IRD takes action against nursing homes

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KATHMANDU, Dec 26 - The Inland Revenue Department (IRD) has begun taking sweeping action against tax evaders, collecting millions of rupees from twelve different nursing homes in the valley in the first phase of the programme initiated recently.

The action is targeted against those who do not submit their income statement or reduce liabilities acruing out of Value Added Tax (VAT) by issuing fake bills or by under-valuing the goods.

The twelve nursing homes against which the IRD took action are B&B hospital, Ishan Nursing Home, Kathmandu Hospital, Om Nursing Home, Medicare Nursing Home, Patan Dental Clinic, Blue Cross, Hargansh Nursing Home, Dance Care Nursing Home, Sarbanga Nursing Home, Norvic Health Care Centre and Himal Nursing Home.

Officials at the IRD informed The Kathmandu Post that most investigations targeting the nursing homes have already been completed and revenue ranging from rupees two hundred thousand to Rs 1.4 million from each of the nursing homes were collected.

"Some investigations are yet to conclude, and hence tax assessment is yet to be done," one of the IRD sources said. He informed that the latest action was initiated to bring all potential private taxpayers to widen the revenue base. "And the nursing homes are one of the largest private earners," said the source.

So much so that Patan Dental Clinic was found to be operating without any registration. Also, this was the second time that action against Om Nursing Home was taken, the source disclosed.

The IRD investigation team had confiscated books of account for almost a month and a half from each of the nursing homes. And most of the nursing homes were found laxing in maintaining their accounts straight. Furthermore, the remuneration to even well known doctors were found to be shown far less than what they usually receive.

In addition, the source said that nursing homes were found to collect VAT regularly from its customers. However, most did not pay the collected VAT to their respective area revenue offices.

Justifying the latest action of the IRD, Director General of the department Awanindra Kumar Shrestha said that a majority of the nursing homes in their income statements showed transaction that were much less than actual.

He informed that some nursing homes even went to the extent of falsely explaining that they merely provided rooms to visiting doctors on rent and that the doctor’s income were not theirs. "This means that the nursing homes are merely taking the rent of the rooms that they are providing to doctors, and which is not true," said Shrestha. "After all that is not what nursing homes merely do."

He warned that stringent action would be taken against those who act in contradiction to the existing rules and regulations. The government in its bid to increase the base for revenue collection had brought professional service providers like doctors, engineers and lawyers, among others, under the VAT net last year.

Shrestha informed that after the completion of the first phase of the programme, which is targeted against the nursing homes, the IRD will begin its investigations against all private schools in the valley.

Meanwhile, including the nursing homes, the IRD has investigated 330 firms from around the country lately. Of them, investigations against 50 business establishments have already completed, bringing transactions worth over Rs 100 million under the VAT net, sources said. From the fifty firms alone, revenue of over Rs 10 million was collected.

Govt prioritises governance reform: Minister Bhatta

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KATHMANDU, Dec 26 – Khem Raj Bhatta, Minister for General Administration, has said that the Ministry has accorded top priority to make the government machinery more transparent, efficient, goal-oriented, accountable and above all corruption free recently.

Good governance is the commitment Nepali Congress made long before it came to power and we have been looking forward to that day in the tenth plan, said Minister Bhatta.

In Nepal Development Forum meet held in Paris, Nepal had placed corruption and administrative reforms atop its list of priorities.

To begin with, we have increased the salary of civil servants and laid off 400 employees, Bhatta added.

After the formation of a Reform Coordination Unit under the General Administration, the Ministry has set up "change units" at the Ministries of Agriculture and Cooperative, and Education and Sports and Health.

As a corruption control measure, we’ll make it mandatory for tabling the property details of high-ranking government officials in the Parliament annually, ministry officials said.

However, they said such property details of civil servants are often sketchy and not so handy for the purpose, as they are kept as "confidential".

The government has initially sought the financial assistance amounting to US $ 1.35 million from the Asian Development Bank (ADB) for governance reform. The government has estimated that the reform project would cost US $ 1.5 million.

The ADB and the government are going to meet in Manila, Philippines next week to discuss on the proposed loan.

MoICS forms team for smooth petro supply

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KATHMANDU, Dec 26 – The Cabinet on Tuesday constituted a five-member working force to suggest measures for ensuring smooth supply of petro-products into the country.

According to a press release issued by the Ministry of Industry Commerce and Supplies, Sher Bahadur Pandey, Chairman of Nepal Oil Corporation, leads the work force. The team will have three weeks to submit its report. The team is expected to suggest the necessary changes in the current petroleum policy for ensuring its unhindered supply.

