Foreign Trade continues to bear grim face

Kathmandu, Sept. 3: Of its 185 partner countries in international trade, Nepal is facing trade deficit with 142 nations along with its neighbours India and China.

Country's export trade plummeted by approximately 17.54 per cent last year.

Foreign Trade Statistics of the last Fiscal Year 2015/16 published by the Department of Customs (DoC) shows that Nepal's highest trade surplus is Rs. 643 million with the United Kingdom which is followed by the United States with Rs. 617 million, Afghanistan by Rs. 117 million and Norway Rs. 107 million.

Total size of trade with the UK is Rs. 4.92 billion, USA Rs. 17.79 billion, Afghanistan Rs. 294 million and Norway Rs. 298 million.

But, the trade deficit data show a horrible figure with Rs. 443.84 billion with India and Rs. 114.39 billion with China.

Nepal exported goods and services equivalent of Rs. 39.56 billion to its southern neighbour against the import of Rs.483.30.

Its import size was Rs. 116.16 billion against Rs. 1.71 billion export to its northern neighbour.

Other trade partners with higher deficits are the United Arab Emirates with Rs. 16.87 billion, Switzerland Rs. 10.60 billion and Thailand Rs. 9.99 billion. 

Of 185 countries that Nepal traded goods and services with, there were imports only from 51 countries.

Likewise, there were no imports from 13 countries like Algeria, Bermuda, Guam, Rwanda and Tajikistan.

There are instances that Nepal imported goods or services equivalent to about Rs. 1,000, Rs. 3,000 and Rs. 7,000.

Major facts of Nepal's international trade

Trade surplus (Rs. in millions)
Country	Exports	Imports	Trade Balance	Total Trade
United Kingdom	2,782	2,139	643	4,921
United States	9,208	8,590	617	17,798
Afghanistan	206	88	117	294
Norway	203	95	107	298
American Samoa	12	0.07	12	12.6
Trade deficit (Rs. in billions)
India	39.56	483.30	-443.74	522.86
China	1.71	116.16	-114.39	117.83
UAE	0.75	16.95	-16.87	17.02
Switzerland	0.63	11.23	-10.60	11.87
Thailand	0.12	10.12	-9.99	10.24

Source: Nepal Foreign Trade Statistics 2015/16

According to the DoC, the minuscule size of trade with those countries was not a formal trade instead they were the good brought in by Nepalese workers or tourists from those countries. As they pay the customs charges, such imports are listed on the foreign trade statistics.

For instance, Nepal imported goods equivalent of Rs. 3,000 from Chad, Rs. 1,000 each from Iceland and Moldova and 3,000 from Nigeria.

During the last decades, Nepal's export trade registered positive growth but the continuous supply chain constraints for almost five months after the promulgation of the constitution last year, it suffered decline.

Similarly, annual imports declined plummeted by 1.46 per cent last year.

Imports sunk largely due to the Indian blockade at the southern Nepal-India border.

Nepal imported only two-third of its total petroleum demand while vegetables and other agro-products were also saw negative growth.

Nepal imported the goods and services of Rs. 774.71 billion in the last fiscal which is 1.46 per cent less than the previous fiscal year 2014/15. Likewise, it only exported the goods and services of Rs. 70.25 billion. The size of export was Rs. 85.19 billion in the previous fiscal.

The import export ratio stands somewhere 11.03, higher by 19.50 per cent than the last year's ratio of 9.23.

Export trade is the major source of foreign currency income for many countries around world while Nepal is almost fully dependent on the remittances coming from the overseas as its tourism and export trade both are not fully developed.

Nepal exports goods that are largely labour intensive like handicraft, carpets and other textiles, felt products, basket ware and other indigenous artifacts.

Another characteristic of its export is less value addition – it exports raw hides, ginger and other agro-products with zero value addition.

The grim scenario of export trade indicates that there are less employment opportunities in the country which itself explains the exodus of youth power to the Gulf countries and elsewhere in search of work.

Published in The Rising Nepal English Daily

Governor warns BFIs not to misuse public savings

Kathmandu, Sept. 2:

Governor of Nepal Rastra Bank (NRB), Dr. Chiranjivi Nepal, Friday warned the bank and financial institutions (BFIs) of severe punishment and their dissolution if they were found misappropriating the public’s savings.

Inaugurating  Vibor-Society Development Bank Limited (VSDBL), an institution created after the merger of two ‘B’ class development banks- Vibor Bikas Bank and Society Development Bank, the governor instructed the Board of Directors and management of BFIs to be vigilant and cautious  in mobilizing the deposits.

“As the new Nepal Rastra Bank Act has enabled the NRB to dissolve the BFIs, you should be careful not to let the companies go off track,” stated the governor.

