Capital spending below median mark

Kathmandu, July 9

Government capital spending has remained the worst this year compared to the past several years except the period of the coronavirus pandemic in 2020 and 2021.

Total mobilisation of the capital allocation for the current fiscal year 2021/22 has reached just 46.22 per cent by Friday, according to the report of the Financial Comptroller General Office (FCGO). The number is about 8 per cent less than the development spending in the last FY 2020/21 when the government had spent about 54 per cent of the budget earmarked for development works. Then the county was under the threat of COVID-19 and businesses had been trying to recover from the damages caused by the pandemic.

However, this year, coronavirus did not threaten the economy and people's lives except a brief spike in the COVID-19 cases in January 2022. Likewise, speaking to the journalists in a post-budget press meet after the presentation of the Replacement Bill, Finance Minister Janardan Sharma had told the journalists that he would spend about 10 per cent of the capital allocation each month and achieve about 90 per cent execution of it.

In a hope to have better environment to implement development projects and achieve the economic growth of 8 per cent, FM Sharma had significantly increased the size of budget to Rs. 1632.8 billion for this year against Rs. 1474.6 billion of the last year. But since the capital expenditure of the government was below one-third by the end of the first half of the year, the finance minister adjusted the size of the budget to 94.7 per cent (Rs.1546.2 billion) of the total.

Capital allocations were adjusted to Rs. 340.3 billion from original Rs. 378 billion while recurrent budget was lowered from Rs. 1065.29 billion to Rs. 1035.4 billion.

With just five working days remaining, there are less chances that the government could mobilise any significant amount of budget except making the payments to the contractors. According to the Federation of Contractors Association of Nepal, the contractors have to get the payment equal to more than Rs. 30 billion for the construction of public infrastructure.

Economist Dr. Achyut Wagle said that the failure was caused by the fiscal inefficiency and mismanagement. "There was no adverse situation like an emergency or pandemic in the country which challenged the budget mobilisation, so it’s purely an issue of fiscal mismanagement," he said.

However, total budget spending has exceeded this year compared to the last fiscal. According to the FCGO, the government has spent about 74.23 per cent of the total budget Rs. 1632.8 billion. It includes 88 per cent recurrent expenditure and just 52.45 per cent mobilisation of financing budget.

Last year, by the same date, expenditure stood at 75.23 per cent of Rs. 1474.6 billion including 87.17 per cent mobilisation of recurrent budget and 53.82 per cent of financing.

Meanwhile, the government received Rs. 1058.5 billion by Friday which is 85.33 per cent of the total annual target of Rs. 1240.5 billion. Of the Rs. 1180.6 billion revenue target, Rs. 1000.7 billion (84.76) was collected. But only 23.17 per cent target of Rs. 59.9 billion grant was met. 

Published in The Rising Nepal daily on 10 July 2022. 

Domestic industries yield 42 per cent value addition

Kathmandu, July 8

The number of industrial enterprises in Nepal has reached 60,185 by March 2020, concluded the National Industrial Survey 2020 published by the Central Bureau of Statistics (CBS) on Friday.

There are 56,611 enterprises in industrial manufacturing, 356 in mines and minierals, 994 in electricity, gas and air-conditioning, and 2,224 in water supply, sewarage, and waste management and its treatment.

The CBS said that 491,227 people are involved in these industrial enterprises – 6485 in mines and minerals, 444,964 in manufacturing, 21,593 in electricity, gas and air-conditioning, and 18,185 in water supply, waste management and treatment sector.

However, the number of employees and workers getting regular salary and wages is only 381,687.

All the industrial establishments have spent about Rs. 107.89 billion in salaries and wages – including cash, goods and other facilities –  in the reference year 2020. Of the total amount paid for the salary and wages to the employees and workers, enterprises in mines and minerals sector mobilised Rs. 1.8 billion, industrial manufacturing Rs. 95.77 billion, gas and air-conditioning Rs. 6.92 billion and water, sewarage and waste management Rs. 3.4 billion.

Likewise, the enterprises with the fixed assets worth Rs. 619.5 billion have produced goods and services of Rs. 1201.17 billion by spending Rs. 846.66 billion cost investment. It means, the total value addition was Rs. 354.51 billion – about 42 per cent.

Capacity utilisation

About 76 per cent enterprises had run for more than 270 days, 19 per cent 180-269 days, 4 per cent 90-179 days and 1 per cent less than 90 days.

But only 39.9 per cent industries had run in their full capacity and 18.7 per cent enterprises utilised 75-99 per cent of their capacity while 29.1 per cent of them ran in 50-74 per cent capacity.

About half of the industries (46 per cent) cited lack of demand and market for their inability to optimise the maximum capacity of the production plants. Similarly, insufficient raw materials (10 per cent), lack of resources (8 per cent) and shortage of skilled manpower (8 per cent) were other reasons.

Access to finance

The survey has found that the small manufacturing enterprises – having less than 10 workers - have poor access to finance with only 34 per cent of them obtaining loan from the financial institutions. One per cent of them have received the commitment for loan mobilisation while 5 per cent are in the process of receiving loans.

