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R&D Economic Research & Business Development Date: 22nd Oct, 2009 Highlights •

Private banks in Nepalgunj, the main trade centre in the mid-west, are luring customers with swift service and attractive savings and loan schemes.

The Ministry of Labour and Transport Management (MoLTM) has intensified the Japan International Training Cooperation Organisation (JITCO) process to send Nepali workers to Japan soon.

The Ministry of Labour and Transport Management (MoLTM) and the Human Resource Department (HRD) of South Korea are preparing to extend the Employment Permit System (EPS) contract for another three months.

The government has said that it will not be able to release salaries of parliamentarians and Maoists combatants after mid-November, if the parliament fails to approve budget for running fiscal year soon.

The dissonance between the Commerce and Supply Ministry and Forest Ministry has hampered the timely completion of the SEZ project.

Nepal Stock Exchange Limited(NEPSE) has decided to de-list some 19 of its listed companies due to their failure to meet the requirement of paying annual renewal charge within the first three months of the current fiscal year.

After being on an upswing for three consecutive trading days, the Nepal Stock Exchange (NEPSE) slipped 8.34 points on Wednesday. The NEPSE index settled at 601.21 points when trading closed.

This year’s PATA Travel Mart (PTM) in Hangzhou China has received widespread praise from industry delegates, China-based sellers and the host city’s organising body.

Minister for Forest and Soil Conservation Deepak Bohara on Wednesday said that the seven resorts and hotels inside Chitwan National Park (CNP) would "re-open soon."

Nepal and India are all set to ink their revised trade treaty on October 27.

The National Human Rights Commission (NHRC) has urged the government to revoke an agreement reached with the Office of the High Commissioner on

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R&D Economic Research & Business Development Human Rights-Nepal (OHCHR-N) to provide human rights related training to the personnel of all security bodies -- Nepal Army, Armed Police Force (APF) and Nepal Police. •

The Supreme Court today served a three-month ultimatum to various government authorities to clean the Bagmati River, which has been filled with dirt, filth and refuse of astronomical proportions.

It takes 73 days to fulfil six procedures to get an electricity connection in Nepal, according to a World Bank pilot project. The same can be done in 22 days and four procedures in Iceland but takes 424 days in Afghanistan.

Nepali Prime Minister Madhav Kumar Nepal Wednesday said the government is in favor of maintaining good relations with neighboring countries of India and China.

A day after UCPN-Maoist Chairman claimed that major political parties would find solution to the political impasse, a senior leader of the party said an agreement among the parties was not possible now.

Dogged by serious differences among the major political parties, the Constituent Assembly (CA) Committee on the system of governance has decided to take the issues to the top party leaderships for consensus.

Prime Minister Madhav Kumar Nepal has urged all political parties to lay more importance to national security guided by the principle of Panchsheel.

UCPN (Maoist) senior leader Baburam Bhattarai has said there is a slim chance of parties striking a deal to end the prevailing political deadlock despite the ongoing efforts.

Deputy Prime Minister and Minister for Foreign Affairs Sujata Koirala urged the United Nations (UN) to continue its support in facilitating the peace process in the country.

While Nepali Congress (NC) President and former Prime Minister Girija Prasad Koirala has adopted silence over the appointment of his daughter Ms. Suajata Koirala as Nepal’s deputy prime minister in the current 22-party

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R&D Economic Research & Business Development coalition government, some middle-ranking NC leaders have met secretly in a corner of Kathmandu. •

Transportation services have been halted in far-western region, as the roads damaged by the landslide have not been repaired yet. This has led to shortage of daily commodities and medicines in the seven hilly districts of the region.

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Commissioners of the National Human Rights Commission (NHRC) have increased their own salaries and allowances significantly, a decision only the cabinet is authorized to take.

BANKING: Nepalgunj banks lure customers Private banks in Nepalgunj, the main trade centre in the mid-west, are luring customers with swift service and attractive savings and loan schemes. The number of new branches of these banks, which are of international standard, has been on the rise for the past two years. Banking transactions in Nepalgunj have gone up due to the environment for investment after peace was established in the country, said president of the Nepalgunj Chamber of Commerce and Industry Damodar Acharya. Similarly, commercial banks and development banks have expanded their services in Karnali too. It is reported that 16 commercial banks, three development banks and six finance companies are providing international standard service in Nepalgunj. Besides, some other banks are planning to open new branches in the town soon. According to manager of Nepal Investment Bank, Nepalgunj branch office, Mantri Lal Gupta, an easy system of disbursing loans has also attracted the middle and low class people in the mid-western districts. The banks have also increased plans like providing foreign employment loans, education loans and home loans to their customers, he added. Source: The Kathmandu Post

