Business News

Nepal Rastra Bank (NRB), the central bank, has lowered Cash Reserve Ratio (CRR) (the amount that has to be compulsorily deposited out of the total deposit made by a commercial bank with the NRB) by one percentage point on an average, and bank rates and refinancing rates by between one and two percentage points, with, according to NRB, a view to enhance investment and economic activities by reducing cost of capital.

The CRR for current account in Nepalese currency has been reduced from 8 to 7 percent, saving account in Nepalese currency also from 8 to 7 percent and fixed account from 6 to 4.5 percent with effect from December 20, 2001.

However, no change has been made in cash-in-vault provision for the commercial banks, which remains at three percent.

Similarly, refinancing rate for foreign currency for export purpose has been brought down to 2 percent from 4, and the rate of refinancing loan to sick industries has been scaled down from 4.5 percent to 3.

The rate of refinancing through rural development banks for export in Nepalese currency has also been lowered by one percent from 5.5 to 4.5 percent, and the rate of all other refinancing has been cut by one percent from 6.5 to 5.5 percent.

The measures have been announced at a time when the economy is passing through a slowdown. The announcement by the central bank of flexible monetary policy is expected to release about 2 billion rupees into the market, as the excess liquidity has come down to Rs 2.8 billion form Rs 5 billion last year.

2001 Unfavourable for Nepal, Good for Relationship: ADB

Asian Development Bank (ADB), one of the principle donors to Nepal, is to consider more effective support to the country’s rural development, and is willing to continue its assistance as Nepal has a sound loan repayment record.

"In our recent meeting, the Prime Minister had indicated a request for additional support but there were no specifications. However, as of yet, there is no outstanding arrears and Nepal’s loan payment is also fully satisfactory. ADB will try to continue support consistent with the Bank’s policy," said Dr. Richard Vokes, Resident Representative of ADB Nepal Resident Mission, speaking at a year-end press meet.

Premier Deuba had met a group of donors to brief them about the security situation of the country and the official economic programmes adopted by the government after it declared the state of emergency on November 26.

Even as 2001 has been an extremely difficult year for Nepal it has been a positive one for ADB operations in the country, Vokes said. Adding that in terms of relationship between Nepal and ADB, it has been good in the sense that a Poverty Reduction Partnership Agreement was signed between Nepal and ADB in October during ADB vice – president My Oungto Shih’s visit to Nepal.

The bank this year has approved US$ 95.6 million loan for Teacher Education Project, Governance Reform and Road Network Development Project. ADB, apart from the loan, also approved US$ 4 million for technical assistance to the country. Ever since it began operating in the country in 1968, ADB has so far provided Nepal loan worth US$ 1.9 billion while its technical assistance to date amounts to US$ 200 million. The bank, in the last 33 years, has been involved in 162 projects in the country.

Dr. Vokes also suggested that the government provide matching fund to donor-aided development projects, by reprioritizing development project considering the soaring security expenditure.

Talking about the much hyped US$ 464 million Melanchi Water Supply Project (MWSP), Vokes said that the US$ 120 million loan sanctioned by ADB for the MWSP – which was approved last year and became effective on Nov 28 – will allow the government to bring in the project management consultants, formally start social activities in Melanchi valley, and begin the detailed preparatory work on tunnel, etc.

Apart from providing loan to Tribhuvan International Airport Improvement Project, ADB has sanctioned a loan of US$ 151.1 million to Hyatt Regency Hotel, a private enterprise.

Govt. Simplifies Visa Fees

The government has opened up restricted areas in at least six districts for group tourists, Minister for Information and Communications Jaya Prakash Gupta announced recently.

As part of the government’s initiatives to attract tourists to the country, places in Taplejung and Manang districts that have long been off-limits for tourists will be opened up for groups.

Minister Gupta said that the government has also decided to issue only two types of visas – single entry and multiple entry – to replace the three types of visas currently being issued by the Immigration Department.

Single entry visas would cost US$ 30 while multiple entry visas would cost US$ 50. Minister Gupta also informed that between Jan 1 and July 15, 2002, the government has waived fees charged for one day visits.

Also the government will stop charging the huge fees for filming documents in the country and a one-window policy will be put in place where the Ministry of Information and Communications will have the sole authority to issue permits for such projects.