Number of large industries has increased by 23 per cent in a decade. There were 4,076 large enteprises in 2010 which has gone up to 5,017 in 2020. Likewise, the number of people involved in these institutions has increased by 41 per cent in the past 10 years to reach 288,170. The average number of people involved in an enterprise is 57. It was 50 in 2010.

Deputy Director General of the CBS Dr. Hem Raj Regmi said that although the reference year was set for 2020, the survey was conducted in the last fiscal due to the COVID-19 pandemic.

The report also revealed that the first lockdown in 2020 caused the complete closure of 63 per cent enterprises, 24 per cent could run partially and only 13 per cent were operated in full capacity.

Likewise, about 17 per cent employees and workers were forced to leave their work without any facility.

Published in The Rising Nepal daily on 9 July 2022. 

PM Deuba, Chairman Oli expresses condolence on Abe’s demise

Kathmandu, July 8

Prime Minister Sher Bahadur Deuba has expressed condolences on the demise of the former PM of Japan, Shinzo Abe. He sent a message of condolences to the Prime Minister of Japan, Fumio Kishida on the passing away of Abe while strongly condemning the heinous attack.

In the message, PM Deuba has stated that late Abe was a visionary statesman, a charismatic leader and a relentless champion of democratic values and ideals. He also said that Abe’s demise is an irreparable loss not only to Japan but also to the world at large, the Ministry of Foreign Affairs informed in a statement.

Saying that Abe was a close friend and well-wisher of Nepal, PM Deuba recalled his contributions to further promoting and consolidating the friendly ties between Nepal and Japan during his long tenure as the Prime Minister of Japan.

"He was not only a renowned world leader but also a good friend of Nepal. At this hour of grief, our thoughts and prayers are with the people of Japan and bereaved family members," reads PM Deuba's tweet posted on Friday evening.

Meanwhile, leader of the main opposition party in the parliament, CPN-UML and its chairman, KP Sharma Oli expressed condolences to Abe's bereaved family.

Condemning the 'barbaric murder' of the former PM of Japan, he said that he was deeply saddened by the demise of Abe who was a friend of Nepal.

"Abe was a friend of Nepal and had played an important role in strengthening Nepal-Japan relations during his premiership," said Oli.

Abe was shot by a man on Friday morning. 

Published in The Rising Nepal daily on 9 July 2022. 

CBFIN wants to convert promoter shares to ordinary ones in 10 years

Kathmandu, July 8

The Confederation of Bank and Financial Institutions of Nepal (CBFIN) has suggested the Nepal Rastra Bank to make arrangements to convert the promoter shares into ordinary shares after 10 years of the concerned company came into operation. It said that it would make a good impact on the capital market, banking and overall financial sector.  

It suggested giving the authority to Nepal Stock Exchange Limited to make the promoter shares immediately tradable without having to take the permission from the NRB by determining the process of fit and proper test.

Likewise, it recommended to raise the CD Ratio to 95 per cent to reduce the pressure on the overall economy and the banking and financial sectors. It also suggested making arrangements to increase the CD Ratio by 5 per cent from the current 90 per cent on the condition that the loan facility should be made available to the productive sector.

"Banks and financial institutions should be allowed to open subsidiaries in order to operate digital banking services in a sustainable manner," it said.

According to CBFIN, there should be an arrangement of allowing the deposit of local body to be calculated as 100 per cent deposit to help in the flow of credit to the productive sector.

It suggested bringing attractive schemes to save a certain portion of remittances, provide special interest rates on remittances, provide special facilities in insurance, participate in social security funds, analyse one's ability to return to Nepal and run the industry up to ten times the amount saved.

Providing concessional loans, reservations in the Initial Public Offerings, attractive savings for non-resident Nepalis and special schemes to invest in productive industries are also suggested.

Published in The Rising Nepal daily on 9 July 2022. 

Sana Kisan reaches 1.19 million families

Kathmandu, July 8

Small Farmer Development Microfinance Financial Institution Limited has expanded its services to 1.19 million families in 76 districts in the country.

This number includes 11 per cent Dalits and 43 per cent janajatis, said Dr. Shiva Ram Prasad Koirala, Chief Executive Officer of the company, at the 21^st Anniversary programme organised the other day.

The company has forged collaboration with various financial partners in 540 local levels to expand microfinance services to people. They have generated internal capital equal to Rs. 59.6 billion and mobilised it to people.

"We have been collaborating with 1448 cooperatives in 540 local units to serve 1.19 million people. We are working with a motto 'no one should be excluded from the financial access'," said Dr. Koirala.

Sana Kisan has less than 1 per cent bad loan and more than 99 per cent loan repayment rate. It's paid-up capital is Rs. 1.56 billion and capital fund Rs. 4.01 billion. Small farmers have 44 per cent shares in the company.

By mid-June 2022, the company has mobilised Rs. 135 billion loans and recovered Rs. 105 billion loans.  

According to the company, it is providing loans for milk and meat enterprises, vegetable farming, alternative energy, tea industry, foreign employment, and other demands. It has been also sending youth to Israel for agricultural training. About 35 per cent youth who were trained from Israel have been involved in various enterprises in their villages and created employment opportunities.

