From the Editor

Trishuli 3A : Roll-back Not Enough

Nov 30, -0001 0 3 minutes 23 seconds to read

…

Mirage Of Industrial Security

Nov 30, -0001 0 3 minutes 24 seconds to read

…

Political Copycats

Nov 30, -0001 0 3 minutes 28 seconds to read

…

Private Sector Concerns

Nov 30, -0001 0 3 minutes 39 seconds to read

…

Utter Discouragement

Nov 30, -0001 0 4 minutes 2 seconds to read

…

Adhoc Ad-Rules

Nov 30, -0001 0 3 minutes 53 seconds to read

…

Upper Karnali Blues

Nov 30, -0001 0 13 minutes 37 seconds to read

…

From The Editor December 2012

Nov 30, -0001 0 14 minutes 1 seconds to read

…

An Insured Activism

Nov 30, -0001 1 12 minutes 52 seconds to read

…

Made-in-Nepal Concept

Nov 30, -0001 0 13 minutes 32 seconds to read

…

Bottlenecks To Investment

Nov 30, -0001 0 12 minutes 41 seconds to read

…

Tunnel To Prosperity

Nov 30, -0001 1 2 minutes 12 seconds to read

…

Triangular Fight On Budget

Nov 30, -0001 0 2 minutes 20 seconds to read

…

The Hydropower Politics

Nov 30, -0001 0 2 minutes 44 seconds to read

…

Hoax Of Free Competition

Nov 30, -0001 0 2 minutes 37 seconds to read

…

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No Laughing Matter

The Sweet Rewards of Power

By Madan Lamsal

. . .
read more »

