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R&D Economic Research & Business Development

Date: October 7, 2009

Highlights

Prime Minister Madhav Kumar Nepal is scheduled to pay an official visit to the People’s Republic of China at the end of October.

Despite the secret meeting between Nepali Congress president and Maoist chairman that invited rumours of change in government, Prime Minister Madhav Kumar Nepal has said the parties will reach a consensus by Wednesday evening ending the two-month long deadlock.

The Nepali Congress president Girija Prasad Koirala has called NC’s informal Central Committee (CC) meeting tomorrow morning at his residence in Maharajgunj.

Nepali Congress leader and Minister for Foreign Affairs Sujata Koirala assured PM Nepal of NC's full support for the present government.

Unified CPN (Maoist) Chairman Pushpa Kamal Dahal on Tuesday said that the party is preparing to come up with a new 'resolution proposal' that will be 'acceptable to all political parties'.

The government is planning to use journalists as paid informants under the special security campaign it is preparing to launch.

Dev Gurung, a senior Maoists’ Leader speaking at an interaction program in the capital said that the Maoists’ Party was raising the issue of unconstitutional decision of the president with full force only to make the democratic process more systematic and acceptable to the people.

Ram Bahadur Thapa alias Badal, the Maoists’ Party General Secretary speaking at a program held in Nawalparasai October 6, 2009 has said that with the Maoists party being cornered, the peace process can’t continue.

The two members of the Constituent Assembly who left Unified CPN (Maoist) to form a new party are likely to get their parliamentary membership cancelled.

The fourth inter-governmental steering committee meeting on establishment of the South Asian University (SAU) kicked off in Kathmandu on Sunday with the goal of finalizing the modalities for its smooth operation.

The Supreme Court (SC) on Tuesday issued an interim order staying Education Minister Ram Chandra Kushwaha’s decision to summon ViceChairman of the Higher Secondary Education Board (HSEB) Dr Upendra Koirala on deputation to the Ministry of Education.

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Nepal will deploy armed police along its largely unguarded trans-Himalayan border with Tibet, raising criticism that the move was prompted by pressure from China against the Tibetans.

In a move that will help boost bilateral relations with Bhutan and Nepal, the plan to connect the two Himalayan neighbors with the Indian mainland through a railway network is now being given the push.

Amid severe criticism and objection from civil servant unions, the government has decided to provide incentives amounting to 200 percent of pay to employees working at five major projects.

Nepal has formally expressed its interest to rejoin Poverty Reduction and Growth Facility (PRGF), a program sponsored by International Monetary Fund (IMF) to avert any unexpected Balance of Payment crisis.

Rastriya Banijya Bank (RBB), the largest bank of the country in terms of deposits and coverage, has floated a plan to make its net-worth positive and lower Non-Performing Assets (NPA) to less than 5 percent within the next two years.

Kuwait is preparing to deport 17,000 illegal migrant workers including 500 Nepalis by November, An-Nahar daily newspaper reported on Saturday citing Kuwaity Ministry of Interior sources.

India has imposed 4 percent countervailing duty (CVD) on Nepali readymade garment export, contrary to the spirit of the revised bilateral trade treaty on which two sides recently put initials on.

Readymade garment exports to the U.S. continued to drop sharply in 2009 continuing the trend that began after the quota system was phased out in 2005. In September, exports plunged 86 percent to US$ 90,660 against the same month in 2008.

Sugar imports have stopped for the last three months after the government imposed two different tax provisions for the private sector and the government. Legal imports may have come to a halt, but smuggling is rife and there is no shortage of sugar in the market.

Minister for Agriculture and Cooperatives Mrigendra Kumar Singh Yadav on Tuesday said that the government would soon endorse the much awaited floriculture policy to boost the floriculture business in the country.

In an unprecedented case seen in Nepal´s capital market, shareholders of Standard Chartered Bank (SCB) lost Rs 1,440 per share in a single trading day on Tuesday, prompting Nepal Stock Exchange (Nepse) index to shed 23.69 points.

Thirty-nine border pillars in various places that were swept away by rivers during the monsoon have not been put back in place yet. 2


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The government on Tuesday gave full shape to the Hajj Committee. The move comes in the wake of concerns that any further delay in giving full shape to Hajj Committee could dash hopes of many Muslims aspiring to make pilgrimage to the holy Mecca and Medina this year.

Metropolitan police had its first big break in nabbing the bike-borne jewelry snatchers after it turned to the “ambushing method”. The method involves women volunteers decked with fake ornaments, who roam around the anticipated areas luring them to attempt snatching. As soon as the snatchers hold out hands to grab the jewelries, plainclothesmen, who stay close to the volunteers, get them into the net.

National Democratic Front of Bodoland (NDFB), an underground armed outfit active in North-east India, has shot dead eight Nepali speaking persons.

Majid Manihar, the alleged kingpin of fake Indian currency notes (FICN) racket being run from Nepal, was shot dead at a hotel in Nepalgunj in Nepal on Monday.

POLITICS: PM Nepal to visit China Prime Minister Madhav Kumar Nepal is scheduled to pay an official visit to the People’s Republic of China at the end of October. A highly-placed source at the Ministry of Foreign Affairs today told this daily that the exact date, however, will be finalised after a consultation with the Chinese authorities. This is going to be the fourth foreign visit PM Nepal will embark on after assuming the office in May. The PM had already visited India, US and Egypt. Meanwhile, Minister for Foreign Affairs Sujata Koirala today apprised the PM of her recent China visit. Likewise, State Minister for Home Affairs Rijwan Ansari is also scheduled to visit China from October 10 to 15. Deployment of Armed Police Force (APF) in the Nepal-China border figure out high on the agenda, the source added. The Home Ministry is planning to set up APF camps to contain anti-China activities in the bordering areas. Source: The Himalayan Times Date: 2009-10-06

