SAFTA treaty framework likely to be delayed

By Milan Mani Sharma

KATHMANDU, Dec 23:Even as the deadline to finalise South Asia Free Trade Area (SAFTA) Draft Treaty Framework is on the verge of maturation, seven South Asian countries are yet to agree on approaches and timeframe for slashing tariff and non-tariff barriers, thereby leaving the fate of draft treaty framework hanging in mid-air.

People knowledgeable to the matter opined that the deadline of its finalisation would be missed for the second time as well. The deadline for finalising the draft treaty matures on December 31, 2002, the date fixed by the 11th South Asian Association for Regional Cooperation (SAARC) summit held in Kathmandu earlier this year. Earlier the deadline was set for December 2001, which was also not met.

"With just a week left for the year to end and another round of Committee of Experts (CoE) meeting yet to be held, the finalisation of the SAFTA framework within the deadline is impossible," said Padma Jyoti, President of SAARC Chambers of Commerce and Industry talking to The Kathmandu Post.

Although, the SAARC Secretariat has scheduled to hold the fourth meeting of CoE from 27 to 29 December to give the final shape to the preliminary draft that it developed in 2000, members of Nepali delegation at CoE rule out the possibility of meeting the deadline.

"As the member countries still differ in views on major components of the draft and issues related with trade facilitation measures, resolving differences over sensitive trade issues in the three-day meeting is most unlikely," said a Nepali official preferring to be unnamed.

The fourth CoE meeting needs to settle matters like reduction and gradual revocation of tariff and non-tariff barriers, technical assistance and flexibility to SAARC least developed members allowing them to enlist higher number of ‘negative products’ to finalise the SAFTA framework.

"Moreover, it needs to agree upon and thrash out an appropriate revenue compensatory mechanism, an issue that has been strongly raised by Bangladesh and supported by Nepal as customs is the major source of revenue in the country," said the official.

Also, demand of the least developed members to provide them facilities on ‘rules of origin’ and ‘tariff reduction on non-reciprocal basis’, which drew varying opinion from other member states, is expected to consume much of the time of the fourth CoE. "This is likely to extend negotiation process," he said.

Issues like tariff and non-tariff reduction approach and transition period would also take lengthy time before these are agreed upon, viewed experts, indicating of growing differences among the member states on the matter.

"The differences among the members is paramount," said the official, adding that Bangladeshi delegation had even tabled a separate SAFTA draft treaty framework in the last meeting after serious differences surfaced between developing and least developed SAARC countries.

Nonetheless, the meeting discussed the Bangladeshi draft at length and decided to incorporate some of its provisions in the main draft. It also finalised 10 articles out of the total 25 articles of the preliminary draft. The CoE has already discussed the preliminary draft twice this year, but without definitive achievement.

Meanwhile, few member states even opine that the SAFTA draft treaty framework should be finalised only after a detail study on implications of free trade area to member countries is carried out, informed the official.

The SAARC secretariat has recently appointed Sri Lanka-based Institute for Policy Studies (IPS) to study "Implication to SAARC countries: Transformation to SAFTA from SAPTA" and it has been asked to submit the final report by March 2003.

Although, officials knowledgeable to the matter said that the secretariat has asked IPS to submit an interim report during the fourth CoE meeting to deal with this possible impasse, experts doubt over the potentiality of such report produced in haste.

The SAARC secretariat should not haste the SAFTA framework draft process, as it would largely determine the economic fate of the entire region, they said. "The framework of the free trade area should be delineated carefully given the socio-economic and political condition of the region," expert said.

Even Yadav Kant Silwal, former General Secretary of SAARC, speaking at a programme today stressed that the regional trading provisions should be mutually beneficial and equitable.

Nevertheless, Jyoti said that just going through the motion is not enough if the SAFTA framework is to be developed soon. "Drive and motivation should go from top to bottom," he said referring to the slackened SAARC process affected by weak commitment and escalating bilateral differences among the member states.