NEPSE

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			'title' => 'Trishuli 3A : Roll-back Not Enough',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 12px;">The Nepal Electricity Authority (NEA) Board of Directors, on 11 June, rolled-back its highly controversial decision of upgrading the capacity of Upper Trishuli 3A Hydropower Project from existing 60MW to 90MW. The same board ten days before had decided to upgrade it. Both decisions were taken in the meetings of the Board chaired by Energy Minister Umakant Jha, who allegedly had personal vested interests in upgradation.&nbsp;</span></p>
<p>
	Although the decision was withdrawn due to persistent pressure from several quarters and, more importantly, by the protests of the NEA employees, no action is initiated to investigate on why, at the first place, the upgradation was sanctioned earlier. When the employees dared to cut the power supply off ministers&rsquo; official quarters and threatened to do the same to Singha Durbar Central Secretariat, Minister Jha was compelled to roll-back the decision.&nbsp;</p>
<p>
	But, most surprising in this chain of events is that the NEA management issuing an statement has tried to defend the earlier decision to upgrade the capacity of the Project. &ldquo;The NEA had upgraded the capacity of the project completing technical, economic and existing legal assessments. The project has been designed in Q70 flow, which is not the optimum utilization of the water available in the river,&rdquo; it said.&nbsp;</p>
<p>
	But, with the upgradation, the cost of the project would increase to from USD 89 million to 132 million. It was also agreed to release USD 20 million extra to the contractor, China Gezhouba Group Company&rsquo;s proposal of upgrading it to 90 MW for USD 112 million.&nbsp;</p>
<p>
	This is enough to conclude that there were vested interests, malafied intentions and apparent intended embezzlement of the public funds in the name of upgradation. But, all the people, including the minister, who made the decision, are still in their respective public positions. On top of that, NEA management had had the temerity of issuing the statement claiming that the decision to upgrade was in national interest. This is the height of impunity and lawlessness.&nbsp;</p>
<p>
	The gravity of the case suggests that all parties concerned, the minister, entire NEA Board, the contractor and the local Nepali representative who allegedly lured the decision makers must be brought under the book. The NEA officials who still claim that upgradation was right must not only be questioned but should be challenged to establish the claim in public.&nbsp;</p>
<p>
	Surprisingly, all this happened under the nose of newly appointed chief of anti-graft body, the Commission for the Investigation of Abuse of Authority (CIAA) and he didn&rsquo;t seem at all interested to investigate into it. This indeed is the reflection of hand-in-glove relations of the people who run the government and the CIAA&rsquo;s new chief. The trend has raised fears of this constitutional body exercising its powers by selection and discretion, as against the very concept of an ombudsman organization that acts on the merit of the case basis.&nbsp;</p>
<p>
	If the architects of such a big scandal can go scot-free, then it will cast a very long shadow on Nepal&rsquo;s hydropower prospects. It will set wrong precedence for future as well as other on-going projects.&nbsp;</p>
<p>
	In addition to it, a number of questions have been raised about credibility and professionalism of this particular Chinese Company. Since it is a Chinese government undertaking, Nepal government should have guts enough to raise this issue to its Chinese counterpart. It might be the case that a few employees in the company are misleading their government and pocketing hefty sums in collusion with some Nepali operatives, in and out of bureaucracy. It is also assumed that a number of senior political leaders abetted to take the decisions in anticipation of proper kick-backs. A proper investigation is required to bring the facts out of the closets. A mere roll-back is not enough of we want to set a good precedence of fair play in the hydropower development</p>
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			'title' => 'Mirage Of Industrial Security',
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			'summary' => null,
			'content' => '<p>
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<p>
	Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.</p>
<p>
	For more than a decade now, industrial security has been a main concern for Nepal’s industrial and business sectors. The facets of insecurity are many. Industrialists and business people are often kidnapped, killed, threatened or extorted. Factories and businesses are forced to close down. Barriers are created for products reaching the markets, etc. This has had a very crippling effect on industrial growth, investment climate and overall expansion of the economy. As the result, the contribution of manufacturing sector to country’s GDP has gone down in the recent years and all along has remained far below its potential, much lower than the agricultural and service sectors.</p>
<p>
	In our context, industrial security is a complex issue since the insecurity stems out from a multitude of sources, mainly from the politically protected powerful formal or informal outfits. For this reason, a number of measures of industrial security of bureaucratic nature announced by different governments during last one decade have neither protected the industries nor the industrialists.</p>
<p>
	Therefore, more important than a force to be set-up, at first place, there must be a political commitment and honest implementation of the same if an effective security were to be provided to the sector. As long as the political parties, specifically some top leaders of major parties, continue to protect and nurture the criminal gangs and notorious dons, any security force of proposed nature will be rendered ineffective in no time. That is what has happened so far. Similarly, the violent activities that take place in the name of trade unions affiliated to these political parties is another headache, which in fact has in recent years forced a number of industries and businesses to close down permanently. In addition to it, frequent strikes and blockades very often organized by this or that political party are other main reasons of insecurity.</p>
<p>
	If the country is indeed determined to provide industrial security, it must first come in the form of political commitment of all reckonable political forces. They must be able to reign in their respective trade unions so as to prevent them from acting as ‘licensed criminal organizations’. Rampant impunity is another equally alarming phenomenon. Even if one is caught with reasonable evidence of involvement in criminal activities that jeopardize the industrial security, he is hardly punished. Political protection, corruption or legal loopholes set them free sooner than one could imagine.</p>
<p>
	Undoubtedly, an effective industrial security is possible only when the overall law and order situation of the country improves, political forces stop impeding the justice and making their unions an extortion apparatus. But, at the industry level, right of ‘hire and fire’ to the employer would give another level of security to the industries. This will put all those elements at bay who claim to be workers but never work in the industry but in the political front.</p>
<p>
	Equally crucial is an industrialist and businessman being true to his profession. If the business people align themselves with this or that political force, or habour political ambitions, they are naturally opposed by the rival political forces. It is no secret that a large number of businessmen clandestinely finance the political parties and leaders, not only because of compulsion but as an ‘investment’ at their free will. These activities certainly do not help to consolidate their security situation. For the proposed force to be effective or mere functional, political commitment on the part of parties and professionalism on the part of industries are minimum prerequisites.</p>
<div>
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			'description' => 'Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.',
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			'article_category_id' => '52',
			'title' => 'Political Copycats',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	Nepal’s private sector seems to have extracted every possible evils from our debasing political environment. The country’s business community is always expected to set good examples of best practices, leadership, magnanimity and vision that could be replicable even by politicians. Sadly though, these supposedly rich, learned, professional and responsible business leaders themselves seem determined to ruin umbrella business organizations like FNCCI (Federation of Nepalese Chamber of Commerce and Industry) and NCC (Nepal Chamber of Commerce), thus far largely saved from the meanness of dirty politics.</p>
<p>
	All but one out of a dozen former presidents of FNCCI boycotted the 47th AGM of the organization held in the first week of April, allegedly protesting the ‘unprofessional’ behaviour of the incumbent President. The past presidents are also ex-officio advisers to the organization and, failure of the entire brigade to turn up in the event was indeed an unwanted precedent.</p>
<p>
	Existence of lobbies in such organizations is but natural. Albeit, it is the responsibility of the leadership to accommodate the differing views within organization and address the genuine concerns of members. But the opponents argue that ever since his election, the present president has been inaccessible and impervious to the well-being of the institution. Without going into the exercise to verify the truth behind this claim, it can be safely concluded that the leaders of the chambers are finding it hard to reconcile their businessman traits (that in Nepal requires being selective in socializing) and social leader traits (that virtually requires complete sacrifice of private life). &nbsp;&nbsp;</p>
<p>
	Likewise, 60th AGM row in the country’s oldest organization of the business community, NCC, has invited shameful hostilities between the lobbies of President Suresh Basnet and Vice-president Lokmanya Golchha. It went to the extent that the Golchha lobby held a separate press conference in early April alleging Basnet of taking the entire organization for ransom. Before that, the office was padlocked for almost a month, ironically, at the behest of the incumbent president.&nbsp;</p>
<p>
	Both in FNCCI and NCC, lust for clinging to power who are already in positions or ousting the incumbent by any means by the opponents are at the heart of all these misadventures. All of them seem to have forgotten the values of democracy and importance of fairness in the game of ballots. Equally so, those in the hot seats have failed to uphold the dignity their respective positions deserved. Instead, they seems to have either believed in no-inclusive decision making or use of extraneous tricks other than winning the heart of own constituencies to remain in or gain crucial positions. This is exactly what our business leaders have learnt from our politicians and political culture -- undermine democracy and dance haywire, shamelessly in public.</p>
<p>
	&nbsp;This is perhaps the time the country’s private sector came up with some prescription to revive sluggish economy. The GDP growth rate for this year is predicted to less than 3.5 percent and contribution of the manufacturing and formal business sector is even negligible. This unimpressive performance of the economy without any strikingly visible barrier to growth manifests even cancerous trend of gradual decay. It is the private sector that should now come-up with a blue-print for its rescue.</p>
<p>
	There are other more serious business for business leaders than political-type bickering among themselves. The private sector has constantly blamed to the unstable and hostile politics for Nepal being unable to attract the foreign investment, among other. But, international business community has started to doubt on the very credentials of Nepal’s private sector. One of the crucial questions asked is why the real sector has chosen not to be transparent and failed to even register in the stock market. This issue entails other number of inherent deficiencies in our corporate sector. And, one more deficiency is added spatially by the growing unprofessionalism and animosity within the community, that must be contained and corrected, sooner the better.</p>
<p>
	<img alt="Political Copycats, From the editor" height="296" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/from_the_editor_mar2013_political_copycats(1).jpg" width="590" /></p>',
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			'created' => '2013-05-22',
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			'id' => '943',
			'article_category_id' => '52',
			'title' => 'Private Sector Concerns',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better. So much so, the newly installed ‘election’ government too doesn’t seem much concerned about predicaments the business and industry sectors of the country are currently faced with.</p>
<p style="text-align: justify;">
	All communist party literatures, most prominently of the Maoist Party, unrelentingly criticized the form of the government what their jargon said to be of a ‘bourgeois comprador’, the state of the State run by the rent-seeking elites and bureaucrats. But it is the very Maoist Party which played the most crucial role to form the present government comprising of only former bureaucrats. This was a complete anti-thesis to their sworn doctrine. And, it was but natural for ‘bourgeois compradors’ not to listen to the private sector entrepreneurs.&nbsp;</p>
<p style="text-align: justify;">
	In the run up to form new government, headed by incumbent Chief Justice of the Supreme Court, Khil Raj Regmi, four major political parties signed an 11-point agreement. Sadly, that document didn’t incorporate even a single sentence regarding the sorry state of the economy and prescription to reinvigorate it. FNCCI, the umbrella organization of Nepali businesses and industries, however, protested against this apparent apathy of the country’s major political forces and supposedly apolitical government now at the helm of affairs. But materially not much change seems to be in the offing.&nbsp;</p>
<p style="text-align: justify;">
	Similarly, next thing the Maoists after coming to power in 2008 professed was protecting the ‘nationalist’ businesses. But, in practice, it is the only nationalist businessmen and industrialists that they have selectively made to suffer. The business people who had created businesses and had links to other countries, primarily India, have already shifted to their businesses or wealth. Only those who chose to work here and die here, or the most nationalist ones, are subjected to suffer day in and day out. And, nobody cares.</p>
<p style="text-align: justify;">
	Surprisingly, political parties other than the Maoist have also maintained a suspicious silence on economic issues like increased infringement of private property rights and rapidly deteriorating business climate of the country. &nbsp;The present government is also likely to shirk away from responsibility of doing its bit in the guise of just being an election government. The fact is: the economy should be a continuous priority regardless of any nature of government that comes in or goes out, with whatever pretext. But, alas; this has not been the case for Nepal.</p>
<p style="text-align: justify;">
	One of the major concerns of the private sector has been the politically protected, rampant corruption in the financial administration of the country. But, the Maoist Party now seems to have engaged in indirect form of extortion by using highly corrupt bureaucrats. One of the recent media reports suggests that a few notably corrupt officials under political protection of the Party are deliberately inflicting pain on some businesspersons by making them to make rounds to the revenue investigation office, without framing any charges. Maoists’ pick to head the anti-corruption constitutional body-the Commission for the Investigation of Abuse of Authority- has surprised many.</p>
<p style="text-align: justify;">
	These things have longer repercussions in the country’s business environment. &nbsp;Nepal is already in the red area of the ‘doing business’ and ‘private property rights’ indices. According to an estimate by the business community, some 150,000 large or medium level Nepali business households have fled the country to settle and start business abroad during last one decade.&nbsp;</p>
<p style="text-align: justify;">
	These realities must be of concern to the parties that provide leadership to the country. But, now it appears as if improving the country’s businesses climate is not in any party’s agenda. This also implies that the Nepali private sector, at least for some time to come, have to depend on whatever little they can do on their own and contribute to make things better. One of the appropriate medium of such contribution could be the elections themselves where they can advocate and vote for the party which is better in terms of creating a business-friendly climate in Nepal. They can’t just keep complaining and doing nothing meaningful.</p>
<div>
	 </div>',
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			'description' => 'Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better.',
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			'title' => 'Utter Discouragement',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p style="text-align: justify;">
	<img alt="From the editor, March 2013" height="362" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_from_the_editor(1).jpg" width="580" /></p>
<p style="text-align: justify;">
	The private sector of Nepal has been a constant victim of government inaction, for decades now. The latest in the row is Nepal Purwadhar Bikas Company Limited (NPBCL), headed by outgoing President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi. The company is planning to construct a 2.9 km tunnel connecting Kulekhani and Bhimphedi stretch of Kathmandu-Hetauda road. The proposed tunnel will reduce the Kathmandu-Hetauda road distance to 58 km and travel duration to 45 minutes. It now takes at least four hours to drive between the two cities.</p>
<p style="text-align: justify;">
	But the Company’s plan to lay a foundation stone for the tunnel on February 8 was dampened by the government inaction and the prescheduled ceremony was just limited to a ritual pooja than the real act of marking the formal beginning of construction. Contrary to the expectation, the government didn’t sign a go-ahead agreement with the NPBCL so as to allow the Company to formally inaugurate the construction of the tunnel on the very day.</p>
<p style="text-align: justify;">
	The government reservation that the Company didn’t have convincing plans to repay the investors was a mere excuse given the credibility of the people involved as promoters, shareholders and partners of the company.</p>
<p style="text-align: justify;">
	Firstly, it is promoted by wider participation of local beneficiaries. Though their investment may be small in amount, it would automatically provide a social audit framework for such a large project. As the number of promoters is going to be 264,000, the company is unlikely to be case of one large single obligor insolvency, even if the company, by any chance, met an unexpected fate.</p>
<p style="text-align: justify;">
	Second, the promoters themselves, including Joshi, are renowned business leaders and the government must have an iota of trust on them. If not, whom will it trust upon to invest in?</p>
<p style="text-align: justify;">
	Third, there are organizations like Non-resident Nepali Association (NRNA) that have signed agreement to invest and help complete the project in stipulated four-year period. Despite these all, if the officials in the Ministry of Physical Planning and Transport Management had any reservation on any issue, that had to be resolved through negotiation with the company, before setting the date of official inaugural.&nbsp;</p>
<p style="text-align: justify;">
	The modalities for sharing benefits between promoters and public investors, collection of the toll and plans of financial closure are undoubtedly important for a Rs 20 billion project. But they had to be sorted out well ahead setting the date of formal commencement of the construction. The Company’s approach to take the government’s likely obstruction for granted and the government intention to obstruct in any pretext have given all the wrong messages to the public about the very future of the project.</p>
<p style="text-align: justify;">
	The government contention that the estimated cost of the project was too low and funding sources were not clearly demonstrated, are not a well-founded. To say the least, it is not the business of the government to tell a private company whether any amount it set aside for the project was enough or not. And, the funding sources the Company has enlisted are of course the most credible ones available in Nepal.</p>
<p style="text-align: justify;">
	This episode is the combination of government’s unfriendly attitude towards the private sector and ad-hoc working style of Nepali corporate sector. The government must acknowledge the fact that it is the first large-scale private sector initiative to invest in country’s key infrastructure like road project. For this reason, the government should leave no stone unturned to facilitate the execution of the project. And, on the part of the company, there should be more transparent and convincing flow of information, so that the mala fide government intentions could easily be defeated by the strength of public confidence on it.</p>
<p style="text-align: justify;">
	There are questions whether the entire road from Balkhu of Kathmandu to Hetauda will be developed by the Company or is it constructing the tunnel alone and expects the government to make the rest of 55 km road widened to four-lanes with the tax-payers’ money. In such a case, how will the tolled amount be distributed?</p>
<p style="text-align: justify;">
	Obviously, the Company must have discussed these things with the relevant government agencies in detail. But the same details have not come to the public notice. Therefore, it is important that both parties, the government and the Company, played a transparent game so that this project can set a benchmark for future such projects.&nbsp;</p>',
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<p style="text-align: justify;">
	<img alt="Adhoc Ad-Rules" height="357" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/AdhocAd_Rules.jpg" width="500" /></p>
<p style="text-align: justify;">
	The Maoist-led government seems determined to execute a one-window policy to allocate slots and budget to publish and broadcast public sector advertisements in the Nepali media. Some smaller media houses appear to be falsely jubilant just because they had the feeling that only a few big media houses had monopolized the public sector advertisements while the rest were unfairly relegated. It would be completely immature to think that the government’s discretion to allocate these advertisements in exchange of news favourable to it will in any way help even the smaller publications and broadcasters that are struggling to be professional.</p>
<p style="text-align: justify;">
	All media houses, big and small, are in fact getting only a residual fraction of the public sector advertisement that is saved from going to government-owned publications and broadcasting corporations. There are still several active laws that make it mandatory to publish public sector entities in the government mouthpiece like the Gorkhapatra. One of the darkest sides of the last two decades of democracy in the media industry is that the government couldn’t be forced out of the media business. Regardless of their rapidly dwindling readership and viewership, they have almost a monopoly over government advertisements. This is a professionally unethical phenomenon, and a real bottleneck to the growth of the sector.</p>
<p style="text-align: justify;">
	Even under such a virtual government monopoly, there was one good thing -- intermediary agencies as designers and developers of advertisements have had a role, which was developing as an industry in itself. But in the proposed arrangement, the agents’ role will also be taken over by the Department of Information. Then, this ‘industry’ too is doomed to die. It is altogether a different question, however, whether the Department has the manpower, creativity and resources to do all the pre-publicity art and design work before the advertisements are actually released to the media. Even news of bypassing the advertisement agencies has made some media houses happy given that some agencies have really deceived them on a continuous basis. This happiness too is an unfounded one and the relations between the media house and the agency is entirely a separate issue to deal with than the current problem.</p>
<p style="text-align: justify;">
	At the very crux of the problem is the government intention to treat advertisements as means of distributing ‘mercy’ and not treat them as part of the media business. It has not even considered how large logistical operation it should have if it considers centralizing all advertisements and then distributing it fairly, to the media scattered all over the country. As there has been an impressive growth of regional media, the Department might need its offices at regional or even district levels if it were to be fair as claimed, which is an impossible proposition in itself. Second, it wants to be discretionary than a rule-based institution. Because, once it is rule-based, the game will be the same again. For example, if it plans to make disbursement proportionate to the circulation and reach of the given media as the criteria, again the large media houses will only be entitled to a very large chunk of public advertisements. There is one good possibility that the government media might get less public advertisements than at present. But the government media is not at all likely to be treated on the same ground. So, this too is not going to happen.&nbsp;</p>
<p style="text-align: justify;">
	Therefore, a fair and rule-based proportionate distribution is certainly not the objectives of this entire exercise. Even if it were, making an inclusive rule is a daunting task given the weak database at the centre and virtually no records existing at the local levels.</p>
<p style="text-align: justify;">
	It is not difficult to figure out that the major objective of the current exercise is to reward some publication houses which are supportive of the UCPN(Maoist) and the present government and, at the same time, ‘teach some lessons’ to those media houses which &nbsp;are supposedly ‘hounding’ the prime minister.</p>
<p style="text-align: justify;">
	Besides, this whole proposition is against the internationally accepted norm of professional journalism and media ethics. This is surely an exercise in detriment to the very foundation of the free-market. And, this will not help the media of any shape or size except the ones the incumbent government wants to protect. It goes without saying who they all will be!&nbsp;</p>',
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<![endif]-->	<span heaveneticacond9="" style="font-size:56.0pt;
  font-family:"><img alt="from the editor" border="1" height="217" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/upperkarnali(1).jpg" vspace="10" width="316" /><br />
	I</span><span style="letter-spacing:-.15pt">n the last week of December, the Maoist government led by Dr Baburam Bhattarai extended the survey license tenure for six more months to GMR, the Indian infrastructure major that is developing the Upper Karnali Hydel Project. The government has also sanctioned the proposal of the company to increase the installed capacity of this run-off-the-river project from 300 MW to 900 MW and granted permission to open a project liaison office in New Delhi. With all these developments at hand, things look good at the face of it. But not quite!</span> <br />
	<br />
	<span style="letter-spacing:
-.1pt">From the very beginning, since early 2010, it was the Maoist party that was creating obstacles to the project. In May 2010, the GMR offices at the project site were vandalized and the same was repeated in December 2012. It is quite a paradox that it was Dr Bhattarai's cadres who campaigned systematically at the local, national and international levels against GMR developing the project.<span style="mso-spacerun:yes">&nbsp; </span>Dr Bhattarai now may shirk aside pointing finger to break-away Mohan Baidya faction of the party, but both Bhattarai and his party Chairman Puspa Kamal Dahal did not actually act in time to facilitate the project operation.<span style="mso-spacerun:yes">&nbsp; </span>That led to some cadres of their party living abroad to create an NGO<span style="mso-spacerun:yes">&nbsp; </span>network called Karnali Sarokar Samaj and collect money both as donation to organize protests against GMR and in the form of 'shares' to a then proposed company that has now taken shape as Karnali Jalavidhyut (hydropower) Limited.</span></p>
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	<span style="letter-spacing:
-.15pt">Apparently, now, the only party that is all-out against the GMR is CPN-Maoist (Baidya faction) and some of the technocrats of panchayat era are helping it to develop what they call a presentable case against the project contract. Their main bastion of argument has been, it was an 'anti-national' move to award contract to an Indian company. The new Company formally made public a couple of weeks ago is manned by Baidya cadres and it has vowed to replace GMR and develop the entire project by itself. </span></p>
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	<span style="letter-spacing:
-.15pt">The company is claimed to have registered by the government two months ago. This is where the intentions of Dr Bhattarai appear questionable. How can a government register a new company to develop the same project that has been formally contracted out to a foreign company years ago?<span style="mso-spacerun:yes">&nbsp; </span>Baidya's Party has fed in massive misinformation from local to international levels. It officially opposed the recent government decision by issuing a statement at the central level and has prepared a 'defense force' at the project site to stop GMR in its work.<span style="mso-spacerun:yes">&nbsp;&nbsp; </span>And, surprisingly, the government has done nothing to facilitate GMR in smooth operation of the project that has to start its civil works within a few months time, if the project were to be actually constructed. <br />
	</span></p>
<p>
	<span style="letter-spacing:
-.15pt">All this has added complications to the project to take off. The financial and technical abilities of the new company might be questionable from any possible angle, but it is unquestionably a big enough force to act as an irritant in the process. How will the people who are very active in generating money from non-resident-Nepalis in foreign land in whatever pretext will not only be stopped but their face also saved if the government wants GMR to develop this project?</span><span style="letter-spacing:
-.15pt">&nbsp;</span></p>
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	The government doesn't seem to have understood the extent of fall-out effects if the GMR is compelled to withdraw from the project. It will create an image of the country as unfriendly to foreign direct investment and will thus have long-term ramifications. The dream of developing large hydropower projects with FDI will never be realized if this company is sent back. It is because, the deals offered by the company to provide 12 percent of generated energy free of cost to Nepal and 27 percent equity participation to Nepal Electricity Authority are highly generous.</p>
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	The issue of 'compromised national interest' in this particular case is an absolutely fabricated dogma. Nepali nationals will be far better protected if we have enough power generation to support industrialization, transportation and household use. And, a private company GMR must not be penalized for any act of the Indian establishment that are often seen by different political forces as detrimental to Nepali national interests.</p>',
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			'description' => 'In the last week of December, the Maoist government led by Dr Baburam Bhattarai extended the survey license tenure for six more months to GMR, the Indian infrastructure major that is developing the Upper Karnali Hydel Project. The government has also sanctioned the proposal of the company to increase the installed capacity of this run-off-the-river project from 300 MW to 900 MW and granted permission to open a project liaison office in New Delhi. With all these developments at hand, things look good at the face of it. But not quite!',
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	<strong><span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">The Baseless Rate</span></span></strong></p>
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	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;<br />
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	<span style="font-size:14px;"><span class="A4">I</span><span style="color: rgb(34, 30, 31);">n the second week of November, the Nepal Rastra Bank (NRB) issued a base rate circular targeting the commercial banks. The circular, however, has taken only a recommendatory rather than a mandatory stance as regards its compliance. In other words, it is a mere paper, not a policy. It is because if the banks were to treat this as a mere reference rate on lending, as the NRB claims, the rationale of the whole exercise, as it is, would be futile. If the NRB intended to make the circular mandatory but remained short of doing so in apprehension of reprisals, it is on the wrong plank of policy formulation. </span></span></p>
<p>
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">The formulae suggested by our central bank through this circular to calculate the cost of fund for lending make us believe that the rate is similar to the ‘base rate’ of the Reserve Bank of India that came into effect in July 2010 or the Discount Rate of the US Federal Reserve that has been there for years. Central banks enforce such base rates to prevent the systemic failure of financial institutions, if the latter indulge in deficit-driven transactions for a long period of time. But in our case, there are only a few instances where Class ‘A’ banks have actually incurred losses by resorting to competitive lending rates, which are below the actual cost of fund.</span></span><span style="font-size:14px;"><br />
	<br />
	<span style="color: rgb(34, 30, 31);">If the idea behind the NRB’s base rate circular is to keep the interest rate regime transparent, then it may be taken positively. However, the transparency component has already been incorporated in the concept of quarterly publication of the financial statements of the banks and financial institutions. Therefore, this circular without teeth was an unnecessary exercise.</span></span><span style="font-size:14px;"><br />
	<br />
	</span><span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">In fact, central banks which have to handle a financial system with abundant liquidity often enforce base rates to prevent banks from resorting to cheaper lending rates to attract or retain clients. Also, such rates are applicable where the interest on lending, like in the US, is very low - at times below 3-4 percent per annum. Or, in the case of the 2010 Indian economy which was feared to be over-heated. But Nepal’s banking system at present has no such issues. The system, more often than not, remains cash-strapped. As a result, the banks’ interest rates are usually high - at times as high as 20 to 22 percent. </span></span><span style="font-size:14px;"> </span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">Besides, the practice of central banks fixing base rates has become an outdated and anti-free-market concept over the past couple of years. If a particular bank opts to lend at a cheaper rate with low profit margin, it may earn even more out of the sheer volume of the transactions. Therefore, it is up to the business manager of a bank to decide what market strategy to adopt and at what price to sell its products. </span></span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;">&nbsp;<span style="color: rgb(34, 30, 31);">The NRB’s circular to the banks to publish their base rates on a monthly basis is an additional cost burden on them. Not only that, barring the banks in all circumstances from lending at rates lower than the base rate is barring them from the freedom of portfolio and treasury management. The interest rates on lending to a variety of projects (like SME loan, consumer financing and mega-project financing) are bound to be starkly different. Therefore, an efficient bank may like to finance at lower interest rates the projects that give it a better mileage in the market, though not a direct profit, and compensate for the ‘loss’ by lending to projects where it may be able to charge higher interest rates. </span></span></p>
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	<span style="font-size:14px;">&nbsp;<span style="line-height: 115%; color: rgb(34, 30, 31);">In this exercise of base rate policy, the intentions of quite a few stakeholders got badly exposed. The NRB’s actual intention was to make it mandatory, not because it would do any good to the system, but because the regulator perhaps wanted to show that it still has some controlling powers over the financial sector. </span></span></p>