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Consensus by Wednesday, says PM Despite the secret meeting between Nepali Congress president Girija Prasad Koirala and Maoist chairman Pushpa Kamal Dahal that invited rumours of change in government, Prime Minister Madhav Kumar Nepal has said the parties will reach a consensus by Wednesday evening ending the two-month long deadlock. Talking to media persons in Pokhara, PM Nepal, who reached there to inaugurate the Pokhara University General Assembly on Tuesday, said discussion for ending the current deadlock is close to consensus. He, however, rejected the Maoist demand for parliamentary discussion on president's move saying the interim constitution hasn’t given such authority to the House. He said the Maoist’s resolution motion against President Dr. Yadav will not be introduced at the House for debate and called on the opposition party to come up with impeachment motion, instead. Stating that parties have no alternatives to forging consensus at this critical hour, he expressed hope that Maoists would agree with the NC-UML proposal to end the deadlock. In response to journalists’ question of possibility of change in government, Prime Minister Nepal said present government will continue even after reaching agreement among parties and that Maoists will join the coalition. He said government can be extended or reshuffled to include the Maoists. Source: www.nepalnews.com Date: 06 October 2009

GPK calls CC meeting The Nepali Congress president Girija Prasad Koirala has called NC’s informal Central Committee (CC) meeting tomorrow morning at his residence in Maharajgunj. Sources said that the meeting would highlight the party’s recent high-level meetings with the Unified CPN-Maoist and CPN-UML top brass. Also in the agenda are NC’s bottom-line on the proposed common Sankalpa Prastav to resolve the political stalemate. “We will also discuss on the current politics, including NC’s Mahasamiti meeting slated for October 31 to November 2 in Birganj and the party’s 12th National General Convention from March 10 to 14, 2010 in Kathmandu,” said Arjun Narsingh K.C., NC spokesperson. The NC CC meeting on August 29 had called the Mahasamiti meeting. But Koirala is pressing hard on the party leaders to cancel it. Source: The Himalayan Times Date: 2009-10-06

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FM Koirala meets PM Nepal, assures NC's full support to the govt Amidst various speculations being made about the longevity of the current government, Nepali Congress leader and Minister for Foreign Affairs Sujata Koirala called on Prime Minister Madhav Kumar Nepal at the latter's official residence in Baluwatar Tuesday morning. The meeting between the duo was focused on the latest political situation of the country and the initiatives being taken by the three main parties - NC, CPN-UML and Unified CPN (Maoist) - to resolve the current political deadlock, it is learnt. Minister Koirala, who leads the NC team in the government, assured PM Nepal of NC's full support for the present government. She basically asked PM Nepal not to believe in rumors about NC being intent on toppling the government, a source having access to the meeting said. Minister Koirala was suddenly prompted to meet the prime minister after reports appeared in the media that her father and NC president Girija Prasad Koirala held secret talks with Maoist chairman Pushpa Kamal Dahal at the residence of a former royal aide few days ago. Reports claimed that during the meeting Dahal proposed the NC president to become the prime minister again. Dahal later trashed the reports as baseless, but said that he wants to see a new 'national unity' government under his party's leadership. Foreign Minister Koirala didn't accompany PM Nepal during the latter's maiden India visit about a month ago, creating a major diplomatic embarrassment for the country and starting rumor mills that the UML-government is about to fall soon. Although she said she couldn't go to India due to health reasons, political observers said that it was her way of showing her dissatisfaction to PM Nepal for not promoting her to the post of Deputy Prime Minister. Source: www.nepalnews.com Date: 06 October 2009 Dahal says party's 'new proposal' to resolve political deadlock Unified CPN (Maoist) Chairman Pushpa Kamal Dahal on Tuesday said that the party is preparing to come up with a new 'resolution proposal' that will be 'acceptable to all political parties'. Speaking at the launching ceremony of 'Naya Sikcha' monthly magazine in the capital city, the former rebel leader said that the party is soon coming up with the new proposal since the common proposal that the ruling CPN-UML and Nepali Congress has come up with "didn't address the President's unconstitutional move on the Army Chief row and other civilian supremacy issues."

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He said that even after the party's proposal is endorsed by the legislature parliament, the political deadlock that ails the country will be 'resolved in packages'. Stating that the mandate of the Constituent Assembly elections was the formation of a Unified CPN (Maoist) led government, Dahal said no one should dare to tamper with this fact. He said that UCPN (Maoist) has taken initiatives to bring the major political parties into consensus, but threatened that if the political parties don't reach to an understanding (to form a national unity government under Maoist leadership) before the Tihar festivals then the UCPN (Maoist) will wage a decisive movement immediately after the festival. But in a positive note he said that NC and UML have become far more flexible compared to what they looked in the initial stage. Meanwhile, amidst rumors that the present government may soon fall, Nepali Congress President Girija Prasad Koirala has invited the members of his party's powerful Central Working Committee (CWC) for a discussion at his Maharajgunj located residence Wednesday morning. After being accused by his own party colleagues for engaging in a conspiracy to topple the present government following his 'secret meeting' with Unified CPN (Maoist) chairman Pushpa Kamal Dahal at the house of a former royal aide few days ago, Koirala has asked the CWC members to gather in his residence for consultations, it is learnt. The latest situation of the country, political deadlock, the nationwide agitation of the Maoists and the party's upcoming national convention is expected to be discussed during the meeting, according to a NC CWC member. Senior NC leaders and activists have expressed intense dissatisfaction over the meeting in which Dahal reportedly offered Koirala the post of Prime Minister. Dahal later dismissed reports that he proposed Koirala to become the prime minister again after senior leaders from his own party said that they will take up the matter very seriously if it were true. The NC president has already served as the country's premiere multiple times in the past. Source: www.nepalnews.com Date: 06 October 2009 Govt plans to use journalists as informants The government is planning to use journalists as paid informants under the special security campaign it is preparing to launch. The home ministry has proposed to keep journalists on its pay-roll both in the centre as well as in the districts for the campaign. 6


