Wednesday, August 31, 2011
The positive momentum of the previous months held strong for Southeast Asia, which led the region with 15.5 per cent growth during the month of June. The rebound in arrivals to Thailand (up by 54 per cent) positively impacted this overall result, strongly supported by the other reporting destinations in this sub-region all of which enjoyed double-digit growth. This in turn was supported by strong travel demand within ASEAN and an increase in arrivals from China, the result revealed.
International arrivals growth to South Asia was a robust 12 per cent in June, boosted by double-digit increases in inbound numbers to Nepal (up by 38 per cent), the Maldives (up by 27 per cent) and Sri Lanka (up by 20 per cent).
India maintained the same pace of growth seen in the previous month at seven per cent. European arrivals are amongst the main contributors to this growth. Northeast Asia saw an improvement after posting slow growth of 0.6 per cent in May, with a 3.7 per cent increase in arrivals for June. The growth, however, was very unevenly distributed among destinations in the sub-region. Tourism demand to Japan continued to recover, reducing losses in inbound arrivals from -63 per cent in April to -50 per cent in May and -36 per cent in June. Chinese Taipei (down by two per cent) and China (up by one per cent) registered weak results while Hong Kong SAR (up by 16 per cent), Macau SAR (up by 15 per cent) and Korea (up by 11 per cent) enjoyed buoyant growth for the month, supported by the key origin market of China.
It should be remembered that even though the percentage growth rate may be relatively weaker than for other sub-regions, the sheer volume of arrivals to Northeast Asia means that 3.7 per cent growth directly translates into more than 600,000 additional arrivals for the month.Director of PATA’s Strategic Intelligence Centre Kris Lim said that the first-half year growth of around five per cent, given the challenges the industry has faced so far this year underlines the resilience of travel and tourism in the Asia/Pacific region. "The comparatively weaker economies of the USA and Europe mean that much of this growth has had to come from intra-regional travel and this in turn has only been possible because of the stronger regional economies and the continued expansion of airline seat capacity within the region."
Lim added that at the current rate of growth, overall arrivals to the region will push to the 433 million mark by the end of the year, up from 408 million last year. The majority of the Asia/Pacific destinations will once again look at record numbers of arrivals, led by South Asia and Southeast Asia destinations in terms of percentage growth. “While European arrivals remain key to South Asia’s growth, Southeast Asia will be driven by the rapidly growing China and India outbound markets while Northeast Asia is expected to see strong gains in arrivals from Southeast Asia driven by the steadily growing LCC network,” said Lim.
International arrivals to the Pacific recorded an aggregate decline of four per cent in June. The main destinations of Australia (down by four per cent) and New Zealand (down by 10 per cent) showed significant decreases compared to the corresponding period last year.Of the 31 destinations reporting half-year arrivals (January to June ), 26 indicted positive growth, with 14 showing double-digit gains. Clear growth leaders over this period were Sri Lanka, Myanmar and Thailand with gains of 37 per cent, 29 per cent and 28 per cent respectively during January to June year-on-year.
Collectively, these 31 destinations generated growth of 5.3 per cent for the Asia/Pacific region during the first half of 2011. Even with the loss of almost 1.4 million arrivals to Japan, this cluster of destinations collectively not only countered that contraction but managed to add enough additional arrivals to the collective count to post a year-on-year gain of more than eight million international arrivals.
Tuesday, August 30, 2011
Flights from Bahrain will leave after midnight and arrive in Katmandu in the early morning, said the airlines.
"From Katmandu, the departure time will also be in the morning. The departure times are designed to arrive in Katmandu early morning to facilitate same day onward travel into Nepal for residents and tourists alike, director Commercial Operations of Bahrain Air said, adding that Bahrain Air is delighted to be returning to Katmandu after a brief hiatus.
Katmandu is and will remain a core part of Bahrain Air’s network, and we look forward to boosting direct connections between Nepal and Bahrain, he added. "It is the start of a new period of growth for Bahrain Air that will include resumption of old routes, some new destinations, and agreements with other carriers to boost our network still further.
"Bahrain Air is the Kingdom of Bahrain’s second national carrier which currently operates to more than 20 destinations from Bahrain using its brand new A320 and A319 aircraft, offering both Business Premium Class and Economy Class, free baggage allowances and complimentary meals.
It plays a major role in linking Bahrain — the financial center of the Middle East — to major cities in the GCC, the Levant, Africa and the Indian Sub-Continent, with fast and economical point-to-point services, for both the business community and the travelling public.
Earlier, Bahrain Air had launched three flights weekly, making Kathmandu the 17th destination on its network in 2009 March. Kathmandu was also the third city Bahrain Air had been operating in the Asian region.
Monday, August 29, 2011
The three projects will be funded by grants totaling $7.7 million from the Japan Fund for Poverty Reduction (JFPR) and administered by the ADB.
"From 2001 to August 2011, Nepal has been the beneficiary of ten JFPR projects worth more than $17.05 million," country director of Asian Development Bank Barry J Hitchcock said, adding that the additional three programmes will benefit the most vulnerable and often excluded groups.
Reducing Child Malnutrition through Social Protection will help Nepal improve planning and delivery of its social protection programmes, whereas Support for targeted and sustainable development programme for highly marginalised groups will provide assistance to develop new livelihood opportunities and improve income in the poorest and the most disadvantaged communities. Similarly, Improving Gender-Inclusive access to clean and renewable energy — a sub-regional project — will promote greater access to clean energy for poor rural women in Bhutan, Nepal and Sri Lanka.
"Despite Japan's rising expenditure for reconstruction of earthquake and tsunami in Japan, we are firmly determined to continue providing all possible assistance for the welfare of Nepal," ambassador of Japan to Nepal Tatsuo Mizuno said, during the launching of the projects.
Japan has helped Nepal upgrade Kathmandu-Bhaktapur road under its grant aid ODA and also constructing 160-km Sindhuli road that is expected to complete in future, he said, adding that the road will help local people generate income and reduce poverty.
Finance secretary Krishnahari Baskota and Local development secretary Sushil Ghimire, on the occasion, thanked Japan government and ADB for their consistent help in Nepal's development.
Sunday, August 28, 2011
“It is mainly attributed to a good harvest of winter crops (April-June) and employment opportunities generated by development aid,” according to Nepal Food Security Bulletin jointly produced by Ministry of Agriculture and Cooperatives and World Food Programme (WFP).
The main winter crops of wheat and barley production increased by 12.2 per cent and 9.6 per cent respectively compared to last year. Wheat production set a national record of 1.75 million metric tonne.
The situation, however, remains a concern for some in some pocket areas where crops were affected by localised natural disasters like insufficient rainfall and hailstorm, the report added.In Saptari the District Food Security network (DFSN) has identified 28 Village Development Committees (VDCs) in the south-western belt of the district as highly food insecure.
The report has attributed it to a 60 per cent reduction of wheat and spring paddy production due to a dry spell, which was cumulative to the 2010 reduction of 40-60 per cent in the main paddy production. Parts of the Eastern Hill and Mountain districts are reported as moderately food insecure, it said, adding that it reflected a seasonal deterioration in those areas where winter crops like wheat and barley are cultivated in limited areas and hence do not play a significant role in food security.
Most of the Mid and the Far Western Hill and Mountain districts reported a food secure situation, according to the report. Overall wheat and barley production ranged from normal to a 30 per cent or higher increase compared to last year.
Development programmes supported by various organisations have created good employment opportunities, it said, adding that main summer crops of maize and paddy are growing well across the country and the overall production outlook is good.
Good production of winter crops, wage employment opportunities created by development programmes, remittances, and regular supply of food to the local markets contributed to a stable food security situation across the country, it concluded, adding that a seasonal deterioration is reported in part of the Eastern Hill and Mountain districts where the winter crops of wheat and barley are cultivated in limited areas and do not play a vital role in food security.
The situation in upper Dolpa and some Village Development Committees in the northern and the southernbelt of Baitadi are likely to deteriorate to the highly food insecure phase during the next cycle as there will be no incoming harvest and employment opportunities as well as market supply will be affected by monsoon.
The food security situation in the rest of the country will remain stable expected to improve due to the positive outlook of summer crops.According to the central bank, High food prices remain a concern. The year-on-year inflation, measured by the Consumer Price Index, increased by 8.8 per cent in mid-June 2011 whereas the indices of the cereal subgroup increased by 10.4 per cent.
Saturday, August 27, 2011
"Reducing price of the mobile handsets and bringing more features in a single set will be our strategy," said country manager for Nokia Emerging Asia, Abu Daud Khan.
"We are reducing prices every quarter to make it more affordable under our slogan 'Connecting next billion," he said, adding that Nokia is also concentrating on bringing the features of smart phones in a normal phone.
As mobile is not only meant for communications at present, Nokia is also in talks with domestic mobile service providers — Nepal telecom and Ncell — to offer better value services to the Nepali customers. "If we succeed in joining hands with local mobile service providers, we can definitely offer better value service as the operator and company both can offer more to the customers," Khan added. "Collaboration with local partners will also encourage Nokia to add local features apart from social network sites that is built free.
