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R&D Economic Research & Business Development

Date: September 7, 2009

Highlights

UCPN-Maoist Chairman Pushpa Kamal Dahal has said that the true essence of the concept of civilian supremacy is to “arm every citizen with a gun.”

Expecting respectful words from the Unified Maoists’ Party Chief Pushpa Kamal Dahal towards the first president of the republic has certainly been a rare proposition. “How could a person who only knows rearing buffalos could be more intelligent than a shepherd”, Prachanda said of Dr. Ram Baran Yadav.

Despite continued obstruction of parliament and the growing threat of unrest, the UML-led government on Sunday claimed its 100 days in office a success story in terms of achievements.

Nepali Congress President Girija Prasad Koirala rejected to meet Prime Minister Madhav Kumar Nepal who reached the formers residence citing health problem Monday morning. It has been learnt that Prime Minister Nepal waited for Koirala at the latter's residence for some 10 minutes but in vain.

Koirala believes that the Nepali Congress party must be accorded second position in the government both numerically and hierarchically. “If our demands are not met with, we may have to go in for a suitable alternative to this government”, Koirala is quoted as saying by the Rajdhani Daily.

Three ruling Madhesi parties -- Madhesi People´s Rights Forum (Democratic), Tarai-Madhes Democratic Party and Sadbhavana Party -- have decided not to pull out from the coalition government and continue fighting for the cause of Madhes by remaining in the government.

The Special Committee for Supervision, Integration and Rehabilitation of the People’s Liberation Army (PLA) combatants today held out renewed hope for the Maoist fighters, who are living in seven cantonments and 21 satellite camps across the nation.

The Maoists´ People´s Liberation Army (PLA) is ready to facilitate the discharge of disqualified combatants from the cantonments if the government commits to provide cash relief for their proper rehabilitation.

The Judicial Council (JC) on Sunday appointed 47 appellate court justices and 27 district court judges to fill the positions lying vacant for the last one year.

The Ministry of Peace and Reconstruction has readied the much-awaited disappearance bill that proposes forming a high-level independent commission to investigate the conflict-time disappearance cases and recommend reparation to the victims.

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The government has initiated the process for seeking a soft loan worth US$ 1 billion from the Chinese Export and Import Bank, known as China Exim Bank, to finance three major development projects. The proposed three projects include one regional airport at Pokhara, a hydropower project in Jajarkot district and a road connectivity package that mainly includes construction of bridges.

Though the government publicised Prime Minister Madhav Kumar Nepal’s recent India visit as a huge success in terms of trade between the two neighbours, the trade ministry is still unaware of the export sector’s problem.

The commercial banks are doing fine by and large in terms of reduction in their Non-Performing Loan (NPL) in the previous fiscal year, according to the central bank. While 16 of the 25 banks witnessed a drop in their NPL, three saw it rising, states a recent report of Nepal Rastra Bank (NRB).

Yeti Airlines and Everest Bank Ltd (EBL) have joined hands to allow EBL account holders to book and buy tickets of Yeti Airline´s destinations across the country online.

South Korea is planning to launch a massive crackdown against overstaying migrant workers in October and November. The move is expected to affect over 3,000 Nepali workers.

Two international airlines are to begin flights to and from Kathmandu within a month. While China Eastern Airlines will launch its Kunming-Kathmandu flights four times a week from September 8, Arc Fly, the state-owned Dutch airlines, will launch Kathmandu services in October, the Ministry of Tourism and Civil Aviation said.

13 Chinese and Nepalese enterprises have signed export and import trade contracts with a value of 15.91 million US dollars, covering wool, home appliances, textile products etc. in the China's Tibet-Nepal economic & trade fair by September 4, the second day of the fair.

The prices of bricks and sand, two major construction materials, have soared sharply in the market, as manufacturers and suppliers increased prices citing shortfall in supply. However, the prices of cement and steel rods have gone down, easing the overall cost of construction.

The Birgunj customs office will seize vehicles if importers delay the release as per the new evaluation.

The Nepal Stock Exchange (NEPSE) started the week on a promising note as it went up by 2.17 points on Sunday. The development bank sector was the highest gainer increasing by 5.14 points followed by the finance sector which went up by 2.73 points. Similarly, the insurance sector was the biggest loser on the floor as it shed 4.12 points followed by the hydropower sector and the banking sector which fell by 1 point and 0.37 point respectively.

