Issuu on Google+

R&D Economic Research & Business Development

Date: June 3, 2010

Highlights

 

The Global Environment Facility (GEF), a World Bank initiative to address environmental problems, is set to double its aid to Nepal under its new programme GEF-5 which starts July 1. "Nepal will receive US$ 12 million under the four-yearly programme," said Bhuwan Karki, under secretary at the Finance Ministry. Poverty Alleviation Fund (PAF) Nepal, the World Bank (WB) supported antipoverty project, has sought additional grant assistance of $200 million to implement its programs for the next three years, starting 2012. The National Planning Commission has set a budget ceiling of Rs. 810 million for the Ministry of Tourism and Civil Aviation for the fiscal year 2010/11. The four-wheeler market that enjoyed over five straight years of robust expansion now seems cooling down, thanks to the banks chocking off auto loans. The plunge in demand in the auto market is so deep that some leading car dealers call it the most severe ´recession´ in recent memory. The Ministry of Finance (MoF) has directed the Ministry of Tourism and Civil Aviation (MoTCA) to cancel the aircraft procurement process initiative by national flag carrier Nepal Airlines Corporation. In a letter to MoTCA on Wednesday, MoF suggested MoTCA direct NAC to recover the lock-up money of $750,000 forwarded to aircraft manufacturer Airbus. The government needs to develop a pro-migrant worker policy and utilise remittances to that end, a government sponsored study has suggested. The study commissioned by the Department of Foreign Employment (DoFE) and carried out by Nepal Development Study Corporation (NDSC) has suggested five points that include training to migrant workers, exploring new destinations, simplifying remittance policy, and utilisation of the remittance money in the manufacturing sector. The study has suggested to invest at least five per cent of the annual budget in this sector. The Department of Revenue Investigation (DRI) has dug out all membership details of fraudulent Unity Life International (ULI) that raked in billions of rupees from some 650,000 persons. But it has not yet managed to access crucial financial data of the company, even two weeks after it seized all related documents. International long distance call rates have come down significantly with telecom service providers coming up with attractive new schemes. Many customers, whether of Nepal Telecom, Ncell or United Telecom, are enjoying 1


R&D Economic Research & Business Development

the lowered tariff to call their children studying abroad or family members working in foreign countries as these three major telecom service providers have slashed international call rates to attract new customers. The price of the precious yellow metal skyrocketed to yet another record high of Rs. 30,910 per 10 gm (Rs. 36,050 per tola) on Wednesday amid scarcity in the local market. Last Wednesday, the precious yellow metal was traded for Rs. 30,605 per 10 gm (Rs. 35,700 per tola) and the price had declined to Rs. 30,180 per 10 gm on Thursday. The price had steadied for four consecutive days till Monday. The Nepal Stock Exchange (NEPSE) benchmark index on Wednesday saw a marginal gain of 0.5 points to end at 480.84 points. Yesterday, the index had plunged by 10.1 points to close at 479.98 points while on Monday it had lost 16.27 points. The second meeting of the three big parties after signing the three-point agreement to extend Constituent Assembly (CA) tenure has ended inconclusively on Wednesday afternoon. Constituent Assembly (CA) Chairperson Subash Nemwang has urged the 25 political parties represented in the CA to promulgate the constitution within the extended deadline and take the peace process to a logical conclusion. A meeting of the Army Integration Special Committee (AISC) for Supervision, Integration and Rehabilitation of Maoist combatants called for Wednesday afternoon was postponed after the main opposition Unified CPN (Maoist) representatives boycotted the meeting. CPN-UML senior leader KP Sharma Oli—whose role was crucial in clinching a deal among the three major parties at the eleventh hour on May 28 to extend the Constituent Assembly term by a year—is miffed at the main opposition for what he says ‗speaking against the spirit of the deal‘. The UPCN (Maoist) on Wednesday said that the ruling Nepali Congress and the CPN-UML betrayed it over the issue of the prime minister‘s resignation. The main opposition said that though five days had elapsed since the ruling parties committed to the prime minister‘s resignation for consensus, they did not implement it. US ambassador to Nepal Scott H DeLisi today visited the Khudunabari refugee camp in Jhapa. During his visit, he enquired the Bhutanese refugees about the resettlement programme and its impact in their lives. The Cabinet on Wednesday gave the nod to the Nepal Army (NA) to invite Indian Army Chief Gen. V. K. Singh for an official visit to Nepal. Singh, who succeeded Gen. Deepak Kapoor on March 31, will be conferred the title of Honorary General of NA. Gen. Kapoor was decorated with the honorary title during his Nepal visit in January.

2


R&D Economic Research & Business Development 

In a twist to Nepal‘s desire to acquire Machine Readable Passports (MRPs), India and China have recently picked up tender copies for MRP bids at a cost of Rs 10,000 each. A Beijing-based security printing firm recently picked up the bid document. However, it is not known whether it was a government undertaking or a private company.

