Nepal’s Redoubtable Poverty Statistics September 2011

Nov 30, -0001 0 3 minutes 5 seconds to read

…

R K Associates: Aiming High - August 2011

Nov 30, -0001 0 8 minutes 10 seconds to read

…

Explore Asia Pacific: Satisfying Customers - August 2011

Nov 30, -0001 0 8 minutes 25 seconds to read

…

Monetary Policy And Question Of Financial Stability (august 2011)

Nov 30, -0001 1 22 minutes 33 seconds to read

…

Monetary Policy2011/12:Hard To Realise The Promises (august 2011)

Nov 30, -0001 0 6 minutes 8 seconds to read

…

'We Want To Target Corporates On A Much Bigger Way' (august 2011)

Nov 30, -0001 0 10 minutes 37 seconds to read

…

'I Refuse To Call This A Liquidity Crisis' (august 2011)

Nov 30, -0001 0 9 minutes 31 seconds to read

…

Economic Policy Deflections (august 2011)

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

…

Sorry State Of SOEs (august 2011)

Nov 30, -0001 0 16 minutes 11 seconds to read

…

Policy Twists For Public Enterprises (august 2011)

Nov 30, -0001 0 4 minutes 49 seconds to read

…

What’s Wrong With Public Enterprises? (august 2011)

Nov 30, -0001 0 7 minutes 22 seconds to read

…

International Privatisation Trend (august 2011)

Nov 30, -0001 0 18 minutes 24 seconds to read

…

Brand Buzz (august 2011)

Nov 30, -0001 0 6 minutes 18 seconds to read

…

HR Audit (august 2011)