"Nokia has last week launched its browser phone in the domestic market planning to offer more service to its customers. "It will help reduce time and cost as Nokia browser will help download fast," he said, promising that Nokia will also bring more dual sim phone with reduced costs, internet with local content and — if possible — try to add Nepali language too."At present people need more information, so we are also planning to add news feed too," elaborated Khan.
Apart from domestic partnership in various countries, Nokia has also partnered with Microsoft to cater to changing demand of customers. "The collaboration with Microsoft will be a next big story," he said, adding that the strategic partnership with Microsoft will be a main platform for the future technology of Nokia.
The information technology and communication market has witnessed a sea change lately. "The market is no more one device against another now," Khan said, adding that it is rather going to be one ecosystem Vs another as Nokia and Microsoft collaboration has created a new ecosystem in the information technology and communications sector globally. "We are creating the third eco system," said the country manager for Nokia Emerging Asian markets.
Friday, August 26, 2011
The state oil monopoly has hiked Rs 1.5 to Rs 75 per liter in kerosene and diesel. “Decision to hike kerosene and diesel price is irrational as the prices have been falling in the international market," said general secretary of Forum for Protection of Consumer Rights Nepal Jyoti Baniya.
According to him, consumer groups have taken the irrational action of the government as a ‘gift to people’ before festive season.
"Price hike in diesel will play a key role in price hike of consumer goods rising inflation to two-digit,” he said, adding that the government should reverse the decision to give relief to people in the festive season.
Another consumer activist, Prem Lal Maharjan criticised the government for adding ‘extra burden to the poor. "Kerosene is the source of energy for the poor," he said, adding that price hike in kerosene will affect poor section of the society.
According to him, the government has hiked the price when the international price of petroleum is at $76 per barrel. "Why the NOC did not hike price when the price was $126 in June," he asked. "It is ill intention of the government to suppress poor."
After the price hike, one liter diesel and kerosene will now cost Rs 75 per litre. "It will reduce NOC's loss to Rs 505.3 million from current Rs 583.8 million," said spokesperson of the state entity Mukunda Dhungel. "We are still incurring Rs 7.58 loss in a liter of diesel."
Thursday, August 25, 2011
The political leadership has been suggested not to back track from the liberal economic regime as only free market economy can generate economic growth.
"Moving back to controlled economic regime will be ironic and self-destructive for Nepal," said US ambassador to Nepal Scott H DeLisi in a talk on 'Building a New Nepal: Focus on the Economy’ organised by Public Affairs section of US Embassy in association with Society of Economic Journalists-Nepal here today.
He urged that Nepal need to take advantage of being located in between India and China, two of the fastest growing economies in the world. "Just the spillover effects from these two economies should create thousands of jobs and expand trade," he said.
"Nepali tourism sector can gain massively even if just a tiny fraction of the tourists from neighboring China and India started coming to Nepal," the Us envoy said, adding that its effect on the economy would be massive.
"The leaders seem to be less focused on issues about nation’s development strategy, strengthening of the economy, and creation of jobs than they are on their political agenda," he opined. "Even business houses are seeking to avoid paying taxes and maneuver to sneak their money out of the country, bureaucratic red tapes discourage young entrepreneurs, state owned enterprises are draining resources."
Nepali economy has been struggling at anemic growth rate of 3.5 per cent as investors are scared off by the political instability, labour problems, and power shortages, DeLisi said, pointing out the instances like closure of Surya Nepal garment unit that has diminished efforts to convince foreign investors that Nepal is open for business.
The US ambassador also assured that US will keep investing in Nepal and remain focused on economic issues because no matter where the political winds blow, growing economy and creating jobs will remain critical to Nepal’s future.
He also disproved of dependency on remittances comparing it with addictive drug that feels good at present but causes devastation in the long run. "Remittance flows are fuelling increased consumption but are not being channelled into productive investment while Nepal’s competitiveness and productivity continue to decline," he said, adding that policy reforms are required and hard decisions has to be taken about cracking down on corruption and nepotism and raising prices on fuel to attain the desired and sustainable growth.
The ambassador during his talk also highlighted Nepal's huge potential for achieving economic development in the sectors like IT outsourcing, tourism, hydropower and agriculture despite problems.
"Nepal’s unique climate and geography create a comparative advantage in horticulture and high-value agricultural products like coffee, tea, and medicinal herbs, despite the failed potential of hydropower there is still so much more to achieve in the sector," DeLisi added.
Is cooperatives third pillar of economy?
KATHMANDU: US Ambassador to Nepal Scott H DeLisi pointed out policies that would seek to limit the role of private sector are fundamentally misguided referring to Nepali government's characterisation of 'cooperatives' as the third pillar of economy. Though he confessed to be strong proponents of cooperatives, Nepal's recognition of cooperatives as one of the guiding principles has worried him as it could be a code language for expanded government control of the economy. "Cooperatives played a key role in the US rural economy and there are some wonderfully successful cooperatives making a difference here in Nepal too, he added.
Apple, the world's second most valuable company by market capitalisation, said chief operating officer Tim Cook would succeed Jobs as chief executive. The announcement sent Apple shares tumbling by 5.3 per cent in after-hours US trade. But in Seoul, Apple's South Korean rivals rallied. Shares in Samsung Electronics, whose Galaxy tablet is sparring with the iPad, jumped by three per cent, while LG Electronics surged by four per cent.
Steven Paul 'Steve' Jobs (born on February 24, 1955) is an American business magnate and inventor. He is co-founder, chairman, and former CEO of Apple Inc. Jobs, who also previously served as chief executive of Pixar Animation Studios, became a member of the board of directors of The Walt Disney Company in 2006, following the acquisition of Pixar by Disney. He was born in San Francisco, California and was adopted by Paul and Clara Jobs of Mountain View, California, who named him Steven Paul. Paul and Clara later adopted a daughter, whom they named Patti. Jobs' biological parents – Abdulfattah Jandali, a Syrian graduate student who later became a political science professor, and Joanne Simpson, an American graduate student, who went on to become a speech language pathologist – later married, giving birth to and raising Jobs' biological sister, the novelist Mona Simpson. Jobs attended Cupertino Junior High School and Homestead High School in Cupertino, California, and frequented after-school lectures at the Hewlett-Packard Company in Palo Alto, California. He was soon hired there and worked with Steve Wozniak as a summer employee. In 1972, Jobs graduated from high school and enrolled in Reed College in Portland, Oregon. Although he dropped out after only one semester, he continued auditing classes at Reed, such as one in calligraphy, while sleeping on the floor in friends' rooms, returning Coke bottles for food money, and getting weekly free meals at the local Hare Krishna temple. Ranked 43rd wealthiest American by Forbes magazine with an estimated net wealth at $5.1 billion in 2009 Jobs later said, "If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts." Even though Jobs earned only $1 a year as CEO of Apple, he holds 5.426 million Apple shares, as well as 138 million shares in Disney. — Agency
“Innovation distinguishes between a leader and a follower.” — Steve Jobs
The expo is planned to be the largest finance and investment show in the countyr and the first ever dedicated event of its kind that is focusing on the promotion of investment opportunities and wealth protection strategies.
The most empowering event of the year is going to be the pre-eminent business-networking event for financial sector and its constituents, according to the organisers.
The expo provides investors ample opportunity to speak directly with the nation's top experts, whose knowledge covers trading and investing, banking, insurance, mutual funds, stocks, tax strategies, commodities and personal finance planning, they claimed, adding that the expo also provides the participants opportunity to learn about new products, services and industry trends, as well as meet potential customers and seal important business deals.
There will be more than 100 stalls from different sectors including regulatory bodies, stock exchange, commodities exchanges, banks and financial institutions, merchant bankers, investment companies, insurance companies, brokerage firms (stocks and commodities), remitters, Depositories and Clearing Houses, portfolio managers, financial knowledge management and training companies, microfinance and cooperatives, traders' and investors' associations, Clubs, and many more.
More than 50,000 visitors are expected to visit the expo, the organisers said, adding that the expo will also have other attractions like seminars and lectures from financial experts, regulators, analysts and successful investors as well as quiz contest, art exhibition, national and international currency show, trading and investment movies show, attractive door prizes, best stall award and certificates for all stallholders.
Wednesday, August 24, 2011
'Millennium Development Goals: Needs Assessment for Nepal 2010' launched jointly by the National Planning Commission and United Nations Development Programme (UNDP) pointed out that during the period 2011 and 2015, a total of Rs 1,395.8 billion is required to achieve the targets. Of the total, there is a gap of Rs 451.4 billion, a 32.34 per cent of total needs.
The country has not yet decided how the resource gap is going to be managed.
However, Nepal is likely to achieve most of the Millennium Development Goals (MDG) targets set for 2015, the report said, adding, however, reducing the proportion of the population below a minimum level of dietary energy consumption, proportion of underweight children aged 6-59 months, proportion of stunted children aged 6-59 months, survival rate to grade five, literacy rate for 15-24 years old, proportion of skill birth attendants, universal access to reproductive health and proportion of population using an improved sanitation facility will be difficult to achieve, said
The report has also stressed some strategic intervention to achieve the targets.