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POLITICS:

Dahal for gun for everyone UCPN-Maoist Chairman Pushpa Kamal Dahal has said that the true essence of the concept of civilian supremacy is to “arm every citizen with a gun.” Clarifying the meaning of civilian supremacy upheld by his party for quite sometime, Dahal said, “Every citizen must own a gun, but not be under its threat.” Dahal´s argument has come at a time when many analysis and views have emerged around the definition of civilian supremacy for which the Maoist government professedly stepped down. Dahal also said the Nepali Congress should follow BP Koirala who wanted to democratize the Nepal Army. "The NC should follow the BP´s ideology if it wants to institutionalize democracy," he added. "We are fighting for revolution, democracy and the people," Dahal further said, adding, "We are currently engaged in a big discussion on whether the people should be supreme or the gun." Addressing a mass gathering organized by the Maoist Kochila State Committee in Biratnagar, he said, "Those who are now sitting on the same chair (that I quit) with the help from foreign masters are making a big mistake." He added, "Some stooges from home and outside are trying to steal away the hard-earned prestige of the Nepalis." Referring to the bomb blast at the venue of the mass meeting on Saturday, Dahal said, "The people will retaliate through rocket launchers against those who are threatening the people´s leaders by firecrackers." Source: www.myrepublica.com Date: 09/07/2009 Prachanda spits venom at Nepal President Expecting respectful words from the Unified Maoists’ Party Chief Pushpa Kamal Dahal towards the first president of the republic has certainly been a rare proposition. “How could a person who only knows rearing buffalos could be more intelligent than a shepherd”, Prachanda said of Dr. Ram Baran Yadav. The Unified Maoists Party chief, Pushpa Kamal Dahal alias Prachanda was addressing a mass meet in Biratnagar, Morang District, September 7, 2009. “I have heard that he was a buffalo care-giver, I feel sorry for him because he could not turn more intelligent than what he used to be”, said the firebrand leader of the Nepal’s proletariat.

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However, our president is very good at obeying to the diktats of the outsiders sent though Aakashbani and that too in the midnight, he continued. “How well he executed the diktats of his foreign masters by reinstating Katawal who was sacked by the peoples’ elected government”, reminded Prachanda? Look what says Prachanda of the outgoing Chief of the Nepal Army Rukmangad Katawal. “Our government sacked him mainly because he is the agent of the King and a leader of the mass killers”. “Katawal is the leader of the feudal and mass killer of thee institution of Army.” Amid presence of 200 thousand people, the leader of the working class, Prachanda said, “unless and until weapons of the Nepal Army is brought under the ambit of the people, establishing peoples’ supremacy was impossible”. Prachanda added, “To establish people’s sovereignty and peoples’ supremacy the weapons must come under the control of the people.” “So far what they have witnessed is just a trailer, we are yet to protest in the real sense…I urge you all to prepare for the big”, said Dahal. The mass meet was organized by the Unified Uprising Committee-Kochila Chapter in Biratnagar. Question thus could be raised as to whether Prachanda has the right to deride at the Nepal President in such a demeaning manner? Source: www.telegraphnepal.com Date: 2009-09-07

Govt jumps for joy: Congress skips celebrations Despite continued obstruction of parliament and the growing threat of unrest, the UML-led government on Sunday claimed its 100 days in office a success story in terms of achievements. Unveiling the government's report card for its first 100 days, Information and Communications Minister Shanker Pokhrel said on Sunday that the government was on the path of success, especially in forging national unity as it had organised 11 meetings on national issues among coalition partners and the 22 parties supporting it. While Minister Pokhrel claimed success, Nepali Congress ministers stayed away from the 100th day celebrations.

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"A crucial central committee meeting of Nepali Congress is underway, where vital issues are being discussed. So, NC ministers could not be there at the press conference," explained Pokhrel. "We should keep in mind that the government was formed at a time when the nation was reeling under huge political transformation. People were apprehensive the military would take over after the previous government collapsed and the issue of civilian supremacy was high on the agenda. We have now established civilian supremacy and the political order is intact," said Pokhrel. Revenue generation and expenditure have touched a new high and the government is mulling over implementation of the budget at the local level, he said. "Continued obstruction of parliament by UCPN (Maoist) is a matter of worry," This government has to endorse the budget, the obstruction notwithstanding," he said. Pokhrel claimed the government has the capacity to encounter any challenge to civilian supremacy. "The government is committed to control hikes in prices of essential goods and to monitor the market strictly," he said as he unveiled the 54 page booklet giving the government flying colours. Source: www.kantipuronline.com Date: 2009-09-07