Nov 30, -0001 0 7 minutes 51 seconds to read

…

Feedback August 2011

Nov 30, -0001 0 4 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' => 'Nepal’s Redoubtable Poverty Statistics September 2011',
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			'content' => '<div style="margin-bottom: 0.0001pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;">T</span><span style="font-size: 9.5pt;">he report of the Third Living Standard Survey (TLSS) a month ago declared that only 13 per cent of Nepali people now live under the so called absolute poverty line. Highly encouraging though, this news is the one extremely hard to believe instantly. There are reasons for this suspicion. With only 13 per cent of people below the poverty line, the data puts Nepal in better position than the countries like Russia, United Kingdom, South Korea, Belgium, Germany and Japan with 13.1, 14, 15, 15.2, 15.5 and 15.7 per cent of people below the poverty line, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Nepal's ground realities regarding the factors that could contribute to poverty reduction availability of foods, shelter and job opportunities to the social and economic safeties are in no way comparable to the countries mentioned above, as the examples. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	 </div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	 </div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;"><img alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/img1%283%29.jpg" style="width: 324px; height: 400px;" vspace="10" /></span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 9.5pt;"><br />
	Such drastic reduction of poverty from 12 per cent in 2004 to 13 per cent in 2011 has taken place during the most adverse political climate in the country's history. There was civil war of sorts until 2006. Since then, political instability has gravely affected the industrial and business climate. In absence of elected local governments for over a decade now, service delivery mechanism is in virtual ramshackle. No substantive FDI has flowed in. No other economic indicators are positive to cite under these adversities. Such an astonishing improvement in poverty situation is a real paradox. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Only reason attributed to the impressive improvement is the somewhat consistent inflow of the workers remittances. But, given the fact that majority of Nepali workers going abroad for meagrely paid jobs, it is hard to believe that this single phenomenon can make such a huge difference. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Therefore, the date catered to the people by the government agencies are either deliberate lies or, if that is not the case, we have adopted some highly flawed method in conducting the research for TLSS. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">In fact, the task of measuring poverty is in itself a very complex affair. It is more so in a country like Nepal where competent and independent research institutions are, in real terms, non-existent. And, citizenry and other stakeholders of economic activities have no alternative but to mime government agencies like the National Planning Commission and Central Bureau of Statistics.</span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Our universities and other independent institutions have so far failed to generate comparable, or at best, countering data on the various aspects of the country's economy, including poverty. <br />
	<br />
	</span></div>
<div>
	<span style="font-size: 9.5pt; line-height: 115%;">These factors have combined to raise serious questions on Nepal's credibility in international community. Culprits to this have been none other than the government agencies involved. The situation warrants more credible and pragmatic approach in counting our poverty. </span></div>',
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			'title' => 'R K Associates: Aiming High - August 2011',
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			'content' => '<div style="text-indent: 0in;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><img align="left" alt="corporate focus" border="1" height="202" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cor.jpg" style="margin: 10px; padding: 10px;" vspace="10" width="350" />The business journey of R K Associates dates back to 1978 when Dr Rajesh Kazi Shrestha, an energetic, young and pro-active entrepreneur established Rajesh Concern with the objective of focusing on hospitality and trading business. It imported various kinds of goods from around the world and helped promote Nepal to strengthen its trade relations with many countries.<br />
	<br />
	Today, R K Associates has diversified manifold and has stakes in every business segment. With its over three decades of experience in trading and services sectors, it manages various assignments and projects in automobiles, banking, insurance, information technology, flooring, medical equipment and supplies, fast moving consumer goods and many more. The group is behind the presence of many leading household, home decor and high-end products in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group is now among the most trusted names in Nepal and has forged, nurtured and maintained global alliances over the last 33 years. Its founder Dr Shrestha was honoured by International Journal of Non-Aligned Countries and Foreign Policy Research Institute (FPRI), New Delhi, with an honorary PhD in February 2010. He says, I attribute our growth to the deep understanding of local markets, people and customs </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">It currently has a turnover of USD 20 million. It&nbsp;has contributed to the national economy and promoted infrastructural and entrepreneurial capability of Nepal. It is closely associated with prestigious domestic and international federations and associations. A former Assistant Minister of Industry, Commerce and Supplies, Dr Shrestha holds several prestigious positions. He is Chairman of Nepal-China Chamber of Commerce &amp; Industry and International Chamber of Commerce, Nepal. He is also a Past President of Nepal Chamber of Commerce. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Group Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group looks at integrating dealers, distributors, retailers, suppliers and joint venture partners into the R K Associates family. It is currently focusing on branding of its products and consolidating them in the market. It is looking forward to NADA (Nepal Automobiles Dealers Association) Expo in September 2011 for showcasing different vehicles from its stable. Dr Shrestha says, Through our hard work, we want to reach as high as possible and prove our worth in the market. The group also plans to help orphanages and sponsor underprivileged students as part of its CSR (corporate social responsibility) activities. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">R K Associates aims to recruit, develop, motivate and retain the best talents within the country and provide them a challenging and demanding environment. It fosters a strong emotive feeling of oneness and ownership among the employees within the company. The group aspires to transform into a model corporate institution and make its employees proud to be part of the group. It provides employment to close to 250 people out of which 38 people work for Constant Business Group alone.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Management Style</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Dr Shrestha believes in giving employees the liberty and opportunity to prove themselves. He says, Instead of me telling them what to do, they should come and update me on the latest information. He says he is most happy working as the link and let his employees do all the work. He goes to great lengths to ensure that the employees feel at home and treat the group as their own. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">He strongly feels that political stability and government's economic policies are key to nation's prospects. We are going through the most difficult phase now. If the government policies are good, I am sure businesses will prosper and generate employment for hundreds of thousands of youth who are leaving the country due to lack of opportunities. Dr Shrestha believes that the government would do better if it consults the private sector before taking decisions or implementing them, in the larger interest of the nation. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">He says it is the government's duty to reduce taxes on automobiles so that the industry is saved from a certain collapse. He also recommends that the government should focus on phasing out the vehicles that are over 20 years old. The government's policies have had an adverse impact on the industry as it has experienced a huge market slump. This has obviously resulted in reduced revenue for the government, he says. </span></span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Teamwork among partners</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Hard-working staff</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Honesty</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Trust</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Inability to penetrate the market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Lack of aggression</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Possibility of a favourable government policy</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Over import by all vehicle distributors</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">More supply than demand</span></span></li>