"The planning commission is strengthening the monitoring and evaluation mechanisms to monitor MDG related outcomes," vice chair of the national think tank Dr Dinesh Chandra Devkota said, adding that the government will fully take ownership and leadership of development strategies.
The government plans to adopt forward-looking macroeconomic policies that promote sustainable development and lead to sustained, employment-centric, inclusive and equitable, broad-based economic growth, he added.
The report has also recommended programme implementing partners to focus on small holder farmers, food security, employment centric interventions, nutrition, reproductive health, economic empowerment, and universal primary education particularly for hard to reach group of children, women and the communities.
In the context of shifting global priorities towards fighting global recession and climate change implications, the government has to make greater efforts to manage resources for meeting the MDG targets by the year 2015 despite the resource gap. "Nepal will have to show higher development aid effectiveness to attract global funds," according to the report.
UNDP resident representative Robert Piper, on the occasion, said that the preliminary results of the third National Living Standard Survey suggested that Nepal has significantly improved in many areas including average household income and per capita income. "The achievement is nothing short of extraordinary given the country’s post-conflict status and country’s difficult political and economic environment,” he said, adding that the progress in the indicators at national, aggregated level is impressive, as always, but the country should not lose sight of what lies beneath. "We are yet to see if the significant rise in average household income has also led to reduction in inequality," he added.
The MDG Needs Assessment for Nepal is a joint initiative by the planning commission and UNDP to estimate the resources needed and identify gaps for achieving Nepal’s MDG targets within the next five years.
Tuesday, August 23, 2011
Siddhartha Bank's subsidiary Siddhartha Mutual Fund is the first mutual fund to obtain the license from Securities Board of Nepal (Sebon) based on Mutual Fund Regulation 2067. The commercial bank's subsidiary had applied for the license a month ago.
The bank is planning to launch different mutual fund schemes worth Rs 1 billon. It will work as the sponsor while its merchant banking subsidiary will act as the asset management company as per the regulations.
There are three more commercial banks that are waiting for Sebon's green signal to start mutual funds. NMB Bank, Nabil Bank and Laxmi Bank's merchant banking subsidiaries have also applied for the license to operate mutual funds.
The regulations require the sponsor of the mutual fund to have minimum paid up capital of Rs 1 billion and have been in existence for last five years and be earning net profit from last three years among others, making the commercial banks the most suitable entity to start the business.
Monday, August 22, 2011
In a month the precious yellow metal witnessed a growth of Rs 9,200 per tola as on Shrawan 5, gold was traded at Rs 42,200, according to Nepal Gold and Silver Dealers Association (Negosida). In the international market, gold hit a record high near $1,900 an ounce during today's trade as lingering fears of a fresh global recession caused dealers to snap up the precious metal regarded as a safe-haven investment.
It struck an all-time peak of $1,894.80 on the London Bullion Market, beating its high of $1,878.15 recorded last Friday. It stood at $1,880 in afternoon London deals.
The psychologically important mark is likely to be tested soon in the current market climate and is probably not a serious hurdle as uncertainty and nervousness are still high among market players.
Similarly, silver also touched Rs 1,265 per tola in the domestic market today.
Shrawan — Rs 44,200
Bhadra — Rs 53,400
The rising economic giants China and India should be models for Nepal, as Economic Freedom can only make a country sovereign. The government has projected economic growth at 3.5 per cent for the current fiscal year, which is the lowest in the last three fiscal years. It should ring an alarm to the political parties that the economic activities are shrinking due to prolonged political tug-of-war. It is also a warning that political parties should be more serious and concentrate on economic issues.
When the country elected the Constituent Assembly (CA), there was hope that the country would now move forward with a new vigor with priority on the economic agenda. However, politics pushed the economic agendas on the back burner, even posing a threat to post-1990 achievements.
The failure of the successive governments in pushing and helping the CA draft the constitution has made the younger and energetic manpower lose faith on the governance, and forced to opt for foreign jobs. Over 354,000 left the country in the fiscal year 2010-11 in search for greener pasture due to the government’s failure in creating jobs. In fact, the frequent labor trouble fuelled by the political parties has hurt the industries, to the extent of closures and seeing more youths jobless.
The rising energy crisis, politically-backed labor disputes, insecurity and political instability are limiting the opportunities for business and economic activities, pulling the economic growth to below four per cent.
The only hope is remittance – the life line of the economy that is in tune of government’s revenue target – sent by Nepali migrant workers. If it starts falling, no one can rescue the country from being a failed state, as the remittance-fuelled consumerism has failed to increase domestic industrial and agricultural production. It has only led to imports rising six-fold to that of exports.
Due to the lack of manpower, not only the fertile lands are barren but also the industries lack skilled labour cutting their production capacity.
The fall in manufacturing has led to a dramatic drop in country’s export as Nepal witnessed only Rs 58 billion worth of exports in the first 11 months of the fiscal year 2010-11. In the fiscal year 2008-09, the country had exports worth Rs 68.59 billion. Political change that promises stability and liberal market policies could encourage the economic activities in the country. But, since the CA polls, the regular change of government and unstable policy coupled with the successive governments’ market-distorting decisions have disappointed the private sector, the propeller of economic growth.
This fiscal year, the government brought the budget on time, but it could not boost the morale of the private sector. Due to lack of more investment opportunities, not only the domestic but also the foreign investors are shying away. The government failed in guaranteeing the Economic Freedom – one of the key indicators – that the post-1990 government guaranteed, and proved that the country can only prosper in the liberal economic regime.
Nepal’s economic freedom score is 50.1, making it the 146th economy in the 2011 Economic Freedom Index. Its score is 2.6 points lower than a year ago, reflecting declines in eight of the 10 economic freedoms. The country is ranked 33rd out of 41 countries in the Asia–Pacific region and recorded the sixth largest score decline in the 2011 Index. The economy lacks the entrepreneurial dynamism that would propel economic growth and long-term economic development.
Overall, weak reform efforts have failed to stimulate broad-based economic growth. The state continues to hamper private-sector development, and political instability further weakens the country’s capacity to implement economic reform or create a stable environment for development. The statist approach to economic management and development in Nepal has been a serious drag on business activity. Lack of transparency, corruption, and a burdensome approval process impede much-needed expansion of private investment and production. Property rights are undermined by the inefficient judicial system, which is subject to substantial corruption and political influence, according to the report. The distributive budget that has focused more on cooperatives instead of strengthening the private sector is a reminder of the closed economy of the Panchayat era.
The political parties should be pragmatic on economic issues, and work to complete the peace process and finalize the new constitution as soon as possible. The longer the transition period, the harder it is for the investors. It’s high time for the government to create conducive investment environment, with improved security and boost the private sector’s confidence to put the economy back on track. Otherwise, the derailed economy will make the future of the country bleak.
Judges Tanka Moktan and Kul Ratna Bhurtel of the commercial bench of Patan Appellate Court today appointed insolvency expert Jagdish Bhattarai as an investigation officer to send Samjhana Finance into liquidation.
The finance company will be the second financial institution to be liquidated after Nepal Development Bank.
The central bank had filed a case at the Patan Appellate Court seeking for liquidation of the Kavre-headquartered finance company after the finance company could not improve its financial health. Earlier, the central bank had on March 24 decided to send Samjhana Finance for liquidation. It has an outstanding loan worth Rs 210 million and its non-banking assets have been calculated at Rs 300 million. Headquartered in Banepa of Kavre district, the class C financial institution has two branches, one each in Lalitpur and Kathmandu.
The central bank had sought an explanation with Samjhana Finance on why not to send it to liquidation. But it could not satisfy the central bank with its explanation. The finance company had submitted its explanation also with a proposal of new management to run it but the central bank rejected the proposal and decided to send it for liquidation.
After declaring Samjhana Finance a troubled financial institution, the central bank had last year restricted the financial institution to mobilise deposits and float loans on the basis of its weak capital base and high non-performing asset.
On June 23, the Central Investigation Bureau of Nepal Police has arrested former CEO of Samjhana Finance Hem Bahadur Gurung for isappropriating Rs 40.9 million of the company. He was arrested after Nepal Rastra Bank requested the CIB.
Sunday, August 21, 2011
The first meeting of the steering committee for the preparation of BIMST-EC and SAARC on poverty alleviation, held recently at National Planning Commission secretariat has proposed the date for both the meetings. The proposed SAARC level ministerial meeting on poverty alleviation is the third in the series while it is the second high level BIMST-EC meeting on poverty alleviation as Bangladesh hosted the first ministerial meeting on poverty alleviation in 2008 in Dhaka.
The dates will be proposed to the respective SAARC and BIMST-EC member countries and finalised according to their consensus.
Participated by secretaries of different ministry and senior officials of Poverty Alleviation Fund, the Steering Committee meeting was chaired by the vice chairman of National Planning Commission (NPC) Dr Dinesh Chandra Devkota.
The planning commission will work as the lead agency to organise both the events while Ministry of Foreign Affairs will look into SAARC secretariat matters and hospitality. It also agreed to form a technical committee in chairmanship of Poverty Alleviation Fund vice-chair. The steering committee secretariat will be established in Poverty Alleviation Fund and Poverty Alleviation Fund executive director will work as the member secretary of the steering committee.
