Readymade garments exports dip

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KATHMANDU, April 3 : The garment industry, one of the hardest hit sector among other industries, continue to fledge under a serious downturn with the latest export figures showing a dismal performance.

Figures released by Garment Association Nepal (GAN) show that the export of garment items to the United States alone slumped by over 60 per cent in March as compared to the figures of the same month last year.

Such decline was to the tune of 45 per cent in January and 56 per cent in February. While readymade garments worth US $ 6.91 million was exported in March 2002, the exports in the same period last year stood at US $ 17.3 million.

On a quarterly basis, with the 60 per cent decline in March alone, the slump in the export of readymade garments to the United States stood at over 53 per cent.

While garments worth US $ 59.6 million was exported to the United States in the first quarter of 2001, the exports fell to touch US $ 27.76 million in the first three months of 2002.

The drastic fall in exports to the United States has far-reaching implications on the Nepali garment industry since it alone absorbs around 85 per cent of total garments exported from Nepal.

And adding to the woes of the failing sector, garment exports to the European Union and Canada also declined. The fall in exports to Canada is almost 98 per cent. While garments worth over half a million dollars was exported to Canada last March, its exports fell to a little over six thousand dollars in March this year.

Similarly, exports to EU, as per GAN recommendation for certificate of origin, have also declined during the period. The fall is against an increment of 16 per cent and 18 per cent in garment exports to EU in January and February.

However, the fall in exports to EU is much less as compared to the United States. While garment exports to EU in March last year stood at US $ 1.34 million, it dropped over 15 per cent to settle at US$ 1.13 million in March 2002.

Garment entrepreneurs say that the industry is bracing for worse days ahead since the inflow of orders have gone down drastically. Nepal had exported garments worth US $ 164.22 million in 2000 and 136.53 million in 2001 to the United States.

The woes of the industry had begun with the US government allowing duty- and quota-free market access to garments from African and Caribbean countries. Other factors, including the September 11 incident also affected the Nepali garment industry adversely.

Int’l co-operatives conference begins

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KATHMANDU, April 3 : Sixth Co-operative Ministerial Conference of Asia and Pacific Region began in the capital today, which aims at establishing relevant policies and legislation for co-operatives in the new millennium.

The five-day conference that is being participated in by over 200 delegates, including 13 ministers from 18 countries and eight international organisations was inaugurated by Prime Minister Sher Bahadur Deuba amid tight security today.

In his inaugural speech, Premier Deuba said that the idea of co-operatives has a great significance in overcoming some of the major obstacles and to resolve some of the basic development constraints. "It has proved to be an effective means to uplift the socio-economic status of our communities," he added.

He further said that the government’s control over the co-operatives is detrimental to their growth since it increases dependence on co-operatives. Therefore, he said, "The government has adopted a policy of providing conducive environment to the co-operative organisations and help them establish as self-motivated and self-standing institutions,"

Ivano Barberini, President of the International Co-operatives Alliances (ICA) mentioned the threats and challenges brought about by the globalisation and said, "Co-operatives have to manage contradictions between economy and solidarity in a context of globalisation and rapid changes."

Stating that the co-operatives are important for all sorts of countries both developed and the developing, he added, "Co-operatives can play an important role to overcome economic and social crisis everywhere and especially in helping developing countries achieve its economic, social and political aims."

Addressing the inaugural session, Shil Kwan Lee, Regional Director of the ICA-Regional Office for Asia and Pacific said that the conference is organised every two years and the major problem for the development of the sector is the absence of proper laws and guidance. He further said that the conference would review the existing legislative policies of different countries and evaluate its relevance in a changing global environment.

Minister for Agriculture and Co-operatives Mahesh Acharya said that the co-operatives have been broadly accepted as a tool for enhancing socio-economic strengths of the people. However, he added, "They are confronted with many shortcomings and challenges. Especially in developing countries, co-operative movements are yet to establish deeper roots and gain organisational strength."

Deepak Prakash Baskota, Executive Chairman of National Co-operatives federation of Nepal, briefing the status of co-operatives in Nepal said, that Nepali co-operative movement represents 6,484 primary co-operatives of various kind, 105 secondary level and 3 central level co-operative unions.

"Though, Nepal’s co-operative movement is almost 45 years old, it is still young because it has not been able to qualitatively grow. It needs considerably more support from internal organisations such as the government and all the other bodies," he added.

Later today, Mitsubiro Mikayoshi, Permanent Secretary at the Ministry of Agriculture of Japan presented a paper on "Role of Agricultural Co-operatives for the Co-existence of Various Types of Agriculture". While Dr R B Singh, Assistant Director General of Food and Agriculture Organisation (FAO) presented a paper on "Impact of Globalisation on Farmers and Role of Co-operatives", Dr Tilak Rawal, Governor of Nepal Rastra Bank presented a paper on "Perspectives of Co-operative Bank".

A preparatory meeting for the sixth conference was also organised in Iran in July 2001. The consultation meeting had advanced some possible items for the conference of which reforms in co-operative legislation, proximity to the ICA, co-operative identity statement, impact of taxation on co-operatives are the main ones.

Nepal has continuously been participating in the ministerial conference since the second conference held in Jakarta in 1992 and is hosting the conference for the first time.

The programme is being organised by International Co-operative Alliance–Regional Office for Asia and Pacific and supported and co-ordinated by His Majesty’s Government of Nepal, Ministry of Agriculture and Co-operatives and National Co-operatives Federation of Nepal.

First eight months’ revenue mobilisation
Revenue collection way below target

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KATHMANDU, April 3 : Beset by a number of factors, including the slump seen in all economic fronts and the ongoing Maoist insurgency, the revenue collection for the government in the first eight months of the current fiscal year fell way below its target.