POLICY:

Nepal to get $12m in eco aid The Global Environment Facility (GEF), a World Bank initiative to address environmental problems, is set to double its aid to Nepal under its new programme GEF-5 which starts July 1. "Nepal will receive US$ 12 million under the four-yearly programme," said Bhuwan Karki, under secretary at the Finance Ministry. The ministry's foreign aid coordination division has been working as the operational focal point for GEF aid. "The aid will be used for addressing climate change, preserving bio-diversity and addressing land degradation into drought or concrete zones," said Karki. Under the ongoing GEF-4 programme, Nepal was eligible to get a maximum of US$ 6 million from the GEF. Nepal had to compete with Bhutan, Myanmar and Maldives to get the money as they were in the same group. "The proposed US$ 12 million will be allocated exclusively to Nepal, and it will not have to compete with any country for it," said Karki. Nepal will have to submit projects with co-financing options to receive the committed money, he added. Nepal did not receive all of the US$ 6 million under the GEF-4 programme whose term is expiring on June 30. Nepal received funds under GEF-4 for the areas of bio-diversity and climate change. Nepal got US$ 3 million for climate change recently under GEF-4. The fund is being used in the Asian Development Bank (ADB) funded Sustainable Urban Transport Management Project under which the Kathmandu Valley's transportation system will be improved.

3


R&D Economic Research & Business Development

The ADB will be making an additional investment for the project which aims to manage traffic, control vehicular pollution and improve the operation of public transport. Nepal is poised to get only US$800,000 for the bio-diversity sector which has been used for wetland conservation and some other purposes. The GEF is a global partnership among most of the countries, international institutions, non-governmental organizations (NGOs) and the private sector to address global environmental issues while supporting national sustainable development initiatives. It provides grants for projects related to six focal areas: biodiversity, climate change, international waters, land degradation, the ozone layer and persistent organic pollutution. For the world community, Nepal‘s eco-conservation holds priority. http://www.ekantipur.com/the-kathmandu-post/2010/06/02/business/nepal-to-get12m-in-eco-aid/208972/

PAF seeks $200m for next 3 yrs overty Alleviation Fund (PAF) Nepal, the World Bank (WB) supported anti-poverty project, has sought additional grant assistance of $200 million to implement its programs for the next three years, starting 2012. Vidyadhar Mallik, vice chairman of PAF, said they had already written to Prime Minister´s Office and Ministry of Finance about the need for additional grant assistance. He expressed optimism that the WB would extend the support, especially as its recently concluded medium-term review of the project too has recommended to extend the support. PAF sought the new support for expanding its programs to additional 15 districts and also for implementing targeted anti-poverty programs in the special poverty pockets in 20 districts of the country. It has already expanded its programs to 40 districts, including the 15 districts where the programs are being implemented from this fiscal year. It implemented the programs in other 25 districts five years ago. Under the programs, implemented under PAF I and PAF II projects, the anti-poverty body has carried out its programs in 372,207 poorest households of the country. ―These households have formed around 12,000 community organizations and are implementing over 12,850 income generation activities and 2,590 community infrastructure development programs,‖ Mallik said. Referring to the independent impact assessment of the programs in four PAF districts by Department of Population Studies of Tribhuvan University, PAF executive director

4


R&D Economic Research & Business Development

Raj Babu Shrestha said poor beneficiaries of PAF witnessed 19 percent higher rise in household income and 23 percent rise in consumption as compared to households in non-PAF districts. ―PAF beneficiaries too recorded 45 percent rise in education spending, something which demonstrate improvement of access to education among poor,‖ said Shrestha. He further said that the 72 percent of PAF beneficiaries are female-led households and that the programs have covered more than 29 percent Dalits, 27 percent indigenous nationalities and more than 43 percent other communities. Moreover, studies have also shown that PAF programs have facilitated social inclusion and fostered harmony at the community level. Apart from support from the WB, PAF officials said that they are also knocking doors of other donors as well, like Department for International Development (DFID), for garnering support from multiple development partners. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=19418

Rs 810m budget ceiling for MoTCA The National Planning Commission has set a budget ceiling of Rs. 810 million for the Ministry of Tourism and Civil Aviation for the fiscal year 2010/11. This upper limit represents an increment of 45 percent compared to the current fiscal year's budget. This fiscal year, the Tourism Ministry has been allocated a budget of Rs. 500 million to build tourism infrastructure and develop projects. The Tourism Ministry has sought Rs. 920 million for the next fiscal year. It has also asked for an additional Rs. 230 million for Nepal Tourism Year 2011. "We have set ambitious projects, and have asked for funds in line with them. However, the National Planning Commission's ceiling is comparatively low as per our programmes and projects," said Ranjan Krishna Aryal, acting secretary at the Tourism Ministry. The proposed budget for the coming fiscal year has given priority to a number of infrastructure development projects. A number of projects proposed in the current fiscal year's budget are likely to be continued in the next fiscal year, Aryal said. Among the projects being carried over are expansion of Pokhara and Janakpur regional airports, installation of a new radar system at Tribhuvan International Airport (TIA) and TIA improvement project. The government has allocated Rs. 180 million for infrastructure out of the total budget. Likewise, new trekking trails, beautification projects and temple renovation are some of the new projects the ministry has proposed in the upcoming budget. http://www.ekantipur.com/the-kathmandu-post/2010/06/02/business/rs-810m-budgetceiling-for-motca/208971/

