Implementation of VAT not satisfactory

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KATHMANDU, Nov 15 - Various experts and policymakers said that even after six years of the enforcement of Value Added Tax (VAT), its contribution toward the country’s economy is not satisfactory.

Speaking at a seminar on VAT in Nepal organised here today by Nepal Law Society in cooperation with Revenue Administration Support (RAS) Project DANIDA, they said that commitment in both thought and action should be made from all the concerned sectors to fully implement VAT.

Dr Ram Sharan Mahat, former Finance Minister, said that business community as well as the society must change their mentality and be transparent in order to implemented fully.

"It is a matter of great pleasure that today our society has accepted VAT and it has been proved that VAT is being established and would stay in the country," he said.

He stressed on the need to fully implement VAT in order to save national industries from being deteriorated due to the availability of comparatively cheaper foreign goods.

"While illegally imported goods, which are cheaper compared to the legally brought in goods, are penetrating the local market, it is being quite difficult to the national industries to maintain competitiveness with such goods," he said.

Speaking on the occasion, Bhanu Prasad Acharya, Secretary at the Ministry of Finance, said that VAT has still been unable to expand its sectors as expected due partly to lack of transparent tax administration and tax system.

"With the enforcement of VAT, some problems such as its billing system and complex process of duty drawback, have arisen. And the government is gearing up to resolve such problems to make the implementation of the Vat efficient," he said.

Avanindra Kumar Shrestha, Director General of Inland Revenue Department, said that contribution of VAT towards the nation’s Gross Domestic Product (GDP) is three percent and the total collection of VAT during the last fiscal year was Rs 13.6 billion. "At present, around 30,000 businessmen and industrialists are yet to be registered with VAT," he said.

Similarly, Lene Bendix, chief technician of DANIDA RAS Project said that there is extremely low awareness of tax system among the citizens and this has created hurdles in Nepal’s efforts to accomplish the desired result in tax collection.

Nepse index slips marginally

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KATHMANDU, Nov 15 - Stock trading at the country’s sole secondary market once again tumbled as its index declined this week.

The information issued by the Nepal Stock Exchange (Nepse) states that the stock trading during the week declined by 0.83 points.

While the index at the Nepse opened at 207.04 points on Monday, the opening day of the week, it went down and closed at 206.21 points on Friday, the closing day of the week, according to the Nepse.

Despite the overall decline suffered by the Nepse, the index of three out of eight key enlisted groups, went up, while the remaining groups either saw a decline or remained constant throughout the week.

According to the Nepse, index of the commercial bank group, the largest trader at the Nepse floor, landed at 206.21 points from 207.04 points during the week.

Likewise, the indices of the manufacturing and the hotel group suffered downfall as their indices closed at 258.73 points and 184.40 points respectively from 259.27 points and 185.55 points respectively.

Indices of insurance, finance and development bank groups, however, witnessed a growth during the week. While the indices of the insurance and finance opened at 240.70 and 198.53 points respectively, both of it climbed and closed at 241.21 and 199.54 points respectively.

The development bank group also saw a growth during the period as it index climbed and closed at 242.42 points from 240.95 points.

The indices of the trading and other group, meanwhile, remained constant throughout the week at 140.31 points and 103.55 points respectively.

Once again the commercial bank group dominated the Nepse floor as it captured 53.15 per cent of the total trading followed by the finance group with 37.14 and the development bank group with 4.52 per cent. Then it was insurance group with 4.37 per cent, the hotel group with 0.77 per cent and the manufacturing group with 0.05 per cent.

Life Insurance Company topped the list as the largest trader in terms of recording maximum number of transactions, 84. Universal Finance and Capital Markets, meanwhile, became the leaders of the market in terms of monetary transactions and number of share units sold, 20,000 share units at Rs 3 million.

During the week, a total of 60,185 share units were traded through 979 transactions at Rs 12.57 million, against last week’s trading of 31,323 share units traded through 759 transactions at Rs 7.34 million.

Jute production goes down

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BIRATNAGAR, Nov 15 - Experts and farmers have said that the jute producers have been unable to meet the demand of the local jute mills due largely to the negligence of the government towards jute farming.

Speaking at an interaction organised here, they stressed on the need to introduce a new programme for jute farming. The government should give a special priority to jute farming to help ensure the agricultural and industrial development of the country, they demanded.

Ranga Lal Upaddhyaya, a jute expert, said that the country, once known as the jute exporter, has been forced to depend on the foreign countries to meet the demand of the jute.

"The total demand of jute in the country is 8,000 metric tons while the contribution of the local jute production towards the total demand is only 10 percent," he informed.

Commercial banks deny smaller loans
Small businessmen affected

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BIRATNAGAR, Nov 15 - Refusal of the commercial banks to disburse loans less than one million rupees has caused inconvenience to the local entrepreneurs, who were heavily dependent on the banks’ loans to run their cottage and small-scale industries.

"To expand my business, I visited several banks in search of loans. However, no commercial banks agreed to lend me less than one million rupees," lamented Siya Ram Rauniyar, who runs a rickshaw repairing business.

He said that he neither needed such a huge amount nor he had collateral enough to draw one-million rupee loan from the commercial bank.

