Nepal To Have A Media Village

-By Our Correspondent

Prime Minister Girija Prasad Koirala laid a foundation stone of a first-ever Media Village near the Tribhuvan International Airport on the occasion of the International Press Freedom Day.

The well-facilitated center will be a pivotal point for acquiring information for the journalists. It will also be a playground for them.

Speaking at the inaugural function, Prime Minister Girija Prasad Koirala said that the government is always committed to support.

Koirala also said that he had personally approached the Pashupati Area Development Committee to acquire the land for the development of the Media Village. He expressed the hope that the media sector will always remain a watch dog to lead the society to a right direction.

The area of the media village is stretched to 12 ropanis of land. This year one building for the Department of Information will be constructed and in the coming years all the other information related bodies like Nepal Press Institute, Federation of Nepalese Journalists, training centres will be established.

Minister for Information and Communication Jaya Prakash Prasad Gupta lauded the role played by Premier Koirala for providing the land to develop the Media Village.

Bhaktapur Shows Way To Conservation

-By BMD

When, in 1994, Bhaktapur municipality decided to charge Rs. 50 as tourist service fee from every tourist visiting the town, it received a lot of criticism from different quarters. There were also doubts expressed that tourists would stop going there. But that did not happen.

The decision proved to be a farsighted one for generating funds for conserving monuments, shrines and other heritage sites.

Two years later, the municipality revised the fee making it US$ 5 (or Rs. 300). Still the number of tourists visiting the city did not diminish because of the entrance fee.

Today the municipality earns about Rs.60 million a year from the fee and importantly, the money is spent on conserving the cultural and heritage sites of the municipality.

The city has 172 temples, 256 rest houses, 77 stone waterspouts, 152 wells, 36 ponds, 37 sattals and 19 maths. The dances and festivals are also equally important from the point of view of culture and heritage.

Prem Suwal, Mayor of Bhaktapur Municipality proudly says, "Since the municipality, with the cooperation of the local residents, has taken initiative to conserve the heritage and clean up the city, the number of visiting tourists has been growing by 15 per cent each year."

Around 200,000 tourists visit the historic and cultural city every year and as many as 1200 have been recorded as visiting Bhaktapur in a day during the tourist season.

"With the number of tourists going up significantly, the municipality’s income has also been increasing each year," says Suwal.

Suwal also says that the municipality has been spending the money generated from tourists on heritage conservation, tourist facilities, and clean-up campaigns.

"But we have not been able to use all the money generated from tourists for keeping the city clean and heritage conservation as we have to spend it on other activities."

Nonetheless, the city area of the Bhaktapur Municipality is cleaner. However, the problem of drainage and drinking water is still there.

Suwal complaints that the municipality has not been given the responsibility of maintaining the sewerage system and regulating the drinking water project.

Once the sewerage system is fixed and maintained and drinking water is available in the city, it will be more attractive to the tourists.

The holding of an international conference on "Culture, Heritage Management and Tourism" recently is a proof of Bhaktapur's success in conserving its heritage. Suwal says it has also become a guideline for the Municipality and the local residents to preserve its age-old culture, conserve heritage and promote tourism.

"We have learnt a lot from the conference and the activities being carried out by the municipality were also commended by foreign participants," he says.

But Bhaktapur still lacks good hotels and restaurants. So, it has only become a place for guided tour. During the day, tourists visit the artistic city but they are bound to return to either Kathmandu or go to Nagarkot or Dhulikhel to spend the night.

Krishna Prasad Tamrakar, President of the Bhaktapur Chamber of Commerce and Industry, realizes that Bhaktapur has been unable to benefit from the tourists due to the lack of quality hotels.

"Now we are holding talks with different investors to establish quality hotels in Bhaktapur so as to develop tourism business," Tamrakar says.

However, the number of small hotels and lodges are found increasing fast in the city. Until last year, there were about 75 hotel beds in Bhaktapur but this year the number has reached well over 150 hotel beds.

"If we are able to give continuity to the task of heritage conservation, clean-up campaigns and attract potential investors in hotel industry, the city will be an alluring tourist destination," Tamrakar says.

Lauda Air Replaces Austrian Airlines

-By Our Correspondent

Lauda Air of Austria has started its flights to Nepal from May 4 in place of its sister airline, the Austrian Airlines, with a wide-bodied Boeing 767. There are three airlines under the umbrella of Austrian Airlines— Austrian Airlines, Lauda Air and Tyrolian Air.

The pressing in the service of the 258-seater aircraft, instead of the earlier 213-seater aircraft, indicate the prospect of increasing number of passengers coming from Vienna, the Austrian capital.

The airline also has a capacity to carry about 12 tons of cargo, in comparison to the 6 tons of the Austrian Airlines. The airline will operate one flight a week from May to September which will be increased to three in the months of October, November, March and April.

Bharat Basnet, Managing Director of The Explore Nepal Group of Companies which is the general sales agent (GSA) of Lauda Air and Austrian Airlines in Nepal, says that the operation of Lauda Air will give a further boost to Nepal’s tourism since the wide-body plane can carry more passengers and cargo.

