--------------Analysis--------------------------
PRABHAKAR GHIMIRE
That fair is widely been credited for the boom of the sector in Chitwan, which now commands more than 50 percent of the total poultry business across the country. The fair was a forum for both poultry entrepreneurs to explore new avenues and the development of this sector in the district. More than Rs 10 billion has already been invested in the sector, annual turnover has reached Rs 20 billion and it also represents a significant chunk of employment in the district. The district tops production of vegetables, honey, fish, dairy products and is now emerging as a leading banana growing district. The secret behind farm commercialization there is the Chitwan Festival and the Agriculture Festival regularly organized on alternating years over the last two decades. Both festivals have been proved to be instrumental in informing about modern technology and for sharing of ideas between farmers and experts. News reports of different industrial and trade fairs being organized pour in on a regular basis from correspondents across the country. However, the impact has not been as effective as the 1996 poultry expo in Chitwan as such fairs have not focused on increasing quality and supply of local goods in line with local and global demands. Though such festivals, organized jointly by the government, local bodies and business associations, have served as a platform for showcasing local produce, they have not been able to promote local products at the local, cross-country and international levels. In the absence of effective promotional activities on production to marketing of goods, such fairs are still forums for buying and selling of goods. At a time when the country is suffering from a daily trade deficit of Rs 1.5 billion, such fairs could play significant roles in expanding the local and international markets for locally-produced goods. The government introduced the Nepal Trade Integration Strategy (NTIS) -- a policy roadmap for promoting 19 chosen domestic products, 12 goods and seven services -- in 2010 in an effort to boost domestic supplies and enhance export capacity. Under the NTIS list of goods, large cardamom, ginger, honey, lentil, tea, instant noodles and medicinal herbs/essential oils are agro-based goods while handmade paper, silver jewelries, iron and steel products, pashmina products and woolen products are industrial goods. Similarly, tourism, labor services, IT/BPO, health, education, engineering and hydro-electricity are services selected under the NTIS. Ever year the winter season sees dozens of industrial and trade fairs aimed at introducing and further promoting local goods and services. At a recent program organized by the Confederation of Nepalese Industries (CNI) in the capital, former Finance Minister Surendra Pandey drew an anecdote which summed up the reality of how weak the supply capacity of Nepali producers was. “One trader from the UAE tried to import Nepali vegetables a few months back. He could not get sufficient quantity of vegetables from Nepali market to fill the required load for an aircraft. We can´t even guarantee the quality at a par with export standards,” Pandey said. As Pandey said, Nepali exportable products are stuck with the twin problems of not being able to meet the required quality and quantity. In a similar example, a Japanese trader offered Nepali tea producers a deal to supply tea to Japan. Although the Nepali traders were delighted to get the lucrative offer, their excitement evaporated when found out that the quantity of tea demanded by the Japanese trading firm was more than Nepal can produce annually. China has offered duty-free access to around 8,000 products from the so-called Least Developed Countries (LDCs), including Nepal, and a huge number of Nepali goods have been getting similar access to India -- our largest trade partner. Nepali goods are also enjoying a higher demand from other overseas markets. But, the only problem is the problem in guaranteeing quality and ensuring adequate supply as demanded by the importers. Keeping in view the supply constraints of domestic goods, the government initiated support for the private sector in organizing regional trade fairs from this year. The government allocated Rs 2 million for each regional industrial trade fair, to be organized in collaboration with the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Such regional trade fairs have already organized in Surkhet and Butwal while two more are scheduled in the central and eastern regions outside the capital. Besides, an international trade fair is also on the cards for Kathmandu this year. “We started supporting the private sector to organize such regional trade fairs which could be instrumental in discussing different trade and industrial issues amongst the business people, the media and the central-level policymakers,” Toya Narayan Gyawali, the joint-secretary at the Ministry of Commerce and Supplies told Republica on Thursday. Gyawali, who is also overseeing the implementation of NTIS, said such expos will provide opportunities not only for promoting goods, but also introduce new technologies being used in other countries. “Trade fairs should not only be a venue for promoting goods, but also serve as a forum to exchange ideas and explore new business opportunities through open discussions between government officials and local producers,” Gyawali added. |
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Thursday, January 30, 2014
Mushrooming trade fairs vs supply constraints
Wednesday, January 29, 2014
Finance Minister is liberal with state largesse
PRABHAKAR GHIMIRE
