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R&D Economic Research & Business Development Date: 25th Oct, 2009

Highlights • The World Bank (WB) has pledged grant assistance worth more than US$ 100 million (Rs 7.45 billion) to Nepal for the purpose of blacktopping of roads linking remote districts of the country's far western and mid-western regions. • Though total exports expanded by 12.4 percent in the first month of this fiscal year in comparison to a rise of 4.5 per cent in the same month last fiscal year, exports to India went up by only 6.6 per cent. • In conjunction with other stakeholders including the Nepal Tourism Board (NTB), the Pacific Asia Travel Association (PATA) is hosting an international conference on adventure travel and tourism on Feb. 1-5, 2010. • Finance Minister Surendra Pandey on Thursday said that the government believed that the Maoists would allow parliament to endorse the budget for the current fiscal year. • The number of the Nepalese migrant workers leaving the country for foreign employment purpose has decreased by 14.12 percent during the first quarter of the current fiscal year compared to same period last year. • Nepal faces an indication of increased debt vulnerability and the country's debt servicing capacity is at a moderate level, according to a debt sustainability analysis of 69 low income countries (LICs) carried out by the International Monetary Fund (IMF). • Nepal Telecom (NT) topped the chart both in terms of transaction amount and number of share units traded this week — with Rs 9.28 million for 17,000unit of shares, but it could neither save Nepse nor the others sub-group that has NT under its belt. • With growing uncertainty in investment in other sectors amid deepening impact of global financial crisis and rising inflation, customers have started making investment in precious metals like gold and silver, traders say • Nepal Stock Exchange (NEPSE) opened just for two days -- Wednesday and Thursday -- for trading last week due to public holiday during Tihar festival. • Farmers from the northwest villages of Udayapur district earn a good sum of money annually through commercial ginger farming. • Due to continuous decline in jute farming in the country, the jute mills in Sunsari-Morang corridor have been compelled to be dependent in India and Bangladesh for raw jute needed. • Nepal Police and Armed Police Force have launched a joint operation in the eastern hill districts in line with the special security strategy introduced recently by the government.

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R&D Economic Research & Business Development •

The Communist Party of Nepal (Unified Marxist-Leninist) has reiterated that the party is all for adopting a directly-elected prime ministerial and a ceremonial presidential system in the new constitution.

Prime Minister Madhav Kumar Nepal Saturday renewed his call to the Maoist party to come to a political understanding by giving up its protest programmes.

The Kathmandu District Court (KDC) has rejected the cabinet decision to withdraw charges against president of Reporters Club Rishi Dhamala and two other journalists on Friday.

In a significant departure from its earlier stance on the President’s move of reinstating the then Army chief Rookmangud Katawal, CPN-UML Chairman Jhalanath Khanal said on Saturday it was worthless to debate on the President’s move, which had already become a history.

Reiterating that the extreme left-wing Naxal rebels are the biggest internal security threat, India Saturday claimed that the rebels are procuring arms from Bangladesh, Myanmar and Nepal to carry out their attacks in the country. A team of Nepal-based diplomats from six Security Council members today visited army barracks and cantonment sites in the Asian country as part of their first collective tour since the establishment of a United Nations political mission there in 2007. Senior leaders of the Nepali Congress today decided to take a decision at the party’s Central Committee meeting not to let the party president take unilateral decision in the future as was done while recommending his daughter Sujata Koirala as Deputy Prime Minister. The standing committee meeting of the ruling CPN-UML has remained firm on its earlier stance on the major contents of new constitution. The ongoing spat between the two factions of the UML-- one loyal to the party establishment and the other supporting senior leader K.P Oli - dominated Saturday's standing committee meeting of the party.

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Indian Home Minister P. Chidambaram has said that Indian Maoists might be acquiring weapons through Nepal. Minister for Information and Communications Shankar Pokharel has ruled out the possibility of change in government leadership even if the UCPN (Maoist) joins the national unity government.

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R&D Economic Research & Business Development •

Amid a Maoists threat of a stir, the Nepalese Prime Minister today asked the former rebels to help end the political deadlock over the President?s controversial decision to reinstate the former army chief in May.

The sub-committee under the Constituent Assembly (CA) committee on determining fundamental rights and directive principles has proposed to issue two types of citizenship -- by descent and by naturalization. Hundreds of people affiliated to Newa Mukti Morcha, a Maost-affiliated organisation of the Newar community, started a motorcycle rally Saturday morning on the occasion of Nepal Sambat 1130. The Asian Centre for Human Rights (ACHR) has urged the United Nations Peace Keeping Operations to initiate vetting of individual soldiers as to whether National Human Rights Commission of Nepal or NGOs in Nepal have received any complaint, to make sure that the credibility of UN Operations is not destroyed through deployment of criminals. The Chinese clamour over Arunachal Pradesh has raised many eyebrows in India.

BANKING: WB pledges Rs 7.4 billion for blacktopping remote roads The World Bank (WB) has pledged a grant assistance worth more than US$ 100 million (Rs 7.45 billion) to Nepal for the purpose of blacktopping of roads linking remote districts of the country's far western and mid-western regions. The bank's grant would be spent on blacktopping a 105-km stretch of the Karnali Highway. Similarly, the financial assistance will also be mobilised for blacktopping the road linking the lower section of the Dungeshwor-Siyakot-Dailekh road located below the Surkhet-Jumla road, it is understood. Of the total of Rs. 7 billion grant assistance, more than Rs. 1 billion will be used for blacktopping sections of the Karnali Highway and the rest will be mobilised for blacktopping roads joining the headquarters of districts like Jajarkot, Darchula, Bajhang, Myagdi and Jomsom, it is learnt. The WB has already provided a grant of US$ 40.2 million for the ongoing project of blacktopping the 127-km Surkhet-Khitkijhula section of the Karnali Highway in Kalikot district. The road linking Surkhet and Khitkijhula will be completely blacktopped within this fiscal year.