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	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;It was clear that some established bank were in favour of the circular whereas the new ones, whose costs of fund are likely to run high if calculated according to NRB guidelines, were averse to it. But, the new banks could not muster the courage to say that the circular was an unnecessary exercise. The NRB, on the other hand, could not justify its half-hearted approach in introducing it. </span><br />
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	<span class="A15"><span style="font-size:59.0pt">T</span></span><span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">he recent activism of regulatory authority of insurance industry of Nepal, the Insurance Board (IB) or Beema Samiti, has created new ripples in the sector. Some of the very bold actions taken against ‘erring’ insurance companies, including the fully government-owned Rastriya Beema Sansthan (RBS), have apparently served to establish that it is not a toothless entity, as seen so for years now. <br style="mso-special-character:line-break" />
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">More interesting drama unfolded when the IB ordered RBS to defer its annual general meeting scheduled for the first week of October and ordered to stop its engineering insurance business the following week. This episode has special significance as the government-owned financial institutions have a history of invariably remaining recalcitrant to the regulatory authorities which has often given ground to the private sector operators to complain of not getting a level-playing field to compete with these ‘protected’ public sector companies. It may be recalled that a number of government-owned large banks were, for all practical purposes, acting beyond the regulatory mechanism of the central bank until their net worth became untenably negative, about a decade or so ago.<br />
	<br />
	At the core of such controversy and temerity to non-compliance to the regulator are the separate Acts that instituted these entities. Still, RBS Act of 1969 is intact. (Similar Acts were there for Banks as well until an Umbrella Act ‘BAFIA’ was enacted in 2006.) This incident also establishes the fact that government should not continue to be one of the competitors in the business where private sector has already made competent market presence. Let’s hope the IB will also force the RBS to speed up the process to split its life and non-life insurance businesses. The only private sector company that was operating both of these businesses has already obliged to IB’s directive whereas RBS is still adamant.</span></p>
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">But the cardinal question here is: Is this all an insurance regulator of the country expected to do? Certainly not! A regulator has a responsibility of evaluating the situation of service availability, and on the basis of such evaluation, creating appropriate legislative and institutional frameworks to ensure a healthy growth of the market as well as a ground for fair play. But, the recent acts of the IB appear more of populist and bullying nature than the ones having long-lasting meaningful impacts. Some of the decisions like limiting the operation expenses of the insurance companies only to 6 percent of their total expenses are unquestionably naïve, to say the least. This favours the old and established companies and puts the new companies in disadvantage while the latters deserve credit for the speedy expansion in the insurance services across the country.</span></p>
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Still, barely six percent of the population that has capacity to buy insurance coverage has got some sort of insurance coverage. The knowledge about the insurance among the masses is negligible and products that are suitable to Nepali context are neither available nor accessible to the potential clients. Nepal’s insurance industry lacks human resource of all levels and we don’t even have a training academy for the sector, so far. <br />
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Though the IB has been repeating its plan to set up such an academy time and again, the plan is still rudimentary at best. Updating several legal arrangements is long overdue. The very Insurance Act has become outdated. It is the responsibility of the regulator to develop a universal framework of evaluation to avoid institution-wide discretionary practices of evaluation and compensation. It is already late to bring in international best practices into our insurance industry. </span></p>',
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						<span heaveneticacond9="" style="font-size:56.0pt;
  font-family:">A</span><span style="mso-spacerun:yes">&nbsp; </span>four-day ‘Made in Nepal Products and Service Expo-2012’ that concluded on 9th September in Kathmandu created hype of a sort with its tagline: afno bhanya afnai ho (our own, means our own). Two weeks later, Nepali elite class was seen scrambling to buy jackets made of allo (stinging nettle plant with scientific name Girardinia diversifolia) fibre in the Small and Cottage Industries Products’ Exhibition. Everyone, from prime minster to the commoner who visited these fairs, and the media alike, portrayed these as the moments proud to be. Indeed they were, but rather more emotionally.</p>
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	These expos and exhibitions designed to showcase and promote Nepali products and services no doubt are welcome endeavors. For that matter, any business initiative at a time when almost all economic and manufacturing activities in Nepal are dented by the prolonged political crisis is praiseworthy. But, the kind of twist these expos brought in to trade ‘afno’ emotions than goods and services warrants a serious debate on the very concept of ‘made in Nepal’ and its indispensability for the national economy.</p>
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	Let’s think beyond debatable issues of whether everything showcased in these exhibitions was truly a Nepali product. In the present globalised and highly interconnected world, can any economy of the size of Nepal operate and manage her ‘own’ economy and, is it at all necessary to be so? Or, shouldn’t we now think of making Nepal a ‘profitable economy’ than being falsely proud with hollow emotional swipe?</p>
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	Unquestionably, Nepal needs to produce and sell products and services that have comparative and competitive advantages, mainly those that are profitable both in domestic and international markets. First, the very concept of self-producing everything we need must be abandoned. Second, generating pride by renaming or changing the label to ‘made in Nepal’ of the goods produced by others is surely not an ethical practice and not going to help even our psychological bliss of industrialism, let alone economy.</p>
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	<span style="mso-spacerun:yes">&nbsp;</span>We saw a swadeshi, self-reliant economic paradigm in the economies like India for almost half a century that got reverted to open market only at the beginning of 1990s. But, swadeshi policy could hardly help the market of its own of such a large size, apparently capable of creating economies of scale in any given sector. Even in our case, the guided economy of the panchayat era tried to produce everything through the state-owned entities -- from cigarettes to sugar and, run transport services to groceries outlets. Clearly, the prime objectives in those both cases were to create an economy of ‘national pride’ not a profitable economy based on cost-benefit analysis. Now we have the results in front of us – in the form of an absolutely tattered economy and also pathetic fate of these state-owned establishments, as an outcome of these costly prides.</p>
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	The official figures of the last fiscal year 2068/69 show that Nepal’s export import ratio stands at almost 1:6 and, unofficially, it is estimated to be well above 1:8. This indeed is indicative of the fact that Nepal only has two options to bridge this gap – either to increase the export or, produce the goods that can replace the massive import in substantial scale, or, instead of producing everything, focus on prioritizing the products with better domestic or international markets with higher rate of returns. As China has now shown, it is always preferable to import what turns out to be cheaper to import than producing ourselves and produce only that which brings in better rate of returns. Therefore, instead of being ‘proud’ for producing everything, the nation as one economy should think about pragmatic plans to make it more ‘profitable’. Then only ‘made in Nepal’ actually can contribute in making Nepal economically better off.<span style="mso-spacerun:yes">&nbsp; </span></p>
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59.0pt">T</span></span><span style="mso-tab-count:1">he Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so. The recent example is the closure of Kathmandu franchisee outlets of the global food chain KFC and Pizza Hut. And, as of penning these lines, there was no convincing sign of them opening soon. Even if they did, the damage done by the reason of its closure – overtly politicized labour highhandedness – is sure to be a detracting factor for the potential investors. Moreover, this is the second such case after Surya Nepal closed its readymade garments’ unit some six months ago, also due to industrial disputes.&nbsp;&nbsp; <br />
	<br />
	</span><span style="mso-tab-count:1"><span class="A13"><span style="font-size:
59.0pt"><img alt="fromtheditor" border="1" height="212" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/investment(1).jpg" vspace="5" width="330" /></span></span>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">Only political formalities like announcing an Investment Year by the government would never be enough to materially attract the investment. On the contrary if the ‘pull factors’ are adequate, such an investment would automatically flood in even without such announcements. Therefore, Nepal as the nation-state should first check whether such pull factors exist at all, at present.</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">As the fact of the matter, they don’t exist at all. The prolonged political uncertainty, as claimed by all and sundry, is not only the distraction; the radical Reds at the helms of state affairs with the ‘Maoist’ tag is even larger scary factor. The ruling party here might furnish innumerable arguments to establish how investment-friendly they are prepared to be. But why would a potential investor take pain of subscribing these sugar-quoted arguments instead of reading the writing on the wall–THE MAOISTS; whatever it means?</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">The trade union leaders at the Pizza Hut, after its closure came-up with a lame-duck statement to prove their innocence claiming that they were just forming a unit there and were not planning even to ‘immediately’ strike. That may or may not be true. But why would any investor even take the risk of running the trade under the perennial duress in over-unionized set-up?</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">There are many instances that the industrial disputes are not limited to securing the trade union rights of any company concerned, but in fact the means to achieve political objectives of the mother Party one is affiliated to. It’s been years that collective bargaining processes enshrined in the labour laws of the country are grossly dishonoured. Sheer force and political protection to union activities has been the cardinal modus operandi in extracting benefits from the employers.</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Some other reasons like the power shortages, infrastructure deficits and lack of policy predictability could be cited as other bottlenecks to attract both international and domestic investment. They are but only secondary to overarching ultra-red communist image of the government and industrial anarchy created by the trade unions invariably led by party cadres rather than the workers. Not only international, even domestic investment is not likely to come by in any significant measure until and unless these fundamentals are changed for the better.<br />
	<br />
	<br />
	</span></p>',
			'published' => true,
			'created' => '2012-10-10',
			'modified' => '2012-10-30',
			'keywords' => '',
			'description' => 'The Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so.',
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	(int) 11 => array(
		'Article' => array(
			'id' => '659',
			'article_category_id' => '52',
			'title' => 'Tunnel To Prosperity',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<br />
	<strong><img alt="From the editor" border="1" height="262" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/editoiral.jpg" vspace="5" width="400" /><br />
	<br />
	<br />
	The commercial viability of Kathmandu-Kulekhani-Hetauda road tunnel is unquestionably attractive given the traffic pressure it is likely to have. <br />
	</strong><br />
	<br />
	Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km. <br />
	<br />
	<br />
	Fully functional roads that now connect Kathmandu with Hetauda are much longer. The most used Kathmandu- Mugling-Narayanghat-Hetauda road’s length is 224 kilometers (kms) while the largely discarded Tribhuvan Highway is 133 kms. The proposed fast track will be about 80 kms long and would open at a point of some 20 kms east of the main town of Hetauda. However, the distance with this tunnel would be only about 50 kms and the total travel time from Kathmandu to Hetauda will reduce to barely one hour. The pace of progress in the work to construct the tunnel has been more than impressive; demonstrating the advantage that a private sector led project can have even in infrastructure development aspect. The Company has also been a first test case of much talked about Public-Private Partnership and serves as the actual implementation of BOOT (Build, Operate, Own, and Transfer) model through a project entirely financed domestically. This also sets an example of how a large sized investment of about Rs 20 billion for this project alone could be generated within the country if a viable project is chosen and all users and stakeholders are made effective owners of the project. <br />
	<br />
	<br />
	Since the company got license in the third week of May 2012 from the government, it has created a tight timeline to complete the Detailed Project Report (DPR) by the end of November. The commercial viability of the tunnel is unquestionably attractive given the traffic pressure it is likely to have. This model also constitutes a rationale that the carrying capacity of the tunnel should also be fixed by the research on existing and potential increase in traffic flow between Hetauda and Kathmandu. <br />
	<br />
	<br />
	Most importantly, without upgrading the total stretch of the Balkhu-Pharping- Kulekhani-Hetauda road, only the proposed tunnel of mere three-kilometer length is unlikely to give any substantial benefit to the national economy and return to the investors. Had the entire road length been part of this project, it would only have delivered results as aspired. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-15',
			'modified' => '2012-10-10',
			'keywords' => '',
			'description' => 'Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km.',
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			'id' => '645',
			'article_category_id' => '52',
			'title' => 'Triangular Fight On Budget',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong>The president too has come out with his ‘political position’ on a full-fledged budget, making it a triangular fight. </strong><br />
	<br />
	<br />
	<img alt="from the editor" border="1" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from-the-editor(1).jpg" vspace="5" /><br />
	<br />
	It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY). Unlike in the past, the timeliness of the budget announcement was hampered by political bickering between the ruling alliance and the opposition in the parliament. But, this time around, a third party--the president--has also come out with his ‘political position’ on a full-fledged budget, making it a triangular fight.<br />
	<br />
	On the 5th of July, President Ram Baran Yadav hinted that he would not put the seal of assent on the full ‘finance ordinance’ covering the entire FY 2012/13. This controversy was absolutely unnecessary. Apart from that, the president’s willingness to choose ‘this over that’ is even more distressing. In view of the danger of financial crisis looming large and private sector confidence hitting bottom rock, the sincere effort from all quarters should have been to bring about a full-budget. This would have at least helped to boost the investors’ confidence and provided some degree of policy predictability in the economy. One of the major concerns of the opposition parties—mainly the Nepali Congress and the CPN-UML—is that the full-budget will provide the government to allocate more sum for its party’s vested interests. That may or may not be true, but the kind of protest these parties are now engaged in, is also not going to stop the present government either to practice porkbarrel economy. <br />
	<br />
	<br />
	The wisest thing for the opposition would have been to be a part of the budget formulation team. Instead of sloganeering from outside, they could have stopped the government from allocating exorbitant amount for the UCPN-Maoists’ pet schemes like Youth Self-employment and the agreed full-payment to its ex-combatants. Nepal seems to be sharply veering from the objective of concluding the peace process. This means that there will be prolonged political uncertainty and, if a consensus is not reached soon, many more budgets to follow are likely to be victims of Nepal’s sharply polarised politics. And, thus the woes of economy are sure to aggravate. Therefore, the major political forces of the country must first cease the practice of treating the annual budget as a means to meet their sectarian political ends. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-09',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY).',
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	(int) 13 => array(
		'Article' => array(
			'id' => '585',
			'article_category_id' => '52',
			'title' => 'The Hydropower Politics',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<img align="middle" alt="editor" border="1" height="224" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/editor2.jpg" vspace="10" width="300" /></p>
<p>
	Nepal still lives by dream of developing its hydropower to the fullest potentials so that it could not only meet own energy needs but also export a substantial amount of power produced; to help maintain the trade balance, primarily with India. It has been at least five and half decades (since the planned development began here in 1956) we are following this mirage of commercially harnessing our literally limitless potentials of water resources. Nepal may have moved an inch but surely not a foot to this direction. And, worse, there is not a single large project in pipeline that could complete in, say, five years from now.</p>
<p>
	Talking about large projects, Upper Karnali (800 MW) and West Seti (750 MW) are in recent limelight. But the proposed promoter of Upper Karnali, the Indian energy major GMR is still apprehensive about the security it would get from the state to implement the project. The story of West Seti a reservoir based proposed project, is circling around for last one decade when Australian company SMEC came in and went out without making much headway in the project. Recently, the Chinese promoter of legendary Three Gorges Dam project has reportedly shown a renewed interest in it. But, things are not likely to move much differently than in the past. It is because Nepali water resources, hydropower in particular, is by now no longer an investment or commercial proposition alone, rather it has become a true game of politics, at both national and international levels.</p>
<p>
	At the national level, a misconstrued nationalism has always been a real impediment to the development and growth of this sector. It is natural to seek to maximise the benefit for the nation while developing the project with bilateral or multilateral partnerships, but it is entirely an weird approach to prevent the very construction of the project defining the nationalism attached to it at a convenience of a vested interest group.</p>
<p>
	Every Nepali party with communist tag has done this politics. The Mohan Vaidya faction of UCPN-Maoist is the latest incarnation of a force dying to protect nationalism by creating hurdles to not only Upper Karnali but also Upper Marsyangdi. The government issuing statement of assurances of security appears absolute farce at the face of what is evident at the site. At the international levels, for both of our neighbours India and China, Nepal's development is also part of regional geopolitics. There are instances, like in Kohalpur-Banbasa part of east-west highway, where one party did not like the involvement of the other in any particular project. Even the expression of interest by a party to develop a certain project causes the other party smell a rat.</p>
<p>
	Therefore, any proposition is difficult to materialise on the ground. It is particularly so when the projects, like West Seti, to be developed by China with plans to export its major portion of power-produced to Indian states adjoining Nepal. To sum up, the dark days in hydropower will only end when it is started to be viewed as pure business sans politics at the national level and sans geopolitics at regional level. &nbsp;</p>',
			'published' => true,
			'created' => '2012-02-22',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'Nepal still lives by dream of developing its
hydropower to the fullest potentials so that
it could not only meet own energy needs but
also export a substantial amount of power
produced; to help maintain the trade balance, primarily with
India.',
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	(int) 14 => array(
		'Article' => array(
			'id' => '515',
			'article_category_id' => '52',
			'title' => 'Hoax Of Free Competition',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size:12px;"><img align="top" alt="" height="336" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from the editor.jpg" vspace="5" width="500" /></span></p>
<p>
	<span style="font-size:12px;">Last couple of governments made headlines for declaring that appointments of the chiefs of public enterprises would be made through a free competition. Going a step further, present government opened˜tenders even for the constitutional positions like the chief and other commissioners for the Election Commission, Commission for the Investigation of Abuse of Authority (CIAA) and Public Service Commission. <br />
	</span></p>
<p>
	<span style="font-size:12px;">At the face, it appeared as a welcome idea as those crucial institutions could now expect to be headed by the most talented professionals than the political cronies of the party in power. Some of the selection process, like for the Executive Director of Nepal Electricity Authority (NEA), at the beginning appeared reasonably fair. The erstwhile government made the appointment on the basis of that very selection. Even the present government has appointed in couple of positions by calling for applications, like in case of the Chairman of Securities Board of Nepal (SEBON). <br />
	</span></p>
<p>
	<span style="font-size:12px;">However, status of application collected for constitutional bodies is yet in the dark. But, as it turned out now, all these so called free competitions were mere hoax. Ultimately, only hardcore cadres of the ruling party are getting appointment. The new NEA Executive Director turned out to be a devout UML party worker and Chairman of SEBON a staunch Maoist supporter. In both cases of NEA and SEBON, there were more qualified persons than those who were lucky enough to be picked for the job. But those PhD degree holders and true professionals were summarily discarded. <br />
	</span></p>
<p>
	<span style="font-size:12px;">Then, why is there drama of free competition as the people in power were freely appointing their near and dear ones in these positions for years? Because, this has several advantages for both the appointee and the appointer. Generally, such government appointments are made with a clause for maximum of (so many) years if it is a political appointment as in the past. But the person who is selected through free competition&nbsp; has a negotiation power not only on tenure but also for the perks. Then it has two advantages. First, the chosen cadre will have a fixed term appointment instead of uncertain maximum of. Second, he can bargain for better pay than the normal effective government pay-scale. In turn, the appointing party also can bargain for the appointee's contribution mostly monetary, called levyâ. <br />
	</span></p>
<p>
	<span style="font-size:12px;">What is important here is not the process but the intent of the appointer. If their intentions are to appoint the best professional, the free competition for mere publicity is an unnecessary waste of time and resources. On the contrary, if the ruling parties want their own cadres in any pretext, the so called free competition will only add to the worries of public enterprises, most of which are already in precarious situation.<br />
	<br />
	<br />
	</span></p>',
			'published' => true,
			'created' => '2011-11-16',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'Last couple of governments made headlines for declaring that appointments of the chiefs of public enterprises would be made through a free competition.',
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		'Article' => array(
			'id' => '1441',
			'article_category_id' => '52',
			'title' => 'Trishuli 3A : Roll-back Not Enough',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 12px;">The Nepal Electricity Authority (NEA) Board of Directors, on 11 June, rolled-back its highly controversial decision of upgrading the capacity of Upper Trishuli 3A Hydropower Project from existing 60MW to 90MW. The same board ten days before had decided to upgrade it. Both decisions were taken in the meetings of the Board chaired by Energy Minister Umakant Jha, who allegedly had personal vested interests in upgradation.&nbsp;</span></p>
<p>
	Although the decision was withdrawn due to persistent pressure from several quarters and, more importantly, by the protests of the NEA employees, no action is initiated to investigate on why, at the first place, the upgradation was sanctioned earlier. When the employees dared to cut the power supply off ministers&rsquo; official quarters and threatened to do the same to Singha Durbar Central Secretariat, Minister Jha was compelled to roll-back the decision.&nbsp;</p>
<p>
	But, most surprising in this chain of events is that the NEA management issuing an statement has tried to defend the earlier decision to upgrade the capacity of the Project. &ldquo;The NEA had upgraded the capacity of the project completing technical, economic and existing legal assessments. The project has been designed in Q70 flow, which is not the optimum utilization of the water available in the river,&rdquo; it said.&nbsp;</p>
<p>
	But, with the upgradation, the cost of the project would increase to from USD 89 million to 132 million. It was also agreed to release USD 20 million extra to the contractor, China Gezhouba Group Company&rsquo;s proposal of upgrading it to 90 MW for USD 112 million.&nbsp;</p>
<p>
	This is enough to conclude that there were vested interests, malafied intentions and apparent intended embezzlement of the public funds in the name of upgradation. But, all the people, including the minister, who made the decision, are still in their respective public positions. On top of that, NEA management had had the temerity of issuing the statement claiming that the decision to upgrade was in national interest. This is the height of impunity and lawlessness.&nbsp;</p>
<p>
	The gravity of the case suggests that all parties concerned, the minister, entire NEA Board, the contractor and the local Nepali representative who allegedly lured the decision makers must be brought under the book. The NEA officials who still claim that upgradation was right must not only be questioned but should be challenged to establish the claim in public.&nbsp;</p>
<p>
	Surprisingly, all this happened under the nose of newly appointed chief of anti-graft body, the Commission for the Investigation of Abuse of Authority (CIAA) and he didn&rsquo;t seem at all interested to investigate into it. This indeed is the reflection of hand-in-glove relations of the people who run the government and the CIAA&rsquo;s new chief. The trend has raised fears of this constitutional body exercising its powers by selection and discretion, as against the very concept of an ombudsman organization that acts on the merit of the case basis.&nbsp;</p>
<p>
	If the architects of such a big scandal can go scot-free, then it will cast a very long shadow on Nepal&rsquo;s hydropower prospects. It will set wrong precedence for future as well as other on-going projects.&nbsp;</p>
<p>
	In addition to it, a number of questions have been raised about credibility and professionalism of this particular Chinese Company. Since it is a Chinese government undertaking, Nepal government should have guts enough to raise this issue to its Chinese counterpart. It might be the case that a few employees in the company are misleading their government and pocketing hefty sums in collusion with some Nepali operatives, in and out of bureaucracy. It is also assumed that a number of senior political leaders abetted to take the decisions in anticipation of proper kick-backs. A proper investigation is required to bring the facts out of the closets. A mere roll-back is not enough of we want to set a good precedence of fair play in the hydropower development</p>
<div>
	&nbsp;</div>',
			'published' => true,
			'created' => '2013-07-19',
			'modified' => '2013-07-19',
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			'description' => 'The Nepal Electricity Authority (NEA) Board of Directors, on 11 June, rolled-back its highly controversial decision of upgrading the capacity of Upper Trishuli 3A Hydropower Project from existing 60MW to 90MW. The same board ten days before had decided to upgrade it. Both decisions were taken in the meetings of the Board chaired by Energy Minister Umakant Jha, who allegedly had personal vested interests in upgradation.',
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			'title' => 'Mirage Of Industrial Security',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p>
	Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.</p>
<p>
	For more than a decade now, industrial security has been a main concern for Nepal’s industrial and business sectors. The facets of insecurity are many. Industrialists and business people are often kidnapped, killed, threatened or extorted. Factories and businesses are forced to close down. Barriers are created for products reaching the markets, etc. This has had a very crippling effect on industrial growth, investment climate and overall expansion of the economy. As the result, the contribution of manufacturing sector to country’s GDP has gone down in the recent years and all along has remained far below its potential, much lower than the agricultural and service sectors.</p>
<p>
	In our context, industrial security is a complex issue since the insecurity stems out from a multitude of sources, mainly from the politically protected powerful formal or informal outfits. For this reason, a number of measures of industrial security of bureaucratic nature announced by different governments during last one decade have neither protected the industries nor the industrialists.</p>
<p>
	Therefore, more important than a force to be set-up, at first place, there must be a political commitment and honest implementation of the same if an effective security were to be provided to the sector. As long as the political parties, specifically some top leaders of major parties, continue to protect and nurture the criminal gangs and notorious dons, any security force of proposed nature will be rendered ineffective in no time. That is what has happened so far. Similarly, the violent activities that take place in the name of trade unions affiliated to these political parties is another headache, which in fact has in recent years forced a number of industries and businesses to close down permanently. In addition to it, frequent strikes and blockades very often organized by this or that political party are other main reasons of insecurity.</p>
<p>
	If the country is indeed determined to provide industrial security, it must first come in the form of political commitment of all reckonable political forces. They must be able to reign in their respective trade unions so as to prevent them from acting as ‘licensed criminal organizations’. Rampant impunity is another equally alarming phenomenon. Even if one is caught with reasonable evidence of involvement in criminal activities that jeopardize the industrial security, he is hardly punished. Political protection, corruption or legal loopholes set them free sooner than one could imagine.</p>
<p>
	Undoubtedly, an effective industrial security is possible only when the overall law and order situation of the country improves, political forces stop impeding the justice and making their unions an extortion apparatus. But, at the industry level, right of ‘hire and fire’ to the employer would give another level of security to the industries. This will put all those elements at bay who claim to be workers but never work in the industry but in the political front.</p>
<p>
	Equally crucial is an industrialist and businessman being true to his profession. If the business people align themselves with this or that political force, or habour political ambitions, they are naturally opposed by the rival political forces. It is no secret that a large number of businessmen clandestinely finance the political parties and leaders, not only because of compulsion but as an ‘investment’ at their free will. These activities certainly do not help to consolidate their security situation. For the proposed force to be effective or mere functional, political commitment on the part of parties and professionalism on the part of industries are minimum prerequisites.</p>
<div>
	<img alt="Mirage of Industrial Security" height="263" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/from_the_editor_june2013_image.jpg" style="margin:0 10px 0 0;" width="595" /></div>',
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			'created' => '2013-06-07',
			'modified' => '2013-07-15',
			'keywords' => 'Mirage of Industrial Security, From the editor, editorial, New Business Age, June 2013',
			'description' => 'Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.',
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			'id' => '992',
			'article_category_id' => '52',
			'title' => 'Political Copycats',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	Nepal’s private sector seems to have extracted every possible evils from our debasing political environment. The country’s business community is always expected to set good examples of best practices, leadership, magnanimity and vision that could be replicable even by politicians. Sadly though, these supposedly rich, learned, professional and responsible business leaders themselves seem determined to ruin umbrella business organizations like FNCCI (Federation of Nepalese Chamber of Commerce and Industry) and NCC (Nepal Chamber of Commerce), thus far largely saved from the meanness of dirty politics.</p>
<p>
	All but one out of a dozen former presidents of FNCCI boycotted the 47th AGM of the organization held in the first week of April, allegedly protesting the ‘unprofessional’ behaviour of the incumbent President. The past presidents are also ex-officio advisers to the organization and, failure of the entire brigade to turn up in the event was indeed an unwanted precedent.</p>
<p>
	Existence of lobbies in such organizations is but natural. Albeit, it is the responsibility of the leadership to accommodate the differing views within organization and address the genuine concerns of members. But the opponents argue that ever since his election, the present president has been inaccessible and impervious to the well-being of the institution. Without going into the exercise to verify the truth behind this claim, it can be safely concluded that the leaders of the chambers are finding it hard to reconcile their businessman traits (that in Nepal requires being selective in socializing) and social leader traits (that virtually requires complete sacrifice of private life). &nbsp;&nbsp;</p>
<p>
	Likewise, 60th AGM row in the country’s oldest organization of the business community, NCC, has invited shameful hostilities between the lobbies of President Suresh Basnet and Vice-president Lokmanya Golchha. It went to the extent that the Golchha lobby held a separate press conference in early April alleging Basnet of taking the entire organization for ransom. Before that, the office was padlocked for almost a month, ironically, at the behest of the incumbent president.&nbsp;</p>
<p>
	Both in FNCCI and NCC, lust for clinging to power who are already in positions or ousting the incumbent by any means by the opponents are at the heart of all these misadventures. All of them seem to have forgotten the values of democracy and importance of fairness in the game of ballots. Equally so, those in the hot seats have failed to uphold the dignity their respective positions deserved. Instead, they seems to have either believed in no-inclusive decision making or use of extraneous tricks other than winning the heart of own constituencies to remain in or gain crucial positions. This is exactly what our business leaders have learnt from our politicians and political culture -- undermine democracy and dance haywire, shamelessly in public.</p>
