Biznews May 2015

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Foundation Stone of Bheri-Babai Multipurpose Project Laid
 
 
Prime Minister Sushil Koirala laid the foundation stone of the Bheri-Babai Multipurpose Project at a programme in Hattikhal of Bheriganga Municipality, Ward No. 15, Surkhet, on April 2. The government has attached top priority to this project, which is also a project of national pride, among the eight other multipurpose projects. A study has shown that the diverting Bheri into Babai river will help generate 48 MW of electricity. Other projects that are studied are. Sunkoshi-Marin, Kaligandaki-Tinau, Sunkoshi-Kamala, Rapti-Kapilbastu, Kaligandaki-Nawalparasi, Trishul, Chitwan and Madi-Dang. Under the project, Bheri River will be diverted into Babai River.
 
“Bheri-Babai Diversion Multipurpose Project is a project of national pride as it is using Nepali investment and technology,” said the PM, adding that everyone should cooperate for the timely completion of such projects. 
 
“The project will also provide irrigation to Banke and Bardiya districts, which are considered to have fertile land. This will increase agricultural production. Besides, we can also generate 48 MW of electricity. So, everyone should cooperate for the early completion of this project,” said Koirala. 
 
The project will have 3 major construction works. In the first phase, a 12 km long tunnel will be constructed for the diversion of water from Bheri into Babai, according to Project Director Shiva Kumar Basnet. Constructing the tunnel will require about Rs 10.58 billion, according to Basnet.
 
NRB Urged to Treat Hotel Sector as Export Industry
Hotel entrepreneurs have requested the Nepal Rastra Bank (NRB) to treat the hotel industry as an export industry and provide cash incentives to hotels. In a meeting with newly-appointed NRB Governor Dr Chiranjibi Nepal, hotel entrepreneurs demanded to treat the tourism industry, the biggest earner of foreign currency, as a ‘deemed export industry’.
 
They also requested NRB to lower the interest rate of banks and financial institutions (BFIs) and play the role of a facilitator for the infrastructural development projects of the hotel industry. The entrepreneurs also demanded to facilitate loan on easy collateral, withdraw cash in local currency, reduce the credit card commission of BFIs from three percent at present to up to 1 percent and to allow hotels to open accounts in foreign banks.
 
In response, Dr Nepal said that NRB is positive towards the development of the tourism sector, adding that the Hotel Association of Nepal (HAN) can play a vital role in resolving the problems of the hotel industry where billions of rupees has already been invested. Led by HAN President BK Shrestha, the delegation comprised former HAN president Prasiddha Bahadur Pandey, 1st Vice-president Amarman Shakya, 2nd Vice-president Shrijana Rana, General Secretary Binayak Shah, Executive Member Binod Shankar Shrestha and Chief Executive Officer Pravesh Aryal.
 
Insurance Companies Relying on Consultant CEOs
The management of several Nepali Insurance companies is being led not by chief executive officers (CEO) but by consultants or advisors. According to industry experts, such a situation has arrived because the boards of directors of the insurance companies have chosen the wrong way of running the company through consultants or advisors. As per the Directive Related to the Corporate Governance of Insurers 2069 BS, the post of CEO of any insurance company cannot remain vacant for more than three months. But some insurance companies have not appointed their CEOs for more than two years. 
 
At present, there are eight insurance companies without CEO. Of these companies, only United Insurance and Alliance Insurance have started the process to appoint their CEOs. Surya Life Insurance and Gurans Life Insurance have not given the responsibility of CEO to anyone. Sunil Devkota who left Gurans Life Insurance and went to become the chief executive of NB Insurance is back to same company after failing to meet the qualification criteria. He is currently working as a management advisor of Gurans Life Insurance Company. It is said that Narayan Bhattarai, deputy general manager of Gurans,  too does not meet the qualification for the post. Similarly, Neco Insurance has appointed Ashok Kumar Khadka as management advisor. NB Insurance that was acquired by a new group after it became problematic too hasn’t appointed its CEO. 
 
