Govt to issue finance ordinance next week
Present budget to be continued, no major change

By Prem Khanal
 
KATHMANDU, Jan 2 : The forth-coming financial ordinance that the government is planning to issue next week would be a continuation of the current budget and would have no major policy-wise change except for some minor administrative and institutional reforms. A high-level government source informed The Kathmandu Post that the Ministry of Finance has completed all necessary preparation regarding the issuance of the ordinance and is planning to get it approved from the cabinet Monday. A high-level delegation from the Finance Ministry including Finance Minister Dr Badri Prasad Shrestha presented a briefing about the ordinance to the His Majesty the King on Wednesday. 

The source also said that the ordinance will bring no change in the existing customs rates, but would take some concrete measures to reform the present revenue administration to stem revenue leakage. The source also informed that the ministry has been seriously looking into the possible steps that can be immediately taken to check revenue leakage.

With an aim to contain the leakage in the collection of customs duties mainly through under-valuation, the government through ordinance is also planning to bring reference price of major imports of the country. Similarly, the government would also introduce a mechanism to track the status of raw materials that the domestic industries’ import at nominal customs duties.

Despite repeated appeal to provide some relief to recession-hit private sector, the source said that the government is not in a position to fulfil the demand due to less-than-expected performance of the revenue collection and soaring regular expenditures. “Though the government is in dire need of extra resources to bridge resource gap due to lesser revenue mobilisation, it will not increase the present existing tax rates given the sluggish economy,” said the source.

The source also said that the development expenditure allocated for the current fiscal year would not be changed. “Since there are a lot of complications to change the development budget in mid-year, the upcoming ordinance would not make any change in the development expenditures,” added the source. 

In response to the low actual development expenditure, which is just around Rs three billion during the first five months of the current fiscal year against the released amount of Rs 4.19 billion as of mid-December, the ordinance might bring some minor policy-level change to boost the development expenditures. 

The ordinance will also take proper measures to ensure adequate flow of budget to the priority one projects categorised under Medium Term Expenditure Framework (MTEF) and its effective and speedy implementation. “The Finance Ministry is committed towards the smooth release of budgets to the 186 prioritised projects under MTEF,” said the source. 

With a basic motto of ‘Investment for Peace’, the then Prime Minister and Finance Minister Sher Bahadur Deuba had presented a Rs 96.12 billion budget for the current fiscal year through an ordinance promulgated by the King. The government has been compelled to bring a new financial ordinance for the rest of period as per the constitution the ordinance would automatically expire within the six months of its issuance if not endorsed by the parliament.

Former PM Deuba had allocated Rs 57.44 billion for regular expenditure, an increment of 16.46 per cent against current fiscal year’s estimated regular budget, while on the development front, he had proposed Rs 38.67 billion, which is 23.1 per cent less than the amount earmarked for this year. 
However, given the current trend, the total development budget for the current year is not expected to remain around Rs 30 billion due mainly to continuing violence. A source of the National Planning Commission said government might not be able to use the foreign grants worth around Rs 7 billion extended for the development activities. 

The ordinance will not have specific programmes to expedite financial sector reforms, said the source adding that the government is planning to take concrete measures only after a high-level task force formed recently to review the reforms processes submits its report.

Garment exports dip 22 pc in 2002

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KATHMANDU, Jan 2:Nepali readymade garment exports to the United States, which absorbs over 85 per cent of the total garments exported abroad from Nepal, fell by 22 per cent in 2002 as compared to the exports of 2001. While garments valued at US$ 136.5 million were exported in 2001, it fell to US$ 106.6 million in 2002, latest statistics provided by Garment Association Nepal (GAN) reveals.

The overall 2002 decline in the exports of the largest foreign currency earner for Nepal comes despite the rebound that the sector had been experiencing in the last five months. Garment exports to the United States since August had been on a double-digit upturn, as high as 65 per cent in December in comparison to the respective period of 2001.

However, the increments seen in the second half of 2002 could not cover the export fall experienced by the sector in the first half. The sector in the last five months of 2002 did well as compared to the exports in the last five months of 2001, whence exports had fallen in high figures, as high as 45 per cent as compared to that of the previous year.