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It plans to include journalists in sub-committees to be formed in centre and the districts led by a home ministry official and a National Investigation Department officer, respectively. According to the plan, the sub-committee in the districts will include three journalists - a representative of a local FM radio, a TV journalist and a print journalist. Likewise, the committee in the centre will include three senior journalists, a senior FM radio journalist and a senior TV journalist. The journalists in the sub-committee at the centre will be paid Rs 7000 per month, while journalists in the sub-committee of the districts will be paid Rs 4000 per month each. Federation of Nepalese Journalists (FNJ) has condemned the government plan saying such system would put journalists- already working in a very risky environment- to a further risk. It has warned the government not to go ahead with such plan. FNJ has also urged all its members not to be part of the government plan saying it would cancel the membership of journalists who join the sub-committees. Using journalists as informants is against the code of ethics of journalists as journalists need to protect the identity of their sources. Source: www.nepalnews.com Date: 07 October 2009

Civilian Supremacy issue not to grab power: Nepal Maoist leader Dev Gurung, a senior Maoists’ Leader speaking at an interaction program held in Kathmandu October 6, 2009 has said that the common resolution proposal, must mention the unconstitutional decision of the President which reinstated the Maoists’ Government sacked erstwhile Army Chief Rukmangad Katawal, May 3, 2009. Mr. Gurung speaking at an interaction program in the capital said that the Maoists’ Party was raising the issue of unconstitutional decision of the president with full force only to make the democratic process more systematic and acceptable to the people. He said that it was totally constitutional and equally a democratic practice to discuss the working moves of the President at the Parliament. “We want the Interim Constitution delineate the role of the ceremonial president”, he said urging the leaders of other political parties not to see the issue of Civilian Supremacy as the Maoists’ desire to grab power in Singh Durbar. Just ahead of Mr. Gurung, Laxman Ghimire, one the NC leaders, speaking at the interaction program had charged the Maoists’ party that the issue of Civilian supremacy raised by the ex-rebel party was in fact their conspiracy to grab power.

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A journalist turned UML politician and a defeated CA election candidate Mr. Raghu Ji Panta also spoke on the occasion. Mr. Panta is an aide to the prime minister. Source: www.telegraphnepal.com Date: October 7, 2009

Nepal Maoists not to allow parliamentary process continue: Badal Ram Bahadur Thapa alias Badal, the Maoists’ Party General Secretary speaking at a program held in Nawalparasai October 6, 2009 has said that with the Maoists party being cornered, the peace process can’t continue. Mr. Badal is taken as the Military Strategist of the Maoist party. Mr. Badal inaugurating a program organized by one of the Maoists’ Party affiliates in Kawasoti, also made it clear that neither the peace process will conclude nor will the constitution drafting process come to an end without the Unified Maoists’ Party’s active involvement and engagement. Mr. Badal also claimed that the UML-NC led coalition government was taking authoritarian steps and thus the Maoists’ party had been forced to raise the issue of civilian supremacy in the country. “Unless our demands are addressed by the government, we will not let the parliamentary process to continue.” He also urged his party cadres to get ready to sacrifice blood for the conclusion of the peace process. “We took the path to revolt for over a decade and lost thousands of lives for peace and stability, we are now ready to sacrifice again for institutionalizing peace and drafting constitution on time”, he concluded. Appears New republic may land in trouble soon. Source: www.telegraphnepal.com Date: October 7, 2009 Maoist 'defectors' likely to loose MP status The two members of the Constituent Assembly who left Unified CPN (Maoist) to form a new party are likely to get their parliamentary membership cancelled. A sub-committee entrusted to recommend the future of two Maoist 'defectors' Matrika Yadav and Jagat Yadav - asked the parliament secretariat for canceling their membership on Tuesday.

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The sub-committee headed by Nepali Congress leader Pushpa Bhusal submitted its recommendation to the Business Advisory Committee of the CA for final approval. After discussing the legal and constitutional provisions related to CA membership and cancellation, CA Chairman Subas Nembang will take a final decision on the matter. The Yadav duo had left their party after unification between CPN (Maoist) and CPN (Unity Center-Masal) - renamed as UCPN (Maoist), -- and went on to re-organise CPN (Maoist). Immediately after they left the party, the UCPN (Maoist) had asked the Constituent Assembly to revoke the duo's membership . Source: www.nepalnews.com Date: 06 October 2009 SAARC varsity meet sees light of day Kathmandu - The fourth inter-governmental steering committee meeting on establishment of the South Asian University (SAU) kicked off in Kathmandu on Sunday with the goal of finalizing the modalities for its smooth operation. The university, whose academic programmes are all set to commence by August 2010, aims to attract at least 5,000 students from SAARC member states for its master programme. There are at least 50 seats for the university’s master-level in information technology and Biotechnology programmes, according to officials. Speaking at the inauguration on Tuesday, officials said the three-day intergovernmental steering committee meeting in Kathmandu will finalise the modalities for the university’s operation, financial contribution and curriculum, among others. The meeting will continue till Oct. 8. “Establishment of a world class university in the region will enhance cooperation among South Asian countries and also help young scholars come together, work together, share experiences and ideas about development and solve the common issues and problems of the region,” said R. D. Rajapakse, Director of SAARC secretariat. It was decided to establish the South Asian University in India during the fourteenth South Asian Association for Regional Cooperation (SAARC) Summit in New Delhi in April 2007. The heads of state from SAARC member countries had also agreed that an intergovernmental steering committee would be set up to complete tasks related to the charter, by-laws, rules and regulations, curriculum development, business plans and other issues of the university related to signing of the intergovernmental agreement.