Senior Officers meeting will be held a day before the SAARC and BIMST-EC ministerial meeting on poverty alleviation. A national consultative meeting on country poverty issues and regional perspective in preparation of both the SAARC and BIMST-EC ministerial level meeting will also be organised.
Friday, August 19, 2011
"It is yet another chance for them to reduce their expenses and collect loans," said central bank spokesperson Bhaskar Mani Gyanwali.
Once the PCA is imposed, the banks and finance companies cannot mobilise deposits, open branches, distribute dividends and increase salaries and incentives of employees and add new employees that could add expenses.
On June 24, Capital Merchant Bank and Finance Company had pulled its shutter down citing acute cash shortage. The central bank has decided to enforce Prompt Corrective Action (PCA) on Capital Merchant Banking and Finance to give it a chance to correct itself.
Similarly, People’s Finance ran into trouble after its executive chairperson Chhabilal Bhusal went on missing leading the finance company to closure due to liquidity crunch.
These financial institutions ran into trouble due to over exposure on real estate lending, bad corporate governance and lack of Assets Liability mismatch.
“Independent power producers have been asking for a complete VAT exemption on the materials they use for civil works,” said president of Power Producers’ Association, Nepal (IPPAN) Subarna Das Shrestha.
“The government has, however, decided to refund only Rs 1 million of the VAT paid,” he said, adding that a megawatt power generation generally costs Rs 150 million. Out of the total cost, some 60 per cent goes on civil works that uses materials like cement attracting VAT.
“If the government exempts complete VAT on materials, it will come to around Rs 11.9 million roughly,” he said, adding that the Finance Ministry decision is just one tenth of what the private power producers have been asking for.
If there is no guarantee on return, why should the private sector invest on any project, he asked, adding that the exemption will not ensure the rate of return that could attract more investors.
“Increasing cost of materials and high interest rates have already made the projects less viable,” Shrestha added.
The Finance Ministry is also under pressure to meet its revenue target as in the last fiscal year, it could not meet its target by over Rs 16 billion.
Value Added Tax (VAT) is the largest contributor to the government coffer.
However, Shrestha said that the Finance Ministry is more conscious over revenue mobilisation instead of economic development by boosting hydropower development. “If the Finance Ministry encourages private sector by exempting VAT, more power projects will come into operations in another five years time giving boost to the economic activities, which naturally results in more revenue mobilisation in the country,” according to him.
“However, the current decision will not have any impact on projects financial indicators.”
Earlier, declaring the Energy Crisis, the government had promised to give some incentives for the hydropower projects that could encourage them to invest on more hydropower projects.
The government had also increased the tax holiday period upto 10 years from seven years and half tax exemption for another five years.
The budget for the current fiscal year had spelled out the tax holiday extension but was silent on VAT exemption — the key demand of the private power producers.
The private sector will be encouraged t invest on hydropower if the government could ensure some 15 per cent return by either increasing power purchase agreement (PPA) rate or exempting VAT, according to power producers.
But Nepal Electricity Authority (NEA) has increased power purchase agreement (PPA) rate for only new projects not for the projects under construction.
“If the government cannot increase PPA rate, then it could encourage the private sector by exempting VAT,” Shrestha added.
In absence of regular power, the industrial sector has been suffering and its contribution to the national economy is decreasing every year.
With gold price touching a new high every day, many believe the festival could not be as joyous Yesterday the precious yellow metal was traded for Rs 50,700 per tola and the domestic market witnessed a jump of Rs 1,550 per tola in a day due to fears of a global double-dip recession that sent investors piling into gold.
Last year, during Teej the sale of gold jumped up to 40 kg per day from a normal 30 kg per day demand. "But the continuous rise in the price of gold has compelled the consumers drop their idea of buying gold jewellery even during the festivals," said Nepal Gold and Silver Dealers Association president Tej Ratna Shakya.
"The demand has dropped to less than 10 kg due to 'unbelievable' price," he said, adding that there is only 25 per cent demand in the market.The domestic market witnessed a rise of Rs 15,750 per tola in a year as on August 19, 2010 — last year today — the gold was traded at Rs 36,500 per tola.
The gold import — that has hurt the Balance of Payment in the fiscal year 2009-10 by recording a Rs 41.63 billion — has also dropped by over four times to Rs 9.07 billion in the first eleven months of fiscal year 2010-11 from Rs 39.40 billion in the same period a fiscal year ago, according to the central bank.
In the international market, the precious yellow metal prices have risen more than five per cent in just a week as investors gobble up the metal as protection against slowing global growth from China to Germany to the US. A day after Morgan Stanley lowered US growth prospects for 2011 and 2012, gold prices showed no signs of slowing down but experts warn that time may be up for the current rally.
Gold’s strong start to the year was reinforced during the second quarter of 2011 where total global gold demand measured 919.8 tonnes, worth a near-record $44.5 billion, with broad-based support across all sectors and geographies especially India and China, as these two markets accounted for 52 per cent of total gold bar and coin investment and 55 per cent of global jewellery demand.
According to the Gold Demand Trends report for second quarter of 2011, gold demand will remain strong owing to a number of key factors despite a higher gold price.
"Indian and Chinese demand grew by 38 per cent and 25 per cent respectively during the second quarter of 2011 compared to the same period of a year ago," the report said, adding that the growth is likely to continue, due to increasing levels of economic prosperity, high levels of inflation and forthcoming key gold purchasing festivals.
The impact of the European sovereign debt crisis, the downgrading of US debt, inflationary pressures and the still-fragile outlook for economic growth in the West are all likely to drive high levels of investment demand for the foreseeable future.
Central banks are also likely to remain net purchasers of gold as purchases of 69.4 tonnes during second quarter of 2011 demonstrated that central banks are continuing to turn to gold to diversify their reserves.
Not only the traditional Hindu society, but in most cultures at some point had a practice of keeping large amounts of wealth stored in the form of gold jewellery as jewellery has been used as a currency or trade good.
One of the oldest metals on the earth as gold was known to man even before 3600 BC, mankind has been obsessed with the luster of gold and lost their minds on the glitter of gold mesmerised by its yellow beauty.
Meanwhile, silver also touched a new record of Rs 1,175 per tola in the domestic market today.
Import of precious yellow metal drops
2008-09 — Rs 13.38 billion
2009-10 — Rs 39.40 billion
2010-11 — Rs 9.07 billion
(All figures are of eleven months of fiscal years. Source: Nepal Rastra Bank)
Thursday, August 18, 2011
According to Nepal Airlines Corporation (NAC), a passenger can now fly to New Delhi from Kathmandu at Rs 4,960.
"The two-way air fare on Dubai, Doha and Kuala Lumpur routes have come down to Rs 27,820 from Rs 29,960. "The one-way air fare on Dubai, Doha and Kuala Lumpur routes will now cost Rs 14,445 from earlier price of Rs 16,050," the ailing national flag carrier said, adding that the two-way air fare on Kathmandu-Bangkok-Kathmandu route has also come down to Rs 18,920 from Rs 26,750.
"For the passengers flying from Bangkok to Kathmandu, the air fare will now cost 8,000 bhat for two way," it said, adding that it used to charge 13,300 bhat for the two-way travel, earlier. Meanwhile, Nepal Airlines Corporation has provided free airtickets to 102 cancer patients for their abroad trip for treatment in the last fiscal year. The airliner provides free round ticket to the patient in their first trip and 50 per cent discount on second trip along with providing 50 per cent discount to the companion of the patient. The tickets thus provided under NAC's corporate social responsibility were worth Rs 224,900.
Global demand for the second quarter to June was 919.8 tonnes, down by 17 per cent year-on-year, from 1,107 tonnes in the same period last year, as the "remarkably" high European investment seen earlier levelled off.
The World Gold Council, an industry body, said demand for gold was still "healthy", particularly for jewellery, despite the decline in demand, which steadied after the heavy investment in the last 12 months in gold exchange traded funds.
The 2011 June-end quarter was the second-highest quarterly value ever at $44.5 billion, the WGC said in a report.
The highest-ever quarterly demand for gold was valued at $44.7 billion in the three months ended last December, the council said.
WGC expects demand for gold to remain strong for the rest of the calendar year, driven by demand from India and China.
The impact of Eurozone and US debt crisis, inflationary pressures and buying from global central banks will also boost investment demand for gold, it said.
"The strength of demand in India and China, coupled with an overall drop in recycling activity this quarter, demonstrates that consumers have adjusted to the current price environment," said Marcus Grubb, WGC investment managing director, said in the emailed report.
"In addition, ongoing macro economic uncertainty, the continued sovereign debt crisis and widespread inflationary pressures, will result in gold demand remaining strong," Grubb said.
India and China are battling high inflation, alongside other Asian economies like Vietnam, Indonesia, South Korea and Thailand (VIST).
"High inflation has become a positive driving force for gold (amongst the VIST countries), the report said.
India is the world's biggest importer and consumer of gold. It constituted over a third of global gold demand, while China's share is also expanding rapidly.
Indians bought 540 tonnes of gold in the first-half of 2011, up by 21 per cent from the same period last year.