<p>
	&nbsp;This is perhaps the time the country’s private sector came up with some prescription to revive sluggish economy. The GDP growth rate for this year is predicted to less than 3.5 percent and contribution of the manufacturing and formal business sector is even negligible. This unimpressive performance of the economy without any strikingly visible barrier to growth manifests even cancerous trend of gradual decay. It is the private sector that should now come-up with a blue-print for its rescue.</p>
<p>
	There are other more serious business for business leaders than political-type bickering among themselves. The private sector has constantly blamed to the unstable and hostile politics for Nepal being unable to attract the foreign investment, among other. But, international business community has started to doubt on the very credentials of Nepal’s private sector. One of the crucial questions asked is why the real sector has chosen not to be transparent and failed to even register in the stock market. This issue entails other number of inherent deficiencies in our corporate sector. And, one more deficiency is added spatially by the growing unprofessionalism and animosity within the community, that must be contained and corrected, sooner the better.</p>
<p>
	<img alt="Political Copycats, From the editor" height="296" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/from_the_editor_mar2013_political_copycats(1).jpg" width="590" /></p>',
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			'created' => '2013-05-22',
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			'description' => 'Nepal’s private sector seems to have extracted every possible evils from our debasing political environment. The country’s business community is always expected to set good examples of best practices, leadership, magnanimity and vision that could be replicable even by politicians.',
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			'id' => '943',
			'article_category_id' => '52',
			'title' => 'Private Sector Concerns',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better. So much so, the newly installed ‘election’ government too doesn’t seem much concerned about predicaments the business and industry sectors of the country are currently faced with.</p>
<p style="text-align: justify;">
	All communist party literatures, most prominently of the Maoist Party, unrelentingly criticized the form of the government what their jargon said to be of a ‘bourgeois comprador’, the state of the State run by the rent-seeking elites and bureaucrats. But it is the very Maoist Party which played the most crucial role to form the present government comprising of only former bureaucrats. This was a complete anti-thesis to their sworn doctrine. And, it was but natural for ‘bourgeois compradors’ not to listen to the private sector entrepreneurs.&nbsp;</p>
<p style="text-align: justify;">
	In the run up to form new government, headed by incumbent Chief Justice of the Supreme Court, Khil Raj Regmi, four major political parties signed an 11-point agreement. Sadly, that document didn’t incorporate even a single sentence regarding the sorry state of the economy and prescription to reinvigorate it. FNCCI, the umbrella organization of Nepali businesses and industries, however, protested against this apparent apathy of the country’s major political forces and supposedly apolitical government now at the helm of affairs. But materially not much change seems to be in the offing.&nbsp;</p>
<p style="text-align: justify;">
	Similarly, next thing the Maoists after coming to power in 2008 professed was protecting the ‘nationalist’ businesses. But, in practice, it is the only nationalist businessmen and industrialists that they have selectively made to suffer. The business people who had created businesses and had links to other countries, primarily India, have already shifted to their businesses or wealth. Only those who chose to work here and die here, or the most nationalist ones, are subjected to suffer day in and day out. And, nobody cares.</p>
<p style="text-align: justify;">
	Surprisingly, political parties other than the Maoist have also maintained a suspicious silence on economic issues like increased infringement of private property rights and rapidly deteriorating business climate of the country. &nbsp;The present government is also likely to shirk away from responsibility of doing its bit in the guise of just being an election government. The fact is: the economy should be a continuous priority regardless of any nature of government that comes in or goes out, with whatever pretext. But, alas; this has not been the case for Nepal.</p>
<p style="text-align: justify;">
	One of the major concerns of the private sector has been the politically protected, rampant corruption in the financial administration of the country. But, the Maoist Party now seems to have engaged in indirect form of extortion by using highly corrupt bureaucrats. One of the recent media reports suggests that a few notably corrupt officials under political protection of the Party are deliberately inflicting pain on some businesspersons by making them to make rounds to the revenue investigation office, without framing any charges. Maoists’ pick to head the anti-corruption constitutional body-the Commission for the Investigation of Abuse of Authority- has surprised many.</p>
<p style="text-align: justify;">
	These things have longer repercussions in the country’s business environment. &nbsp;Nepal is already in the red area of the ‘doing business’ and ‘private property rights’ indices. According to an estimate by the business community, some 150,000 large or medium level Nepali business households have fled the country to settle and start business abroad during last one decade.&nbsp;</p>
<p style="text-align: justify;">
	These realities must be of concern to the parties that provide leadership to the country. But, now it appears as if improving the country’s businesses climate is not in any party’s agenda. This also implies that the Nepali private sector, at least for some time to come, have to depend on whatever little they can do on their own and contribute to make things better. One of the appropriate medium of such contribution could be the elections themselves where they can advocate and vote for the party which is better in terms of creating a business-friendly climate in Nepal. They can’t just keep complaining and doing nothing meaningful.</p>
<div>
	 </div>',
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			'created' => '2013-04-17',
			'modified' => '2013-07-05',
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			'description' => 'Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better.',
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			'id' => '891',
			'article_category_id' => '52',
			'title' => 'Utter Discouragement',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p style="text-align: justify;">
	<img alt="From the editor, March 2013" height="362" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_from_the_editor(1).jpg" width="580" /></p>
<p style="text-align: justify;">
	The private sector of Nepal has been a constant victim of government inaction, for decades now. The latest in the row is Nepal Purwadhar Bikas Company Limited (NPBCL), headed by outgoing President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi. The company is planning to construct a 2.9 km tunnel connecting Kulekhani and Bhimphedi stretch of Kathmandu-Hetauda road. The proposed tunnel will reduce the Kathmandu-Hetauda road distance to 58 km and travel duration to 45 minutes. It now takes at least four hours to drive between the two cities.</p>
<p style="text-align: justify;">
	But the Company’s plan to lay a foundation stone for the tunnel on February 8 was dampened by the government inaction and the prescheduled ceremony was just limited to a ritual pooja than the real act of marking the formal beginning of construction. Contrary to the expectation, the government didn’t sign a go-ahead agreement with the NPBCL so as to allow the Company to formally inaugurate the construction of the tunnel on the very day.</p>
<p style="text-align: justify;">
	The government reservation that the Company didn’t have convincing plans to repay the investors was a mere excuse given the credibility of the people involved as promoters, shareholders and partners of the company.</p>
<p style="text-align: justify;">
	Firstly, it is promoted by wider participation of local beneficiaries. Though their investment may be small in amount, it would automatically provide a social audit framework for such a large project. As the number of promoters is going to be 264,000, the company is unlikely to be case of one large single obligor insolvency, even if the company, by any chance, met an unexpected fate.</p>
<p style="text-align: justify;">
	Second, the promoters themselves, including Joshi, are renowned business leaders and the government must have an iota of trust on them. If not, whom will it trust upon to invest in?</p>
<p style="text-align: justify;">
	Third, there are organizations like Non-resident Nepali Association (NRNA) that have signed agreement to invest and help complete the project in stipulated four-year period. Despite these all, if the officials in the Ministry of Physical Planning and Transport Management had any reservation on any issue, that had to be resolved through negotiation with the company, before setting the date of official inaugural.&nbsp;</p>
<p style="text-align: justify;">
	The modalities for sharing benefits between promoters and public investors, collection of the toll and plans of financial closure are undoubtedly important for a Rs 20 billion project. But they had to be sorted out well ahead setting the date of formal commencement of the construction. The Company’s approach to take the government’s likely obstruction for granted and the government intention to obstruct in any pretext have given all the wrong messages to the public about the very future of the project.</p>
<p style="text-align: justify;">
	The government contention that the estimated cost of the project was too low and funding sources were not clearly demonstrated, are not a well-founded. To say the least, it is not the business of the government to tell a private company whether any amount it set aside for the project was enough or not. And, the funding sources the Company has enlisted are of course the most credible ones available in Nepal.</p>
<p style="text-align: justify;">
	This episode is the combination of government’s unfriendly attitude towards the private sector and ad-hoc working style of Nepali corporate sector. The government must acknowledge the fact that it is the first large-scale private sector initiative to invest in country’s key infrastructure like road project. For this reason, the government should leave no stone unturned to facilitate the execution of the project. And, on the part of the company, there should be more transparent and convincing flow of information, so that the mala fide government intentions could easily be defeated by the strength of public confidence on it.</p>
<p style="text-align: justify;">
	There are questions whether the entire road from Balkhu of Kathmandu to Hetauda will be developed by the Company or is it constructing the tunnel alone and expects the government to make the rest of 55 km road widened to four-lanes with the tax-payers’ money. In such a case, how will the tolled amount be distributed?</p>
<p style="text-align: justify;">
	Obviously, the Company must have discussed these things with the relevant government agencies in detail. But the same details have not come to the public notice. Therefore, it is important that both parties, the government and the Company, played a transparent game so that this project can set a benchmark for future such projects.&nbsp;</p>',
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			'created' => '2013-03-24',
			'modified' => '2013-04-17',
			'keywords' => '',
			'description' => 'The private sector of Nepal has been a constant victim of government inaction, for decades now. The latest in the row is Nepal Purwadhar Bikas Company Limited (NPBCL), headed by outgoing President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi.',
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		'Article' => array(
			'id' => '817',
			'article_category_id' => '52',
			'title' => 'Adhoc Ad-Rules',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p style="text-align: justify;">
	<img alt="Adhoc Ad-Rules" height="357" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/AdhocAd_Rules.jpg" width="500" /></p>
<p style="text-align: justify;">
	The Maoist-led government seems determined to execute a one-window policy to allocate slots and budget to publish and broadcast public sector advertisements in the Nepali media. Some smaller media houses appear to be falsely jubilant just because they had the feeling that only a few big media houses had monopolized the public sector advertisements while the rest were unfairly relegated. It would be completely immature to think that the government’s discretion to allocate these advertisements in exchange of news favourable to it will in any way help even the smaller publications and broadcasters that are struggling to be professional.</p>
<p style="text-align: justify;">
	All media houses, big and small, are in fact getting only a residual fraction of the public sector advertisement that is saved from going to government-owned publications and broadcasting corporations. There are still several active laws that make it mandatory to publish public sector entities in the government mouthpiece like the Gorkhapatra. One of the darkest sides of the last two decades of democracy in the media industry is that the government couldn’t be forced out of the media business. Regardless of their rapidly dwindling readership and viewership, they have almost a monopoly over government advertisements. This is a professionally unethical phenomenon, and a real bottleneck to the growth of the sector.</p>
<p style="text-align: justify;">
	Even under such a virtual government monopoly, there was one good thing -- intermediary agencies as designers and developers of advertisements have had a role, which was developing as an industry in itself. But in the proposed arrangement, the agents’ role will also be taken over by the Department of Information. Then, this ‘industry’ too is doomed to die. It is altogether a different question, however, whether the Department has the manpower, creativity and resources to do all the pre-publicity art and design work before the advertisements are actually released to the media. Even news of bypassing the advertisement agencies has made some media houses happy given that some agencies have really deceived them on a continuous basis. This happiness too is an unfounded one and the relations between the media house and the agency is entirely a separate issue to deal with than the current problem.</p>
<p style="text-align: justify;">
	At the very crux of the problem is the government intention to treat advertisements as means of distributing ‘mercy’ and not treat them as part of the media business. It has not even considered how large logistical operation it should have if it considers centralizing all advertisements and then distributing it fairly, to the media scattered all over the country. As there has been an impressive growth of regional media, the Department might need its offices at regional or even district levels if it were to be fair as claimed, which is an impossible proposition in itself. Second, it wants to be discretionary than a rule-based institution. Because, once it is rule-based, the game will be the same again. For example, if it plans to make disbursement proportionate to the circulation and reach of the given media as the criteria, again the large media houses will only be entitled to a very large chunk of public advertisements. There is one good possibility that the government media might get less public advertisements than at present. But the government media is not at all likely to be treated on the same ground. So, this too is not going to happen.&nbsp;</p>
<p style="text-align: justify;">
	Therefore, a fair and rule-based proportionate distribution is certainly not the objectives of this entire exercise. Even if it were, making an inclusive rule is a daunting task given the weak database at the centre and virtually no records existing at the local levels.</p>
<p style="text-align: justify;">
	It is not difficult to figure out that the major objective of the current exercise is to reward some publication houses which are supportive of the UCPN(Maoist) and the present government and, at the same time, ‘teach some lessons’ to those media houses which &nbsp;are supposedly ‘hounding’ the prime minister.</p>
<p style="text-align: justify;">
	Besides, this whole proposition is against the internationally accepted norm of professional journalism and media ethics. This is surely an exercise in detriment to the very foundation of the free-market. And, this will not help the media of any shape or size except the ones the incumbent government wants to protect. It goes without saying who they all will be!&nbsp;</p>',
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<![endif]-->	<span heaveneticacond9="" style="font-size:56.0pt;
  font-family:"><img alt="from the editor" border="1" height="217" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/upperkarnali(1).jpg" vspace="10" width="316" /><br />
	I</span><span style="letter-spacing:-.15pt">n the last week of December, the Maoist government led by Dr Baburam Bhattarai extended the survey license tenure for six more months to GMR, the Indian infrastructure major that is developing the Upper Karnali Hydel Project. The government has also sanctioned the proposal of the company to increase the installed capacity of this run-off-the-river project from 300 MW to 900 MW and granted permission to open a project liaison office in New Delhi. With all these developments at hand, things look good at the face of it. But not quite!</span> <br />
	<br />
	<span style="letter-spacing:
-.1pt">From the very beginning, since early 2010, it was the Maoist party that was creating obstacles to the project. In May 2010, the GMR offices at the project site were vandalized and the same was repeated in December 2012. It is quite a paradox that it was Dr Bhattarai's cadres who campaigned systematically at the local, national and international levels against GMR developing the project.<span style="mso-spacerun:yes">&nbsp; </span>Dr Bhattarai now may shirk aside pointing finger to break-away Mohan Baidya faction of the party, but both Bhattarai and his party Chairman Puspa Kamal Dahal did not actually act in time to facilitate the project operation.<span style="mso-spacerun:yes">&nbsp; </span>That led to some cadres of their party living abroad to create an NGO<span style="mso-spacerun:yes">&nbsp; </span>network called Karnali Sarokar Samaj and collect money both as donation to organize protests against GMR and in the form of 'shares' to a then proposed company that has now taken shape as Karnali Jalavidhyut (hydropower) Limited.</span></p>
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	<span style="letter-spacing:
-.15pt">Apparently, now, the only party that is all-out against the GMR is CPN-Maoist (Baidya faction) and some of the technocrats of panchayat era are helping it to develop what they call a presentable case against the project contract. Their main bastion of argument has been, it was an 'anti-national' move to award contract to an Indian company. The new Company formally made public a couple of weeks ago is manned by Baidya cadres and it has vowed to replace GMR and develop the entire project by itself. </span></p>
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	<span style="letter-spacing:
-.15pt">The company is claimed to have registered by the government two months ago. This is where the intentions of Dr Bhattarai appear questionable. How can a government register a new company to develop the same project that has been formally contracted out to a foreign company years ago?<span style="mso-spacerun:yes">&nbsp; </span>Baidya's Party has fed in massive misinformation from local to international levels. It officially opposed the recent government decision by issuing a statement at the central level and has prepared a 'defense force' at the project site to stop GMR in its work.<span style="mso-spacerun:yes">&nbsp;&nbsp; </span>And, surprisingly, the government has done nothing to facilitate GMR in smooth operation of the project that has to start its civil works within a few months time, if the project were to be actually constructed. <br />
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	<span style="letter-spacing:
-.15pt">All this has added complications to the project to take off. The financial and technical abilities of the new company might be questionable from any possible angle, but it is unquestionably a big enough force to act as an irritant in the process. How will the people who are very active in generating money from non-resident-Nepalis in foreign land in whatever pretext will not only be stopped but their face also saved if the government wants GMR to develop this project?</span><span style="letter-spacing:
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	The government doesn't seem to have understood the extent of fall-out effects if the GMR is compelled to withdraw from the project. It will create an image of the country as unfriendly to foreign direct investment and will thus have long-term ramifications. The dream of developing large hydropower projects with FDI will never be realized if this company is sent back. It is because, the deals offered by the company to provide 12 percent of generated energy free of cost to Nepal and 27 percent equity participation to Nepal Electricity Authority are highly generous.</p>
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	The issue of 'compromised national interest' in this particular case is an absolutely fabricated dogma. Nepali nationals will be far better protected if we have enough power generation to support industrialization, transportation and household use. And, a private company GMR must not be penalized for any act of the Indian establishment that are often seen by different political forces as detrimental to Nepali national interests.</p>',
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	<strong><span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">The Baseless Rate</span></span></strong></p>
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	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;<br />
	<img alt="From The Editor" border="1" height="242" hspace="10" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/NRB.jpg" vspace="10" width="380" /><br />
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	<span style="font-size:14px;"><span class="A4">I</span><span style="color: rgb(34, 30, 31);">n the second week of November, the Nepal Rastra Bank (NRB) issued a base rate circular targeting the commercial banks. The circular, however, has taken only a recommendatory rather than a mandatory stance as regards its compliance. In other words, it is a mere paper, not a policy. It is because if the banks were to treat this as a mere reference rate on lending, as the NRB claims, the rationale of the whole exercise, as it is, would be futile. If the NRB intended to make the circular mandatory but remained short of doing so in apprehension of reprisals, it is on the wrong plank of policy formulation. </span></span></p>
<p>
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">The formulae suggested by our central bank through this circular to calculate the cost of fund for lending make us believe that the rate is similar to the ‘base rate’ of the Reserve Bank of India that came into effect in July 2010 or the Discount Rate of the US Federal Reserve that has been there for years. Central banks enforce such base rates to prevent the systemic failure of financial institutions, if the latter indulge in deficit-driven transactions for a long period of time. But in our case, there are only a few instances where Class ‘A’ banks have actually incurred losses by resorting to competitive lending rates, which are below the actual cost of fund.</span></span><span style="font-size:14px;"><br />
	<br />
	<span style="color: rgb(34, 30, 31);">If the idea behind the NRB’s base rate circular is to keep the interest rate regime transparent, then it may be taken positively. However, the transparency component has already been incorporated in the concept of quarterly publication of the financial statements of the banks and financial institutions. Therefore, this circular without teeth was an unnecessary exercise.</span></span><span style="font-size:14px;"><br />
	<br />
	</span><span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">In fact, central banks which have to handle a financial system with abundant liquidity often enforce base rates to prevent banks from resorting to cheaper lending rates to attract or retain clients. Also, such rates are applicable where the interest on lending, like in the US, is very low - at times below 3-4 percent per annum. Or, in the case of the 2010 Indian economy which was feared to be over-heated. But Nepal’s banking system at present has no such issues. The system, more often than not, remains cash-strapped. As a result, the banks’ interest rates are usually high - at times as high as 20 to 22 percent. </span></span><span style="font-size:14px;"> </span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">Besides, the practice of central banks fixing base rates has become an outdated and anti-free-market concept over the past couple of years. If a particular bank opts to lend at a cheaper rate with low profit margin, it may earn even more out of the sheer volume of the transactions. Therefore, it is up to the business manager of a bank to decide what market strategy to adopt and at what price to sell its products. </span></span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;">&nbsp;<span style="color: rgb(34, 30, 31);">The NRB’s circular to the banks to publish their base rates on a monthly basis is an additional cost burden on them. Not only that, barring the banks in all circumstances from lending at rates lower than the base rate is barring them from the freedom of portfolio and treasury management. The interest rates on lending to a variety of projects (like SME loan, consumer financing and mega-project financing) are bound to be starkly different. Therefore, an efficient bank may like to finance at lower interest rates the projects that give it a better mileage in the market, though not a direct profit, and compensate for the ‘loss’ by lending to projects where it may be able to charge higher interest rates. </span></span></p>
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	<span style="font-size:14px;">&nbsp;<span style="line-height: 115%; color: rgb(34, 30, 31);">In this exercise of base rate policy, the intentions of quite a few stakeholders got badly exposed. The NRB’s actual intention was to make it mandatory, not because it would do any good to the system, but because the regulator perhaps wanted to show that it still has some controlling powers over the financial sector. </span></span></p>
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	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;It was clear that some established bank were in favour of the circular whereas the new ones, whose costs of fund are likely to run high if calculated according to NRB guidelines, were averse to it. But, the new banks could not muster the courage to say that the circular was an unnecessary exercise. The NRB, on the other hand, could not justify its half-hearted approach in introducing it. </span><br />
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	<br />
	<span class="A15"><span style="font-size:59.0pt">T</span></span><span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">he recent activism of regulatory authority of insurance industry of Nepal, the Insurance Board (IB) or Beema Samiti, has created new ripples in the sector. Some of the very bold actions taken against ‘erring’ insurance companies, including the fully government-owned Rastriya Beema Sansthan (RBS), have apparently served to establish that it is not a toothless entity, as seen so for years now. <br style="mso-special-character:line-break" />
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">More interesting drama unfolded when the IB ordered RBS to defer its annual general meeting scheduled for the first week of October and ordered to stop its engineering insurance business the following week. This episode has special significance as the government-owned financial institutions have a history of invariably remaining recalcitrant to the regulatory authorities which has often given ground to the private sector operators to complain of not getting a level-playing field to compete with these ‘protected’ public sector companies. It may be recalled that a number of government-owned large banks were, for all practical purposes, acting beyond the regulatory mechanism of the central bank until their net worth became untenably negative, about a decade or so ago.<br />
	<br />
	At the core of such controversy and temerity to non-compliance to the regulator are the separate Acts that instituted these entities. Still, RBS Act of 1969 is intact. (Similar Acts were there for Banks as well until an Umbrella Act ‘BAFIA’ was enacted in 2006.) This incident also establishes the fact that government should not continue to be one of the competitors in the business where private sector has already made competent market presence. Let’s hope the IB will also force the RBS to speed up the process to split its life and non-life insurance businesses. The only private sector company that was operating both of these businesses has already obliged to IB’s directive whereas RBS is still adamant.</span></p>
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">But the cardinal question here is: Is this all an insurance regulator of the country expected to do? Certainly not! A regulator has a responsibility of evaluating the situation of service availability, and on the basis of such evaluation, creating appropriate legislative and institutional frameworks to ensure a healthy growth of the market as well as a ground for fair play. But, the recent acts of the IB appear more of populist and bullying nature than the ones having long-lasting meaningful impacts. Some of the decisions like limiting the operation expenses of the insurance companies only to 6 percent of their total expenses are unquestionably naïve, to say the least. This favours the old and established companies and puts the new companies in disadvantage while the latters deserve credit for the speedy expansion in the insurance services across the country.</span></p>
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Still, barely six percent of the population that has capacity to buy insurance coverage has got some sort of insurance coverage. The knowledge about the insurance among the masses is negligible and products that are suitable to Nepali context are neither available nor accessible to the potential clients. Nepal’s insurance industry lacks human resource of all levels and we don’t even have a training academy for the sector, so far. <br />
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Though the IB has been repeating its plan to set up such an academy time and again, the plan is still rudimentary at best. Updating several legal arrangements is long overdue. The very Insurance Act has become outdated. It is the responsibility of the regulator to develop a universal framework of evaluation to avoid institution-wide discretionary practices of evaluation and compensation. It is already late to bring in international best practices into our insurance industry. </span></p>',
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			'description' => 'The recent activism of regulatory authority of insurance industry of Nepal, the Insurance Board (IB) or Beema Samiti, has created new ripples in the sector. Some of the very bold actions taken against ‘erring’ insurance companies, including the fully government-owned Rastriya Beema Sansthan (RBS), have apparently served to establish that it is not a toothless entity, as seen so for years now.',
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						<span heaveneticacond9="" style="font-size:56.0pt;
  font-family:">A</span><span style="mso-spacerun:yes">&nbsp; </span>four-day ‘Made in Nepal Products and Service Expo-2012’ that concluded on 9th September in Kathmandu created hype of a sort with its tagline: afno bhanya afnai ho (our own, means our own). Two weeks later, Nepali elite class was seen scrambling to buy jackets made of allo (stinging nettle plant with scientific name Girardinia diversifolia) fibre in the Small and Cottage Industries Products’ Exhibition. Everyone, from prime minster to the commoner who visited these fairs, and the media alike, portrayed these as the moments proud to be. Indeed they were, but rather more emotionally.</p>
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	These expos and exhibitions designed to showcase and promote Nepali products and services no doubt are welcome endeavors. For that matter, any business initiative at a time when almost all economic and manufacturing activities in Nepal are dented by the prolonged political crisis is praiseworthy. But, the kind of twist these expos brought in to trade ‘afno’ emotions than goods and services warrants a serious debate on the very concept of ‘made in Nepal’ and its indispensability for the national economy.</p>
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	Let’s think beyond debatable issues of whether everything showcased in these exhibitions was truly a Nepali product. In the present globalised and highly interconnected world, can any economy of the size of Nepal operate and manage her ‘own’ economy and, is it at all necessary to be so? Or, shouldn’t we now think of making Nepal a ‘profitable economy’ than being falsely proud with hollow emotional swipe?</p>
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	Unquestionably, Nepal needs to produce and sell products and services that have comparative and competitive advantages, mainly those that are profitable both in domestic and international markets. First, the very concept of self-producing everything we need must be abandoned. Second, generating pride by renaming or changing the label to ‘made in Nepal’ of the goods produced by others is surely not an ethical practice and not going to help even our psychological bliss of industrialism, let alone economy.</p>
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	<span style="mso-spacerun:yes">&nbsp;</span>We saw a swadeshi, self-reliant economic paradigm in the economies like India for almost half a century that got reverted to open market only at the beginning of 1990s. But, swadeshi policy could hardly help the market of its own of such a large size, apparently capable of creating economies of scale in any given sector. Even in our case, the guided economy of the panchayat era tried to produce everything through the state-owned entities -- from cigarettes to sugar and, run transport services to groceries outlets. Clearly, the prime objectives in those both cases were to create an economy of ‘national pride’ not a profitable economy based on cost-benefit analysis. Now we have the results in front of us – in the form of an absolutely tattered economy and also pathetic fate of these state-owned establishments, as an outcome of these costly prides.</p>
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	The official figures of the last fiscal year 2068/69 show that Nepal’s export import ratio stands at almost 1:6 and, unofficially, it is estimated to be well above 1:8. This indeed is indicative of the fact that Nepal only has two options to bridge this gap – either to increase the export or, produce the goods that can replace the massive import in substantial scale, or, instead of producing everything, focus on prioritizing the products with better domestic or international markets with higher rate of returns. As China has now shown, it is always preferable to import what turns out to be cheaper to import than producing ourselves and produce only that which brings in better rate of returns. Therefore, instead of being ‘proud’ for producing everything, the nation as one economy should think about pragmatic plans to make it more ‘profitable’. Then only ‘made in Nepal’ actually can contribute in making Nepal economically better off.<span style="mso-spacerun:yes">&nbsp; </span></p>
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	<span class="A13"><span style="font-size:
59.0pt">T</span></span><span style="mso-tab-count:1">he Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so. The recent example is the closure of Kathmandu franchisee outlets of the global food chain KFC and Pizza Hut. And, as of penning these lines, there was no convincing sign of them opening soon. Even if they did, the damage done by the reason of its closure – overtly politicized labour highhandedness – is sure to be a detracting factor for the potential investors. Moreover, this is the second such case after Surya Nepal closed its readymade garments’ unit some six months ago, also due to industrial disputes.&nbsp;&nbsp; <br />
	<br />
	</span><span style="mso-tab-count:1"><span class="A13"><span style="font-size:
59.0pt"><img alt="fromtheditor" border="1" height="212" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/investment(1).jpg" vspace="5" width="330" /></span></span>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></p>