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R&D Economic Research & Business Development Source: www.nepalnews.com Date: 10/25/2009 ECONOMY: Yawning gulf between Nepal’s import, export Though total exports expanded by 12.4 percent in the first month of this fiscal year in comparison to a rise of 4.5 per cent in the same month last fiscal year, exports to India went up by only 6.6 per cent. Though according to Nepal Rastra Bank’s (NRB) data the rise in exports to India was attributed to the rise in the exports of polyester yarn, thread, jute goods, textiles and copper wire rod, overall export to the largest trading partner has not been satisfactory. Export is not going up but import is growing fast. In the total trade, import’s share stands at 80.4 per cent and exports at less than one fourth — at 19.6 per cent — widening the gap between import and export. Since India is the largest trading partner of Nepal, and the negligible export to India has hurt the trade balance creating a huge deficit of over Rs 108 billion with a single country. However, entrepreneurs are hoping that the revised trade treaty between Nepal and India will accelerate Nepal’s exports to India. “The revised trade treaty — the outcome of two years’ negotiations — provides additional facilities to Nepal’s export trade,” a trader said categorically adding that the implementation is — as always — yet another factor that could either help boost or bust exports to India. After the signing of the treaty by minister for commerce and supplies Rajendra Mahato and his Indian counterpart Anand Sharma on Tuesday, the treaty will have a seven-year shelf life. The two ministers will also sign a new agreement upgrading the 1996 agreement to control unauthorised trade from third countries as such trade has also hit Nepal. The over one month belated signing of the bilateral trade treaty was been initialled during Prime Minister Madhav Kumar Nepal’s five-day visit to New Delhi in August. The revised trade treaty will see bilateral trade being conducted in Indian rupees (IRs) at par with trade in convertible currency in respect of tax rebates and other benefits available to such trade. It is expected to simplify the current mechanism of tax refunds. The switch will provide Nepal direct control over customs duty revenues on the import of manufactured goods from India. Other tax rebates and export promotion benefits will also become available on exports from India to Nepal, with the combined impact making imports from India cheaper both for sale and further manufacture in Nepal. According to the treaty, India will allow several new items to the list of primary products Nepal wants to export, like floriculture products, wheat flour, bran, husk, bristles, herbs, stone aggregates, boulder, sand and gravel. “Duty free access of these goods without any quantitative restriction to India will help boost Nepal’s exports,”

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R&D Economic Research & Business Development said the trader. Apart from that, India will also facilitate export under the Most Favoured Nation (MFN) treatment of articles manufactured in Nepal which do not fulfil the criteria for preferential access and establish four additional Land Customs Stations (LCS) and open air traffic for bilateral trade. The treaty will boost Nepal’s technical standards, quarantine and testing facilities and related human resource capacities. Both countries have agreed to facilitate cross-border flow of trade through simplification, standardisation and harmonisation of customs, transport and other trade-related procedures and development of border infrastructure. Source: The Himalayan Times Date: 10/25/2009 Nepal to host int'l conference on travel and tourism In conjunction with other stakeholders including the Nepal Tourism Board (NTB), the Pacific Asia Travel Association (PATA) is hosting an international conference on adventure travel and tourism on Feb. 1-5, 2010. The conference will feature multiple sessions with deliberations on adventure travel, responsible tourism, adventure sports tourism, zero waste challenge and other issues of sustainable tourism. PATA is said to have received important backing from two influential organisations Adventure Travel Trade Association (ATTA) and the International Union for Conservation of Nature (IUCN) - for its 2010 Adventure Travel Mart. According to Prachanda Man Shrestha, CEO of NTB, the conference would act as an important platform for tourism stakeholders to discuss and promote environmental protection and social sustainability. He also believed that the conference will assist the country's target of brining in a million tourists during Nepal Tourism Year 2011. Source: www.nepalnews.com Date: 10/25/2009 FM expresses hope that budget will be passed Finance Minister Surendra Pandey on Thursday said that the government believed that the Maoists would allow parliament to endorse the budget for the current fiscal year.

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R&D Economic Research & Business Development Due to continuous obstruction of parliamentary proceedings by the Maoists, the government has failed to pass the budget. This has prevented the government from paying the salaries of the ministers. No government agency can spend more than one-third of the allocated budget until the budget is passed by parliament as per the Advance Expenditure Bill. The bill is endorsed by parliament on the day the budget is presented which allows government agencies to spend a third of the budget until it is passed after discussion at the house. The government has got approval to spend Rs. 85.49 billion as per the passed bill. “If they (Maoists) continue to stifle the parliamentary process, their combatants in the UN-monitored camps, along with civil servants and parliamentarians, will also suffer,� he further said while addressing an interaction program held in the capital. Source: www.nepalnews.com Date: 10/25/2009 Migrant workers’ number declines The number of the Nepalis migrant workers leaving the country for foreign employment purpose has decreased by 14.12 percent during the first quarter of the current fiscal year compared to same period last year. The Department of Foreign Employment (DoFE) officials and foreign employment entrepreneurs term the decline as an impact of Nepal's festive season, which started a month earlier than usual schedule. "Many outbound workers did not leave the country prior to festive season," said Purna Chandra Bhattarai, joint-secretary at the Ministry of Labour and Transport Department. He said that the impact of global financial recession had already started to ease with the increase in the demand of migrant workers. "There is no any hidden cause for the decline. It is simply festival which kept job aspirants home," he added. According to labour export data compiled by the DoFE, 56,282 individuals left for job abroad. Of the total 12,714 had left for foreign employment by their own personal contacts. During the same quarter of the last fiscal year, a total of 65,543 persons (including 11,029 by personal contacts) had gone for jobs in various labour destinations.

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However, foreign employment entrepreneurs are hopeful that number of people going for foreign employment will rise. Kumud Khanal, secretary of the Nepal Foreign Employment Agencies' Association said that the number of people leaving the country for foreign employment will sharply increase after the festive season. According to him, demand for migrant workers from Malaysia will double within December as the country is looking for human resource in sectors like plastic, furniture and food industries after the recovery from recession. "Qatar's demand is also expected to increase by 50 percent," he said. The top five countries that absorbed the Nepali migrant workers during the first quarter are -- Malaysia, Saudi Arabia, Qatar, the United Arab Emirates and Lebanon. Malaysia took 14,079 work forces through foreign employment agencies. The number is a rise by 6 percent compared to 13,271 of same period last fiscal year. Saudi Arabia stood second favourable labour destination for Nepali migrant workers as the country hired 15,648 individuals for job. It had hired 11,110 persons during the same period last year. Similarly, Qatar took 7,068 individuals through Nepalis foreign employment agencies. But the outflow to this country has registered decline by 62.26 percent because it had absorbed 18,731 work forces during the same period last fiscal year. The number of Nepalis migrant workers going for jobs in the United Arab Emirates has also gone down by 49.37 percent to only 4,306 individuals against 8,505 of same quarter last fiscal year. However, the number of workers going to Lebanon -- one of the lucrative labour destinations for Nepali women migrant workers has increased to 1,342 from 471 of same period of last fiscal year. "There is good demand for workers in Lebanon to work in service and household sector but we are not being able to send quality work forces," said Khanal. He said that candidate going for work in Lebanon should at least be high school graduate so that they could easily handle electronic devices while working as a house maid. Pandey also said that the government was facing pressure on recurrent expenditure (salary and operation cost) not in the development expenditure. Source: The Kathmandu Post Date: 10/25/2009

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Nepal’s repayment capacity moderate: IMF