Not just in the United States, garment exports to Canada, though it consumes only a small fraction of the total Nepali garments, also fell last year. According to the GAN figures, exports to Canada plunged by over 65 per cent in 2002 against the exports of 2001, when it had increased over 9 per cent in comparison to that of the previous year’s export.

Readymade garment lately has become a matter of concern to both the government and the private sector. Garment exports to the United States has been suffering ever since the US government announced duty- and quota-free market access to garments manufactured in the Caribbean region and the Sub-Saharan African countries in 2000.

And amid all the garment fiasco, both the business community as well as the government has been urging the United States to grant similar facilities as provided to the Sub-Saharan African and Caribbean countries, but in vain. Without duty-free access to the American markets, Nepal’s garments would be at a disadvantaged position.

Presently, US importers pay up to 21 per cent in duties while importing garments from Nepal. Furthermore, the cost factor of Nepali garments, primarily due to its landlockedness, is also proving detrimental. The cost of production of Nepali garments is 15 to 20 per cent higher than that of other South Asian and African countries.

The slump witnessed in garments is largely due to diversion of orders from Nepal to the Caribbean and Sub-Saharan African countries. With such a large chunk of Nepali garments going to the US alone, the privileged entry enjoyed by other countries has spelt disaster for Nepal. Unfortunately, the US government officials have shown a cold response to the request made by Nepal so far.

Meanwhile, a delegation of GAN, including a government representative, is to visit Canada shortly to explore market for Nepali garments. The Canadian government had recently announced to extend duty- and quota-free market access to all imports from the Least Developed Countries (LDCs) from January 1, 2003, however, prohibiting dairy products, poultry and eggs.

Such a decision of the Canadian Government had come in response to repeated demands from African countries for greater market access to developed countries. The decision will not only benefit the thirty-four African LDCs, but also Nepal, which too fall under the same category. Nepali entrepreneurs, especially garments, had been upbeat that the decision will prove a milestone in strengthening Nepali exports to the North American markets.

GAN president Kiran Saakha said that the main objective of the delegation would be to explore markets for Nepali garments not just in Canada, but even in the United States. "The delegation would try and make arrangements for taking advantage of the duty- and quota-free arrangement as announced by Canada, and expand the US markets," he said.

Bajra Net launches Internet service

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KATHMANDU, Jan 2:Director at the Department of Information Dharanidhar Koirala inaugurated the Internet service of Bajra Net Private Limited amid a function here yesterday.

Bajra Net, a new Internet service provider (ISP) has said that it would provide internet service at a very faster speed which will be 2 to 4 kilobytes per second (kpbs) for each user.

Speaking at the inaugural function, Khina Lama, Chief Executive of the company said that Bajra Net had launched Internet service as part of developing the company into a full IT solution house.

He also said that the new service would be launched in all the five development regions within three months. Bajra Net, established two years ago, has been involved in web hosting, web designing, domain registration, software development and hardware sales.

CSC receives lukewarm response

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KATHMANDU, Jan 2:The government’s effort to attract more savings from individuals through the issuance of Citizen Savings Certificate (CSC) received a lukewarm response as more than one-fourth of the CSC certificates floated recently remained unsubscribed.

According to the central bank officials, as against the issuance of the CSCs valuing Rs 400 million, the CSC worth only Rs 300 million were sold within the allocated days. Officials said, the value of unsubscribed certificates would be purchased by the central bank.

"As the deadline for subscription of CSC the latest government bond expired today, the public signed up for only 75 per cent of the total issue," said Rita Pant, Executive Director at the Public Debts Department.

Though the total subscription was less than the floating, it is encouraging, she said pointing out less than one third-subscription in the previous issuance made in January and April last year. It was sold 27.33 per cent in the January issue and 40 per cent in the second issue in April last year.

One of the main reasons for lower response on the CSC from general public is due to the restriction that the CSC cannot be used as collateral in financial institutions, experts have said. The government with an aim to control cross-rate advantage taken by the banking institutions had introduced the CSC last year.