Similarly, after the resignation of Bir Birkram Rayamajhi from United Insurance, Assistant General Manager, Jiwan Uprety has been promoted as Officiating General Manager. As per the existing law, advisors should not be paid salary and allowances but the insurance companies are paying attractive salaries to their advisors. The Insurance Board has remained tight-lipped on this issue.  
 
Global IME’s Representative Office in Australia 
 
 
Global IME Bank has opened its representative office in Sydney, Australia, becoming the first Nepali commercial bank to open an office in the country. Minister for Finance, Dr Ram Sharan Mahat inaugurated the office amidst a programme on April 2. In the first phase, the office will operate as a remittance service provider and will gradually provide other banking services in the future, according to the bank’s president Chandra Dhakal.
 
“Besides providing remittance services, the bank should work towards promoting trade and investment between the two countries,” said Minister Mahat. 
 
While sending remittance to Nepal, Australian banks charge Australian dollar 25 per transaction. Global IME in association with National Australia Bank, will charge only Australian dollar 7 per transaction, according to Dhakal.
 
Cable Car Service in Pokhara   
Lake city Pokhara will soon have a cable car service. Mankamana Darshan Pvt Ltd which already operates a cable car from Kurintar of Chitwan to the Mankamana temple in Gorkha is going to construct the cable car in Pokhara. An agreement for preparing the Detailed Project Report (DPR) of the cable car service in Pokhara was signed between Mankamana Darshan Pvt Ltd and the Ministry of Physical Infrastructure and Transport Management (MoPITM) on March 31. 
 
The cable car will stretch from Basundhara Park to Shanti Stupa (Peace Pagoda) of Pokhara. Executive Director of Manakamana Darshan Pvt. Ltd., Rajesh Babu Shrestha and Joint Secretary of the MoPITM, Bishnu Shrestha signed the agreement in the presence of Secretary Tulsi Prasad Sitaula. 
 
“We have got two months to prepare the DPR. We will get extra 30 days if the DPR is not completed within the given deadline,” said Shrestha. The construction of cable car will be started after the completion of the DPR and it will take two years to complete the project, he added. 
 
Once completed, the cable car service will significantly contribute to promote tourism in Pokhara, said Shrestha. The cable car is going to be constructed under Public-Private Partnership (Build, Own, Operate and Transfer model).
 
USD 1.11 Billion Foreign Assistance in 2013/14 
The government received a total of USD 1.11 billion in foreign assistance from different donor agencies in fiscal year 2013/14 of which 66 percent was grant. Grant comprised 61 percent of the total foreign assistance mobilized in fiscal year 2012/13. According to the Development Cooperation Report of 2013/14 made public by the Ministry of Finance on April 10, loan and technical assistance comprised 18 16 per cent, respectively. Finance Minister Dr Ram Sharan Mahat informed the press that the government was able to mobilize USD 1.11 billion from different development partners and through NGOs. The total foreign assistance mobilized in the previous fiscal year i.e. 2012/13 was USD 960 million.
 
“Data show that the assistance from developing partners is out of the government’s priority areas,” said Dr Mahat, “The government’s priority is infrastructure development but most of the donor money has gone to the social sector.”  According to the report, 26 percent of the foreign assistance has gone to infrastructure development while 39 percent to the social sector. In FY 2012/13, 39 percent of donor money was invested in national level projects and 61 percent in district level projects. OF the total donor money mobilized in 2013/14, USD 1.04 billion came from development partners and USD 76 million from 56 different INGOs. 
 
The grant received from INGOs was spent on 110 projects. The trend of development partners providing their assistance through the country’s budgetary system has improved. In FY 2012/13, such expenditure was 36 percent while in FY 2013/14, this increased to 71 percent. The World Bank provided the highest amount of assistance - USD 276.7 million – among the multilateral donors. Among the bilateral donors, Britain tops the list with more than USD 160.1 million.
 
FNCCI Appeals for Pandey’s Release
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has appealed to the government for a respectful release of FNCCI President Pradeep Jung Pandey. Issuing n a press release, FNCCI has urged the government to encourage the private sector by releasing Pandey, who was arrested on March 17 in connection with a 32 years old corruption case.
 