Koirala rejects to meet Prime Minister Nepali Congress President Girija Prasad Koirala rejected to meet Prime Minister Madhav Kumar Nepal who reached the formers residence citing health problem Monday morning. It has been learnt that Prime Minister Nepal waited for Koirala at the latter's residence for some 10 minutes but in vain. Koirala's helpers' informed the Prime Minister about Koirala's health. Prime Minster Nepal had reached Koirala's residence to held talks on the recent political situation of the country. Koirala has been expressing his dissatisfactions over the Prime Minister for not appointing his daughter Sujata, the Deputy Prime Minister, not briefing him the Prime Minister's India visit, not appointing the person he nominated for the ambassador's post and so forth. According to the source, the two can hold talks at any time later today. Source: www.kantipuronline.com Date: 2009-09-07

Search begins for suitable alternative to Nepal Govt. begins Fresh media reports claim that Nepali Congress President Girija Prasad Koirala is currently occupied in holding inner-party and intra-party meetings in order to elevate the ranks of his daughter Sujata Koirala as the deputy prime minister of the country.

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Ms. Koirala is currently the Foreign Minister of the Nepal. Father Koirala had summoned a meeting of Nepali Congress’ high ranking leaders at his personal residence to discuss the issue, say reports. Ram Chandra Poudel, the NC leader of the Constituent Assembly delegation is quoted as saying by the Rajdhani Daily, September 4, 2009, that he had been invited at the Koirala residence. “I have no idea as to what is purpose of the meeting”, says Poudel. Koirala believes that the Nepali Congress party must be accorded second position in the government both numerically and hierarchically. “If our demands are not met with, we may have to go in for a suitable alternative to this government”, Koirala is quoted as saying by the Rajdhani Daily. Writes Rajdhani, Koirala had sent Sher Bahadur Deuba to meet with the Unified Maoists’ Chairman Prachanda and UML chairman Jhala Nath Khanal. Mr. Sher Bahadur Deuba met with Prachanda at the Hotel Himalaya on Friday evening. A new equation apparently is already in its embryonic stage. Source: www.telegraphnepal.com Date: 2009-09-06

Madhesi parties to remain in govt Three ruling Madhesi parties -- Madhesi People´s Rights Forum (Democratic), TaraiMadhes Democratic Party and Sadbhavana Party -- have decided not to pull out from the coalition government and continue fighting for the cause of Madhes by remaining in the government. A meeting of the top leaders of the three parties held at the MPRF-D headquarters in Sanepa on Sunday made the decision, allaying speculations that Madhesi parties would eventually pull out from the Madhav Kumar Nepal-led government over vice president´s oath row. “We have agreed in principle not to pull out from the government over Vice President Parmananda Jha´s oath row,” said a senior Madhesi leader present at the meeting. “There is no danger to the Madhav Kumar Nepal-led government at least for now.” The meeting of the three ruling parties came in the wake of seven MPRF-D lawmakers urging Madhesi parties on Saturday to pull out from the ´anti-Madhes´ government as the government stripped state privileges of Jha for his refusal to take oath in Nepali.

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The meeting concluded that the call by MRRF-D lawmakers to withdraw support from the government was an outcome of dissatisfaction within the party. “The party [MPRF-D] will take initiatives to address their grievances and settle the issue,” said the top leader. The meeting has decided to ask the UCPN (Maoist) to lift House obstruction to find peaceful outlet for the ongoing oath row through an amendment to the interim constitution. An amendment bill to allow oath-taking in mother tongue has already been registered in parliament. Talking to myrepublica.com, SP Chairman Rajendra Mahato said the meeting also dwelt on issues related to Indian priests´ appointment row at Pashupatinath Temple, implementation of eight-point agreement reached between United Democratic Madhesi Front (UDMF) and the government in the past and about Inclusive Bill that is already registered in the Legislature Parliament for approval. However, the meeting could not hold detailed discussion on the issues as the meeting started later than the scheduled time of 5 pm. “We have decided to hold further discussion during Monday´s meeting and reach a decision,” said Mahato, who also heads the Ministry of Supplies. TMDP Joint General Secretary Jitendra Sonar said the next meeting will be held at 11 am Monday at Singha Durbar. Meanwhile, Pramod Kumar Gupta of MPRF-D, who on Saturday had urged lawmakers to resign from the government, said that the number of party lawmakers supporting their cause reached eight with one more lawmaker, Laxman Kumar Mehta, joining the group. Source: www.myrepublica.com Date: 09/07/2009