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R&D Economic Research & Business Development Date: 10/22/2009 ECONOMY: MoLTM bid to jog JITCO process The Ministry of Labour and Transport Management (MoLTM) has intensified the Japan International Training Cooperation Organisation (JITCO) process to send Nepali workers to Japan soon. A high-level team of Labour Minister Mohammad Aftab Alam, secretary Babu Ram Acharya and section officer Bhagabhan Thani will visit Japan’s JITCO office on October 22-27. “JITCO is my priority project and I am working hard to finalise it within this year,” said Alam. Getting more quota for Nepalis in industrial training service (ITS) will be our major focus, he added. The team will explore other sectors where Nepalis can be hired. “Care-givers can be a good sector for Nepalis,” said Acharya, “As the life expectancy of Japanese is increasing, it will be a new sector.” According to an estimate, the Japanese government needs more than five million care-givers to support its aged population in 2010. During the visit, the team will hold talks with Japan’s minister for labour, minister for law, JITCO officials and Japan International Cooperation Agency (JICA). “Talks with ministers and JITCO officials will be under the ITS process,” said Alam. The Nepali team will focus on two major areas — signing new MoUs and getting more quota for ITS. “My concern is to send more Nepalis to Japan,” said Alam adding that more numbers of unemployed Nepali youth should benefit from it. The meeting with Japanese officials will decide the policy guidelines for the JITCO process in Nepal. Nepal and Japan signed an MoU in December 2003 for JITCO but its sole agent Federation of Nepalese Chambers of Commerce and Industry (FNCCI) could not succeed in sending workers till 2008. FNCCI has sent two groups of industrial trainees in 2009. After the failure of FNCCI, MoLTM decided to include foreign employment agencies in the JITCO process. It selected 172 foreign employment agencies for JITCO this May. “We don’t favour either FNCCI or outsourcing agencies. The new MoU will

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R&D Economic Research & Business Development provide sufficient space for both,” said Alam. The New MoU for JITCO will set the visa fee, service charges and other prerequisites, said Acharya. According to him, Nepali workers going to Japan under ITS must have knowledge of Japanese language and culture along with good physical health. “Japan wants physically fit people for ITS,” he said. JITCO officials are coming to Nepal in February 2010 for the implementation of the MoU. Meanwhile, the government is also including the duties and responsibilities of outsourcing agencies in the MoU. “They will be responsible for the behaviour of Nepalis at work,” said Acharya. The Japanese are quite suspicious of the unionist tendency of Nepalis, he added. Talks with JICA officials will be for transport sector reform, said Acharya. JICA has been supporting the Nepali transport sector since two decades. Also, MoLTM has been running vehicle number plates and blue-book modernizing projects with the support of Asian Development Bank. Source: The Himalayan Times Date: 10/22/2009 EPS contract to get three-month extension The Ministry of Labour and Transport Management (MoLTM) and the Human Resource Department (HRD) of South Korea are preparing to extend the Employment Permit System (EPS) contract for another three months. Earlier on July 22, both parties had decided to extend by three months the two-year contract ending on October 22. The political situation of South Korea compelled us to take this action again, said MoLTM secretary Babu Ram Acharya. Although MoLTM has submitted a new draft for contract it will not be possible to make a new contract due to the recent cabinet reshuffle. “We want the new contract soon,” he said adding Nepal has asked South Korea to increase the EPS quota for 2010.

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R&D Economic Research & Business Development South Korea is a lucrative destination for Nepali blue-collar jobseekers where they earn five times more than in other destinations like Gulf countries and Malaysia. The monthly salary of EPS workers is $970 to $1,000, based on their work. Nepalis working in South Korea are sending Rs two billion remittance every year. Around 3,100 Nepalis are working in South Korea under the EPS system. Hiring Nepalis under EPS has increased since September when the destination country gradually started coming out of the global financial crisis. Seoul hired 201 Nepali in September and 306 more this October. Around 6,500 Nepalis work in South Korea. Source: The Himalayan Times Date: 10/22/2009 No salary to lawmakers after mid-Nov: Govt The government has said that it will not be able to release salaries of parliamentarians and Maoists combatants after mid-November, if the parliament fails to approve budget for running fiscal year soon. Finance Minister Surendra Pandey told myrepublica that one-third of the proposed recurrent budget, which the government is authorized to spend until the budget is endorsed by the parliament, is fast depleting due to rise is various unplanned financial liabilities. The normal activities of parliament has been in stalemate for the last five months, as a result of prolonged political dispute among major political players over the President ´s decision to nullify the then government´s decision to sack the then army chief. The main opposition UCPN (Maoist) that has been obstructing the regular parliamentary business, however, allowed the government to present budget for current fiscal year, totaling Rs 285 billion. The financial liabilities, particularly under the recurrent head, have increased

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R&D Economic Research & Business Development remarkably after the budget was tabled in the parliament. As a result, available recurrent budget is fast shrinking, Pandey said. According to informal sources, the total demand for non-budgetary expenditure has touched a record Rs 12 billion within the first three months of the running fiscal year. As per the Interim Constitution, the government is authorized to spend one-third of the proposed budget once it is tabled in the parliament. This means that the government can spend up to Rs 95 billion before the budget is approved. "The government is compelled to curtail expenses for headings that absorb huge chunk of expenditure like salaries and allowances for parliamentarians and Maoists combatants," he said. As per the law, the government can spend up to Rs 53 billion for recurrent expenditures whereas annual salary and allowances of over 400,000 government employees sum up to Rs 60 billion. Pandey also said that impacts have already started emerging as the government could not clear salaries for a garrison of Nepal Army, which is mainly engaged in support activities for the army personnel, due to lack of adequate funds. The Minister also said he has already informed Maoists leader and former finance minister Dr Baburam Bhattarai about the looming financial impacts of the lingering political deadlock. Pandey, however, said the expenditure earmarked for development activities have not been affected yet and added that the real expenditure have been less than expected due to various problems. "As of yet, the government is committed to the funds allocated for development activities. However, if the development activities speed up, the available fund might be used up by end of 2009, he said.

