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Vol.
3 :: No. 3 February, 2001 (Magh-Falgun) |
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Business News |
Nepali accounting firm BRS Neupane & Co. has been appointed an associate office of Deloitte Touche Tohmatsu (DTT), one of the five largest accounting firms in the world.
Another of the big five international accounting firms, Pricewaterhouse Coopers (PwC) also has a Nepali associate firm, Citracar Sharma & Co. (CSC).
Both DTT and PwC are among the eight short-listed contenders for management contract of Nepal Bank Ltd. and Rastriya Banijya Bank for which Nepal Rastra Bank, the central monetary authority of Nepal, is looking for appropriate candidates.
The World Bank’s private sector lending affiliate International Finance Corporation (IFC) has committed to invest Rs. 22 million as equity in Nepal’s International Leasing and Finance Company Ltd. (ILFC), raising a hope for the development of suitable atmosphere for lease finance business in the country.
Initially promoted by Nepali investors led by National Life and General Insurance Company Ltd. in joint venture with Korea’s KDB Capital Corporation (KDBCC), ILFC will now be owned 18% by IFC, 36% by Nepali promoters and 21% by KDB CC while the remaining 25% will be offered to the general Nepali public after the central bank formally endorses the IFC-ILFC agreement.
ILFC and some other finance companies that are involved in lease financing business have been complaining that the existing legal provisions are not suitable for a healthy growth of the lease financing business.
At present, legal provision for the protection of the equipment provided on lease finance are absent. Nor are the borrowers attracted to this service. The key to lease financing is that the borrowers who take equipment on lease finance are allowed to write off the rental payments as expenses while the depreciation of the equipment is allowed to be written off as expense of the lending institution. But for the lack of such clear provisions in the existing income tax laws, this type of lending is still not popular in Nepal, according to the finance company sources. Therefore, the business is now limited to vehicles and construction equipment, they say.
Moreover, no authority is designated to register the ownership of machines and equipment. IFC’s involvement in the business now is expected to ease the situation. IFC is learnt to have sent the Ministry of Finance a draft law for this purpose.
Currently, IFC has a portfolio of close to US$ 60 million invested in tourism and hydropower projects in Nepal.
Pashupati Paints (P) Ltd. has received ISO 2002 certificate from DNC-Netherlands.
Established some 18 years ago with entire domestic investment, Pashupati Paints has its factory located at Sonapur, Sunsari.
Shree Distillery (P) Ltd., Nepal Ekarat Engineering (P) Ltd. and Hukam Pharmaceuticals (P) Ltd. are among other Nepali industrial units that have already received the prestigious ISO certification.
Honouring the repeated
calls from the private sector for representation in the Board of Directors of
Nepal Rastra Bank (NRB), His Majesty’s Government has appointed Pradeep
Kumar Shrestha, President of the Federation of Nepalese Chambers of Commerce
and Industry (FNCCI), to the vacant position of NRB Board.
The position had fallen vacant after the appointment of Deependra Purush Dhakal as NRB Governor removing former governor Dr. Tilak Rawal.
Industrial Development Bank of India (IDBI) is to take 10% equity in Nepal Development Bank (NDB), the first private sector development bank of Nepal operating since 1999 with an issued capital of Rs. 160 million.
An agreement to this effect was signed recently in Mumbai between IDBI and NDB. With this, IDBI is to buy the 10% share of NDB for Rs. 16 million, and nominate one member in the Board of Directors of NDB.
The initial capital structure of NDB had a provision for 10% equity holding from a foreign financial institution.
An Indian government undertaking, IDBI is the apex development finance institution (DFI) of India supervising several national and state level development banks there. Under the agreement with NDB, the Indian DFI is also to provide various technical cooperation.
The seventh AGM and 20thexecutive committee meeting of SAARC Chamber of Commerce and Industry (SCCI) concluded in Kathmandu recently creating the position of senior vice-president and electing former FNCCI president Padma Jyoti to the position.
The meeting also decided to carry out a study on how the SAARC member countries can put united front in the WTO, to hold SAARC economic conference, to study about the condition of cottage industries in the member countries and to promote public-private partnerships.
The third and final tender call for privatizing Butwal Power Company saw only two bidders – Interkraft and IPC/PLC – seriously come forward to purchase a controlling 75 percent stake in the power company.
Other than the Norwegian Interkraft and Anglo-American IPC/PLC, other companies that were expected to submit their bids were Australian multi-national power developer Pacific Hydro, Khetan Group, Sanima Hydro and Imsit.
The first call for bids had been participated in by only the Jyoti Group supported Interkraft and the Chaudhary Group partnered IPC/PLC. The call had, however, been cancelled following revocation of the bid by the Anglo-American company which accused irregularity in the privatization process of BPC.
The privatization of BPC, which had wrecked havoc on the entire privatization program of the government, is now expected to speed up. The technical bids of the two companies will be thoroughly examined by a technical team before the companies are allowed to participate in the second round of financial bids slated to take place after two weeks.
Kenichi Ohashi, World Bank’s new Country Director for Nepal, was recently
here on a two-week visit. Appointed to the position with 
effect
from December 17, 2000, Japanese national Ohasi is scheduled to take residence
in Nepal in summer this year.
Being the leader of the international donor community that share the majority of Nepal's government budget, World Bank’s Country Director has a major role to play in the shaping of Nepal’s on-going development efforts. In the total development budget of Rs. 48108 million for the current fiscal year that ends on mid-July 2001, Rs. 19792 million is to come as loan from bilateral and multi-lateral donors.
Currently, the World Bank is assisting Nepal in poverty alleviation, finance sector reform and infrastructure development covering wide-ranging fields such as education, health, agriculture, forestry etc.
Exercising its authority to regulate and control the finance sector, Nepal Rastra Bank (NRB) has directed private sector development banks to maintain their liquidity at minimum of 10% of their total deposits.
The rule applies to private sector development banks such as Nepal Development Bank Ltd., Malika Development Bank Ltd. and Development Credit Bank Ltd. Meanwhile, NRB has also directed the finance companies not to distribute dividend if their capital fund is not enough to meet the capital adequacy requirement.
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