"The bringing in of the bigger plane also indicate that the airline has seen a good business prospect in Nepal," Basnet says.

He says that the operation of Lauda Air’s will help bring in more tourists from Europe because it is considered a reputed airline in the world.

It could also help Nepal’s export to Europe because of its big cargo capacity, says Basnet.

Recently, Lauda Air also became a member of the Star Alliance which has a worldwide networking.

It will take about seven hours and twenty minutes to arrive in Kathmandu but the return flight will be a bit longer because the aircraft will make stoppage in Delhi for refueling, and the fare is US$ 995.

Lauda’s predecessor, the Austrian Airlines had started coming to Kathmandu in September 1998. It was the first airline to link Kathmandu with the Eastern European hub destination— Vienna.

"In the beginning, the Austrian Airlines was thinking of operating flights only during the tourist season.

But with the help of all the travel trade people, we were able to operate it throughout the year," Basnet says.

Basnet adds that as the Lauda Air is well equipped, it can easily operate four or five flights a week if there are passengers.

Apart from Laura Air, there are only two other airlines — Royal Nepal Airlines Corporation (RNAC) and Transavia — which connect Nepal with Europe.

RNAC To Lease B&B Plane

-By Our Correspondent

The Royal Nepal Airlinees Corporation (RNAC) has decided in favour of the Babcock and Brown to lease a plane.

The lease agreement will be of 18 months and by then the RNAC expects to have its own plane lease-purchased fromt he manufacturer, Boeing.

The Babcock and Brown, an Irish Company, had offered the plane, Boeing 767 300 ER, at a rate of US $ 3576 per flying hour. Its nearest competitor, Annset of Australia had bid US$ 4100.

With the decision the almost three month-long episode of leasing process has come to an end. The decision by the RNAC management is also being taken as appropriate. The leased plane will come into service after the extended lease of the China Southwest Airlines, expires in about two months time. The wide-bodied plane will be used for long-range flights.

Radisson's Olive Garden With New Italian Menu

-By Our Correspondent

With the re-visit of Andrew Blundy, a visiting Italian-trained chef, the Radisson Hotel introduced new Italian menu at its Olive Garden from last week.

More importantly, the ingredients needed for conjuring the dishes the very local organic ingredients have been used, according to Blundy.

"Only if local productions do not meet our standard we use premium quality imported food items to prepare dishes for our valued guests," he informed the selected journalists who were invited to have a taste of new menu and comment over.

The eateries served in the Olive Garden are prepared in ingredient-based technique.

He further informed that the Ingredients are handled with exacting international hygiene standards.

A visitor can experience a very different but believing taste and new atmosphere in the Garden with the course prepared by Blundy, a product of Riverside Restaurant, the top eatery in England, only if he has thousand box in his pocket.

Forthcoming Budget: Issues and Priorities

-By Dr. Bhuban B. Bajracharya,

This forthcoming budget is coming out at a critical juncture. The liberal economic policies vigorously promoted after the political change ten years ago are still lame duck due to inadequacies and lack of clarity at the operational level and instability in the political situation. The Governance and implementation capability are increasingly being questioned and sincerity of purpose on the part of the government action is in jeopardy. The age old observation that policies are good but implementation is bad still is still deeply rooted in our psyche. The realization has not made us any wiser.

The recent government statement emphasising on good governance and the operational aspects and also in the second phase of economic reform announced in the wake of Nepal Development Forum meeting in Paris are welcome measures, and indicate a change in efforts. These changes should be reflected in the forthcoming budget.

Issues and priorities

The preponderance of poverty is the major concern of our development efforts. It has been acknowledged that almost half of the population live below the poverty line. The Ninth Plan has also recognized it and also has taken it as a principal agenda. It has targeted to bring down the incidence of poverty to 32 per cent by the end of the Plan period. It is to be achieved through (i) broad-based growth, (ii) development of infrastructures and social sectors primarily social priority sectors, and (iii) targeted intervention programmes. The plan's aim has been evaluated variously as ambitious in view of our failures and weaknesses, and realistic and achievable in view of our successes and the reform measures we are aiming at.

The broad-based growth is expected to be based on agriculture development, tourism development, enabling policy environment for vibrant private sector participation and foreign direct investment etc. Private sector participation is also encouraged in the development of infrastructures and social sectors, and target based programmes are designed to benefit the beneficiaries directly at the household level through different intervention programmes such as micro-credit programmes etc.

The government's efforts in social priority sectors and target based programmes are expected to benefit the very poor people who are not in a position to move along with the mainstream of development process by themselves.

The plan has made a target of achieving an average six per cent growth in GDP factor cost. The targeted growth will be even higher at the producers’ price. Since initial years have been bad in terms of economic performance, a higher level of growth is needed if we are to achieve the Ninth Plan target. Though achieving an average of more than six per cent growth in GDP is difficult, it is imperative to aim for that to reduce poverty. For this to happen, it is essential to, ·Promote agriculture development,·Invest more on social sectors and infrastructures, and ·Enhance investment, both domestic and FDI and create enabling environment for that.