Data compiled by the Finance Ministry recently reveal that actual revenue collection as of March 15 grew by only 3 per cent. The actual revenue growth is far below the budgetary target of 25 per cent growth in revenue collection.

The aggregate collection in the first eight months stood at only Rs 29.1 billion. The mobilisation of revenue in the like period of last fiscal year was Rs 28.24 billion.

The collected revenue in the first eight months represents only a little over 48 per cent of the total revenue collection for the current fiscal year. The government in its budget had envisaged collecting over Rs 60.25 billion in revenue.

With dismal performance in revenue mobilisation, officials are downbeat that total collection for the whole fiscal year will even not cross Rs 54 billion.

"Given the present circumstances, it is likely that revenue collection would grow at only around 10 per cent and total collection would touch Rs 54 billion during the whole fiscal year," said Bhoj Raj Ghimire, Chief of the Revenue Division at the Finance Ministry.

He said that the major causes of decline in revenue mobilisation are instability leading to a slump in economic activities and poor performance in the tourism front. Tourist arrivals in the month of March alone declined by 42 per cent.

The current revenue mobilisation too may not have been achieved had the government not amended the Financial Act for the current fiscal year recently. The government a few months back had increased taxes and customs duties on a variety of commodities to ensure that its revenue target is met.

"The change in the Financial Act has certainly helped in the realisation of a greater revenue growth," said Ghimire.

While revenue accruing out of taxes grew at 7.6 per cent during the period, non-tax revenue increased by 16.5 per cent. Of the total collected revenue in the first eight months, tax revenue stands at Rs 24.61 billion, while non-tax revenue accounts for Rs 4.49 billion.

Of the total revenue collected so far, Rs 8.56 billion was realised from customs duty. The collection is 59.3 per cent of the targeted customs duty collection for the current fiscal year, and is 11.3 per cent greater than the customs duty collected in the like period last year.

Likewise, collection out of Value Added Tax (VAT) during the first eight months of the fiscal year fared no better. During the period, a total of Rs 7.64 billion was collected in the form of VAT.

While VAT collection during the period represents 51.8 per cent of the targeted VAT collection for the whole year, it is only 3.3 per cent higher than the collection made in the like period last fiscal year.

Collection of other taxes, including income tax, in the first eight months of the current fiscal year touched Rs 5.19 billion, which represents 44.2 per cent of the targeted income tax revenue. The growth in tax collection under this category is 7.5 per cent as compared to the first eight months of the last fiscal year.

Similarly, the collection of excise duties during the period increased by 7.6 per cent. The total excise collection in the first eight months stood at Rs 2.2 billion, which is 45.2 per cent of the whole year’s targeted collection. In addition, revenue mobilisation from other taxes amounted to Rs 170 million.

The most respectable growth was seen in the collection of land registration fees during the period, indicating that the real estate business is picking up. A total of Rs 850 million was collected in registration fees, which is 65.1 per cent higher than that collected in the like period of the last fiscal year.

The shortfall in the revenue collection at a time when the country’s security expenditure is ballooning puts pressure on the government to prudently carry out its financial administration.

Gold price touches 5-yr high

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KATHMANDU, April 3 : The gold price in the domestic market zoomed further today to cross the five years’ highest mark, thanks to the non-stop soaring international gold price propped up mainly by pessimistic results of recent steps to revive global stock market.

The domestic gold price, which was hovering around Rs 7,845 per ten grams since last couple of days, surged to touch Rs 7,890 per ten-grams today, recording an over-night increment of Rs 45 per ten grams. An all time high price of the gold in the domestic market was witnessed on 8 February 1996, when the market touched Rs 9,040 per ten grams.

The international gold price, which had been soaring slightly since last couple of days, recorded another unprecedented jump to touch US $ 305.40 per troy ounce yesterday. However, the price today slightly declined and settled at 304.95 US $. Given the poor performance of the major European stock market today, gold traders predict that the international gold price can again rise further to touch US $ 306 per troy ounce Thursday which could push up the price in the domestic market to touch around Rs 7,925 per ten grams. An increase of a dollar in gold price in the international market would lead to an increase of Rs 20 in ten-grams in the domestic market.

Gold traders say that the continued poor performance of the global stock market and of the Japanese economy, world’s second largest economy after the American economy, are the major reasons behind the continually soaring gold demand leading to price surge around the world. As a result, the investors are still pouring in financing on gold as the best and reliable alternative investment sector.

The price hike effect of gold in the domestic market has been directly reflected in the dwindling gold demand, which according to the gold entrepreneurs has declined by more than 50 per cent. "The overall gold demand has gone down by more than half of the normal national demand," says Tej Ratna Shakya, President of Nepal Gold-Silver Dealers Association. According to the association, the normal national demand of gold is 30 kilograms per day.

He also said that with the end of marriage season the actual market condition has now been visible. During the beginning of the marriage season last month, the average daily demand of gold had plunged to remain at less than half the normal demand.

Along with the rising gold price, gold traders continued to face newly emerged problems as the sales of old gold stock and ornaments have skyrocketed in recent months. With slipping demand of fresh gold, people’s heavy turnout to sell their old gold stock and ornaments has created a never-faced challenge. "The transaction of old gold currently stands at around 40 per cent of the total gold transaction due to which we are increasingly facing difficulties in making hard currency against sales of old gold stock and ornaments," says Niranjan Shakya, former president of Nepal Gold-Silver Dealers Association.

He further said that gold traders have already started facing a crash-crunch due to such trend. "Gold traders need to think alternative option to withstand the new challenge," he added.