5


R&D Economic Research & Business Development

BUSINESS & ECONOMY:

Auto sales plunge as banks tighten credit KATHMANDU, June 3: The four-wheeler market that enjoyed over five straight years of robust expansion now seems cooling down, thanks to the banks chocking off auto loans. The plunge in demand in the auto market is so deep that some leading car dealers call it the most severe ´recession´ in recent memory. Leading global brands like Nissan, Chevrolet and Honda say that their sales have gone down to half of what they used to be just six months back. "There is more than 50 percent decline in sales of private vehicles from Nissan, whereas sales of commercial vehicles have plummeted nearly 90 percent," said Shambhu Subedi, senior manager of Nissan Vehicles, Dugar Brothers & Sons. The single reason for the decline, all of them say, is the wedging of auto loans that have come down to almost nil, as the credit exposure of most established banks has already crossed the limit set recently by Nepal Rastra Bank. Not that all banks have stopped lending. Some banks with comparatively comfortable portfolios are still lending but the rates have gone up to 16 percent from around 7 to 8 percent just a year back. This is natural when banks are compelled to pay 12 percent for fresh one-year deposits, says Rajan Singh Bandari, CEO of Citizen bank, adding, "Sixteen percent interest becomes normal when you add 4 percent cost of funds," he said. "The scarcity of financing is making a huge difference in the sales of Daihatsu cars," said Akash Golchha, director of Golchha Organization. Local market leader Hyundai is also feeling the heat. "Sales of Hyundai cars have gone down 35 to 40 percent but we don´t see much difference in sales for high-end vehicles," said Rupesh Sharma Bhatta, senior manager for Business Development and Planning at Laxmi Intercontinental Pvt Ltd, the official partner for Hyundai. Hyundai is selling the popular hatchbacks i10 and i20. There are similar jitters at almost all other dealers. Rabindra Raut, general manager for sales and after sales at Vijay Motors, authorized dealer for Chevrolet cars, said, "Expensive cars from Chevrolet are not affected much but sales of the smaller ones that dominate sales volume have decreased by almost 50 to 60 percent." Ananda Raj Gurung, marketing manager of Honda Car Showroom, Syakar Company Ltd, speaks of similar pain but declines to give figures. The impact of weak sales is also reflected in vehicle registration data. "Nearly 70 percent fewer vehicles are being registered since the banks tightened the flow of auto loans," said Anil Kumar Gurung, director of the Department of Transport

6


R&D Economic Research & Business Development

Management. The Department issued the order on replacement of Safa Tempos (three wheelers) with faster means of transport in October. Approximately 500 three wheelers in Kathmandu were to be replaced. "If financing by the banks was as before, all three-wheelers would have been replaced by now but only about 50 of them have been replaced to date," added Gurung. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=19425

MoF wants Airbus purchase scrapped KATHMANDU, June 2: The Ministry of Finance (MoF) has directed the Ministry of Tourism and Civil Aviation (MoTCA) to cancel the aircraft procurement process initiative by national flag carrier Nepal Airlines Corporation. In a letter to MoTCA on Wednesday, MoF suggested MoTCA direct NAC to recover the lock-up money of $750,000 forwarded to aircraft manufacturer Airbus. MoF has also asked MoTCA to recover the money with interest from the officials concerned if Airbus refuses to return the lock-up money. A ministerial-level decision taken by MoF on May 24 concluded that the aircraft purchase and selection process was not as per the existing law, citing a similar conclusion reached in the case by the Public Accounts Committee. The MoF decision has recommended adherence to the Center For Pacific Aviation (CAPA) report on management reform at NAC and initiation of another purchase process for new aircraft to be operated in profitable sectors. MoTCA had sent a letter to MoF on November 8, 2009 seeking government guarantees for loans to purchase new aircraft for NAC. MoF made the recommendations in response to MoTCA´s letter. "We received the MoF letter on June 1. The opinion reached after discussions with the tourism minister will be as a directive for Nepal Airlines Corporation", Ranjan Krishna Aryal, acting secretary at MoTCA, told myrepublica.com. According to him, MoTCA has not taken any decision after receiving the MoF letter. According to sources, KB Limbu, managing director of NAC, had received a copy of the letter before it reached MoTCA. "Before acceptance of tender in the purchase process for new aircraft, financial closure and a decision on the Nepal government´s guarantee should be completed", the letter states. However, an official at NAC said on condition of anonymity,"The aircraft purchasing process is not against the law as MoF is claiming and we have taken steps as per the Public Procurement Act."

