Exports and imports surge, garment tops export list

-By a Post Reporter

KATHMANDU, Jan 4 - During the first four months of the current Fiscal Year 1999/2000 the growth of narrow money has accelerated while that of broad money has accelerated mainly due to the decline in time deposits, according to a communique issued by Nepal Rastra Bank here today. Government expenditure has accelerated due to a significant growth in development and freeze expenditure. Budgetary deficit has been observed as a consequence of low resources mobilization. The rate of inflation on point to point basis has come down to a single digit from two digits because of the improvement in the prices of food and beverages group. In the external front, as compared to last year both exports and imports have increased significantly. However, trade deficit has widened substantially due to high volume of imports in relation to exports. The foreign exchange holding of the banking system has recorded a rise due to a surplus in the balance of payment emanating from the growth in net foreign loan and miscellaneous capital net. The foreign exchange reserves is sufficient to cover merchandise imports of about 10 months. The NEPSE share price index has improved compared to last month.

In the monetary front, narrow money increased by 6.8 percent to Rs 56618.4 million during the review period in contrast to a decline of 2.1 percent last year. Broad money also recorded a growth of 2.1 percent to Rs 1,56,081.4 million in the review period as compared to 4.5 percent growth last year. But, time deposits which had increased by 8.1 percent last year, registered a decline of 0.3 percent during the review period reflecting the effect of the downward revision of interest rates on time deposits. The share of time deposits in the broad money marginally declined to 65.0 percent, adds the press release.

Net foreign asset of the banking system which had increased by 1.1 percent (Rs. 624.1 million) last year, surged up by 1.3 percent (Rs 839.8 million) during the review period. At the same time, domestic credit increased only by 2.5 percent as compared to 2.6 percent growth in the previous year. Of the total domestic credit, share of credit to the private sector increased slightly to 67.7 percent.

On the fiscal sector, government expenditure registered a significant growth as compared to that during last year. Total expenditure increased by 18.2 percent to Rs 12881.7 million during the review period as compared to 7.6 percent growth in the previous year. The rise in such expenditure is mainly due to significant rise in development expenditure by 42.1 percent, freeze expenditure by 52.9 percent and regular expenditure by 10.2 percent. In   addition to the expansion of development activities in the public sector this year, the higher growth seen in development expenditure is also attributed to the fact that such expenditures being low last year has had a shrunk base. During the review period, revenue collection increased by 8.6 percent to Rs 19325.3 million as compared to 15.8 percent last year. A low growth of revenue collection and decline in foreign cash grant receipts has lowered the growth rate of total resources mobilization to 5.8 percent as compared to last year’s level of 0.2 percent. Low resources mobilization as compared to total expenditure growth resulted in a budget deficit of Rs 2517.6 million. During the review period, the government has overdrawn amounting to Rs 132.1 million along with issuing treasury bills worth Rs 310 million to meet the resource gap created by the declining receipts of foreign cash loan, the release further says.

On the external sector, both exports and imports registered a growth of 33.5 percent and 30.4 percent to Rs 13798.8 million and Rs 30919.6 million respectively. Surge in total imports is attributed to higher imports of foodgrains, industrial raw materials, medicine and gold. Due to a higher volume of imports, the merchandise trade deficit rose by 27.9 percent to Rs 17120.8 million. Nevertheless, present exports can cover about 44.6 percent of total import value. During the review period, exports of readymade garments and woolen carpet increased by 77.8 percent and 8.6 percent respectively. The export of readymade garments, (Rs 4036.8 million) has occupied the front position by outpacing the export of woolen carpet (Rs 3277.8 million). In addition, a remarkable growth in the export of Pasmina shawl (Rs 1150 million) has registered itself to the third position during the review period.

On the price front, rate of inflation on point to point basis was recorded at 2.0 percent during the review period compared to 18.5 percent last year. The decelerating trend in the price of food and beverages helped to lower down the national price index to a single digit. The price index of the food and beverages group increased slightly by 0.7 percent in the review period as compared to an increase of 26.3 percent in the previous year. The declining tend in the prices of oil and ghee, vegetable and fruits, as well as sugar products are attributed for the lower growth in the price index of food and beverages. The prices for non-food and services moved up by 4.6 percent as compared to 4.4 percent last year. Regionwise, prices in the Hills recorded the highest growth of 3.3 percent followed by respective growth of 1.9 percent and .6 percent in Terai and Kathmandu, according to the communique.

Based on the available statistics for the first two months of this fiscal year, the balance of payments remained favourable by Rs 543.0 million. In the review period, a noteworthy increase in net services income followed by a marginal increase in net transfer income off set by a significant trade deficit caused a deficit of Rs 1923.0 million in the current account. However, a substantial increase in the official capital inflow and miscellaneous capital items net have helped balance of payments to record a sizable surplus. Based on the monetary statistics for the first four months of the current fiscal year, overall balance of payments recorded a surplus of Rs 839.0 million.

As a result of continued balance of payments surplus, the foreign exchange holdings of the banking system increased by 16.2 percent to Rs 7896.4 million as at mid-November 1999. Of the total reserve, 91.8 percent accounted for convertible currency and 8.2 percent non-convertible currency. A sharp increase in the convertible currently serve is attributed, among others, to the higher growth in exports to countries other than India.