FNCCI has said that Supreme Court verdict for the implementation of the verdict on a more than three decades old corruption case, and the state’s behaviour towards Pandey has saddened the entire private sector. “The country’s private sector has been discouraged by the state’s behaviour towards Pandey, a respected entrepreneur who has been paying a good amount of tax to the government and providing employment in huge numbers,” said the release. FNCCI further claimed that Pandey’s arrest has come as a discouragement to the investment environment.
 
Mittal Awarded FCAN Excellence Award 
 
 
The Federation of Contractor’s Association of Nepal (FCAN) has presented its founder president, Banwarilal Mittal, with FCAN Excellence Award, recognizing his contribution to the construction sector. Mittal was awarded at a programme titled ‘Jagdamba Steel – FCAN Excellence Award, 2071’ organized in the capital. FCAN has said that Mittal’s contribution to introducing new technologies in the construction sector was unparalleled.
 
FCAN holds the award ceremony every year. This year Tudi Construction has been awarded the best ‘A’ class construction company. Similarly, Himdung & Thokar Construction Pvt Ltd and Pushpanjali Construction Service Pvt Ltd have been awarded as the best ‘B’ and ‘C’ class construction companies, respectively.
 
Speaking at the award ceremony, Bimalendra Nidhi, Minister for Physical Infrastructure and Transport Management, said the government was ready to cooperate with the construction entrepreneurs for the country’s development. Similarly, FCAN President Sharad Gauchan requested everyone not to doubt the commitment of construction entrepreneurs for nation building. Immediate past president of FCAN, Jayram Lamichhane said that a prosperous Nepal was not far away if the government and the construction entrepreneurs worked together.
 
Value Addition Growth Rate of Manufacturing Sector Negative
The value addition growth rate of the manufacturing sector in the economy has gone negative. The analytical monograph report prepared by the Central Bureau of Statistics (CBS) in 2012 shows the negative value addition growth of the manufacturing sector. Based on the industrial censuses of 2000/01 and 2012/13, the report states that the manufacturing sector’s value addition growth over this period has been -0.2 percent.
 
“Such data doesn’t bode well for the economy,” said CBS Director General Bikash Bista. He observed that the contribution of the service sector to the economy has been rising while that of the manufacturing sector has been decreasing. CBS has been conducting industrial census every 5 years since 1965. 
 
The value addition growth rate of the wholesale and retail sector, too, is very minimum, as shown by the report. The value addition growth rate of banking and financial, health and social sectors of the economy is higher. The growth of those sectors is 6.6 percent in the time period of 13 years. The education sector occupies the third place (6.5 percent) in the value addition growth rate table. The other high value addition sector are; Public Administration and Security, Community, Social and Personal Services, fish farming, transportation, telecommunication and storage.
 
Nepal’s Productive Sector’s Contribution to GDP Lowest
The contribution of the productive sector to the Gross Domestic Product (GDP) is lowest in Nepal in entire South and South-East Asian countries. The information has been included in the analytical report prepared of the National Industrial Census, 2012 which was publicized by Central Bureau of Statics (CBS) in Birgunj on April 3. 
 
The report based on the industrial census of last five years shows that the contribution of the productive sector to the GDP is only 6.5 percent. “The productive sector’s contribution to GDP is very pessimistic due to the lack of political instability, power crisis, and lack of skilled manpower,” said Suman Raj Aryal, assistant director general at CBS. 
 
CBS has prepared the report considering the productive sector’s contribution to GDP in eight countries. The value is highest for Thailand (34 percent) followed by Bangladesh (17.6 percent) and Cambodia (16 percent. The contribution productive sector to GDP is more in Laos, Bhutan, India and Pakistan than that of Nepal. 
 
President of Birgunj Chamber of Commerce and Industries, Pradeep Kumar Kedia said Stressed on the need for a thorough study about the awful condition of industries in the country. “If we still delay to address the problems of the productive sector, it will further deteriorate,” he said.
 
Polythene ‘Carry Bags’ Banned in Kathmandu
 
 
With the Supreme Court (SC) denying issuing an interim order as demanded by plastic manufacturers, the ban on the use of polythene ‘carry bags’ in Kathmandu has come into effect from the new Nepali year (April 14). Using the right under Section 7(3) of the Environment Protection Act 1997, the government has already published a notice in the national gazette banning the use of polythene bags in Kathmandu if their thickness is less than 40 microns.
 