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R&D Economic Research & Business Development Ministry of Finance has already stopped sanctioning salaries of benefits to the Prime Minister and Ministers. Source: www.myrepublica.com Date: 10/22/2009 Lack of coordination between ministries delays SEZ construction It has been almost one and a half year since the announcement was made to establish Special Economic Zones (SEZ) in Jhapa. However, the proposal, forwarded by the previous Maoist-led government, is yet to see the light of the day thanks to dillydallying and lack of coordination between concerned government authorities. The then government had come up with the concept of SEZ in order to expand economic development at regional level. The feasibility study vis-Ă -vis the establishment of SEZs in Jhapa and Kailiali has been accomplished. However, the lack of inter-ministerial coordination is stifling the establishment of SEZ. The dissonance between the Commerce and Supply Ministry and Forest Ministry has hampered the timely completion of the project. During the course of the feasibility assessment, the former has recommended Kerkha area of Jhapa district as a viable place to construct SEZ. However, the latter rejected this proposal as some 300 bighas of land,that fall under Ratuwamai Plantation Project, has to be acquired for establishing SEZ in Kerkha. The proposed area is said to be apt for SEZ from the viewpoints of its proximity with the Mechi custom point and security. According to entrepreneurs, if the SEZ established in Kerkha, it will be easy to export Nepali goods to third countries as the Mechi custom is just 50 km east from the area.

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It is provisioned that no organisation can stage any kind of protest and bandh in the SEZ. Similarly, the industries established in the SEZ can enjoy tax holiday during the period of the first 5 years of their commencement. Similarly, they are exempted from the provision of paying custom duty and Value Added Tax (VAT) forever. However, such manufacturers have to pay a 50 percent income tax after five years as per the prevailing provision. Moreover, they will also be officially bound to export 85 percent of their products to third countries. Source: www.nepalnews.com Date: 10/22/2009 MARKET: NEPSE bans 19 companies Nepal Stock Exchange Limited(NEPSE) has decided to de-list some 19 of its listed companies due to their failure to meet the requirement of paying annual renewal charge within the first three months of the current fiscal year. "As these companies violated the concerned provision of the Stock Listing Regulation, 2053 (Second Amendment), we have decided to prohibit them from carrying out stock transaction by way of delisting," read a press release issued by NEPSE on Wednesday. The releases further stated that the de-listed companies will again be allowed to operate in the capital market if they adhere themselves to the related provision by

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R&D Economic Research & Business Development paying annual renewal charge. The de-listed companies include Nepal Electricity Authority (Bond-2069), Nabil Bank Limited (Bond 2075), Raghupati Jute Mills, Jyoti Spinning Mill, Nepal Finance Limited, Yak and Yeti Hotels Ltd and Nepal Welfare Company Limited, among others. Source: www.nepalnews.com Date: 10/22/2009 NEPSE slides 8.34pts After being on an upswing for three consecutive trading days, the Nepal Stock Exchange (NEPSE) slipped 8.34 points on Wednesday. The NEPSE index settled at 601.21 points when trading closed. A majority of the sub-indices on NEPSE except the development bank sector witnessed a fall. The development bank sector gained 2.36 points while banking, finance and insurance lost 9.3 points, 0.84 points and 0.03 points respectively. The share market witnessed a total turnover of Rs. 36.94 million with 63,813 shares being traded. Shares of 53 companies changed hands on NEPSE. Among the 19 commercial banks present on the trading floor, Nepal Industrial and Co. Bank posted the biggest growth with its stock rising by 15 points while Everest Bank lost the most by shedding 368 points. Similarly, among the 14 development banks whose shares were traded on NEPSE on Wednesday, Infrastructure Development Bank witnessed the highest increase of 18 points while Pashupati Development Bank dropped 15 points. Among the 16 finance companies on NEPSE, Shree Investment Finance Co. and

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R&D Economic Research & Business Development Standard Finance were the highest gainers with an increase of 10 points each in their share prices. Kuber Merchant Finance lost 25 points. The top five winners on NEPSE were Infrastructure Development Bank with a 4.06 percent rise in its stock price followed by Standard Finance, Gandaki Bikas Bank, Birat Laxmi Bikas Bank and Business Development Bank. Nepal Doorsanchar Company topped the chart in terms of turnover with Rs. 8.46 million. Source: The Kathmandu Post Date: 10/22/2009 BUSINESS: Stakeholders sing PATA Travel Mart 2009’s hosannas; hail opportunity This year’s PATA Travel Mart (PTM) in Hangzhou China has received widespread praise from industry delegates, China-based sellers and the host city’s organising body. Local sellers expressed great satisfaction with the pre-matched appointments system and seemed very impressed with the outcome of the appointments. Many companies are reporting firm commitments or the concluding of actual business agreements, according to PATA’s Beijing-based regional director Kate Chang. Hosting PATA Travel Mart may be regarded as an excellent and successful case study for promoting Hangzhou as a leisure and MICE destination. It is a very good opportunity for service improvement and product enhancement, said the Hangzhou Tourism Commission. A seller from Nepal, Pawan Tuladhar, who is president and CEO of Dharma Adventures in Kathmandu, said,”I have been participating in PATA Travel Mart for the past six years and I am pleased to say that it gets better every year.” A survey of delegates, conducted by PATA, showed that 80 per cent of buyers attending PTM 2009 were satisfied with the results of pre-matched business appointments and 87 per cent were satisfied with the quality of sellers at the Mart. 11