Panel urges political role for PLA The Special Committee for Supervision, Integration and Rehabilitation of the People’s Liberation Army (PLA) combatants today held out renewed hope for the Maoist fighters, who are living in seven cantonments and 21 satellite camps across the nation. Earlier, this morning a joint meeting was held between members of the Special Committee and the Technical Committee at the Prime Minister’s Office in Singha Durbar. During that meeting, the Technical Committee suggested the following to the Special Committee: The PLA fighters are free to choose between politics and integration with the Nepali Army. “The UCPN-Maoist now has to take a call. It has to figure out how many fighters are willing to join politics,” said Jaya Prakash Prasad Gupta, one of the members of the Special Committee. The seven-member Technical Committee has urged the Special 7


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Committee to finalise the modalities of the integration at the political level. The Special Committee, in turn, directed the Technical Committee to compile a report, spelling out how the PLA combatants can be kept under its control. Dr Ram Sharan Mahat, a member of the Special Committee, admitted that past moves to bring the exrebels under its command could not be implemented. “The Special Committee has also directed the Ministry for Peace and Reconstruction to resume the rehabilitation of around 4,000 disqualified fighters. The ministry will give them vocational training before they’re discharged,” said Gupta. Source: The Himalayan Times Date: 09/07/2009

Cash relief sought for disqualified combatants The Maoists´ People´s Liberation Army (PLA) is ready to facilitate the discharge of disqualified combatants from the cantonments if the government commits to provide cash relief for their proper rehabilitation. PLA commanders asked Maoist chairman Pushpa Kamal Dahal to push for cash relief for the rehabilitation of the disqualified PLA personnel during the ongoing PLA general staff meeting that began in Kathmandu on Friday. "The government can immediately begin the discharge process if the combatants are given cash in bulk for their rehabilitation into the society. We will fully cooperate with the government," said Maoist deputy commander Baldev, one of the PLA commanders to participate in the meeting. The meeting on Sunday also appointed Baldev as the PLA spokesperson. There are 4,008 combatants disqualified by the United Nations Mission (UNMIN) during the verification process. They are still languishing in the UNMIN-monitored seven cantonments and 21 satellite camps. He said the disqualified combatants are not ready to leave the camps without proper rehabilitation package that ensure their normal lives when they are back into the society. But he said the PLA commanders, on their part, are ready to cooperate with the government. On July 17, a government team had reached the Pariwartan Smriti Brigade in Chitwan to get the views of the disqualified PLA combatants on rehabilitation, but the PLA commanders told the team that the government should begin the discharge process only after introducing packages that ensure the rehabilitation of the combatants. During the meeting, the PLA commanders also expressed concern over the integration and rehabilitation of the PLA commanders in light of the contradicting views from other political parties. They also told the party chairman about the confusion surrounding the reporting of the PLA activities as the PLA had come under the Special Committee´s purview on 8


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the supervision, integration and rehabilitation. The PLA commanders have been reporting the PLA activities to the party chairman till date. Now they will have to report the PLA activities to the Special committee. Besides, the commanders also raised the issue of infrastructure at the cantonments and the transfer of PLA units Source: www.myrepublica.com Date: 09/07/2009

47 appellate court justices appointed The Judicial Council (JC) on Sunday appointed 47 appellate court justices and 27 district court judges to fill the positions lying vacant for the last one year. Of the 47 appellate court justices, 10 are appointed as 'additional'. Seventy percent of the new appointees are law practitioners. Minister for Law and Justice Prem Bahadur Singh said the JC had given special attention to make the appointments inclusive and fair. "We invested a lot of energy to make our decision inclusive and we are successful in that," Singh told the Post. Of the total appointees three are women-- Sharanga Subedi from Kaski, Nita Gautam Dixit from Bara and Sushmalata Mathema from Chitwan. They are appointed as justices of Butwal, Pokhara and Hetauda appellate courts respectively. Source: www.kantipuronline.com Date: 2009-09-07

POLICY: Govt readies much-awaited disappearance bill The Ministry of Peace and Reconstruction has readied the much-awaited disappearance bill that proposes forming a high-level independent commission to investigate the conflict-time disappearance cases and recommend reparation to the victims. A source at the Ministry of Peace and Reconstruction said that the bill is being presented in the next cabinet meeting for a final approval. Minister for Peace and Reconstruction Rakam Chemjong told myrepublica.com in an interview last week that the bill will be tabled in the parliament before Dashain festival. The bill proposes forming a commission of maximum five members. The members need to have ten years experience either in the filed of human rights or psychology or law or conflict or sociology or peace process. The government will appoint the members upon recommendation from a three-member committee to be headed by the