Nepal faces an indication of increased debt vulnerability and the country's debt servicing capacity is at a moderate level, according to a debt sustainability analysis of 69 low income countries (LICs) carried out by the International Monetary Fund (IMF). The country is not a heavily indebted poor country (HIPC), though. Same was the case in 2008 with Nepal. However, it was pushed to high risk zone in 2007. The IMF has categorised these countries on the basis of their debt servicing capacity if they were facing low, moderate, high risk and debt distress situation. That's why the IMF has said that Nepal does not need HIPC initiative or multilateral debt relief initiative. Officials said that Nepal has been paying back loans continuously and it is in comfortable position to repay the lending agencies. During FY 2008/09, Nepal paid back Rs. 7.5 billion to multilateral donors and Rs. 2.4 billion to bilateral donors. Nepal aims to pay Rs. 9.5 billion to multilateral donors and Rs. 3.1 billion to bilateral donors during this fiscal year. Keshav Acharya, senior economic advisor at the finance ministry, said Nepal's debt sustainability position has strengthened due to increased revenue collection in addition to surplus status of balance of payment and current account as a result of growing remittance. Another reason he put was that Nepal has got concessional loans from multilateral donors, including the World Bank and Asian Development Bank, at very low interest rates between 0.5 and 1.5 percent whose maturity period stretches up to 30 years. According to Finance Ministry, the revenue collection witnessed an increase of more than 50 percent last month and the collection had exceeded the target in the last fiscal year. Given the growth of remittance amidst global recession, the IMF in its World Economic Report 2009, has also revised its earlier statement on foreign exchange reserves and current account balance against Gross Domestic Product (GDP). The foreign exchange reserve is expected to grow by 8.4 percent and current account

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R&D Economic Research & Business Development balance to grow by 4.2 percent against GDP in contrast to earlier estimation of 3.7 and 0.2 percent, respectively. The debt sustainability analysis was carried out of poor countries as per the joint IMF and World Bank's debt sustainability framework, introduced in 2005 to support LICs in their efforts to achieve their development goals without creating future debt problems. There are seven African LICs which are facing debt distress situation and 14 other countries facing high risk of sliding to debt distress situation, according to the report. Likewise, there are 22 countries including Nepal which are in moderate position and 18 countries facing low risk of debt distress. India, Pakistan, the Maldives, Azerbaijan and Uzbekistan have not been included in the list due to their significant market access. Risk of Debt Distress and HIPC status (South Asia) Countries Nepal

HIPC status

Non-HIPC

Bangladesh Sri Lanka Afghanistan

Risk Rating

moderate

Non-HIPC Non-HIPC

low

yes

Debt vulnerability Bhutan

Non-HIPC

moderate

-

yes

moderate

-

Interim Country high

yes

Source: The Kathmandu Post Date: 10/25/2009 MARKET: Nepal Telecom tops in transaction Nepal Telecom (NT) topped the chart both in terms of transaction amount and number of share units traded this week — with Rs 9.28 million for 17,000-unit of shares, but it could neither save Nepse nor the others sub-group that has NT under its belt. The others sub-group dropped by 17.62 points to close at 640.32 points from last

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R&D Economic Research & Business Development Thursday’s closing of 657.94 points. Of the nine sub-groups, only the hydropwer group that gained this week — adding 7.12 points to reach 821.07 points from last week’s closing of 813.95 points. However, development banks, others, commercial banks, finance and insurance subgroups plunged, pulling Nepse down by 8.39 points to 601.16 points from last week’s closing of 609.55 points. Development banks lost a whopping 35 points to 624.72 points. Others and commercial banks lost 17.62 points and 11.75 points to drop to 640.32 points and 583.88 points respectively. The books closure of Everest Bank dragged down the commercial banks sub-group. The finance and insurance sub-groups shed 2.55 points and 0.03 points to drop to 624.72 points and 609.29 points, respectively. Three sub-groups — trading, hotels and manufacturing — did not see any trading this week that unlike regular five-day trading witnessed only two-day trading due to festivals. During the two-day trading, only 67 companies saw their shares traded as against the 93 companies shares traded during the last five-day week. The minimal trading days also made the trading amount plunge by five times to Rs 73.23 million this week from last week’s Rs 370.10 million. The Group-A companies’ contribution — in overall trading — also dropped to 44.89 per cent from last week’s 56.48 per cent while the 78-scrip sensitive index — a barometer of Group-A companies — lost 1.90 points to drop to 151.77 points from the earlier closing of 153.67 points. The float index — calculated on the basis of real transactions — also dropped by 0.68 point to drop to 57.48 points from the earlier closing of 58.16 points. Standard Chartered Bank Nepal followed NT in terms of transaction, with Rs 9.17 million. Standard Finance with Rs 4.08 million, Nepal SBI Bank with Rs 3.76 million and Nabil Bank with Rs 3.02 million managed to come in the top five slots. In terms of number of transactions Pashupati Development Bank topped the chart with 254 transactions this week. This week, 57.5-million-unit of development bonds were listed in the secondary market but these bonds till date have not seen any trading. Source: The Himalayan Times Date: 10/25/2009 Investment in gold, silver as hedge up five-fold With growing uncertainty in investment in other sectors amid deepening impact of global financial crisis and rising inflation, customers have started making investment in precious metals like gold and silver, traders say. They said that the purchase of gold and silver for stocks has increased by five-fold over five years.

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R&D Economic Research & Business Development “Earlier, investors used to be fully interested to invest in golden ornaments. Now, gold is regarded as a hedge against inflation to secure investment,” Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (NEGOSIDA), told myrepublica. Shakya said share of the gold purchased by the customers to secure profitable investment has increased to 25 percent as compared to around 5 percent in 2004. “We have expected the imports of gold to increase during this fiscal year as compared to the fiscal year 2008/09 when the import was recorded at around 5,000 kg. But soaring bullion prices can bring a setback in imports this year as customers are expected to lower demands for the precious yellow metal,” added Shakya. Similarly, sales of silver have also increased significantly in the market with the increasing use of silver in industrial purpose among domestic consumers, said Shakya. On average, daily sales of silver hover around 100 kg, which is almost 20 percent higher than what was recorded a couple of years back. “The diversified use of silver besides ornament purposes has pushed up silver demand in domestic market. The imports would further go up if we boost exports of silver ornaments by increasing their quality,” Shakya said. The trend of using silver in industrial purpose such as photography, scientific research, medicine, electronic goods and decoration and even in furniture has raised demand of silver in Nepali market. However, ballooning price of gold and silver in international market has offset the sales even during festive seasons as compared to the same period in the past years, according to the traders. Shakya said sales of gold have dropped to an average of 10 kg per day, down from the average sales of 15 kg per day due to ever increasing gold prices in domestic as well as international market. Price of gold in domestic market reached a new high of Rs 25,765 per 10 gram (Rs 30,050 per tola) on Oct 14, with international market price touching $1058 per troy ounce. Nepal imports gold and silver from Hong Kong, Singapore and the United Arab Emirates. Source: www.myrepublica.com Date: 10/25/2009