R&D Economic Research & Business Development Some 76 percent of sellers stated that buyers’ attendance at PTM 2009 met their expectations. Around the same number plan to attend PTM 2010 in Macau. “I have been attending PATA Travel Mart for the past five years, evolving new relationships with agents, hotels, resorts and attractions year after year. Every PTM that I attended has contributed to our endeavours to add new destinations and, of course, each year brings us closer to our existing suppliers and gives us an opportunity to know what is new,” said Guldeep Singh Sahni, managing director of Weldon Tours and Travels Pvt Ltd in India. The set-up and choice of city for this year’s PATA Travel Mart has elicited praise from many quarters. “It was a well-organised event and the Buyer/Seller online meeting arrangements worked very well, giving us ample opportunity to increase our meeting base — even at the last minute. The venue was suited for PATA 2009 and the hospitality in Hangzhou was warm and welcoming,” said Nilufer Mama, president and CEO of Millenium International Travel, Canada. Over 1,000 delegates, including local and world media, attended the 32nd annual PATA Travel Mart. Source: The Himalayan Times Date: 10/22/2009 CNP resorts to reopen soon:Forest Minister Minister for Forest and Soil Conservation Deepak Bohara on Wednesday said that the seven resorts and hotels inside Chitwan National Park (CNP) would "re-open soon." Speaking to myrepublica, Minister Bohara said that the cabinet committee headed by finance minister and comprising the forest, tourism, and law and justice ministers, the vice-chairman of National Planning Commission and secretaries of all the ministries concerned is all set to take a decision on reopening the resorts. "We will give the resorts an exit plan and as per the decision of the Public Accounts Committee (PAC). Keeping in view the upcoming Nepal Tourism Year, they will be

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R&D Economic Research & Business Development allowed to operate till 2012," said Minister Bohara. He added that the decision to this effect would be taken within "few days" by the cabinet committee. Stating that the Natural Resources and Means Committee (NRMC) had delayed the decision in this regard, Minister Bohara said, "My Ministry is positive about the decision taken by the Public Accounts Committee and we are working towards reopening the resorts." As per the exit plan, the seven resorts -- Tiger Tops Jungle Lodge, Machan Wildlife Camp, Chitwan Jungle Lodge, Gaida Wildlife Camp, Island Jungle Resort, Hotel Narayani Safari and Temple Tiger Hotel -- will be asked to close down latest by June 2012. As per the PAC decision, those resorts that willingly close before the stipulated time will be provided incentives as well. This initiative comes at a time when the NRMC has directed the government not to take any decision unless the PAC gives a clear directive. The NRMC also claimed that PAC has no jurisdiction over the matter. Also, the decision is against the recommendation jointly presented by the Department of Wildlife and Nature Conservation, Nepal Army, WWF and other conservation experts early this month. The hoteliers along with the Hotel Association of Nepal and the Nepal Tourism Board are now in the forefront advocating such an exit plan. While the seven resort owners, who were earlier adamant on not leaving the CNP, have now agreed to the Committee recommendation to close down, 63 other hotel operators outside the conservation area too have joined hands with them to echo a "common voice" before the government. Claiming that the government is positive about reopening the seven resorts, Prasiddha Pandey, President of HAN said, "It is a welcome decision as the closure has already hit the tourism industry hard," adding, "We have urged the concerned authorities to arrive at a decision within this month." Source: www.myrepublica.com

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R&D Economic Research & Business Development Date: 10/22/2009 Nepal, India to sign revised trade pact soon Nepal and India are all set to ink their revised trade treaty on October 27. It is learnt that the treaty will be signed between Nepali Commerce and Supplies Minister Rajendra Mahato and his Indian counterpart Ananda Sharma on the sidelines of ministerial level meeting of fourth South Asian Free Trade Agreement (SAFTA), slated to take place on October 28. The revision of the pact came as a corollary of two-year consultation between the two countries. It entitles Nepal to enjoy more facilities apart from solving non-tariff barriers, additional duty and standards related problems the country has been facing for quite a while. Likewise, as per the new treaty, India will avert itself from imposing extra-customs duty and non-tariff barriers on Nepali goods. The treaty also makes it mandatory for India to waive off special additional duty and other duties that are in place. Some of the major highlights of the treaty, that features 14 new points, include establishment of five new trade points, repairing of old machines in India and scrapping of dutyrefund procedures. As per the treaty, India should also recognize the quality certification of Nepali labs after an upgrade. This move is expected to give a boost to Nepal's agro-exporters. The enforcement of the treaty is widely believed to insert a new momentum to Nepal's export to its largest trading partner as it can safely be predicted to remove various export related hurdles the country has been suffering for long. Source: www.nepalnews.com Date: 10/22/2009

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R&D Economic Research & Business Development POLICY: NHRC keen on training security personnel The National Human Rights Commission (NHRC) has urged the government to revoke an agreement reached with the Office of the High Commissioner on Human Rights-Nepal (OHCHR-N) to provide human rights related training to the personnel of all security bodies -- Nepal Army, Armed Police Force (APF) and Nepal Police. NHRC officials had also drawn attention of Chief of Army Staff Chhatra Man Singh Gurung on the issue at a meeting with the latter a week ago. Talking to myrepublica, NHRC Chief Kedar Nath Updhaya said the commission has urged the government to nullify the agreement with OHCHR-N and instead give NHRC the authority to conduct such training. “We have asked the government to review its agreement with OHCHR on providing trainings for security agencies,” Upadhaya said, adding, “NHCR should be given full responsibility of conducting such trainings and other necessary programs to the country´s security bodies.” He also claimed that the government had turned a deaf ear to similar request NHRC made in the past. Currently OHCHR-N has been providing human rights related trainings to security personnel. It has been providing such trainings since its establishment six years ago. “OHCHR should be given the responsibility of assisting our activities. It shouldn´t be given full authority to organize trainings and other programs,” Updhaya said. He added that Army Chief Gurung was positive toward NHRC´s proposal. “General Gurung gave a positive response,” Updhaya said. During the meeting, Updhaya argued that OHCHR-N could only contribute experts for trainings. “I strongly oppose the practice of providing trainings under direct