"This growth is likely to continue, due to increasing levels of economic prosperity and high levels of inflation," research analyst Louise Street said in the report, describing demand for gold from India and China.
Year-on-year demand for gold grew by 38 per cent in India in the second quarter ended June and China by 25 per cent, the report said.
Gold jumped to a record $1,814.95 per ounce this week after global equities markets slumped and investors were spooked after the US sovereign debt downgrade and growing concerns about the Eurozone crisis.
The precious metal, whose key drivers are investment and jewellery, is widely seen as a safe haven in times of economic uncertainty and high inflation.
WGC said the "still-fragile outlook" for economic growth will continue to drive people to buy gold as a form of investment.
Demand for gold is likely to increase in India in the coming weeks, as key religious festivals get under way, where the metal is often bought or gifted.
Demand traditionally leaps in India during its main wedding season from October to December and also during religious festivals when India's nearly 900 million Hindus believe it is lucky to purchase gold jewellery, coins and bars.
Wednesday, August 17, 2011
The factory that has been producing John Players and Springwood labels in Biratnagar was started in 2007 — three years after Surya Nepal diversified into garments from tobacco production.
But the militant trade unionism has forced the unit to pull down its shutters and the peoples like Bijaya Yadav of Morang have to suffer, as they have been earning their livelihood in Tankisinuwari-based Surya Nepal Garments.
"Many workers like me are left in a helpless situation after the management decided to shut down the industry because of the vested interest of few workers," he said, after receiving his last salary from the industry today.
The industry was closed from June 15 due to dispute between some workers and management after the agitating workers of UCPN-Maoits-affiliated Nepal Trade Union Workers' Organisation held management employees hostage demanding for hike in wages. The militant trade union had also closed the industries in the Sunsari-Morang corridor for eight days in April.
According to the industry's general manager Rabi KC, ITC had taken the decision yesterday to close the garment unit forever after ongoing talks with the trade union leaders failed to reach any conclusion.
"The decision has been taken after we had to cancel the orders from our clients," he added.
The industry management has distributed nearly Rs a total of 2.5 million in salaries to the workers through Standard Chartered Bank Nepal from the premises of Industies' Organisation Morang today.
KC also accused the UCPN-Maoist trade union in obstructing the regular works of the industry, after the management decided to dismiss 24 workers involved in the hostage-taking in April.
"The decision will not only hurt the workers but also the government as it will lose revenue," he added.
Tejlal Karna, a leader of the UCPN-Maoist-affiliated trade union, however said that the industry's decision to take action against the workers was illegal.
The industry, established with Rs 300 million investment, had been providing jobs to more than 600 workers and employees. Nearly 85 per cent of its products were being exported to the countries including US, Canada, France and EU.
The blue-chip company, operating with a paid-up capital of Rs 2 billion, last year paid the state revenues worth about Rs 7 billion.
Surya Nepal — which controls nearly 70 per cent of the cigarette industry in Nepal — has freshly invested about Rs 1,000-1,500 million to build a new tobacco factory in Tanahun district, which is expected to be operational by 2013.
"It is not possible for the central bank to examine details of creditors, detect discrepancies and take action so directors and management of the banks and financial institutions need to manage the risk by themselves," said governor of Nepal Rastra Bank (NRB) Dr Yubaraj Khatiwada addressing a workshop here in the central bank today.
Lately, the good corporate governance has been a serious issue with many a banks and financial institutions leading some of them to failure.
He also opined that banks and financial institutions have to strengthen their internal risk management capacity to tackle the possible threats in the future.
"The promoters, directors and managers of the banks and financial institutions must follow proper governance ethics for a better future that could attribute to the good corporate governance as basis of financial stability," he said, adding that the real sectors like manufacturing are though not in a good shape at present due to transitional period, banks and financial institutions should support the sector by extending loans.
The governor also advised the banks and financial institutions not to hasten the lowering of deposit interest rate based on the recent liquidity easing but they should try to attract more deposits from the informal channels for long-term sustainability.
The prospects of mobile video calling have improved in the last eighteen months due to the launch of mobile video calling services by major industry players, availability of front-facing cameras on smartphones and underlying technology improvements.
The increasing dominance of the smartphone in developed markets, meanwhile, and the application download model have improved the market for mVoIP delivered through mobile clients downloaded to the handset, although there are few alliances between MNOs and mVoIP service providers, the report added.
Alliances between Facebook and several mVoIP service providers, and the acquisition of Skype by Microsoft are expected to enhance this trend. Mobile VoIP and mobile video calling services will develop in developed markets due to the direct correlation between 3G and 4G roll-outs and the take up of mobile VoIP and mobile video calling. Revenues from the circuit switched voice market will continue to diminish over the next five years, although this is not expected to accelerate.
Many basic mobile video calling services are offered for free by players wishing to launch the market, it revealed.
Tuesday, August 16, 2011
Icra will have 55 per cent stake in the rating agency while the remaining stake will be held by Credit Information Bureau, Himalayan Infrastructure Fund and some Nepali banks, according to the Sebon. "The rating agency needs to complete necessary undertaking to obtain the operating licence."
The recently endorsed Credit Rating Agency Regulation-2068 states that the domestic credit rating agency needs to have minimum of 25 per cent stake of foreign credit rating agency.
Moody's Investor Service — an international credit rating agency — holds the majority stake in ICRA that also has rating agencies in Indonesia and Sri Lanka.
The companies planning to issue ordinary shares, bonds, debentures, preference shares exceeding Rs 30 million in value have to get themselves rated by a rating agency that also have to continue rating once rated companies for next two consecutive years as well.
Monday, August 15, 2011
At a time when the domestic banks and financial institutions are complaining of central bank’s over interference, the International Monetary Fund (IMF) team has prescribed to give the central bank more teeth to quick fix financial problems but at the same time, it also urged for increased supervisory capacity.
Talking to the press here today at the central bank, senior representative of the IMF to India and Nepal Sanjaya Panth said that the risk has been increasing in the financial sector since last one year. "Weak supervision and increasing number of financial institutions coupled with over exposure to real estate and share also increased the risk," he said, adding that excessive exposure of the banks and financial institutions to the real estate sector — where an asset price bubble has now burst — has brought many of the risks to the fore.
In such a situation, the central bank should have the right to direct merge, close or create new financial institutions, said IMF deputy division chief of Asia and Pacific Department John Nelmes, who led the mission to Nepal.
The mission also suggested the central bank to take a comprehensive and multi-faceted programme — to resolve the current situation — that includes better diagnostic assessments, strengthened supervision and enforcement of prudential regulations, and stronger intervention powers for the central bank.
"Relaxation of prudential and accounting regulations or blanket provision of liquidity assistance would only postpone the crisis not address it," Panth added.
The mission has also warned of the deterioration in financial institutions’ balance sheets that could lead to potentially significant untoward consequences for the economy.
The team — that visited Kathmandu from July 31 to August 15 to conduct the 2011 Article IV Consultation discussions — after holding talks with deputy prime minister Bharat Mohan Adhikari, central bank governor Dr Yubraj Khatiwada, senior officials in the government and the central bank, private sector representatives, trade unions, and other stakeholders also concluded that the macroeconomic situation is also challenging.
"Growth in non-agricultural activity slowed significantly in 2010-11 and despite a good monsoon overall GDP growth eased to 3.5 per cent from about 4.5 per cent the previous two years," it said, adding that inflation also remained stubbornly high in the range of 9.5 per cent annually. "Despite moderation in import growth, the Balance of Payments remained under pressure for part of the year from higher international oil prices and slower remittance growth, though it ended with a modest surplus."
The growth is expected to remain below four per cent in the near term but in the absence of other shocks, inflation should decline somewhat due to decline in the prices of commodities in the international market and India, from where Nepal is said to import inflation too.
"The authorities’ plans to limit domestic financing of the fiscal deficit to two per cent of GDP is appropriately consistent with macroeconomic and debt sustainability but achieving the deficit target will not be easy," Nelmes said, suspecting that the revenue mobilisation for the current fiscal year could also shortfall like last fiscal year.
"The government must have a contingency plan to ensure the domestic financing target is met," the mission said, suggesting to focus on collection of VAT arrears, further improvements in tax administration, and reductions in unproductive subsidies, while safeguarding spending on priority poverty reduction and infrastructure.
Keep rates at par with India
KATHMANDU: The peg should remain the key policy priority Regards monetary and exchange rate policy, the IMF mission suggested, adding that monetary policy should be conducted in a manner that ensures interest rates in Nepal do not fall below those in India.
ECF talks ing on
KATHMANDU: The government is holding talks with the IMF for the Extended Credit Facility (ECF). Nepal had received Rapid Credit Facility (RCF) in 2010 and is in talks with the IMF for ECF — a three year programme to stabilise macroeconomic situation — that come at a concessional rates. The IMF team will return to Kathmandu in the next few months to continue negotiations.
While the emergency in the Horn of Africa was triggered by prolonged droughts, especially in areas struggling with conflict and internal displacement such as Somalia, food prices that are near the record high levels seen in 2008 also contributed to the situation, the report said.
Over the last three months, reportedly 29,000 children under five have died in Somalia and 600,000 children in the region remain at risk in the ongoing crisis that is threatening the lives and livelihoods of more than 12 million people.
