Business News

October, 2002

FOLLOW-UP

Revenue collection Hike

The Ministry of Finance (MOF) has claimed 13% increase in the revenue collection from the customs duty during the first one month and 23 days of the current fiscal year (that began on mid-July 2002) compared to the same period last year.

According to the information the MOF officials revealed at a meeting with the economic journalists on September 10, the customs duty collection during the one month between mid-July and mid-August 2002 was less than what it was during the same period last year. But when the period between mid-August and September 8, 2000 is also considered, the collection figure this year becomes nearly 13% higher than in the last year. Collections as customs revenue during the fiscal year 2001-02 had totaled Rs. 13985 million and the target for the current fiscal year 2002-03 is Rs. 15759 million. By September 8, 2002 of the current year, the customs revenue collection has totaled Rs. 1672 million as compared to Rs. 1482 million collected during the same period last year.

This claim from the authorities came at a time when rumors were spreading that the revenue collection of the government had reduced drastically after the anti-corruption body the Commission for the Investigation of the Abuse of Authority (CIAA) raided the residences of 22 revenue officials on August 16 night seizing a huge quantity of cash and jewelry, thus sending fears across the revenue administration staff.

On the same occasion, the Ministry also informed about the reforms being carried out in revenue administration (see box).

Reforms Agenda for Revenue Administration

1. Vacancies being filled up (about 70 positions of Section Officers in addition to some other positions in higher levels are vacant at present)

2. Clear-cut policy is being formulated for transfer of the staff within and outside revenue administration.

3. Performance evaluation of revenue administration staff is to be carried out against newly developed performance indicators.

4. The central monitoring unit will be strengthened to take swift actions on public complaints about revenue administration employees.

5. An incentive scheme is to be introduced to compensate the revenue administration employees for the hard work required from them.

6. The system for investigation into revenue leakage is being reformed and special surveillance is to be conducted to check such leakage.

7. A system of weekly public hearing on taxpayers’ complaints has been started.

8. Taxpayer service over the telephone started. A call centre is to be set up for this and the phone calls to this call centre will be made free of charge.

9. A monitoring committee is set up under the chairmanship of the Director General of the Inland Revenue Department with representation also from the Office of the Auditor General and the Association of the Chartered Accountants to make the tax assessment transparent and effective.

10. Self-assessment of income tax is fully implemented.

11. One-window system is introduced for taxpayer services.

12. Link-audit will be carried out of those identified taxpayers who are linked among themselves in connection with their business.

13. Information Technology Section is to be set up in the Department of Customs. The position for the staff to operate this section is now approved.

14. More effective monitoring system has been introduced to track the goods released or about to be released from the customs points.

15. A system is adopted to declare in the L/C document itself, the detailed specification of the goods being imported so that the customs valuation is compatible with the GATT/WTO system.

Tourist Arrivals Update

Indian tourist arrivals to Nepal by air showed a robust growth of 68% in August 2002 compared the same month in 2001. This is the third consecutive month this year that the Indian arrivals recorded a positive growth. According to data compiled by Nepal Tourism Board (NTB), the arrival from India stood at 6,138 visitors exceeding August 2001 number by 2,488. The increase is attributed to the promotional campaigns jointly launched by NTB and RNAC, claims NTB. The month also hosted SAARC secretarial and ministerial level meeting in Kathmandu and this is found to have caused a growth also in the arrivals from SAARC member countries including Sri-Lanka.

Among the third country markets the positive growth in the arrival were from Japan and China. Japanese visitors outnumbered the previous year arrival by 6% at 1,666. Chinese arrivals grew by 23% whereas visitor arrival from Sri-Lanka improved by 104%.

Overall the third country arrival declined by 24% to the total of 11,147 visitors, but this number also indicates a softening in the decline when compared to the trends in the previous months, notes NTB.

However, the major markets of Europe and US continue to decline. Arrivals from USA were lowered by 33% and from UK 38%. Germany’s pace has softened at 13% negative and French arrival declined by 41%.

The market share of the third country arrivals on the total arrivals is slowly picking up. It stood at 64% for August 2002, says NTB.

Highlights: International Visitor Arrivals for (the month of August 2002)

India up 68% to 6,138 visitors
Japan up 6% to 1,666 visitors
China up 23% to 280 visitors
Sri-Lanka up 104% to 126 visitors
Germany down 13% to 801 visitors
UK down 38% to 847 visitors
USA down 33% to 963 visitors

Total Arrival (by Air only)
Month	Total Tourist			Third Country Tourist			Indian Tourists
Month	2001	2002	% Inc.	2001	2002	% Inc	2001	2002	% Inc.
January	25,905	13,576	-47.59%	20,611	9,559	-53.62%	5,294	4,017	-24.12%
February	30,814	16,743	-45.66%	24,897	13,256	-46.76%	5,917	3,487	-41.07%
March	38,831	21,712	-44.09%	32,808	17,999	-45.14%	6,023	3,713	-38.35%
April	35,325	18,078	-48.82%	28,454	13,747	-51.69%	6,871	4,331	-36.97%
May	25,536	16,666	-34.74%	14,601	8,819	-39.60%	10,935	7,847	-28.24%
June	10,238	13,841	35.19%	6,137	5,361	-12.64%	4,101	8,480	106.78%
July	15,176	13,458	-11.32%	10,733	7,387	-31.17%	4,443	6,071	36.64%
August	18,383	17,285	-5.97%	14,733	11,147	-24.34%	3,650	6,138	68.16%
Total	200,208	131,359	-34.39%	152,974	87,275	-42.95%	47,234	44,084	-6.67%
Source: Nepal Tourism Board

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