The team will also study the impact of price fluctuations in the international markets on Nepali market, and will also suggest mechanisms for price adjustments. The newly formed team will also determine the infrastructure required for constructing a LPG storage plant and a pipe-line to import petroleum form India, says the release.

Issuing a separate press release here today, a meeting of the Industrial Promotion Board held today has decided to include Agriculture and Forestry, Construction, Tourism and Service related business into the classification of industry. The decision will be forwarded to the ministry soon. The meeting was headed by Minister for Industry, Commerce and Supplies Purna Bahadur Khadka, states the release.

Yet another press release issued by the ministry states its decision to waive one per cent import license duty for two years to garment industries importing raw materials (clothing) without opening a Letter of Credit. The release states that new provision is expected to revive the ailing garment industries.

The ministry today informed that the member countries of the European Community have extended the derogation from the rules of origin on Nepalese textile products to December 31, 2004, issuing another separate press release.

According to the Ministry, the facility was extended at the request of His majesty’s Government. The government had been requesting the Community to extend the facility with a view to boost export of textile products, the release states.

Dip in Indian tourist arrival hits tourism

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KATHMANDU, Dec 26 – Minister for Public Health and Environment P L Singh speaking at a programme on Tourism and Environment today said that the fall in the inflow of Indian tourist has greatly affected the Nepali tourism industry.

He said that due care must be taken to develop the tourism industry for which national plan of action should be formulated to contain the slumping trend presently faced by the industry.

He also said that it is the responsibility of each Nepali to enhance the social and physical environment in the whole of the country.

On the same occasion, Rajesh Kazi Shrestha, President of Nepal Chamber of Commerce, the organiser of the programme, said that new tourism products needs to be developed and the negative perception held by foreigners presently should be rectified by lobbying intensely through various means of mass communication.

Pradeep Raj Pandey, Executive Director of Nepal Tourism Board, said that given the visits by citizens of the neighbouring countries, steps must be taken even at the political levels to promote Nepal as a tourism destination.

The programme that was attended by representatives from various tourism organisations also formed a Visual Promotion Committee and Tourism Awareness Training Committee for promoting Nepal as one of the best tourism destinations in the world.

Govt ready to review policies: Khadka

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KATHMANDU, Dec 26 – Minister for Industry, Commerce and Supplies Purna Bahadur Khadka has said that the government is ready to review its economic policy if domestic industries are suffering due to it.

Minister Khadka’s remark came at the inaugural session of a national seminar on ‘Nepalese Garment Industry Under Changing Global Environment.’ He said, "Enhancing the competitiveness of the export industries is important to mitigate the challenges ushered in by globalisation."

He also urged the industrialists to enhance the quality of their products in order to boost the competitiveness of Nepali products in the international markets. He
said that the private sector should not just blame the government for its shortcomings, and should
carry out its responsibilities and duties well.

The private sector should assert a leading role in suggesting the government on various agendas of national development as is the practice elsewhere, he emphasised.

Kiran Prakash Shakha, Cordinator of the WTO Cell at Garment Association Nepal (GAN), said that the vibrant readymade garment industry in Nepal that flourished due to the Multi-fibre Arrangement (MFA) is now on the verge of collapse.

The phasing out of the arrangement, and hence the quota system, opening up the garment industries over the world to compete for international market would have a devastating effect upon Nepali industries as their competitiveness is low, he added.

He urged the government to take necessary steps to face the challenge that will confront Nepal following the complete phase-out of the quota system under the MFA regime.

Besides, the phasing out of the system, the US Trade and Development Act (USTDA), the African Growth and Opportunity Act (AGOGA) and the Caribbean Basin Trade Partnership Act (CBTPA) have posed serious threat lately, he warned.

Brij Gopal Inani, President of GAN, said that despite being the principal foreign exchange earner, the problems of the garment sector have not been taken up seriously by the government.

The garment industry employs more than 200,000 people and more than 1,500,000 are indirectly dependent on it. "If the industry collapses, it will have a disastrous effect on the entire national economy," he warned.

Chandi Raj Dhakal, Third Vice President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), asked the government to formulate policies conducive to the industry.

He expressed strong displeasure over the draft of a new Labour Act stating that if it is passed, it will prove detrimental to the export industry since it contains provisions protecting labour, and not industries.

Various independent analysts also spoke on the occasion. Economist Dr Puskar Bajracharya, said, "If the government simply makes the Labour Act more flexible and fulfills its past commitments, the garment industry will take a breath of relief."