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">Only political formalities like announcing an Investment Year by the government would never be enough to materially attract the investment. On the contrary if the ‘pull factors’ are adequate, such an investment would automatically flood in even without such announcements. Therefore, Nepal as the nation-state should first check whether such pull factors exist at all, at present.</span></p>
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">As the fact of the matter, they don’t exist at all. The prolonged political uncertainty, as claimed by all and sundry, is not only the distraction; the radical Reds at the helms of state affairs with the ‘Maoist’ tag is even larger scary factor. The ruling party here might furnish innumerable arguments to establish how investment-friendly they are prepared to be. But why would a potential investor take pain of subscribing these sugar-quoted arguments instead of reading the writing on the wall–THE MAOISTS; whatever it means?</span></p>
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	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">The trade union leaders at the Pizza Hut, after its closure came-up with a lame-duck statement to prove their innocence claiming that they were just forming a unit there and were not planning even to ‘immediately’ strike. That may or may not be true. But why would any investor even take the risk of running the trade under the perennial duress in over-unionized set-up?</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">There are many instances that the industrial disputes are not limited to securing the trade union rights of any company concerned, but in fact the means to achieve political objectives of the mother Party one is affiliated to. It’s been years that collective bargaining processes enshrined in the labour laws of the country are grossly dishonoured. Sheer force and political protection to union activities has been the cardinal modus operandi in extracting benefits from the employers.</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Some other reasons like the power shortages, infrastructure deficits and lack of policy predictability could be cited as other bottlenecks to attract both international and domestic investment. They are but only secondary to overarching ultra-red communist image of the government and industrial anarchy created by the trade unions invariably led by party cadres rather than the workers. Not only international, even domestic investment is not likely to come by in any significant measure until and unless these fundamentals are changed for the better.<br />
	<br />
	<br />
	</span></p>',
			'published' => true,
			'created' => '2012-10-10',
			'modified' => '2012-10-30',
			'keywords' => '',
			'description' => 'The Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so.',
			'sortorder' => '599',
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	(int) 11 => array(
		'Article' => array(
			'id' => '659',
			'article_category_id' => '52',
			'title' => 'Tunnel To Prosperity',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<br />
	<strong><img alt="From the editor" border="1" height="262" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/editoiral.jpg" vspace="5" width="400" /><br />
	<br />
	<br />
	The commercial viability of Kathmandu-Kulekhani-Hetauda road tunnel is unquestionably attractive given the traffic pressure it is likely to have. <br />
	</strong><br />
	<br />
	Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km. <br />
	<br />
	<br />
	Fully functional roads that now connect Kathmandu with Hetauda are much longer. The most used Kathmandu- Mugling-Narayanghat-Hetauda road’s length is 224 kilometers (kms) while the largely discarded Tribhuvan Highway is 133 kms. The proposed fast track will be about 80 kms long and would open at a point of some 20 kms east of the main town of Hetauda. However, the distance with this tunnel would be only about 50 kms and the total travel time from Kathmandu to Hetauda will reduce to barely one hour. The pace of progress in the work to construct the tunnel has been more than impressive; demonstrating the advantage that a private sector led project can have even in infrastructure development aspect. The Company has also been a first test case of much talked about Public-Private Partnership and serves as the actual implementation of BOOT (Build, Operate, Own, and Transfer) model through a project entirely financed domestically. This also sets an example of how a large sized investment of about Rs 20 billion for this project alone could be generated within the country if a viable project is chosen and all users and stakeholders are made effective owners of the project. <br />
	<br />
	<br />
	Since the company got license in the third week of May 2012 from the government, it has created a tight timeline to complete the Detailed Project Report (DPR) by the end of November. The commercial viability of the tunnel is unquestionably attractive given the traffic pressure it is likely to have. This model also constitutes a rationale that the carrying capacity of the tunnel should also be fixed by the research on existing and potential increase in traffic flow between Hetauda and Kathmandu. <br />
	<br />
	<br />
	Most importantly, without upgrading the total stretch of the Balkhu-Pharping- Kulekhani-Hetauda road, only the proposed tunnel of mere three-kilometer length is unlikely to give any substantial benefit to the national economy and return to the investors. Had the entire road length been part of this project, it would only have delivered results as aspired. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-15',
			'modified' => '2012-10-10',
			'keywords' => '',
			'description' => 'Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km.',
			'sortorder' => '557',
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	(int) 12 => array(
		'Article' => array(
			'id' => '645',
			'article_category_id' => '52',
			'title' => 'Triangular Fight On Budget',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong>The president too has come out with his ‘political position’ on a full-fledged budget, making it a triangular fight. </strong><br />
	<br />
	<br />
	<img alt="from the editor" border="1" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from-the-editor(1).jpg" vspace="5" /><br />
	<br />
	It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY). Unlike in the past, the timeliness of the budget announcement was hampered by political bickering between the ruling alliance and the opposition in the parliament. But, this time around, a third party--the president--has also come out with his ‘political position’ on a full-fledged budget, making it a triangular fight.<br />
	<br />
	On the 5th of July, President Ram Baran Yadav hinted that he would not put the seal of assent on the full ‘finance ordinance’ covering the entire FY 2012/13. This controversy was absolutely unnecessary. Apart from that, the president’s willingness to choose ‘this over that’ is even more distressing. In view of the danger of financial crisis looming large and private sector confidence hitting bottom rock, the sincere effort from all quarters should have been to bring about a full-budget. This would have at least helped to boost the investors’ confidence and provided some degree of policy predictability in the economy. One of the major concerns of the opposition parties—mainly the Nepali Congress and the CPN-UML—is that the full-budget will provide the government to allocate more sum for its party’s vested interests. That may or may not be true, but the kind of protest these parties are now engaged in, is also not going to stop the present government either to practice porkbarrel economy. <br />
	<br />
	<br />
	The wisest thing for the opposition would have been to be a part of the budget formulation team. Instead of sloganeering from outside, they could have stopped the government from allocating exorbitant amount for the UCPN-Maoists’ pet schemes like Youth Self-employment and the agreed full-payment to its ex-combatants. Nepal seems to be sharply veering from the objective of concluding the peace process. This means that there will be prolonged political uncertainty and, if a consensus is not reached soon, many more budgets to follow are likely to be victims of Nepal’s sharply polarised politics. And, thus the woes of economy are sure to aggravate. Therefore, the major political forces of the country must first cease the practice of treating the annual budget as a means to meet their sectarian political ends. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-09',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY).',
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		'Article' => array(
			'id' => '585',
			'article_category_id' => '52',
			'title' => 'The Hydropower Politics',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<img align="middle" alt="editor" border="1" height="224" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/editor2.jpg" vspace="10" width="300" /></p>
<p>
	Nepal still lives by dream of developing its hydropower to the fullest potentials so that it could not only meet own energy needs but also export a substantial amount of power produced; to help maintain the trade balance, primarily with India. It has been at least five and half decades (since the planned development began here in 1956) we are following this mirage of commercially harnessing our literally limitless potentials of water resources. Nepal may have moved an inch but surely not a foot to this direction. And, worse, there is not a single large project in pipeline that could complete in, say, five years from now.</p>
<p>
	Talking about large projects, Upper Karnali (800 MW) and West Seti (750 MW) are in recent limelight. But the proposed promoter of Upper Karnali, the Indian energy major GMR is still apprehensive about the security it would get from the state to implement the project. The story of West Seti a reservoir based proposed project, is circling around for last one decade when Australian company SMEC came in and went out without making much headway in the project. Recently, the Chinese promoter of legendary Three Gorges Dam project has reportedly shown a renewed interest in it. But, things are not likely to move much differently than in the past. It is because Nepali water resources, hydropower in particular, is by now no longer an investment or commercial proposition alone, rather it has become a true game of politics, at both national and international levels.</p>
<p>
	At the national level, a misconstrued nationalism has always been a real impediment to the development and growth of this sector. It is natural to seek to maximise the benefit for the nation while developing the project with bilateral or multilateral partnerships, but it is entirely an weird approach to prevent the very construction of the project defining the nationalism attached to it at a convenience of a vested interest group.</p>
<p>
	Every Nepali party with communist tag has done this politics. The Mohan Vaidya faction of UCPN-Maoist is the latest incarnation of a force dying to protect nationalism by creating hurdles to not only Upper Karnali but also Upper Marsyangdi. The government issuing statement of assurances of security appears absolute farce at the face of what is evident at the site. At the international levels, for both of our neighbours India and China, Nepal's development is also part of regional geopolitics. There are instances, like in Kohalpur-Banbasa part of east-west highway, where one party did not like the involvement of the other in any particular project. Even the expression of interest by a party to develop a certain project causes the other party smell a rat.</p>
<p>
	Therefore, any proposition is difficult to materialise on the ground. It is particularly so when the projects, like West Seti, to be developed by China with plans to export its major portion of power-produced to Indian states adjoining Nepal. To sum up, the dark days in hydropower will only end when it is started to be viewed as pure business sans politics at the national level and sans geopolitics at regional level. &nbsp;</p>',
			'published' => true,
			'created' => '2012-02-22',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'Nepal still lives by dream of developing its
hydropower to the fullest potentials so that
it could not only meet own energy needs but
also export a substantial amount of power
produced; to help maintain the trade balance, primarily with
India.',
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		'Article' => array(
			'id' => '515',
			'article_category_id' => '52',
			'title' => 'Hoax Of Free Competition',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size:12px;"><img align="top" alt="" height="336" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from the editor.jpg" vspace="5" width="500" /></span></p>
<p>
	<span style="font-size:12px;">Last couple of governments made headlines for declaring that appointments of the chiefs of public enterprises would be made through a free competition. Going a step further, present government opened˜tenders even for the constitutional positions like the chief and other commissioners for the Election Commission, Commission for the Investigation of Abuse of Authority (CIAA) and Public Service Commission. <br />
	</span></p>
<p>
	<span style="font-size:12px;">At the face, it appeared as a welcome idea as those crucial institutions could now expect to be headed by the most talented professionals than the political cronies of the party in power. Some of the selection process, like for the Executive Director of Nepal Electricity Authority (NEA), at the beginning appeared reasonably fair. The erstwhile government made the appointment on the basis of that very selection. Even the present government has appointed in couple of positions by calling for applications, like in case of the Chairman of Securities Board of Nepal (SEBON). <br />
	</span></p>
<p>
	<span style="font-size:12px;">However, status of application collected for constitutional bodies is yet in the dark. But, as it turned out now, all these so called free competitions were mere hoax. Ultimately, only hardcore cadres of the ruling party are getting appointment. The new NEA Executive Director turned out to be a devout UML party worker and Chairman of SEBON a staunch Maoist supporter. In both cases of NEA and SEBON, there were more qualified persons than those who were lucky enough to be picked for the job. But those PhD degree holders and true professionals were summarily discarded. <br />
	</span></p>
<p>
	<span style="font-size:12px;">Then, why is there drama of free competition as the people in power were freely appointing their near and dear ones in these positions for years? Because, this has several advantages for both the appointee and the appointer. Generally, such government appointments are made with a clause for maximum of (so many) years if it is a political appointment as in the past. But the person who is selected through free competition&nbsp; has a negotiation power not only on tenure but also for the perks. Then it has two advantages. First, the chosen cadre will have a fixed term appointment instead of uncertain maximum of. Second, he can bargain for better pay than the normal effective government pay-scale. In turn, the appointing party also can bargain for the appointee's contribution mostly monetary, called levyâ. <br />
	</span></p>
<p>
	<span style="font-size:12px;">What is important here is not the process but the intent of the appointer. If their intentions are to appoint the best professional, the free competition for mere publicity is an unnecessary waste of time and resources. On the contrary, if the ruling parties want their own cadres in any pretext, the so called free competition will only add to the worries of public enterprises, most of which are already in precarious situation.<br />
	<br />
	<br />
	</span></p>',
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			'created' => '2011-11-16',
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			'description' => 'Last couple of governments made headlines for declaring that appointments of the chiefs of public enterprises would be made through a free competition.',
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		'Article' => array(
			'id' => '1441',
			'article_category_id' => '52',
			'title' => 'Trishuli 3A : Roll-back Not Enough',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 12px;">The Nepal Electricity Authority (NEA) Board of Directors, on 11 June, rolled-back its highly controversial decision of upgrading the capacity of Upper Trishuli 3A Hydropower Project from existing 60MW to 90MW. The same board ten days before had decided to upgrade it. Both decisions were taken in the meetings of the Board chaired by Energy Minister Umakant Jha, who allegedly had personal vested interests in upgradation.&nbsp;</span></p>
<p>
	Although the decision was withdrawn due to persistent pressure from several quarters and, more importantly, by the protests of the NEA employees, no action is initiated to investigate on why, at the first place, the upgradation was sanctioned earlier. When the employees dared to cut the power supply off ministers&rsquo; official quarters and threatened to do the same to Singha Durbar Central Secretariat, Minister Jha was compelled to roll-back the decision.&nbsp;</p>
<p>
	But, most surprising in this chain of events is that the NEA management issuing an statement has tried to defend the earlier decision to upgrade the capacity of the Project. &ldquo;The NEA had upgraded the capacity of the project completing technical, economic and existing legal assessments. The project has been designed in Q70 flow, which is not the optimum utilization of the water available in the river,&rdquo; it said.&nbsp;</p>
<p>
	But, with the upgradation, the cost of the project would increase to from USD 89 million to 132 million. It was also agreed to release USD 20 million extra to the contractor, China Gezhouba Group Company&rsquo;s proposal of upgrading it to 90 MW for USD 112 million.&nbsp;</p>
<p>
	This is enough to conclude that there were vested interests, malafied intentions and apparent intended embezzlement of the public funds in the name of upgradation. But, all the people, including the minister, who made the decision, are still in their respective public positions. On top of that, NEA management had had the temerity of issuing the statement claiming that the decision to upgrade was in national interest. This is the height of impunity and lawlessness.&nbsp;</p>
<p>
	The gravity of the case suggests that all parties concerned, the minister, entire NEA Board, the contractor and the local Nepali representative who allegedly lured the decision makers must be brought under the book. The NEA officials who still claim that upgradation was right must not only be questioned but should be challenged to establish the claim in public.&nbsp;</p>
<p>
	Surprisingly, all this happened under the nose of newly appointed chief of anti-graft body, the Commission for the Investigation of Abuse of Authority (CIAA) and he didn&rsquo;t seem at all interested to investigate into it. This indeed is the reflection of hand-in-glove relations of the people who run the government and the CIAA&rsquo;s new chief. The trend has raised fears of this constitutional body exercising its powers by selection and discretion, as against the very concept of an ombudsman organization that acts on the merit of the case basis.&nbsp;</p>
<p>
	If the architects of such a big scandal can go scot-free, then it will cast a very long shadow on Nepal&rsquo;s hydropower prospects. It will set wrong precedence for future as well as other on-going projects.&nbsp;</p>
<p>
	In addition to it, a number of questions have been raised about credibility and professionalism of this particular Chinese Company. Since it is a Chinese government undertaking, Nepal government should have guts enough to raise this issue to its Chinese counterpart. It might be the case that a few employees in the company are misleading their government and pocketing hefty sums in collusion with some Nepali operatives, in and out of bureaucracy. It is also assumed that a number of senior political leaders abetted to take the decisions in anticipation of proper kick-backs. A proper investigation is required to bring the facts out of the closets. A mere roll-back is not enough of we want to set a good precedence of fair play in the hydropower development</p>
<div>
	&nbsp;</div>',
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			'created' => '2013-07-19',
			'modified' => '2013-07-19',
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			'description' => 'The Nepal Electricity Authority (NEA) Board of Directors, on 11 June, rolled-back its highly controversial decision of upgrading the capacity of Upper Trishuli 3A Hydropower Project from existing 60MW to 90MW. The same board ten days before had decided to upgrade it. Both decisions were taken in the meetings of the Board chaired by Energy Minister Umakant Jha, who allegedly had personal vested interests in upgradation.',
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		'Article' => array(
			'id' => '1075',
			'article_category_id' => '52',
			'title' => 'Mirage Of Industrial Security',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p>
	Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.</p>
<p>
	For more than a decade now, industrial security has been a main concern for Nepal’s industrial and business sectors. The facets of insecurity are many. Industrialists and business people are often kidnapped, killed, threatened or extorted. Factories and businesses are forced to close down. Barriers are created for products reaching the markets, etc. This has had a very crippling effect on industrial growth, investment climate and overall expansion of the economy. As the result, the contribution of manufacturing sector to country’s GDP has gone down in the recent years and all along has remained far below its potential, much lower than the agricultural and service sectors.</p>
<p>
	In our context, industrial security is a complex issue since the insecurity stems out from a multitude of sources, mainly from the politically protected powerful formal or informal outfits. For this reason, a number of measures of industrial security of bureaucratic nature announced by different governments during last one decade have neither protected the industries nor the industrialists.</p>
<p>
	Therefore, more important than a force to be set-up, at first place, there must be a political commitment and honest implementation of the same if an effective security were to be provided to the sector. As long as the political parties, specifically some top leaders of major parties, continue to protect and nurture the criminal gangs and notorious dons, any security force of proposed nature will be rendered ineffective in no time. That is what has happened so far. Similarly, the violent activities that take place in the name of trade unions affiliated to these political parties is another headache, which in fact has in recent years forced a number of industries and businesses to close down permanently. In addition to it, frequent strikes and blockades very often organized by this or that political party are other main reasons of insecurity.</p>
<p>
	If the country is indeed determined to provide industrial security, it must first come in the form of political commitment of all reckonable political forces. They must be able to reign in their respective trade unions so as to prevent them from acting as ‘licensed criminal organizations’. Rampant impunity is another equally alarming phenomenon. Even if one is caught with reasonable evidence of involvement in criminal activities that jeopardize the industrial security, he is hardly punished. Political protection, corruption or legal loopholes set them free sooner than one could imagine.</p>
<p>
	Undoubtedly, an effective industrial security is possible only when the overall law and order situation of the country improves, political forces stop impeding the justice and making their unions an extortion apparatus. But, at the industry level, right of ‘hire and fire’ to the employer would give another level of security to the industries. This will put all those elements at bay who claim to be workers but never work in the industry but in the political front.</p>
<p>
	Equally crucial is an industrialist and businessman being true to his profession. If the business people align themselves with this or that political force, or habour political ambitions, they are naturally opposed by the rival political forces. It is no secret that a large number of businessmen clandestinely finance the political parties and leaders, not only because of compulsion but as an ‘investment’ at their free will. These activities certainly do not help to consolidate their security situation. For the proposed force to be effective or mere functional, political commitment on the part of parties and professionalism on the part of industries are minimum prerequisites.</p>
<div>
	<img alt="Mirage of Industrial Security" height="263" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/from_the_editor_june2013_image.jpg" style="margin:0 10px 0 0;" width="595" /></div>',
			'published' => true,
			'created' => '2013-06-07',
			'modified' => '2013-07-15',
			'keywords' => 'Mirage of Industrial Security, From the editor, editorial, New Business Age, June 2013',
			'description' => 'Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.',
			'sortorder' => '945',
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	(int) 2 => array(
		'Article' => array(
			'id' => '992',
			'article_category_id' => '52',
			'title' => 'Political Copycats',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	Nepal’s private sector seems to have extracted every possible evils from our debasing political environment. The country’s business community is always expected to set good examples of best practices, leadership, magnanimity and vision that could be replicable even by politicians. Sadly though, these supposedly rich, learned, professional and responsible business leaders themselves seem determined to ruin umbrella business organizations like FNCCI (Federation of Nepalese Chamber of Commerce and Industry) and NCC (Nepal Chamber of Commerce), thus far largely saved from the meanness of dirty politics.</p>
<p>
	All but one out of a dozen former presidents of FNCCI boycotted the 47th AGM of the organization held in the first week of April, allegedly protesting the ‘unprofessional’ behaviour of the incumbent President. The past presidents are also ex-officio advisers to the organization and, failure of the entire brigade to turn up in the event was indeed an unwanted precedent.</p>
<p>
	Existence of lobbies in such organizations is but natural. Albeit, it is the responsibility of the leadership to accommodate the differing views within organization and address the genuine concerns of members. But the opponents argue that ever since his election, the present president has been inaccessible and impervious to the well-being of the institution. Without going into the exercise to verify the truth behind this claim, it can be safely concluded that the leaders of the chambers are finding it hard to reconcile their businessman traits (that in Nepal requires being selective in socializing) and social leader traits (that virtually requires complete sacrifice of private life). &nbsp;&nbsp;</p>
<p>
	Likewise, 60th AGM row in the country’s oldest organization of the business community, NCC, has invited shameful hostilities between the lobbies of President Suresh Basnet and Vice-president Lokmanya Golchha. It went to the extent that the Golchha lobby held a separate press conference in early April alleging Basnet of taking the entire organization for ransom. Before that, the office was padlocked for almost a month, ironically, at the behest of the incumbent president.&nbsp;</p>
<p>
	Both in FNCCI and NCC, lust for clinging to power who are already in positions or ousting the incumbent by any means by the opponents are at the heart of all these misadventures. All of them seem to have forgotten the values of democracy and importance of fairness in the game of ballots. Equally so, those in the hot seats have failed to uphold the dignity their respective positions deserved. Instead, they seems to have either believed in no-inclusive decision making or use of extraneous tricks other than winning the heart of own constituencies to remain in or gain crucial positions. This is exactly what our business leaders have learnt from our politicians and political culture -- undermine democracy and dance haywire, shamelessly in public.</p>
<p>
	&nbsp;This is perhaps the time the country’s private sector came up with some prescription to revive sluggish economy. The GDP growth rate for this year is predicted to less than 3.5 percent and contribution of the manufacturing and formal business sector is even negligible. This unimpressive performance of the economy without any strikingly visible barrier to growth manifests even cancerous trend of gradual decay. It is the private sector that should now come-up with a blue-print for its rescue.</p>
<p>
	There are other more serious business for business leaders than political-type bickering among themselves. The private sector has constantly blamed to the unstable and hostile politics for Nepal being unable to attract the foreign investment, among other. But, international business community has started to doubt on the very credentials of Nepal’s private sector. One of the crucial questions asked is why the real sector has chosen not to be transparent and failed to even register in the stock market. This issue entails other number of inherent deficiencies in our corporate sector. And, one more deficiency is added spatially by the growing unprofessionalism and animosity within the community, that must be contained and corrected, sooner the better.</p>
<p>
	<img alt="Political Copycats, From the editor" height="296" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/from_the_editor_mar2013_political_copycats(1).jpg" width="590" /></p>',
			'published' => true,
			'created' => '2013-05-22',
			'modified' => '2013-06-07',
			'keywords' => 'Political Copycats, From the editor, New Business Age',
			'description' => 'Nepal’s private sector seems to have extracted every possible evils from our debasing political environment. The country’s business community is always expected to set good examples of best practices, leadership, magnanimity and vision that could be replicable even by politicians.',
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	(int) 3 => array(
		'Article' => array(
			'id' => '943',
			'article_category_id' => '52',
			'title' => 'Private Sector Concerns',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better. So much so, the newly installed ‘election’ government too doesn’t seem much concerned about predicaments the business and industry sectors of the country are currently faced with.</p>
<p style="text-align: justify;">
	All communist party literatures, most prominently of the Maoist Party, unrelentingly criticized the form of the government what their jargon said to be of a ‘bourgeois comprador’, the state of the State run by the rent-seeking elites and bureaucrats. But it is the very Maoist Party which played the most crucial role to form the present government comprising of only former bureaucrats. This was a complete anti-thesis to their sworn doctrine. And, it was but natural for ‘bourgeois compradors’ not to listen to the private sector entrepreneurs.&nbsp;</p>
<p style="text-align: justify;">
	In the run up to form new government, headed by incumbent Chief Justice of the Supreme Court, Khil Raj Regmi, four major political parties signed an 11-point agreement. Sadly, that document didn’t incorporate even a single sentence regarding the sorry state of the economy and prescription to reinvigorate it. FNCCI, the umbrella organization of Nepali businesses and industries, however, protested against this apparent apathy of the country’s major political forces and supposedly apolitical government now at the helm of affairs. But materially not much change seems to be in the offing.&nbsp;</p>
<p style="text-align: justify;">
	Similarly, next thing the Maoists after coming to power in 2008 professed was protecting the ‘nationalist’ businesses. But, in practice, it is the only nationalist businessmen and industrialists that they have selectively made to suffer. The business people who had created businesses and had links to other countries, primarily India, have already shifted to their businesses or wealth. Only those who chose to work here and die here, or the most nationalist ones, are subjected to suffer day in and day out. And, nobody cares.</p>
<p style="text-align: justify;">
	Surprisingly, political parties other than the Maoist have also maintained a suspicious silence on economic issues like increased infringement of private property rights and rapidly deteriorating business climate of the country. &nbsp;The present government is also likely to shirk away from responsibility of doing its bit in the guise of just being an election government. The fact is: the economy should be a continuous priority regardless of any nature of government that comes in or goes out, with whatever pretext. But, alas; this has not been the case for Nepal.</p>
<p style="text-align: justify;">
	One of the major concerns of the private sector has been the politically protected, rampant corruption in the financial administration of the country. But, the Maoist Party now seems to have engaged in indirect form of extortion by using highly corrupt bureaucrats. One of the recent media reports suggests that a few notably corrupt officials under political protection of the Party are deliberately inflicting pain on some businesspersons by making them to make rounds to the revenue investigation office, without framing any charges. Maoists’ pick to head the anti-corruption constitutional body-the Commission for the Investigation of Abuse of Authority- has surprised many.</p>
<p style="text-align: justify;">
	These things have longer repercussions in the country’s business environment. &nbsp;Nepal is already in the red area of the ‘doing business’ and ‘private property rights’ indices. According to an estimate by the business community, some 150,000 large or medium level Nepali business households have fled the country to settle and start business abroad during last one decade.&nbsp;</p>
<p style="text-align: justify;">
	These realities must be of concern to the parties that provide leadership to the country. But, now it appears as if improving the country’s businesses climate is not in any party’s agenda. This also implies that the Nepali private sector, at least for some time to come, have to depend on whatever little they can do on their own and contribute to make things better. One of the appropriate medium of such contribution could be the elections themselves where they can advocate and vote for the party which is better in terms of creating a business-friendly climate in Nepal. They can’t just keep complaining and doing nothing meaningful.</p>
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			'created' => '2013-04-17',
			'modified' => '2013-07-05',
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			'description' => 'Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better.',
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			'id' => '891',
			'article_category_id' => '52',
			'title' => 'Utter Discouragement',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p style="text-align: justify;">
	<img alt="From the editor, March 2013" height="362" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_from_the_editor(1).jpg" width="580" /></p>
<p style="text-align: justify;">
	The private sector of Nepal has been a constant victim of government inaction, for decades now. The latest in the row is Nepal Purwadhar Bikas Company Limited (NPBCL), headed by outgoing President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi. The company is planning to construct a 2.9 km tunnel connecting Kulekhani and Bhimphedi stretch of Kathmandu-Hetauda road. The proposed tunnel will reduce the Kathmandu-Hetauda road distance to 58 km and travel duration to 45 minutes. It now takes at least four hours to drive between the two cities.</p>
<p style="text-align: justify;">
	But the Company’s plan to lay a foundation stone for the tunnel on February 8 was dampened by the government inaction and the prescheduled ceremony was just limited to a ritual pooja than the real act of marking the formal beginning of construction. Contrary to the expectation, the government didn’t sign a go-ahead agreement with the NPBCL so as to allow the Company to formally inaugurate the construction of the tunnel on the very day.</p>
<p style="text-align: justify;">
	The government reservation that the Company didn’t have convincing plans to repay the investors was a mere excuse given the credibility of the people involved as promoters, shareholders and partners of the company.</p>
<p style="text-align: justify;">
	Firstly, it is promoted by wider participation of local beneficiaries. Though their investment may be small in amount, it would automatically provide a social audit framework for such a large project. As the number of promoters is going to be 264,000, the company is unlikely to be case of one large single obligor insolvency, even if the company, by any chance, met an unexpected fate.</p>
<p style="text-align: justify;">
	Second, the promoters themselves, including Joshi, are renowned business leaders and the government must have an iota of trust on them. If not, whom will it trust upon to invest in?</p>
<p style="text-align: justify;">
	Third, there are organizations like Non-resident Nepali Association (NRNA) that have signed agreement to invest and help complete the project in stipulated four-year period. Despite these all, if the officials in the Ministry of Physical Planning and Transport Management had any reservation on any issue, that had to be resolved through negotiation with the company, before setting the date of official inaugural.&nbsp;</p>
<p style="text-align: justify;">