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Constituent Assembly chairman. The commission will also have a member from the National Human Rights Commission and a member nominated by the government. The bill has recognized disappearance as the continued crime and proposes up to 15 years of jail and fine of up to Rs 1 million for the guilty. The commission will have three responsibilities, according to the bill. First, the commission will probe the disappearances occurred between February 13, 1996, when the Maoist insurgency began, and November 21, 2006 when the Maoists signed a peace agreement with the then government. It will be the duty of the commission to inform facts on disappeared persons to their kin. The second responsibility, according the bill, is that the commission will also identify those involved in disappearing persons during the conflict time. Third, the bill gives authority to the commission to recommend to the government reparations for the victims. Such a commission will enjoy authority to suspend those accused in disappearing people if they are holding any public post to prevent possible destruction of evidence by the accused. Experts who have studied the bill say that there a couple of flaws in the bill. Human rights lawyer Govinda Bandi said that the bill would have been excellent had it defined disappearance as crime against humanity. “The bill should define act of disappearing people as crime against humanity as it is committed systematically and in a widespread manner,” said Bandi. “It also fails to have adequate statute of limitation Source: www.myrepublica.com Date: 09/07/2009

Nepal seeks $1b loan from Chinese Exim bank The government has initiated the process for seeking a soft loan worth US$ 1 billion from the Chinese Export and Import Bank, known as China Exim Bank, to finance three major development projects. The proposed three projects include one regional airport at Pokhara, a hydropower project in Jajarkot district and a road connectivity package that mainly includes construction of bridges. An official at the Ministry of Finance informed myrepublica.com that a formal request to finance two of the three proposed projects -- Nalsyagugad hydropower and Pokhara regional airport -- has been forwarded to the Chinese bank through Ministry of Foreign Affairs about two week ago. The three projects are on the top of the 60 MW Upper Trishuli Hydropower Project that was approved by the Exim bank some two years back but construction of which have not begun due to delay in selecting contractors. 10


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The official said that the loan with a repayment period of 20 years will carry 1.75 percent annual interest rates along with 0.5 percent one-time service charge. As per the request forwarded to the Chinese bank, the government has sought US$600 million for the construction of Nalsyagugad Hydropower Project located in the midwestern region. The storage-type 400 MW project, whose detailed feasibility study is expected to complete this year, will need a 30-km access road linking the powerhouse site and the district headquarters. According to a preliminary study, the project will be connected to the national grid through a 105 km 220 kV double circuit transmission line to Kohalpur substation. Likewise, the Ministry of Finance is seeking a loan worth US$200 million for the construction of a regional airport in Pokhara, the headquarters of the Western Development Region. Once completed, the Short Takeof and Landing airport will have a 2,500 meters long runway. Similarly, the government is also planning to request for another US$200 million loan from the Chinese bank for the construction over 200 bridges to establish round-theyear road connectivity to the district headquarters having no roads. However, the MOF official said that the ministry has not yet forwarded a formal loan request to the Chinese bank. "As soon as we receive the details of the project from the Ministry of Physical Planning that we are expecting soon, we will forward a formal request to the bank," said the official. The government is planning to secure Chinese grant assistances for improvement of the existing 27-kilometer Ring Road and construction of a Dry Port at Tatopani near Nepal-China border during the upcoming China visit by Foreign Minister Sujata Koirala. The proposed package of aid that the Chinese government is likely to announce during the Koirala´s visit scheduled for September 8-13 will be a part of 100 million Yuan grant that the northern neighbor has been providing Nepal each year. According to sources, the improvement of Ring Road will mainly include construction of flyovers at major intersections like Maharajgunj, Koteshwar and Chabahil. China is also expected to announce an aid package for Kathmandu Municipality which among others will include road cleaning machines and vehicles. Source: www.myrepublica.com Date: 09/07/2009

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AD has RMG sector in doghouse Though the government publicised Prime Minister Madhav Kumar Nepal’s recent India visit as a huge success in terms of trade between the two neighbours, the trade ministry is still unaware of the export sector’s problem. The much-talked Trade Treaty was supposed to support hugely in the economic enhancement granting great relief to Nepal but still the readymade garments exported to India are being charged four per cent additional duty (AD) on maximum retail price (MRP). Ministry of Commerce and Supplies secretary Purushottam Ojha said that talks are going on to remove the four per cent additional duty on MRP, but he was not sure about its confirmation. “We are aware of the problem that the garment export sector is facing due to the additional four per cent duty on MRP,” he said adding that talks are going on with the Indian government. “But as yet nothing can be said as we have not yet seen any development,” Ojha added. Meanwhile, Garment Association Nepal (GAN) president Prashant Kumar Pokharel said that the additional duty charge of four per cent on garment products exported to India is unjustified. The Counter Valuing Duty (CVD) of four per cent is rational but they are having great problems due to the additional duty charge on MRP, he added. “There must be preferential treatment for export-oriented Industry,” Pokharel said adding that thios should be done to make export products competitive from the local level. “We are facing hard times as this is a totally labour intensive sector and while we do have the capacity to bring out quality productions here, we lack an appropriate environment for industrial operations.” There is great possibility of Nepali readymade garment (RMG) to expand in the Indian market. Currently, 70 per cent of Nepali RMG is exported to India while the export scenario to the United States which used to be the largest buyer of Nepali RMG is in peril of vanishing, said Pokharel. After the PM’s India visit, the sector had hoped that the Nepal-India Treaty of Trade would enhance Nepal’s international trade and that the Nepal-India Treaty of Trade and Agreement of Cooperation to Control Unauthorised Trade would support the economic development of the country. The treaty added five more ports to the 27 for Nepal and will be renewed every seven years but the garment export sector is suffering. Source: The Himalayan Times Date: 09/07/2009