The filming fees on Upper Dolpa and Upper Mustang has also been slashed from US$ 40,000 to US$ 5,000. The fees on Indian registered buses and cars entering Nepal through the land routes is also being reviewed, informs the Finance Ministry.

The government has also announced relief package for hotels under which they would be able to reschedule their payment of electricity bills by one year and bills would have to be paid only in three months.

In view of the security for industries, an Industry Security Agency will also be formed which will have committees in the central, regional and district levels, HMG has further announced.

Nepal in Time’s Hot Spot

The December issue of Time magazine projects the hill station of Nagarkot ‘as a great weekend holiday with great views and pleasant weather’, the Royal Chitwan National Park ‘as one of Asia’s best wildlife areas’ and the Kathmandu valley ‘as a rewarding travel destination for those seeking spiritual lift.’

The Travel Watch section of Time has contributed two full pages to Nepal, and Nagarkot has been placed in the much coveted ‘hot spot’ of the same section.

The magazine writes "In Nagarkot you can see the majesty of the mountains without suffering the ill effects of a trek. Besides, it’s a great weekend getaway in the foot hills, above the clouds but not quite into thin air."

Nepal’s image as a tourist destination has brightened over the years, and, in addition, the modus operandi of accessing the remotest corners of the kingdom has been gradually simplified.

The Time magazine also quotes, "Nepalese traditions are richer than the ratified air of the surrounding peaks."

FDI Sees Decline

Foreign Direct Investment (FDI) coming into the country has dipped by 15.53 percent during the first four months of the current fiscal year even as the number of foreign investment projects has gone down during the period in comparison to the same period last year, says the Foreign Investment Cell at the Department of Industry (DoI).

According to the Cell, it has registered 30 foreign investment projects during the period, among which one has already been licensed.

The total cost of these projects has been put at Rs. 1822.41 million and the FDI coming into these projects has been valued at Rs. 751.03 million.

However, the DoI reveals that it had registered 39 foreign investment projects during the same period last year, with total project cost running into some Rs. 3344.15 million, out of which about Rs. 889.21 million had been FDI.

The department relates that among the units registered under foreign investment, 14 fall into manufacturing sector, 8 services sector, 6 tourism sector, one construction and one into energy sector.

The country topping the list of investors is India, with investment of Rs. 564.09 million in nine projects registered during the first four months, according to DoI. The total costs of these projects have been put at Rs. 1506.48 million. Meanwhile, the investment coming from the USA ran into Rs. 61.09 million from four projects during the period, adds DoI.

Last year, a total of 99 projects were registered even as the FDI during the period had run into Rs. 3121.92 million, reveals the department.

As of now, the country has 721 FDI projects, total project cost of which has been put at Rs. 77403.35 million. From this amount, some Rs. 20360.51 million has been put as foreign direct investment.

Among the total foreign investment coming into the country, India tops the list both in terms of investment amount and the number of projects. In fact, there are 249 foreign investment projects registered under Indian investment. Total cost of these projects run into Rs. 281221.87 million and it has been said that Rs. 7271.93 million worth of investment is accounted for by India.

Meanwhile, the US has 74 FDI projects, total project cost of which runs into Rs. 11666.47 million. Among this, foreign direct investment has been put at Rs. 3488.88 million, the DoI further reveals.

25 Companies Likely to be Delisted

Twenty-five companies presently listed with the Nepal Stock Exchange (Nepse) are likely to be delisted after these companies failed to report to the secondary market authorities despite the expiry of a 35-day notice issued to them.

The stock exchange had summoned the twenty-five companies to seek clarification over their failure to comply with the secondary market regulations. Nepse had even published the 35-day notice asking the companies to report to the stock exchange.

The companies have been accused of failing it is learned, had failed to either submit their financial statements to the Nepse, or to pay the registration fees, or both. Furthermore, shares of many of the companies are said to have remained untraded for years.

As per the current Stock Exchange Act, companies must be listed with Nepse to issue and transact shares on the Nepse floor. The delisting of the 25 companies in question is expected to affect over 12 thousand shareholders. A company not listed with the Nepse cannot openly trade its shares.