	The modalities for sharing benefits between promoters and public investors, collection of the toll and plans of financial closure are undoubtedly important for a Rs 20 billion project. But they had to be sorted out well ahead setting the date of formal commencement of the construction. The Company’s approach to take the government’s likely obstruction for granted and the government intention to obstruct in any pretext have given all the wrong messages to the public about the very future of the project.</p>
<p style="text-align: justify;">
	The government contention that the estimated cost of the project was too low and funding sources were not clearly demonstrated, are not a well-founded. To say the least, it is not the business of the government to tell a private company whether any amount it set aside for the project was enough or not. And, the funding sources the Company has enlisted are of course the most credible ones available in Nepal.</p>
<p style="text-align: justify;">
	This episode is the combination of government’s unfriendly attitude towards the private sector and ad-hoc working style of Nepali corporate sector. The government must acknowledge the fact that it is the first large-scale private sector initiative to invest in country’s key infrastructure like road project. For this reason, the government should leave no stone unturned to facilitate the execution of the project. And, on the part of the company, there should be more transparent and convincing flow of information, so that the mala fide government intentions could easily be defeated by the strength of public confidence on it.</p>
<p style="text-align: justify;">
	There are questions whether the entire road from Balkhu of Kathmandu to Hetauda will be developed by the Company or is it constructing the tunnel alone and expects the government to make the rest of 55 km road widened to four-lanes with the tax-payers’ money. In such a case, how will the tolled amount be distributed?</p>
<p style="text-align: justify;">
	Obviously, the Company must have discussed these things with the relevant government agencies in detail. But the same details have not come to the public notice. Therefore, it is important that both parties, the government and the Company, played a transparent game so that this project can set a benchmark for future such projects.&nbsp;</p>',
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			'description' => 'The private sector of Nepal has been a constant victim of government inaction, for decades now. The latest in the row is Nepal Purwadhar Bikas Company Limited (NPBCL), headed by outgoing President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi.',
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			'id' => '817',
			'article_category_id' => '52',
			'title' => 'Adhoc Ad-Rules',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
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<p style="text-align: justify;">
	<img alt="Adhoc Ad-Rules" height="357" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/AdhocAd_Rules.jpg" width="500" /></p>
<p style="text-align: justify;">
	The Maoist-led government seems determined to execute a one-window policy to allocate slots and budget to publish and broadcast public sector advertisements in the Nepali media. Some smaller media houses appear to be falsely jubilant just because they had the feeling that only a few big media houses had monopolized the public sector advertisements while the rest were unfairly relegated. It would be completely immature to think that the government’s discretion to allocate these advertisements in exchange of news favourable to it will in any way help even the smaller publications and broadcasters that are struggling to be professional.</p>
<p style="text-align: justify;">
	All media houses, big and small, are in fact getting only a residual fraction of the public sector advertisement that is saved from going to government-owned publications and broadcasting corporations. There are still several active laws that make it mandatory to publish public sector entities in the government mouthpiece like the Gorkhapatra. One of the darkest sides of the last two decades of democracy in the media industry is that the government couldn’t be forced out of the media business. Regardless of their rapidly dwindling readership and viewership, they have almost a monopoly over government advertisements. This is a professionally unethical phenomenon, and a real bottleneck to the growth of the sector.</p>
<p style="text-align: justify;">
	Even under such a virtual government monopoly, there was one good thing -- intermediary agencies as designers and developers of advertisements have had a role, which was developing as an industry in itself. But in the proposed arrangement, the agents’ role will also be taken over by the Department of Information. Then, this ‘industry’ too is doomed to die. It is altogether a different question, however, whether the Department has the manpower, creativity and resources to do all the pre-publicity art and design work before the advertisements are actually released to the media. Even news of bypassing the advertisement agencies has made some media houses happy given that some agencies have really deceived them on a continuous basis. This happiness too is an unfounded one and the relations between the media house and the agency is entirely a separate issue to deal with than the current problem.</p>
<p style="text-align: justify;">
	At the very crux of the problem is the government intention to treat advertisements as means of distributing ‘mercy’ and not treat them as part of the media business. It has not even considered how large logistical operation it should have if it considers centralizing all advertisements and then distributing it fairly, to the media scattered all over the country. As there has been an impressive growth of regional media, the Department might need its offices at regional or even district levels if it were to be fair as claimed, which is an impossible proposition in itself. Second, it wants to be discretionary than a rule-based institution. Because, once it is rule-based, the game will be the same again. For example, if it plans to make disbursement proportionate to the circulation and reach of the given media as the criteria, again the large media houses will only be entitled to a very large chunk of public advertisements. There is one good possibility that the government media might get less public advertisements than at present. But the government media is not at all likely to be treated on the same ground. So, this too is not going to happen.&nbsp;</p>
<p style="text-align: justify;">
	Therefore, a fair and rule-based proportionate distribution is certainly not the objectives of this entire exercise. Even if it were, making an inclusive rule is a daunting task given the weak database at the centre and virtually no records existing at the local levels.</p>
<p style="text-align: justify;">
	It is not difficult to figure out that the major objective of the current exercise is to reward some publication houses which are supportive of the UCPN(Maoist) and the present government and, at the same time, ‘teach some lessons’ to those media houses which &nbsp;are supposedly ‘hounding’ the prime minister.</p>
<p style="text-align: justify;">
	Besides, this whole proposition is against the internationally accepted norm of professional journalism and media ethics. This is surely an exercise in detriment to the very foundation of the free-market. And, this will not help the media of any shape or size except the ones the incumbent government wants to protect. It goes without saying who they all will be!&nbsp;</p>',
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			'title' => 'Upper Karnali Blues',
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<![endif]-->	<span heaveneticacond9="" style="font-size:56.0pt;
  font-family:"><img alt="from the editor" border="1" height="217" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/upperkarnali(1).jpg" vspace="10" width="316" /><br />
	I</span><span style="letter-spacing:-.15pt">n the last week of December, the Maoist government led by Dr Baburam Bhattarai extended the survey license tenure for six more months to GMR, the Indian infrastructure major that is developing the Upper Karnali Hydel Project. The government has also sanctioned the proposal of the company to increase the installed capacity of this run-off-the-river project from 300 MW to 900 MW and granted permission to open a project liaison office in New Delhi. With all these developments at hand, things look good at the face of it. But not quite!</span> <br />
	<br />
	<span style="letter-spacing:
-.1pt">From the very beginning, since early 2010, it was the Maoist party that was creating obstacles to the project. In May 2010, the GMR offices at the project site were vandalized and the same was repeated in December 2012. It is quite a paradox that it was Dr Bhattarai's cadres who campaigned systematically at the local, national and international levels against GMR developing the project.<span style="mso-spacerun:yes">&nbsp; </span>Dr Bhattarai now may shirk aside pointing finger to break-away Mohan Baidya faction of the party, but both Bhattarai and his party Chairman Puspa Kamal Dahal did not actually act in time to facilitate the project operation.<span style="mso-spacerun:yes">&nbsp; </span>That led to some cadres of their party living abroad to create an NGO<span style="mso-spacerun:yes">&nbsp; </span>network called Karnali Sarokar Samaj and collect money both as donation to organize protests against GMR and in the form of 'shares' to a then proposed company that has now taken shape as Karnali Jalavidhyut (hydropower) Limited.</span></p>
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	<span style="letter-spacing:
-.15pt">Apparently, now, the only party that is all-out against the GMR is CPN-Maoist (Baidya faction) and some of the technocrats of panchayat era are helping it to develop what they call a presentable case against the project contract. Their main bastion of argument has been, it was an 'anti-national' move to award contract to an Indian company. The new Company formally made public a couple of weeks ago is manned by Baidya cadres and it has vowed to replace GMR and develop the entire project by itself. </span></p>
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	<span style="letter-spacing:
-.15pt">The company is claimed to have registered by the government two months ago. This is where the intentions of Dr Bhattarai appear questionable. How can a government register a new company to develop the same project that has been formally contracted out to a foreign company years ago?<span style="mso-spacerun:yes">&nbsp; </span>Baidya's Party has fed in massive misinformation from local to international levels. It officially opposed the recent government decision by issuing a statement at the central level and has prepared a 'defense force' at the project site to stop GMR in its work.<span style="mso-spacerun:yes">&nbsp;&nbsp; </span>And, surprisingly, the government has done nothing to facilitate GMR in smooth operation of the project that has to start its civil works within a few months time, if the project were to be actually constructed. <br />
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<p>
	<span style="letter-spacing:
-.15pt">All this has added complications to the project to take off. The financial and technical abilities of the new company might be questionable from any possible angle, but it is unquestionably a big enough force to act as an irritant in the process. How will the people who are very active in generating money from non-resident-Nepalis in foreign land in whatever pretext will not only be stopped but their face also saved if the government wants GMR to develop this project?</span><span style="letter-spacing:
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	The government doesn't seem to have understood the extent of fall-out effects if the GMR is compelled to withdraw from the project. It will create an image of the country as unfriendly to foreign direct investment and will thus have long-term ramifications. The dream of developing large hydropower projects with FDI will never be realized if this company is sent back. It is because, the deals offered by the company to provide 12 percent of generated energy free of cost to Nepal and 27 percent equity participation to Nepal Electricity Authority are highly generous.</p>
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	The issue of 'compromised national interest' in this particular case is an absolutely fabricated dogma. Nepali nationals will be far better protected if we have enough power generation to support industrialization, transportation and household use. And, a private company GMR must not be penalized for any act of the Indian establishment that are often seen by different political forces as detrimental to Nepali national interests.</p>',
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	<strong><span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">The Baseless Rate</span></span></strong></p>
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	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;<br />
	<img alt="From The Editor" border="1" height="242" hspace="10" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/NRB.jpg" vspace="10" width="380" /><br />
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	<span style="font-size:14px;"><span class="A4">I</span><span style="color: rgb(34, 30, 31);">n the second week of November, the Nepal Rastra Bank (NRB) issued a base rate circular targeting the commercial banks. The circular, however, has taken only a recommendatory rather than a mandatory stance as regards its compliance. In other words, it is a mere paper, not a policy. It is because if the banks were to treat this as a mere reference rate on lending, as the NRB claims, the rationale of the whole exercise, as it is, would be futile. If the NRB intended to make the circular mandatory but remained short of doing so in apprehension of reprisals, it is on the wrong plank of policy formulation. </span></span></p>
<p>
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">The formulae suggested by our central bank through this circular to calculate the cost of fund for lending make us believe that the rate is similar to the ‘base rate’ of the Reserve Bank of India that came into effect in July 2010 or the Discount Rate of the US Federal Reserve that has been there for years. Central banks enforce such base rates to prevent the systemic failure of financial institutions, if the latter indulge in deficit-driven transactions for a long period of time. But in our case, there are only a few instances where Class ‘A’ banks have actually incurred losses by resorting to competitive lending rates, which are below the actual cost of fund.</span></span><span style="font-size:14px;"><br />
	<br />
	<span style="color: rgb(34, 30, 31);">If the idea behind the NRB’s base rate circular is to keep the interest rate regime transparent, then it may be taken positively. However, the transparency component has already been incorporated in the concept of quarterly publication of the financial statements of the banks and financial institutions. Therefore, this circular without teeth was an unnecessary exercise.</span></span><span style="font-size:14px;"><br />
	<br />
	</span><span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">In fact, central banks which have to handle a financial system with abundant liquidity often enforce base rates to prevent banks from resorting to cheaper lending rates to attract or retain clients. Also, such rates are applicable where the interest on lending, like in the US, is very low - at times below 3-4 percent per annum. Or, in the case of the 2010 Indian economy which was feared to be over-heated. But Nepal’s banking system at present has no such issues. The system, more often than not, remains cash-strapped. As a result, the banks’ interest rates are usually high - at times as high as 20 to 22 percent. </span></span><span style="font-size:14px;"> </span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">Besides, the practice of central banks fixing base rates has become an outdated and anti-free-market concept over the past couple of years. If a particular bank opts to lend at a cheaper rate with low profit margin, it may earn even more out of the sheer volume of the transactions. Therefore, it is up to the business manager of a bank to decide what market strategy to adopt and at what price to sell its products. </span></span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;">&nbsp;<span style="color: rgb(34, 30, 31);">The NRB’s circular to the banks to publish their base rates on a monthly basis is an additional cost burden on them. Not only that, barring the banks in all circumstances from lending at rates lower than the base rate is barring them from the freedom of portfolio and treasury management. The interest rates on lending to a variety of projects (like SME loan, consumer financing and mega-project financing) are bound to be starkly different. Therefore, an efficient bank may like to finance at lower interest rates the projects that give it a better mileage in the market, though not a direct profit, and compensate for the ‘loss’ by lending to projects where it may be able to charge higher interest rates. </span></span></p>
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	<span style="font-size:14px;">&nbsp;<span style="line-height: 115%; color: rgb(34, 30, 31);">In this exercise of base rate policy, the intentions of quite a few stakeholders got badly exposed. The NRB’s actual intention was to make it mandatory, not because it would do any good to the system, but because the regulator perhaps wanted to show that it still has some controlling powers over the financial sector. </span></span></p>
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	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;It was clear that some established bank were in favour of the circular whereas the new ones, whose costs of fund are likely to run high if calculated according to NRB guidelines, were averse to it. But, the new banks could not muster the courage to say that the circular was an unnecessary exercise. The NRB, on the other hand, could not justify its half-hearted approach in introducing it. </span><br />
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	<br />
	<span class="A15"><span style="font-size:59.0pt">T</span></span><span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">he recent activism of regulatory authority of insurance industry of Nepal, the Insurance Board (IB) or Beema Samiti, has created new ripples in the sector. Some of the very bold actions taken against ‘erring’ insurance companies, including the fully government-owned Rastriya Beema Sansthan (RBS), have apparently served to establish that it is not a toothless entity, as seen so for years now. <br style="mso-special-character:line-break" />
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">More interesting drama unfolded when the IB ordered RBS to defer its annual general meeting scheduled for the first week of October and ordered to stop its engineering insurance business the following week. This episode has special significance as the government-owned financial institutions have a history of invariably remaining recalcitrant to the regulatory authorities which has often given ground to the private sector operators to complain of not getting a level-playing field to compete with these ‘protected’ public sector companies. It may be recalled that a number of government-owned large banks were, for all practical purposes, acting beyond the regulatory mechanism of the central bank until their net worth became untenably negative, about a decade or so ago.<br />
	<br />
	At the core of such controversy and temerity to non-compliance to the regulator are the separate Acts that instituted these entities. Still, RBS Act of 1969 is intact. (Similar Acts were there for Banks as well until an Umbrella Act ‘BAFIA’ was enacted in 2006.) This incident also establishes the fact that government should not continue to be one of the competitors in the business where private sector has already made competent market presence. Let’s hope the IB will also force the RBS to speed up the process to split its life and non-life insurance businesses. The only private sector company that was operating both of these businesses has already obliged to IB’s directive whereas RBS is still adamant.</span></p>
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">But the cardinal question here is: Is this all an insurance regulator of the country expected to do? Certainly not! A regulator has a responsibility of evaluating the situation of service availability, and on the basis of such evaluation, creating appropriate legislative and institutional frameworks to ensure a healthy growth of the market as well as a ground for fair play. But, the recent acts of the IB appear more of populist and bullying nature than the ones having long-lasting meaningful impacts. Some of the decisions like limiting the operation expenses of the insurance companies only to 6 percent of their total expenses are unquestionably naïve, to say the least. This favours the old and established companies and puts the new companies in disadvantage while the latters deserve credit for the speedy expansion in the insurance services across the country.</span></p>
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Still, barely six percent of the population that has capacity to buy insurance coverage has got some sort of insurance coverage. The knowledge about the insurance among the masses is negligible and products that are suitable to Nepali context are neither available nor accessible to the potential clients. Nepal’s insurance industry lacks human resource of all levels and we don’t even have a training academy for the sector, so far. <br />
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Though the IB has been repeating its plan to set up such an academy time and again, the plan is still rudimentary at best. Updating several legal arrangements is long overdue. The very Insurance Act has become outdated. It is the responsibility of the regulator to develop a universal framework of evaluation to avoid institution-wide discretionary practices of evaluation and compensation. It is already late to bring in international best practices into our insurance industry. </span></p>',
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						<span heaveneticacond9="" style="font-size:56.0pt;
  font-family:">A</span><span style="mso-spacerun:yes">&nbsp; </span>four-day ‘Made in Nepal Products and Service Expo-2012’ that concluded on 9th September in Kathmandu created hype of a sort with its tagline: afno bhanya afnai ho (our own, means our own). Two weeks later, Nepali elite class was seen scrambling to buy jackets made of allo (stinging nettle plant with scientific name Girardinia diversifolia) fibre in the Small and Cottage Industries Products’ Exhibition. Everyone, from prime minster to the commoner who visited these fairs, and the media alike, portrayed these as the moments proud to be. Indeed they were, but rather more emotionally.</p>
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	These expos and exhibitions designed to showcase and promote Nepali products and services no doubt are welcome endeavors. For that matter, any business initiative at a time when almost all economic and manufacturing activities in Nepal are dented by the prolonged political crisis is praiseworthy. But, the kind of twist these expos brought in to trade ‘afno’ emotions than goods and services warrants a serious debate on the very concept of ‘made in Nepal’ and its indispensability for the national economy.</p>
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	Let’s think beyond debatable issues of whether everything showcased in these exhibitions was truly a Nepali product. In the present globalised and highly interconnected world, can any economy of the size of Nepal operate and manage her ‘own’ economy and, is it at all necessary to be so? Or, shouldn’t we now think of making Nepal a ‘profitable economy’ than being falsely proud with hollow emotional swipe?</p>
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	Unquestionably, Nepal needs to produce and sell products and services that have comparative and competitive advantages, mainly those that are profitable both in domestic and international markets. First, the very concept of self-producing everything we need must be abandoned. Second, generating pride by renaming or changing the label to ‘made in Nepal’ of the goods produced by others is surely not an ethical practice and not going to help even our psychological bliss of industrialism, let alone economy.</p>
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	<span style="mso-spacerun:yes">&nbsp;</span>We saw a swadeshi, self-reliant economic paradigm in the economies like India for almost half a century that got reverted to open market only at the beginning of 1990s. But, swadeshi policy could hardly help the market of its own of such a large size, apparently capable of creating economies of scale in any given sector. Even in our case, the guided economy of the panchayat era tried to produce everything through the state-owned entities -- from cigarettes to sugar and, run transport services to groceries outlets. Clearly, the prime objectives in those both cases were to create an economy of ‘national pride’ not a profitable economy based on cost-benefit analysis. Now we have the results in front of us – in the form of an absolutely tattered economy and also pathetic fate of these state-owned establishments, as an outcome of these costly prides.</p>
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	The official figures of the last fiscal year 2068/69 show that Nepal’s export import ratio stands at almost 1:6 and, unofficially, it is estimated to be well above 1:8. This indeed is indicative of the fact that Nepal only has two options to bridge this gap – either to increase the export or, produce the goods that can replace the massive import in substantial scale, or, instead of producing everything, focus on prioritizing the products with better domestic or international markets with higher rate of returns. As China has now shown, it is always preferable to import what turns out to be cheaper to import than producing ourselves and produce only that which brings in better rate of returns. Therefore, instead of being ‘proud’ for producing everything, the nation as one economy should think about pragmatic plans to make it more ‘profitable’. Then only ‘made in Nepal’ actually can contribute in making Nepal economically better off.<span style="mso-spacerun:yes">&nbsp; </span></p>
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<p class="MsoNormal">
	<span class="A13"><span style="font-size:
59.0pt">T</span></span><span style="mso-tab-count:1">he Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so. The recent example is the closure of Kathmandu franchisee outlets of the global food chain KFC and Pizza Hut. And, as of penning these lines, there was no convincing sign of them opening soon. Even if they did, the damage done by the reason of its closure – overtly politicized labour highhandedness – is sure to be a detracting factor for the potential investors. Moreover, this is the second such case after Surya Nepal closed its readymade garments’ unit some six months ago, also due to industrial disputes.&nbsp;&nbsp; <br />
	<br />
	</span><span style="mso-tab-count:1"><span class="A13"><span style="font-size:
59.0pt"><img alt="fromtheditor" border="1" height="212" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/investment(1).jpg" vspace="5" width="330" /></span></span>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">Only political formalities like announcing an Investment Year by the government would never be enough to materially attract the investment. On the contrary if the ‘pull factors’ are adequate, such an investment would automatically flood in even without such announcements. Therefore, Nepal as the nation-state should first check whether such pull factors exist at all, at present.</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">As the fact of the matter, they don’t exist at all. The prolonged political uncertainty, as claimed by all and sundry, is not only the distraction; the radical Reds at the helms of state affairs with the ‘Maoist’ tag is even larger scary factor. The ruling party here might furnish innumerable arguments to establish how investment-friendly they are prepared to be. But why would a potential investor take pain of subscribing these sugar-quoted arguments instead of reading the writing on the wall–THE MAOISTS; whatever it means?</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">The trade union leaders at the Pizza Hut, after its closure came-up with a lame-duck statement to prove their innocence claiming that they were just forming a unit there and were not planning even to ‘immediately’ strike. That may or may not be true. But why would any investor even take the risk of running the trade under the perennial duress in over-unionized set-up?</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">There are many instances that the industrial disputes are not limited to securing the trade union rights of any company concerned, but in fact the means to achieve political objectives of the mother Party one is affiliated to. It’s been years that collective bargaining processes enshrined in the labour laws of the country are grossly dishonoured. Sheer force and political protection to union activities has been the cardinal modus operandi in extracting benefits from the employers.</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Some other reasons like the power shortages, infrastructure deficits and lack of policy predictability could be cited as other bottlenecks to attract both international and domestic investment. They are but only secondary to overarching ultra-red communist image of the government and industrial anarchy created by the trade unions invariably led by party cadres rather than the workers. Not only international, even domestic investment is not likely to come by in any significant measure until and unless these fundamentals are changed for the better.<br />
	<br />
	<br />
	</span></p>',
			'published' => true,
			'created' => '2012-10-10',
			'modified' => '2012-10-30',
			'keywords' => '',
			'description' => 'The Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so.',
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	(int) 11 => array(
		'Article' => array(
			'id' => '659',
			'article_category_id' => '52',
			'title' => 'Tunnel To Prosperity',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<br />
	<strong><img alt="From the editor" border="1" height="262" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/editoiral.jpg" vspace="5" width="400" /><br />
	<br />
	<br />
	The commercial viability of Kathmandu-Kulekhani-Hetauda road tunnel is unquestionably attractive given the traffic pressure it is likely to have. <br />
	</strong><br />
	<br />
	Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km. <br />
	<br />
	<br />
	Fully functional roads that now connect Kathmandu with Hetauda are much longer. The most used Kathmandu- Mugling-Narayanghat-Hetauda road’s length is 224 kilometers (kms) while the largely discarded Tribhuvan Highway is 133 kms. The proposed fast track will be about 80 kms long and would open at a point of some 20 kms east of the main town of Hetauda. However, the distance with this tunnel would be only about 50 kms and the total travel time from Kathmandu to Hetauda will reduce to barely one hour. The pace of progress in the work to construct the tunnel has been more than impressive; demonstrating the advantage that a private sector led project can have even in infrastructure development aspect. The Company has also been a first test case of much talked about Public-Private Partnership and serves as the actual implementation of BOOT (Build, Operate, Own, and Transfer) model through a project entirely financed domestically. This also sets an example of how a large sized investment of about Rs 20 billion for this project alone could be generated within the country if a viable project is chosen and all users and stakeholders are made effective owners of the project. <br />
	<br />
	<br />
	Since the company got license in the third week of May 2012 from the government, it has created a tight timeline to complete the Detailed Project Report (DPR) by the end of November. The commercial viability of the tunnel is unquestionably attractive given the traffic pressure it is likely to have. This model also constitutes a rationale that the carrying capacity of the tunnel should also be fixed by the research on existing and potential increase in traffic flow between Hetauda and Kathmandu. <br />
	<br />
	<br />
	Most importantly, without upgrading the total stretch of the Balkhu-Pharping- Kulekhani-Hetauda road, only the proposed tunnel of mere three-kilometer length is unlikely to give any substantial benefit to the national economy and return to the investors. Had the entire road length been part of this project, it would only have delivered results as aspired. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-15',
			'modified' => '2012-10-10',
			'keywords' => '',
			'description' => 'Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km.',
			'sortorder' => '557',
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	(int) 12 => array(
		'Article' => array(
			'id' => '645',
			'article_category_id' => '52',
			'title' => 'Triangular Fight On Budget',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong>The president too has come out with his ‘political position’ on a full-fledged budget, making it a triangular fight. </strong><br />
	<br />
	<br />
	<img alt="from the editor" border="1" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from-the-editor(1).jpg" vspace="5" /><br />
	<br />
	It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY). Unlike in the past, the timeliness of the budget announcement was hampered by political bickering between the ruling alliance and the opposition in the parliament. But, this time around, a third party--the president--has also come out with his ‘political position’ on a full-fledged budget, making it a triangular fight.<br />
	<br />
	On the 5th of July, President Ram Baran Yadav hinted that he would not put the seal of assent on the full ‘finance ordinance’ covering the entire FY 2012/13. This controversy was absolutely unnecessary. Apart from that, the president’s willingness to choose ‘this over that’ is even more distressing. In view of the danger of financial crisis looming large and private sector confidence hitting bottom rock, the sincere effort from all quarters should have been to bring about a full-budget. This would have at least helped to boost the investors’ confidence and provided some degree of policy predictability in the economy. One of the major concerns of the opposition parties—mainly the Nepali Congress and the CPN-UML—is that the full-budget will provide the government to allocate more sum for its party’s vested interests. That may or may not be true, but the kind of protest these parties are now engaged in, is also not going to stop the present government either to practice porkbarrel economy. <br />
	<br />
	<br />
	The wisest thing for the opposition would have been to be a part of the budget formulation team. Instead of sloganeering from outside, they could have stopped the government from allocating exorbitant amount for the UCPN-Maoists’ pet schemes like Youth Self-employment and the agreed full-payment to its ex-combatants. Nepal seems to be sharply veering from the objective of concluding the peace process. This means that there will be prolonged political uncertainty and, if a consensus is not reached soon, many more budgets to follow are likely to be victims of Nepal’s sharply polarised politics. And, thus the woes of economy are sure to aggravate. Therefore, the major political forces of the country must first cease the practice of treating the annual budget as a means to meet their sectarian political ends. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-09',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY).',
			'sortorder' => '545',
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	(int) 13 => array(
		'Article' => array(
			'id' => '585',
			'article_category_id' => '52',
			'title' => 'The Hydropower Politics',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<img align="middle" alt="editor" border="1" height="224" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/editor2.jpg" vspace="10" width="300" /></p>
<p>
	Nepal still lives by dream of developing its hydropower to the fullest potentials so that it could not only meet own energy needs but also export a substantial amount of power produced; to help maintain the trade balance, primarily with India. It has been at least five and half decades (since the planned development began here in 1956) we are following this mirage of commercially harnessing our literally limitless potentials of water resources. Nepal may have moved an inch but surely not a foot to this direction. And, worse, there is not a single large project in pipeline that could complete in, say, five years from now.</p>
<p>
	Talking about large projects, Upper Karnali (800 MW) and West Seti (750 MW) are in recent limelight. But the proposed promoter of Upper Karnali, the Indian energy major GMR is still apprehensive about the security it would get from the state to implement the project. The story of West Seti a reservoir based proposed project, is circling around for last one decade when Australian company SMEC came in and went out without making much headway in the project. Recently, the Chinese promoter of legendary Three Gorges Dam project has reportedly shown a renewed interest in it. But, things are not likely to move much differently than in the past. It is because Nepali water resources, hydropower in particular, is by now no longer an investment or commercial proposition alone, rather it has become a true game of politics, at both national and international levels.</p>