The Legislature-Parliament endorsed the Nepal Rastra Bank (Second Amendment) Bill 2073 on Thursday, September 1.

In absence of the power to dissolve the BFIs, the banking sector regulator, NRB, had to go to the court with the case and it used to take years to dissolve the company and liquidate it.

Governor Dr. Nepal viewed that the BFIs were not like the other profit-oriented companies and therefore they should not mobilize loans in the risk areas to earn higher profits.

He informed that about Rs. 16 billion deposits in various BFIs  had been embezzled so far.

Saying that the BFIs were the custodians of the public savings, he urged them to work in such a way that the public felt secure about their deposits in the banks.

Chief executive officer of the new bank, Jhalak Prasad Khanal, informed that the VSDBL, had now become the strongest development bank in terms of paid up capital and branch network.

The paid up capital of the bank has reached Rs. 1.81 billion which is the highest amongst the development banks in the country.

The new bank has mobilized Rs. 14 billion deposits and Rs. 11 billion loans.

It has 42 branches network, one extension counter, 12 ATMs across the country.

VSDBL's central office has been located at the head office of erstwhile Vibor Bikas Bank.

Sushil Raj Parajuli, Ashok Raj Pandey, Dr. Roop Jyoti, Hari Prasad Rimal, Rajesh Kumar Agrawal and Prem Raj Tiwari have been elected to the Board of Directors. 

Coordination needed to curb money laundering activities

Kathmandu, Sept 1: Chairman of the Security Board of Nepal (SEBON) Dr. Rewat Bahadur Karki Thursday emphasized coordination among the regulators and other stakeholders of the capital market to save it from being used in money laundering activities.

Inaugurating an orientation programme on anti-money laundering and terror financing organized for the officials of SEBON, Investors Forum, CDS and Clearing Limited and Merchant Bankers Association, Dr. Karki said that for the fair, sustained and credible development of the capital market, there should be proper system to check the money laundering activities.

"As Nepal has become the member of Association of National Numbering Agencies (ANNA) and International Organization of Securities Commissions (IOSCO), there is a potential of developing the Nepalese capital market at the international level. Therefore, the market should be more transparent," he said.

Board's director Dr. Nava Raj Adhikari called for urgency of creating legal framework to alleviate the money laundering and terror financing.

Deputy director of the Nepal Rastra Bank Hari Nepal imparted training to the participants.

The programme was focused on collecting true information and details from the customers and investors, reporting suspicious transactions, developing efficient system of reporting, finding the source of illegal property and possible ways of money laundering.

It also discussed about the present and proposed legal framework on anti-money laundering.

Participants said that if any transaction of same trading below Rs. 1 million is repeatedly reported, it should be taken as the suspicious activity. 

New rating agency in the offing

Kathmandu, Aug 31: Vishal Group Limited and Emerging Nepal Limited Wednesday signed a Memorandum of Understanding (MoU) with the Care Ratings India (CRI) to establish a rating agency in Nepal.

Ashok Agrawal and Lalmani Joshi, chairmen of Vishal Group and Emerging Nepal respectively and managing director and chief executive officer of CRI Rajesh Mokashi, signed the MoU on behalf of their respective companies.

The new rating company with its proposed name Credit Rating Nepal will apply to the Security Board of Nepal (SEBON) to get the license.

"We are hopeful to bring the company in operation within a couple of months," informed Joshi.

CRI will have 51 per cent stake in the company while Vishal Group and Emerging Nepal will hold 19 and 10 per cent shares respectively. 

Rest of the stakes will go to the bank and financial institutions and Government of Nepal.

Chairman of CRI S. B. Mainak said that his company would bring good practice, management transparency and efficiency to the new joint-venture in Nepal.

"We will try to explore various rating opportunities in the country. Preparations are underway to apply to the regulators for the license. The company will be a complete array of risk calculating information," he stated.

Agrawal expressed his hope to start the company in a couple of months.

CRI already has its joint ventures or partnerships in Mauritius, Maldives, England and Portugal.

Currently, the country has one credit rating agency – ICRA Nepal.

The rating service company or credit rating agency is a company that assigns credit ratings.

According to the BBC, the ratings are given to large-scale borrowers, whether companies or governments, and are an indications to buyers of this debt how likely they are to be paid back. 

Capacity development training for labour stakeholders

Kathmandu, Aug 31: A capacity development training for the staffs of public Employment Services Centres (ESCs), partner organizations and other stakeholders of the ‘Labour Market Information and Employment Services project started the other day. 

The Ministry of Labour and Employment (MoLE), Department of Labour (DoL) and International Labour Organization (ILO) had forged a partnership to organize a capacity development training on counselling and employment services (CDT-CES) for them.