‘Revenue mobilisation not to meet target’

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KATHMADNU, Dec 23:Finance minister today said that the government’s revenue target for the current fiscal year of Rs 57 billion is likely to fall short to real revenue mobilisation due to deteriorating economic conditions of the country.

Statistics for revenue mobilisation up to now suggests that the actual revenue mobilisation would be far below the estimation, Minister Shrestha said adding, that the government would therefore focus on simplifying procedural complications for strong enforcement of several taxes.

Minister Shrestha was speaking at a programme organised today to hand over the report of Revenue Advisory Committee (RAC) to the ministry. "The government would make a thorough study on the report and include necessary suggestions into the upcoming financial ordinance," he assured.

Receiving the suggestion report of RAC, Minister Shrestha said that the government would not make any revision in the rates of the taxes that need annual assessments. "As the new finance ordinance is being announced in the middle of the fiscal year, there would not be any change that can affect the tax assessment."

The report jointly prepared by both the government and the private sector comes at a time when the government is busy preparing upcoming fiscal ordinance, following the expiry of the current one on January 8th.

Minister Shrestha also informed that Income Tax desk is being installed at the Inland Revenue Department (IRD) to provide taxpayers with necessary information. He also informed that the government would opt for possible revisions on the Income Tax Act to make it simpler.

Vidyadhar Mallik, chief of the RAC, informed that the report consists of three sets of suggestion: to be addressed in upcoming ordinance, to be introduced in the budget for the next fiscal year and the long-term strategies.

"There are separate suggestions for the income tax, customs tax, Value Added Tax, excise duty and for strengthening the revenue administration," said Mallik, adding, that the committee had suggested for strengthening the customs valuation system, facilitating exports, and increasing tax base among others.

Earlier, Professor Madan Kumar Dahal had pointed out the need to set clear objective of the government’s tax policy. "While Nepal has a higher tax burden, compared with per capita income in the entire SAARC region, there is also an enough ground for the expansion of the tax base," Dr Dahal said.

Professor Bishwombhar Pyakuryal, stating that the partnership between the private and public sector has taken a good shape, said that it is good that the government seems convinced not to revise tax rates at this hour, as the tax paying ability of the citizens has weakened.

Submitting the recommendations on the development of economy and industrial sector, Rajendra Kumar Khetan, second vice president of the Federation of Nepalese Chambers of Commerce and Industry, requested the government to increase tax revenue by strengthening the tax administration and improving revenue policies and not by increasing tax rates.

Meanwhile, stating that the current fiscal policy is focuses more on revenue-mobilisation than economic growth, Minister for Finance Dr Badri Prasad Shrestha said today that the Ministry is mulling to enforce growth-oriented fiscal policy in the upcoming budget.

The ministry, within a few days, would constitute a task force for Fiscal Policy and Taxation to study on the prospects and problems of the new fiscal policy, said the Minister. He also said that the government would include technocrats, intellectuals, private sectors among others in the task force.

"If needed, the government would approach the donor communities for the financial support for the detailed study of the taskforce," he added.

Rupee appreciates

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KATHMANDU, Dec 23:Nepali currency today appreciated by 3 paisa against one unit of American Dollar. As result of the latest appreciation, the exchange rate of one unit of dollar has been revised from Rs 78.39 on Sunday to Rs 78.36 today.

This is the second time within three days, the Nepali currency has appreciated vis-à-vis US dollar. Nepali currency had appreciated by 20 paisa three days ago.

The appreciation of Nepali currency comes as a response to the appreciation of the Indian currency against the US dollar in the later days. The fall in the exchange rate of the American dollar with the Indian currency is mainly caused by the falling demand of the greenback.

According to the reports, a strong surge in dollar inflows on account of Non Resident Indian (NRI) deposits as well as Foreign Direct Investment (FDI) inflow is affecting the exchange rate of dollar in the Indian market.