Claiming that the ban had dealt injustice to them, polythene manufacturers had knocked the SC doors. After preliminary hearings on the writ petition by the entrepreneurs, a joint bench of SC Justices Sushila Karki and Gopal Parajuli ruled that there was no need to issue an interim order. 
 
Officials at the Ministry of Science Technology and Environment said that the ministry, in cooperation with different NGOs, will soon start a public awareness campaign to discourage the use of polythene bags. “We will keep hording boards at various places to discourage the use of plastic bags. The Department of Environment, in association with the home ministry, will monitor whether the government’s decision is being implemented,” said Joint Secretary Mahendraman Gurung. 
 
In the first phase, the government has banned the use of poly bags in all the 21 municipalities of the Kathmandu valley. 
 
Plastic manufacturers have said that they respect the court’s decision and are waiting for the final verdict. They have also requested the government to extend the deadline to ban the use of polythene bags. “We believe that the Supreme Court’s final verdict on the case will provide justice to poly bag manufacturers,” said Sharad Sharma, president of Nepal Plastic Industries Association. According to Sharma, there are more than 200 plastic bag manufacturers in the country and the investment in such industries is more than Rs 10 billion.
 
Andhikhola Hydel Project Starts Commercial Production
The Andhikhola Hydropower Project, constructed by Butwal Power Company, has started commercial production of 9.4 MW of electricity from April 5. The project has started supplying the electricity produced to the transmission system of Nepal Electricity Authority (NEA).
 
The project has upgraded its capacity from 5.1 MW to 9.4MW by replacing the equipment and machine that were too old. Annually the project will produce 70.73 GW hour of electricity with three turbines. Mega Bank Nepal and International Finance Corporation under World Bank have provided finance to the project. It took two years to complete the project. The underground power house has been extended by 8 meters, the size of tail race tunnel has been increased and 250 meters long penstock pipe has been added, said the management of the project. 
 
The project has, for the first time in the country, used a rubber dam. The project will also provide regular irrigation as demanded by the local farmers. The irrigation facility provided by the project will irrigate a total of 560 hectares of land including 250 hectares land of Syanja and Palpa.
 
American Company to Manage Hotel Krishna
 
 
The proposed 4 star hotel, Hotel Krishna which is being constructed at Nepalgunj is going to be managed by the popular multinational company in the hotel sector, Signet Inn. Being Constructed with an investment of Rs 500 million by drug entrepreneur, Dipendra Agrawal of Nepalgunj, the hotel aims to come into operation from upcoming July. As Agrawal was not operating the hotel by himself, he was in search of a good manager. “We have signed an agreement with Signet Inn to manage the hotel for 10 years,” said he.
 
American brand Signet Inn has been looking after the management of hotels in India, according to Agrawal. 
 
Being built in the heart of Nepalgunj on Surkhet Road, the hotel has 8 stories including an underground floor. It is also the first 4 star hotel in Nepalgunj. The construction of physical structures of the hotel is in the final stage. 
 
As told by Agrawal, the hotel has fulfilled all requirement criteria to be a 4 star hotel. It has 92 rooms, one marriage hall, 4 restaurants, play zone for kids, swimming pool, gym club, health club, 3 meeting halls and parking space.
 
FNCCI’s 49th General Assembly Concluded 
 
 
Businessmen and entrepreneurs have requested the government to take the private sector into confidence to expedite the country’s development process and increase investment in the national economy. Speaking at the 49th General Assembly of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) in the capital on April 11, they stressed on strong and sustained cooperation between the public and private sectors. They added that though the private sector plays a crucial role in the economy, the behaviours of the state organs towards the private sector are not always free and fair. This has affected the investment environment in the country, according to them. 
 
Addressing the general assembly, officiating FNCCI President Pashupati Murarka urged the government to create an environment where the private sector can carry out their activities in a free manner. “We run our business by fulfilling all the procedures and criteria,” he said, “The state is creating troubles for the plastic, cement and paint industries in the name of environment protection without giving them any alternatives.”
 
