Entrepreneurs demand trade infrastructure rehabilitation
Kathmandu, Oct. 3
About a month ago, the
government announced several economic and financial measures to support the
recovery and rehabilitation of the businesses destroyed and affected by the
devastating Bhotekoshi flood that occurred on August 26.
But the entrepreneurs
and businesses are yet to obtain the announced facilities.
The concerned
government authorities - The Nepal Rastra Bank (NRB),
the Inland Revenue Department (IRD), the Nepal Insurance Authority (NIA), and
the Department of Customs (DoC) - said
that they are in the process of assessing the situation and determining the
future course of action.
The NIA said that
sector data on businesses and enterprises has not yet been collected, while the
DoC said that the procedure needed to implement the discounts and waivers on
the customs duties has not been formulated. This absence of the procedure to
offer the announced discounts and facilities has barred the businesses from
obtaining them.
Since most of the
customs-related provisions are for the imports of vehicles, durable goods and
industrial machineries which were mostly supposed to be imported from China and
both the entry points at Rasuwagadhi and Tatopani are not in proper
functioning, it will take a while to avail of the facilities.
Meanwhile, the
entrepreneurs and businesses affected by the disaster are in the process to
manage basic necessities like food, shelter and safety of family and they
haven't initiated the process to import machinery, recover the business or
rehabilitate the industry.
Even if they decide to
rehabilitate the industries or businesses including the resumption of operation
of the transport company by importing trucks, containers and passenger
vehicles, it will take a few months until the goods reach the customs points in
Nepal.
However, several
entrepreneurs and business leaders expressed ignorance about the
government-announced recovery package.
According to the
package, the machinery and vehicles should be replaced with the import of
similar items of the same capacity.
According to the Rapid
Damage Need Assessment (RDNA), the flood affected about 4,800 economic establishments, and caused about Rs. 30 billion damage to businesses in Rasuwa, Nuwakot,
Dhading and Chitwan districts.
"Reported annual economic losses total
Rs. 115.89 billion, bringing the combined damage and losses to Rs. 146.19
billion. The flood affected education, health, utilities, finance and
insurance, and agriculture, forestry and fishing," read the RDNA.
The National Statistics Office (NSO) and
National Disaster Risk Reduction and Management Authority (NDRRMA) are
undertaking the Post Disaster Need Assessment (PDNA) which will collect the
detailed statistics and recommend the actions needed.
The NRB is soliciting the data from the
banks and financial institutions (BFIs) that were doing businesses in the flood
affected areas.
Spokesperson of the NRB Guru Prasad Poudel
said that the banks are facing three-pronged challenge – loss of borrower, loss
of collateral, and loss of business. "It is a challenge to assess the
situation in such a complex scenario and determine the future course of
action," he said.
Poudel said that once the PDNA is completed
and data from the BFIs are analysed, the NRB will analyse the situation in
order to take necessary steps to support the affected businesses and BFIs.
The recovery package
The business recovery package announced by
the government on September 3 includes measures like tax and customs duty
waiver, interest rate discount and priority insurance claim clearance for the
businesses and industries affected by the Bhotekoshi flood.
The NRB, the IRD, the NIA, and the DoC will
implement the provisions for relief and recovery in their respective sector.
Affected businesses will get customs duty
waivers for replacing irreparably damaged machinery, equipment and commercial
vehicles. Flood-damaged imported goods can also qualify for customs duty
adjustment if replacements are imported within six months.
The package seeks to speed up insurance
settlements, allowing advance payments of up to 50 per cent based on
preliminary assessments and simplifying claim procedures.
Likewise, the central bank will facilitate
loan restructuring, repayment extensions and new lending for affected
businesses, including financing for replacement vehicles and machinery.
Borrowers will receive interest relief for one year, while additional recovery
loans may be provided to support businesses and employment.
Similarly, tax measures include extending
VAT, income tax and excise duty filing and payment deadlines until November 11,
simplifying VAT adjustments, and allowing deductions for destroyed assets.
Individuals directly affected by the floods will receive a full income tax
exemption for the year.
Need of the hour
While rescue and relief operations are
still being conducted along the flood-affected areas, the entrepreneurs said
that the government should immediately initiate the business support measures.
The initiative should begin with the
rebuilding of the damaged bridges, they said.
"This is the time the government begin
support to the affected entrepreneurs in rehabilitating their enterprises with
all possible measures. Distribution of a sack of rice, a kilo of sugar and a
packet of cooking oil will not solve the problem in the long run," said
Suksang Tamang, President of the Rasuwa Chamber of Commerce and Industry.
He suggested for the construction of Bailly
bridges at Betrawati and Syaphrubensi and two suspension bridges at Syaphrubensi,
and one in Aamachhodingmo Rural Municipality to open the route to the
Gosainkunda and the Langtang Valley.
"A bridge at Betrawati will open the
route for the Gosainkunda, so this should be the first priority. Restoring
tourism will immensely help in business recovery and livelihood
restoration," said Tamang.
According to him, road and bridges will be
instrumental in reviving hope and instil resilience in business community in
Rasuwa and Nuwakot. Operation of the road and Rasuwagadhi border point could
work as 'sanjeevani' – a lifeline.
Reactions from businesses
Although the business bodies said the
recovery package was a welcome step, they didn't officially comment on it.
Immediate Past President of the Federation
of Nepalese Chambers of Commerce and Industry (FNCCI) Chandra Prasad Dhakal
reached the flood-affected areas in Nuwakot in the immediate aftermath and
described the situation as 'horrific'.
"Entrepreneurs have lost everything in
the flood. They don't have their enterprises, houses and other structures. Many
of them have lost their family members," he said.
Dhakal said that it will take a long time
for the recovery of the business which demands a rethinking on the part of the
government and central bank. "An entrepreneur has invested a lot of
resources including time and finance to create a business. The Bhotekoshi flood
was something that we didn't encounter in the past, so the support policies
should be implemented differently," he said.
Likewise, Senior Vice-President of the
Nepal Chamber of Commerce Deepak Malhotra appreciated the recovery package and
said that there should be additional facilities on top of loan restructuring
and interest rate discount.
The NCC has established a help desk at its
secretariat in Kathmandu to support the affected businesses in obtaining
insurance and other facilities.
"The government has begun work to
create shelters for the people affected by the flood. The NCC is also
mobilising its national and international network to collect support for the
same," he said.
The NADA Automobiles Association of Nepal
(NADA) was among a few business associations which welcomed the recovery
package.
It had said the government’s initiative to
provide immediate relief to disaster-affected businesses and create an
environment for them to resume operations was highly positive and commendable.
"The NADA believes that the decision
to cancel the registration of commercial vehicles and transport equipment that
were completely damaged or swept away by the floods and provide customs duty
exemptions when importing similar vehicles will provide significant relief to
automobile and transport operators," it said in a statement, and added
that the concessions provided for the re-import of damaged machinery and
equipment are important for the recovery process.
NADA said the provision for loan
restructuring, rescheduling and interest concessions for flood-affected
borrowers would ease the immediate financial pressure on businesses.
Likewise, President of the FNCCI Anjan
Shrestha, addressing an event in Kathmandu a few days ago had said that the
disaster had compelled Nepal to think about developing safer and
climate-resilient infrastructure over the long-term.
"Nepal should work with China to reduce the risk of glacial lake
outburst floods and focus on developing safer settlements and infrastructure. We
need to take environmental risks into account when developing hydropower
projects," he said.
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