Contrary to this crucial function, Minister for Finance Shankar Prasad Koirala has doled out state funds haphazardly for non-budgetary programs to please particular individuals and organizations. The MoF funds non-budgetary programs under the ´miscellaneous´ head. With Koirala providing opportunities for frequent foreign trips by individuals who have no need for such junkets and his uncontrolled and imprudent distribution of funds to different organizations and individuals, huge costs have been incurred by the state.   Finance Minister Koirala Koirala has been arranging frequent foreign trips to his close aides--press advisor Sanket Koirala and personal secretary Sumin Dhakal--purportedly for participating in international programs. In a bid to maintain austerity, then finance secretary Rameshwor Khanal had taken initiatives to restrict foreign trips by the personal assistants of ministers. As a consequence, ministers generally do not take their personal assistants with them on foreign trips. “The finance minister seems not to be serious at all about his responsibility for controlling unnecessary spending. Instead, he is himself misusing state funds by leading jumbo teams to different countries, including his personal assistants,” said a senior official at MoF. Whether it is participating at the 9th World Trade Organization (WTO) Ministerial Conference held in Bali, Indonesia in December or visiting the USA to take part in the annual general meeting of the World Bank and IMF in October, he has continued to take his close associates along with him. The government had to foot a bill of Rs 2.9 million for an 18-member delegation to the Bali conference. The latest example of how Minister Koirala squanders state funds is his participation -- with aides Koirala and Dhakal-- in the 5th Meeting of SAARC Commerce Ministers held early this month in New Delhi. Koirala, who is liberal with foreign trips, is found to be equally liberal in doling out money to different individuals, organizations or groups. Due to pressure from Koirala, MoF officials have been compelled to issue funds meant for non-budgetary programs as financial support to different recipients, ranging from non-government organizations to various groups and individuals. Recently, Koirala directed MoF officials to provide Rs 3.3 million or a vehicle for a social organization run by Nepali Congress leader Uma Adhikari. The ministry also provided a vehicle to the National Cooperative Federation of Nepal for free. MoF recently decided to extend financial support of Rs 500,000 to a Tharu organization for holding a Maghi festival function in Kathmandu. His attempt to provide Rs 100,000 for a Magar student organization could not succeed due to resistance from MoF officials. The ministry also issued an additional Rs 5 million rupees for the treatment of Justice Ram Kumar Prasad Sah, who is undergoing treatment for a brain tumor at his residence in Kathmandu, without properly verifying the necessary documents. Sah has already received Rs 2.9 million to pay his medical bills. “Under pressure from Koirala, the ministry issued the huge amount to Sah without properly studying the medical documents,” added the source. Koirala, who is spiritually inclined, has instructed ministry officials to provide funds to various temples and shrines. Koirala pledged to provide financial assistance to Maulakalika temple at Gaidakot, Pathibhara temple in Taplejung and Binda Basini temple in Pokhara. He already come under controversy when media disclosed that he had provided Rs 30 million for an ashram run by Kamal Nayanacharya. Recently, MoF provide Rs 1.5 million to the GP Foundation at the request of Nepali Congress leader Sujata Koirala for organizing an international event. The state has been squandering tax-payer money on meaningless programs because of Minister Koirala´s imprudence, it is stated. His policy-level decisions have also placed an excessive financial burden on the state. In giving his consent to a proposal to add another 9,200 police personnel of different ranks, Koirala has dented the state coffers for decades to come. “Despite resistance from MoF officials, Koirala gave his consent to the Home Ministry to take the proposal to the cabinet to recruit the additional 9,200 police personal. This is going to burden the state for salary and pensions for decades,” said a high-level source at the Office of Prime Minister and Council of Ministers (OPMCM). Koirala made another policy mistake in giving his consent to open five regional offices for the Commission for Investigation of Abuse of Authority (CIAA), the constitutional anti-graft body. “It is one of many decisions to add offices and staff to the police, the judicial service, district attorney offices and other civil service entities, which are going to be a long-term economic burden for the government,” said the source. |
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Tuesday, January 28, 2014
Gutkha, tobacco become potent revenue source
PRABHAKAR GHIMIRE