7


R&D Economic Research & Business Development

He said,"MoF has failed to explain how it has violated the existing legal provisions and we have not understood it yet." According to him, the aircraft purchase process was forwarded following the financial regulations of NAC. PAC had also given directions to the government to cancel the aircraft purchase process for NAC, on Dec 28, 2009. NAC has to operate international flights with its two 20-year-old Boeing B757s. According to tourism entrepreneurs, the MoF decision will affect the government´s plans to celebrate Nepal Tourism Year 2011 as a mission to bring in one million tourists that year. On Oct 2, 2009, NAC had decided to buy a wide-body Airbus A330-200 and a narrow-body A320-200. The committee formed under the coordination of then Joint Secretary Bimal Wagle had set eight conditions before NAC for a government guarantee for loans. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=19422

Investigators access Unity's membership details KATHMANDU, June 3: The Department of Revenue Investigation (DRI) has dug out all membership details of fraudulent Unity Life International (ULI) that raked in billions of rupees from some 650,000 persons. But it has not yet managed to access crucial financial data of the company, even two weeks after it seized all related documents. Of the three servers, which are is believed to contain crucial data, seized by the joint team of DRI, district administration office and Nepal Police, DRI has yet to get access to one of them. "We have retrieved all the data from the two servers. But we are still facing problems in accessing crucial financial data as we encountered technical glitch on the third server," said Mahesh Prasad Dahal, director general of DRI. Although he did not disclose what the technical glitch was, sources at DRI said the investigation team had encountered hardware problems on the server. To overcome the problem, DRID has sought help of hardware specialists. "We expect the problem to be sorted out by Thursday," Dahal said. Home Ministry officials, however, said the problems faced in accessing membership and financial details of the company was the sole factor behind delay in filing case against Unity.

8


R&D Economic Research & Business Development

"To file the case, we need concrete figures on the number of people that Unity cheated and how much amount it collected from them. We are waiting for the crucial data from DRI," the source added. DRI has stated that it will hand over all the data that it has unearthed so far and also the financial details of Unity to the police as soon as it gained access to the third server. "Police will file forgery case against Unity as soon as we handover the data," Dahal said, adding that DRI too will simultaneously launch separate investigation against Unity on the cases related to revenue evasion, money laundering and capital flight. As for other fraudulent activities, Nepal Rastra Bank (NRB) and Insurance Board (IB) have already forwarded formal documents to the Home Ministry seeking action Unity for the financial crime, clearly specifying the laws that it flouted. Investigations have also shown that Unity had violated both Insurance Act and banking law of the country by providing those services without due approval from concerned regulators. "Ministry of Commerce and Supplies (MoCS) too have forwarded a notification to the Home Ministry to take action against Unity for operating network marketing business of services despite its ban and also for flouting Consumers Rights Protection Act," said Commerce Secretary Purushottam Ojha. Company Registrar´s Office (CRO), meanwhile, said that the government decision to deregister the company has come without due study of the existing Company Act and that it was facing problems to implement it. Acting Company Registrar Keshav Prasad Adhikari said they had received the formal direction from Ministry of Industry on Sunday, but could not act promptly because of the lack of legal provision on forceful deregistration of any company. Going by the existing law, CRO can scrap registration of a company only if the promoters asked for it, if the company did not renew its registration for protracted period, and if it did not submit necessary documents to the CRO for three consecutive years. CRO officials admit that Unity´s crime was serious that not furnishing documents to the CRO for three years. "But because the law is silent on such deregistration, we do not know how to implement the decision," the added. The most surprising thing in the whole Unity saga is that the police have not yet managed to nab its top brass, including Chairman Kashi Ram (Prasad) Gurung and Managing Director Bishnu Bahadur Chhetri. Police say they have not yet traced their whereabouts, even though various media this week carried advertisement undersigned by Kashi Ram (Prasad) Gurung, appealing Unity clients to maintain patience.

9


R&D Economic Research & Business Development

In the advertisements, Gurung not only dared to challenge different government ministries and the state as a whole, but has also claimed that the company will come out clean from the actions launched against it. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=19427

ILD calls become cheaper International long distance call rates have come down significantly with telecom service providers coming up with attractive new schemes. Many customers, whether of Nepal Telecom, Ncell or United Telecom, are enjoying the lowered tariff to call their children studying abroad or family members working in foreign countries as these three major telecom service providers have slashed international call rates to attract new customers. "Till a few years ago, it used to cost Rs. 35 to call my son in the US," said Parbati Lamsal, a housewife from Jawalakhel, Lalitpur. "Now it is very cheap, so I call him everyday." The price war started about six months ago with United Telecom offering calls to India for Rs. 3 per minute. After the re-branding of Mero Mobile to Ncell, Spice Nepal introduced a corporate offer that allows customers to make international calls for Rs. 4 to the US, Rs. 5 to India, China, Hong Kong, Singapore and Thailand and Rs. 6 to Malaysia and South Korea. On May 14, Ncell introduced a scheme for international long distance calls that allows postpaid and prepaid customers to make calls at Rs. 6 to 10 various countries the US, India, Canada, China, Hong Kong, Malaysia, Baharain, Saudi Arabia, South Korea, and Thailand. "We offer quality service conveniently without customers having to dial an access code," said Sanju Koirala, corporate communication manager of Ncell. "We will continue bringing additional quality services at lower prices to our customers." While making international calls under United Telecom's offer, its subscribers have to dial the code 1220 before the country code. It offers international calls to the US and Canada for Rs. 4, and to China, Singapore, Hong Kong and Thailand for Rs. 5. For, Taiwan, Pakistan and Bangladesh, United Telecom charges Rs. 8 per minute. Following the launching of Ncell's scheme, Nepal Telecom on Tuesday also introduced a new tariff which allows its subscribers having international call facility to make international calls at Rs. 4 to seven countries and Rs. 6 to three other countries. It costs Rs. 8 per minute to call Bangladesh, Pakistan, Israel and Taiwan and Rs. 10