</ul>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><i>Sister Concerns</i></span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Constant Business Group Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">Established in January 2007, this company distributes vehicles from China (Zotye, Lifan, Jonway, Grand Tiger and Lobo), Malaysia (Proton) and South Korea (Ssangyong). R K Associates was awarded the best distributor for Zotye in 2009. The company has sold over 300 units of Zotye so far out of which 75 units were sold in the last one year. Among other vehicle products, 50 units of Ssangyong have been sold, so far. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Nepal International Business Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">A trading house established 17 years ago, it imports tower crane, film faced plywood, commercial plywood and hotel supplies. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Status Trading Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">This trading house that started 3 years ago imports furnishing, flooring carpets, laminated flooring and PVC. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Alliance Insurance Company Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">R K Associates is affiliated with this insurance company as a promoter which has Dr Shrestha on its Board of Directors. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Rajesh Concern</span></span></div>
<div>
	<span style="font-size: 14px;">It's the first entrepreneurial venture of R K Associates and imports food items, readymade garments, carpets, PVC etc. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Soaltee Hotel Limited</span></span></div>
<div>
	<span style="font-size: 14px;">Dr Shrestha features in the Board of Directors of Soaltee Hotel Limited.</span></div>',
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			'id' => '434',
			'article_category_id' => '39',
			'title' => 'Explore Asia Pacific: Satisfying Customers - August 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="line-height: 120%;"><br />
	Neeraj Sharma</span></b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="line-height: 120%;">Managing Director</span></span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">Explore Asia Pacific Pvt Ltd</span></span></div>
<div style="text-align: justify; text-indent: 0in;">
	<span style="font-size: 14px;">Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal.<br />
	<br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product basket. In mid-2010, it also ventured into the business of solar panels and desktop components from Simmtronics. Currently headquartered in Kathmandu, the company registered an annual turnover of Rs 120 million in 2010. Having gradually enhanced its product basket, it aims at a 300 percent growth in 2011. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific is known for its ethical business practices and value-added approach which is solution-centric and vertically focused. Neeraj Sharma, Managing Director of the company, says, Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal. It seems set to meet this objective as it already has a strong presence in the up-country regions and possesses management skills with proven controls and processes.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company claims it is fortunate to have dedicated partners as part of its organised distribution system. Sharma says, Along with the modern marketing and branding concepts, our knowledge and hold in the Nepali market has held us in good stead. It plans to invest in infrastructure and technology in the long term and aspires to establish sound performance in a short period of time, though of course, with a long term commitment. </span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Company Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific aims to have leading market shares for all products it deals with. It also envisions to have satisfied and loyal customers through value-added before and after sales services. Creating high recall brands is high on its agenda as it helps customers association by being reliable and trustworthy. Sharma says, We want to be the first choice as a distribution partner for both the vendor and the reseller by adding value to the supply chain through efficient logistics, high level of product knowledge, value-added marketing services and demand creation activities. The company is working hard to ensure wide and deep presence through an effective distribution system. It also wants to be able to create a profitable business proposition for all stake holders. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Brands and Products</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company is proud to be associated with reputed and well known brands such as ADATA, Simmtronics, Genius, Panda, Jetway and Samsung among others. It deals in well-received products like classic pen drives, pen drives superior, Simtronics desktop, external HDD, memory card, monitors, graphics card, motherboard, RAM etc. Explore Asia Pacific also plans to launch its own brand and manufacture cabinets, PSUs, keyboards, speakers and headphones etc. The tremendous market potential has propelled us to think along these lines. Once the liquidity problem gets settled, the market situation will definitely receive a boost, Sharma reasons. </span></div>
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	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company boasts of having a strong human capital and talent pool. It has among the best talents in the industry with professionals from different sectors and proven experience levels. We perform best practices in place like in-depth induction programmes, in-house training, performance management systems and employee satisfaction surveys, informs Sharma. The strong sense of bonding that exists in the company has ensured a very low attrition rate. The company currently has a workforce of 18 employees at its corporate office and plans to increase it to 35 from the new fiscal year once it unveils its expansion plans. Sharma believes in dealing with his staff in an honest manner which has paid rich dividends as he has got positive results from them. He thinks that Ajay Sadewra joining Explore Asia Pacific as Director-Operation in March 2011 was a major turning point for the company's fortunes. Sadewra was earlier associated with Neoteric Nepal. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Immediate Plans</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Expanding with Explore Digital, an independent and retail chain, the company plans to open 10 retail outlets in the country. There will be four outlets at prime locations in Kathmandu alone. We will geographically divide channels for our 18 distributors beginning Shrawan, informs Sharma. The company plans to advertise its upcoming retail outlets in major national dailies as well as the distribution channels. Having established its credibility with the consumer segment, Explore Asia Pacific now wants to focus on the enterprise sector and spread its wings to cater to government organisations, NGOs and INGOs and Banking and Financial Institutions among others. The company that has already made its foray into the energy sector with solar equipment also plans to provide complete solutions from this fiscal year. It is slated to start production of solar items such as the lighting system which the company says holds a big potential in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">Sharma attributes Explore Asia Pacific's success to a number of factors including trust, profitability concern of the channel partners, adequate service mechanism and honesty. He adds, We have come this far because of our hard work, vision and market understanding. Among its competitors, Neoteric Nepal is doing well, he says. The company was awarded for good performance by ADATA during Computex held in Taipei earlier this year in June. It seeks to reach new heights demonstrating its value added services (VAS) through its envied network and ensuring price transparency, uniformity and dedicated service among others. </span></span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths </span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Experienced Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Channel Strength</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Brand Image</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Product Range</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Technical Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Countrywide Presence</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inability to incorporate MNCs</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inadequate Product Basket</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Being a fairly new company</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unorganised ICT market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unprofessional Distribution Channels</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Marketing growth in various pockets</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Government embracing e-governance</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Financial sector growth</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable political scenario</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable government</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">&nbsp;&nbsp; Unethical price cutting<br />