 HAN delegattion to Tourism Ministry

-By a Post Reporter

KATHMANDU, Dec 4 - A delegation of Hotel Association Nepal led by its president Gautam Das Shrestha called on Minister for Tourism and Civil Aviation Bijay Kumar Gachchhadar at the latter’s office today, reads a HAN press release issued today.

The delegation asked the Minister to tighten security arrangements at the Tribhuvan International Airport (TIA) submitting a string of suggestions to him.

Similarly, the delegation also met Vice-Chairman of the National Planning Commission (NPC) Prithvi Raj Ligal and secretary at the Ministry of Tourism and Civil Aviation Barun Prasad Shrestha,separately and requested to make effective security arrangement at the TIA.  

The delegation raised the issue of negative publicity of the country through Indian media on the recent Delhi-bound hijacking of IC 814 airbus, during the meeting, it is said.

The delegation comprised of Vice-President of HAN Narendra Bajracharya, ex-president of HANYogendra Shakya, Treasurer Sagar Man Shrestha and executive members Ribhu Chatterjee, Ajaya Sthapit, Shyam Sundar Lal Kakshapati and executive director Madhav Om Shrestha.

Nepal participates in India Trade Fair

-By Post Reporter

KATHMANDU, Jan 4 - Nepal participated in an Industrial India Trade Fair in Calcutta, India, organized by the state government of West Bengal and National Chamber of Commerce and Industries.

According to a press release issued here today by Nepal Chamber of Commerce, various business groups from Nepal participated in the fair through Nepal Mandap established in the fair.

Nepal Pavilion Company, Thai Foods Pvt Ltd, K L Dugar and Group, Agro Enterprise Centre, Women Art Preniar Win of Nepal, Royal Nepal Airlines Corporation, Manakamana Cable Car P Ltd, KC’s Enterprizes, Yeti Woodcraft, Himalayan Knitting Arts and Munindra Shakya participated in the fair.

Chamber expects the fair would help to contribute to the diversification of Nepal’s export. According to the release, over five hundred thousand visitors from Nepal, Bangladesh, China, Thailand, Bhutan and India visited Nepal Mandap.

Nepal Scandinavia Chamber  established

-By a Post Reporter

KATHMANDU, Jan 4 - Nepal-Scandinavia Chamber of Commerce and Industry (NSCCI) has been set up recently to enhance industrial, commerce and other relations between Nepal and the Scandinavian countries, according to a press release.

Yadav Prasad Pant is the Chairman and Mohan Gopal Khetan is the Vice-Chairman of the chamber.

Surya Ram Shrestha, Giridhari Sharma and Uddhav Mohan Ranjit have been nominated as General Secretary, Secretary and Treasurer respectively.

Similarly, Dr Jayahari Raj Pandey, Mana Raja Shrestha, Shailendra Shumsher JBR and Surya Prakash Shrestha are the members of the chamber.

Chandra Prakash Khetan and Soren Thegishen are the advisors of the organization.

It is expected that the establishment of the chamber would be helpful in promoting export, bilateral trade, joint venture and in the field of tourism between Nepal and the Scandinavian countries.

The Scandinavian countries comprise Denmark, Finland, Norway, Sweden and Iceland.

 EU prepares to sue France over British beef ban 

-By Allen Nacheman

BRUSSELS, Jan 4 (AFP) - The European Commission said Tuesday it was sending the European Court of Justice in Luxembourg its case against France’s refusal to lift a ban on British beef, a commission spokesman announced.

The court is, in effect, the last resort in the commission’s efforts to get France to abide by the August 1 lifting of the 3-1/2 year ban on British beef that was triggered by fears of mad cow disease.

“The papers in all probability will leave here at two o’clock (1300 GMT) this afternoon by the daily shuttle van between the commission’s legal service and the court of justice in Luxembourg,” the spokesman said.

“So one should expect the papers to be lodged in the court late this afternoon,” he said.

They were supposed to have left on Monday, but the commission delayed it a day to give its lawyers more time to finalize them.

“This is a matter of considerable legal and public health importance,” said the spokesman, “and I think everybody will understand that the commission has taken every possible precaution in making sure it has its legal arguments and the facts as clearly set out as possible.”

He said the average time for the court to process a case was 22 months.

“I don’t know whether other member states will become involved. This could complicate and extend the procedures,” he said, adding the case represented “a very important issue related to public health and animal welfare.”

Should the court ultimately rule against France, the commission could then ask it to impose financial sanctions which could run to several hundred thousand euros (dollars) a day.

“We haven’t reached that stage yet,” said the spokesman. “We think that France, like any other member state, will follow a court ruling...This has never occurred, we have never reached the stage of the court imposing sanctions.”

The EU imposed a worldwide ban on British beef imports in 1996 after madcow disease, or bovine spongiform encephalopathy (BSE), until then strictly a veterinary disease, jumped species to humans in the form of Creutzfeldt Jakob Disease (CJD).  Britain’s monthly health bulletin in December said 48 people had died of CJD.