He also said that lack of proper linkage between international distributors and exporters and the lack of rescue packages are the main problems behind the dipping export of Nepalese readymade garments.

Garment industry still stands as the largest foreign exchange earner of the country. Though the industry lately has been fledging through tough times, it earned foreign exchange worth over Rs 13 billion in the last fiscal year.

Role of private sector stressed

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KATHMANDU, Dec 26 – Experts gathered at an interaction program have unanimously stressed that the industrialisation of the country would not be possible without development and active participation of private sectors in industrial activities.

Speaking at an interaction program organised jointly by the Ministry of Industry, Commerce and Supplies and Small industries Promotion Program of the Swiss Development Corporation (SDC/SIPP) to incorporate views of experts in the new Industrial Policy, they said that the industrial policy should incorporate changing global scenarios.

Dr Shankar Sharma, Member of the National Planning Commission, said that the government has given high priority to speed up the industrialization process of the country. "Though agriculture has its own importance in any anti-poverty alleviation campaigns, the expansion of the industrial sector can play a vital role in that direction by absorbing the rapidly growing unemployment," Sharma added.

He also informed the gathering that the government has initiated an in-depth study on the plunging industrial and trading activities seen since last two years.

However, he stressed that the remarkable progresses made in the trade and industrial sectors during the nineties should not be underrated. "The average value addition in the industrial sector in the eighties was jus 6.6 per cent, which within a decade surged to over 10 per cent," he said.

He further said that though the some of the exportable goods to India have showed robust export growths but due to their low value addition, the actual benefit to the economy has been less than expected. "Development of export oriented industry with high value addition can play a vigorous role in stimulating the process of industrialization," he said.

Addressing the same function, Leon Houdret, Project Manager of SISP, said that investment in the real sector has an important role to create employment opportunities for the growing labour force.

He also said that the Nepal should pay attention in improving effective implementation of the development strategies and added that the formulation of an integrated package to develop the industrial sector in Nepal is a real challenge.

Stressing upon the need of active participation of the private sector in the overall development of a country including trade and industry, he said that any development objective would remain incomplete without active participation of the private sector.

Govinda P Kusum, Joint Secretary at the Ministry, said that the government has initiated reviewing the Industrial Policy
to ensure greater involvement of the private sector in the process of industrialisation and to correct some shortcomings seen in the past policy.

He also informed that similar types of one-day seminar have been organised in the major industrial cities of the country with an aim to incorporate valuable views of the private sector.

"All the industry related policies including the one-window policy will be reviewed and appropriate policy would be formulated to accelerate both the foreign and domestic investment in the industrial sector," he said.

Kusum further said that the draft of the new industrial policy would be completed by the end of February.

Effective foreign aid utilisation urged

KATHMANDU, Dec 26 (PR)– Former Prime Minister Lokendra Bahadur Chand today stressed
upon the need for effectively utilising foreign aid to reduce the high
levels of poverty incidence in
the country.

"The core objective of the Ninth Five Year Plan was poverty alleviation. However, poverty incidence cannot be reduce unless real development takes place at grassroots level," he said.

Chand was speaking at a one-day workshop on "Foreign Aid and the Development of Remote Area of Nepal" organised by Remote Area Development Nepal (RAD-Nepal) and sponsored by Action Aid Nepal.

He said that since mass scale poverty exists in the rural areas, funds for development should seep down to that level. "Unfortunately, foreign aid and grants have not been effectively utilised. The reasons and causes of its ineffective utilisation should be probed and remedial measures taken," he said.

He also said that the upcoming Tenth Five Year Plan, in addition to other plans, should take up poverty reduction as the core targets. "The target should be the rural poor. The government must prioritise the rural populace," he stressed.

Similarly, K B Rokaya, Country Director of Intermediate Technology Development Group (ITDG), said that although only a mere 15 per cent of Nepal’s total population live in the urban areas, it consumes almost 70 per cent of the total resources.

"Heavy concentration of resources at only the urban areas would not serve the purpose of uplifting the rural poor from the clutches of poverty," he said, adding, "The planners lack vision."

He further added that the development endeavours so far has been prescriptive. "The efforts should now be pro-active and diagnostic," he said. He added that the donor community, the National Planning Commission and the government departments and agencies should adopt coherent and congruous policies in their fight against poverty.

On the same occasion, participants urged upon the need for a participatory approach in undertaking development works. Lack of participation of the recipient communities or groups in the overall formation of plans and programmes have marred the government’s development endeavours.