The instrument was targeted at individuals and non-profit making institutions and was expected to reduce the huge investment difference between the banking and non-banking sectors in investing in the government securities. Currently, 85 per cent of internal loan is held by banking sector, while the remaining 15 per cent by individuals.

The CSC offers interest rate of only 8 per cent per annum. However, the charges of 6 per cent income tax on interest earnings from CSC makes the real interest rate at only 7.52 per cent. The earnings are given to the CSC owners on a half yearly basis.

The NRB officials say one major reason behind the low response is that CSCs are not allowed to pledge as collateral in commercial banks for obtaining loans, and which they claim is the major cause for its failure to attract much attention of investors.

"The government’s decision to bar CSCs from being used as a collateral for loan purposes has distracted investment from businessmen and traders. And that is the major reason behind the less-than-expected response on the issue," said another official at the central bank.

Similarly, another reason for the low subscription is that the new instrument is open to individuals and the non-profit-making institutions only and not to the commercial banks and other financial institutions for investment.

Despite that only private individuals can invest in the instrument, the ownership of the CSC can be changed among the individuals through the NRB and it can also be sold in the secondary market through market makers.

The CSC is the fourth financial instrument being used by the government to resort to deficit financing and the second for the non-banking financial institutions. While one of them is National Saving Certificate, the other two are Treasury Bills and Development Bonds.

Locals deprived of banking service

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DANG, Jan 2:Local people of remote areas of this district are deprived of banking facilities in recent times, after several banks have shifted to district headquarters from the rural parts, on the grounds of security concerns.

Most branch offices of Agricultural Development Bank (ADB) and Small Farmers’ Development Projects, those serving banking facilities to the local people have now started their function in the district headquarters due mainly to escalating Maoist violence in remote parts.

The local trade in the rural parts now is left with thorny days ahead following the displacement of small-scale banks from these parts. Even senior official of ADB/N conceded the fact that the rural business has suffered a lot after most banks shifted to the district headquarters.

Apart from the local farmers, the displacement of these banks also has created difficulties to the banks in disbursing and collecting loans from the remote areas. "Our rural business activities have almost come to a halt since we left the remote region," said Binayak Raj Pant, an official of ADB/N based in Ghorahi.

Even the recent record of banking activities hints towards the negligible banking involvement in the rural parts of the district. According to the record of the bank, out of total disbursed loan, the remote parts have acquired only five per cent of it.

But, Pant on the other hand, strongly refuted that the local people of remote areas are facing heat due to the lack of bank. "Our bank has always encouraged the people of various parts," he added.

Earlier, banks of rural areas used to support the people of rural areas by disbursing loans in the local areas. Farmers used to draw bulk amounts for the cultivation of various cash crops.

Trade Fair attracts 150,000 visitors in 8 days

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BUTWAL, Jan 2:The ongoing Industrial Trade Fair – 2059 has attracted over 150 thousand visitors in the last eight days. The fair is being organised not just to celebrate Nepal Chamber of Commerce’s (NCC) Golden jubilee, but also to mark the entry of Butwal Chamber of Commerce into its golden jubilee.

According to the organisers, visitors from adjoining districts including Tanahun, Banke, Bardiya, Dang, Syangja, Kaski, Dhading and Chitwan attended the trade fair during the period. "Also a large number of Indian traders and consumers from Maharajgunj, Sunauli, Nautanawa and Gorakhpur are continuing to visit the exposition," they said.

The fair comprises a total of 137 stalls of both domestic and foreign products including stalls on information technology (IT) from China, Pakistan, Iran, Bangladesh, Germany and America.

Coordinator of the fair organising committee and President of Butwal Chamber of Commerce and Industry (BCCI), Kush Prasad Mali said that the fair has obtained better response than the organisers’ expectation. "The BCCI had targeted to attract 200 thousand visitors throughout the fair. However, that is expected to cross 250 thousand," he said.

This is the fourth time the western city of Butwal is hosting the trade fair. The organisers have charged Rs 4,000, Rs 6,000, 10,000 and 15,000 for a stall of the firms having the registered capital of Rs 1 million, Rs 5 million, Rs 10 million and over Rs 10 million, respectively. The highest stall charge of Rs 25,000, however, is fixed for the cigarette and tobacco companies.