Of the 15 EU member states, 13 have lifted the beef ban.

France is refusing on scientific grounds, saying its scientists have submitted evidence — rejected by EU scientists — that BSE still poses a human health risk.

Germany has refused on legal grounds, saying only an act of the Bundesrat, its upper house of parliament, could lift the ban, which it has not done.

An impatient commission last month fired off a sharp warning to Berlin demanding action, but the spokesman on Tuesday said no response had been received.

In a surprise move, France said last week it would countersue the commission to establish whether Brussels was right to lift the beef ban “despite new (scientific) elements which it has received.”

The BSE scandal is particularly sensitive in France, which is still reeling from a public health scandal in which hundreds of people died as a result of receiving transfusions of AIDS-infected blood that had been cleared by the government.

Pashmina export witnesses sharp decline

-By Bhaskar Sharma

KATHMANDU, Jan 4 - Pashmina, which had shown a sudden growth towards the end of the last fiscal year, has experienced a sharp decline in its production and exports within the last one month.

“The production of pashmina has plunged by 90 percent,” claims Pushpa Man Shrestha, the largest exporter of pashmina to the European market last year.

The whopping demand for pashmina products in the European and the American markets, which raised its exports by over eight folds in the last three months of 1998/99, had attracted many small and large scale businessmen to the industry.

However, the recent dip in its production and exports has been a topic of concern for the new entrants. Speculations have set in if the pashmina boom takes a turn like that of the carpet industry about five years ago.

While the concern of the new entrants can be well justified recapitulating the crash of the carpet industry in the past resulting in huge investment losses, experienced pashmina entrepreneurs term the dive as normal.

Old-time entrepreneurs claim that the pashmina popularity in the international market will sustain and say that it will not collapse like the carpet industry.

Shrestha, who has been in the pashmina business for the past 15 years, says, “December to February is a period of off-season for pashmina. As soon as this period ends, the pashmina business will surge again.”

Shiva Kumar Shrestha, proprietor of Dhaulagiri Pashmina Industry, who has been exporting pashmina to America for the past 20 years, declares that the present dip in pashmina business will be short-lived.

“The demand for pashmina in the international market has not died. The present dip is temporary,” he says.

Entrepreneurs claim that foreign importers are not only using the off-season to study the market potential in their respective countries, but are also expanding the pashmina market by promoting it through their participation in various trade shows and fairs.

Moreover, with a view to enhance the demand of pashmina products in the international market, entrepreneurs are also diversifying their product items. While pashmina is still synonymously taken as shawls, manufacturers have started producing a wide range of items including gowns, trousers, shirts, bags and even shoes.

“Such diversification is necessary not only to cater to the need of a large segment of population, but also to give them choice during purchase. This will ensure the longevity of the industry,” claim entrepreneurs.

This apart, the need for product diversification businessmen now believe that a single entrepreneur cannot carry out all the functions of weaving, dyeing and marketing among others. “All the functions need to be decentralized. Just like an exporter should concentrate on foreign public relations, a manufacturer should focus on production,” says largest exporter Shrestha.

“Separation of various functions ensures the supply of pashmina products, both qualitatively and quantitatively,” he says.

Although he claims that the overall quality level of the products is improving, a case of rejection of 25,000 pieces of pashmina shawls, which had been exported to India, may project a bad image on the overall Nepalese pashmina industry.

On the other hand, Shiva Shrestha claims that the quality is deteriorating. The degradation in pashmina’s quality has compelled the businessmen to sell them in footpaths abroad. This has brought down the status of the product, he says.

Chairman of Momento Apparels Pvt Ltd, Chandi Raj Dhakal claims that the decline in pashmina quality is natural when such a large number of inexperienced manufacturers is entering the business.

With a view to promote the pashmina business in the long run, ensuring both the quantity and quality of pashmina products, a fully mechanized joint venture factory, between Nepal and China, at an investment cost of US$ 3 million has been set up at Bhadrapur, he informed.

In order to maintain the quality of all pashmina products, entrepreneurs are of the view that the present off-season must be utilized to enhance the skills of the workers. They say that the government should take initiative to increase the professionalism of Nepali workers at a time when many pashmina workers are Indians. Moreover, most of them have also demanded the formation of a separate body to control the quality of pashmina products.

Chief of the Department of Cottage and Small Industries, Shiva Prasad Bharati says if popularity of pashmina is to be prolonged in the foreign markets, the workers must be trained and their skills developed. “Although there are no such training programmes this year, it can be arranged, in case of demand from entrepreneurs,” he assured.

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Nepal Stock Exchange
Singhadurbar Plaza, Kathmandu

4 January , 2000

                           Trading Information                                     Trading Price                             

Paid-up value of S. N. 9  is 57.

Paid-up value of S. N. 12 is 50.
Paid-up value of S. N. 21 is 60.
Paid-up value of S. N. 22 is 65.
Paid-up value of S. N. 23 is 95.
Paid-up value of S. N. 24 is 80.
NEPSE Index : 262.94 (0.44) Base : 12th.  Feb, 1994 = 100