BANKING: Majority banks see drop in NPL The commercial banks are doing fine by and large in terms of reduction in their NonPerforming Loan (NPL) in the previous fiscal year, according to the central bank. 12


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While 16 of the 25 banks witnessed a drop in their NPL, three saw it rising, states a recent report of Nepal Rastra Bank (NRB). Financial institutions with NPL hovering below five percent are considered sound. The NPL of Nabil, Machhapuchhre and Development Credit Bank Limited went up slightly but it is still manageable with Nabil having 0.8 percent at the lowest and Machhapuchhre with 2.8 percent at the highest. The rise and fall of the NPL in case of Global Bank, Citizens Bank, Prime Bank, Sunrise Bank and Bank of Asia could not be assessed as they have not reported their their NPL status to the central bank either in the last fiscal year or the previous year or both years. NIC bank's NPL remained constant at 0.9 percent in both years. NCC bank has been able to reduce its NPL significantly last year from 16.36 percent to 2.7 percent during the 12-month period. Chief Executive Officer of NCC Bank Ratna Raj Bajracharya said recovery of loans from some major groups - including the N.B. group, which is also the promoter of the NCC bank - was the principal reason behind sharp decline in the NPL of NCC. "The Harisiddhi Brick Factory owned by N.B Group itself had owed the bank five percent NPL," he said. "We acquired its lands as a part of recovery." The bank was to recover loans of Rs. 330 million from Harisiddhi. The bank also acquired the lands owned by Tribeni Distillery to recover around Rs. 60 million loans last year, Bajracharya said. "We will reduce the NPL to one percent within the next six months," he said. There are still five banks whose NPL level is higher than five percent: Nepal Bank Limited, Rastriya Banijya Bank, Nepal Bangladesh Bank, Lumnibini Bank and Agriculture Development Bank. RBB CEO Janardan Acharya said they would reduce the NBL below five percent within the next two years. The government owned bank has still 15.7 percent NPL which represents Rs. 4.9 billion. "We have plans to recover around Rs. 2.5 billion this year and recovery of the remaining amount in the next year," he said. The bank recovered Rs. 2.4 billion in the last fiscal year. NPL Change in Top 20 Banks Bank NBL

2007/08 NPL (%) 8.05

2008/09 NPL (%) 5.9

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RBB Nabil NIBL StanChart HBL NSBI NBBL Everest BoK NCC NIC Lumbini MBL Kumari Laxmi Siddhartha ADBL DCBL NMB

21.63 0.79 1.12 0.92 2.36 3.65 31.11 0.64 1.76 16.36 0.90 14.87 1.04 1.35 0.13 0.60 10.40 1.26 1.52

15.7 0.8 0.8 0.7 2.2 2.0 19.3 0.5 1.3 2.7 0.9 9.1 2.8 0.4 0.1 0.5 8.8 1.6 0.5

Source: www.kantipuronline.com Date: 2009-09-07

Yeti Airlines, EBL launch online ticketing Yeti Airlines and Everest Bank Ltd (EBL) have joined hands to allow EBL account holders to book and buy tickets of Yeti Airline´s destinations across the country online. The bank also announced that it was providing Yeti Airlines´ Sky Club members with the option of opening a ´zero-balance´ account with the bank. The online ticketing service will be provided through both the airline and the bank´s official websites www.yetiairlines.com and www.everestbankltd.com. The two companies signed the Memorandum of Understanding (MoU) to this effect and launched the service at a function in Kathmandu on Sunday. Speaking on the occasion, EBL chief executive officer RK Ummat said the agreement was part of the bank´s aim to provide ultimate banking services and products in Nepal. “Now any of our account holders who needs to fly will not have to visit a travel agent but simply log into our e-banking website, compare rates and get the tickets,” he said, adding that the bank aims to start similar service to international destinations in partnerships with international airlines soon. Travelers logging in for the services are required to choose their originating destination, where they want to fly, date of flight, type of ticket (one-way or return) and number of seats (limited to five for the moment). They will then be given