Nepse officials are, however, confident that the de-listing of the companies would have negligible impact on the overall share market. Since a majority of the companies, they relate, are small companies, their participation in share transaction is negligible. Most of these companies are learned to be from the manufacturing and processing group.

Of the total 37 such companies enlisted in the Nepse, shares of only 10 companies were traded last year.

The latest action of the Nepse also complements the budgetary announcement of the Finance Minister Dr Ram Sharan Mahat who pledged to remove those companies from the secondary market that fail to issue audited financial statement for two consecutive years.

Trolley Bus Service Collapses

The trolley bus services, the exclusive electronic vehicular service in Nepal operating from Suryabinayak of Bhaktapur to Tripureshwor, has been closed. With manpower of 11 permanent and 53 temporary staff, the services has been closed in line with the decision of HMG in November to dissolve the corporation with effect from December 16. The government, it is alleged, had abruptly closed the service, operating under the Nepal Transport Corporation (NTC), without taking any decision on the terms and conditions of the services of the employees.

The service had begun some 26 years back with 32 trolley buses and, of late, 12 of them were operational but the hydraulic pump of four were out of order while one could not be repaired owing to paucity of fund, it is learnt.

Moreover, the NTC employees claim that they have not received their monthly remuneration since the last six months and the sum deducted for their provident fund too has not been deposited.

Colgate Palmolive Restarts Operation

The Hetauda-based multinational company Colgate Palmolive that temporarily suspended its production a few weeks back has resumed normal operations.

The company had put a halt to its production activities citing security reasons after the declaration of emergency by the government on Nov.26. The closure, however, is believed to have been partly prompted by the confusion that subsequently arose over the renewal of the Nepal – India Trade Treaty of 1996 that allows preferential entry to Nepali products in Indian market.

Officials at the multinational company are quoted to have said that the decision has been made to resume all activities of the company in the light of increased industrial security.

The company was established with an investment of Rs 600 million and it presently employs around 120 people.

NB Bank is Profit

Nepal Bangladesh Bank Ltd. has realized a profit put at Rs. 198.7 million during the last fiscal year even as it has decided to issue 5 percent dividend to general shareholders and 2:1 bonus shares. The decision regarding the same was realized by the board meet of the bank held recently.

According to a communique issued by the bank, the bank has mobilized deposit valued at Rs. 8.6 billion while its loan investment has been put at Rs. 6.98 billion during the last fiscal year.

It may be recalled that the bank had made a profit of Rs. 139.5 million during the fiscal year 1999-2000. Furthermore it had distributed bonus shares at the rate of 1:1 during the period.

The paid up capital of the bank too has been increased to Rs. 561.6 million by the end of the last fiscal year, according to the communique. This has been done in accordance with the commercial banks directives issued by Nepal Rastra Bank whereby the commercial banks were asked to upgrade their paid-up capital to Rs. 500 million by the last fiscal year-end.

NTB’s New Promo Schemes

With an aim to create awareness and promote Nepal as a tourism destination globally, Nepal Tourism Board (NTB) has begun publicity campaigns in partnership with various national and international organizations.

The Board, formed three years ago as joint initiatives between the government and the private sector, at its third anniversary recently gave a formal beginning to its new venture. NTB signed two different Memorandum of Understandings (MoUs) with Kantipur Publications Pvt. Ltd. and World Wide Fund for nature conservation (WWF) in this regard.

Minister for Culture, Tourism and Civil Aviation, Bail Bahadur KC said that the government is committed to formulate programmes and policies conducive to the promotion of the tourism industry.

He said that the government has begun preparing a Master Plan for reviving the sliding tourism industry with the technical assistance of World Tourism Organisation and the government is contemplating to establish branch offices of NTB in all the five development regions of the country.

B’desh Trade Fair Held

Embassy of Bangladesh in Nepal and Export Promotion Board of Government of Bangladesh jointly organized a five-day long Bangladesh Single Country Trade Exhibition from January 2 to 6, 2002 in the capital.

Participated in by some 20 exhibitors, the exhibition had on display items like cotton and silk sarees, readymade garments, leather goods, household goods, medicines, jute products, milk products and carpets

The objective of the fair was to build neceessary infrastructure to expedite trade and economic relations between Nepal and Bangladesh, it is said.

-By Business Age Reporters

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