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Following the agreement, the high-level steering committee on establishment of the university was set up the same year. The committee held its first and second intergovernmental steering committee meetings in New Delhi in 2007 and in Dhaka in 2008. The two meetings decided to establish a project office to draft the by-laws, charter and legal framework, among others. The third steering committee meeting of the university held in Mussorie in April this year discussed in detail the funding modalities. The ongoing meeting will revise the statutes, regulations, business plan, legal framework and academic structure of the university prepared by the project office, according to officials. Officials said they have decided on a cost sharing modality for the operation of the university and it would require at least Rs. 23.12 billion (US $303 million) to operate the university for the first five years. “The university envisions achieving three goals: to build a culture of understanding for regional development, produce a new class of liberal leadership for social and economic development of the region and build the capacity of regional countries through higher education, especially in the field of science and technology and the socio-economic field,” said G. K. Chedha, chief executive officer, SAU project office. Speaking at the inauguration, State Minister for Education Govinda Chaudhary said that currently the SAARC region is undergoing social and political transformation and aspiring to stand at the forefront of world development. In this context, establishment of the university will help enhance the relevance and effectiveness of higher education to alleviate overwhelming economic poverty in the region. Source: www.ekantipur.com Date: October 7, 2009 SC blow to defiant minister Kathmandu - The Supreme Court (SC) on Tuesday issued an interim order staying Education Minister Ram Chandra Kushwaha’s decision to summon Vice-Chairman of the Higher Secondary Education Board (HSEB) Dr Upendra Koirala on deputation to the Ministry of Education. On Monday, Koirala along with Member-Secretary of the Council for Technical Education and Vocational Training (CTEVT), had knocked on apex court door for justice after the education minister stopped them from carrying out their regular duties at their respective offices for allegedly failing to appoint the minister’s henchmen. During the Monday’s hearing at the single bench of Justice Gauri Dhakal, the advocates pleading on behalf of Koirala argued that as per the HSEB Act 1989 the education minister’s decision to summon HSEB vice chairman was illegal since the Act nowhere confers the minister with such authority. Kushwaha’s Sept. 23 letter sent to Koirala does not mention any specific law or act to legitimize his decision.

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The advocates also argued that since Koirala’s appointment was from a Cabinet-level decision, a single minister could not alter that on any ground whatsoever. The court, however, could not take any decision on Tandan’s case as a hearing on the same could not proceed on the same day. Upon hearing the court decision, Koirala, who had absented from his office since the minister’s letter, said he would attend office from Wednesday. “The court decision has cleared the deck for me,” he added. Senior advocates, including Nepal Bar Association Chairman Bishwo Kant Mainali, Indira Kharel, Hari Upreti, advocates Hari Krishna Karki and Tika Ram Bhattarai had pleaded on Koirala’s behalf. Source: www.ekantipur.com Date: October 7, 2009

POLICY: Armed police to guard Nepal's border with China KATHMANDU (Reuters) - Nepal will deploy armed police along its largely unguarded trans-Himalayan border with Tibet, raising criticism that the move was prompted by pressure from China against the Tibetans. Home Minister Rawal said armed police had already been deployed along southern borders with India and the idea was to duplicate the effort in the north to secure its 1,414 km (884 miles) border with Tibet. "Every country protects its borders. We also want to secure our borders from any trans-border movement by any criminal elements," Rawal told Reuters. "It is not because of the insistence of any country." More than 20,000 Tibetans live in Nepal since fleeing their homeland in 1959 with the Dalai Lama after a failed uprising against Chinese rule. Every year nearly 2,500 Tibetans cross the Himalayas and pass through Nepal en route to India where the Dalai Lama runs a Tibetan government-in-exile. Nepal and India share an open border, with their citizens free to travel in each other's country without documents. Chinese nationals need a visa to travel to Nepal. Some analysts said the move was to appease Beijing, a key donor and trading partner. "What this reflects is China's extreme sensitivity to the possibility of Nepal being used as a springboard for Tibetan nationalism," said Kunda Dixit, editor of the Nepali Times weekly. Nepal considers Tibet part of China and has arrested more than 10,000 Tibetan exiles who stage regular protests against Beijing since last year's Chinese crackdown on protests in and around Lhasa.

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"No one, especially refugees, has the right to use any sort of force or carry out any malicious, organised activities against our friendly country from our soil," Rawal said. The Washington-based International Campaign for Tibet (ICT) group, said in July that Kathmandu was under increasing pressure from Beijing to crack down on refugees despite centuries of shared culture with Tibet. Source: af.reuters.com Date: October 7, 2009 Plans afoot for Nepal, Bhutan rail links JALPAIGURI: In a move that will help boost bilateral relations with Bhutan and Nepal, the plan to connect the two Himalayan neighbors with the Indian mainland through a railway network is now being given the push. Northeast Frontier Railway (NFR) would execute the plans for laying the railway tracks to Bhutan and Nepal. Railway minister Mamata Banerjee had announced during her recent Siliguri visit that the projects would be expedited. NFR had earlier conducted the necessary surveys and sent the reports to the railway ministry for approval. Of the three Indian places that will be connected to Bhutan, two are in Assam Pathshala and Kokrajhar and one is in West Bengal's Jalpaiguri district Hasimara. The 51.15-km track from Pathshala will go up to Bhutan's Nanglam while that from Kokrajhar will connect Gelephu covering a distance of 57.7 km. Another 17.4-km track will be laid from Hasimara to Phuentsholing. The cost of laying the three tracks has been estimated at Rs 753 crore, Rs 302 crore and Rs 2.8 crore respectively. "We completed the survey in June last year and submitted the report to the railway ministry. Work will start once the projects are approved,'' an NFR spokesperson told TOI. The Centre had asked the railways to conduct the survey following requests from Bhutan to develop the rail network. The Hasimara-Phuentsholing link was announced by Mamata on Sunday. Meanwhile, the two places in India that will have railway connectivity to Nepal are Naxalbari in Bengal and Jogbani in Bihar. The line from Naxalbari will go up to Kankarvitta in eastern Nepal, covering a distance of 16 km, while that from Jogbani will connect Biratnagar, a 15-km journey. Surveys for these two projects were completed in August this year and the reports were subsequently sent to the railway ministry for sanction. Source: timesofindia.indiatimes.com Date: October 7, 2009