10


R&D Economic Research & Business Development

per minute to call Japan and Russia. Nepal Telecom subscribers have to dial the access code 1424 to make calls under this scheme. Surendra Prasad Thike, spokesperson of Nepal Telecom, said that they had reduced the call rates to compete with cheaper internet calls and also because the tariff has been declining in the international market following technological advancements and market expansion. "Competition among telecom service providers is also one of the reasons behind the tariff reduction," Thike added. http://www.ekantipur.com/the-kathmandu-post/2010/06/02/business/ild-calls-becomecheaper/208974/

MARKET:

Use remittances to develop migrant workers policy The government needs to develop a pro-migrant worker policy and utilise remittances to that end, a government sponsored study has suggested. The study commissioned by the Department of Foreign Employment (DoFE) and carried out by Nepal Development Study Corporation (NDSC) has suggested five points that include training to migrant workers, exploring new destinations, simplifying remittance policy, and utilisation of the remittance money in the manufacturing sector. The study has suggested to invest at least five per cent of the annual budget in this sector. Remittance is contributing around one-fifth to the total gross domestic production (GDP), second after the agriculture sector that contributes 32 per cent. NDSC study has further suggested the government to develop separate policy for women migrant workers as a large number of housemaids are suffering from exploitation in destination countries. Over 1,00,000 Nepali women believed to be working in the Gulf countries –– Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, Oman and others –– are vulnerable to exploitation in workplace. According to the study ‗around 40-50 per cent Nepalis are leaving the country for overseas jobs through illegal channel'. According to the report, around 800 Nepalis are leaving the country for overseas jobs every day, which is significantly higher than the previous year. Around three million Nepalis are engaged in jobs overseas, with the Gulf countries and Malaysia together accounting for about 90 per cent of them. According to DoFE, 1,87,149 Nepalis have been employed in overseas jobs last year while in the current year 2,31,943 have already left for foreign jobs.

11


R&D Economic Research & Business Development

Foreign employment is generating revenue for the country. According to the study, the government had earned Rs 1.13 billion from passport and airport tax from migrant workers in 2008-09. Of 4,28,612 passports issued in Nepal, 2,19,965 are migrant workers. Outsourcing and orientation organisations are paying Rs 7.4 million per year as renewal fee. Around 3,43,913 Nepalis are employed abroad. Training unskilled workers is a major challenge for increasing remittance base for Nepal. Around 75 per cent Nepali workers are unskilled, followed by about 25 per cent semi-skilled and only a nominal per cent of the migrant workers are skilled. Nepali banks and finance companies depend on remittances. According to the study, around 26 commercial banks, two finance companies and 45 remittance companies are engaged in the business. Nepali migrant workers going to the Gulf countries and Malaysia are occupying 58.97 per cent of the total seats in airways that fly to these destinations. Of 7,172 weekly air seats to the destinations, Nepali migrant workers occupy 4,230 seats. 2010-06-01 http://www.thehimalayantimes.com/fullNews.php?headline=Use+remittances+to+dev elop+migrant+workers+policy+&NewsID=245855

Gold soars to Rs 30,910 The price of the precious yellow metal skyrocketed to yet another record high of Rs. 30,910 per 10 gm (Rs. 36,050 per tola) on Wednesday amid scarcity in the local market. Last Wednesday, the precious yellow metal was traded for Rs. 30,605 per 10 gm (Rs. 35,700 per tola) and the price had declined to Rs. 30,180 per 10 gm on Thursday. The price had steadied for four consecutive days till Monday. "Devaluation of the Indian rupee against the US dollar and the effect of the European Union's rescue package for Greece has especially contributed to the price hike," said Tej Ratna Shakya, president of the Nepal Gold and Silver Dealers Association. "Yesterday, we traded around 25 kg of gold. Today, we have sold hardly 10 kg due to the price hike as people are in a wait and see mood." The daily requirement of the local market is 25 kg because of the wedding season. According to gold traders, NIC Bank, NMB Bank, Standard Chartered, Machhapuchchhre Bank, Nabil Bank and Prime Commercial Bank are engaged in importing 10 kg of gold from the international market daily. "Maybe importing gold is not the job of commercial banks as they have not been able to import even 10 kg a day on a regular basis," said Shakya. He added that as per the provision of Nepal Rastra Bank, commercial banks should have imported around 450 kg by now, but they have released only around 370 kg in the market. Traders said that demand was expected to increase to over 30 kg per day within two weeks because of

12


R&D Economic Research & Business Development

the wedding season. Meanwhile, representatives of the gold traders association are scheduled to meet with Nepal Rastra Bank governor Yuvraj Khatiwada on Sunday to discuss the demand and supply of gold in the local market. Shakya said that as the commercial banks had not been able to address the demand of the local market by importing gold in low quantities, they would urge the central bank to make a new provision to allow gold traders to import at least 20 kg of gold daily.