From the budgetary perspective, three important aspects from the above points of view are:

A. Revenue Mobilisation

B. Good Governance and Enabling Environment for Private Sector, and

C. Restructuring Public Expenditure.

A. Revenue Generation as per cent of the GDP (at 10 to 12 per cent) is minimal in Nepal. It is probably the lowest in South Asia. The growth rate of revenue is not only less than that of the public expenditures budget also showed a downward trend in the recent past. During 1996-98 period, public expenditure increased at the rate of 12.9 per cent per annum while revenue increased at an annual rate of 10.3 per cent only. The growing dependence on foreign assistance and difficulty in controlling fiscal deficit is a stark reminder of poor resources mobilisation at the domestic front. Poor resource mobilisation has given very limited flexibility in allocating resources for new ventures, causing problem for coordination of foreign assistance and other associated institutional problems, and also limited the mobilisation of foreign assistance and failing to extend adequate counterpart fund.

With regards to revenue mobilisation and taxation, following efforts are to be made:

Reform in tax administration: Tax administration needs to be reformed to make it more transparent and simple. The tax administration is being criticised for failing to expand tax base and increase tax rates.

Implementation of VAT: Reforms in tax administration are to be made supportive to the effective implementation of the Value Added Tax. Nepal has, now, relied totally upon VAT for its domestic resources mobilisation and hence the development process will be at stake if VAT is not implemented effectively.

Exemption limits of different taxes: Exemption limit for house and property tax in terms of monetary value is not realistic for Nepal and need to be changed to physical one. Since such asset formation in our context largely takes place out of stock rather than income flow, it is suggested to set the limit in physical terms. It will be simpler in the sense that area specific valuation does not reflect the location specific commercial values of the real estates. In case of income tax also, the first lower slab has to be taxed at the low rate. The present 15 per cent tax rate is high since this tax bracket covers mainly the fixed income holders.

Agriculture tax: It is high time that we seriously think about raising more resources from the agriculture sector. As an immediate measure, we can think of reclassifying the land on the basis of their uses – subsistence agriculture, commercial agriculture, industrial use, homestead etc. By playing with the land ceiling particularly for subsistence agriculture and with the tax rates for the other uses, land tax can be progressively employed for productive purposes. Micro credit facilities can be extended to landless and marginal farmers if they want to procure land.

B. Good governance and Enabling Policy Environment for Private Sector – Civil Service Reform should be at the top of the agenda for improving implementation capability.

Decentralisation has taken a fairly good shape. Empowering local government bodies to mobilize the resources and the central grant have given them some resources for development activities. To support this process further, a Village Development Fund need to be established. Such fund will extend loans to the local bodies on the basis of technical proposals and repayment schedule.

Civil service reforms are required to make (i) the contract and tendering process transparent and less vulnerable to corruption, (ii) bureaucracy more efficient by evolving a merit-based system, and reducing political interventions, and (iii) the CIAA more effective.

In case of FDI, it is clear that only facilities and congenial policies are not enough. Steps should also be taken in arbitration and legal perspectives.

Nepal is facing a typical situation of high liquidity with financial institutions, low investment level, and high fiscal deficit and/or suppressed public spending in the public sector. High lending rates, inadequate coordination between different government agencies, simultaneous existence of formal and informal sectors, etc. have been hindering investment. Lending rates and spread between borrowing and lending rates are still high except for two commercial banks. Loan recovery has to be given top priority to save them from further eroding their capital base

C. Restructuring Public Expenditure – Public spending restructuring need to be assessed from the potentiality of private sector involvement and the necessity of higher level of allocation infrastructures and social priority sectors.

Increase allocation in the social priority sector: Nepal is committed to 20/20 Compact under which it has to gradually increase the budgetary allocation to 20 per cent of the total government spending on social priority sectors. In 1998/99, only about 13 per cent of total government spending were spent in social priority sectors.

In all these social priority sectors, government needs to widen its coverage and enhance the quality of services. In 1998/99, the government spending on these social priority sectors account for less than Rs. 400 per person per annum. With this amount, quality service cannot be expected.

To promote private sector participation in priority social sectors, tax deductions can be given to vocational and technical institutions established in small towns and rural market centres.

Emphasis on agriculture sector: Since, primary reliance for broad-based growth is on the agriculture sector, infrastructure development should undoubtedly be supportive to agriculture development.

The APP (Agriculture Perspective Plan) thrusts for infrastructure development in the forms of rural roads, small hill irrigation, and pump irrigation in the Terai. But these have not moved at a desired pace. The other critical input is the credit. Recently credit flow to the rural areas has seen the changes in the institutional forms. Commercial banks are gradually pulling out from the rural areas. The Small Farmers Development Bank, which extends credit facilities to poor farmers in the rural areas has shown signs of fatigue.

The decline in credit flow to rural areas due to these phenomenon is partially offset by the establishment of Grameen Banks, micro-credit operations, and the mobilisation of NGOs and CBOs. To strengthening the process of mobilisation of financial resources through NGOs and CBOs, a more systematic and organised approach is required.

(The author is associated with the CEDA of Tribhuvan University, and the article is based on the theme paper submitted at an interaction programme on forthcoming budget organised by the Management Association of Nepal)