Published in The Rising Nepal daily on 9 July 2022. 

NCC launches entrepreneurship training for women

Kathmandu, July 8

The Women's Chamber under the Nepal Chamber of Commerce (NCC) has launched a training as an economic empowerment programme for women.

The Women's Chamber has organized training in various fields to increase women's participation in the economic sector through entrepreneurship development and job creation. In the first phase, training is to be provided to women in six different fields including cooking, beautician, photography, candle crafting and fabric painting. The women's chamber has stated that training is being provided to different women in different areas.

Inaugurating the training, President of NCC, Rajendra Malla, said that economic participation of women should be increased through entrepreneurship development.

"NCC has given high priority to the issue of women's empowerment. Many options have been started in the field of information technology for income from home in recent times, so women should take advantage of it," he said.

According to Malla, the chamber will assist in the marketing the products produced by women. Training is also required for the processing of agricultural commodities. The chamber will help in it, he said.

Stating that the participation of women in the economic sector has increased, Malla said that they have a significant contribution in creating employment.

Urmila Shrestha, vice-chairperson of NCC and president of the Women's Chamber, said that the training was conducted for the financial security of women and it being provided as per the market demand. She said that training would be important to create trade and employment.

Secretary of the Women's Chamber Lima Adhikari said that the participating women would be given training for at least 15 days.

Chobhar Dry Port fails to attract containers

Minister Badu urged entrepreneurs to use the facility

 

Kathmandu, July 7

The Chobhar Dry Port, the first and only dry port in the country away from the border point, has a dismal performance as only 16 containers have arrived here in the past three months since the beginning of its operation on April 5.

Built by Nepal Intermodal Transport Development Board (NITDB) at a cost of Rs. 1.54 billion, the port has the required facilities like warehouses, appraisal shades, customs, quarantine, security, stuffing and de-stuffing shade, banks, operator company office, electricity substation and weighing machine.

Containers from the sea ports in India can directly reach Chobhar for customs clearance and other works. But despite one-door service system in place to facilitate the importers and exporters, they have not been using the infrastructure in their cross-border trade.

Executive Director of the NITDB, Ashish Gajurel, in an interaction organised by the board at the Ministry of Industry, Commerce and Supplies (MoICS) and chaired by Minister Dilendra Prasad Badu, said that contrary to the enthusiasm of the private sector seen at the inaugural programme, they were not attracted to the port. Meanwhile, goods worth more than Rs. 20 billion are exported from Kathmandu to India and third countries.

Entrepreneurs said that the procedural hassles barred them from using the facility. For example, they alleged that the Birgunj Dry Port force the importers to clear customs there in order to meet its annual revenue target.

President of Nepal Freight Forwarders Association, Manoj Adhikari, said that the customs clearance cost is high at Chobhar Dry Port since the goods need to unload and load at the border points and the activity should be repeated here as well.

According to him, entrepreneurs also want a sound security system for the containers.

Entrepreneurs suggested that the government needed to promote the dry port since many traders and producers are not aware of the infrastructure and facility available here. Binod Kumar Sethia, First Vice President of Nepal Foreign Trade Association, suggested to provide additional facilities to the traders using the port.

They also said that the shipping company only pay the transportation cost up to the border point and importers can't pay the additional cost of the international containers. Likewise, they don't get containers in time while exporting goods.

The Ministry had said earlier that the new dry port in the Kathmandu Valley would reduce the traffic and crowd at the customs at the border points.

Port to be listed in shipping map

Director of the Department of Customs, Ram Prasad Regmi, said that an application was sent to the World Trade Orgnaisation, through the MoICS, for the Unilog Number for the Chobhar Dry Port. The number will put it in the global shipping map. After the assignment of the number to the port, cargo will have the cost, insurance and freight (CIF) – an international shipping agreement representing the charges paid by the seller that covers the CIF cost for the goods in transit, he said.

In terms of customs clearance, the port has facilities on par with the Tribhuvan International Airport, while the foreign containers have double time, 144 hours, to stay in Nepal without paying the customs duties. For other ports, the time is only 72 hours.

According to Regmi, Kathmandu-bound containers need not be opened at Birgunj customs, only the entry of basic information is required.

Minister Badu urged the entrepreneurs to use the facility. "If you are getting time and cost benefits while using the new dry port in the Valley, you have to change your policy and practice of conducting cross-border trade," he said.

Committee is proposed

Secretary of Commerce, Dr. Ganesh Prasad Pandeya, proposed to form a committee including the representatives from the ministry, Department of Customs (DoC), exporters, freight forwarders and other concerned business bodies.

Likewise, Secretary of Industry, Arjun Prasad Pokharel, suggested to prioritise about 20 goods to be handled by the port and expand the list in the future.

He also suggested the DoC to prepare a document including all the information about the dry port and facilities provided at it.

The port has 65,000 square metres space, enough to accommodate 500 containers and 500 trucks. 

  Published in The Rising Nepal daily on 8 July 2022.