Total revenue, including excise duty, VAT and income tax, from chewing tobacco and gutkha shot up more than 12-fold to touch around one billion rupees during the first six months of the current fiscal year. The government had raised only around Rs 80 million in revenue from gutkha and chewing tobacco during the same period last year. Officials at the Inland Revenue Department (IRD) said excise duty alone raised up to Rs 800 million during the review period, significantly up compared to Rs 60 million reported raised during the same period last year. The government had collected Rs 120 million and Rs 200 million in revenue from the gutkha and chewing tobacco business during fiscal year 2011/12 and 2012/13 respectively. “It is a shining example of how we can boost revenue if we expand the revenue net to reach areas where widespread revenue leakage is reported. We are confident we can mobilize up to two billion rupees in revenue from chewing tobacco and gutkha if revenue collection continues is to go up at this pace until the end of the fiscal year,” Ram Mani Duwadi, deputy director general of IRD, told Republica on Monday. He said the potentiality of increasing revenue from this sector very high as still large chuck of transaction is not coming into the tax system.  | Following the budget announcement, IRD had strictly enforced the use of
excise duty stickers for gutkha and tobacco products. Before the budget
also, IRD had introduced excise duty stickers on a trial basis from
mid-April to mid-June. “We formally introduced excise duty stickers for those products after witnessing the positive impact on revenue during the trial period,” added Duwadi. Following reports of rampant leakage in revenue in gutkha and tobacco, the government consulted the producers and traders and introduced sticker use for transactions in those products. The government has been levying excise duty of Rs 160 per kg and Rs 240 per kg for plain tobacco and tobacco with jarda incredient respectively. Similarly, Rs 275 per kg in excise duty has been fixed for gutkha products. “We are surprised to find that one single business firm dealing with gutkha and tobacco has been paying over R 25 million per month as excise duty. We found many other firms contributing over Rs 10 million in excise duty,” added Duwadi. |
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Sunday, January 26, 2014
Proposal to reduce SAFTA sensitive list to 100
PRABHAKAR GHIMIRE
SAARC countries have put a total of 6,768 and 5,148 goods for Non-Least Developing Countries (NLDCs) and Least Developed Countries (LDCs), respectively, inside the SAARC region under the sensitive lists.  The sensitive lists include products on which huge customs tariffs are imposed by individual member countries so as to protect their domestic industries supplying similar products. Though South Asian Free Trade Area (SAFTA) agreement envisages facilitating intra-regional trade by reducing tariffs and non-tariffs barriers, member nations are still maintaining long lists of sensitive products with high customs duty. SAARC member countries have been showing reluctance to reduce the sensitive lists to protect domestic industries and put their customs revenue intact. The source said those four countries have also proposed to bring down the existing import duties to 0-5 percent by 2022 to ensure greater mobility of goods produced by member countries. “We are soon holding discussion with line ministries and other stakeholders, including the private sector, regarding the proposal of the four countries,” a senior official at the Ministry of Commerce and Supplies (MoCS) told Republica on Sunday. SAARC member countries had decided to reduce the number of goods in their sensitive lists by 20 percent in the second phase a couple of years ago. Of the eight member countries, Bhutan, India, the Maldives and Nepal have already provided the names of goods removed from the sensitive lists to the SAARC Secretariat. Afghanistan, Bangladesh, Pakistan and Sri Lanka are yet to provide the lists. Nepal, which has longest list of goods among SAARC countries, has put 998 and 1,036 goods originating from sensitive lists of LDCs and NLDCs respectively. Before the reduction, Nepal had 1,257 goods for LDCs and 1,295 goods for NLDCs under its sensitive lists. The Maldives has the shortest list with 154 goods included in sensitive list. Similarly, Afghanistan and Bhutan have 850 and 156 goods respectively while Pakistan has 936 goods under its sensitive lists for both LDCs and NLDCs. Bangladesh has 987 and 993 goods for LDCs and NLDCs, whereas India has 25 goods for LDCs and 614 for NLDCs under the sensitive lists. Similarly, Sri Lank has 845 and 906 goods for LDCs and NLDCs respectively. Three SAFTA meeting postponed Three crucial meetings of SAFTA scheduled to be held in Kathmandu in the second week of February have been postponed as per the request of Pakistan. The Special SAARC Meeting of Customs and Commerce Authorities on Verification Mechanism relating to Rules of Origin set to be held on February 10, the Third Meeting of Working Group on Reduction in the Sensitive Lists to be held on February 11-12 and the Eleventh Meeting of Experts Group on SAARC Agreement on Trade and Service (SATIS) was scheduled to be organized under the SAFTA by SAARC Secretariat in Kathmandu have been postponed. The SAARC Secretariat has sent notifications to concerned ministries, including the Ministry of Foreign Affairs and the Ministry of Commerce and Supplies (MoCS), a couple of days ago, stating that the meetings have been postponed due to forthcoming India Show at Lahore on February 14-16. The seventh meeting of the SAFTA Committee of Experts held in Islamabad on January 14-15 2012 had decided to establish an ad-hoc Working Group on Reduction in the Sensitive Lists under implementation of SAFTA. The first and second meetings of the working group were held in Kathmandu on 18 June 2012 and July 30, 2013. |
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Thursday, January 23, 2014
Waning hope of achieving budget targets
--------------Analysis------------------------------
PRABHAKAR GHIMIRE