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Slight decline in NEPSE Nepal Stock Exchange (NEPSE) opened just for two days -- Wednesday and Thursday -- for trading last week due to public holiday during Tihar festival. That's why, the market turnover dropped significantly. The NEPSE index witnessed a decline of 0.05 points to 601.16 points on Thursday against 601.21 points on Wednesday. The groups comprising development banks and finance companies witnessed a decrease in their indices by 5.25 points and 2.71 points, respectively, contributing to a slight decline in NEPSE index. However, the book closure (the period any company transfers dividends and other benefits to shareholders) of Everest Bank also contributed to the downfall in NEPSE index. The EBL's per share price declined to Rs. 2022 on Oct. 21 when the market opened from Rs. 2390 on Oct. 15, the last day of trading before Tihar festival. The index of commercial banks remained positive by 0.55 points which could remain higher if EBL's share price had not come down relatively higher level. The hydropower sector also witnessed an increase of 7.12 points in its index. The indices of manufacturing, hotel, trading and others groups however remained the same. A total of 121,900 shares of 67 companies worth Rs. 73.2 billion were traded. The Class 'A' companies witnessed a transaction of Rs. 41.3 million which covered 56.48 share of total turnover. The sensitive index that measures the transactions of Class 'A' companies witnessed a decline of 0.02 points last week. Nepal Telecom and Pashupati Development Bank topped in terms of turnover and number of shares traded, respectively. The shares of two government bonds (Development Bond 2071 and Development Bond 2073) were listed in NEPSE last week. The number of shares of first bond stands at Rs. 30 million and second at Rs. 2.75 million, respectively. Source: The Kathmandu Post Date: 10/25/2009

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R&D Economic Research & Business Development BUSINESS: Udayapur locals cash in on ginger farming

Farmers from the northwest villages of Udayapur district earn a good sum of money annually through commercial ginger farming. Peasants in Sirise, Hardeni, Manyekhu and Lekhani VDCs said a household could make at least Rs. 200,000 annually through this ginger cultivation. "The locals started commercial farming of ginger as they could hardly make any profits from traditional farming of maize and millet," said Rajendra Karki, a farmer of Hardeni. According to him, the locals were attracted towards ginger farming as an appropriate alternative to maize and millet, which could suffice their food demands just for three months. "Morevoer, ginger farming requires much less laborer force compared to others," he added. The farmers here have easy access to markets as these VDCs are connected to Siddhicharan Marga of Katari-Okhaldhunga road. The ginger produced here is sold in the district headquarters Gaighat, Lahan and Mirchaiya of Siraha and Rajbiraj of Saptari. Another farmer Kavita Basent says ginger farming has not only supported her livelihood but also helped manage resources for children's education. Source: The Kathmandu Post Date: 10/25/2009 Low jute production hits factories hard Due to continuous decline in jute farming in the country, the jute mills in SunsariMorang corridor have been compelled to be dependent in India and Bangladesh for raw jute needed. Decline in the jute production has resulted in the closure of some of the jute mills. Of the 11 jute mills in this corridor, three are already closed, including Biratnagar Jute Mills, the country's oldest.

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R&D Economic Research & Business Development According to Raj Kumar Golchha, president of Nepal Jute Mills' Association, jute mills are running in loss due to the decline in the jute production. Nepal has been importing raw jutes from Bangladesh and India, also the buyers of finished jute products. He said that the jute farming had declined due mainly to the lack of subsidy to farmers. The nine jute industries here need 80,000 tons of raw jute but districts in East Tarai only produce just about 10,000 tons. Remaining demand is fulfilled by importing it from Bangladesh and India. Last year, the region produced 10,600 tons of jute, about one-tenth lesser than that of the previous year. Despite the jute being a profitable cash crop farmers are not interested in farming, and this is because the government lacks a vision, says Champalal Rathi, an industrialist. The jute mills being operated in the corridor has been producing sacks, mats and threads and 90 percent of the goods produced by these mills are exported to India. According to Golchha, Nepal has been exporting jute products worth more than Rs. 3.50 billion annually from these jute mills. Demand of jute sacks from India is still high because the Indian government has made it necessary for using the jute sack to pack food stuff and sugar but demand in Nepal is decreasing because most of goods here are packed with plastics sacks. Once, the government had also made it mandatory to use the jute sack but it could not be implemented well. Jute traders said that the Nepal government too should make it compulsory to use jute sack in food stuff and sugar and provide subsidy to the farmers to encourage them in jute farming. Source: The Kathmandu Post Date: 10/25/2009 POLICY: Govt on offensive in east hills Nepal Police and Armed Police Force have launched a joint operation in the eastern hill districts in line with the special security strategy introduced recently by the government. Khotang Chief District Officer Keshavraj Acharya told this correspondent that District Security Committee had given its go-ahead to the joint operation.

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R&D Economic Research & Business Development The offensive is meant to curb the activities of the Kirant Janabadi Workers’ Party, whose cadres have been terrorising civilians, committing murders, abducting people for ransom, attacking police posts and indulging in extortion in the name of donation for some years, Acharya said. Since several outfits have been affecting law and order in the eastern hilly districts, the government established APF base camps in eight districts, including Khotang, Okhaldhunga, Bhojpur, Sankhuwasabha, Solukhumbu and Udaypur under the special security strategy and has intensified security operations. Khotang district DSP Rupam Lama said the cadres of the Kirant Janabadi Workers Party and Matrika Yadav-led CPN-Maoist had been extorting people in the name of donation drive. “We have started the security operation by coordinating with security chiefs of other districts,” Lama said, adding, “We will arrest the persons involved in criminal activities and file cases as per legal provisions.” He claimed that cadres and activists of major political parties were also involved in criminal activities. “Action will be taken against anyone involved in criminal activities,” he added. Leaders of major political parties mount pressure for the release of criminals if they are arrested, Lama alleged. Sixteen base camps of APF have been established in eight hilly districts under the special security strategy in the eastern region. A team of 30 APF personnel led by an inspector has been deployed in each base camp, ASI at APF base camp in Diktel said. Security personnel have been deployed in large numbers in Khotang, Bhojpur, Okhaldhunga, Solukhumbu, Udaypur and Sankhuwasabha districts. The Kirant Janabadi Workers’ Party, meanwhile, issued a press release on Friday evening, stating that it will hold talks with the government. The release issued by Hansa Kiranti, a central secretariat member of the party, stated that the party was ready to hold talks with the government to redress their woes. Source: The Himalayan Times Date: 10/25/2009 UML all for directly-elected PM, MMP electoral system The Communist Party of Nepal (Unified Marxist-Leninist) has reiterated that the party is all for adopting a directly-elected prime ministerial and a ceremonial presidential system in the new constitution. The party has said that it is in support of giving all executive power to the cabinet headed by a prime minister who obtains at least 51 percent of votes directly from the people.