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R&D Economic Research & Business Development initiation of OHCHR,” he said. Meanwhile, the Nepal Army has said that no course under the direct initiation of the OHCHR is run in the institution. “The only institution that runs a course on the Law of Armed Conflict is the ICRC,” said Brigadier General Ramindra Chettri. He informed that the ICRC has been running a course (attended by officers of all levels) on Human Rights and Humanitarian Law since 2002. The course is designed as a two-week advance course. “We have only requested human rights experts from OHCHR to deliver a few guest lectures so far on related subject matter,” Chettri said adding, “OHCHR does not run a separate course in NA.” In January, the Directorate of Human Rights of NA was given full authority to run independent advance course. Source: www.myrepublica.com Date: 10/22/2009 Clean Bagmati in 3 months: SC The Supreme Court today served a three-month ultimatum to various government authorities to clean the Bagmati River, which has been filled with dirt, filth and refuse of astronomical proportions. A division bench comprising Chief Justice Min Bahadur Rayamajhi and Kalyan Shrestha issued the ultimatum to the government to clean the Bagmati within three months. The apex court was responding to a contempt of court case against the government authorities. Meanwhile, Dr Trilochan Uprety, Secretary, Prime Minister's Office and the Cabinet, Udaya Raj Sharma, Secretary, Ministry of Environment and Science, and Mohan Bahadur Basnet, the Chair of the High Level Commission on Bagmati who attended the bench, have assured that they would clean the Bagmati within the given timeframe. They assured before the court that they would bring palpable changes to Bagmati within three months. The bench, in reply, told them to submit a progress report after accomplishing the 16


R&D Economic Research & Business Development task. The officials were brought before the bench as per the apex court's order to defend the case on the contempt of court pending before them. The bench has been considering charges of disobedience of apex court's verdict that was issued to clean the river eight years ago. Charging the government authorities of not abiding by the court ruling, advocate Bhoj Raj Air filed the contempt of court against government authorities three years ago. In 2001, the apex court had issued a mandamus order to the government to clean the Bagmati. Meanwhile, responding to a separate PIL filed by Pro Public, an NGO, the bench told the government authorities to ban indirect promotion of advertisement of cigarettes through organising concerts, or games. The bench was responding to a petition filed by one Hom Lal Shrestha who challenged such concerts and games of indirectly promoting advertisements of cigarette despite a prohibitory order. Source: The Himalayan Times Date: 10/22/2009

WB sheds light on power woes It takes 73 days to fulfil six procedures to get an electricity connection in Nepal, according to a World Bank pilot project. The same can be done in 22 days and four procedures in Iceland but takes 424 days in Afghanistan. Getting Electricity — the two-and-a-half-year project — presents findings on the constraints entrepreneurs around the world face in getting access to electricity and illustrates patterns in connection processes. The study also tracks all the procedures, the time, and the cost required to obtain an electricity connection for a newly constructed building. However, in Nepal the cost of not having electricity is higher than the cost of connection, as the country reels under long hours of power outage. World Bank surveys in 89 economies of the world show that electricity tops infrastructure needs of the business entities. 17


R&D Economic Research & Business Development Many businesses lack access to power connections and are prevented from moving into higher-value-added activities that rely on electricity-based technologies. According to International Energy Agency, in 2005 more than a quarter of the world’s population lacked access to electricity. Businesses also care about the cost of both the electricity connection and the electricity supply-because electricity-related expenditure eats up a significant share of their revenue. Managers responding to World Bank Enterprise Surveys estimated that on average their spending on electricity amounts to four per cent of their annual sales, while combined spending on other infrastructure services like fuel, communication services and water accounts for 6.4 per cent. Among the 140 economies surveyed for Getting Electricity, Ukraine ranks at the bottom, with 10 procedures required to get new power connection. It’s much easier to do the same in Denmark, Germany, Japan and Mauritius. The survey details the efficiency and cost of the services provided to commercial customers by distribution utilities, the complexity of procedures, and the resources expended by businesses in obtaining a connection. “In the 10 economies with fewest procedures, the process of obtaining an electricity connection takes only 56 days on an average, while in 10 economies with most procedures, it takes 215 days,” the report adds. Source: The Himalayan Times Date: 10/22/2009

Nepal favors for good relations with China, India: PM Nepali Prime Minister Madhav Kumar Nepal Wednesday said the government is in favor of maintaining good relations with neighboring countries of India and China. He said "Nepal has consistently emphasized its policy of not allowing our territory against the interest of any country."