Nepali business people, political parties and even economist had offered their appreciation to the government for a timely announcement of the annual budget after the process had been mired in hiccups in the previous five years. This had raised hopes for a better economic environment at a time when the country was reeling under the frequent disruptions in budget announcement for the past years. But, government officials are losing hope about achieving some crucial targets set in the budget. “Though we set out to attain 5.5 percent growth in the current fiscal year, it looks this is not possible. But we hope we can achieve 5 percent growth despite a disappointing progress in capital spending,” Finance Secretary Shanta Raj Subedi said at an event in Chitwan last week. In the last fiscal year too, the government had had to revise down the economic growth target to 3.6 percent from 5.1 percent announced in the budget due to low capital spending, resulting in slowing of economic activities in the country. In its ‘Marco-Economic Update 2013’, the Asian Development Bank had said a few months back that Nepal’s target of 5.5 percent growth in Gross Domestic Product (GDP) was ‘ambitious’ and limiting inflation within 8 percent was ‘conservative’. Naoyuki Shinohara, the deputy managing director of the International Monetary Fund (IMF), in his visit to Nepal in November last year also forecast that Nepal would be able to achieve around 4.5 percent growth this year. Despite the announcement of a full-fledged budget, the situation has looked no different from previous years which were marked with low budgetary spending. Though the government spent an overall 30 percent of the total budget, capital spending, which is crucial for pushing up economic growth, has been disappointing this year. During the first six months of the current fiscal year, capital expenditure stood at 13 percent of the total capital budget. Out of a total of Rs 85.09 billion allocated for capital expenditure, only Rs 11.50 billion was spent during the review period. However, regular expenditures reached to around Rs 130 billion out of a total of Rs 353.41 billon allocated under the heading for the fiscal year. “We succeeded in bringing out the annual budget on time but we could not end problems facing the country in implementing development projects on time,” added Subedi. Total commitments for assistance from development partners increased to over Rs 53 billion during the first six months of the current fiscal year, up from around Rs 15 billion recorded during the same period last year. But, slow progress in capital spending has hampered the utilization of development assistance extended by donors. In a clear reflection of growing concern among donors over Nepal’s ability to spend development aid, Australian ambassador Glen White expressed his dissatisfaction during a meeting with Finance Minister Shankar Koirala on Wednesday, stating that Nepal has not been able to spend the health assistance provided by Australia. The trend of slow progress in capital spending is not a new phenomenon in the country. Hosts of problems regarding land acquisition, relocation of squatters from project sites, frequent problems in collection river products used for infrastructure projects and slow progress in awarding contracts, have hampered the progress in capital expenditure. “We came to know that just announcing the budget on time cannot resolve problems that have existed in spending development budget, we need to end several chronic problems that still exit in our budgetary system and implementation process,” said Ram Saran Pudasaini, the chief of the Monitoring and Evaluation Division at the Ministry of Finance (MoF). A team led by Pudasaini, is on tour to different districts in the mid and far-western regions to assess the implementation of big projects. He said disruption in smooth implementation of big development projects is a major factor that has limited capital spending. Sikta Irrigation Project, which is one of the government’s priority projects, has been reeling under prolonged disputes about the compensation against the land acquired for the project. Similarly, the implementation of RaniJamara Irrigation, another ‘most prioritized project’, also hit a roadblock due to persisting problems in resettlement of squatters, who have been occupying project site. “These two crucial irrigation projects are examples of how land acquisition is affecting implementation of national priority projects. We have many other projects that deal with extension of transmission lines and construction of highways which are also facing the same fate,” added Pudasaini. Like his team, two other teams from MoF are traveling to sites of major development projects to assess the real problem for execution of such projects. The teams are submitting reports on implementation of big projects and offering recommendations to deal with the problems identified in the projects. “Our report with recommendations to deal with the problems will be included in the upcoming mid-term review of budget implementation,” he said. He, however, says that the pace of implementation will go up in the coming days as the process to award contracts in most of the big projects has been completed. In the past, development projects used to complain that the government allocated insufficient budget. But, this year the government has allocated sufficient funds and MoF officials have been repeatedly pledging that such highly prioritized projects will not face budget scarcity. Even the National Planning Commission (NPC) – the apex policy-making body of the government -- directly intervened in the budget allocation process for such projects to ensure sufficient budget for them. MoF has identified 68 big projects that the ministry directly wants to specially