Day Price per 10 gm

Price per tola

June 2 Rs. 30,910 Rs. 36,050 June 1 Rs. 30,435 Rs. 35,500 May 31 Rs. 30,180 Rs. 35,200 May 26 Rs. 30,605 Rs. 35,700 http://www.ekantipur.com/the-kathmandu-post/2010/06/02/business/gold-soars-to-rs30910/208970/

NEPSE gains 0.5 pts 02 June 2010 The Nepal Stock Exchange (NEPSE) benchmark index on Wednesday saw a marginal gain of 0.5 points to end at 480.84 points. Yesterday, the index had plunged by 10.1 points to close at 479.98 points while on Monday it had lost 16.27 points. Except the two groups of development and commercial banks, the key players in the secondary market, the sub-indices of all groups whose shares were traded today moved up. The commercial banks declined by 5.39 points to close at 454.55 points while the development banks lost 3.35 points to rest at 497.81 points. On the other hand, the group categorised as others led the upturn rally as it gained 21.15 points to end at 558.1 points. The hydropower, insurance and finance rose by 7.03 points, 5.57 points and 0.51 points to finish at 747.6 points, 564.96 points and 437.72 points respectively. The sensitive index, that measures the performance of Group A companies, also gained a meagre 0.25 points to end at 117.5 points. The NEPSE today traded 57,662 units of shares worth Rs 28,307,011 in 873 transactions. nepalnews.com

13


R&D Economic Research & Business Development

POLITICS:

Crucial three-party meet ends without results The second meeting of the three big parties after signing the three-point agreement to extend Constituent Assembly (CA) tenure has ended inconclusively on Wednesday afternoon. During the meeting held at the CA building, the leaders are learnt to have stood firm on their position over implementation of the three-point agreement. The parties had failed to meet after Sunday due to differences among them on interpretation of the agreement. Prime Minister Madhav Kumar Nepal, who also attended the meeting, told reporters at the CA building premises that he is ready to step down if parties reach consensus on peace process and implementation of the past agreements. Nepali Congress acting president Sushil Koirala said his party would not support the formation of a new government until other conditions are met. He said PM‘s resignation and implementation of other issues must be resolved simultaneously. Maoist vice chairman Narayan Kaji Shrestha said his party urged PM Nepal to step down by this evening and open way for formation of the new unity government considering the approaching day for unveiling budget for the new fiscal year. However, he refused to comment on future action from his party if PM did not resign today. NC acting president Koirala and parliamentary party leader Ram Chandra Poudel, CPN (UML) chairman Jhala Nath Khanal and senior leader K. P. Oli and Unified CPN (Maoist) chairman Pushpa Kamal Dahal and vice chairman Narayan Kaji Shrestha attended the meeting. Khanal had, earlier today, expressed confidence that the three parties will materialise the pact by this evening paving way out for PM Nepal to resign and initiate formation of the national consensus government. The smaller parties have intensified pressure on the big three to sincerely implement the pact and end the deadlock. nepalnews.com

CA chair urges 25 parties to promulgate statute within extended deadline, conclude peace process Constituent Assembly (CA) Chairperson Subash Nemwang has urged the 25 political parties represented in the CA to promulgate the constitution within the extended deadline and take the peace process to a logical conclusion.

14


R&D Economic Research & Business Development

In a meeting with the leaders of the 25 political parties he called at the Constituent Assembly building at the International Convention Center on Wednesday, he laid special emphasis on promulgating the constitution within the next eight or nine months. Talking to media-persons after the meeting, Nemwang said that the leaders of all the political parties are serious regarding promulgating the new constitution within the extended deadline. He also expressed confidence that the three major parties will move ahead as per Friday‘s three-point agreement which led to the extension of the CA‘s tenure. The agreement binds the three parties to complete all the remaining tasks of the peace process. Nepalnews.com

Oli boils over Maoists NEW DELHI: CPN-UML senior leader KP Sharma Oli—whose role was crucial in clinching a deal among the three major parties at the eleventh hour on May 28 to extend the Constituent Assembly term by a year—is miffed at the main opposition for what he says ‗speaking against the spirit of the deal‘. In the dying hours of House, the ruling coalition—the Nepali Congress and CPNUML—and the UCPN-Maoist struck a three-point deal to extend the CA term. However, differences have surfaced since then regarding the definition of the deal. ―The issues of Prime Minister Madhav Kumar Nepal‘s resignation and implementation of the Maoists‘ commitment to dissolve YCL, agreeing to a common modality on integration of their combatants and returning of the seized property to the rightful owners are all inter-related. PM‘s resignation issue cannot be treated separately,‖ Oli told The Himalayan Times just before his departure from here to Kathmandu. The UML leader made it clear that he had told the Maoist leaders to take at least 15 days to implement what they had committed. ―But they said they would need only five days to implement the deal. So, I said the PM would resign within five days only in the case they keep their word,‖ said Oli. But Oli accused the Maoists of not moving even an inch forward on implementing the deal and playing blame game. ―The five-day commitment was not mentioned in the deal, it was just a verbal agreement,‖ he said. ―Nobody, not even the Maoist leaders were supposed to reveal the five-day deadline. But now they have spread the word, they should wait patiently until the last moment of the deadline.‖ The UML leader came down heavily on the Maoists saying they are harping on the PM‘s resignation but have forgotten the commitment they made.Oli was of the view that the first two points of the three-point agreement would, among other things, entail

