No more FDI in cement: CMA

Kathmandu, Aug 9

Minister for Industry, Commerce and Supplies Matrika Prasad Yadav said on Friday that private sector industries must not panic about the business environment in the country.


"The government is serious about the challenges facing by the domestic industries. The government considers your problems as its own," he said while speaking at an interaction on 'Existing challenges of cement industry in Nepal and way forward' organised by the Cement Manufacturers Association (CMA).

He said that the private sector industries were the partners in the national prosperity campaign as they were helping in export substitution and employment generation.


Minister Yadav also said that the ministry was in interaction with the private sector, Nepal Electricity Authority (NEA) and other stakeholder agencies.


The CMA said that the Foreign Direct Investment (FDI) should not be welcomed in the sectors on which the country is self-reliant.


"FDI should be welcomed only in the deficit sectors" said Dhurba Thapa, President of the CMA. "We are self-sustained in cement, so we don't need FDI in this sector."


He further said that some FDI industries were raising loans from the Nepali banks which had further contributed to the shortage of financing to other domestic industries.


According to him, by the end of fiscal year 2020/2021, the demand of cement would reach 12.2 million tonnes per annum while the installed capacity of the industry would reach 25 million tonnes which would create a surplus of 50 per cent product.


Thapa said that the solution was to increase the use of cement through the rapid infrastructure development.


"Building concrete road is one of the best solutions as it is more durable, enables bulk transportation and costs less while maintaining," he said.


Industries also demanded removal of the land ceiling for the cement industries, and they should be allowed to sell the land.


There are 61 cement industries in the country – 40 grinding plants and 21 integrated plants – with 15 million tonnes of total installed capacity for grinding.


In the past 17 years, the country has become self-reliant in cement with average 10 per cent growth trend.


Cement entrepreneurs suggested reducing production cost through the elimination of multiple taxation, assurance of law and order, formulation of cement export policy and providence of cheaper power in order to promote the export of cement.


They said that the sector was suffering from poor law and order, land occupation by non-entrepreneurs, Article 169 of International Labour Organisation (ILO) and lack of one window system.


"Land acquisition is a big problem. The land acquired cannot be used for other purposes and is nationalised after the specified use," said Thapa.


He said that freight stations and bulk cargo terminals should be developed in Nepal at the earliest to facilitate the import and transportation of coal – an important raw material for the cement production.

Krishna Kharel, Acting Director General of the Department of Industry (DoI), said that the FDI in cement and steel industry should be allowed for some years from now.


"About 6-7 large clinker industries should be established with FDI. Similarly, the opening of export to the regional market may attract more foreign investment," he said.


According to him, the import of cement is reduced to 80,000 tonnes now from 800,000 tonnes about a decade ago.


The NEA said that as additional 1,000 mw electricity is being added to the national grid in coming year, it will resolve the energy shortage issues in the industry.


Gopi Mainali, Secretary at the Ministry of Land Management, Cooperatives and Poverty Alleviation, said that the ministry was working to remove the land ceiling for once but maintained that the provision to return the land to the government after its use wouldn't be amended.

Published in The Rising Nepal daily on 10 August 2019.