As Nepal maintains a fixed exchange rate with the Indian currency, every fluctuation in the exchange rate of Indian rupee with American dollar is directly reflected in the exchange rate of the Nepali currency as well.

Hackers become active once more

By Bijaya Babu Khatri

KATHMANDU, Dec 23:A group of Internet hackers has threatened some important government organisations and some Internet service providers (ISPs) of hacking their web sites by Wednesday.

Following the reception of the threat, the concerned people and experts have demanded with the government to enforce cyber law, which is in the final stage of approval, through ordinance.

The group, which had hacked some important web sites of the government including some leading Internet service providers (ISPs) some times back, has been threatening the ISPs and organisations including the Computer Association of Nepal (CAN) through email since a month.

The Ministry of Science and Technology, Home Ministry and Nepal Police Headquarters have also received the threats from the hackers. The miscreants have warned that they would make confidential documents public by hacking their web sites.

They have stated that they can cause damage to some of the local ISPs and some Indian web sites.

Suman Khadka is an accomplice of Saroj Joshi. Joshi was arrested by the police for hacking the web site of Nepal Police and was released after 15 days because of lack of cyber law to take action against him.

Concerned people say that all this has been taking place just because of lack of cyber law. The same group had hacked the main server of the Ministry of Science and Technology and deprived the ministry of using its web site for over a month, but the ministry just remained a mute spectator, they say.

The government had initiated the formulation of cyber law some three years ago, but it has not been able to implement it and the hackers go scot-free even if police arrest them.

According to the officials at the Ministry of Science and Technology, the ministry has forwarded the final draft of cyber law to the Ministry of Law. The process of formulation of the law has been stagnated due partly to the delay of the concerned ministry and partly because of the political instability.

Lochan Lal Amatya, President of CAN, says that such miscreants could be arrested and taken action against them had there been cyber law in place. He also suggested the users and the ISPs to be alert of such activities by updating their sites through new technologies.

He said that the hackers have been exerting more pressure than destroying the web sites. "Upon receiving threats, I replied them through email, but they did not respond", he said.

According to Gaurav Raj Upadhyaya, CAN Secretary, The Association has formed a committee under the co-ordination of Deepak Rauniyar, who is doing his Ph.D. in technology security.

"The committee would extend best possible support upon receiving the threat of web site hacking. Though we cannot make web sites completely foolproof, the committee has been formed to raise awareness among the service providers and users", Upadhyaya added.

However, the hackers have been saying that hacking is not their crime as the concerned party has not been able to protect their web sites. They say that they have hacked some important web sites and are threatening to do so in order to make the web sites hack-proof.

Kerosene shortage in Dhankuta

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DHANKUTA, Dec 23:After Nepal Oil Corporation (NOC) regional office slashed the monthly supply of kerosene, there has been shortage of petroleum product in Dharan, the district headquarters.

The customers lament of being in a queue for at least three hours to buy three litres of kerosene which the sole NOC authorised dealer of the district has been supplying to them. While the consumers lambaste the dealers for the inadequate supply and the trouble, proprietor of the dealer flays the NOC for the short supply.

"The NOC has curtailed the supply to the depot to 12,000 litres for the month, while the sales of the dealer crosses over 24,000 litres," said he said.

As students and employees of various government offices comprise the largest chunk of district headquarters’ population and they mainly use kerosene stove for cooking, the demand of kerosene is high here.

Hari Katuwal, a student who queued for kerosene from seven to 10 in the morning lambastes the dealer for making him miss his classes at the college. "To add to the problem, the dealer supplied just three litres of kerosene," he said adding, that he would have to face the same problem again within a few days.

While the NOC authorised dealer claim of the short supply, the black marketers are reaping the best of the shortage. The consumers said that the black marketers are selling kerosene at Rs 25 per litre, which is higher by Rs 8.

Meanwhile, Binod Kumar Dahal, Chief District Officer, said that the dealer has been asked to distribute the product at a fixed amount to all the customers to prevent kerosene crisis. Speaking on growing black marketers, he said that the District Administration Office would take stern actions against the wrongdoers.

