reserve Bank of India on the back of weakening US dollar against rival currencies, gold price saw an unprecedented rise in recent days setting new records. Price of gold touched an all time high of $1,225 per troy ounce in international market last week. Source: www.myrepublica.com Date: December 6, 2009

MARKET:

Bearish trend continues to engulf NEPSE Nepal Stock Exchange (NEPSE) continued to go downhill as it plunged by 11.44 points to rest to 517.45 points last week. The capital market was so engulfed by bearish trend that not even a single group posted any gain. There was no trading of shares of trading, hotel and manufacturing groups while other groups had a decline in their respective indices. The commercial banks' group was the biggest loser last week as its index lost 16.38 points to decline to 479.54 points in the final day. The development banks' group tumbled 9.88 points to close at 570.77 points while the hydropower sector suffered a loss of 5.64 points to 791.58. Likewise, finance companies' group index declined by 5.29 points to 555.26. The group categorised as others lost 4.70 points to settle at 587.46 points. The insurance group also reeled under downward trend as its index lost 2.24 points to settle at 573.36 points.

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A total of 266,600 shares of 82 companies worth Rs. 147.77 million were traded through 2,969 transactions last week in the NEPSE. In the previous week, the capital market saw trading of 562,000 shares worth Rs. 276.84 million through 4,910 transactions. Bank of Kathmandu topped in terms of turnover amount and number of shares traded whereas Prime Commercial Bank topped in terms of number of transactions. Source: www.nepalnews.com Date: December 6, 2009 RBS tops average share price list Rastriya Bima Sansthan (RBS) saw the highest average share price among the 12 insurance companies whose shares were traded in the Nepal Stock Exchange (NEPSE) between November 13 to December 13. The average share price of RBS, which witnessed trading of 338 shares worth Rs 3,73,200 during the period, stood at Rs 1,102.50. Life Insurance Co. Nepal (LICN) and National life Insurance Co. Ltd (NLICL) were ranked at second and third position respectively in terms of posting highest average share price. The average share price of LICIN was calculated at Rs 686.50 while the same of NLICIL stood at Rs 539. Neco Insurance Co (NIL) witnessed the least average share price during the period of one month as the same of the company was Rs 124. NIL experienced trading of 462 shares worth Rs 57,546. Premier Insurance Co Ltd (PIC) and Siddhartha Insurance Limited (SIL) were amongst the insurance companies to see the second and the third lowest average share price respectively. The average share price of PIC stood at Rs 170 while the same of SIL was Rs 180. Between November 13 to December 13, the 12 insurance companies whose shares were traded in the capital market saw a total of 291 transactions worth Rs 1,831,234. Similarly, they experienced a total trading of 6,604 shares during the period of one month. Source: www.nepalnews.com Date: December 6, 2009 People attracted toward non-life insurance scheme

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People's attraction towards non-life insurance coverage has soared here in Pokhara since the government three months ago made it mandatory for the vehicle-owners to go for the third-party insurance coverage. According to executives at insurance companies, number of people with vehicle insurance coverage is the highest in the city followed by number of those opting for insurance coverage for possible damage of houses, shops, bridges, road, factories, hospitals, financial institutions and other assets. People have shown interest in insurance for the coverage of loss due to theft and fire. Branch Manager of the Oriental Insurance Company Jeevan Sapkota said that the branch paid as high as Rs.150 million to third parties under the insurance coverage of vehicles in the last two months. "We are also mulling over providing compensation to the injured as well as vehicle-owners for the damage," he added. Sapkota said that there was a trend of seeking insurance coverage because of increased vehicle accidents in the region and the government policy has helped a lot in this regard. Kabi Raj Poudel, Branch Manager of Sagarmatha Insurance Company, said that the rise in trend of seeking insurance coverage was also because of increased construction activities, trading, industrial activities and growing business of vehicles. "Of course, awareness also has played a major role," he said. "People are seeking insurance coverage in view of possible loss of property due to frequent strikes and natural calamities," he added. "The third-party insurance was a key factor for the increased non-life insurance coverage." Transport entrepreneur Indra Gurung said he went for insurance coverage as the government offices refuse to renew the registration of uninsured commercial vehicles. "I went for insurance coverage for my two microbuses," he added. There are more than 65,000 vehicles, including 50,000 motorcycles, registered with the Transport Management Office, Pokhara. The insurance companies fetch about Rs. 120 million as premium from vehicle insurance per year. Source: www.kantipuronline.com Date: December 6, 2009

GENERAL: Strike hits life nationwide The UCPN (Maoist)-called nationwide general strike brought life to a standstill across the country on Sunday. The Maoist party had enforced the strike protesting the death of three people in Friday’s police action against squatters in the Kailali-based Dudhejhadi forest. 20


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With vehicles few and far between, roads looked deserted. Businesses and schools were mostly shut. Maoist activists, according to government sources, vandalised or burnt at least 17 vehicles across the country. The Kathmandu Valley alone saw smashing of at least nine vehicles, according to the Police Headquarters. Miscreants pelted an Image Channel vehicle with stones in Lainchaur. Police detained at least 57 people across the country, including 35 in the Capital, for arson and vandalism. The strike’s epicentre, Kailali, was tense due to Maoists’ protests. The strike supporters set an ambulance on fire at Chisapani, while district chairman of the UCPN (Maoist)-aligned All Nepal Landless Association Revolutionary Naresh Shahi said at a press meet at Lamki that the association will recapture the Dudejhari forest to provide shelter for thousands of landless people. In the eastern district of Dhankuta, Maoist cadre vandalised six vehicles. Maoist activists locked government offices at the district headquarters. Police detained two Maoist cadre for attacking security personnel. In Ilam, hundreds of passengers were stranded as vehicles remained off the highway. At least six Maoists were hurt in a clash with security personnel at Ghantagharchowk in Parsa. In Dolakha, Maoist supporters roughed up the chief of the District Agriculture Development Office. Meanwhile, Home Minister Bhim Rawal said at a press meet in the Capital that security personnel had no alternative than using force to drive away the squatters from the Kailali-based Dudhejhadi forest. Police exercised maximum restraint, he said, accusing the Maoists of instigating clashes in the area by luring the squatters into encroaching upon the forest. He said the Maoists should be held accountable for Friday’s fatalities in the Kailali forest. In a bid to stop Maoist cadre from encroaching on the forest and vacate the seized swathe, according to Rawal, the local administration had issued warnings. Despite the warning, at least 15,000 squatters reportedly encroached on the forest. Source: www.ekantipur.com Date: December 6, 2009 Maoists 'ban' newspaper circulation in Pokhara Maoist cadres imposed a ban on circulation of newspapers in Pokhara on Sunday. Distributors could not circulate the newspapers in the tourist town due to the Maoist diktat. Maoist-affiliated Trade Union leaders called newspaper offices on Saturday evening and instructed them not to distribute any newspaper on Sunday as they had called a

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nationwide shutdown to protest the Kailali incident. They said that they would allow entry of vehicles carrying newspapers but would not permit distribution of the copies in the market. Republica, Nagarik and Annapurna Post, among other newspapers, could not be distributed due to the Maoist obstruction. When contacted, the Maoist leaders said they had no policy to obstruct newspaper circulation. "I heard that some of our friends had telephoned the newspaper offices and instructed them not to distribute newspapers on Sunday. This is not our official policy," said Maoist-affiliated Special District Organization Committee In-Charge Gupta Bahadur Hamal. "I have requested our friends not to obstruct newspaper circulation." Source: www.myrepublica.com Date: December 6, 2009

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