Tourist Arrival Increasing

With the security conditions improving, Nepal’s tourism industry is gradually regaining consumer confidence, especially from Indian market, according to Nepal Tourism Board (NTB), the national agency responsible to market Nepal as a global tourism destination.

Analyzing the data made available by the Immigration Office in Tribhuvan International Airport, NTB has informed that a total of 16,960 tourists arrived into Nepal in February 2003 by air. Though this is only 1% higher than the arrival figure of the same month last year, the arrival figure of Indian tourists registered an impressive 44% growth over the same period.

About 80% of the foreign tourists enter Nepal by air. The third country arrival was impacted by the trend for international travelers to holiday closer to home for shorter periods, stated NTB.

There was mixed performance from key tourism markets with increases in arrivals from Japan (up 9 per cent), China (up 7 per cent), Italy (up 2 per cent), Spain (up 20 per cent) and Austria (up by 129%) during the month, while visitor numbers from the US (down 39 per cent), UK (down 30 per cent), Germany (down 6 per cent) and Australia (down 25%) all declined. The French market also declined by 7% and Belgian by 44%. The Benelux market along with Swedish and Canadian also remained negative for the month.

Tourist Arrival

Source: Nepal Tourism Board

MOF Downgrades Growth Forecast

Ministry of Finance (MOF) has revised the estimated growth rate in the GDP (the total value of goods and services produced in the country within a year) this fiscal year to 2.5% after reviewing the performance of the economy during the first six months of the current fiscal year that started in mid-July 2002. Earlier, while making public the national budget estimates for the current fiscal year in mid-July 2002, the Ministry had expected the growth rate to be 4.3%.

In the previous fiscal year (ending on mid-July 2002) the GDP of the country had declined by 0.63%, according to the information revealed by the Central Bureau of Statistics in December 2002.

According to the MOF, the revised estimate for government expenditure this fiscal years is Rs. 8,725 million against the earlier estimate of Rs. 96,120 million. Almost all (i.e. Rs. 5,715 million) of the Rs. 5,744 million allocated earlier for the regular budget is likely to be spent, expect MOF. However, in development budget only Rs. 3,010 is likely to be spent as against the earlier estimate of Rs. 3,860 million.

By the end of the first six months of the current fiscal year, the government had spent Rs. 29,100 million out of which Rs. 24,590 million was regular expenditure while only Rs. 4,510 million was as development expenditure. An additional amount of nearly Rs. 2,500 million was also sanctioned for development expenditure though it was not spent within the period.

The ministry has made a revised projection of the revenue collection at Rs. 53,600 million (as against Rs. 57,150 million targeted earlier) and foreign assistance at Rs. 20,480 million (as against Rs. 26,970 targeted earlier).

Economic Forum

Economists and business people have formed the Ad Hoc Committee of what they call the “Economic Forum Nepal (EFON)” with an objective of providing recomme-ndations to the government and donors on various aspects of economy by undertaking policy analysis, studies, research and workshop.

The Ad Hoc Committee is headed by former Vice Chairman of National Planning Commission Prithvi Raj Ligal and it includes economist Madhukar SJB Rana (columnist of New Business Age), former FNCCI President Ananda Raj Mulmi, former senior bureaucrats Shambhu Saran Kayastha and Narendra Kumar Basnyat, sitting FNCCI Vice President Rajendra Khetan and former diplomat Keshav Raj Jha.

Bundle of ABC Controversy

The attempt by half a dozen Nepali insulated cable manufacturers to bid in the Eighth Power Project for the supply of ABC Cable Package (Tender No. ICB-05/2002) has failed miserably.

Despite their one year long plea to allow them to participate in the global bid, the state monopoly Nepal Electricity Authority (NEA) deliberately decided to keep them out of this project funded by the Asian Development Bank (ADB), as the manufacturers complain. The criteria set by the authorities for this as well as other packages make it virtually impossible to bid by a Nepali company. Thus it is made open to a privileged and ‘specialized’ few, it is alleged.

The industrialists suspect some malintention of the authorities also because as they have lumped accessories/connector (hardware) with cable (they are not even separate packages) in the bid invitation. This makes it easy for particular suppliers (traders). Instead, if the goods are received through more open and direct competition between manufacturers of the two separate commodities, it would be cheaper for NEA, they point out.

“There are more chances of maneuvering in prices by traders than manufacturers. Besides, the more middlemen you have, the higher the cost”, says one cable manufacturer.

When contacted, the authorities point out that the conditions for the tender were set by ADB and they were helpless about it. But the qualification criteria of similar ADB assisted Bangladesh Rural Electrification Board West Zone Power System Development Project Procurement Tender Bid Package No. 02(15- PBS-11) of 2000 AD do not contain such clauses that exclude the domestic companies from the bidding process.