‘Professional training a must for promoting foreign jobs’

By Sameer Ghimire

KATHMANDU, Dec 23:At a time when domestic employment opportunities is squeezing mainly due to escalating violence and downturn of the economy, a high-level committee formed by Ministry of Labour and Transport has recommended several measures to promote foreign employment.

As per the report submitted to the government today, the committee has stressed on the urgent need to initiate skill development training for foreign job seeking people and categorisation of mushrooming manpower agencies, among others.

The committee chaired by Lalit Bahadur Thapa, Director General of Department of Labour (DoL), also recommended various steps to curb the soaring unemployment of the country by promoting foreign employment that would result in increase of national income with high inflow of remittance into the country.

According to Bharat Singh Thapa, President of Federation of Foreign Employment Entrepreneurs and a member of the committee, other recommendations of the committee include a projection of possible total number of outgoing workers and adaptation of necessary strategies and formation of a Revolving Relief Fund for workers.

With an aim to address to under-performance of the Nepali workers due to lack of necessary training, the committee has recommended that the government should arrange required and specific training for the worker before they leave the country. Stressing the need of regular monitoring and evaluation of the outgoing workers, the committee has also suggested the government to forecast total number of outgoing workers at the beginning of each fiscal year.

Likewise, recommendation on the formation of Workers’ Relief Fund was also presented to the government with the provision of immediate compensation amount of Rs 1,00,000 to any Nepali worker who dies abroad. The purposed fund, however, would be established by collecting money from each outgoing Nepali worker.

The committee also has suggested to explore more employment opportunities in other nations besides the existing government-recognised nineteen countries. Of the nineteen countries, Malaysia has been the most popular destination of Nepali workers.

Similarly, the committee has also urged the government to resume the labour desk at the Tribhuvan International Airport. Labour desk, which, according to Bharat Singh Thapa, would be a supportive step for the outgoing workers.

"The resumption of labour desk would be highly beneficial to Nepali workers in sorting out problems that are generally related to immigration procedures," he added.

However, the new recommendation related with regularising the manpower agencies by categorising them is likely to face strong protest from the foreign employment entrepreneurs. According to Lalit Bahadur Thapa, the government has been recommended to classify the manpower agencies on the basis of their performance.

"Owing the increased fraud cases filed against a number of manpower agencies, categorisation has been a must to regularise their function," Thapa added.

But Bharat Singh Thapa ruled out the need of such categorisation and said that such policy would be less beneficial to the manpower agencies, which fall into low rank category. "The categorisation will affect the business of small scale entrepreneurs as they will get less facilities from the government after being categorised at low rank".

Infected fish supply hits Biratnagar

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MORANG, Dec 23:The eastern city of Biratnagar is being supplied with illegally imported bacteria-infected fish, which the Animal Quarantine Check Post (AQCP) had banned last year, said a highly place source at Food Investigation Laboratory (FIL).

The source at the Biratnagar-based FIL further claimed that the diseased fish are being imported from Indian states of Uttar Pradesh and Kanpur area. "The inflow of such fish is on the rise with the arrival of winter season," he said.

The diseased fish belonging to Pangath family, which has thick fatty subcutaneous layer, used to be widely consumed in the past as well. However, its import was banned last year after the AQCP identified that the fish was heavily infected by coliform and staphylococci bacteria, which are said to be hazardous to health.

Consumption of such fish was found to cause diarrhoea and gastro-enteritis and feared to outbreak fever. "The import of the same was banned to protect the people from health hazard," said Tara Nath Sitaula, Chief of FIL talking to The Kathmandu Post.

He too conceded that the diseased fish has been widely seen in the market. However, the fish could not be seized during the investigative raids carried out by the FIL, he said.