monitor implementation of. There were high hopes among policymakers, business people and the general populace that the timely budget announcement immediately followed by authorization for spending would boost capital spending unlike in the previous years. As double-digit inflation was hitting the general people hard, the current budget set a target of containing inflation to 8 percent -- an ambitious target right when the value of the Nepali currency hit record lows against the US dollar, cost of production kept rising and energy crisis was persisting. The current budget itself has identified that rising inflation has hit producers and consumers due to rise in prices of commodities and their cost of production. Similarly, the current monitory policy formulated by Nepal Rastra Bank, the central monetary authority -- also stated that the devaluation of the Nepali currency and rising volume of remittance pushed up inflation. But, the recent macro-economic report released by NRB shows that inflation hit 10.3 percent in mid-December. Tools adopted by NRB in its monetary policy are looking ineffective in controlling soaring inflation. India also faced the same plight as Nepal due to the stronger greenback against the Indian rupee, to which the Nepali rupee is pegged. The Reserve Bank of India (RBI), the Indian central Bank, recently made a host of recommendations to limit inflation at 4 percent in the long run and 6 percent within a couple of years. Inflation in India had accelerated to 18.4 percent in September; its highest since mid-2010, mainly contributed by the skyrocketing prices of vegetables, including onions. Given the direct trade relation with India -- which covers two-thirds of Nepal’s trade, inflation in India highly influences the Nepali market. The rising cost of production on the back of the energy crisis, soaring prices of imported raw materials and supply constraints in the domestic market are all set to continue driving up inflation in Nepal which has already spiraled beyond the government’s target of 8 percent. |
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Tuesday, January 21, 2014
Nepali hangouts in Malaysia look deserted
-----------Crackdown on illegal foreign migrants---------------
PRABHAKAR GHIMIRE
Kumud Khanal, vice-president of Nepal Association of Foreign Employment Agencies (NAFEA) in Malaysia, said many restaurants operated by Nepalis in various places including Kuala Lumpur, Kotaraya, Johor Baharu and Penang areas have shut down due to minimal turnout of Nepali customers. “Restaurants are major targets of law enforcement officials. We have reports that more than five dozen Nepali restaurants in Kotaraya alone -- which is one of the major hangouts of Nepali workers-- have been closed. Numbers of Nepali-run restaurants in other areas are also without customers,” Khanal, who has been sending workers to Malaysia, told Republica on Tuesday.  An official at the Nepali embassy in Kuala Lumpur said Nepali restaurant owners themselves have opted to close their establishments to avoid illegal Nepali customers. “A negligible number of Nepali migrants have shown up at their major hangouts since the last few days, leading to the closure of a number of restaurants,” added the official. The Nepali embassy stated that over 1,600 Nepali illegal workers received their travel documents over the last three days to avoid possible arrest by security personnel. However, embassy officials also said there has been confusion over how to repatriate workers who have received their travel documents. “We are making inquiries with the Malaysian authorities about the check-out process for those who have secured travel documents,” the official added. In a massive crackdown against illegal migrants, the Malaysian government arrested a total of 1,565 foreign workers, including over 60 Nepalis, from different parts of Malaysia on Tuesday. Bernama.com--the Malaysian national news agency-- quoted James Musa Singa, Kuala Lumpur´s immigration enforcement division assistant director, as saying that 257 Indonesians, 60 Bangladeshis, 41 Maynmar nationals, 39 Indian, 30 Nepalis, 18 Pakistani, two Vietnamese and one each from Nigeria, Thailand, Yeman and Togo were arrested in Kuala Lumpur alone. The identity of three of the arrested has not been established. | In Melaka, Kedaha and Penang also, around 30 Nepalis were arrested, in addition to workers from other countries. The local security agencies have conducted search operations at major lcalities where migrant populations are high, including Kuala Lumpur, Johor Baharu, Penag, Seremban, Kuala Terengganu, Kuching, Kampung Gersik, Petra Jaya, Demak Laut and Samariang, Bau, Kedah, Serian, Melaka, Perak, Miri, Bintulu, Sibu, Sandakan and Limbang. Malaysian authorities launched fresh operations to flush out foreign workers who failed to register under the special program for the management of illegal migrants. Around 10,000 enforcement officials from the Immigration Department, Royal Malaysia Police and People´s Volunteer Corps (Rela) have been deployed for a nationwide crackdown after the three-month special program ended Monday mid-night. Ahmad Zahid Hamidi, Malaysia´s home minister, said those captured under Standard Operations Procedure (SOP) will be deported within seven days to avoid overcrowding in detention centers. The government has set up 15 immigration depots nationwide and designated a number of places as detention centers to smoothen the process of repatriating illegal workers. | ||||||||||||||||||||||||
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Monday, January 20, 2014
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