		<br />
		</span></span></li>
</ul>',
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			'created' => '2011-09-24',
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			'description' => 'Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product...',
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	(int) 3 => array(
		'Article' => array(
			'id' => '433',
			'article_category_id' => '37',
			'title' => 'Monetary Policy And Question Of Financial Stability (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;">By Nara Bahadur Thapa</span></i></span></strong></div>
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	<span style="font-size: 14px;"><br />
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<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress in Nepal has added pressure on using monetary policy instruments for securing financial stability. The question asked is: should financial stability be in the domain of monetary policy or should it be pursued as an objective of regulatory policy? Although the debate remains still inconclusive, views on either side of the debate have sharpened.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Undoubtedly, safeguarding financial stability has become an increasingly dominant objective in economic policy. Hence, it is argued that monetary policy should also take care of it. In light of this, besides maintaining price stability and supporting economic growth, Monetary Policy often has the task of preserving financial stability. Monetary variables such as the quantum of money, bank credit, liquidity and the level of interest rates are used to attain monetary policy objectives.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">These monetary variables - the quantum of money, bank credit, liquidity and the level of interest rates - affect financial stability in one way or the other. This is the basis of the argument that monetary policy should be used to safeguard financial stability. In this context, it should be noted that the NRB Act 2002 does not state financial stability as an objective of monetary policy. Monetary policy objectives, as enshrined in the NRB Act 2002, are maintaining low and stable rate of inflation and the external sector stability. These two objectives are supposed to ensure the sustainable development of the economy. Nevertheless, the Act does indicate that the role of the central bank in promoting banking and financial stability as well as developing a secure, healthy and efficient domestic payment system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">We should seek the answer to the question as to why the law of the central bank has not assigned the financial stability as an objective of monetary policy. This implies that the NRB Act has visualized instruments that can be used to ensure monetary and financial stability differently.&nbsp;&nbsp; </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Financial architecture </span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The way monetary policy is conducted and financial stability is pursued should be discussed in the context of the financial architecture that exists at the global as well as the domestic level. The current international financial architecture is rooted in the McKinnon-Shah hypothesis (1973) that argues for the removal of financial repression and the introduction of financial deregulation. The major elements of financial deregulation are: (i) the elimination of credit controls, (ii) the deregulation of interest rates, (iii) free entry into the banking sector/financial services industry, (iv) central bank autonomy, (v) private ownership of banks and (vi) liberalization of international capital flows.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">International organizations such as International Monetary Fund (IMF) and the World Bank supported the McKinnon-Shaw hypothesis and in the process encouraged member nations to adopt liberal financial policies. Many developing countries including Nepal deregulated their financial sector. Even in the USA, the comprehensive regulations introduced in 1933 in the wake of the Great Depression in the form of the Glass-Steagall Act which had ensured financial stability were removed in 1999, ushering in a complete deregulation of the financial sector. The Glass-Steagal Act kept different types of financial institutions separate and dictated the activities they could and could not engage in. It was argued that Glass-Steagall Act prevented banks from diversifying risk. Following this, an agreement was reached at the global level for the international financial architecture. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b>&nbsp;</b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="color: black;">The major elements of which are: </span></b></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">i.&nbsp;Simple rules for monetary and fiscal policy would&nbsp;guarantee macro stability,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">ii. Deregulation and privatization would unleash growth and prosperity,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iii.Financial markets would channel resources to the most productive areas and polish themselves effectively, and</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iv. The rising tide of globalization would lift all economies.</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The agreement on these elements spearheaded by the IMF and the World Bank is known as the Washington Consensus. The spirit is that the adoption of standards and codes on macro-financial policies, transparency, good corporate governance and internationally designed accounting and auditing rules would ensure financial stability. Given these standards, it was thought that market would ensure financial stability. With no restriction on the portfolio, free entry and exit of financial institutions could ensure the dynamic financial stability. There was no need for government intervention, including financial bailout. In keeping with this framework, Lehman Brothers was allowed to fail in September 2008.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the economic liberalization initiated in the mid-1980s, the Nepali financial system has experienced significant developments. The NRB Act 2002 aims at consolidating the foundation for the new domestic financial architecture. The new NRB Act provides an autonomous central bank answerable to parliament. The Act curtails the unlimited lender of last resort (LOLR) facility for both the government of Nepal and the banking sector as the facility has a danger of creating a perpetual financial instability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Prudential regulation and supervision for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Now the question that arises is: What instruments does the NRB Act 2002 envisage to ensure financial stability? The current international financial architecture underscores the importance of prudential regulation and supervision for achieving financial stability. The NRB Act 2002, BAFIA 2004, Debt Recovery Act (DRA) 2002 and Credit Information Bureau (CIB) underpin the new domestic financial architecture. The NRB Act 2002 grants the autonomy to the central bank aimed at strengthening the banking supervision. The BAFIA lays down the framework for banks to operate. The DRA establishes creditors rights. The CIB offers a venue for information sharing among banks with a view to help reduce non-performing loans (NPL). This is key to ensure financial stability over the period. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
