Policy proposed to allow foreign investors to invest in securities

Kathmandu, Oct. 5: The Ministry of Industry is making legal arrangements whereby a foreign investor can make an investment in securities or equity in any Nepalese public limited company, or buy an industry that is in operation.

Through the Draft of the Foreign Investment (Amendment and Integration) Bill, the Ministry has proposed to allow the foreign investors or Non-Resident Nepalese to buy the securities of the companies listed at the Nepal Stock Exchange.

The Draft is prepared to amend the Foreign Investment and Technology Transfer Act, 1992.

Similarly, the foreign investors can establish a venture capital fund to make equity investment in Nepalese companies.

However, such fund should be established as a public limited company and will not be allowed to invest more than 10 per cent of its paid-up capital in any single company.

If the Bill ratified as it is, foreign investors can buy any company that is in operation with the approval from the government.

Likewise, they can make an investment through technology transfer to any industry, and establish branch of foreign company in Nepal.

The Draft has made a mandatory provision that the foreign investors must bring money through the banking channel. The money should be in the convertible foreign currency or Indian reupees.

It has proposed the removal of the cap on foreign investment.

“Apart from the investing in securities, foreign investors can invest up 100 per cent in any companies. But, the government can impose cap on service industry which won’t be less than Nepal’s commitment to the World Trade Organisation,” read the draft.

The proposed legal framework on the foreign investment has made a clear provision on the ‘exit policy’.

Foreign investors can leave the country after clearing their liabilities following the government approval for the same.

The Draft has proposed complete income tax waiver for a specific period for hydroelectricity generation and transmission project, manufacturing industry, mines, tourism and international airlines companies with the foreign investment.

Similarly, tax waive off would be offered to the companies that invest in the research and development of agriculture, minerals and other specified technology sector.

The Draft has proposed cash incentives, loan and foreign currencies facilities for the foreign investors.

“This is the high time for Nepal to attract foreign investment. Without large foreign investment we can not develop the industrial sector, create employment and increase the contribution of the manufacturing sector to the Gross Domestic Product,” Minister for Industry Nabindra Raj Joshi said in an interaction programme on the Draft.

President of the Nepal Chambers of Commerce and Industry (FNCCI) Pashupati Murarka termed the Draft as ‘Bold’ and said that the government had been seriously working to attract foreign investment.

He urged the government that the facilities that were availed to the companies with the foreign investment to the domestic companies.

According to Murarka, the government should open the outbound investment.

“Nepalese should be allowed to invest in the foreign countries. If the outbound investment is legalized, the money that goes out will return, else there will be capital flight,” he said.

Country manager at the Berger Paints Nepal Saibal Ghosh suggested that the foreign countries should be allowed to test their brands in Nepalese market.

Published in The Rising Nepal Daily. 

Report on restructuring before 15th November impossible: LBRC

Kathmandu, Oct. 4: The Local Bodies Restructuring Commission (LBRC) Tuesday hinted that there was no possibility of submitting the final report on the number and border of the local bodies by November 15, 2016 on the basis of the new standards set by the government.

Chief of the Commission Bala Nanda Poudel said that after the government directed the Commission to include ‘Ilakas’ as one of the bases for local body restructuring, now work has to start from the very beginning.

If the report is not submitted by that date, the election to the local bodies cannot take place by mid-April next year.

The Election Commission has already warned the government that if the report of the LBRC was not submitted by November 15, the polls could not be held in April next year.

The local polls must be held by that date as the government must hold three elections within one-and-a-half years to expedite the constitution implementation process.

The Commission said that the confusion over restructuring the local bodies, which had prevailed for a couple of days after the major political parties agreed to create villages and municipalities as per the now existing ‘Ilakas’, has been  removed following the meeting with senior political leaders, including Prime Minister Pushpa Kamal Dahal.

However, a meeting of the ruling CPN-Maoist Centre and Nepali Congress and the main opposition CPN-UML held on Monday at Singha Durbar had asked members of the Commission not to turn the existing Ilakas into local bodies but to consider the Ilakas as one of the bases while restructuring.

But as another standard needed to be included while deciding the number and border of the local bodies, the Commission has to revamp its work yet again.

But, the Commission had outrightly rejected the proposal, maintaining that if the local bodies were to be created on the basis of the existing Ilakas, no study or preparation was needed, and it would be unconstitutional, too.

“Prime Minister Pushpa Kamal Dahal Prachanda and leaders of the other political parties asked us to consider the Ilakas as another basis for restructuring. Therefore, we need additional time to complete our report according to the new provision,” Poudel said at a press meet at the Commission’s secretariat.

 According to Poudel, PM Prachanda had asked the Commission to submit its final report by November 15.

“But, we couldn’t assure the PM on the date because it will definitely take more time to restructure the local bodies by including yet another basis. We may need to begin work from the beginning,” said Poudel.

He said that they would soon begin discussion on how to move forward by implementing the new provision.

Earlier, the Commission had said that it would submit the report by 15^th October.

There are 927 Ilakas in the country.

After the restructuring of the local bodies by including the Ilakas, the number of local bodies in the country will be about 700.