15


R&D Economic Research & Business Development

having appropriate mechanisms to deal with the issues of constitutional provision and peace. ―Had the issue of five-day deadline been that important for the Maoists, they should have pressed for mentioning it in the deal. Since all the parties were unanimous not to write in the deadline in the deal, the Maoists should stop worrying about it,‖ he said. ―It is unfortunate that we begin something with good intentions but end up making attempts to sabotage the same. ―Oli, who has been a vocal critic of the Maoists for long, was involved in engaging the main opposition in serious political debate for the first time. Noting that dealing with ultra forces was not a cake walk, Oli said he however was not discouraged and that he was ready to hold further rounds of dialogue with them. ―Given their ultra communist ideology, it is but natural on their part to make mistakes. We should still engage them and effect moderation on them,‖ said Oli. He also maintained that the Maoists wanted to extend the CA term more than anyone else, but put forth the conditions as a bargaining chip. Without divulging much, Oli blamed ‗various elements‘ for goading the Maoist‘s on to complicate political situation before May 28. Asked if he was in the race for the prime minister‘s chair and his visit was in anyway an attempt to garner moral support from India for the same, Oli tried to clear the air saying those were ‗unhealthy talks‘ and added that if he ever wanted to become prime minister, he would do it on his own. http://www.thehimalayantimes.com/fullNews.php?headline=Oli+boils+over+Maoists &NewsID=245873

‘Twas a betrayal, lament Maoists The UPCN (Maoist) on Wednesday said that the ruling Nepali Congress and the CPN-UML betrayed it over the issue of the prime minister‘s resignation. The main opposition said that though five days had elapsed since the ruling parties committed to the prime minister‘s resignation for consensus, they did not implement it. Speaking to the Post, Maoist Vice Chairman Mohan Baidya said, ―We will react after holding our Standing Committee meeting on Thursday. However, it will shatter the environment of trust among the political parties which is essential to complete the peace process and constitution drafting process.‖ Baidya said they would not go for the three-party meeting until Prime Minister Madhav Kumar Nepal goes.‖ Thursday‘s meeting was not a three-party meeting but a meeting called by the prime minister so we went there,‖ said Baidya. ―UML leader

16


R&D Economic Research & Business Development

KP Oli had promised that the prime minister would resign but he did not communicate properly with the NC and UML brass.‖ NC leaders are saying that they have no knowledge of the verbal agreement on the prime minister‘s resignation. However, Oli in the meeting of the three leaders convened by the prime minister confessed there had been agreement. ―I thought the parties reached an understanding about the implementation of points 1 and 2 of the agreement before I went to the Constituent Assembly building. I only talked about the implementation of point 3 with Maoist Chairman Pushpa Kamal Dahal‖, Maoist Vice Chairman Narayan Kaji Shrestha quoted leader Oli as saying. Point 3 of the pact states that the prime minister will resign forthwith for the formation of a national consensus government. If he does not do so immediately it will be unfortunate for the nation, said Shrestha. Nepal told to stick on POST REPORT KATHMANDU, JUNE 2 Three Madhes-based parties in the ruling coalition on Wednesday urged Prime Minister Madhav Kumar Nepal not to resign unless national consensus is forged by addressing issues related to the peace process and timely constitution-drafting. A meeting held among the Madhesi Janadhikar Forum (Loktantrik), Tarai Madhes Loktantrik Party and Rajendra Mahato-led Sadbhawana Party took a decision to this effect. The three parties have demanded a clear roadmap for integration and management of the Maoist combatants, returning land and property seized by the former rebels and dissolution of the paramilitary structure of the Maoist-affiliated Young Communist League before the formation of a national unity government. ―A national government is necessary for writing the constitution by forging unity among political parties,‖ reads a statement jointly issued by the three parties, adding that they will not accept the decision made only by the big three parties regarding consensus on various pressing issues. The meeting held at Singha Durbar also discussed a diverse interpretation of the three-point agreement signed among the Nepali congress, the CPN-UML and the UCPN (Maoist) on May 28. http://www.ekantipur.com/the-kathmandu-post/2010/06/02/nation/twas-a-betrayallament-maoists/208956/

17


R&D Economic Research & Business Development

GENERAL: AISC meeting postponed due to Maoist boycott A meeting of the Army Integration Special Committee (AISC) for Supervision, Integration and Rehabilitation of Maoist combatants called for Wednesday afternoon was postponed after the main opposition Unified CPN (Maoist) representatives boycotted the meeting. UCPN (Maoist) representatives decided to boycott the meeting saying it would be worthless to attend any meetings until a consensus at a broader level among the political parties. The relation among the three major political parties has dampened in the recent days due to differences in understanding of last Friday midnight's pact. UCPN (Maoist) has been taking a stance that the PM should resign before any further talks or commitments from their side, while the NC-UML have been asking the Maoists to present themselves clearly on other issues of the peace process particularly the integration and rehabilitation of the Maoist combatants.nepalnews.com