"No where are high food prices, poverty and instability combining to produce tragic suffering more than in the Horn of Africa," said World Bank president Robert B Zoellick . "The World Bank is stepping up with short term help through safety nets to the poor and the vulnerable in places like Kenya and Ethiopia, along with medium term support for economic recovery. Long term support is also critical to build drought resilience and implement climate-smart farming."
The Food Price Watch revealed that global food prices in July 2011 remain significantly higher than a year ago.
Prices overall remained 33 per cent higher than a year ago with commodities such as maize (up by 84 per cent), sugar (up by 62 per cent), wheat (up by 55 per cent) and soybean oil (up by 47 per cent) contributing to the increase.
Crude oil prices are 45 per cent higher from July 2010 levels, affecting production costs and the price of fertilisers, which increased by 67 per cent over the same period.
Prices from April through July settled roughly five per cent below the recent spike in February 2011 due to modest declines in grains, fats and oil, and other foods such as meat, fruits, and sugar.
However, prices of some commodities remained volatile during this period. For example, maize and wheat prices declined in June and then increased in the first half of July. The price of rice fell from February to May, but has since increased. "Persistently high food prices and low food stocks indicate that we’re still in the d anger zone, with the most vulnerable people the least able to cope," Zoellick said, adding that the vigilance is vital given the uncertainties and volatility that exists today. "There is no cushion."
The quarterly report warns that vigilance is needed as global food stocks remain low and expected volatility.in the prices of sugar, rice, and petroleum products could have unexpected effects on food prices in the months ahead.
Uncertainties about the global economy combined with the political situation in the Middle East and North Africa region will likely to keep oil prices volatile in the short term, it added.
Domestic food prices continued to be volatile across countries. Maize prices, for instance, were up more than 100 per cent in Kampala, Mogadishu and Kigali markets in the 12 months to June; while prices for maize fell by 19 per cent in Port-au-Prince and Mexico City.
In the midst of these large price variations, domestic prices of key staples increased sharply in a number of regions in the past quarter, notably in Central and South America and East Africa.
The report also says sustained increases in food prices aredriving up inflation in a number of countries such as Ethiopia and Guatemala among others.
In Somalia, prices of locally produced cereals have continued to increase in all regions since October 2010 and have now exceeded their 2008 peak levels.
Prices of the two major commodities that are domestically produced, red sorghum and white maize, have increased up to 240 per cent and 154 per cent respectively.
Prices of imported commodities, such as rice, sugar, wheat flour, vegetable oil, and petrol, are also higherthan a year ago.
Out of 3.7 million people in crisis in Somalia, 3.2 million are in urgent need and 2.8 million of these people are in the south.
Poor farmers with no stock and no means to purchase food are among the worst affected,as are the displaced given their difficulties accessing food. The urban poor are suffering from increases inthe cost of living and falling wages.
The World Bank Group is providing $686 million to save lives, improve social protection, and fostereconomic recovery and drought resilience for people in the Horn of Africa. Initially, the Bank will target themost vulnerable by enhancing safety nets. Economic recovery will be the focus over the next two years.
In the longer term, the bank will focus on building resilience to droughts, including investments in drought risk reduction and risk financing, as well as climate-smart agricultural practices. "We are stepping up to address this crisis with a sense of urgency," said Z oellick, who has beenadvocating for the G20 to put food first since the beginning of this year.
The G20 Agriculture Ministers meeting in June agreed to exempt humanitarian food aid from export bansand to pilot small regional emergency food reserves that could be used to replenish national safety nets.
The ministers also agreed on more transparency, more coordination, stronger risk management instruments and more investment in production.
The G20 Heads of State are due to meet on these issues in November.How the World Bank Group is helping to put food firsth The World Bank Group is providing $686 million to save lives, improve social protection, and fostereconomic recovery and drought resilience for people in the Horn of Africa. More than 12 million peopleare affected by the crisis.
A first-of-its-kind World Bank Group risk management product, provided by International Finance Corporation (IFC), will enable up to $4 billion in protection from volatile food prices for farmers, food producers, and consumers in developing countries.
The Global Food Crisis Response Program (GFRP) is helping some 40 million people through $1.5 billion in support.
The World Bank Group is boosting its spending on agriculture to some $6 to $8 billion a year from $4.1billion in 2008. Supporting the Global Agriculture and Food Security Programme (GAFSP), set up by the World Bank Group in April 2010 (at G20’s request) to assist country-led agriculture and food security plans and help promote investments in smallholder farmers. To date, six countries and Gates Foundation have pledged about $925 million over the next three years, with $520 million received.
The World Bank Group is coordinating with UN agencies through the High-Level Task Force on the Global Food Security Crisis and with NGOs.
Sunday, August 14, 2011
He also called for regrouping of directors on the basis of financial capability.
“Banking and businesses
of directors should be different,” he said, adding that conflict of interest will exist while taking any decision, if they mix the both.
Lately, the issue of good governance has become more important as some of the financial institutions were hit by the crisis purely due to lack of good governance. “The director of the banks and financial institutions should also disclose their loan portfolio,” said the governor of the central bank that has recently brought regulation to clip their wings.
The directors of the bank and financial institutions from now on have to disclose the loans taken not only by them and but also their family members, according to the directives that directed the bank and financial institutions to publish the details of the loans taken by directors and their family members in the annual report.
All of the seven cases of failure of financial institutions — including Samjhana Finance and Nepal Development Bank that are in liquidation process — were the results of bad corporate governance.
National Banking Training Institute organised the workshop to educate the directors of their roles and responsibilities, said NBTI chief executive Sanjeeb Subba.
The IFC consultant presented a paper on role of directors with examples of foreign banks and popular global practices in the workshop, where NBTI chairman Sashin Joshi was also present.
Saturday, August 13, 2011
The channel built up stock at the end of the first quarter in preparation of possible component shortages following the Japanese earthquake. As a result, sell-in demand slowed in the second quarter of 2011 to 421.1 million units, a 4.4 per cent decrease from the previous quarter.
"Sales of smartphones were up by 74 per cent and accounted for 25 per cent of overall sales, up from 17 per cent in the second quarter of 2010," the report said, adding that it is supported by operator promotions on low and mid-range smartphones, which consumers are choosing over feature phones.
However, replacement sales in Western Europe showed signs of fatigue as smartphone sales declined quarter-on-quarter. Gartner expected manufacturers and distributors to remain cautious about raising their stock levels in the second half of 2011, following the recent uncertainty on world financial markets. The market researcher expected sales of mobile devices to grow around 12 per cent in the full year 2011.
In smartphones, Nokia’s sales into the channel in the second quarter of 2011 were low. "It was partly due to a very competitive market that deflated demand for Symbian, but also to inventory management issues in Europe and China in particular," it added.
Samsung achieved strong growth in sales of mobile devices. The Galaxy S II sold well, and the model went on to chalk up by five million in sales by the end of July. A strong performance in the smartphone market helped Samsung increase its market share to become the third-largest smartphone vendor. However, its overall share dropped year-on-year, and grew only marginally quarter-on-quarter, mainly due to Samsung’s weaker presence in more price-sensitive market segments.
Apple continued to exceed expectations, even though the iPhone 4 will soon be replaced by a new model, according to Gartner that attributed the growth to its 42 new carriers and fifteen new countries that brought its total coverage to 100 countries.
In mainland China, Apple is the seventh-largest mobile phone vendor and the third-largest smartphone vendor. RIM’s share of the smartphone market declined to 12 per cent, from 19 per cent a year ago. The company also lost its number five position in the worldwide ranking of mobile device vendors to ZTE. Demand for RIM’s devices in the second quarter was impaired by an ageing portfolio and delays in shipping products. Google and Apple are the obvious winners in the smartphone ecosystem. The combined share of iOS and Android in the smartphone OS market doubled to nearly 62 per cent in the second quarter, up from over 31 per cent in the corresponding period of 2010.
Friday, August 12, 2011
The committee today also directed the central bank and Finance Ministry to submit the 'dumped' report within three days.
After complaints of the quality of Rs 10 denomination polymer notes in 2007 from the Australian agency, the central bank had prepared a report but 'dumped' it without taking action against those involved in the 'corruption'.
The PAC members asked for serious investigation on the bribe 'scandal' that came into light after the Australian newspaper 'The Sydney Morning Herald' broke the news about the corruption in Australia and started investigation.
In 2002, when the Polymer notes were planned to be issued, the central bank has convinced the common people saying that paper money is easy to counterfeit — 97 per cent of fake banknotes are paper— and has a circulation life of about eight months at the most. But the polymer has longer life and difficult to counterfeit.
"Worn notes also cause more errors in ATMs and high-speed note validators," it had justified, adding that the need of bringing the Polymer notes that the high cost of replacing high-circulating, low-denomination paper currency often takes the lion’s share of any reserve bank’s budget at around Rs 100 million.
Nepal was the 21st country to make polymer notes.
After a hard lobbying with politicians and central bank, Note Printing Australia (NPA) — a subsidiary of the Reserve Bank of Australia — won a tender worth $1.64 million to produce 50 million worth Rs 10 denomination currency notes.