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R&D Economic Research & Business Development “The prime minister should be directly elected from the people so as to avoid instability and uncertainty in the country,” the party said in a statement issued after a standing committee meeting on Saturday. The UML announced to adopt the policy in its election manifesto and the party´s eighth general convention held in February endorsed it. On electoral system, the party has proposed mixed member proportional electoral system in which representatives will be elected through both the first-past-the-post and proportional electoral systems. “The mixed member proportional electoral system is best for our country,” it said. While the UML is for prime ministerial system, the largest party Unified CPN (Maoist) is for presidential system. This has made the job of CA committee on determining the system of governance all the more difficult. The Maoists are for adopting an electoral system with multi-member constituency and unicameral legislature, whereas the NC is for indirect election of executive prime minister and ceremonial president and bicameral legislature. On the other hand, the UML is for indirect election of ceremonial president and bicameral legislature. The party has also entrusted standing committee member Bharat Mohan Adhikari to play a coordinating role in the party in the constitution making process. Source: www.myrepublica.com Date: 10/25/2009 PM to Maoists: Stop protests and come to a compromise Prime Minister Madhav Kumar Nepal Saturday renewed his call to the Maoist party to come to a political understanding by giving up its protest programmes. Addressing a function at Koteshwor in Kathmandu, Prime Minister Nepal said street protests would not lead to any solution and that there is no alternative to a compromise to resolve the current stalemate. Nepal also claimed that the current deadlock in the parliament is solely because of the Maoists and urged them to act responsibly, warning that the country might brace for political confrontation if the current situation prevailed. The Prime Minister argued that the Maoists were not going to make any political gain by indefinitely obstructing the parliament and carrying out street protests. He added that the current coalition was ready to welcome the Maoists into the government.

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R&D Economic Research & Business Development Source: www.nepalnews.com Date: 10/25/2009 Court rejects cabinet decision to withdraw Dhamala's case The Kathmandu District Court (KDC) has rejected the cabinet decision to withdraw charges against president of Reporters Club Rishi Dhamala and two other journalists on Friday. Stepping on a precedent set by the Supreme Court that subjudice cases cannot be withdrawn partially, a single bench of Shekhar Poudel of the KDC declared the cabinet decision was unacceptable. A cabinet meeting on September 20 had decided to withdraw charges against Dhamala, Ram Suvak Mahato and Birendra KM. However, the cabinet had not decided anything about the charges against the fourth person Manoj Mahato on the same case. Mahato and KM, who were brought to the court Friday for hearing, were taken back to the detention centre in Dillibazaar after the court refused to free them. Whether to allow the withdrawal of the case or not will be decided when the government revises its decision, the court said. According to existing provisions, a subjudice case can be withdrawn only after the approval of the court hearing the case. Dhamala was arrested on February 3 from his office in Putalisadak for his alleged connection with Ranavir Sena, which was involved in various riminal activities including bomb explosions, extortions, kidnapping and murders. He was later freed on bail. His case was withdrawn on September 20, one day before Prime Minister Madhav Kumar Nepal left for New York, USA, leading the Nepali delegation to the 164th UN General Assembly. Dhamala was also part of the delegation. Sources say, the very reason for withdrawing Dhamala's case was to enable him to go to the US. The cabinet had taken the decision under pressure from foreign minister Sujata Koirala. Dhamala is known to have close ties with Koirala. Source: www.nepalnews.com Date: 10/25/2009 PRESIDENT MOVE: Khanal thumbs down debate

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In a significant departure from its earlier stance on the President’s move of reinstating the then Army chief Rookmangud Katawal, CPN-UML Chairman Jhalanath Khanal said on Saturday it was worthless to debate on the President’s move, which had already become a history. “It is insignificant to discuss the President’s move, which has now become a history,” Khanal told reporters, during a reception hosted by senior party leader KP Oli at his residence in Balkot, Bhaktapur. “Our party stands for President’s respectful position in the new constitution,” UML statement reads. At a time when the CPN-UML had been witnessing an intra-party feud, Oli invited senior leaders of the party, including Prime Minister Madhav Kumar Nepal for dinner on Saturday. Although the reception aimed to send a message to the cadre that unity among the leaders was intact, the party’s Standing Committee earlier decided to hold a politburo meeting in mid-Novemebr to sort out differences surfaced in the party’s district committees. Khanal said that the UCPN (Maoist)’s 9-day ultimatum to the government for resolving the political deadlock should be taken as an opportunity than a challenge. “We have to forge a consensus and the Maoists should help create atmosphere for the same,” he said. Oli, however, said the differences among party leaders were objective, policy-related and procedural. The Saturday’s standing committee meet also directed leaders and cadre against involving in any kind of allegations and counter-allegations. The upcoming politburo meeting is supposed to take measures to address disputes in the district committees. The meeting also appointed Bharat Mohan Adhakari as the party’s coordinator to look after the entire affairs of the constitution making, and discussed possible agenda of Party Chairman Khanal’s India visit slated from Nov. 3. Source: The Kathmandu Post Date: 10/25/2009 India says left-wing rebels procuring arms from Bangladesh, Myanmar, Nepal

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R&D Economic Research & Business Development Reiterating that the extreme left-wing Naxal rebels are the biggest internal security threat, India Saturday claimed that the rebels are procuring arms from Bangladesh, Myanmar and Nepal to carry out their attacks in the country. "Naxals are acquiring weapons through Bangladesh, Myanmar and possibly Nepal. In terms of the threat to security from Indian sources or internal sources, Naxalism remains the biggest threat. There is, of course, the other threat which is cross border terrorism but that is emanating from across the border," Indian Home Minister P. Chidambaram said in a media interview. He added: "There is no evidence of any money flowing in from abroad to the Naxals. But there is certainly evidence of weapons being smuggled from abroad through Myanmar or Bangladesh which reach the Naxals." The Home Minister's statement came a day after he made it clear that it would not under any circumstances enter into any dialogue with the extreme left-wing rebels or Naxals until they give up arms and violence. "No talks until Naxals abjure violence," he had said. Claiming that the Naxal violence has been proving to be costly for the country, Chidambaram had also said: "India is going through a difficult phase of internal security, but we will overcome the challenges." Source: http://news.xinhuanet.com Date: 10/25/2009 Diplomats from Security Council members tour barracks in Nepal A team of Nepal-based diplomats from six Security Council members today visited army barracks and cantonment sites in the Asian country as part of their first collective tour since the establishment of a United Nations political mission there in 2007. Accompanied by Karin Landgren, the Secretary-General’s Special Representative, the team saw first-hand how UNMIN is electronically monitoring weapons, which are under live surveillance, stored by the Nepal Army at Chhauni barracks and by the Maoist army in Chulachuli. “That there is a light UN monitoring presence speaks to the confidence that the AMAAA [Agreement on Monitoring the Management of Arms and Armies] will be