The Commission had finalised on 565 local bodies and more than 52 districts had submitted their report on restructuring to the Commission.  

Japan and NIBL to reconstruct Jagannath and Gopinath temples

Kathmandu, Oct. 3: Japan Government and Nepal Investment Bank Limited (NIBL) have pledged financial assistance for the reconstruction of Jagannath and Gopinath temples, two important religious and historical heritage sites in the Basantapur Durbar Square.

“The Rs. 25 million project will receive Rs. 15 million from Japan while NIBL will provide Rs. 10 million,” informed Dr. Suresh Shrestha, chief archaeological officer of the Department of Archaeology (DoA).

The project is being implemented by the UNESCO Kathmandu Office in close coordination with the DoA.

The stakeholder organizations organized a programme on Monday to announce the reconstruction of the temples and the financial assistance under the project.

According to Dr. Shrestha, the project had been executed since last November and would take another one to three years for its completion.

The two temples were damaged in the devastating earthquakes in April and May last year.

While most of the temples and other structures, including the Kasthamandap temple after which the capital city was named, were flattened, Jagannath and Gopinath temples were partially damaged.

The tremors damaged 39 structures at the Durbar Square and 12 of them totally collapsed.

The upper most storey of Jagannath temple collapsed while the wall around the ground floor of Gopinath temple was damaged.

The wall has been retained with external support since then.

“The top floor of Jagannath temple should be dismantled and rebuilt while the four pillars at the corners should be reconstructed,” said Christian Manhart, UNESCO representative for Nepal.

Chairman of NIBL Prithvi Bahadur Pande claimed that for the first time a private sector company, international organization, government and a friendly nation had come together for the post-quake reconstruction work.

The bank had provided assistance in restoration of Kaal Bhairav and other temples in the past.

“Since the heritages are our treasures, quality will not be compromised while renovating the temples,” said Pande.

As the temples are in the area listed on the UNESCO World Heritage Sites, they should be renovated with traditional methods and materials.

UNESCO has warned the government not to use concrete and bricks while rebuilding the heritage.

It has also asked the government to expedite the heritage reconstruction and warned any neglect in the work on the temples could lead to their removal from the list of World Heritage Sites.

According to the Post Disaster Need Assessment (PDNA) the quake incurred losses of about Rs. 19.2 billion in the heritage sector.

Temples, historical buildings and other cultural, religious and historic heritages at all three Durbar Squares -- Basantpur, Patan and Bhaktapur-- were damaged in the quake.

The Durbar Squares are the major tourist destinations and cultural hubs of the Kathmandu Valley.  

Read the story in The Rising Nepal Daily

Govt forms task force to study Hetauda Kapada Udyog

Kathmandu, Oct. 2: The government has taken initiatives to bring Hetauda Kapada Udyog into operation.

Minister for Industry Nabindra Raj Joshi Sunday said that the government had formed a task force to study the present status of the industry, and it is to submit its report to the ministry soon.

“The government has constituted a 9-member task force led by economist and former National Planning Commission Member Dr. Pushkar Bajracharya. It has representatives from the Nepal Army, Nepal Police, Armed Police Force, Ministry of Industry (MoI), Ministry of Finance (MoF) and business community members,” he said.

According to the ministry, joint secretary of MoF Hari Sharan Pudasaini, joint secretary of MoI Yam Lal Bhusal and private sector representatives Ram Ekbal Yadav, Ajay Mudbhari and Bina Gautam Shrestha are in the committee along with the other stakeholders.

Established about four decades ago, Hetauda Kapada Udyog has the capacity to produce approximately 36,000 metres of cloth per day. The company has already been liquidated and merged into the Industrial District Management Limited. 

Minister Joshi said that the government would operate those industries which were shut in the past decades.

After his appointment as the Minister for Finance, Joshi had floated ‘the Industrial Sector Reform Action Plan’ with an aim to attract more investment from Nepalese and foreign investors and operate the state-owned industries that had been out of operation for many years.

Agriculture Inputs Company Limited, Nepal Metal Company, Nepal Oriend Magnesite Company, Birgunj Sugar Mills, Nepal Drug Company Limited, Butwal Dhago Karkhana, and Gorakhkali Rubber Udhyog are the top priority for re-operation.

Minister Joshi said that other industries would also be brought into operation in collaboration with the private sector.

The government has been planning to reform the policies related to the mines and geological studies.

Likewise, it is planning to utilise the budget from the Constituency Development Fund to create entrepreneurs and promote entrepreneurship.

“The government has been planning to call business proposals from individuals with innovative ideas for business development, and they will be provided with necessary advice, financing and other necessary things,” said Joshi.

The government has already called for business proposals from the people. Those with the best ideas will be provided with training immediately after the festival season this year. 

NRA fails to monitor reconstruction works

Kathmandu, Oct. 1: Although the National Reconstruction Authority (NRA) has approved 123 reconstruction projects run under more than 100 national and international Non-Governmental Organizations (I/NGO), it lacks mechanism to monitor their activities.

It has been months since the I/NGOs had got approval for the reconstruction of private houses, schools, health posts, and training and awareness programmes but the government was ignorant as to who is doing what.