Polymer banknotes were, though, expensive — as they cost almost twice the amount of paper — it had guaranteed longer circulation life that could have ssaved budget of the central bank. But the NPA was proved wrong immediately after Nepal received the first batch of the polymer notes as they worn out as fast as the paper currency notes.
Though, the Australia's central bank yesterday dismissed 'unwarranted' media reports that board members had known about an Asian banknotes bribery scandal involving one of its companies as early as 2007, the case has now came under scanner in Nepal.
One of the Australian newspaper Fairfax reported that senior Australian central bank figures failed to alert police to claims that agents from Note Printing Australia (NPA) were involved bribing officials in Nepal.
The allegations were brought before the NPA board, of which a number of Reserve Bank of Australia (RBA) officials were members, in mid-2007, according to the newspaper, 'but the bank decided to handle it internally.'
RBA said NPA's board was alerted to 'serious deficiencies in the practices and controls related to the use of sales agents' after commissioning an audit in 2007. Nepal Rastra Bank, though, tried to investigate but dumped the case afterwards.
However, skeletons started to come out of the closet after the Australian newspaper reported it this week. The Nepal Rastra Bank and anti-graft watchdog both are in fix for their suspicious role in the scandal. But PAC's directive might bring those involved out to open after almost a decade.
Delivering a lecture, 'Global Financial Crisis and Lessons Learnt by India', at Nepal Rastra Bank here yesterday, he underlined the need to bring down inflation and inflationary expectations to sustain growth.
The visiting governor of the RBI also said deregulation alone is not sufficient to maintain a sound economy and a certain level of regulation is necessary for rescuing the economy from the current financial crisis.
Subbarao''s comments come against the backdrop of the Indian central bank''s fight against inflation, which was 9.44 per cent in June. Besides, food inflation for the week ended July 30 shot up to 9.9 per cent sparking investor fears of another round of monetary tightening, which will further push up interest rates impacting growth.
The RBI has hiked its lending and borrowing rates 11 times since March last year in a bid to curb consumer spending to tame the rate of price rise. However, high interest rates have increased borrowing costs for the industry crimping corporate margins and fanning fears of a slowdown in economy''s expansion.
Subbarao, who is on courtesy visit in the invitation of central bank governor Dr Yuvaraj Khatiwada shared his experience regarding the current global financial crisis with senior bank officials.
Talks on IRs 500 and IRs 1000 denomination notes
KATHMANDU: Governor of Reserve Bank of India Dr D Subbarao said that there is a possibility to transaction of 500 and 1000 denomination notes in Nepal. It is possible to transact those notes in Nepal but it should be agreeded by governments of Nepal India, he said. Curently, 500 and 1000 denomination notes are not accepted in Nepal and its tranasaction is illegal according to NRB laws.
Thursday, August 11, 2011
The precious yellow metal hit a record price of Rs 50,499.28 (11.664 gram) for a tola today increasing by Rs 1,405 from yesterday’s Rs 49,093 for a tola.
For those who are planning for marriage this season — normally during November-January — will have to increase their budget as one of the most essential commodity for ornaments in the marriage according to the tradition, has seen a steep rise in the last some months.
The precious metal hit $1,815.50 in early trade as Asian markets tumbled after Wednesday’s massive sell-off in the US and Europe, which was caused by fresh concerns over the global economy.Rumours of a downgrade in eurozone giant France — due to problems at a number of French banks — reignited concerns that the European debt crisis has spread from the peripheral states. Gold is traditionally used as jewellery universally mainly due to its beauty, grandeur, colour and luster but the rising price distracted the customers from buying. “There is hardly any sales of the gold, despite the coming Teej — a festivals of women, who buy new jewelleries,” said Nepal Gold and Silver Dealers Association president Tej Ratna Shakya. But, the country has witnessed a huge import of 700 kg of gold worth Rs 2.46 billion in Jestha (mid-May-Mid-June) from around 100 kg some months ago.
Since its discovery in 325 BC, gold — because of its rarity and difficulty to mine — has been considered also as a currency and an investment, used to create political power and settle trades.
Lately it has become the best investment option worldwide.
During the first quarter of 2010, investment demand grew by 26 per cent to 310.5 tonnes from 245.6 tonnes in the first quarter. In value terms, investment demand was $13.8 billion, according to World Gold Council.
The main growth came from bar and coin demand which increased by 52 per cent year-on-year, to 366.4 tonnes. In value terms, it represented a near-doubling of demand to $16.3 billion from $8.6 billion in the first quarter in 2010.
The customers are buying not jewelleries but gold bar as an investment, Shakya said, justifying the increased demand in the domestic market.
Gold has been a valuable and highly sought-after precious metal for coinage, jewellery, and other arts since long before the beginning of recorded history. Gold standards have been the most common basis for monetary policies throughout human history, being widely supplanted by fiat currency only in the late 20th century.
A total of 166,600 tonnes of gold have been mined in human history till date. The world consumption of new gold produced is about 60 per cent in jewellery, and 40 per cent in investments that has fuelled the price in recent years.
Besides its widespread monetary and symbolic functions, gold has many practical uses in dentistry, electronics, and other fields. Its high malleability, ductility, resistance to corrosion and most other chemical reactions, and conductivity of electricity lead to many uses of gold, including electric wiring, coloured glass production and even gold leaf eating. Gold is a chemical element with the symbol Au (from Latin: aurum meaning gold) and an atomic number of 79. The atomic number of gold, which means there are 79 protons in the nucleus of every atom of gold.
Held securely in national vaults as a reserve asset, gold has an irrefutable logic, released from the tombs of pharaohs and emperors alike, gold has an undeniable magic. And the magic of gold seems to continue for decades to come.
* Gold melts at 1,064 degrees centigrade and only boils at 2808 degrees centigrade.
* Some 166,600 tonnes of gold has been mined since beginning of civilisation and over 90 per cent of the world’s gold has been mined since the California Gold Rush.
* Some 60 per cent of the gold mined has become jewellery.
* 31.103 gram is equal to one troy ounce the popular measurement of gold.
* US Federal Reserve holds 6,200 tonnes of gold.
* The largest gold coin ever minted, a 2007 Canadian $1,000,000 Maple Leaf is 53cm in diameter.
* In a total of 22 times, the gold has reached a new high in 2010.
Kuroda was first elected ADB president in November 2004, officially assuming office on February 1, 2005 to complete the term of former president Tadao Chino. He was subsequently reelected for a full five-year term beginning from November 2006.
Kuroda is the eighth president of ADB. Under his stewardship, ADB adopted a new long-term strategy charting the Bank’s strategic course to the year 2020, refocusing ADB’s operational agenda on inclusive economic growth, environmentally sustainable growth and regional cooperation and integration, the Manila-based agency said, adding that during Kuroda’s tenure, ADB has tripled its capital base from $55 billion to $165 billion, and significantly bolstered its concessional lending window, Asian Development Fund, enabling ADB to push forward on mainstreaming climate change and strengthening support to countries in fragile and conflict-affected situations among others.
Before joining ADB, Kuroda was special advisor to the Cabinet of Japanese Prime Minister Junichiro Koizumi and a professor at the Graduate School of Economics at Hitotsubashi University in Tokyo. In a career spanning nearly four decades, Kuroda has represented Japan’s Ministry of Finance at a number of international monetary conferences as vice minister of Finance for International Affairs.
Born in 1944, Kuroda holds a BA in Law from the University of Tokyo and a Master of Philosophy in Economics from the University of Oxford.
Wednesday, August 10, 2011
Lately meetings, incentives, conference and exhibition (MICE) tourism has seen an encouraging growth in the country also due to government's policy.
According to the budget for the current fiscal year 2009-10, an organiser of meeting, seminar, workshop or interaction programme inviting more than 100 foreign passport holders once at a time entering Nepal through air.
“If the company applies within seven days of completion of such programmes with evidence and relevant documents, it will be awarded Rs 500,000 cash incentives
A report of Pacific Asia Travel Association (PATA) Issues and Trends, revealed that Asia accounts for 16 per cent of total meetings worldwide. Asian destinations are increasingly seeking to attract MICE visitors as they spend between three and seven times the amount of leisure visitors, depending on which criteria one uses, said the Pacific Asia Travel Association (PATA) published 24-page analysis of the meetings, incentives, conference and exhibition (MICE) industry in Asia.
The report, entitled 'MICE Comes of Age in Asia Pacific', notes that despite the growth in international events, domestic meetings continue to represent the bulk of the MICE sector, representing 71.5 per cent of all events recorded by the International Association of Professional Congress Organisers in 2009. Similarly, domestic meetings grew by 227 per cent from 2006 to 2009, while international meetings increased by just 45 per cent over the same period.
"A robust MICE sector is a strong indicator of a sophisticated economy,” said PATA’s Strategic Intelligence Centre's John Koldowski. "Attracting top level international events requires the hardware of physical infrastructure, the software of people skills and a first-class service mentality."
The PATA report stated that must-have credentials to be a MICE destination include easy access by air, road or rail, at least one good quality congress centre, an adequate range of three- to five-star hotels, an attractive destination and surroundings, value for money, adequate marketing muscle, and a good range of local professional conference organisers.