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	<strong><span style="font-size: 14px;">The case for the use of monetary policy for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The recent global crisis showed that prudential regulation and supervision alone did not guarantee financial stability. Hence, a case is made for using monetary policy in support of financial stability. In the wake of the recent global crisis, the IMF urged member nations to use monetary policy as the first line of defense. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the importance of financial sector stability for the overall functioning of macro economy in general and the transmission mechanism of monetary policy in particular, the NRB is cognizant of the role of monetary policy in attaining financial stability in recent years. Accordingly, monetary policy instruments have been used in support of financial stability. For instance, the bank rate, which was as high as 9 percent some years ago, was gradually reduced to 5.5 percent. Currently, it is 7 percent. Recently, the penal rate of 3 percent has been added to it for the LOLR facility to banks. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Besides the bank rate, concessional refinancing rates have been lowered to 1.5 percent for exporters, sick industries, small and medium scale industries and targeted people for foreign employment.&nbsp;The NRB has been making a provision for refinancing banks for their sick industry loans over the last several years. The objective is to help financial institutions and thereby achieve financial stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The cut in CRR has been consistently and systematically aimed at reducing the financial intermediation cost. The argument in this case is that monetary policy in no way should be a factor responsible for a higher financial intermediation cost measured in terms of interest rate spread. For this reason, CRR has been systematically reduced from 12 percent a few years ago to the current level of 5.5 percent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of flexible open market operations aimed at modulating liquidity has been put in place since 2004/05. Open market monetary instruments such as sale, purchase, repo and reverse repo auctions are being used either to inject or drain liquidity from the system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of standing liquidity facility (SLF) has been introduced for counterparties. The purpose of the SLF is to provide a safety valve for domestic payments system. Under this facility, counterparties can make an automatic and hassle - free access to funds from the central bank.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">The case against overly use of monetary policy for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There are counter arguments for overly use of monetary policy for financial stability. First, it is argued that the mixed role of the central bank, namely securing banking stability and maintaining monetary stability, at times, creates policy tensions. For example, the use of accommodative monetary stance aimed at supporting financial stability could be counterproductive to price and external stability in the face of pressures on inflation front and a deficit in country's BOP position. As such, the central bank faces policy tensions of using soft interest rate policy for securing financial stability or hard interest rate policy for keeping inflation low and maintaining external stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Second, as per Tinbergin's rule (one instrument - one target), monetary policy, which is one instrument, can not be used for two policy goals - monetary stability and financial stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">&nbsp;Third, rescuing financial institutions by way of soft interest rate policy or the protracted use of quantitative easing through the LOLR facility will only prolong financial imbalances, posing risks to financial stability over the medium term. This will only postpone financial distress leading to a bursting of financial crisis in some points of time in the future. In this context, Greenspan's prolonged low interest rate policy is cited as one of the causes of the financial crisis in the US in 2008.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fourth, it is argued that the expectation of monetary authorities stepping in to defuse a crisis undermines market discipline and creates moral hazard problem in that it weakens the incentive for market participants to act prudently.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fifth, as Greenspan argued, the cleaning up the mess after the bubble bursts would be technically easier and less interfering with the market and more cost effective. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Back home in Nepal, it is argued that excessive monetary injection by way of repo and SLF lending helped perpetuate low interest rate regime in the past. This encouraged banks to indulge in financial excesses, leading to the recent financial distress in Nepal, including a deficit in country's BOP. It must be noted that the deficit in BOP during the last two years is not on account of the government budgetary imbalances, it is due to the private sector excesses and imbalances.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Of the various facts of financial stability, the question of monetary policy taking care of real estate and share prices has remained controversial. The question often asked is as to what should be the role of monetary policy in keeping these prices stable. This question is asked because stock market developments generate wealth effects, which have monetary policy implications. Likewise, stock market developments have implication for NPA level and, at times, threaten banking sector stability. Foreign portfolio investment in stocks has implication for external stability, for a greater volatility in share prices causes a sudden capital outflow, leading to BOP and exchange rate crises. Since foreign portfolio investment in the Nepalese stock market does not exist, this kind of tension does not arise in Nepal as for now. The consensus so far reached is that monetary authorities should be watchful of these prices. However, it is argued that monetary policy should not be overly used in containing these prices.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Macro prudential regulation</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Micro prudential regulation does not make a distinction between growth enhancing credit and speculative ones. The consensus is also not to use monetary policy overly for financial stability. Hence, the focus has now shifted on macro prudential regulation.&nbsp;It is argued that macro prudential regulation is needed to deal with the issue of pro-cyclicality and build defenses against emerging structural vulnerability in the financial sector. Pro-cyclicality and structural vulnerability are manifested in terms of real estate bubbles, common exposure to asset price bubbles, excessive leverage and low level of liquidity. To deal with these problems, macro prudential measures such as capital ratios, capital buffers, dynamic (forward looking) provisioning, liquidity ratios and prudent collateral valuation are applied. According to Blanchard, in case, excessive leverage emerges, regulatory capital ratio should be raised. If liquidity is low, regulatory liquidity ratio should be increased. If housing prices are rising, loan-to-value (LTV) ratio should be lowered. If stock prices are rising, margin requirements (haircuts) should be raised. In the wake of emerging financial distress, the NRB has introduced a number of macro prudential measures. For example, sectoral loan limit for housing sector is capped at 25 percent and real estate at 10 percent. C-D ratio for banks and financial institutions is fixed at 80 percent. The LTV ratio for shares has been fixed at 60 percent. Similarly, the LTV ratio has been fixed at 60 percent for both real estate and housing.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although macro prudential regulation could act as the first line of defense and be an important element of new financial architecture in the wake of the recent global financial crisis, there is a possibility of strong political pressure against the use of it. In the US, the delay in adopting the Volcker plan which aims at separating functions of different financial institutions is an example of it. Back home in Nepal, the strong pressure for the removal of LTV ratio for shares and strong lobby for the relaxation of capping real estate and housing loans are cases in point. This suggests that the existing domestic financial architecture will remain intact, implying that only micro prudential norms and market discipline will remain instruments for financial stability. There will be growing demand for the excessive use of monetary policy for securing financial stability. However, the latter will not help safeguard the long term financial stability. If it is used, it will be only at the peril of macroeconomic stability. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Tentative conclusions</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There is no doubt that financial stability is a public good which must be secured through preventive and remedial measures. Micro - macro prudential and deposit insurance measures can be applied to maintain financial stability. Keeping monetary conditions at an appropriate level is also key to securing financial stability. For example, easy liquidity conditions would encourage banks to take excessive risks by overindulging in lending. This happened in Nepal in the recent past. Likewise, overly tight liquidity conditions would lead to financial distress. Both of these monetary conditions should be avoided.