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respected by the parties,” Ms. Landgren, who also heads UNMIN, said. She underscored that there have been few serious violations of the agreement, which was struck between the parties and the UN, and the mission has made recommendations to both the Nepal Army and the Maoist army on how to enhance monitoring and cooperation. The Council mission – comprising Nepal-based diplomatic representatives of China, France, Japan, Russia, the United Kingdom and the United States – was also briefed today by some UNMIN arms monitors, who come from 18 countries. “The presence of weapons containers and arms monitors reflects the unfinished business of the peace process, and UNMIN calls on the parties to make strengthened and sincere efforts to create the conditions for UNMIN to complete its work and for Nepal’s peace process to usher in a stable, just and prosperous future for its people,” Ms. Landgren noted. A decade-long civil war, claiming some 13,000 lives, ended in 2006 with the signing of a peace accord between the Government and Maoists. After conducting Constituent Assembly elections in May 2008, the nation abolished its 240-year-old monarchy and declared itself a republic. UNMIN was established in 2007 as a special political mission tasked with helping advance the peace process. It has been extended through January 2010 to assist in the management of arms and army personnel contained in the cantonments. Source: www.un.org/apps/news Date: 10/25/2009

POLITICS: NC not to let GPK's monopoly Senior leaders of the Nepali Congress today decided to take a decision at the party’s Central Committee meeting not to let the party president take unilateral decision in the future as was done while recommending his daughter Sujata Koirala as Deputy Prime Minister. They will ask NC president Girija Prasad Koirala to commit to seek party’s official consent before taking such decisions. Acting president Sushil Koirala, vice presidents Ram Chandra Poudel and Prakash Man Singh, joint general secretary and spokesperson Arjun Narsingh KC, central members Chakra Prasad Bastola, Dr Ram Sharan Mahat, Krishna Prasad Sitaula,

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R&D Economic Research & Business Development Chirinjivi Wagle and Gopal Pahadi were present at the meeting held at the residence of central member Purushotam Basnet in Shifal. “We dwelt on how to resolve the rift over Sujata Koirala’s elevation to the post of DPM,” a leader, who attended the meeting, said. “Almost all those present were of the view that the party’s support to Nepal-led government should not be unconditional as in the past,” said a leader, who was privy to the meeting. The furious leaders alleged that the PM had been ignoring NC’s official decisions and recommendations. They said the PM’s conduct would decide NC’s support to him. Meetings held at the residences of Bastola and Dr Mahat on Wednesday had also dwelt on the same issue, said another leader. “The party’s October 14 CC meeting urged party president Koirala to clarify on the matter in the next CC meeting. However, Koirala is unlikely to attend the CC meeting due to his poor health. If we brought up the issue in the upcoming Mahasamiti meeting slated for November 1-3 in Kathmandu, it will not augur well for the party’s image. We want to resolve the issue through CC meeting to be held within a couple of days,” said a party source. Party’s office bearers are likely to meet Koirala and seek a commitment from him not to take unilateral decisions in the future, a highly placed source of the party said. Source: The Himalayan Times Date: 10/25/2009 UML for direct polls to elect PM The standing committee meeting of the ruling CPN-UML has remained firm on its earlier stance on the major contents of new constitution. The meeting, chaired by party president Jhala Nath Khanal, decided that the new constitution should have a provision of electing the Prime Minister, who will enjoy executive rights, through an adult franchise. The PM should poll at least 51 per cent of the total valid votes cast during the election, UML secretary Yuvraj Gyawali, also the party spokesperson, said at the end of the meeting held at the party headquarters, Balkhu. He said the President will act as a ceremonial head of the state and would remain a symbol of national unity. The UML, the third largest force in the Constituent Assembly, has proposed a mixed election system (first-past-the-post and proportional representational system) for the federal parliament and provincial assemblies. The mixed election system was followed during the Constituent Assembly election. Gyawali said the party had already formed a seven-member talks team headed by party standing committee member Bharat Mohan Adhikari to hold talks with other parties in the Constituent Assembly. The meeting also endorsed party president Khanal’s trip to India beginning November

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R&D Economic Research & Business Development 3. Gyawali said Khanal would meet prominent Indian leaders to discuss bilateral relations between the two countries. It also decided to convene the party’s politburo meeting in mid-November. He said the planned politburo meeting would resolve the differences, considering the parallel organisations formed by the Khanal and Oli factions in the Kathmandu district. He said next standing committee meeting that would take place before the politburo meet would resolve internal rift in the party. Meanwhile, standing committee member KP Oli hosted a dinner for the UML leaders at his private residence in Balkot. Party president Khanal, PM Madhav Kumar Nepal, UML ministers and other leaders were present during the dinner. The dinner has been dubbed as an initiative to patch up internal differences between Khanal and Oli, who have been locking horns over the party organisation and statute since the party held its eighth general convention in February. A group of UML youth leaders close to Khanal had also organised a tea-party at Hotel Soaltee on Wednesday in a bid to bury differences. “The dinner has helped normalise relations among the top leaders. Party leaders have now realised that that the internal differences should be ironed out at ideological, organisational and political level,� said Rameshwor Phuyal, a UML central committee member and Kathmandu district secretary. Source: The Himalayan Times Date: 10/25/2009

UML standing committee takes up internal row; Khanal to visit Delhi The ongoing spat between the two factions of the UML-- one loyal to the party establishment and the other supporting senior leader K.P Oli - dominated Saturday's standing committee meeting of the party. During the meeting held at the party headquarters Balkhu, standing committee members close to party chairman Jhala Nath Khanal complained that some party leaders [Oli supporters] had been violating discipline by challenging the party's decisions and giving statements against the leadership. They also raised objection to the parallel district committees formed by Oli faction in Dhanusa and Mahottari districts. On the other hand, leaders loyal to Oli accused the leadership of not supporting the government led by the party and speaking in favour of a national government inclusive of the Maoists. In an attempt to resolve the dispute in the Kathmandu district committee, the party decided to ask the dissident local leaders not to hold a separate tea reception they have

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R&D Economic Research & Business Development been planning. Party chairman Khanal will personally discuss the issue with the district leaders to resolve the differences. The standing committee also decided to intensify dialogue with other major parties to end the political impasse. Likewise, the party has decided to hold the politburo meeting by mid November. Meanwhile, UML chairman Khanal is scheduled to visit India from November 3 "at the invitation of the Indian Prime Minister". In the past few weeks, a number of political leaders including Rastriya Janashakti Party chairman and former Prime Minister Surya Bahadur Thapa, Madhesi Janadhikar Forum chairman Upendra Yadav and UML leader Oli had visited India. Maoist chairman Pushpa Kamal Dahal, who returned from China after a nine-day long visit last week, is also said to be planning a trip to New Delhi soon. Source: www.nepalnews.com Date: 10/25/2009 Agitation to revitalise statute drafting: Dahal A day after the UCPN (Maoist) set a deadline to launch massive protests, party Chairman Pushpa Kamal Dahal on Saturday said mass movement was imperative to draft the constitution and take the peace process to a logical conclusion. “We have aspired for a federal republic state since the days of the people’s war and we are quite close to materialising it. However, feudal and traditional forces are trying to foil it,” said Dahal, while addressing a programme organised by Maoist-affiliated Newa Mukti Morcha in Kathmandu. “Mass movement is a must to achieve our goals.” The Maoists on Friday set a conditional Nov.1 deadline to organise massive protests across the country if amicable environment was not created by then for a political consensus to address their demands. “A constitution that guarantees the rights of all the ethnic communities is what we are aiming at. But conspiracies are being hatched to prevent the country from embracing ethnicity-based provinces,” xsaid the Maoist chairman.