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available flights on the day and different types of seat rates available. Finally, they will be directed to their EBL e-banking account and make the payment transfer. They will then be given the confirmation code and allowed to print the e-ticket. “This is a totally new product here and it gives travelers an easier option,” Pradeep Bikram Shah, director-sales and marketing, Yeti Airlines, said. Both the companies also said they would also look to add more banks and domestic airlines to their services in the days to come. Source: www.myrepublica.com Date: 09/06/2009

BUSINESS & ECONOMY: Korea to act tough against overstaying workers South Korea is planning to launch a massive crackdown against overstaying migrant workers in October and November. The move is expected to affect over 3,000 Nepali workers. However, labor rights groups have expressed concerns over the possible violations of human rights and suppression on foreign workers in the name of flushing out illegal workers from the country. Issuing a statement on Thursday, Korea´s Ministry of Law has declared September as the period of voluntary exit for migrant workers. The Korean government has also urged the overstaying foreign workers to voluntarily return to their home country ahead of the government´s planned crackdown. As a part of implementing the decision, Korea´s law ministry, together with the labor ministry and Federation of Korea Small and Middle Entrepreneurs´ Association, has initiated a massive campaign in areas dominated by migrant workers. Korea has also decided to impose a penalty of $1,700 and suspend the license of companies employing illegal migrants for three years. The law ministry has also said that it would waive penalty of overstaying workers and allow them to enter Korea a year after their departures. According to conservative estimate, almost half of around 7,000 Nepalis living in Korea have overstayed their visas. Many Nepalis were deported from Korea during last year´s crackdown. Responding to the government´s announcement about crackdown on migrant workers, different trade unions, including Korea Confederation of Trade Unions and Migrant Labor Union, have asked the government to respect human rights while conducting crackdown on migrant workers.

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Source: www.myrepublica.com Date: 09/07/2009

Two new airlines to fly to Nepal Yeti Airlines, EBL launch online ticketing Two international airlines are to begin flights to and from Kathmandu within a month. While China Eastern Airlines will launch its Kunming-Kathmandu flights four times a week from September 8, Arc Fly, the state-owned Dutch airlines, will launch Kathmandu services in October, the Ministry of Tourism and Civil Aviation said. The China Eastern will be the third Chinese airlines to fly to Kathmandu. It will be using Boeing 737-700 aircraft on the route. The government gave the airlines the permission last month as per the Air Service Agreement signed between Nepal and China in 2003. Source: www.myrepublica.com Date: 09/06/2009

$15.91 mln contract achieved in China-Nepal trade fair 13 Chinese and Nepalese enterprises have signed export and import trade contracts with a value of 15.91 million US dollars, covering wool, home appliances, textile products etc. in the China's Tibet-Nepal economic & trade fair by September 4, the second day of the fair. On September 4, a joint-contract-signing ceremony was held in China-Nepal trade fair following a seminar,where enterprises from both sides showed great satisfaction for the fair and the Nepalese peers also welcomed Xigaze enterprises to do business and invest in Nepal. According to the contract-signing ceremony, 5 enterprises has contracted 6.81 million US dollars worthing investment projects, 1 Xigaze company and 4 Nepalese companies. http://chinatibet.people.com.cn September 07, 2009