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Therefore, going forward, the NRB will, in due course of time, appropriately streamline monetary operations. For example, there are ample instruments for the injection of liquidity. However, there are few to drain it. Sale and reverse repo auctions fall short of draining liquidity due to various reasons. Hence, the NRB will seek rationale in introducing standing deposit facility for banks as and when situation warrants.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The creation of standing deposit facility entails bearing financial costs by the central bank. Therefore, it requires strengthening the financial position of the central bank. It is especially important in relation to the growing size of counterparties and liquidity that would be needed to drain. One way of improving financial position of the central bank for the operation of deposit facility is increasing its paid up capital from the current three billion rupees to five billion rupees. This will help the NRB to absorb possible losses arising from monetary operations.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The exchange rate and the interest rate are the fundamental macro variables. As the current exchange rate regime as being used as the nominal anchor for macroeconomic management, there is no question of disturbing it at this stage. Therefore, given the depth and breadth of the domestic financial sector development so far, the interest rate is slowly emerging as key policy variable for macro-financial management. In this context, a need has been felt for using short term interest rate instead of the quantity of liquidity as an operating target. The NRB will pursue this in due course of time.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of monetary policy becomes crucial when preventive measures fail to ensure financial stability. Therefore, the role of monetary policy should come at the remedial stage. This is the market failure stage. When this stage comes, as the past intervention indicates, the NRB is extremely cautious to distinguish between those having solvency problem and those with liquidity problem. The LOLR facility should be provided to those solvent but with liquidity problem. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the current financial architecture, the NRB's intervention will take place only when market fails to ensure financial stability. Therefore, the NRB intervention, for that matter, will come with strings such as merger, management change, improvement in corporate governance etc. If financial institutions with solvency problem are systemic, the government should intervene by way of either injecting capital or guaranteeing deposits. Otherwise as per the spirit of the current domestic financial architecture, such financial institutions should be liquidated.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In case, the financial distress continues and additional LOLR facility is called for, Nepal will have to negotiate for the IMF program. This will be inevitable to deal with the possible adverse impact of LOLR facility on international reserves and BOP.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Summing up</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The kind of domestic financial architecture we have chosen is key to consider the role of monetary policy for financial stability. If we were to adopt liberal licensing policy and allow banks to have portfolio of their choice, micro prudential, self regulation and market discipline should be key for financial stability. The focus of monetary policy should be on inflation, BOP and foreign exchange. These are crucial areas for attaining macroeconomic stability including financial stability. The role of monetary policy should be marginal and come at the remedial stage. Those financial institutions which cannot survive on their own under the liberal framework of financial architecture should be allowed to disappear. If we were to seek a larger role of monetary policy in ensuring financial stability we will have to be willing to change the current financial architecture including readiness to adopt macro prudential regulation. Given the existing framework of the financial architecture, any lobbying for political interference for the change in monetary policy is construed as an attack on professionalism and autonomy of the central bank. This does not bode well for market discipline, a crucial element for financial stability either.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Thapa is the Chief Manager at Biratnagar Office of Nepal Rastra Bank (NRB). He was earlier the Director of Research Department at NRB's central office in Baluwatar, Kathmandu. He also spent two years between 2008 and 2010 as Advisor to the Executive Director at International Monitory Fund (IMF), Washington DC, prior to returning to Nepal.)<br />
	<br />
	<br />
	</span></i></span></div>',
			'published' => true,
			'created' => '2011-09-24',
			'modified' => '2012-09-20',
			'keywords' => '',
			'description' => 'Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress.......',
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	(int) 4 => array(
		'Article' => array(
			'id' => '432',
			'article_category_id' => '37',
			'title' => 'Monetary Policy2011/12:Hard To Realise The Promises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size:12px;"><strong><i><span style="line-height: 120%;">By Hom Nath Gaire<br />
	<br />
	<br />
	</span></i></strong></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size:12px;">The Monetary Policy for the fiscal year 2011/12 has made an attempt to be balanced with the expansionary fiscal policy of the government of Nepal despite fears of inflationary pressure, apart from reducing the Cash Reserve Ratio (CRR) by 50 basis points to five per cent. At the same time, NRB, the country's monetary authority, has accepted the ground reality that the monetary management of the economy is getting tough due to high inflation and unfavourable external sector accompanied by the deepening liquidity crisis in the financial system of the country.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">To ease the liquidity situation in the economy, the policy has reduced CRR by 0.5 percentage point to five per cent. The policy document said, The revised CRR is estimated to instantly release around Rs 4 billion in the financial system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">This fiscal year too, the policy has targeted seven per cent inflation. To support the fiscal policy aim of&nbsp;five per cent growth rate, the central bank is planning to increase the broad money supply by 12.5 per cent but the policy is ignoring its implications on general price level. However, NRB has attributed rising consumer price to supply constraints, defending its failure to contain the inflation to seven percent according to the target of its last year's monetary policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the central bank data, the broad money supply including the balance sheet of commercial banks, development banks and finance companies enlarged by 7.3 per cent but the consumer price increased by an average of around 10 per cent in the last fiscal year's first 10 months. The 7 per cent target of consumer inflation for the current fiscal year is a big challenge due to the adverse impact of expansionary fiscal policy on which the government is planning to finance the capital as well as the recurrent expenditure through deficit financing. The overall macroeconomic policies have to be revisited as the Monetary Policy could not achieve inflation and Balance of Payment (BoP) target, the policy accepted, Apart from that managing liquidity and maintaining financial stability is an immense challenge for effective execution of the policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the policy, BoP that was Rs 11.67 billion deficit in the first 10 months of the fiscal year, has however, recorded an unexpected surplus of around Rs 1 billion by the end of 2010-11, attributing surprise surplus to foreign grants and aids released in the eleventh month.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">For the current fiscal year, the Monetary Policy has targeted Rs 5 billion BoP surplus. In such unpredictable and volatile cash flow situation, the BOP target for the current fiscal year may also be hard to realise. Because, as the Monetary Policy has brought no change in the bank rate, refinancing rate and Statutory Liquidity Ratio (SLR), the debt servicing of the private sector may remain higher and the production of exportable goods will be affected adversely, which in turn will result in wider trade deficit and unfavorable BoP. However, the central bank has stated that refinancing will be revised according to liquidity need. This alone may not be sufficient to meet the demand for credit in the productive sector and boost the exports. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The foreign exchange policy for individuals has become more as a Nepali willing to visit abroad can get foreign exchange up to $2,500 for once or a maximum of $5000 in a fiscal year, revising the facility from last fiscal year's $2,000 and $4,000 respectively. Similarly, NRNs can open foreign currency bank accounts and special arrangements will be made for Nepalis to open NOSTRO accounts in foreign countries. Likewise, the policy allowed the banks to exchange foreign currency up to $1,000 provided the beneficiary supplies credible source of foreign exchange with identity. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The policy has increased provision of deprived sector lending to 3.5 per cent and asked banks and financial institutions (BFIs) to raise this ratio by 0.5 percentage point for two years. This provision will be helpful in directing lending towards productive sector as well as deprived sector and supportive to achieve the economic growth of 5 percent, revealed the policy. The targeted economic growth is also hard to achieve in the situation of deteriorating investment climate and low investor confidence due to government's tilt towards a socialist economic system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the monetary policy, the deposit mobilisation of BFIs will be increased at the rate of 13 percent by the end of the current fiscal year and will add around Rs 100 billion to the country's banking system. To achieve this target, the policy tries to address the crisis of trust in the banking system by extending deposit insurance up to Rs 200,000 to commercial banks as well so that small depositors feel safe. Earlier, the deposit insurance was mandatory only for the B and C class BFIs. By the end of last fiscal year, the deposits of BFIs increased 8.2 per cent to Rs 788.72 billion and the foreign exchange reserve increased by a mere Rs 2 billion to Rs 270 billion from a fiscal year ago's Rs 268 billion.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size:12px;"><span style="line-height: 115%;">Apart from encouraging BFIs to open branches in select nine districts, where there is less access to formal source of finance, the policy directed BFIs to include a collateral-free loan of up to Rs 200,000 for the study of technical education under deprived sector lending.<br />
	<br />
	<br />
	</span></span></div>',
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			'created' => '2011-09-24',
			'modified' => '2012-09-20',
			'keywords' => '',
			'description' => 'The Monetary Policy for the fiscal year 2011/12 has made an attempt to be balanced with the expansionary fiscal policy of the government of Nepal despite fears of inflationary pressure, apart from reducing the Cash Reserve....',
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	(int) 5 => array(
		'Article' => array(
			'id' => '431',
			'article_category_id' => '31',
			'title' => ''We Want To Target Corporates On A Much Bigger Way' (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="right" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/altaf.jpg" style="width: 415px; height: 346px;" vspace="10" />Altaf Halde</strong> joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of Kaspersky antivirus. For Nepal, Sagar Infosys is the sole authorised distributor for Kaspersky products. Halde revealed the company will soon release the enterprise version of the antivirus in the Nepali market. In an interview with <i>New Business Age</i>, Halde shared his views on the latest product and Nepal as the market for Kaspersky. Excerpts:</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How do you see the market for Kaspersky products in Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I was pleasantly surprised to know about the market potentials of Nepal which I visited after Bangladesh where also we have a very good market share. In Nepal, we have more than 70 to 75 per cent market share. Based on what I hear from dealers, I think there is definitely a big potential over here. I can see a lot of educational institutes coming up, IT initiatives happening, and increasing penetration of laptops and desktops. That automatically translates that you need protection for your computers or laptops and that is where Kaspersky comes on the scene.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Most people use pirated software and operating system at home. What will be the extent of risk to such users from security viewpoint?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Risk is a lot. When you google the key â€˜free antivirusâ€™, you can find a lot of them that you can download. The download shows it is installing but you donâ€™t know whether it is actually installing. It might be downloading some malwares too. Nothing comes for free. People are using free software and they are not sure if that is the best thing. Secondly, people use pirated software. In this region, piracy is a big problem. In India, it was similar many years back but now customers realise that just using a process, the solution does not end; you also need support. You get the support&nbsp;by using a licensed product. That will take some time but it will gradually improve over a certain period of time because that is the way our markets are. On the question of risk, there is definitely the risk because you donâ€™t know what you are using. It might have malware, spyware, or some other kind of threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How can Kaspersky minimise such risks and protect users?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Kaspersky Lab which is centrally located in Moscow detects 35 thousand threats every day. You can imagine the number of threats. When a person is on the Internet, it does not matter whether he is sitting in Nepal, India or America. So, what Kaspersky does is that it keeps coming up with&nbsp;regular updates because the threats are increasing. That is how we are able to protect users from such threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Users often complain that Kaspersky requires powerful machine to operate, which slows down their system. How has Kaspersky addressed this issue in its latest version?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In 2012 version, we have come up with a hybrid technology â€“ cloud-based system. With this system, when you are using the desktop and you are not connected to the Internet, you donâ€™t need to have a lot of signature database on your machine. When you have a lot of signature database updates searching on a machine, it takes up your resources and the machine becomes slower. With the hybrid technology we are using cloud-based protection. So, the signatures of the threats are stored in the cloud. Once the user is in the Internet, computing power of the machine is not touched. That will happen in real-time across the Internet. That is how we have been able to address this particular problem. However, if you look in comparison with other products, we are much faster even in the existing version. We do understand that in emerging markets like India, Sri Lanka, Bangladesh and Nepal, computing is not very powerful. That is why this hybrid technology will prove very good technology for us.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In Nepal, Internet bandwidth is lower and majority of users do not have access to high speed Internet. Donâ€™t you think the cloud-based system will be a challenge?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On the consumer level, this could be definitely a challenge because of the Internet speed and probably the bandwidth will be affected but this cloud-based computing will still help reduce this particular problem because the computing is not happening on machine but in real-time in the cloud. We have tested our product with various Internet bandwidth types during the development stage and did not face problem. We will definitely be able to address this particular problem as time progresses. Once the users start using the product they will realise it is actually a good product by making use of good bandwidth.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What is the volume your are looking at in terms of sales for Kaspersky products in Nepal? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I wouldnâ€™t be in a position to give you the target from the sales perspective but we have got very good market share at around 70 to 75 per cent with the previous version. This year, we should definitely look at a market share of 80 to 85 per cent. That is what we would want to achieve.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Who do you think are major competitors for Kaspersky in Nepali market? How is Kaspersky different from&nbsp;other products in the market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;I wouldnâ€™t say only about Nepal but globally, Symantec and McAfee are our competitors. There might be a lot of other products but on a global perspective, Gartner have listed three of us as top three security vendors â€“ Symantec, McAfee and Kaspersky. I would say that they are our real competitors.