US envoy visits Bhutanese refugee camp in Jhapa DAMAK: US ambassador to Nepal Scott H DeLisi today visited the Khudunabari refugee camp in Jhapa. During his visit, he enquired the Bhutanese refugees about the resettlement programme and its impact in their lives. He also urged the refugees to utilise the resettlement programme as an opportunity to secure their future. Responding to the queries of the ambassador, the refugees expressed their satisfaction over the resettlement programme. However, they also drew the attention of the US government to help create an appropriate environment for repatriation for those refugees who want to go back to their motherland. Ambassador DeLisi also held meetings with representatives of donor countries working for the refugees. The US envoy is scheduled to return Kathmandu on Wednesday after visiting the Sanischare refugee camp in Morang. US, one of the countries helping the refugees to resettle, has already announced to immigrate 60,000 of them. Since the third country resettlement programme was launched in March 2008, the US, Canada, Australia, Netherlands, Denmark, Norway and New Zealand have already immigrated 27,381, 1,229, 1,468, 129, 326, 324 and 447 Bhutanese refugees respectively. http://www.thehimalayantimes.com/fullNews.php?headline=US+envoy+visits+Bhuta nese+refugee+camp+in+Jhapa&NewsID=245871

18


R&D Economic Research & Business Development

Indian Army chief to get NA invite KATHMANDU, JUN 03 - The Cabinet on Wednesday gave the nod to the Nepal Army (NA) to invite Indian Army Chief Gen. V. K. Singh for an official visit to Nepal. Singh, who succeeded Gen. Deepak Kapoor on March 31, will be conferred the title of Honorary General of NA. Gen. Kapoor was decorated with the honorary title during his Nepal visit in January. Nepal Army Chief Gen. Chhatra Man Singh Gurung was honoured with a similar title by Indian President Pratibha Patil in December. ―The Chief of Army Staff will soon send an invitation to the Indian army chief as per the Cabinet‘s decision,‖ said Nepal Army Spokesperson Ramindra Chhetri. Wednesday‘s Cabinet also approved the visit of a 15-member NA delegation to China scheduled for Sept. 17-27. The government has also endorsed the US visits of Director General of Military Operations Maj. Gen. Gaurav Shumsher Rana from Aug. 2-6 and Valley Commander Maj. Gen. Daman Ghale‘s visit from June 6-18. The Cabinet has proposed Maj. Gen. Nepal Bhusan Chand for the post of Force Commander for the United Nations Mission for the Referendum in Western Sahara. The UN headquarters will take a call on the appointment. http://www.ekantipur.com/2010/06/03/top-story/indian-army-chief-to-get-nainvite/315634/

New Delhi, Beijing bid for MRP In a twist to Nepal‘s desire to acquire Machine Readable Passports (MRPs), India and China have recently picked up tender copies for MRP bids at a cost of Rs 10,000 each. A Beijing-based security printing firm recently picked up the bid document. However, it is not known whether it was a government undertaking or a private company. Meanwhile, sources said that the Government of India undertaking, Security Printing and Minting Corporation of India (SPMCI), picked the tender copy. This company was awarded the MRP contract by the incumbent government on March 19, but it was later scrapped on April 11 following directives from Public Accounts Committee and pressure from leaders of ruling and opposition parties. Besides the cost factor, the deal landed in controversy after a confidential letter written on Dec. 4, 2009 by Indian envoy Rakesh Sood to Foreign Affairs Minister Sujata Koirala was ―leaked‖. In the letter, Sood had raised India‘s security concerns and defended its interest in 19


R&D Economic Research & Business Development

printing the MRPs. In its deal with the Indian company, the government had agreed to buy MRP copies at a high rate ($4 per copy) ignoring cheaper offers as low as $2.9 per. A fresh bid was floated on May 18. Companies from Canada, Malaysia and Indonesia have also picked up the tender copies. No Indian and Chinese companies took part in the earlier pre-qualification bid, which was quashed later. Two Chinese private companies at that time had expressed interest and forwarded applications to the Foreign Ministry. The Foreign Ministry came up with a new tender on May 18, open to all interested firms with a more ―relaxed format‖. The new tender paper has not barred any country from taking part in the process. ―The tender is open to international security printing companies of all countries,‖ it reads. ―Among the India and China, other eight government and private firms have already picked the MRPs tender copies,‖ said sources.

HOW THE BALL ROLLED Early 2009

: Govt asks MoFA to start bidding

Dec. 1, 2009 : Global bidding begins Dec. 4, 2009 : Indian envoy writes to MoFA Jan. 14, 2010 : Bid off for technical reasons Jan. 16 : Indian Foreign Minister arrives March 23 : Govt signs deal with SPMCIL Feb. 25 : PAC orders bid resumption March 19 : Govt gives contract to India April 7 : SC issues stay order on deal April 11 : Govt withdraws the deal http://www.ekantipur.com/the-kathmandu-post/2010/06/02/top-story/new-delhibeijing-bid-for-mrp/208942/

20


R&D_NewsBrief_03Jun