The cable manufacturers, in their desperation, even came out with official press releases as early as October 4 last year, to put forward their case publicly. But it all went unheeded by all concerned, say the entrepreneurs.

The crux of the issue, according to the industries, is this: The ABC Cable sought to be procured in quantity this time is just another kind of the 200 or so low voltage cables that Nepali manufacturers have been making for the last 20 years. Cross-linking polyethylene used in the ABC is just another kind of insulation like PVC or rubber. Because the country has started using ABC recently, the industries do not have a huge supply record. A huge supply record particularly of ABC was deliberately set by project officials at the instance of commission agents to keep other industrial units out, the Nepali manufacturers claim. It is also pointed that because the prices to be quoted by the Nepali manufacturers are going to be competitive the officials wanted to keep them out. Nepali manufacturers have a benefit in that their financial bid should be acceptable as per the rule even when it is 15% more expensive than what is quoted by a foreigner.

To exclude the Nepalis from the bidding, the tender document has specified that the bidder must have the experience of supplying 6600 Km of ABC cable and ‘… nos of hardware’. This is in addition to the generally used term ‘goods similar to those included in the contract’ in experience criteria. And the Nepali manufacturers say this is basically to suit particular suppliers. No single manufacturer in the world makes both ABC cable and hardware, they say.

Business Connect Launched

Small Industrial Promotion Programme (SIP-P) has started a new service called "Business Connect" which is to connect the users and suppliers of business services such as market research, training, accounting, auditing and legal services.

SIP-P is a project implemented by Swisscontact on behalf of the Swiss Agency for Development and Cooperation (SDC).

According to SIP-P, Business Connect will organize talk shows and workshop meets between buyers and seller and generate referrals and extended linkages. It will list the service providers and buyers for free and facilitate exchange of information between them.

Business Connect is also supporting a "Services Pavilion" in the forthcoming Himalayan Expo 2003, according to SIP-P.

Chamber Activities

#   Acting President of FNCCI Binod Bahadur Shrestha attended the regional forum on monitoring of international labour standards in Colombo, Sri Lanka early March.

#   FNCCI organized an interaction on conflict management early March and came up with a 8-point conclusion to help resolve the ongoing conflict in the country. The major points of the conclusions include holding interactions by district chambers in the respective district and providing economic sector proposals to the negotiation teams, and to speed up economic activities so as to provide employment to those affected by the seven-year conflict.

#   The Chamber of Commerce and Industry, Sunsari, has been bogged down in an internal dispute over the  chamber amended that the local administration (which is the designated authority as the registrar of the NGOs in the district) has registered. But one faction of the chamber members say, the so-called amended statute is approved neither by the executive committee nor by the general meeting of the chamber members. According to the latest report, the chamber has expelled Shrestha from its membership, but another report says, he is still holding on to his chair.

#   A delegation of FNCCI led by its Vice President Suraj Vaidya visited Bhutan in mid-March during which it signed a cooperation agreement with FNCCI’s Bhutanese counterpart Bhutan Chamber of Commerce and Industry (BCCI). The agreement also provides for setting up a joint Economic Committee, among others.

#   FNCCI organized an interaction with Maoist leader Krishna Bahadur Mahara about the economic agenda for the forthcoming talks between the government and the Maoists.

#   Surkhet Chamber of Commerce and Industry is taking over the responsibility of managing the famous lake in Surkhet called Bulbule Tal.

#   Nepal-Britain Chamber of Commerce and Industry (NBCCI) organized an interaction with the Chambers of Commerce and Industry of Narayangarh and Ratnanagar and various local authorities of Narayangarh early March. Similar program is to be organized at Morang in the near future, according to NBCCI President R.K. Khetan.

#   The Western regional industry-trade fair organized by FNCCI in cooperation with Pokhara Chamber of Commerce and Industry concluded on March 15. Originally scheduled for only five days (March 10-14), the fair had to be extended by one more day due to overwhelming participation, say organizers. According to them, nearly 140,000 visitors turned up at the fair during the six days. There were 241 stalls in the fair.

Forthcoming Events

#   7th Nepal Education & Book Fair 2003, May 2-8, 2003, at Bhrikuti Mandap, being organized by Global Exposition & Management Services Pvt. Ltd.

#   Nepal Interior and Lifestyle Expo 2003, April 18-20, 2003, at Birendra International Convention Center, Kathmandu, being organized by Nepal Interiors and Lifestyle Magazine.

#   The 30th Executive Council Meeting of the Federation of Asia-Pacific Air Cargo Association being held in Kathmandu under the auspices of Nepal Freight Forwarders Association during June 6-9, 2003.

# The 50th AGM of Nepal Chamber of Commerce on April 2-3, 2003, at Hotel Hyatt Regency, Kathmandu.

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