The training will run till 2^nd September.

The training is being attended by the participants from 14 ESCs, MoLE, DoL, Council for Technical Education and Vocational Training (CTEVT), Federation of Nepalese Chamber of Commerce and Industries (FNCCI), Federation of Nepalese Cottage and Small Industries (FNCSI), trade unions, Nepal Administrative Staff College, Training Institute for Technical Instruction, Microsoft Innovation Centre Nepal, Career Disha Nepal, and Balaju School of Engineering and Technology.

Speaking at the opening session, National Project Coordinator Saurav Ram Joshi said that the project provides technical assistance to DoL/ESCs for quality improvement in employment services through client orientation and capacity building.

The capacity development training on counselling and employer service is one of the six capacity development programmes planned during the project period.

ILO director Richard Howard stressed on the importance of ESCs to improve job matching and ultimately employment of youth and disadvantaged groups. 

Mahindra launches vehicles in Nepal

Kathmandu, Aug 31: Mahindra and Mahindra Limited has launched Supro Van and Supro Maxitruck at the NADA Auto Show 2016 going on at the Bhrikutimandap.

Supro Van is an eight seater diesel passenger vehicle while Supro Maxitruck is a vehicle for small goods movement.

"The company has also showcased its range of commercial vehicle that have been partnering business growth through decades in Nepal," Mahindra said in a press statement.

Sanjay Jadhav, vice president, head of International Operations –AFS (South Asia) of Mahindra and Mahindra said, "NADA Auto Show is the perfect opportunity to showcase our range of automotive products in Nepal. This helps us to highlight our offering of  accessible technology and gauge the aspirations of our customers."

Chairman of Dugar Brothers and Sons, distributer of Mahindra vehicles in Nepal, Motilal Dugar said that the compay was committed to deliver value to the customers.

"The Supro Van will be used as a personal vehicle for large families in semi-urban areas, as personal cum business application vehicle for traders, as an affordable tour and travel vehicle, and as an additional source of income for farmers. Supro Maxitruck will source business from captive as well as market load operators," read the statement. 

NRA to build model houses in every ward

Kathmandu, Aug 30: The National Reconstruction Authority (NRA) Tuesday informed that it was planning to build a model house in every ward of the quake-damaged villages and municipalities.

"Models houses will be constructed in the course of training to produce the skilled manpower required for the reconstruction works," said NRA chief executive officer Sushil Gyawali while speaking at the meeting of the Development Committee of the Legislature Parliament.

The trainees of masonry, carpentry and other skilled based training will build the model houses, he said.

"People are confused about the design of houses with the acute shortage of skilled manpower. They will have an idea about constructing the quake-resistant houses and construction method following the construction of model houses,” Gyawali said.

Secretary at the Ministry of Urban Development Deependra Nath Sharma stated that the government had upskilled about 8,000 construction workers so far.

“But we have been organizing training for one week which is for the skilled or semi skilled manpower where we trained them about the quake-resistant construction method. Such training needs to be organized for 3 months if it is for the fresh candidates,” said Sharma.

According to a rough estimate, the reconstruction process might need more than 1.5 million construction workers based on an assumption that three workers are required to build one house.  

As per the NRA data, house reconstruction grant agreement was signed with 3,94,915 households by Tuesday and the first installment of the grant, Rs. 50,000, had been deposited the bank account of approximately 200,472 families.

Meanwhile, the government has decided to provide the first installment of the grant to all households of 11 severely-hit districts and the Kathmandu Valley within a month.

Therefore, about 500,000 families will receive Rs. 50,000 each by 18^th September.

As the monsoon is going to be over, hundreds of families are ready to get going to construct new houses and retrofit or repair damaged houses, a large number of manpower and construction materials will be required.

Lawmakers expressed their serious concerns over the possible shortage and black marketing of the construction materials.

Some of them, including the chairman of the Committee, Rabindra Adhikari, suggested creating ‘construction materials banks’, as in Gujrat in the aftermath of devastating earthquake in 2001, to keep the price of construction material under control.

Meanwhile, the Development Committee directed the government, Ministry of Federal Affairs and Local Development, Ministry of Urban Development, Office of the Prime Minister and Council of Ministers, Ministry of Supplies, Ministry of Home Affairs and NRA to make the estimates of required construction materials, expedite the works to develop the model villages and to prepare strategy to establish the construction material banks.

It also asked the government to address the demands of the engineers and other manpower mobilized in the quake hit areas as the NRA and ministries were facing difficulties to retain the workforce.

“Due to poor facilities, skilled manpower is not motivated to go to the remote areas, therefore the government should respond to the demands of the NRA,” said Adhikari.