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200% incentive pay for project staff Amid severe criticism and objection from civil servant unions, the government has decided to provide incentives amounting to 200 percent of pay to employees working at five major projects. The Ministry of Finance (MoFA) took a decision to this effect two days ago in a bid to curb corruption and expedite work at the five largest projects. Previously, the government had been providing 200 percent allowances only to officials working at the customs and revenue offices. The government´s fresh decision comes at a time when its previous decision on such allowances has been subjected to strong criticism. Civil servant organizations two weeks ago submitted a protest letter at MoFA demanding the scrapping of its earlier ´discriminatory´ decision. “The government has decided to provide a maximum of 200 percent allowance to employees working at five projects, with the aim of controlling corruption that might take place at such projects,” a joint secretary at MoFA said. He added that the incentive allowances will not exceed 200 percent. The projects selected for the allowances are the Drinking Water Project for Small Towns (Sana Shahari Khane Pani Aayojana), Mid Hill Lokmarga (Madhya Pahadi Rajmarga), Housing Program for People (Janata Awas Program), Kapilvastu, Rani Jamara Irrigation Project, Kailali and the Postal Highway (Hulaki Rajmarga). Officials at MoFA said that the allowances will be released after assessing the performance indicator. Projects selected for the incentive allowance are required to develop performance indicators. “If officials at the projects are not able to accomplish their work as per the performance indicators, the incentive allowances will not be released,” a joint secretary at MoFA said, reading out the government decision. Officials, however, said the decision has been reached with the positive intention of controlling corruption. “If project officials are provided incentive allowances they will not take bribes,” the source argued. He added that the decision is also aimed at ending the tendency of embezzlement rife at projects and government offices. The source claimed that the decision is aimed at motivating the employees. “Employees are expected to conduct their duties sincerely after getting the two-fold allowances,” he said. Officials said the allowances will also put an end to the lackluster attitude of employees. MoFA officials said that since the incentive allowances are released only after assessing performance, protests against the decision are meaningless. Civil servant unions, on the other hand, have criticized the government´s fresh

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decision. “This is a discriminatory decision and is not fair to all employees,” said Mohan Ghimire, Secretary of the Nepal Government Employees Organization. Ghimire said that their organization will be compelled to launch street protests if the decision is not scrapped. He also said the decision will lead officials to ask for transfers to the five projects concerned. “There will be pressure from employees seeking transfers to the projects concerned in the hope of earning more money,” Ghimire added. Source: www.myrepublica.com Date: 2009-10-07 Nepal ready to enter into IMF's PRGF program Nepal has formally expressed its interest to rejoin Poverty Reduction and Growth Facility (PRGF), a program sponsored by International Monetary Fund (IMF) to avert any unexpected Balance of Payment crisis. According to a high level government official participating at the annual meeting of the World Bank and the IMF being held at Istanbul, Turkey, the Nepali delegation headed by Finance Minister Surendra Pandey made the request during a meeting with high-level IMF officers. "We formally declared Nepal´s interest in IMF´s PRGF program to mitigate any contingency that might arise in case of remittances during a meeting with IMF´ deputy managing director Takatoshi Kato," said the official. Nepal had joined the three-year IMF´s PRGF program in November 2004. But the program expired in 2007. During the meeting, Kato assured the Nepali delegation that the IMF has taken the request positively and instructed its Asia Pacific Division (APD) right away to begin the work on designing a program for Nepal. Later, the director of APD informed the Nepali delegation that the division will soon start working the PRFG program for Nepal. As entry into the PRGF certifies that financial discipline of the country is at par with international standard, it sends a positive signal to donor agencies that Nepal has prudent policies, and qualifies for more assistance and investments. Similarly, the Nepali delegation also met World Bank Managing Director Ngozi Okonjo-Iweala and Vice President Isabell Guerrero and requested them to scale up support to Nepal. "During the meetings we highlighted the need for a pragmatic performance evaluation for Nepal, as the country is trying hard to emerge from conflicts and fragile political situation," the official said. At the meeting, Nepal informed the WB officials that there can be food shortage in

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the range of 300,000 tons this year and apprised that the country might need additional financial assistance to ensure food security. "We also asked additional funding for cross-border transmission with India and the WB positively responded to Nepal´s request," informed the official. During the meeting, both sides also exchanged views on possible impacts of climate change to Nepal. "Managing Director Ngozi said that Nepal can get support from a new window called Weather Vulnerability Support to mitigate possible impacts of climate change,� the official added. The Nepali delegation also met Indian Finance Minister Pranab Mukherjee and held discussion on simplifying quarantine procedures at the border points, speeding up Tarai roads construction and implementing better arrangements on duty refund procedures. Nepal also requested Mukherjee to allow food exports from India to Nepal in the context of swelling trade deficit and put in place a mechanism whereby Reserve Bank of India accepts Indian 500-rupee note forwarded by Nepal Rastra Bank, according to the official. Similarly, the delegation also met with Chinese Finance Minister Xie Xuren and requested the latter to grant zero tariff access to Nepali products into Chinese market. "We requested the Chinese government to help Nepal in promoting tourism and improving road connectivity through Tibet," said the official. Source: www.myrepublica.com Date: 2009-10-07

BANKING:

RBB like to get huge capital injection from govt Rastriya Banijya Bank (RBB), the largest bank of the country in terms of deposits and coverage, has floated a plan to make its net-worth positive and lower Non-Performing Assets (NPA) to less than 5 percent within the next two years. According to the plan forwarded to the central bank for final approval, the RBB has set a target to recover around 50 percent of the outstanding Rs 4.82 billion, which was categorized as bad loan, within the next two years. "If the plan of recapitalizing and recovering the bad loans gets implemented, RBB will emerge as the strongest bank in the country," said Janardan Acharya, the chief executive officer of the bank. The NPA ratio of the second oldest bank in the country with largest branch network came down to 15.68 percent by the end of last fiscal year ending mid July from 21.63