The speakers drew the attention of Constituent Assembly Chairman Subash Chandra Nembang, the chief guest of the programme, towards the fact that the amendment of nearly two dozen Acts related to the economy, industries, finance and labor, are pending at the parliament. “FNCCI is dealing with big problems. So it should move on with patience,” said Nembang, “Delay in calling the winter session has delayed the amendment of those Acts.”
 
President of Nepal Trans Himalayan Border Commerce Association, Bishnu Bahadur  Khatri and Jiwan Kansakar who has worked for 25 years at FNCCI were presented with letters of appreciation at the programme.
 
‘Made in Nepal 2071’ Expo Concluded
55 Thousands of Visitors, Making 10 million of Business 
 
 
With the slogan “Hamro Pani Ramro Pani”, the ‘Made in Nepal Expo 2071’ concluded on April 13 at Bhrikutimandap, Kathmandu. The four-day expo attracted more than 55 thousand visitors and witnessed business transactions of more than Rs 10 million. 
 
The expo which was inaugurated by Industry Minister Mahesh Basnet amidst a programme on April 10 aimed at displacing import by increasing the use of domestic goods, said the organizer of the expo, Nepal Young Entrepreneurs Forum (NYEF). 
 
“Nepal is only known for exporting labour abroad but now it is important to introduce the country as exporter of Nepali goods,” said Minister Basnet. Similarly, NYEF President Niranjan Shrestha remarked that only the production and use of domestic goods can help in the development of Nepal. The speakers of the inauguration programme focused on the need for establishing industries in the country and giving priority to domestic products. 
 
Shivam Cement was the main sponsor of the event which was managed by Rise Global Pvt. Ltd. Former prime ministers Baburam Bhattrai, Jhala Nath Khanal, Madhav Nepal and CPN-UML Chairman KP Oli, CA members, politicians, and foreigners also visited the expo. A blood donation programme and free health camp were organized during the expo. There were a total of 130 stalls at the expo including Nepali cine, music, small and cottage industry, handicrafts. Among them, 30 stalls were of small and cottage industries, according to the organizers.
 
Chachan Group Starts Cement Production in Nepalgunj
Chachan Group, one of the renowned business houses of the country has started commercial production of cement in Nepalgunj. The business house that has been producing Trishakti and Bajrashakti brands of cement at Birgunj for the last 11 years has established Jay Bageshwari Cements Pvt Ltd in Nepalgunj. “Our Nepalgunj plant is targeted at the market demand of mid- and far-western regions,” said the director of Chachan group, Satish Chachan. 
 
Jay Bageshowri will be producing Trishakti Premium (OPC), Trishakti Gold and Bajra Shakti (PPC) cement, according to Managing Director Nishant Chachan. “The capacity of the new industry is 450 metric ton per day and we are planning to increase the capacity in the near future,” said he.  Based on the close circuit technology and PLC, the industry can produce high quality of cement, according to the Chachan Group which has invested Rs 500 million in the new industry at Nepalgunj.  Narayani Cements Pvt Ltd, the Group’s cement factory in Birgunj, produces 1050 metric ton of cement per day.
 
Hotel Shuvakamana in Surkhet with Investment of Rs 25o million
A new hotel with modern amenities and services is being constructed at Birendranagar Municipality-15, Surkhet with an investment of Rs 250 million. The four-storeyed hotel whose construction was started last year will come into operation by October 2015, according to the hotel’s manager, Raj Bahadur Shahi. Shahi further said that 80 per cent construction work of the hotel has already been completed. The hotel will have 60 rooms - three VVIP suites, seven family suite rooms, 20 super deluxe rooms and 30 deluxe rooms.
 
The hotel will have three halls for seminar and party with accommodation capacity of 300, 150 and 50 people, respectively. “The hotel will have Surkhet’s first well-facilitated swimming pool, besides two restaurants, a parlor, a spa, a gym hall, and a tennis court,” said Shahi, adding that the hotel will surely attract tourists visiting the hilly districts of the Mid-western Region. Lately, Surkhet has become the entry point to tourist areas like Rara, Dolpa, Jumla, Dailekh, Jajarkot and Mansarovar.

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