Increasingly discerning MICE clients now also insist on flexible, fast and efficient service, a strong track record of success with previous events, excellent IT and telecoms, meaningful environmental policies, and smart marketing.
Some industries are more lucrative than others for MICE business. The report revealed that in China, the demand is growing fastest in the medical and pharmaceutical sectors followed by banks, financial services and insurance.
According to PATA, emerging fields in the international conference scene are likely to include businesses associated with the environment, security, fashion and design.
“Competing for top-end MICE business in Asia is a high-stakes game,” Koldowski said, adding that decision-makers who decide where to hold large conventions have a burden of responsibility for hundreds and sometimes thousands of association members. Sometimes a ‘guarantee’ from a government ministry can tip the balance in the destination’s favour."
PATA’s MICE report also looks at issues such as the role of subsidies, the impact of mega events in repositioning a destination’s reputation, upcoming Asian MICE destinations of the future, and the impact of economic slumps on the sector.
Tuesday, August 9, 2011
The gold price is fast approaching Rs 50,000 for a tola (11.664 grams) as the domestic market today saw its trading at Rs 49,394 per tola.
The precious yellow metal price took a leap of almost Rs 2,000 from yesterday's price of Rs 47,500 per tola due to European and US debt crisis.
The global bullion market saw the yellow metal surging to $1,775 per ounce on intra-day trading today as the investors’ confidence in paper currency seem to have eroded due to European and US debt crisis.
The international commodity market witnessed gold price surging to $1,721 per ounce from yesterday's $1,680 for an ounce. The yellow metal had shot past $1,600 per ounce in April.
The commodity analysts attribute the speculative buying by the investors aided by the gloomy economic scenario as the reason for such rally of gold. The Eurozone debt troubles are yet to be abated.
However, the downgrading of US credit rating by Standard & Poor credit rating agency has pushed the investors towards gold and precious metals. The investors want to hedge themselves from the possibility of the much-feared double dip recession.
“Emerging Asian markets remain vulnerable to abrupt changes in global investor sentiment," head of ADB's Office of Regional Economic Integration, which prepared the report, Iwan Azis, said, adding that the knock-on effects from events in the US and Europe will go far beyond portfolio returns, as a weakening global economy will hurt our exports.
The 'Asia Capital Markets Monitor', ADB's annual assessment of the performance and outlook for the region's equity, bond and currency markets, stated that the global financial environment has become more volatile in recent months — with investors unnerved by the weakening global economy, US and European debt troubles, and political unrest in the Middle East and North Africa.
While emerging Asia’s markets have not been immune to these developments, the region’s strong fundamentals and interest rate differentials with advanced economies are expected to reignite capital inflows to the region later this year.
“While freer capital mobility is welfare-enhancing in theory — as it promotes better and more efficient allocation of financial resources — large and volatile capital flows are risks and present challenges to emerging market economies,” warned Azis.
Large short-term capital flows have historically disrupted domestic monetary policy, destabilised financial systems and dented economic growth.
The 'Asia Capital Markets Monitor' covers 11 economies of emerging Asia: the People’s Republic of China, Hong Kong, China, India, Indonesia, the Republic of Korea, Malaysia, the Philippines, Singapore, Taipei China; Thailand and Viet Nam.
Fears of a global growth slowdown and worries over US and European debt have seen credit spreads on emerging Asian sovereign bonds widen since March. However, the appetite for sovereign debt paper remains resilient given the region’s relatively sound fiscal positions and positive growth outlook. Emerging Asian borrowers issued $29.5 billion of G3 currency-denominated bonds in the first quarter of 2011, up from $24.5 billion over the same period in 2010.
Equity markets continued to rebound from the global economic crisis, supported by upbeat prospects for the regional economy, strong corporate profits, and a lack of attractive yields in advanced economies.
In 2010, most of emerging Asia’s currencies appreciated — their biggest gains since 2006 — aided by strong capital inflows attracted by the prospect of widening growth and interest rate gaps with advanced economies. The Malaysia ringgit led the gains with an 11 per cent rise against the US dollar. Despite some recent moderation, the report said, adding that the upward trend should continue.
While noting growth in emerging Asia is forecast at a robust 7.9 per cent in 2011 and 7.8 per cent in 2012, the report warns that downside risks loom large as monetary authorities across the region step up their fight against inflation amid increased global economic uncertainty and heightened financial volatility.
Despite visible improvement in the depth and breadth of emerging Asia’s capital markets, persistent vulnerabilities to external shocks suggest the region’s collective efforts are necessary to enhance market resilience. “Providing deep and liquid markets with strong market infrastructure is essential to support the region’s financial development and integration,” he said.
Monday, August 8, 2011
Some 78.9 per cent of the remittance is used on daily consumption, whereas 7.1 per cent of the remittance is used to repay loans followed by 4.5 per cent on household property, 3.5 per cent on education and only a minimal 2.4 per cent is used on capital formation, stated the survey published by the Central Bureau of Statistics here today. “However, percentage of household receiving remittances has also more than doubled from 23.4 per cent 15 years ago to 55.8 per cent in 2010.”
Consumption of expenditure on food, housing and education has increased but on other non-food items it has decreased. “Share of food in total household consumption has seen a increased to 61.5 per cent from 59 per cent in 2003-04, whereas share of non-food consumption has decreased to 22.2 per cent in 2010-11 from 2003-04’s 28.7 per cent,” according to the survey that reflects the migration has not only increased the average income of a Nepali and consumption pattern but changed the social structure too. “The female headed households percentage has doubled — to 26.6 per cent from 13.6 per cent — in the last 15 years since the first Nepal Living Standard Survey 1995-96.”
Despite the remittance being used on household property, households that owned houses have decreased while those renting houses have increased and access to power, safe drinking water and toilet also increased though the load shedding hours are increasing and water comes once in a week in most urban centres.
As a major shift in the agriculture that contributes 33 per cent to the GDP, agriculture households and average size of agriculture land both decreased in the last seven years between second survey in 2003-04 and third survey in 2010-11, whereas self agriculture is still the main sector of employment with 61.3 percentage, though it’s share has come down from 70.7 percentage in 1995-96. The share of wage agriculture as a sector of employment has also dropped significantly from 12.2 percentage to 2.8 percentage in a decade-and-a-half.Similarly, share of farm income in household income has dropped to 27.7 per cent from 61 per cent in 1995-96.
However, share of non farm income surged to 37.2 per cent from 22 per cent and share of other income has doubled in 2010-11 to 35.1 per cent from 16 per cent in the first Nepal Living Standard Survey. The nominal average household income has gone five times up to Rs 202,375 from Rs 43,732.The survey revealed that the nominal average per capita income of a Nepali has increased by seven times to Rs 41,659 in last one-and-a-half decade from Rs 7,690 in 1995-96.
“The poorest 20 per cent of population has seen their nominal average per capita income rise by seven times but the riches 20 per cent of population has seen their nominal average per capita income hike by only around five times.Similarly, the working group population has increased but those dependent (60+) has also increased, whereas dependent population below 14 years has decreased.
In a positive development, more households are now borrowing from banks than from money lenders, according to the survey that was carried out across the country 500 village development committees (VDCs) of 73 districts, said director general of Central Bureau of Statistics Uttam Narayan Malla.The Survey conducted according to the World Bank’s Living Standards Measurement Study (LSMS) has collected the data from 5,988 households, he said, adding that the survey conducted every seven years is the third and this survey has some new data also that will help government formulate policy.
Use of remittance
Daily consumption — 78.9 per cent
Repay loan — 7.1 per
Household property — 4.5 per
Education — 3.5 per cent
Capital formation — 2.4 per cent
Others — 2.6 per cent
(Source: Nepal Living Standard Survey 2010-11)
Yesterday the shortage of gold in the domestic market has propelled the gold price to Rs 46,600 per tola.In the international market, the price of gold struck a record high of above $1,700 an ounce today with dealers flocking to the safe haven metal as Asian stocks tumbled following Standard & Poor's downgrade of US debt.
Gold ended at a record high of $1,706-$1,707 an ounce in Hong Kong, well up from Friday's close of $1,655.50-$1,656.50."People are just taking their money out 1/8 of other markets 3/8, especially from the dollar and euro and investing in gold and the Japanese yen," a Tokyo-based trader said.
Asian markets were sent spinning on Monday after S&P late on Friday cut the United States' AAA rating by one notch, citing deep divisions in Washington over its long-term fiscal standing.
The turmoil has led investors to seek out less-risky gold at a time of economic uncertainty.
S&P's downgrade compounded already weak sentiment amid fears that the eurozone debt crisis will spread to other nations, while the United States has posted a series of poor data indicating an economic slowdown.It has led some analysts to warn of another global financial crisis that could even be worse than that of 2008-09.
The climbing price
April 8 — Rs 40,398.26
May 8 — Rs 41,488.
June 8 — Rs 43,098.48
July 8 — Rs 42,497.78
August 8 — Rs 47,501.
(The price of gold rupees per tola that is 11.664 gram. Source: Nepal Gold and Silver Dealers Association)