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R&D Economic Research & Business Development The Maoist party has been batting for an ethnicity-based state. But the main coalition partners of the incumbent government—Nepali Congress (NC) and CPN-UML—have said the idea of ethnicity-based federal system of governance needs a rethink, for it may spur the threat of ‘state disintegration’. “Awareness about ethnicity should be spread. We want to establish an egalitarian society through the new constitution,” said Dahal, adding, challenges were ahead as feudal and reactionary forces were still against ‘liberation of ethnic communities’. The Maoist supremo said the Maoist-led government had officially recognised Nepal Sambat but an implementation to this end is yet to be seen. He also inaugurated a rally organised by the Newa Mukti Morcha to mark Nepal Sambat 1130. Some 500 motorcyclists are participating in the rally that will tour through Banepa, Panauti, Palung, Kulekhani, Naubise among other places that are demarcated by the Maoists as a proposed Newa state. Source: The Kathmandu Post Date: 10/25/2009 Minister gives Nepal five Minister for Information and Communications Shankar Pokharel has ruled out the possibility of change in government leadership even if the UCPN (Maoist) joins the national unity government. Speaking to reporters in Nepalgunj, Banke, on Saturday, he claimed that if the national unity government was formed under political consensus, Prime Minister Madhav Kumar Nepal will again take the leadership charge. “There is no alternative to Nepal while taking rein of the new government in a volatile political situation of a country like ours,” said Pokharel, who is also the government spokesperson. He said the government will find an alternative if the Maoist continued disrupting the parliament. “The government could not pass the budget in the wake of prolonged House obstruction,” he said, adding that some of the demands raised by the Maoist cannot be addressed at any cost.

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R&D Economic Research & Business Development He claimed that the government has not been facing any economic problem due to the parliament deadlock. Source: The Kathmandu Post Date: 10/25/2009 Nepal wants Maoists to end stir, join govt Amid a Maoists threat of a stir, the Nepalese Prime Minister today asked the former rebels to help end the political deadlock over the President?s controversial decision to reinstate the former army chief in May. Madhav Kumar Nepal asked the Unified CPN Maoist (UCPN-Maoist) to come to a political understanding by giving up its planed protest from November 1. The former rebels have warned that it will launch a fresh agitation if the government failed to find a consensus to discuss in Parliament the President Ram Baran Yadav's controversial decision to reinstate General Rukmangad Katawal in May. The ultimatum by the Maoists if carried out could derail the fragile peace process. The Maoists have already been blocking the Parliament since Prachanda resigned as the Prime Minister on May 4 after President Yadav reinstated the then Army Chief dismissed by the Maoists supremo. Source: www.ptinews.com Date: 10/25/2009 GENERAL: Foreign husbands can be Nepali citizens The sub-committee under the Constituent Assembly (CA) committee on determining fundamental rights and directive principles has proposed to issue two types of citizenship -- by descent and by naturalization. Earlier, the government had added a special provision on issuing citizenship certificates to those born in Nepali territory on or before April 15, 1990 as their inherent right. The sub-committee has proposed to remove this provision in the new constitution. "We finalized the issues related to citizenship in today´s [Saturday´s] meeting although some members had reservations over some points," Ramesh Lekhak, a member of the committee, said.

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R&D Economic Research & Business Development The CA sub-committee has proposed some new provisions for the new constitution. The sub-committee recommended providing citizenship to any foreign national who is married to a Nepali, irrespective of gender. Earlier, only a foreign woman married to a Nepali man was entitled to Nepali citizenship. Nepali women activists and lawmakers were demanding that a foreign national married to a Nepali woman be granted Nepali citizenship also. As per the new provision, the foreign national irrespective of gender should stay in Nepal continuously for 15 years after getting married to a Nepali citizen to become entitled to Nepali citizenship. Earlier, any foreign woman would acquire Nepali citizenship immediately after getting married to a Nepali man while a foreign man would not be eligible for Nepali citizenship just on the basis of being married to a Nepali woman. Lekhak of Nepali Congress and Rajendra Mahato of Sadbhabana Party have opposed the proposed provision arguing that a foreign woman married to a Nepali man should be provided citizenship immediately after the marriage. But, she has to produce testimonials confirming that she has relinquished her citizenship of another country. Any child will be entitled to Nepali citizenship if any one of the parents is a Nepali citizen irrespective of gender. At present, a child born to a Nepali man and a foreign woman will get Nepali citizenship but would be deprived of this right in case the mother is a Nepali woman married to foreign man. Likewise, if a Nepali who has already renounced Nepali citizenship wants to acquire Nepali nationality again, he or she can repossess it after staying in Nepal continuously for five years and relinquishing the citizenship of another country. Majority of members of the committee have proposed that a single type of citizenship certificate be provided by the central government together with the citizen´s provincial identity. But, Lila Nyaichyai of Nepal Workers Peasants Party and Chandika Prasad Yadav of Madhesi People´s Rights Forum have demanded two separate citizenship certificates -- one provided by the central government and another by the provincial government. Nyaichyai is also against issuing naturalized citizenship certificates. "Our [her party ´s] stance is that citizenship certificates should be issued only on the basis of descent," she said. ID card to NRNs, others

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The sub-committee also decided to propose a new provision for issuing identity cards to non-resident Nepalis and to those who are in the process of acquiring naturalized citizenship. Such cards can be given also to those who are already married to Nepali citizens but have to wait for 15 years before they become eligible for Nepali citizenship. "Once they get such cards and regularly renew them, it will help them become eligible for the right to citizenship and also help the state update records about such people living in the country," Lekhak told myrepublica. Identity cards will be issued on the basis of marriage certificates, birth certificates or other testimonials. Nyaichyai is likewise against the idea of issuing such cards to NRNs and others. The provisions need to be passed by a meeting of the full committee and endorsed by a two-thirds majority of the CA before being including in the new constitution. Source: www.myrepublica.com Date: 10/25/2009 Newa Mukti Morcha rallies along proposed Newa Autonomous State border Hundreds of people affiliated to Newa Mukti Morcha, a Maost-affiliated organisation of the Newar community, started a motorcycle rally Saturday morning on the occasion of Nepal Sambat 1130. The rally passed through Banepa, Panauti, Palung, Kulekhani and Naubise, demarking the proposed Newa Autonomous state. More than 500 motorcyclists and some cars participated in the rally. Chairman of Unified CPN (Maoist) Pushpa Kamal Dahal inaugurated the rally. Addressing the inaugural function, chairman Dahal said, regressive forces were conspiring to foil the establishment of caste-based sates. Maoist vice chairman Narayan Kaji Shrestha and leader Hitman Shakya also participated in part of the rally. The Morcha also has organised a cultural programme in Palung Saturday evening. Source: www.nepalnews.com Date: 10/25/2009