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percent a year earlier. The total value of negative net-worth of the bank currently stands at Rs 14.66 billion. Along with extra efforts made on recovery of bad loans, the bank has no NPA on the loans that were extended after the management of the bank was handed over to private management, he said. Acharya also informed myrepublica.com that the government is seriously looking into all options to make the net-worth of the RBB, which at the moment is negative by over 14 billion, positive. "Issuing special bond and divesting 15 percent share of Nepal Investment Bank that the RBB holds are two major options that are on the table to raise the capital base of the bank,� said Acharya. According to concerned government official, a recent meeting of High Level Committee on Financial Sector Reform, chaired by the Finance Minister Surendra Pandey, agreed in principle to issue such bonds and the Nepal Rastra Bank (NRB) has been asked to detail procedures of bond issuance. Though the amount is yet to be decided, the total value of the special bonds is likely be to around Rs 10 billion, said the official. "Along with the special bond, the total negative net-worth of the bank can be made positive if we become successful in divesting 15 percent share of Nepal Investment Bank that is valued at around Rs 4 billion at the current market price," said Acharya. He further said that the bank has a plan to offer 30 percent of its paid-up capital to general public. The bank that was able to manage a record net profit of Rs 2.04 billion during the last fiscal year is also planning to set up offices in major Indian cities to tap remittance business opportunities. "First we are planning to open an office in Indian capital New Delhi soon and if things go as plan, we will open our offices in Chennai and Mumbai within a year," Acharya elaborated. Source: www.myrepublica.com Date: 2009-10-06

BUSINESS & ECONOMY: Kuwait to deport 500 Nepalis KATHMANDU: Kuwait is preparing to deport 17,000 illegal migrant workers including 500 Nepalis by November, An-Nahar daily newspaper reported on Saturday citing Kuwaity Ministry of Interior sources. The ministry arrested these illegal migrant workers from 22 countries during raids last month. It plans to send back them to their respective native countries at the government’s expense. The ministry has applied to the Central Tenders Committee (CTC) to purchase airtickets, the report said. 16


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According to the Ministry, the list of deportees included 4,000 Bangladeshis, 3,500 Indians, 1,000 Filipinos, 1,000 Indonesians, 1,000 Sri Lankans, 1,200 Egyptians, 1,050 Pakistanis, 500 Iranis, 500 Chinese, 500 Ethiopians and 500 Nepalis. Kuwait deported 16,000 illegal migrant workers in 2006. — HNS Source: www.thehimalayantimes.com Date: October 7, 2009 India imposes 4pc CVD Garment exports come to a grinding halt India has imposed 4 percent countervailing duty (CVD) on Nepali readymade garment export, contrary to the spirit of the revised bilateral trade treaty on which two sides recently put initials on. The Indian move, which came just ahead of Dashain festival, has brought exports of popular brands like John Players, Peter England and D J & G to a grinding halt. Uday Raj Pandey, the vice president of Garment Association Nepal (GAN), said the imposition of duty has left some Rs 100 million worth of exports stranded at the customs as well as in the warehouses of the manufacturers. To further worsen the situation, India is imposing the duty over the maximum retail price (MRP) instead of invoice value of the export items -- something that goes against the international practice of taxation. Countries across the world impose duty on ex-factory price. Few impose duty on cost-insurance-freight (CIF) rate. “Duty on MRP was never heard of in other countries and is simply unacceptable,” said Pandey. Exporters lambasted such practice also because MRP, being the negotiable retail price, stands three-fold of invoice value. So, when duty is imposed over it, the actual tax burden for the traders comes in a range of 8 to 10 percent. “It has sharply shrunk the profit return. Hence, the Indian importers have almost stopped accepting the delivery,” said an official of Alina Garment that exports D J & G brand of garment to Big Bazar, an Indian retail chain. Moreover, the new impediment to export has come just ahead of Dipawali, which is the major business season for them. During the season, GAN estimates the export to cross over Rs 200 million a month. On normal days, monthly garment exports to India hover around Rs 100 million. However, this is not the first time that India has imposed CVD on MRP. It had imposed the duty on similar style some one-and-a-half years ago. However, it revoked the decision following the request from the highest political level from Nepal. Given that the new duty has come at a time when Nepal and India are yet to sign revised bilateral trade treaty, which provides special non-tariff preferences for Nepal,

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concerned traders expressed serious doubt over the intention of India on supporting bilateral trade. However, Commerce Secretary Purushottam Ojha debunked such doubts. He said the ministry has already drawn the matter to the Indian government´s notice. “We expect India to revoke the duty soon,” he told myrepublica.com. Source: www.myrepublica.com Date: 2009-10-07 Garment exports in freefall Kathmandu - Readymade garment exports to the U.S. continued to drop sharply in 2009 continuing the trend that began after the quota system was phased out in 2005. In September, exports plunged 86 percent to US$ 90,660 against the same month in 2008. Garment exports were down 70 percent in September 2008 compared to the same month in 2007. According to Garment Association of Nepal (GAN) statistics, exports have been witnessing a continuous decline each month except in July when they edged up 8 percent compared to the same period last year. Exports had plummeted 81 percent in August. The year started with a 73 percent drop in January. Exports went down 147 percent to US$ 4.37 million over the last nine months compared to the same period last year when shipments amounted to US$ 10.83 million. After the quota system was phased out, the Nepali garment industry witnessed a decline of 84 percent as of 2008. Very few factories are operating presently as exports have been going downhill for the last five years. Garment exports saw a decline of 45 percent in 2008 compared to 2007. Likewise, exports tumbled 48 percent in 2007 compared to 2006. There was a slight decline of 6 percent in 2006 while exports were down 41 percent in 2005. Nepal's garment industry is basically dependent on the U.S. market. As the American government did not provide any protection to Nepali garments after the quota system was removed, Nepali products became uncompetitive in the international market. Nepali entrepreneurs have been seeking duty and quota-free access for Nepali garments to the U.S. with success. Garment Export to US Month

Value ($)

Jan Feb

706,964.17 915,275.61

change (%) -73 -55

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March April May June July Aug. Sept.