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Prices of bricks, sand soar Cement, rod sell cheaper The prices of bricks and sand, two major construction materials, have soared sharply in the market, as manufacturers and suppliers increased prices citing shortfall in supply. However, the prices of cement and steel rods have gone down, easing the overall cost of construction. Retailers said the price of bricks have soared 25 percent over the last couple of weeks and gone as high as Rs 10,000 per thousand units. Even the low grade bricks presently cost Rs 8,000 per 10,000 units. The new rate is more than twice the price in the market a year ago. Likewise, the price of sand has increased to Rs 50 per cubic feet from Rs 21 about a month ago. Manufacturers and suppliers have attributed the rise in prices to damages of raw bricks and rapid depletion of stock and also the short supply of sand during rainy season. However, contractors have tagged the new prices as ´unfair´ and a move of the manufacturers to extort higher profits. “It is a clear case of collective price fixing by the manufacturers and suppliers,” Roshan Dahal, a contractor, told myrepublica.com. Contractors had recently raised their concerns over unnatural price rises of bricks and sand to the District Technical Office, requesting the latter t to investigate the pricing. Despite the rise in price of bricks, Dahal noted that the overall cost of construction has presently gone down because the prices of cement and steel rods that occupy lion´s share in overall construction have dropped in recent weeks. For instance, the price of Nepali cement in the market has dropped to Rs 580 per sack (50 kilograms). The rate is inclusive of value added tax. Till a month ago, cement was priced at Rs 700 per sack. Unlike in the past, the price of Indian cement is currently priced higher than Nepali cement in the market. Indian cement is presently sold in the market at about Rs 650 per sack. Retailers attributed this difference in prices to the recent changes in taxes and also the dwindling supplies. Since cement occupies some 29 percent weight in overall construction budget, Dahal noted that the drop in its prices have come as a relief to the customers planning new constructions. The price of steel rod that commands 29 percent weight in overall construction too has dropped to an average of Rs 60 per kilogram. It was priced about Rs 68 per kg about a month ago. Retailers said the drop in was price was mainly due to the decline in the prices of raw materials in the international market. The price of aggregates, which also occupies substantial weight on the construction cost, has remained unchanged at about Rs 42 per cubic feet over the past one month. Source: www.myrepublica.com Date: 09/07/2009

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R&D Economic Research & Business Development

Customs to nab shady vehicle importers The Birgunj customs office will seize vehicles if importers delay the release as per the new evaluation.Since eight years vehicles are being evaluated on the same basis. The customs authority has been halting vehicle import temporarily to adjust prices stating that the vehicles imported for private use are evaluated seven per cent below than the vehicles imported under facility provision. More than 400 vehicles are parked on the customs premises after the office halted clearance. “We have adopted a policy that authorizes the customs office to impound vehicles, which are not cleared under the hiked price, within 90 days,” said information officer Ram Prasad Regmi at Birgunj customs office. The authority has fixed a new evaluation after a month-long disruption of vehicles imported from Korea, Malaysia and Japan. Customs office chief Kebal Prasad Bhandari said the new evaluation has been made on the basis of the declared price of those vehicles imported under discount provision. The customs office has fixed the price of Hundai Taksan at $18,251 from $9,136 after evaluation. Similarly, the new price of Geej, another brand of the same company, is $11,275 from $5,284. The price of Hilux of Toyota brand has been fixed at 1,988,751 Japanese yen from 1,840,000. The new price of Mazda of Nissan now is 1,829,415 Japanese yen and Daihatsu’s has been increased to 1,050,000 from 773,000 yen. Source: The Himalayan Times Date: 09/07/2009

MARKET: NEPSE starts week with gain The Nepal Stock Exchange (NEPSE) started the week on a promising note as it went up by 2.17 points on Sunday. The index settled at 662.57 points when trading closed. The sensitive index lost 0.23 point. The NEPSE sub-indices saw a mixed reaction as only two of them increased while three witnessed a downfall. The development bank sector was the highest gainer increasing by 5.14 points followed by the finance sector which went up by 2.73 points. Similarly, the insurance sector was the biggest loser on the floor as it shed 4.12 points followed by the hydropower sector and the banking sector which fell by 1 point and 0.37 point respectively. Total transactions on NEPSE reached Rs. 117.46 million with 178,992 units of shares being traded. Shares of 69 companies changed hands on Sunday.

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R&D Economic Research & Business Development

Among the 21 commercial banks whose shares were traded on NEPSE on Sunday, Standard Chartered Bank posted the biggest growth with the stock rising 45 points while Laxmi Bank lost the most on the trading floor by shedding 83 points. Similarly, among the 13 development banks, Sanima Vikash Bank witnessed the highest increase of 15 points while Clean Energy Develop-ment Bank lost 14 points. Among the 24 finance companies, Merchant Finance Company promoter share was the highest gainer with an increase of 138 points in its share price. Guheyshwori Merchant Bank and Finance was the biggest loser shedding 59 points. The top five winners on NEPSE were IME Financial Institution with a 6.54 percent rise in its stock price followed by Shikhar Bittiya Sansthan, Nepal Investment Bank, Capital Merchant Banking and Finance and Standard Finance. Similarly, the top five losers on Sunday were Guhyeshwori Merchant Bank and Finance which fell 9.9 percent followed by Laxmi Bank, Nepal Awas Bikas Beeta Sansthan, Siddhartha Bank and World Merchant Bank. Nabil Bank topped the chart in terms of turnover with Rs. 26.92 million. Source: www.kantipuronline.com Date: 2009-09-07

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