Maintaining that the NRA was working on to establish the monitoring mechanism, a senior officer confirmed that the Authority did not have system to keep an eye on the activities of the non governmental organization.

According to the recent statistics of the reconstruction body, 24 I/NGOs have pledged to mobilize Rs. 39.57 billion to implement their projects.

A large share of budget will go to the reconstruction of the private houses.

Approximately Rs. 26.69 billion will be spent on house reconstruction.

According to the Social Welfare Act 1992, the Social Welfare Council (SWC) should supervise, follow up and carry out evaluations of the activities of the non-governmental organizations.

It should work as a center for dissemination of information and documentation to the affiliated service oriented organizations.

But, the SWC has poor track record in terms of monitoring I/NGO-run project.

However, the Act Relating to Reconstruction of the Earthquake Affected Structures, 2015 has allowed the NRA to mobilize non-governmental organizations, private sector or community for reconstruction.

The legal framework has entrusted the reconstruction body to make inspection, examination and monitoring of the activity carried out at the direction of the Authority.

But, despite of the legal provisions, the NRA has not established a mechanism to monitor the activities of the I/NGOs.

Meanwhile, as quake-affected families have begun to receive the first installment of the house reconstruction grant, Rs. 50,000, many have started to build their houses.

The government has deposited the first installment into the bank account of 406,300 households.

But, it does not have exact figures of the number of houses being built.

According to the rough data sent by the engineers in the field, about 3,000 houses were in the phase of completion. But, NRA couldn’t confirm the figures.

However, The NRA plans to keep tab on the activities of the I/NGO in close coordination with the line ministries.

NRA spokesperson Ram Prasad Thapaliya maintained that the reconstruction body was planning to have participatory approach in the monitoring and evaluation works.

He said that the non governmental organizations first needed to obtain approval from the concerned ministries and then come to the Authority.

If any organization directly goes to the Authority, the latter coordinates with the concerned ministry and helps to approve the programme.

According to Thapaliya, it had helped check the duplication of the source and programmes.

“We are mulling to set up a two-tier verification mechanism whereby the data provided by the VDC secretaries will be verified by the district level committees.

 Both the Ministry of Urban Development and Ministry of Federal Affairs and Local Development will be involved in the monitoring mechanism,” Thapaliya said. 

Himalaya flies to Colombo

Kathmandu, Oct. 1: Himalaya Airlines, a Nepal-China joint venture airline company, successfully launched its scheduled flight to Colombo, Sri Lanka on Saturday.

According to a press statement issued by the company, it carried the passengers directly to the destination as an initiative to bring both cities closer and boost tourism, trade and investment opportunities between Nepal and Sri Lanka.

The first scheduled flight flew from the Tribhuvan International Airport at 11:30 am and landed at Bandaranaike International Airport, Colombo at 15:03 PM.

Ambassador of Sri Lanka to Nepal W. S. Parera and secretary general of Federation of Chamber of Commerce and Industry, Sri Lanka Ajith D. Parera were also on board.

“The aircraft received a warm welcome in Colombo,” read the statement.

With the launch of passenger service, Himalaya Airlines has re-established direct links with Sri Lanka after more than 28 years.

The two flights are scheduled for Tuesday and Saturday a week.

“We anticipate that the majority of our passengers will be businessmen and tourists from the two countries,” said Vijay Shrestha, vice-president of administration at the company. 

Nepal to ratify WTO-TFA

Kathmandu, Sept. 30: Minister for Commerce Romi Gauchan Thakali has said that the government would soon ratify the Trade Facilitation Agreement relating to the World Trade Organisation (WTO).

Speaking at a function organised to disseminate the findings of the ‘trade and transport facilitation audit in South Asia’, he said that the Agreement would help Nepal in promoting international trade as it was aimed at enhancing efficiency.

Trade facilitation is aimed at improving the procedures and controls governing the movement of goods across borders in order to reduce related cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives.

The WTO members reached consensus on the Agreement at the Bali Ministerial Conference in 2013. As a member of the WTO, Nepal is obligated to ratify the document.

“Seamless trade in the South Asia Region is important for unleashing the potential of trade for poverty reduction. Poor connectivity and trade facilitation have affected regional trade. Therefore, although the South Asian Free Trade Agreement (SAFTA) is in force since 2006, regional trade is not encouraging in the region,” said Minister Gauchan.

President of SAARC Chamber of Commerce and Industry, Suraj Vaidya, said that the commitments made by the governments in South Asia looked promising, but it was only the private sector that has been trying to move ahead.

He complained that the government responses were not very encouraging, and this was further hampered by issues that came up from time to time like the recent postponement of the 19^th SAARC Summit scheduled to be held in Islamabad.

Director for Trade, Finance and Economics at the SAARC Secretariat, L. Savithri, said that business should be put ahead of politics and that the business community in the SAARC countries could push for greater regional cooperation in South Asia.

Chairman of South Asia Watch on Trade, Economics and Environment (SAWTEE), Dr. Posh Raj Pandey, said that the research had contributed to identifying the trade and transport related bottlenecks in region and estimating the required investment for adopting considerable trade facilitation measures.