<p>
	At the national level, a misconstrued nationalism has always been a real impediment to the development and growth of this sector. It is natural to seek to maximise the benefit for the nation while developing the project with bilateral or multilateral partnerships, but it is entirely an weird approach to prevent the very construction of the project defining the nationalism attached to it at a convenience of a vested interest group.</p>
<p>
	Every Nepali party with communist tag has done this politics. The Mohan Vaidya faction of UCPN-Maoist is the latest incarnation of a force dying to protect nationalism by creating hurdles to not only Upper Karnali but also Upper Marsyangdi. The government issuing statement of assurances of security appears absolute farce at the face of what is evident at the site. At the international levels, for both of our neighbours India and China, Nepal's development is also part of regional geopolitics. There are instances, like in Kohalpur-Banbasa part of east-west highway, where one party did not like the involvement of the other in any particular project. Even the expression of interest by a party to develop a certain project causes the other party smell a rat.</p>
<p>
	Therefore, any proposition is difficult to materialise on the ground. It is particularly so when the projects, like West Seti, to be developed by China with plans to export its major portion of power-produced to Indian states adjoining Nepal. To sum up, the dark days in hydropower will only end when it is started to be viewed as pure business sans politics at the national level and sans geopolitics at regional level. &nbsp;</p>',
			'published' => true,
			'created' => '2012-02-22',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'Nepal still lives by dream of developing its
hydropower to the fullest potentials so that
it could not only meet own energy needs but
also export a substantial amount of power
produced; to help maintain the trade balance, primarily with
India.',
			'sortorder' => '487',
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	(int) 14 => array(
		'Article' => array(
			'id' => '515',
			'article_category_id' => '52',
			'title' => 'Hoax Of Free Competition',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size:12px;"><img align="top" alt="" height="336" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from the editor.jpg" vspace="5" width="500" /></span></p>
<p>
	<span style="font-size:12px;">Last couple of governments made headlines for declaring that appointments of the chiefs of public enterprises would be made through a free competition. Going a step further, present government opened˜tenders even for the constitutional positions like the chief and other commissioners for the Election Commission, Commission for the Investigation of Abuse of Authority (CIAA) and Public Service Commission. <br />
	</span></p>
<p>
	<span style="font-size:12px;">At the face, it appeared as a welcome idea as those crucial institutions could now expect to be headed by the most talented professionals than the political cronies of the party in power. Some of the selection process, like for the Executive Director of Nepal Electricity Authority (NEA), at the beginning appeared reasonably fair. The erstwhile government made the appointment on the basis of that very selection. Even the present government has appointed in couple of positions by calling for applications, like in case of the Chairman of Securities Board of Nepal (SEBON). <br />
	</span></p>
<p>
	<span style="font-size:12px;">However, status of application collected for constitutional bodies is yet in the dark. But, as it turned out now, all these so called free competitions were mere hoax. Ultimately, only hardcore cadres of the ruling party are getting appointment. The new NEA Executive Director turned out to be a devout UML party worker and Chairman of SEBON a staunch Maoist supporter. In both cases of NEA and SEBON, there were more qualified persons than those who were lucky enough to be picked for the job. But those PhD degree holders and true professionals were summarily discarded. <br />
	</span></p>
<p>
	<span style="font-size:12px;">Then, why is there drama of free competition as the people in power were freely appointing their near and dear ones in these positions for years? Because, this has several advantages for both the appointee and the appointer. Generally, such government appointments are made with a clause for maximum of (so many) years if it is a political appointment as in the past. But the person who is selected through free competition&nbsp; has a negotiation power not only on tenure but also for the perks. Then it has two advantages. First, the chosen cadre will have a fixed term appointment instead of uncertain maximum of. Second, he can bargain for better pay than the normal effective government pay-scale. In turn, the appointing party also can bargain for the appointee's contribution mostly monetary, called levyâ. <br />
	</span></p>
<p>
	<span style="font-size:12px;">What is important here is not the process but the intent of the appointer. If their intentions are to appoint the best professional, the free competition for mere publicity is an unnecessary waste of time and resources. On the contrary, if the ruling parties want their own cadres in any pretext, the so called free competition will only add to the worries of public enterprises, most of which are already in precarious situation.<br />
	<br />
	<br />
	</span></p>',
			'published' => true,
			'created' => '2011-11-16',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'Last couple of governments made headlines for declaring that appointments of the chiefs of public enterprises would be made through a free competition.',
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			'id' => '1441',
			'article_category_id' => '52',
			'title' => 'Trishuli 3A : Roll-back Not Enough',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size: 12px;">The Nepal Electricity Authority (NEA) Board of Directors, on 11 June, rolled-back its highly controversial decision of upgrading the capacity of Upper Trishuli 3A Hydropower Project from existing 60MW to 90MW. The same board ten days before had decided to upgrade it. Both decisions were taken in the meetings of the Board chaired by Energy Minister Umakant Jha, who allegedly had personal vested interests in upgradation.&nbsp;</span></p>
<p>
	Although the decision was withdrawn due to persistent pressure from several quarters and, more importantly, by the protests of the NEA employees, no action is initiated to investigate on why, at the first place, the upgradation was sanctioned earlier. When the employees dared to cut the power supply off ministers&rsquo; official quarters and threatened to do the same to Singha Durbar Central Secretariat, Minister Jha was compelled to roll-back the decision.&nbsp;</p>
<p>
	But, most surprising in this chain of events is that the NEA management issuing an statement has tried to defend the earlier decision to upgrade the capacity of the Project. &ldquo;The NEA had upgraded the capacity of the project completing technical, economic and existing legal assessments. The project has been designed in Q70 flow, which is not the optimum utilization of the water available in the river,&rdquo; it said.&nbsp;</p>
<p>
	But, with the upgradation, the cost of the project would increase to from USD 89 million to 132 million. It was also agreed to release USD 20 million extra to the contractor, China Gezhouba Group Company&rsquo;s proposal of upgrading it to 90 MW for USD 112 million.&nbsp;</p>
<p>
	This is enough to conclude that there were vested interests, malafied intentions and apparent intended embezzlement of the public funds in the name of upgradation. But, all the people, including the minister, who made the decision, are still in their respective public positions. On top of that, NEA management had had the temerity of issuing the statement claiming that the decision to upgrade was in national interest. This is the height of impunity and lawlessness.&nbsp;</p>
<p>
	The gravity of the case suggests that all parties concerned, the minister, entire NEA Board, the contractor and the local Nepali representative who allegedly lured the decision makers must be brought under the book. The NEA officials who still claim that upgradation was right must not only be questioned but should be challenged to establish the claim in public.&nbsp;</p>
<p>
	Surprisingly, all this happened under the nose of newly appointed chief of anti-graft body, the Commission for the Investigation of Abuse of Authority (CIAA) and he didn&rsquo;t seem at all interested to investigate into it. This indeed is the reflection of hand-in-glove relations of the people who run the government and the CIAA&rsquo;s new chief. The trend has raised fears of this constitutional body exercising its powers by selection and discretion, as against the very concept of an ombudsman organization that acts on the merit of the case basis.&nbsp;</p>
<p>
	If the architects of such a big scandal can go scot-free, then it will cast a very long shadow on Nepal&rsquo;s hydropower prospects. It will set wrong precedence for future as well as other on-going projects.&nbsp;</p>
<p>
	In addition to it, a number of questions have been raised about credibility and professionalism of this particular Chinese Company. Since it is a Chinese government undertaking, Nepal government should have guts enough to raise this issue to its Chinese counterpart. It might be the case that a few employees in the company are misleading their government and pocketing hefty sums in collusion with some Nepali operatives, in and out of bureaucracy. It is also assumed that a number of senior political leaders abetted to take the decisions in anticipation of proper kick-backs. A proper investigation is required to bring the facts out of the closets. A mere roll-back is not enough of we want to set a good precedence of fair play in the hydropower development</p>
<div>
	&nbsp;</div>',
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			'id' => '1075',
			'article_category_id' => '52',
			'title' => 'Mirage Of Industrial Security',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p>
	Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.</p>
<p>
	For more than a decade now, industrial security has been a main concern for Nepal’s industrial and business sectors. The facets of insecurity are many. Industrialists and business people are often kidnapped, killed, threatened or extorted. Factories and businesses are forced to close down. Barriers are created for products reaching the markets, etc. This has had a very crippling effect on industrial growth, investment climate and overall expansion of the economy. As the result, the contribution of manufacturing sector to country’s GDP has gone down in the recent years and all along has remained far below its potential, much lower than the agricultural and service sectors.</p>
<p>
	In our context, industrial security is a complex issue since the insecurity stems out from a multitude of sources, mainly from the politically protected powerful formal or informal outfits. For this reason, a number of measures of industrial security of bureaucratic nature announced by different governments during last one decade have neither protected the industries nor the industrialists.</p>
<p>
	Therefore, more important than a force to be set-up, at first place, there must be a political commitment and honest implementation of the same if an effective security were to be provided to the sector. As long as the political parties, specifically some top leaders of major parties, continue to protect and nurture the criminal gangs and notorious dons, any security force of proposed nature will be rendered ineffective in no time. That is what has happened so far. Similarly, the violent activities that take place in the name of trade unions affiliated to these political parties is another headache, which in fact has in recent years forced a number of industries and businesses to close down permanently. In addition to it, frequent strikes and blockades very often organized by this or that political party are other main reasons of insecurity.</p>
<p>
	If the country is indeed determined to provide industrial security, it must first come in the form of political commitment of all reckonable political forces. They must be able to reign in their respective trade unions so as to prevent them from acting as ‘licensed criminal organizations’. Rampant impunity is another equally alarming phenomenon. Even if one is caught with reasonable evidence of involvement in criminal activities that jeopardize the industrial security, he is hardly punished. Political protection, corruption or legal loopholes set them free sooner than one could imagine.</p>
<p>
	Undoubtedly, an effective industrial security is possible only when the overall law and order situation of the country improves, political forces stop impeding the justice and making their unions an extortion apparatus. But, at the industry level, right of ‘hire and fire’ to the employer would give another level of security to the industries. This will put all those elements at bay who claim to be workers but never work in the industry but in the political front.</p>
<p>
	Equally crucial is an industrialist and businessman being true to his profession. If the business people align themselves with this or that political force, or habour political ambitions, they are naturally opposed by the rival political forces. It is no secret that a large number of businessmen clandestinely finance the political parties and leaders, not only because of compulsion but as an ‘investment’ at their free will. These activities certainly do not help to consolidate their security situation. For the proposed force to be effective or mere functional, political commitment on the part of parties and professionalism on the part of industries are minimum prerequisites.</p>
<div>
	<img alt="Mirage of Industrial Security" height="263" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/from_the_editor_june2013_image.jpg" style="margin:0 10px 0 0;" width="595" /></div>',
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			'created' => '2013-06-07',
			'modified' => '2013-07-15',
			'keywords' => 'Mirage of Industrial Security, From the editor, editorial, New Business Age, June 2013',
			'description' => 'Armed Police Force, an alternative police force of Nepal, has recently informed that it will mobilize the Industrial Security Force (ISF) as soon as the government adopts the ‘The Directives Relating to Customs, Revenue and Industrial Security.’ It is good news for fledgling industrial sector of Nepal, in a sense that something is certainly better than nothing.',
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		'Article' => array(
			'id' => '992',
			'article_category_id' => '52',
			'title' => 'Political Copycats',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	Nepal’s private sector seems to have extracted every possible evils from our debasing political environment. The country’s business community is always expected to set good examples of best practices, leadership, magnanimity and vision that could be replicable even by politicians. Sadly though, these supposedly rich, learned, professional and responsible business leaders themselves seem determined to ruin umbrella business organizations like FNCCI (Federation of Nepalese Chamber of Commerce and Industry) and NCC (Nepal Chamber of Commerce), thus far largely saved from the meanness of dirty politics.</p>
<p>
	All but one out of a dozen former presidents of FNCCI boycotted the 47th AGM of the organization held in the first week of April, allegedly protesting the ‘unprofessional’ behaviour of the incumbent President. The past presidents are also ex-officio advisers to the organization and, failure of the entire brigade to turn up in the event was indeed an unwanted precedent.</p>
<p>
	Existence of lobbies in such organizations is but natural. Albeit, it is the responsibility of the leadership to accommodate the differing views within organization and address the genuine concerns of members. But the opponents argue that ever since his election, the present president has been inaccessible and impervious to the well-being of the institution. Without going into the exercise to verify the truth behind this claim, it can be safely concluded that the leaders of the chambers are finding it hard to reconcile their businessman traits (that in Nepal requires being selective in socializing) and social leader traits (that virtually requires complete sacrifice of private life). &nbsp;&nbsp;</p>
<p>
	Likewise, 60th AGM row in the country’s oldest organization of the business community, NCC, has invited shameful hostilities between the lobbies of President Suresh Basnet and Vice-president Lokmanya Golchha. It went to the extent that the Golchha lobby held a separate press conference in early April alleging Basnet of taking the entire organization for ransom. Before that, the office was padlocked for almost a month, ironically, at the behest of the incumbent president.&nbsp;</p>
<p>
	Both in FNCCI and NCC, lust for clinging to power who are already in positions or ousting the incumbent by any means by the opponents are at the heart of all these misadventures. All of them seem to have forgotten the values of democracy and importance of fairness in the game of ballots. Equally so, those in the hot seats have failed to uphold the dignity their respective positions deserved. Instead, they seems to have either believed in no-inclusive decision making or use of extraneous tricks other than winning the heart of own constituencies to remain in or gain crucial positions. This is exactly what our business leaders have learnt from our politicians and political culture -- undermine democracy and dance haywire, shamelessly in public.</p>
<p>
	&nbsp;This is perhaps the time the country’s private sector came up with some prescription to revive sluggish economy. The GDP growth rate for this year is predicted to less than 3.5 percent and contribution of the manufacturing and formal business sector is even negligible. This unimpressive performance of the economy without any strikingly visible barrier to growth manifests even cancerous trend of gradual decay. It is the private sector that should now come-up with a blue-print for its rescue.</p>
<p>
	There are other more serious business for business leaders than political-type bickering among themselves. The private sector has constantly blamed to the unstable and hostile politics for Nepal being unable to attract the foreign investment, among other. But, international business community has started to doubt on the very credentials of Nepal’s private sector. One of the crucial questions asked is why the real sector has chosen not to be transparent and failed to even register in the stock market. This issue entails other number of inherent deficiencies in our corporate sector. And, one more deficiency is added spatially by the growing unprofessionalism and animosity within the community, that must be contained and corrected, sooner the better.</p>
<p>
	<img alt="Political Copycats, From the editor" height="296" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/from_the_editor_mar2013_political_copycats(1).jpg" width="590" /></p>',
			'published' => true,
			'created' => '2013-05-22',
			'modified' => '2013-06-07',
			'keywords' => 'Political Copycats, From the editor, New Business Age',
			'description' => 'Nepal’s private sector seems to have extracted every possible evils from our debasing political environment. The country’s business community is always expected to set good examples of best practices, leadership, magnanimity and vision that could be replicable even by politicians.',
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	(int) 3 => array(
		'Article' => array(
			'id' => '943',
			'article_category_id' => '52',
			'title' => 'Private Sector Concerns',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better. So much so, the newly installed ‘election’ government too doesn’t seem much concerned about predicaments the business and industry sectors of the country are currently faced with.</p>
<p style="text-align: justify;">
	All communist party literatures, most prominently of the Maoist Party, unrelentingly criticized the form of the government what their jargon said to be of a ‘bourgeois comprador’, the state of the State run by the rent-seeking elites and bureaucrats. But it is the very Maoist Party which played the most crucial role to form the present government comprising of only former bureaucrats. This was a complete anti-thesis to their sworn doctrine. And, it was but natural for ‘bourgeois compradors’ not to listen to the private sector entrepreneurs.&nbsp;</p>
<p style="text-align: justify;">
	In the run up to form new government, headed by incumbent Chief Justice of the Supreme Court, Khil Raj Regmi, four major political parties signed an 11-point agreement. Sadly, that document didn’t incorporate even a single sentence regarding the sorry state of the economy and prescription to reinvigorate it. FNCCI, the umbrella organization of Nepali businesses and industries, however, protested against this apparent apathy of the country’s major political forces and supposedly apolitical government now at the helm of affairs. But materially not much change seems to be in the offing.&nbsp;</p>
<p style="text-align: justify;">
	Similarly, next thing the Maoists after coming to power in 2008 professed was protecting the ‘nationalist’ businesses. But, in practice, it is the only nationalist businessmen and industrialists that they have selectively made to suffer. The business people who had created businesses and had links to other countries, primarily India, have already shifted to their businesses or wealth. Only those who chose to work here and die here, or the most nationalist ones, are subjected to suffer day in and day out. And, nobody cares.</p>
<p style="text-align: justify;">
	Surprisingly, political parties other than the Maoist have also maintained a suspicious silence on economic issues like increased infringement of private property rights and rapidly deteriorating business climate of the country. &nbsp;The present government is also likely to shirk away from responsibility of doing its bit in the guise of just being an election government. The fact is: the economy should be a continuous priority regardless of any nature of government that comes in or goes out, with whatever pretext. But, alas; this has not been the case for Nepal.</p>
<p style="text-align: justify;">
	One of the major concerns of the private sector has been the politically protected, rampant corruption in the financial administration of the country. But, the Maoist Party now seems to have engaged in indirect form of extortion by using highly corrupt bureaucrats. One of the recent media reports suggests that a few notably corrupt officials under political protection of the Party are deliberately inflicting pain on some businesspersons by making them to make rounds to the revenue investigation office, without framing any charges. Maoists’ pick to head the anti-corruption constitutional body-the Commission for the Investigation of Abuse of Authority- has surprised many.</p>
<p style="text-align: justify;">
	These things have longer repercussions in the country’s business environment. &nbsp;Nepal is already in the red area of the ‘doing business’ and ‘private property rights’ indices. According to an estimate by the business community, some 150,000 large or medium level Nepali business households have fled the country to settle and start business abroad during last one decade.&nbsp;</p>
<p style="text-align: justify;">
	These realities must be of concern to the parties that provide leadership to the country. But, now it appears as if improving the country’s businesses climate is not in any party’s agenda. This also implies that the Nepali private sector, at least for some time to come, have to depend on whatever little they can do on their own and contribute to make things better. One of the appropriate medium of such contribution could be the elections themselves where they can advocate and vote for the party which is better in terms of creating a business-friendly climate in Nepal. They can’t just keep complaining and doing nothing meaningful.</p>
<div>
	 </div>',
			'published' => true,
			'created' => '2013-04-17',
			'modified' => '2013-07-05',
			'keywords' => 'new business age  from the editor news & articles, from the editor news & articles from new business age nepal, from the editor headlines from nepal,  current and latest from the editor news from nepal, economic news from nepal, nepali from the editor economic news and events,  ongoing  from the edi',
			'description' => 'Nepal’s private sector has been constantly undermined, ignored or often humiliated by the State for long. Even after restoration of peace seven years ago, things hardly changed for better.',
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	(int) 4 => array(
		'Article' => array(
			'id' => '891',
			'article_category_id' => '52',
			'title' => 'Utter Discouragement',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p style="text-align: justify;">
	<img alt="From the editor, March 2013" height="362" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_from_the_editor(1).jpg" width="580" /></p>
<p style="text-align: justify;">
	The private sector of Nepal has been a constant victim of government inaction, for decades now. The latest in the row is Nepal Purwadhar Bikas Company Limited (NPBCL), headed by outgoing President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi. The company is planning to construct a 2.9 km tunnel connecting Kulekhani and Bhimphedi stretch of Kathmandu-Hetauda road. The proposed tunnel will reduce the Kathmandu-Hetauda road distance to 58 km and travel duration to 45 minutes. It now takes at least four hours to drive between the two cities.</p>
<p style="text-align: justify;">
	But the Company’s plan to lay a foundation stone for the tunnel on February 8 was dampened by the government inaction and the prescheduled ceremony was just limited to a ritual pooja than the real act of marking the formal beginning of construction. Contrary to the expectation, the government didn’t sign a go-ahead agreement with the NPBCL so as to allow the Company to formally inaugurate the construction of the tunnel on the very day.</p>
<p style="text-align: justify;">
	The government reservation that the Company didn’t have convincing plans to repay the investors was a mere excuse given the credibility of the people involved as promoters, shareholders and partners of the company.</p>
<p style="text-align: justify;">
	Firstly, it is promoted by wider participation of local beneficiaries. Though their investment may be small in amount, it would automatically provide a social audit framework for such a large project. As the number of promoters is going to be 264,000, the company is unlikely to be case of one large single obligor insolvency, even if the company, by any chance, met an unexpected fate.</p>
<p style="text-align: justify;">
	Second, the promoters themselves, including Joshi, are renowned business leaders and the government must have an iota of trust on them. If not, whom will it trust upon to invest in?</p>
<p style="text-align: justify;">
	Third, there are organizations like Non-resident Nepali Association (NRNA) that have signed agreement to invest and help complete the project in stipulated four-year period. Despite these all, if the officials in the Ministry of Physical Planning and Transport Management had any reservation on any issue, that had to be resolved through negotiation with the company, before setting the date of official inaugural.&nbsp;</p>
<p style="text-align: justify;">
	The modalities for sharing benefits between promoters and public investors, collection of the toll and plans of financial closure are undoubtedly important for a Rs 20 billion project. But they had to be sorted out well ahead setting the date of formal commencement of the construction. The Company’s approach to take the government’s likely obstruction for granted and the government intention to obstruct in any pretext have given all the wrong messages to the public about the very future of the project.</p>
<p style="text-align: justify;">
	The government contention that the estimated cost of the project was too low and funding sources were not clearly demonstrated, are not a well-founded. To say the least, it is not the business of the government to tell a private company whether any amount it set aside for the project was enough or not. And, the funding sources the Company has enlisted are of course the most credible ones available in Nepal.</p>
<p style="text-align: justify;">
	This episode is the combination of government’s unfriendly attitude towards the private sector and ad-hoc working style of Nepali corporate sector. The government must acknowledge the fact that it is the first large-scale private sector initiative to invest in country’s key infrastructure like road project. For this reason, the government should leave no stone unturned to facilitate the execution of the project. And, on the part of the company, there should be more transparent and convincing flow of information, so that the mala fide government intentions could easily be defeated by the strength of public confidence on it.</p>
<p style="text-align: justify;">
	There are questions whether the entire road from Balkhu of Kathmandu to Hetauda will be developed by the Company or is it constructing the tunnel alone and expects the government to make the rest of 55 km road widened to four-lanes with the tax-payers’ money. In such a case, how will the tolled amount be distributed?</p>
<p style="text-align: justify;">
	Obviously, the Company must have discussed these things with the relevant government agencies in detail. But the same details have not come to the public notice. Therefore, it is important that both parties, the government and the Company, played a transparent game so that this project can set a benchmark for future such projects.&nbsp;</p>',
			'published' => true,
			'created' => '2013-03-24',
			'modified' => '2013-04-17',
			'keywords' => '',
			'description' => 'The private sector of Nepal has been a constant victim of government inaction, for decades now. The latest in the row is Nepal Purwadhar Bikas Company Limited (NPBCL), headed by outgoing President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi.',
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	(int) 5 => array(
		'Article' => array(
			'id' => '817',
			'article_category_id' => '52',
			'title' => 'Adhoc Ad-Rules',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p style="text-align: justify;">
	<img alt="Adhoc Ad-Rules" height="357" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/AdhocAd_Rules.jpg" width="500" /></p>
<p style="text-align: justify;">
	The Maoist-led government seems determined to execute a one-window policy to allocate slots and budget to publish and broadcast public sector advertisements in the Nepali media. Some smaller media houses appear to be falsely jubilant just because they had the feeling that only a few big media houses had monopolized the public sector advertisements while the rest were unfairly relegated. It would be completely immature to think that the government’s discretion to allocate these advertisements in exchange of news favourable to it will in any way help even the smaller publications and broadcasters that are struggling to be professional.</p>
<p style="text-align: justify;">
	All media houses, big and small, are in fact getting only a residual fraction of the public sector advertisement that is saved from going to government-owned publications and broadcasting corporations. There are still several active laws that make it mandatory to publish public sector entities in the government mouthpiece like the Gorkhapatra. One of the darkest sides of the last two decades of democracy in the media industry is that the government couldn’t be forced out of the media business. Regardless of their rapidly dwindling readership and viewership, they have almost a monopoly over government advertisements. This is a professionally unethical phenomenon, and a real bottleneck to the growth of the sector.</p>
<p style="text-align: justify;">
	Even under such a virtual government monopoly, there was one good thing -- intermediary agencies as designers and developers of advertisements have had a role, which was developing as an industry in itself. But in the proposed arrangement, the agents’ role will also be taken over by the Department of Information. Then, this ‘industry’ too is doomed to die. It is altogether a different question, however, whether the Department has the manpower, creativity and resources to do all the pre-publicity art and design work before the advertisements are actually released to the media. Even news of bypassing the advertisement agencies has made some media houses happy given that some agencies have really deceived them on a continuous basis. This happiness too is an unfounded one and the relations between the media house and the agency is entirely a separate issue to deal with than the current problem.</p>
<p style="text-align: justify;">
	At the very crux of the problem is the government intention to treat advertisements as means of distributing ‘mercy’ and not treat them as part of the media business. It has not even considered how large logistical operation it should have if it considers centralizing all advertisements and then distributing it fairly, to the media scattered all over the country. As there has been an impressive growth of regional media, the Department might need its offices at regional or even district levels if it were to be fair as claimed, which is an impossible proposition in itself. Second, it wants to be discretionary than a rule-based institution. Because, once it is rule-based, the game will be the same again. For example, if it plans to make disbursement proportionate to the circulation and reach of the given media as the criteria, again the large media houses will only be entitled to a very large chunk of public advertisements. There is one good possibility that the government media might get less public advertisements than at present. But the government media is not at all likely to be treated on the same ground. So, this too is not going to happen.&nbsp;</p>
<p style="text-align: justify;">
	Therefore, a fair and rule-based proportionate distribution is certainly not the objectives of this entire exercise. Even if it were, making an inclusive rule is a daunting task given the weak database at the centre and virtually no records existing at the local levels.</p>
<p style="text-align: justify;">
	It is not difficult to figure out that the major objective of the current exercise is to reward some publication houses which are supportive of the UCPN(Maoist) and the present government and, at the same time, ‘teach some lessons’ to those media houses which &nbsp;are supposedly ‘hounding’ the prime minister.</p>
<p style="text-align: justify;">
	Besides, this whole proposition is against the internationally accepted norm of professional journalism and media ethics. This is surely an exercise in detriment to the very foundation of the free-market. And, this will not help the media of any shape or size except the ones the incumbent government wants to protect. It goes without saying who they all will be!&nbsp;</p>',
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			'created' => '2013-03-14',
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			'description' => 'The Maoist-led government seems determined to execute a one-window policy to allocate slots and budget to publish and broadcast public sector advertisements in the Nepali media. Some smaller media houses appear to be falsely jubilant just because they had the feeling that only a few big media houses had monopolized the public sector advertisements while the rest were unfairly relegated.',
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<![endif]-->	<span heaveneticacond9="" style="font-size:56.0pt;
  font-family:"><img alt="from the editor" border="1" height="217" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/upperkarnali(1).jpg" vspace="10" width="316" /><br />
	I</span><span style="letter-spacing:-.15pt">n the last week of December, the Maoist government led by Dr Baburam Bhattarai extended the survey license tenure for six more months to GMR, the Indian infrastructure major that is developing the Upper Karnali Hydel Project. The government has also sanctioned the proposal of the company to increase the installed capacity of this run-off-the-river project from 300 MW to 900 MW and granted permission to open a project liaison office in New Delhi. With all these developments at hand, things look good at the face of it. But not quite!</span> <br />
	<br />
	<span style="letter-spacing:
-.1pt">From the very beginning, since early 2010, it was the Maoist party that was creating obstacles to the project. In May 2010, the GMR offices at the project site were vandalized and the same was repeated in December 2012. It is quite a paradox that it was Dr Bhattarai's cadres who campaigned systematically at the local, national and international levels against GMR developing the project.<span style="mso-spacerun:yes">&nbsp; </span>Dr Bhattarai now may shirk aside pointing finger to break-away Mohan Baidya faction of the party, but both Bhattarai and his party Chairman Puspa Kamal Dahal did not actually act in time to facilitate the project operation.<span style="mso-spacerun:yes">&nbsp; </span>That led to some cadres of their party living abroad to create an NGO<span style="mso-spacerun:yes">&nbsp; </span>network called Karnali Sarokar Samaj and collect money both as donation to organize protests against GMR and in the form of 'shares' to a then proposed company that has now taken shape as Karnali Jalavidhyut (hydropower) Limited.</span></p>