678,694.00 529,569.42 571,232.94 188,622.34 560,454.06 134,749.00 90,660.43

-32 -58 -49 -80 8 -81 -86

Source: GAN

Source: www.ekantipur.com Date: October 7, 2009 Dual tax rate puts off sugar importers Biratnagar- Sugar imports have stopped for the last three months after the government imposed two different tax provisions for the private sector and the government. Legal imports may have come to a halt, but smuggling is rife and there is no shortage of sugar in the market. The retail price of sugar in the Indian market of Jogbani is Rs. 48-50 per kg. When it reaches Biratnagar, the price is Rs. 50-60 depending on the quality. Chocolate, sweet, juice and biscuit factories which require large amounts of sugar have been hardly affected due to the easy availability of this vital raw material According to Tarachand Khetan, owner of Bhagwati Confectionery, there was a lack of sugar in the market because of the dual tax rate imposed by the government. The government had allowed National Trading Limited and Salt Trading Corporation to import sugar by paying 10 percent customs duty, whereas the private sector has to pay 15 percent import duty and 13 percent VAT. The government had reduced the customs duty for the private sector from 25 percent to 15 percent; even then traders have shown no interest to import sugar. Khetan said that merchants had stopped importing sugar because it would be more expensive than that sold by the government. Following a shortage of legally imported sugar, Bhagwati Confectionery has cut production to 500 kg daily. Earlier, it used to produce five tons of chocolate daily. Khetan said that factories using contraband sugar risked government action. The 20 factories in Biratnagar have reduced output because of the scarcity. Mitralal Regmi, chief of the Biratnagar Customs Office, said that 1,619 tons of sugar had entered Nepal from mid-April to mid-July 2009. No sugar has been brought in since then.

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Regmi admitted that the local requirement for sugar was being fulfilled by smugglers. Citing the open border as the main problem in controlling illegal trade, he said, "The border is open from the east to the west. We don't know by which route they bring sugar here." Rameshwor Tamang, assistant manager of Salt Trading Biratnagar, said that it was ready to provide sugar to dealers and cooperative shops. But he added that there was no stock. National Trading Biratnagar has not imported any sugar for the last five years Source: www.ekantipur.com Date: October 7, 2009 ‘Floriculture policy soon’ Kathmandu - Minister for Agriculture and Cooperatives Mrigendra Kumar Singh Yadav on Tuesday said that the government would soon endorse the much awaited floriculture policy to boost the floriculture business in the country. Addressing the inaugural ceremony of a three-day competitive exhibition of the Godavari flower (chrysanthemum) organised by the Agribusiness Promotion Programme (ABPP) at City Hall, he said, "We will approve the floriculture policy at the earliest after the necessary consultation with the Ministry of Agriculture and the Department of Agriculture." The Floriculture Association of Nepal (FAN) had submitted a draft policy to the government four years ago after the necessary review. Minister Yadav also assured full support from the government for the development and promotion of the floriculture business. An estimated Rs. 600 million has been invested in the flower business across the nation. FAN president Arun Chhetri said that many investors were not interested in the floriculture business due to the lack of a sound policy. "It is a must to develop the business more professionally and to promote domestically grown products in the international market as well," he said. As flowers are a highly perishable product, farmers living far from city areas do not plant flowers with a business purpose. "The government and the private sector should work together in various districts to encourage farmers and entrepreneurs to undertake commercial floriculture production which can be a key point to reduce poverty," said Chhetri. Nepal has been exporting various types of flowers to India, Europe, Japan and Germany. It also imports decorative flowers, roses and other flowers during Tihar and Valentine's Day from India. "Annual imports are worth from Rs. 40-50 million," said Chhetri.

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According to ABPP programme chief Roseleen Maharjan, the exhibition is being held with the view of encouraging entrepreneurs and promoting floriculture. "We expect to welcome 30,000 visitors and do business worth Rs. 1 million," said Maharjan. There are 17 stalls at the exhibition showcasing more than 100 types of flowers. Five nurseries have taken part in the Godavari flower competition. Source: www.ekantipur.com Date: October 7, 2009

MARKET: SCB's book closure drags Nepse down Sheds 23.69 points in a single day In an unprecedented case seen in Nepal´s capital market, shareholders of Standard Chartered Bank (SCB) lost Rs 1,440 per share in a single trading day on Tuesday, prompting Nepal Stock Exchange (Nepse) index to shed 23.69 points. Price of SCB shares dropped to Rs 3,960 per share from previous close of Rs 5,400 on Tuesday´s trading, where 200 units of bank´s shares changed hands. Book close cutoff date, the day after which company will not handle any transfer of shares requests until benefits - dividends or bonus issues - are transferred, of the bank on Monday and new pricing from Tuesday pushed down the price sharply. SCB, one of the largest profit making private banks, has announced 50 percent bonus share and Rs 50 per share as cash dividend to its shareholders. The huge loss in the share price of SCB pushed down the benchmark Nepse by 3.72 percent or 23.69 points to close at 613.18 points. During previous two trading sessions, Nepse had recorded marginal gains after weeklong Dashain holidays. Sensitive index, an indicator of trading of Class A category companies, shed 8.61 points or 5.24 percent at the end of Tuesday´s trading session. Banking, the dominant trading group in Nepal´s capital market, lost whopping 39.28 points to drop at 604.24 points in its sub-index with the loss in the share prices of major banks, including Standard Chartered Bank, NMB Bank, Bank of Kathmandu and KIST Bank. Development Bank and Hydro Power groups also saw their sub-indices slip by 2.3 points and 7.8 points to 666.54 points and 814.77 points respectively. However, Finance and Insurance groups registered marginal gains of 0.89 points and 1.48 points to close at 638.03 and 608.52 points respectively at the end of Tuesday´s session. Total turnover reached Rs 6.07 million with 163,259 units of shares and 58 scrips changing hands through 695 transactions on Tuesday. Total market capitalization -total worth of listed shares -- has reached Rs 429.90 billion.