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R&D Economic Research & Business Development "This is the only viable way for a country of such strategic location, irrespective of any government in power in Nepal," he said while addressing the inaugural session of a one-day conference on "Nepal's National Interest: Policies and Recommendations". The conference was jointly organized in the capital Kathmandu by the Center for South Asian Studies and the Konrad Adenauer Foundation. He clarified that Nepal has no desire to play any card or to use relationship with one against the other neighboring country. The Prime Minister reiterated that the government has put the peace, the constitution drafting processes and social and economic transformation as the top tasks Source: http://news.xinhuanet.com Date: 10/22/2009 POLITICS: Consensus unlikely, says Kiran A day after UCPN-Maoist Chairman claimed that major political parties would find solution to the political impasse, a senior leader of the party said an agreement among the parties was not possible now. Chairman Pushpa Kamal Dahal had said yesterday at a gathering of party leaders that the parties would come up with a solution within a few days. “Both Nepali Congress and CPN UML are sticking to their stance and therefore we don’t see any possibility of consensus soon. We will now begin a movement following our standing committee meeting,” said Mohan Baidhya ‘Kiran’ at a face-toface programme organised by Jana Sanchar Abhiyan here today. He claimed that the government had no intention to draft the new constitution. “This government was formed to thwart the peace process and derail the constitutionmaking process,” he added.

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R&D Economic Research & Business Development “We have been tolerating for long. Now it’s time to act,” he said. Baidhya also said his party, however, would not close the door on dialogue. “Our struggle intends to forge consensus among the parties.” He said the government had not responded to his party agitation from the parliament and the streets and even the talks teams had failed to find any solution. “If they are really serious on a political way out of the crisis they must show flexibility on the President’s issue.” He said tripartite meeting held yesterday was not encouraging. “We don’t see any progress in the near future.” Baidhya, who was a member of the Prachanda-led fourmember team visiting China, claimed that China had given importance to their visit. “Hu Jintao managed time to meet our team,” he said. Baidhya claimed that his team had made a verbal agreement with the Chinese leaders. “We agreed not to allow our land against China and Chinese leaders agreed to support us for Nepal’s economic development,” he said. He added the Chinese leaders respected our sovereignty. Source: The Himalayan Times Date: 10/22/2009 Differences dog CA panel on system of governance Dogged by serious differences among the major political parties, the Constituent Assembly (CA) Committee on the system of governance has decided to take the issues to the top party leaderships for consensus. The CA Committee had fixed up an appointment with Maoist Chairman Pushpa Kamal Dahal, NC president Girija Prasad Koirala and CPN Chairman Jhala Nath Khanal at Koirala’s residence in Maharajgunj at 5 p.m. on Thursday, but the meeting was cancelled as Koirala was not in sound health.” “We decided to take the issue to the top party leadership as we could not reach consensus on electoral and governance system,” said NC CA member Shambhu Hajara Dusad, who is also the chairman of the committee. 20


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“The issue can be resolved only after the leaders of three top parties sit together. We shall fix up another appointment with them after Koirala recuperates,” he added. The CA committee has held over 70 meetings, but has failed to reach any decision on the government and electoral systems. The NC has proposed the Westminstrial model of governance. The party has opted for bicameral legislature and election of executive prime minister from the lower house elected on first-past-the-post basis. “But the party will have to pick up the candidates in such a way that the House becomes proportional and inclusive,” said NC leader Govinda Raj Joshi. Similarly, the members of upper house would be elected from the provinces. Similarly, the party has proposed that the ceremonial president be elected from the members of the upper house, lower house and local bodies. On the other hand, the Maoists have proposed direct election of the executive president and unicameral legislature, the members of which would be elected from multi-member constituencies. The directly elected president will form an inclusive cabinet on the basis of seats the political parties have in the parliament. The Maoists have also proposed a multi-member electoral system in which more than one candidate would be elected from each constituency on proportional basis. “We have proposed direct election of executive president and electoral system based on multi-member constituency, but there was no consensus,” said Maoist CA member Pampha Busal, a member of the committee. Similarly, the CPM-UML has proposed direct election of executive PM and indirect election of ceremonial president from the upper house, lower house and local bodies. The party has proposed mixed member proportional representative (MMPR) electoral system in which each party would have representation in parliament in proportion to 21


R&D Economic Research & Business Development the popular votes they garner. “There is compulsion that one party has to accept the proposal of another should there be any agreement,� said Yadav Raj Pokharel, advisor on constitutional law to the CA Committee. Owing to serious differences, the committee also formed an informal subcommittee comprising senior leaders, but failed to reach any conclusion even after month-long discussions. Source: www.myrepublica.com Date: 10/22/2009 PM Nepal swears by 'Panchsheel principle' to maintain cordial ties with China, India Prime Minister Madhav Kumar Nepal has urged all political parties to lay more importance to national security guided by the principle of Panchsheel. Addressing a one-day conference on 'Nepal's National Interest: Policies and Recommendation' organised by Centre for South Asian Studies, in Kathmandu, Wednesday, PM Nepal said that only after the main political parties forge a consensus to end the current political deadlock will the country have a new constitution and the ongoing peace process would reach to a logical conclusion. National security can be ensured only in a developed and affluent Nepal, he opined. Referring to neighboring countries China and India whose relationship had hit an alltime low following some disputes regarding their border, the prime minister said Nepal must maintain cordial relationships with all its neighboring countries. Panchsheel or the Five Principles of Peaceful Coexistence are a series of agreements People's Republic of China and India had reached in 1954 to ensure that newly independent nations of Asia and Africa would not have the same aggressive 22