Manoj Agrawal, a local entrepreneur, said that he was trying to set up a furniture factory taking loans from a local bank.

"But, I could not open the factory as the bank refused to provide me loans. The bank officials asked me either to draw loans more than one million rupees against collateral or to go to the Agricultural Development Bank (ADB) for the propose."

He said that there was no use of taking such a huge loan for an entrepreneur like him.

The local entrepreneurs said that they are quite confused with the policy of the banks. At a time when the government accords special priority to the cottage and small industries to boost the economic activities of the country, such decision of the banks is quite discouraging, they said.

Stating that the commercial banks refused to disburse small loans, as many as four entrepreneurs have filed a request letter with the Morang Traders Association hoping that it would take initiative to resolve the problem.

At present, the ADB has been disbursing loans to the cottage and small industries. But, its interest rate is as high as 16 percent per year. However, the commercial banks have their own story to narrate.

Sushil Acharya, Chief of Biratnagar branch of Rastriya Banijaya Bank (RBB), said that the RBB has disbursed loans even to the entrepreneurs operating the cottage and small industries.

"But as per the new policy of the bank, aspirant borrowers have to get permission from the head office of the bank," he said. "So, it is being difficult for the entrepreneurs to draw the loans from the bank."

NBL requests Nepse to de-list it from trading roster

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KATHMANDU, Nov 15 - The management of Nepal Bank Limited (NBL) today requested the Nepal Stock Exchange (Nepse) Limited to de-list the bank from its trading roster. The management has cited its current financial position responsible for the decision.

Issuing a press statement today, the NBL has claimed that the decision would have no impact on the depositors and would not affect the functioning of the bank’s reform project. Currently, the management of the bank is under the control of Nepal Rastra Bank.

Each equity shares of the bank is currently being traded at Rs 175 in Nepse, the country’s only secondary market. There are about 15,000 ordinary shareholders of the country’s largest commercial bank.

Experts say that the management of the bank took such decision owing to its negative worth. "Share trading of a company having negative net worth is quite unusual and the decision is in response to this fact," said an expert.

KPMG, an international auditing firm, in its report on the financial situation of the bank published some years ago, had also revealed that the bank had negative net worth.

The bank is yet to submit the balance sheet for last seven years to the Nepse.

"It is quite disappointing that a company whose share value was much more than its face value has decided to de-list," said Bishnu Chapagain, president of Brokers Association of Nepal, adding that this would discourage the investors in the secondary market.

‘Nepal becoming a key player in ICT’

Nov 15 - Rammurti Badrinath, Director, International Trade Centre UNCTAD/WTO, who is participating in a seminar on Building e-Business Competencies for Information Society held during the ITC Regional e-Business Forum 2003 for Asia and the Pacific in Kathmandu, says that Nepal is becoming a key player in the field of information and communication technology (ICT). Ram Sharan Sedhai of The Kathmandu Post spoke to him. Excerpts:

TKP: You said that Nepal is becoming a key player in the field of ICT. In what way?

Badrinath: Number one, Nepal is increasingly using ICT, this may be smaller compared to India and China, but I am talking in terms of Nepal’s population. Secondly and most importantly, Nepal has been exporting human resources to many parts of the world and there is greater possibility of sending more ICT experts abroad.

TKP: But does not the abject poverty compounded with high rate of illiteracy and lack of infrastructure create hurdles in the development ICT?

Badrinath: Not exactly. ICT itself is a powerful tool for empowering the poor communities and reducing illiteracy. More importantly, ICT is a knowledge-based industry and even a resource-poor country can make tremendous progress but it depends on the use of the technology. Yes, infrastructure is necessary, but once in place, it is an answer to poverty.

TKP: Since Nepal is sandwiched between India and China, the software and hardware giants, how can Nepal take advantage of ICT?

Badrinath: ICT is such an industry that even smaller companies can survive and take advantage of it. As I said, it is a knowledge-based industry where one can excel despite the size of the industry. Take India for example. Most of the ICT-related companies are small yet they are doing good business. Then why cannot the Nepali companies do the same?

TKP: As Nepal is in the process of becoming a full member of the WTO, how can ITC help Nepal after its accession to the global trading regime?

Badrinath: There is a fair degree of works to be done in informing the business community in the post-accession period. We have a lot of materials and enough staff to support, educate, train and to prepare the business community in the accession period.

TKP: Does ITC have any special programme for Nepal?

Badrinath: Most of our programmes are focused on least developed countries. After Africa, Nepal is on our priority list, but ITC helps those countries that approach it. If Nepal does not request for help, it will not get any assistance.

TKP: Why have you chosen Nepal as the venue for the seminar-cum-forum?

Badrinath: First, Nepal is becoming a key player in ICT-related activities and it will be opportune to hold the forum here. Next, Nepal is a beautiful country and people are very friendly.

TKP: What are the objectives of the forum?

Badrinath: Primarily, it is a preparation for the conference of the World Information Society scheduled to be held from 9-13 December in Geneva, which is the biggest IT summit. Secondly, it focuses on building the capacities of the small and medium enterprises. Similarly, Nepal can learn from the experiences of others and about the ways of market change.