The fair is being organised with a view to boost domestic products and market and familiarisation of the potential exportable goods. "The basic objective of the fair is to stir the slump market and economy," said Mali. The organisers have estimated that goods worth Rs 25 million would be traded during the fair.

Madan Agrawal, a trader from Nepalgunj, said that the organisers, by gathering domestic and foreign traders under the same roof, have provided a good learning opportunities for the local traders. "This will definitely promote domestic trade," he said.

Handicrafts, agro-products, information technology (IT), food products, garment and various cultural programmes and exposition of products of the women entrepreneurs are the major attractions of the trade fair.

Local and national level repartee competition, singing and dancing competition and other cultural programmes are the major attractions of the fair.

Chitwan Festival to be held next week

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KATHMANDU, Jan 2:The locals of Chitwan district are organising Chitwan Festival from January 10 to January 17, with an aim to developing and uplifting the economic, social, cultural and tourism status of the district.

The Festival scheduled to be inaugurated by Prime Minister Lokendra Bahadur Chand is aimed at attracting both the international and domestic tourists, in one of Nepal’s prominent tourist spots.

Organising a press conference in the capital today, the organisers said that fourth bi-yearly festival that was first organised eight years back, would be focussed on the preservation and promotion of Narayani river, one of the holiest rivers of the country.

"The organisation of the festival in the bank of the Narayani river would help creating awareness about the holy river and also promote the religious tourism in the region," R M Piya, chairman of the organising committee said.

Even the water activities are expected to get promoted, said Piya adding that they have planned to introduce water-jets, motor boats, rafting and other adventures during the festival.

Most likely, there would be 275 stalls and more than 150,000 visitors would observe the festival, he said. The same number of visitors had visited the festival organised two years back. According to the organisers the expected cost of organising the festival would be Rs 4.1 million.

The Festival would also include the national repartee competition along with the organisation of agricultural trade fair and exhibition of the culture, arts and sculpture, information technology and several others. Organisers even said that they have come up with a discounted package for the domestic visitors.

Regular cultural programmes, interaction programmes on tourism, arts and literature, food festival, and exhibition of traditional means of entertainment would be the other attractions of the programme, the organisers said.

Speaking at the occasion, Subash Nirola, Director at Nepal Tourism Board (NTB) stressed upon the comprehensive organisation of such programmes. Stating that the festival is the largest one in terms of participation of the stakeholders he said, the organisation of this festival the one of the cultural heritage sites would help sending positive message to the outsiders.

The Festival is being jointly organised by Narayangarh Chamber of Commerce and Industry, District Development Committee of Chitwan, Bharatpur Municipality, Ratnanagar Municipality and Rantanagar Chamber of Commerce and Industry. The programme is being supported and promoted jointly by the NTB and Federation of Nepalese Chambers of Commerce and Industry.

MoCTCA forms Monitoring Cell

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KATHMANDU, Jan 2:The Ministry of Culture Tourism and Civil Aviation (MoCTCA) has formulated a high-level permanent Monitoring Cell to check irregularities and mal-practices inside the ministry and the government offices operating under it.

According to a press release issued by the Ministry, the cell would regularly monitor work-evaluation, leakage, irregularities, arrears and others activities being taking place mainly in the Civil Aviation Authority of Nepal (CAAN) and the Royal Nepal Airlines Corporation (RNAC).

According to the press release, Joint Secretary of the Ministry Medini Prasad Sharma would lead the team that consists of representatives from the Auditor General’s office, CAAN and the RNAC. "The cell would enforce strong Management Check and Control System and suggest for the control of possible irregularities in the future," the release says.

The cell has also been made responsible for the management audit of the said institutions and the development of the permanent control mechanism.

Meanwhile, the ministry has also formed a Study Team for the improvement of the management of the RNAC and upgrading the services being provided by the Corporation. The six-member team is headed by Acting Deputy Director of the Corporation, Gobardhan Khadka. The team would submit its report within the next 45 days.