R&D Economic Research & Business Development relationship they once had with colonizers. Nepal's foreign policy is also guided by the principle of Panchasheel. The prime minister, who has visited India but is yet to tour China, invoked the Panchasheel principle in the context of "highly successful" China visit of UCPN (Maoist) chairman Pushpa Kamal Dahal, which critics have said was done to antagonize India. Nepal and India are also holding crucial security related talks early next month. Speaking at the same programme, Bam Dev Gautam, who is the vice chairman of PM Nepal's party CPN-UML, said it was "highly unfortunate" to have a government without the UCPN (Maoist), whom he said is the largest single party with 1/3rd seats in the Constituent Assembly. The nation would not have a new constitution without the help of the Maoists, Gautam said. The UML leader, who was a home minister during the short-lived Maoist-led government, stressed on the need to do away with partisan politics and form a new government with Maoists on board. Gautam said that the monarchy might come back from the dead if the new constitution is not prepared by the stipulated time. The nation will face a grave crisis if that happens, he warned. Source: www.nepalnews.com Date: 10/22/2009 Bhattarai: Deadlock to stay on

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R&D Economic Research & Business Development UCPN (Maoist) senior leader Baburam Bhattarai has said there is a slim chance of parties striking a deal to end the prevailing political deadlock despite the ongoing efforts. "Although the big parties are in the process of drafting a common resolution motion to forge a political consensus, their chances of reaching an accord are slim," he said. Bhattarai was addressing a programme organised by Samyukta Rastriya Janandolan Nepal, an organisation consisting of the Maoist supporters reportedly formed to institutionalise republic order in the country, at Banepa in Kavre district on Wednesday. The UCPN (Maoist) would launch a stir if the parties failed to reach an agreement, he said. "The preparations for the agitation have completed. If the parties fail to forge a consensus in the next two days, we will announce the struggle after Chhath festival." Bhattarai said the agitation would be peaceful, and its objective would be to exert pressure on the government to correct President Dr. Ram Baran Yadav’s move of reinstating the then Army Chief Rookmangud Katawal. "If this government tries to repress our struggle, there will be retaliation," he said. Once the president’s move is rectified, Bhattarai said, a new government should be formed under the Maoist leadership. Source: The Kathmandu Post Date: 10/22/2009 Sujata: UN support a must Deputy Prime Minister and Minister for Foreign Affairs Sujata Koirala urged the United Nations (UN) to continue its support in facilitating the peace process in the country. She stated that this would aid the process of writing of the new constitution within the stipulated time. 24


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“The United Nations Mission in Nepal (UNMIN) has set an example by facilitating the peace process in the country. We hope this ongoing support will continue until we are able to draft a new constitution,” said Koirala, speaking at a programme organised to commemorate the 64th UN Day in Kathmandu on Wednesday. Robert Piper, UN Resident Representative and Humanitarian Coordinator, said there is a need for the Ministry of Foreign Affairs to have better coordination and cooperation with other ministries. Former Assistant Secretary General of the UN Kul Chandra Gautam said that the government should encourage competitive and qualified candidates to seek candidacy for senior positions in the United Nations in order to put Nepal’s agenda on the world map. Source: The Kathmandu Post Date: 10/22/2009 Middle-ranking Nepali Congress leaders hold secret meeting While Nepali Congress (NC) President and former Prime Minister Girija Prasad Koirala has adopted silence over the appointment of his daughter Ms. Suajata Koirala as Nepal’s deputy prime minister in the current 22-party coalition government, some middle-ranking NC leaders have met secretly in a corner of Kathmandu.

According to political sources, some of the leaders who met to forge out their tactics to cope with any possible blows from Mr. Koirala include Dr. Ram Sharan Mahat, Chiranjivi Wagle, Dr. Narayan Khadka, Purna Bahadur Khadka, Bimalendra Nidhi, Prakashman Singh, Ram Chandra Poudel, Bala Bahadur KC, Sushil Koirala and Nara Hari Akcharya. They are understood to have discussed over possible tactics to cope with the dictatorship and Maoists’ advancement in the country.

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R&D Economic Research & Business Development Among those who met, Ram Chandra Poudel and Sushil Koirala are reported to have stressed on institutionalizing Ms. Sujata Koirala’s appointment as the country’s deputy prime minister at the personal request of her father and NC President Girija Prasad Koirala. Mr. Ram Chandra Poudel said, “We are not against the appointment of any NC leader as deputy prime minister. We are against the personal approach involved in it, which undermines democratic practices,” sources quoted.

However, another NC leader Mr. Nara Hari Acharya is understood to have stood for the replacement of Ms. Koirala by somebody better qualified for the post.

Most of the participants in the discussion are reported to have pledged to fight against hereditary rule within the NC.

The sources further state that NC leaders participating in this secret meeting also discussed on the tactics to cope with the growing influence of Maoists throughout the nation. They are understood to have seen Maoists’ entry into the mainstream peace process as a major threat to the existence to their party politics. They put blame on Mr. Koirala for the progress of Maoists. Dr. Ram Sharan Mahat, who is also believed to have been associated with CIA, stressed on the NC stand against the integration of Maoist People’s Liberation Army (PLA) men into the Nepal Army, sources stated. However, he was not against the rehabilitation of the PLA men.

The Comprehensive Peace Accord signed between Maoist rebels and the then Seven Party Alliance (SPA) in 2006 was a major milestone in Nepal’s peace process, still undergoing. Following the emergence of former Maoist rebels as the largest political force with its commitment to pluralist and peaceful politics in the Constituent Assembly elections held on 10 April 2008, Maoist agenda of republic mandated by the 2006 mass uprising against the feudal monarchy was formally implemented through a declaration in the first meeting of the elected Constituent Assembly. Since then the NC has returned to its regressive mood.