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R&D Economic Research & Business Development Toran Singh appointment draws rights body’s wrath The Asian Centre for Human Rights (ACHR) has urged the United Nations Peace Keeping Operations to initiate vetting of individual soldiers as to whether National Human Rights Commission of Nepal or NGOs in Nepal have received any complaint, to make sure that the credibility of UN Operations is not destroyed through deployment of criminals. The appeal follows the government’s decision to appoint General Toran Singh as the Officiating Chief of the Army Staff. “General Singh is directly implicated in very grave crimes involving torture, summary execution and disappearance of numerous individuals,” the Delhi-based rights organisation stated in a press release on Saturday, expressing concern over the appointment. In its May 2006 report on arbitrary detention, torture and disappearances at Maharajgunj barracks, the Office of the High Commissioner for Human Rights (OHCHR) had concluded that the “the commander of the 10th Brigade—General Toran Singh—knew or ought to have known about these actions.” It suggested that “those potentially implicated directly or through command responsibility for units involved should be suspended pending investigation, and should not be proposed for participation in United Nations peacekeeping missions”. Despite evidence, the government has not only failed to take action, but is now clearly moving towards promoting Singh, claims the release. It adds that Singh’s promotion is a powerful symbol of the government’s reluctance to end the endemic impunity in Nepal for widespread unlawful killings, enforced disappearances, torture and rape by Army personnel committed during the internal armed conflict from 2001 to 2006. “Singh’s promotion follows the promotion of the Army Judge Advocate General, the officer responsible for internal military justice, who has overseen numerous coverups including, most visibly, the criminal

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R&D Economic Research & Business Development proceedings in the case of Maina Sunuwar, a 15-year-old girl killed in February 2004 at the Panchkal army barracks, the camp used to train soldiers for UN peacekeeping duty. Many other officers suspected of human rights violations between 2001 and 2006 remain in their posts or have been promoted, the release says. “If the government is prepared to promote officers implicated in serious crimes to the highest office, then the international community will be forced to assume that other rewards, including prestigious UN service, will be offered to other officers with similarly appalling records,” ACHR Director Suhas Chakma warned. It recommended that the government of Nepal take immediate action to address growing international concern over its failure to address impunity, immediately suspend General Toran Singh and initiate an in vestigation into the rights violations that Nepal Army’s 10th Battalion committed under Singh’s command, in conformity with June 2007 Supreme Court ruling. Source: The Kathmandu Post Date: 10/25/2009 China's 'new front' on Indo-Nepal border The Chinese clamour over Arunachal Pradesh has raised many eyebrows in India.

Even as the meeting between Prime Minister Manmohan Singh and Chinese Premier Wen Jiabao in Thailand on Saturday was being looked at as an effort to cool down the tension between the neighbouring countries, the Dragon nation has opened another anti-India front. This time in Nepal. Silently but speedily China is spreading its wings in the erstwhile Hindu kingdom, mainly to unleash anti-India propaganda. Besides acquiring some major construction projects in Nepal, the Chinese are also making their presence felt by opening language centres in Nepali cities on the Indo-Nepal border. These centres are teaching Chinese language. But, what raises suspicions on Chinese intentions is the fact that these centres are open only for Nepali citizens. The surge in Chinese activities in the neighbour country is a matter of concern for India which is already fighting terrorism being pushed into the country from Pakistan. It’s a known fact that China often uses Nepal as a buffer state against India. After the Indo-China war of 1962, the Dragon country has made constant efforts to increase its influence in Nepal. Though it did not succeed much till Nepal was under the rule of

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R&D Economic Research & Business Development monarchy, the fall of monarchy and growing Maoist grip over Nepal has given a fillip to Chinese plans. A clear indicator of this is the construction of Sikta barrage in Agaiya village of Banke district (Nepal). Its construction was delayed for almost three decades owing to Indian protest. But, once Maoists held sway over the Nepali government, the construction was given a go-ahead in 2006. Moreover, the contract for the project was given to Chinese firm — Sinehydro. In fact, a team of 40 Chinese engineers is engaged in the construction of the Sikta barrage in Agaiya district of Nepal. The district touches the Indian district of Shravasti. The distance from Indian border to the barrage is barely 14 kilometres. The possibility of Chinese infiltration in important zones of war on Indian border areas due to the presence of Chinese engineers cannot be ruled out. Also, after the completion of the barrage the flow of river Rapti towards India will be diverted towards Nepal which will create acute water shortage in Indian area. Efforts have also been started to divert the flow of rivers flowing towards Indian area from Parchu lake located in Chinese area adjoining the state which may lead to floods in the borders districts of India during monsoon. Not only this, if the and Sikta barrage ever breaks down due to technical reasons it will severely impact the security arrangements made on the India border. China, thus, seems to be working on these two projects under well-planned policy to tease India. Similarly, China has established the office of ‘Maitri Sangh’ in Nepal adjoining Indian border territory. Meanwhile, a 10-member team comprising five Chinese and five Tibetan national recently visited Nepalganj headquarters of Banke district (Nepal). The team toured the Indo-Nepal border and secretly clicked photographs of the Rupaidiha main gate located on Indo-Nepal border. The Indian intelligence agencies, however, learnt about this when the team had already left for Kathmandu. Assistant army Nayak Devendra of Shashtra Seema Bal (SSB), when contacted, told TOI that he will report the incident to his senior officers. Source: Times of India Date: 10/25/2009

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R&D Economic Research & Business Development International Financial and Economical NewsBrief: TOP STORIES • Argentina to exchange debt, open doors to foreign investment • Senate and House are leaning in favor of health care public option • Auction of contracts linked to Thomson debt is seen as milestone • China's sovereign fund to increase investments • JAL to get $6 billion under government-aid plan • Pension funds challenge Freddie Mac secrecy in lawsuit • Wall Street rages against pay czar's cuts MARKET ACTIVITY • Asian markets higher after Wall Street sees gains ECONOMICS • U.K. economy sees surprise contraction • Analysis: Central banks face pressure to delay exit strategies • Economists: Weak dollar isn't such a bad thing for the U.S. • China's rapid growth raises fears of inflation, correction • Romer: "Severely elevated" joblessness will continue in recovery GEOPOLITICAL/REGULATORY • House panel endorses Consumer Financial Protection Agency • ECB urges global response to hedge fund regulation • China to require quarterly stress tests on banks, source says • Fed will crack down on compensation that encourages "undue risk" • Court approves France's tough law against digital piracy ETHICS • French judge orders trial for former Vivendi executives

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R&D_NewsBrief_25th Oct, 2009  

R&D_NewsBrief_25th Oct, 2009

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