According to officials, over 2000 kgs of fish is imported from India for local consumption in a month. "Pangath might have been brought in with such import carried out in bulk," said the source, adding that the sellers are supplying it at a rate of Rs 80 per kg.

Hotels, banks tussle over loan repayment

By Kulchandra Neupane

Pokhara, Dec 23:The commercial banks here have threatened to blacklist several local hotels, which are suffering heavy losses due to a declining tourism industry, for failing to pay back the loans.

The recent move by the commercial banks has come in a response to the regional hotel association’s announcement that they would not pay back both the principal and interest if the present slump in business environment continues. The association had made the announcement by sending letters to Rastriya Banijya Bank (RBB) and Nepal Rastra Bank (NRB) two months ago.

As a result of downturn in the tourism industry, for the last two years, the hotels have been unable to pay back even the interest to loans they had taken from the banks. However, the banks have been demanding immediate repayment of the deferred loans, and have threatened to put the hotels in blacklist in case of failing to repay within the extended deadline.

Rambhakta Bhandari, manager at the RBB Pokhara Section, said that such notice had been sent to only those hotels who had taken over-draft loans but failed to repay them even after the termination of the agreed time frame. He informed that those hotels who have not made a repayment for a loan taken eight to ten years ago, have already been blacklisted. In the process, the bank has seized Sahana Hotel at local Halan Chowk.

The tourism entrepreneurs have, on the other hand, flatly expressed their inability to pay back the loan and even the interest. "At a time when the government has declared the hotel business sick industry, it is extremely unfair of the banks to threaten to blacklist the hotels," said Sundar Kumar Shrestha, a local tourism entrepreneur.

Regional Hotel Association Pokhara is still firm in its stance not to pay back the loans if the present downturn in business continues. "The hoteliers have openly declared their bankruptcy," said Hari Prasad Gurung, President of the Association. "In such situation, paying back loans with 12 percent interest to the banks is simply impossible."

The government had, however, announced a relief package to the ‘sick tourism industry’ nearly a year ago. But the local entrepreneurs are yet to get concessional loans from the relief fund. "This so-called relief programme has only served the hotels based in Kathmandu," lamented Gurung. Though three local hotels were selected for concessional loans from the fund, the process was stuck in the way after the commercial banks failed to receive the ‘revolving fund’ from NRB.

The government has set aside 68 percent of the total Rs. 1.5 billion fund for relief package to the sick tourism industry. There are facilities for concession in the interest rate under the programme. "Any request for loan by the hoteliers is outrightly rejected by the bank officials," claimed Shrestha.

According to NRB Pokhara Section, the implementation of relief package has also been affected by the reluctance of the local commercial banks to receive loans for re-finance from NRB. "At a time when the banks are unable even to find secure areas to invest their own deposits, how can they ask for further loans?" asked Sambhu Thapa, Manager at the NRB

Tourism industry is one of the most lucrative industries in Pokhara. The commercial banks have invested more than 75 percent of their total investments in this sector alone. But this high-potential industry has been facing bleak days for the past few years due to deteriorating security conditions in the country.

It is estimated that over three billion rupees have been invested in this sector. Of the total hotels registered at the Regional Hotel Association Pokhara, 29 hotels alone have borrowed Rs. 520.6 million from the banks, said sources at the bank.

Wai Wai Premium launched

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KATHMANDU, Dec 23:Nepal Thai Foods Private Limited, a subsidiary of the Chaudhary Group, has launched Wai Wai Premium brand of instant noodles in the domestic market.

The new product comes with an additional weight of 33 per cent over its regular pack states a press release issued by the company today.

Priced at Rs 15, Premium Wai Wai has impeccable quality, irresistible taste and the essential nutrition apart from benefits from dehydrated vegetables and wholesome egg-powder, states the release.

The company has ensured to adhere completely to ISO 9002 standards throughout the procurement, manufacturing and packaging processes of the newly launched product.

The press statement further informs that Wai Wai Premium would be available at every selected markets of the country along with certain niche markets of the region.