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-.15pt">Apparently, now, the only party that is all-out against the GMR is CPN-Maoist (Baidya faction) and some of the technocrats of panchayat era are helping it to develop what they call a presentable case against the project contract. Their main bastion of argument has been, it was an 'anti-national' move to award contract to an Indian company. The new Company formally made public a couple of weeks ago is manned by Baidya cadres and it has vowed to replace GMR and develop the entire project by itself. </span></p>
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	<span style="letter-spacing:
-.15pt">The company is claimed to have registered by the government two months ago. This is where the intentions of Dr Bhattarai appear questionable. How can a government register a new company to develop the same project that has been formally contracted out to a foreign company years ago?<span style="mso-spacerun:yes">&nbsp; </span>Baidya's Party has fed in massive misinformation from local to international levels. It officially opposed the recent government decision by issuing a statement at the central level and has prepared a 'defense force' at the project site to stop GMR in its work.<span style="mso-spacerun:yes">&nbsp;&nbsp; </span>And, surprisingly, the government has done nothing to facilitate GMR in smooth operation of the project that has to start its civil works within a few months time, if the project were to be actually constructed. <br />
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	<span style="letter-spacing:
-.15pt">All this has added complications to the project to take off. The financial and technical abilities of the new company might be questionable from any possible angle, but it is unquestionably a big enough force to act as an irritant in the process. How will the people who are very active in generating money from non-resident-Nepalis in foreign land in whatever pretext will not only be stopped but their face also saved if the government wants GMR to develop this project?</span><span style="letter-spacing:
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	The government doesn't seem to have understood the extent of fall-out effects if the GMR is compelled to withdraw from the project. It will create an image of the country as unfriendly to foreign direct investment and will thus have long-term ramifications. The dream of developing large hydropower projects with FDI will never be realized if this company is sent back. It is because, the deals offered by the company to provide 12 percent of generated energy free of cost to Nepal and 27 percent equity participation to Nepal Electricity Authority are highly generous.</p>
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	The issue of 'compromised national interest' in this particular case is an absolutely fabricated dogma. Nepali nationals will be far better protected if we have enough power generation to support industrialization, transportation and household use. And, a private company GMR must not be penalized for any act of the Indian establishment that are often seen by different political forces as detrimental to Nepali national interests.</p>',
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			'description' => 'In the last week of December, the Maoist government led by Dr Baburam Bhattarai extended the survey license tenure for six more months to GMR, the Indian infrastructure major that is developing the Upper Karnali Hydel Project. The government has also sanctioned the proposal of the company to increase the installed capacity of this run-off-the-river project from 300 MW to 900 MW and granted permission to open a project liaison office in New Delhi. With all these developments at hand, things look good at the face of it. But not quite!',
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	<strong><span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">The Baseless Rate</span></span></strong></p>
<p class="MsoNormal">
	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;<br />
	<img alt="From The Editor" border="1" height="242" hspace="10" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/NRB.jpg" vspace="10" width="380" /><br />
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<p class="Pa7" style="text-align:justify">
	<span style="font-size:14px;"><span class="A4">I</span><span style="color: rgb(34, 30, 31);">n the second week of November, the Nepal Rastra Bank (NRB) issued a base rate circular targeting the commercial banks. The circular, however, has taken only a recommendatory rather than a mandatory stance as regards its compliance. In other words, it is a mere paper, not a policy. It is because if the banks were to treat this as a mere reference rate on lending, as the NRB claims, the rationale of the whole exercise, as it is, would be futile. If the NRB intended to make the circular mandatory but remained short of doing so in apprehension of reprisals, it is on the wrong plank of policy formulation. </span></span></p>
<p>
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">The formulae suggested by our central bank through this circular to calculate the cost of fund for lending make us believe that the rate is similar to the ‘base rate’ of the Reserve Bank of India that came into effect in July 2010 or the Discount Rate of the US Federal Reserve that has been there for years. Central banks enforce such base rates to prevent the systemic failure of financial institutions, if the latter indulge in deficit-driven transactions for a long period of time. But in our case, there are only a few instances where Class ‘A’ banks have actually incurred losses by resorting to competitive lending rates, which are below the actual cost of fund.</span></span><span style="font-size:14px;"><br />
	<br />
	<span style="color: rgb(34, 30, 31);">If the idea behind the NRB’s base rate circular is to keep the interest rate regime transparent, then it may be taken positively. However, the transparency component has already been incorporated in the concept of quarterly publication of the financial statements of the banks and financial institutions. Therefore, this circular without teeth was an unnecessary exercise.</span></span><span style="font-size:14px;"><br />
	<br />
	</span><span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">In fact, central banks which have to handle a financial system with abundant liquidity often enforce base rates to prevent banks from resorting to cheaper lending rates to attract or retain clients. Also, such rates are applicable where the interest on lending, like in the US, is very low - at times below 3-4 percent per annum. Or, in the case of the 2010 Indian economy which was feared to be over-heated. But Nepal’s banking system at present has no such issues. The system, more often than not, remains cash-strapped. As a result, the banks’ interest rates are usually high - at times as high as 20 to 22 percent. </span></span><span style="font-size:14px;"> </span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;"><span style="color: rgb(34, 30, 31);">Besides, the practice of central banks fixing base rates has become an outdated and anti-free-market concept over the past couple of years. If a particular bank opts to lend at a cheaper rate with low profit margin, it may earn even more out of the sheer volume of the transactions. Therefore, it is up to the business manager of a bank to decide what market strategy to adopt and at what price to sell its products. </span></span></p>
<p class="Pa8" style="text-align:justify">
	<span style="font-size:14px;">&nbsp;<span style="color: rgb(34, 30, 31);">The NRB’s circular to the banks to publish their base rates on a monthly basis is an additional cost burden on them. Not only that, barring the banks in all circumstances from lending at rates lower than the base rate is barring them from the freedom of portfolio and treasury management. The interest rates on lending to a variety of projects (like SME loan, consumer financing and mega-project financing) are bound to be starkly different. Therefore, an efficient bank may like to finance at lower interest rates the projects that give it a better mileage in the market, though not a direct profit, and compensate for the ‘loss’ by lending to projects where it may be able to charge higher interest rates. </span></span></p>
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	<span style="font-size:14px;">&nbsp;<span style="line-height: 115%; color: rgb(34, 30, 31);">In this exercise of base rate policy, the intentions of quite a few stakeholders got badly exposed. The NRB’s actual intention was to make it mandatory, not because it would do any good to the system, but because the regulator perhaps wanted to show that it still has some controlling powers over the financial sector. </span></span></p>
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	<span style="font-size:14px;"><span style="line-height: 115%; color: rgb(34, 30, 31);">&nbsp;It was clear that some established bank were in favour of the circular whereas the new ones, whose costs of fund are likely to run high if calculated according to NRB guidelines, were averse to it. But, the new banks could not muster the courage to say that the circular was an unnecessary exercise. The NRB, on the other hand, could not justify its half-hearted approach in introducing it. </span><br />
	</span></p>',
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			'description' => 'In the second week of November, the Nepal Rastra Bank (NRB) issued a base rate circular targeting the commercial banks. The circular, however, has taken only a recommendatory rather than a mandatory stance as regards its compliance.',
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<![endif]-->	<img alt="from the editor" border="1" height="229" hspace="10" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/editor(3).jpg" vspace="10" width="332" /><br />
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	<span class="A15"><span style="font-size:59.0pt">T</span></span><span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">he recent activism of regulatory authority of insurance industry of Nepal, the Insurance Board (IB) or Beema Samiti, has created new ripples in the sector. Some of the very bold actions taken against ‘erring’ insurance companies, including the fully government-owned Rastriya Beema Sansthan (RBS), have apparently served to establish that it is not a toothless entity, as seen so for years now. <br style="mso-special-character:line-break" />
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">More interesting drama unfolded when the IB ordered RBS to defer its annual general meeting scheduled for the first week of October and ordered to stop its engineering insurance business the following week. This episode has special significance as the government-owned financial institutions have a history of invariably remaining recalcitrant to the regulatory authorities which has often given ground to the private sector operators to complain of not getting a level-playing field to compete with these ‘protected’ public sector companies. It may be recalled that a number of government-owned large banks were, for all practical purposes, acting beyond the regulatory mechanism of the central bank until their net worth became untenably negative, about a decade or so ago.<br />
	<br />
	At the core of such controversy and temerity to non-compliance to the regulator are the separate Acts that instituted these entities. Still, RBS Act of 1969 is intact. (Similar Acts were there for Banks as well until an Umbrella Act ‘BAFIA’ was enacted in 2006.) This incident also establishes the fact that government should not continue to be one of the competitors in the business where private sector has already made competent market presence. Let’s hope the IB will also force the RBS to speed up the process to split its life and non-life insurance businesses. The only private sector company that was operating both of these businesses has already obliged to IB’s directive whereas RBS is still adamant.</span></p>
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	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">But the cardinal question here is: Is this all an insurance regulator of the country expected to do? Certainly not! A regulator has a responsibility of evaluating the situation of service availability, and on the basis of such evaluation, creating appropriate legislative and institutional frameworks to ensure a healthy growth of the market as well as a ground for fair play. But, the recent acts of the IB appear more of populist and bullying nature than the ones having long-lasting meaningful impacts. Some of the decisions like limiting the operation expenses of the insurance companies only to 6 percent of their total expenses are unquestionably naïve, to say the least. This favours the old and established companies and puts the new companies in disadvantage while the latters deserve credit for the speedy expansion in the insurance services across the country.</span></p>
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Still, barely six percent of the population that has capacity to buy insurance coverage has got some sort of insurance coverage. The knowledge about the insurance among the masses is negligible and products that are suitable to Nepali context are neither available nor accessible to the potential clients. Nepal’s insurance industry lacks human resource of all levels and we don’t even have a training academy for the sector, so far. <br />
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	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Though the IB has been repeating its plan to set up such an academy time and again, the plan is still rudimentary at best. Updating several legal arrangements is long overdue. The very Insurance Act has become outdated. It is the responsibility of the regulator to develop a universal framework of evaluation to avoid institution-wide discretionary practices of evaluation and compensation. It is already late to bring in international best practices into our insurance industry. </span></p>',
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			'created' => '2012-12-06',
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			'description' => 'The recent activism of regulatory authority of insurance industry of Nepal, the Insurance Board (IB) or Beema Samiti, has created new ripples in the sector. Some of the very bold actions taken against ‘erring’ insurance companies, including the fully government-owned Rastriya Beema Sansthan (RBS), have apparently served to establish that it is not a toothless entity, as seen so for years now.',
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  font-family:">A</span><span style="mso-spacerun:yes">&nbsp; </span>four-day ‘Made in Nepal Products and Service Expo-2012’ that concluded on 9th September in Kathmandu created hype of a sort with its tagline: afno bhanya afnai ho (our own, means our own). Two weeks later, Nepali elite class was seen scrambling to buy jackets made of allo (stinging nettle plant with scientific name Girardinia diversifolia) fibre in the Small and Cottage Industries Products’ Exhibition. Everyone, from prime minster to the commoner who visited these fairs, and the media alike, portrayed these as the moments proud to be. Indeed they were, but rather more emotionally.</p>
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	These expos and exhibitions designed to showcase and promote Nepali products and services no doubt are welcome endeavors. For that matter, any business initiative at a time when almost all economic and manufacturing activities in Nepal are dented by the prolonged political crisis is praiseworthy. But, the kind of twist these expos brought in to trade ‘afno’ emotions than goods and services warrants a serious debate on the very concept of ‘made in Nepal’ and its indispensability for the national economy.</p>
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	Let’s think beyond debatable issues of whether everything showcased in these exhibitions was truly a Nepali product. In the present globalised and highly interconnected world, can any economy of the size of Nepal operate and manage her ‘own’ economy and, is it at all necessary to be so? Or, shouldn’t we now think of making Nepal a ‘profitable economy’ than being falsely proud with hollow emotional swipe?</p>
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	Unquestionably, Nepal needs to produce and sell products and services that have comparative and competitive advantages, mainly those that are profitable both in domestic and international markets. First, the very concept of self-producing everything we need must be abandoned. Second, generating pride by renaming or changing the label to ‘made in Nepal’ of the goods produced by others is surely not an ethical practice and not going to help even our psychological bliss of industrialism, let alone economy.</p>
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	<span style="mso-spacerun:yes">&nbsp;</span>We saw a swadeshi, self-reliant economic paradigm in the economies like India for almost half a century that got reverted to open market only at the beginning of 1990s. But, swadeshi policy could hardly help the market of its own of such a large size, apparently capable of creating economies of scale in any given sector. Even in our case, the guided economy of the panchayat era tried to produce everything through the state-owned entities -- from cigarettes to sugar and, run transport services to groceries outlets. Clearly, the prime objectives in those both cases were to create an economy of ‘national pride’ not a profitable economy based on cost-benefit analysis. Now we have the results in front of us – in the form of an absolutely tattered economy and also pathetic fate of these state-owned establishments, as an outcome of these costly prides.</p>
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	The official figures of the last fiscal year 2068/69 show that Nepal’s export import ratio stands at almost 1:6 and, unofficially, it is estimated to be well above 1:8. This indeed is indicative of the fact that Nepal only has two options to bridge this gap – either to increase the export or, produce the goods that can replace the massive import in substantial scale, or, instead of producing everything, focus on prioritizing the products with better domestic or international markets with higher rate of returns. As China has now shown, it is always preferable to import what turns out to be cheaper to import than producing ourselves and produce only that which brings in better rate of returns. Therefore, instead of being ‘proud’ for producing everything, the nation as one economy should think about pragmatic plans to make it more ‘profitable’. Then only ‘made in Nepal’ actually can contribute in making Nepal economically better off.<span style="mso-spacerun:yes">&nbsp; </span></p>
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	<span class="A13"><span style="font-size:
59.0pt">T</span></span><span style="mso-tab-count:1">he Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so. The recent example is the closure of Kathmandu franchisee outlets of the global food chain KFC and Pizza Hut. And, as of penning these lines, there was no convincing sign of them opening soon. Even if they did, the damage done by the reason of its closure – overtly politicized labour highhandedness – is sure to be a detracting factor for the potential investors. Moreover, this is the second such case after Surya Nepal closed its readymade garments’ unit some six months ago, also due to industrial disputes.&nbsp;&nbsp; <br />
	<br />
	</span><span style="mso-tab-count:1"><span class="A13"><span style="font-size:
59.0pt"><img alt="fromtheditor" border="1" height="212" hspace="5" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/investment(1).jpg" vspace="5" width="330" /></span></span>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">Only political formalities like announcing an Investment Year by the government would never be enough to materially attract the investment. On the contrary if the ‘pull factors’ are adequate, such an investment would automatically flood in even without such announcements. Therefore, Nepal as the nation-state should first check whether such pull factors exist at all, at present.</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;mso-bidi-font-family:">As the fact of the matter, they don’t exist at all. The prolonged political uncertainty, as claimed by all and sundry, is not only the distraction; the radical Reds at the helms of state affairs with the ‘Maoist’ tag is even larger scary factor. The ruling party here might furnish innumerable arguments to establish how investment-friendly they are prepared to be. But why would a potential investor take pain of subscribing these sugar-quoted arguments instead of reading the writing on the wall–THE MAOISTS; whatever it means?</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">The trade union leaders at the Pizza Hut, after its closure came-up with a lame-duck statement to prove their innocence claiming that they were just forming a unit there and were not planning even to ‘immediately’ strike. That may or may not be true. But why would any investor even take the risk of running the trade under the perennial duress in over-unionized set-up?</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;
mso-bidi-font-family:">There are many instances that the industrial disputes are not limited to securing the trade union rights of any company concerned, but in fact the means to achieve political objectives of the mother Party one is affiliated to. It’s been years that collective bargaining processes enshrined in the labour laws of the country are grossly dishonoured. Sheer force and political protection to union activities has been the cardinal modus operandi in extracting benefits from the employers.</span></p>
<p class="MsoNormal">
	<span myriad="" style="font-size:10.0pt;line-height:115%;mso-bidi-font-family:
">Some other reasons like the power shortages, infrastructure deficits and lack of policy predictability could be cited as other bottlenecks to attract both international and domestic investment. They are but only secondary to overarching ultra-red communist image of the government and industrial anarchy created by the trade unions invariably led by party cadres rather than the workers. Not only international, even domestic investment is not likely to come by in any significant measure until and unless these fundamentals are changed for the better.<br />
	<br />
	<br />
	</span></p>',
			'published' => true,
			'created' => '2012-10-10',
			'modified' => '2012-10-30',
			'keywords' => '',
			'description' => 'The Government of Nepal has declared 2012 as the Investment Year. It was apparently meant to attract international investment, or foreign direct investment (FDI) into Nepal. But as the year closes to its end, there still is not any case of significant FDI entering this country. Worse still, a number of companies with such investment have already pulled their shutters down, or, planning to do so.',
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	(int) 11 => array(
		'Article' => array(
			'id' => '659',
			'article_category_id' => '52',
			'title' => 'Tunnel To Prosperity',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<br />
	<strong><img alt="From the editor" border="1" height="262" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/editoiral.jpg" vspace="5" width="400" /><br />
	<br />
	<br />
	The commercial viability of Kathmandu-Kulekhani-Hetauda road tunnel is unquestionably attractive given the traffic pressure it is likely to have. <br />
	</strong><br />
	<br />
	Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km. <br />
	<br />
	<br />
	Fully functional roads that now connect Kathmandu with Hetauda are much longer. The most used Kathmandu- Mugling-Narayanghat-Hetauda road’s length is 224 kilometers (kms) while the largely discarded Tribhuvan Highway is 133 kms. The proposed fast track will be about 80 kms long and would open at a point of some 20 kms east of the main town of Hetauda. However, the distance with this tunnel would be only about 50 kms and the total travel time from Kathmandu to Hetauda will reduce to barely one hour. The pace of progress in the work to construct the tunnel has been more than impressive; demonstrating the advantage that a private sector led project can have even in infrastructure development aspect. The Company has also been a first test case of much talked about Public-Private Partnership and serves as the actual implementation of BOOT (Build, Operate, Own, and Transfer) model through a project entirely financed domestically. This also sets an example of how a large sized investment of about Rs 20 billion for this project alone could be generated within the country if a viable project is chosen and all users and stakeholders are made effective owners of the project. <br />
	<br />
	<br />
	Since the company got license in the third week of May 2012 from the government, it has created a tight timeline to complete the Detailed Project Report (DPR) by the end of November. The commercial viability of the tunnel is unquestionably attractive given the traffic pressure it is likely to have. This model also constitutes a rationale that the carrying capacity of the tunnel should also be fixed by the research on existing and potential increase in traffic flow between Hetauda and Kathmandu. <br />
	<br />
	<br />
	Most importantly, without upgrading the total stretch of the Balkhu-Pharping- Kulekhani-Hetauda road, only the proposed tunnel of mere three-kilometer length is unlikely to give any substantial benefit to the national economy and return to the investors. Had the entire road length been part of this project, it would only have delivered results as aspired. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-15',
			'modified' => '2012-10-10',
			'keywords' => '',
			'description' => 'Nepal Infrastructure Development Company, a private sector initiative led by Immediate Past President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has shouldered the task of opening up the Kathmandu-Kulekhani-Hetauda road tunnel. This tunnel would substantially reduce the length of the road connecting Kathmandu with Hetauda to 50 km.',
			'sortorder' => '557',
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	(int) 12 => array(
		'Article' => array(
			'id' => '645',
			'article_category_id' => '52',
			'title' => 'Triangular Fight On Budget',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong>The president too has come out with his ‘political position’ on a full-fledged budget, making it a triangular fight. </strong><br />
	<br />
	<br />
	<img alt="from the editor" border="1" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from-the-editor(1).jpg" vspace="5" /><br />
	<br />
	It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY). Unlike in the past, the timeliness of the budget announcement was hampered by political bickering between the ruling alliance and the opposition in the parliament. But, this time around, a third party--the president--has also come out with his ‘political position’ on a full-fledged budget, making it a triangular fight.<br />
	<br />
	On the 5th of July, President Ram Baran Yadav hinted that he would not put the seal of assent on the full ‘finance ordinance’ covering the entire FY 2012/13. This controversy was absolutely unnecessary. Apart from that, the president’s willingness to choose ‘this over that’ is even more distressing. In view of the danger of financial crisis looming large and private sector confidence hitting bottom rock, the sincere effort from all quarters should have been to bring about a full-budget. This would have at least helped to boost the investors’ confidence and provided some degree of policy predictability in the economy. One of the major concerns of the opposition parties—mainly the Nepali Congress and the CPN-UML—is that the full-budget will provide the government to allocate more sum for its party’s vested interests. That may or may not be true, but the kind of protest these parties are now engaged in, is also not going to stop the present government either to practice porkbarrel economy. <br />
	<br />
	<br />
	The wisest thing for the opposition would have been to be a part of the budget formulation team. Instead of sloganeering from outside, they could have stopped the government from allocating exorbitant amount for the UCPN-Maoists’ pet schemes like Youth Self-employment and the agreed full-payment to its ex-combatants. Nepal seems to be sharply veering from the objective of concluding the peace process. This means that there will be prolonged political uncertainty and, if a consensus is not reached soon, many more budgets to follow are likely to be victims of Nepal’s sharply polarised politics. And, thus the woes of economy are sure to aggravate. Therefore, the major political forces of the country must first cease the practice of treating the annual budget as a means to meet their sectarian political ends. <br />
	<br />
	<br />
	 </p>',
			'published' => true,
			'created' => '2012-08-09',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'It will be the fifth consecutive year that the announcement of national budget has been a victim of ‘free-republican’ politics overdose. At times, the presentation of the budget has been delayed by months, very often it came in piecemeal and many times, a change in the government has drastically changed the priorities in the middle or the fag end of the fiscal year (FY).',
			'sortorder' => '545',
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	(int) 13 => array(
		'Article' => array(
			'id' => '585',
			'article_category_id' => '52',
			'title' => 'The Hydropower Politics',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<img align="middle" alt="editor" border="1" height="224" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/editor2.jpg" vspace="10" width="300" /></p>
<p>
	Nepal still lives by dream of developing its hydropower to the fullest potentials so that it could not only meet own energy needs but also export a substantial amount of power produced; to help maintain the trade balance, primarily with India. It has been at least five and half decades (since the planned development began here in 1956) we are following this mirage of commercially harnessing our literally limitless potentials of water resources. Nepal may have moved an inch but surely not a foot to this direction. And, worse, there is not a single large project in pipeline that could complete in, say, five years from now.</p>
<p>
	Talking about large projects, Upper Karnali (800 MW) and West Seti (750 MW) are in recent limelight. But the proposed promoter of Upper Karnali, the Indian energy major GMR is still apprehensive about the security it would get from the state to implement the project. The story of West Seti a reservoir based proposed project, is circling around for last one decade when Australian company SMEC came in and went out without making much headway in the project. Recently, the Chinese promoter of legendary Three Gorges Dam project has reportedly shown a renewed interest in it. But, things are not likely to move much differently than in the past. It is because Nepali water resources, hydropower in particular, is by now no longer an investment or commercial proposition alone, rather it has become a true game of politics, at both national and international levels.</p>
<p>
	At the national level, a misconstrued nationalism has always been a real impediment to the development and growth of this sector. It is natural to seek to maximise the benefit for the nation while developing the project with bilateral or multilateral partnerships, but it is entirely an weird approach to prevent the very construction of the project defining the nationalism attached to it at a convenience of a vested interest group.</p>
<p>
	Every Nepali party with communist tag has done this politics. The Mohan Vaidya faction of UCPN-Maoist is the latest incarnation of a force dying to protect nationalism by creating hurdles to not only Upper Karnali but also Upper Marsyangdi. The government issuing statement of assurances of security appears absolute farce at the face of what is evident at the site. At the international levels, for both of our neighbours India and China, Nepal's development is also part of regional geopolitics. There are instances, like in Kohalpur-Banbasa part of east-west highway, where one party did not like the involvement of the other in any particular project. Even the expression of interest by a party to develop a certain project causes the other party smell a rat.</p>
<p>
	Therefore, any proposition is difficult to materialise on the ground. It is particularly so when the projects, like West Seti, to be developed by China with plans to export its major portion of power-produced to Indian states adjoining Nepal. To sum up, the dark days in hydropower will only end when it is started to be viewed as pure business sans politics at the national level and sans geopolitics at regional level. &nbsp;</p>',
			'published' => true,
			'created' => '2012-02-22',
			'modified' => '2012-08-31',
			'keywords' => '',
			'description' => 'Nepal still lives by dream of developing its
hydropower to the fullest potentials so that
it could not only meet own energy needs but
also export a substantial amount of power
produced; to help maintain the trade balance, primarily with
India.',
			'sortorder' => '487',
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			'homepage' => false,
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	(int) 14 => array(
		'Article' => array(
			'id' => '515',
			'article_category_id' => '52',
			'title' => 'Hoax Of Free Competition',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<span style="font-size:12px;"><img align="top" alt="" height="336" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/from the editor.jpg" vspace="5" width="500" /></span></p>
<p>
	<span style="font-size:12px;">Last couple of governments made headlines for declaring that appointments of the chiefs of public enterprises would be made through a free competition. Going a step further, present government opened˜tenders even for the constitutional positions like the chief and other commissioners for the Election Commission, Commission for the Investigation of Abuse of Authority (CIAA) and Public Service Commission. <br />
	</span></p>
<p>
	<span style="font-size:12px;">At the face, it appeared as a welcome idea as those crucial institutions could now expect to be headed by the most talented professionals than the political cronies of the party in power. Some of the selection process, like for the Executive Director of Nepal Electricity Authority (NEA), at the beginning appeared reasonably fair. The erstwhile government made the appointment on the basis of that very selection. Even the present government has appointed in couple of positions by calling for applications, like in case of the Chairman of Securities Board of Nepal (SEBON). <br />
	</span></p>
<p>
	<span style="font-size:12px;">However, status of application collected for constitutional bodies is yet in the dark. But, as it turned out now, all these so called free competitions were mere hoax. Ultimately, only hardcore cadres of the ruling party are getting appointment. The new NEA Executive Director turned out to be a devout UML party worker and Chairman of SEBON a staunch Maoist supporter. In both cases of NEA and SEBON, there were more qualified persons than those who were lucky enough to be picked for the job. But those PhD degree holders and true professionals were summarily discarded. <br />
	</span></p>
<p>
	<span style="font-size:12px;">Then, why is there drama of free competition as the people in power were freely appointing their near and dear ones in these positions for years? Because, this has several advantages for both the appointee and the appointer. Generally, such government appointments are made with a clause for maximum of (so many) years if it is a political appointment as in the past. But the person who is selected through free competition&nbsp; has a negotiation power not only on tenure but also for the perks. Then it has two advantages. First, the chosen cadre will have a fixed term appointment instead of uncertain maximum of. Second, he can bargain for better pay than the normal effective government pay-scale. In turn, the appointing party also can bargain for the appointee's contribution mostly monetary, called levyâ. <br />
	</span></p>
<p>
	<span style="font-size:12px;">What is important here is not the process but the intent of the appointer. If their intentions are to appoint the best professional, the free competition for mere publicity is an unnecessary waste of time and resources. On the contrary, if the ruling parties want their own cadres in any pretext, the so called free competition will only add to the worries of public enterprises, most of which are already in precarious situation.<br />
	<br />
	<br />
	</span></p>',
			'published' => true,
			'created' => '2011-11-16',
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			'keywords' => '',
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FOREX

Currency	Unit	Buy	Sell
U.S. Dollar	1	121.23	121.83
European Euro	1	131.65	132.31
UK Pound Sterling	1	142.47	143.18
Swiss Franc	1	124.29	124.90
Australian Dollar	1	71.69	72.05
Canadian Dollar	1	83.90	84.32
Japanese Yen	10	10.94	11.00
Chinese Yuan	1	17.17	17.26
Saudi Arabian Riyal	1	32.27	32.43
UAE Dirham	1	33.01	33.17
Malaysian Ringgit	1	27.36	27.50
South Korean Won	100	9.77	9.82

Update: 2020-03-25 | Source: Nepal Rastra Bank (NRB)

Bullion

Fine Gold	1 tola	77000.00
Tejabi Gold	1 tola	76700.00
Silver	1 tola	720.00

Update : 2020-03-25

Source: Federation of Nepal Gold and Silver Dealers' Association

Petroleum

Petrol	1 Liter	106.00
Diesel	1 Liter	95.00
Kerosene	1 Liter	95.00
LP Gas	1 Cylinder	1375.00