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R&D Economic Research & Business Development Analysts doubt the success of the peace process while almost all parties have united to project the former armed rebels into the brink of violence. Maoists, however, have reaffirmed their indomitable attachment to the current peace process. Source: www.groundreport.com Date: 10/22/2009

GENERAL: Food crisis worsened in FWest Transportation services have been halted in far-western region, as the roads damaged by the landslide have not been repaired yet. This has led to shortage of daily commodities and medicines in the seven hilly districts of the region. Roads linking Sanphebagar-Bajura, Sanphebagar-Mangalsen, Satbajh-Darchula and Khdape-Bajhang were damaged in the landslide this monsoon. Chetman Kadayat of Malika Transportation said goods meant for Binayak, Kamalbazar, Bayalpata, Jayagadh, Darna and Mujabazar have been stored in Sanphebagar. Even the medicines meant for Accham District Hospital are stored in Sanphebazar, he added. Foodstuff has not reached the Kolti area of Bajura district. Kadayat added, ‘’About 10 trucks of daily commodities meant for Bajura are stuck in Sanphebagar.’’ Talking over phone, a businessman of Kolti, Lal Bahadur Bohara, said there was scarcity of essential items in the area, as the transportation has been halted for more than five months. Though mules are being used to ferry goods, the supply is not sufficient to meet the huge demand. Bohara added, “Ferrying stuff on mules costs a lot. A kilo of salt costs Rs 45 in Martadi.’’ Pushpa Kunwar of Malika Distributors said, “The businessmen are paying Rs 35 to ferry a kg of goods from Sanphebagar to Kolti on mules.’’ Bishnu Buda, a resident of Kolti area, said, “We do not even have salt.’’ More than 10 link roads of the district have been obstructed due to the landslide. Khopade-Bajhang stretch on Jayaprithivi Bahadur Singh Highway in Baitadi district has also been halted for long. Local businessmen said there was shortage of essential items in the rural areas of the district. Businessmen blamed the road division offices for the crisis.

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Manoj Shrestha, chief of Road Division Office, Doti, who was on Dashain leave, is yet to rejoin duty. There is only a peon in the office. Source: The Himalayan Times Date: 10/22/2009 NHRC in pay hike row Commissioners of the National Human Rights Commission (NHRC) have increased their own salaries and allowances significantly, a decision only the cabinet is authorized to take. Four of the commissioners, including NHRC chief Kedar Nath Upadhyay, took the decision recently despite vehement opposition by Commissioner Dr Leela Pathak, the only woman commissioner. She maintained in minutes on the pay-hike decision which became effective from the last Nepali month, that NHRC could not assume the powers of the cabinet and decide the pay of its members. "We took the decision invoking the National Human Rights Act that says that salary and other allowances will be at par with that of justices of the Supreme Court. The commissioners´ salaries have not been increased since the last salary hike for Supreme Court judges [in 2008]," said Commissioner Gauri Pradhan, NHRC spokesperson, defending the controversial decision. Pradhan said that the commissioners consulted legal experts and held discussions for two months before taking the decision. "We finally concluded that the decision on the pay hike confirms to the Interim Constitution," Pradhan told myrepublica. But senior bureaucrats, who are in a position to comment on the decision, told myrepublica that a constitutional body cannot on its own increase the salaries of its office bearers.

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R&D Economic Research & Business Development "The decision violates provisions relating to financial laws. Only the cabinet can take a decision on pay hike," a knowledgeable bureaucrat said, commenting on the NHRC decision on condition of anonymity. "They have committed an offence subject to impeachment. It shows impunity at the NHRC." According to existing financial laws, the Finance Ministry should be consulted before the cabinet takes any decision that creates an additional financial liability. But the NHRC commissioners did not consult the ministry. With this decision, the NHRC chief draws Rs 63,803 per month including all allowances, Rs 22,216 up from the previous salary. However, there is discrepancy in the total salaries of the commissioners. The telephone allowance has been increased four-fold. Commissioners will get Rs 4,800 each per month to pay their telephone bills as against the Rs 1,200 they used to get. Similarly, the house rent allowance for Commissioner Ram Nagina Singh has been increased more than three-fold. He will now get Rs 24,700. He is the only commissioner who draws a house rent allowance. Source: www.myrepublica.com Date: 10/22/2009

International Financial and Economical NewsBrief: TOP STORIES •

Barofsky says TARP has increased moral hazard in markets

Volcker's advice on fixing U.S. banks is ignored at the White House

Senate, House leaders move toward health care public option

Russia's gas pipeline to Western Europe gets final go-ahead

OPEC says speculators are causing oil-price jump

Analysis: Business-to-business spending will be up in 2010

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R&D Economic Research & Business Development •

Bonuses at U.K. banks could hit $9.9 billion

MARKET ACTIVITY •

Asian markets mostly lower

Mexico sells first World Bank-backed catastrophe bonds

ECONOMICS •

Asian stimulus rollback requires great care, IMF warns

China to open financial markets to ASEAN partners

GEOPOLITICAL/REGULATORY •

Slovakia may join Czech Republic in blocking Lisbon Treaty

BoE's King says fundamental rethink is needed on banking

CESR proposes better protection for money-market investors

Sources: SEC is set to severely restrict dark-pool trading

U.K. causes delay in EU plan for financial watchdogs

FINANCIAL PRODUCTS •

Bank of Montreal to offer Canadian equal-weight ETFs

ETHICS •

California sues State Street, alleging $56.6M fraud

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R&D_NewsBrief_22 Oct, 2009  

R&D_NewsBrief_22 Oct, 2009

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