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APRIL, 2002 |
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Follow-up |
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FNCCI National Excellence Award 20 in the fray Out of 34 applicants for this year’s FNCCI National Excellence Award, 20 have been short listed for site visit by the team of assessors, according to FNCCI. The site visit is scheduled to complete by April 1. The team includes Dharmendra Thakur, Bipin Rajbhandary, Krishna Prasad Kharel and Ramesh Sthapit as the lead auditors. Major companies that could not be short-listed include Gorkha Brewery, Manakamana Darshan, Nepal Ekarat Engineering for reasons such as incomplete application forms. Gorkha Brewery (P) Ltd. had received commendation letter of the Award last year for its significant achievement in sales growth. Among those short-listed are Nepal Lever Ltd. (NLL) which had received commendation letter last year for significant achievement in overall performance from among the large industries and Surya Tobacco Company (P) Ltd. (STC) which had received last year the commendation letter for significant achievement in system development. Another company Asian Paints Nepal (P) Ltd. (APPL) had received commendation letter last year for significant achievement in overall performance from among the small scale industries. Interestingly each of NLL, STC, GBPL and APPL are joint ventures companies. Among the contenders this year Dabur Nepal, Golgate-Palmolive and Standard Chartered Bank Nepal are also joint ventures. Forex spread reduced Nepal Foreign Trade Association (NFTA) has welcomed the Nepal Rastra Bank's decision to reduce the spread between the buying and selling rates of US dollars. As per the decision, the spread now is 65 paisa per dollar instead of 75 paisa in the past. Still the spread is much higher than in Indian Rupee, complains the business community. The difference in the buying and selling rate is only 15 paisa per hundred Indian Rupee. Some six months ago (NBA, December 2001) NFTA had raised a strong voice against what it called a cartel among the banks in fixing the foreign exchange rate and charging a very high premium. Nepal Indosuez saga After about nine months of sitting over the controversy, Nepal Rastra Bank (NRB) has finally signalled to the Credit Agricole Indosuez (CAI) that the French multinational can sell its shares in the Nepal Indosuez Bank Ltd. (NIBL) to the team of Nepali investors selected by the French bank. The buyers are reportedly going to change the name of the bank into Nepal Investment Bank Ltd. The news of the decision comes after about a week of CAI threatening NRB that the French were simply going to cancel the management contract unilaterally if NRB does not grant the permission. Though NRB has signalled positively to the French demand, a formal letter is still awaited. Meanwhile, the Patan Appellate Court is still considering a petition filed against CAI's decision not to sell shares to Chaudhary Group. The French company had decided some nine months ago (June 2001) to sell its stake in the NIBL to a team of investors led by Prithivi Bahadur Pande, the former CEO of Himalayan Bank Ltd. (NBA September 2001). The French party had already wrote 30 letters to Nepali authorities and it is not going to write any more, according to what Marc Domex, the Chief Executive of NIBL, said at a press conference on March 12 in Kathmandu. At the same press conference, the French ambassador warned that if the issue is not settled quickly, it would become a political problem not only between Nepal and France, but also between Nepal and the EU. According to Pande, who was also present at the press meet, his team has 64 members and they are ready to pay Rs. 320 million for the 50% shares in NIBL held at present by Credit Agricole. The team includes Yogendra Shakya, Ajaya Ghimire, Jyoti Group, Mercantile Group, Purushottam Sanghai and Golchha Organisation among others. The dispute was complicated further after Chaudhary Group, one of prominent business houses of Nepal, filed law suits at the Patan Appellate Court and the Supreme Court claiming that the French party is already committed to sell the shares to the Chaudhary Group according to an agreement still valid. It says the Credit Agricole had signed the agreement with Chaudhary Group way back in 1998 under which Chaudhary Group is committed to purchase the 50% shares in NIBL for US $ 2.59 million (around Rs. 200 million), which is nearly Rs 120 million less than what Pande and team are offering. If the shares are sold to Pande and his team, Nepal will lose Rs. 120 million equivalent of additional foreign exchange, argues Chaudhary Group. But according to the lawyers of Credit Agricole, as the court has not issued an interim order in the case, there is no legal hindrance in selling the shares. This argument seems to be followed by NRB also in its latest decision to signal positively to CAI. The said agreement was in connection with the acquisition of the NIBL shares by Nabil Bank Ltd. in which Chaudhary Group has its stakes. Credit Agricole sources argue that the agreement (often referred to as an MOU) was valid only up to July 16, 1999. The agreement was signed in Singapore and is governed by Singapore law, not valid in Nepal, they maintain. The central bank authorities were brushing aside the problem as simply a case of legality in which the central bank can do nothing. They have not issued the formal letter to CAI as yet. The said positive signals are only verbal. The dispute is also viewed as another example of the a feud going on between two groups of business houses in Nepal – one identified as aligned to the Jyoti Group and other to the Chaudhary Group. Whatever might be the case, the delay has been smearing Nepal's image of an investor-friendly country that the Nepali authorities say they have been trying to project to the outside world. FNCCI National Excellence Award Contestants – 2002 Asian Paints Colgate – Palmolive Nepal Dabur Nepal Euro Pashmina Ganapati Rosin & Turpentine Humanwear Leather Jagadamba Press Kunz Artistic Bead Works Momento Apparels Nepal Finance & Saving Nepal Lever Nepal Lube Oil Nepali Paper Products Panchakanya Steel Premier Wires Saurav Oil Mill Standard Chartered Bank Nepal Surya Agro Surya Tobacco Vikash Flour Mill Nepal-India trade treaty changed The much protracted negotiation to renew the Nepal-India trade treaty have concluded with Nepal buckling to the Indian proposal to impose quantitative restrictions on four of the major Nepali exports to India. Scheduled to be renewed early December 2001, the treaty was extended up to March 5, 2002 pending further negotiations on the Indian proposal for revision in the treaty’s major clauses.
Finally, the commerce secretaries of both the countries were able to sign the renewal for five years beginning March 2002 but with condition that all Nepali manufactured exports meet at least 25% value addition requirement for the year till March 2003 and 30% then after. Though hailed by the business community as an achievement, the treaty is flayed by professionals (see interview column in this issue). The revised arrangements allow India the leeway to invoke safeguard measures whenever it feels that Nepali exports are likely to cause injury to Indian industry. 78 Vs 68 Nepali authorities have selected 78 travel agencies to handle the Chinese tourists expected to start coming soon. This is in connection with the arrangement following the Chinese government listing Nepal as one of the outbound destinations to Chinese tourists (NBA, December 2001). They were selected out of 109 that had applied to the authorities for license to handle this lucrative business when the tourist arrival from other traditional markets has been dwindling. The 78 selected agencies have to submit bank guarantee of Rs. 500,000 by April 8. Then their names will be communicated to Chinese authorities. Nepal has already received the names of 68 Chinese travel agencies authorized by China to handle this business. To ease the tourist inflow into Nepal from China, the authorities are reportedly trying for increased airlinks between the two countries, opening Nepali consulates in prominent Chinese cities and to simplify currency convertibility. Meanwhile, a team of Chinese television journalists has completed the familiarization trip to Nepal under invitation of Nepal Tourism Board. |
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