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Source: www.myrepublica.com Date: 2009-10-06

GENERAL: No border pillar at 39 spots BIRATNAGAR: Thirty-nine border pillars in various places that were swept away by rivers during the monsoon have not been put back in place yet. Visitors in the area are in a state of confusion about the border for the pillars are still missing. According to border security office Biratnagar, most of the 24 pillars in the area from Daraiya to Mirjadangi of Mahadev VDC have been swept away. A police officer at border security office said that they had informed the matter to higher authority, but to no avail. The office has accused the government of turning deaf ears to their frequent requests. Source: The Himalayan Times Date: 2009-10-06

Hajj Committee gets full shape The government on Tuesday gave full shape to the Hajj Committee. The move comes in the wake of concerns that any further delay in giving full shape to Hajj Committee could dash hopes of many Muslims aspiring to make pilgrimage to the holy Mecca and Medina this year. According to Hajj Committee member secretary Abdul Kalam Khan, the newlyappointed members of the 21-member Hajj Committee include Gaida Sher Khan (Kathmandu), Ruhi Akhtar (Parsa), Jamiruddin Mansur (Sarlahi), Halim Sah (Dailekh) and Islam Miya (Sangja). All these members belong to the ruling CPNUML. Maulana Mahamud Aalam of Madhesi People´s Rights Forum-Democratic, Mohammad Mustafa of CPN-ML, Jamila Marayam Phalahi of Tarai Madhes Democratic Party and Ilmuddin Miya of Nepali Congress are among those appointed as the members of the committee. Earlier, the government had appointed Abdul Jabbar Manjari as chairman and Khan as member secretary of the Committee. The 21-member Hajj Committee comprises two officio members from various mosques in the country and one each from Home, Foreign, Finance, Tourism and Culture and Federal Affairs ministries. The government appoints 12 other members. Officials said one of the members in the Committee is yet to be appointed as the 22


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Maoists are yet to send name of their representative. Those planning to make pilgrimage to Mecca and Medina this year should reach Saudi Arabia by November 20, 2009. On an average, some 500 Nepali pilgrims visit holy Mecca and Medina every year.

Source: www.myrepublica.com Date: 2009-10-06 Police 'ambush' bike-borne criminals Metropolitan police had its first big break in nabbing the bike-borne jewelry snatchers after it turned to the “ambushing method”. The method involves women volunteers decked with fake ornaments, who roam around the anticipated areas luring them to attempt snatching. As soon as the snatchers hold out hands to grab the jewelries, plainclothesmen, who stay close to the volunteers, get them into the net. The police caught its first prey in Gaushala on Tuesday afternoon. According to police, Rabin Tamang, 18, and Sabin Rai, 19, both from Sunsari, had tried to snatch a woman´s jewelry in Pingalasthan, Gaushala while they were riding a motorcycle (Ba.24.Pa 7067). The police had to devise this strategy after such incidents rose alarmingly over a couple of months, said SP Navaraj Silwal, chief of Metropolitan Police Range Kathmandu. Though the ambush teams had been deployed at major possible areas, four such incidents took place on Monday alone. “Now we will hopefully continue with successes,” Silwal added. Metropolitan Police has fielded some hundred women volunteers and over two hundred male and female cops in the capital to ambush the snatchers. According to police, combined ambush groups are mobilized in various sensitive areas. According to a record prepared by police, two such incidents were reported everyday in the capital for the last two months. Those who are involved in this crime are especially teenagers who are mostly found to be drug addicts. Police said the modus operandi (MO) is simply to ride a motorcycle in a group, enter areas where people move thinly and find the victim from whom the pillion rider snatches whatever comes off handy. The second incident on Tuesday was only a little different in circumstances. Prakash Rai, 21, a +2 student from Jyatha and Shakti Pujari, 19, from Swayambhu snatched the ring from Sharada Khanal in Kalanki where she was looking for vegetables. The two were trapped in Kalanki within 10 minutes by the ambush group at Soalteemode. Source: www.myrepublica.com Date: 2009-10-06 23


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Eight Nepali speaking people shot dead in Assam National Democratic Front of Bodoland (NDFB), an underground armed outfit active in North-east India, has shot dead eight Nepali speaking persons along with two persons of the indigenous community and two Assamese in Sonitpur, Assam, India, Kantipur daily reported. A group of NDFB armed personnel opened fire in Bhimaji village of Sonitpur, about 250-km north-east of state capital Guwahati, Sunday evening killing 12 and wounding a matching number, according to Dil Bahadur Limbu, chairman of All Assam Gorkha Students Union. Those killed include Danu Mani Bahadur Pradhan, Ganesh Chhetri, Chandra Chhetri, Uma Devi, Kuleshwar Pradhan, Ranju Pradhan, Bhuwan Newar and Man Bahadur Chhetri. NDFB could have attacked the village for failing to give them donation and informing the administration about their activity. "They asked a donation of Rs 0.6 million from people owning less than 0.4 million and started killing those who failed to provide the donation," Limbu said. "It could be an attempt to drive out Gorkhalis from there." Associations of Nepali speaking people in Darjeeling and Assam have condemned the attack. Student unions and other organisations have called a 24-hour strike in protest of the incident and demanding security of Nepali speaking people and compensation to the family of the deceased. Gorkha Janamukti Morcha organised a mass assembly in Darjeeling against the attack. Source: www.nepalnews.com Date: 06 October 2009 Kingpin of FICN racket shot in Nepal BAHRAICH: Majid Manihar, the alleged kingpin of fake Indian currency notes (FICN) racket being run from Nepal, was shot dead at a hotel in Nepalgunj in Nepal on Monday. The Indian police have been on the lookout for Manihar for quite some time and he was supposed to be the point man of ISI's chief operative in Nepal. Originally a native of Shrawasti district of UP, Manihar had made his base just across the border. Early last month, Bahraich police had arrested his son Vicky when he was trying to enter India for handing over a consignment of fake currencies.

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According to Nepalese police, Majid, a resident of Bageshwori Tola in Nepalgunj, had gone to a hotel, where he was staying for the past two days, on Monday afternoon. His body, with several gunshot injuries, was recovered from the hotel. Pramod Bahadur, a Nepalese police officer said that empty cartridges of a .9 mm pistol have been recovered from the site. Security has been tightened in the Indian side of the border. Source: timesofindia.indiatimes.com Date: October 7, 2009

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