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">We are using hybrid technology while others are only talking about it. When we set up parameters, we are technically quite advanced in terms of updates size and faster scanning compared to other products. Even in this cloud-based technology, we have come up with a small sized update a day rather than making a big update like other products. We understand, in a country like Nepal, bandwidth rate is a problem. With a big update at once, users will not be able to update in time and will be open to threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How is the response of users to your products in South Asia in comparison&nbsp; with western markets? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Our biggest market is Europe, followed by America. Over there, the split is approximately 65 to 70 per cent in consumer segment and the balance in the enterprise segment which is a matured market for Kaspersky. In South Asia, we are very strong in the consumer space and in the enterprise space we have not yet been able to take it to the next level. So, if you put both of them together, I would say in south Asia, we are probably at the number three position, Symantec and McAfee probably being the leaders.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In small countries like ours, price of software is excessively higher which is sometimes even costlier than buying a pc. How does your new version compare with other products on this count?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;We have retained the same pricing as of the 2011 version. A single user pack of antivirus comes for Rs 1,000 for a year. If you look at the per-day basis, itâ€™s less than what a cup of tea would cost. So, that is the amount you are paying to protect the data or yourself. With the market share of 70 to 75 per cent, a lot of users are using Kaspersky 2011. We have also provided the user of 2011 version a free upgrade. That will come free of cost, if the users still have valid license period.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are the challenges you are facing&nbsp; in the Nepali market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Based on what I have seen in my first exposure to the Nepali market, piracy is rampant. Then, there are a lot of other products that come into the market with a lower price to dump their stock. They achieve their sales but there is no support. So, the consumers feel they are cheated. We see that as a challenge. While other products come to dump but we are there in the market with a proper focus. Sagar Infosys is Kaspersky products since 2008 and also providing support and there is our focus. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are your future plans for Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.2pt;">We plan to keep coming here more often for developing consumer awareness because for us awareness is the key. If consumers donâ€™t know about the threats they will not look for protection. We want to make sure about the awareness on the threats and product developments. So, we want to have many such marketing events where we can go and address the threat scenario to consumers as well as corporate houses. We want to target corporates on a much bigger way in the Nepali market. We want to keep coming to Nepal with more and more solutions which are technically advanced. Everybody was talking about this cloud-based technology but nobody came up with a solution. So, whatever the technology or threats, Kaspersky will be the first to come with a solution.</span></span></div>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '2011-09-28',
			'keywords' => '',
			'description' => 'Altaf Halde  joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of ......',
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	(int) 6 => array(
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			'title' => ''I Refuse To Call This A Liquidity Crisis' (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/dr gautam vora.jpg" style="width: 283px; height: 328px;" vspace="10" />Dr Gautam Vora</strong><span style="letter-spacing: -0.05pt;">, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques, interest-rate modeling, investment strategies and mathematical modeling of financial plans.&nbsp;Dr Vora is also a Visiting Professor with Kathmandu University School of Management (KUSOM), and during his recent visit to Kathmandu, he addressed issues at a talk programme titled â€˜Financial Crisis: Will Nepal Join It or Avoid It?â€™ organised by KUSOM. In an interview with </span><i>New Business Age</i><span style="letter-spacing: -0.05pt;">, he discusses the likely consequences for Nepal and its people in the event of a financial crisis, among other issues. Excerpts:</span></span></span></div>
<div style="text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><br />
	</span></span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How, do you think, the current liquidity crunch in Nepal can be set right?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">First of all, â€˜liquidity crunchâ€™ is a wrong phrase to use. Secondly, the problem is not that of liquidity because there is enough money in circulation including the so-called monetary supply. It is actually credit crunch. The people who need to repay the money arenâ€™t able to manage credit to repay quickly. So, primarily, it affects them. The people who speculated are the ones unable to borrow more to make payments on their loans. I have been told that land prices in Kathmandu soared outrageously but have come down drastically in recent times. The BFIs lent against those lands as collateral at higher prices and everybody got large amounts as loans. Now that the value of same land holdings has come down immensely, the borrowers cannot sell off the land to repay the loans. So, these people are looking elsewhere for more money. The impact of this situation on the banks is that they were expecting certain cash inflow of interest and repayment of the principal on the loan but they are not getting it. The BFIs have stopped getting money from the borrowers while they still have to pay interests to their depositors. It is a small world and everybody knows whatâ€™s happening. The depositors the world over stand in the queue immediately to withdraw all their cash the minute they panic. In such an event, the bank has to find money from somewhere to pay cash to the depositors. We can call it insolvency on the bankâ€™s part because it may have the assets but not enough cash. I refuse to call this a liquidity crisis in technical terms: itâ€™s a cash problem. This is precisely the case when the NRB is forced to bail out such BFIs by supplying them bundles of cash to pay the depositors. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;">&nbsp;You have labeled the global financial crisis a â€˜group of crisesâ€™. What is your logic behind this observation?</span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">Itâ€™s because the complete picture on global financial crisis is not only about impacting financial markets but also the path it treaded to reach there. It is for everyone to see that there is a crisis but most people are unaware of the real causes behind it. The problems are deep within the system due to which many commentators started calling it a systemic failure. The system was designed and modified over the years in such a manner that it led us to this problem. Thatâ€™s why I call it a group of crises because it took us a long time to get there. The whole story was in the making for 10 â€“ 15 years in the US and before the people could realise, it carried over to other countries as well. It started during the Clinton (Former US President Bill Clinton) administration when the liberalisation policies were implemented and the government agencies were indirectly asked to do certain things for the society. But it slowly increased in size and intensity and ultimately developed into a major crisis.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What, in your opinion, should be the conduct of Nepal Rastra Bank as well as the Banking and Financial Institutions (BFIs) to ensure smooth running of the economy?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">It seems to me that Nepal Rastra Bank (NRB) is currently the only organisation in Nepal which can look after the financial sector as well as the economy. That makes it a very important agency. I did have the opportunity to speak to a few NRB officials and realised that they are exceedingly competent and have the countryâ€™s interest at heart. The problem is that when you overwhelm a small group of people with too much work, they cannot handle it. You also need regulatory and legal structures backing these people up. The decision of classifying commercial banks, development banks, finance companies, etc as part of the financial sector is definitely very important but it is equally important to set limits for them. It would have been useful to categorise the scope of work for these institutions and spare them interference from the ruling structure of the country as well as the promoters of respective companies. Everybody has a stake in the institutional well being but the ultimate goal for these institutions should be to promote the national economy. If they are going to look at their own narrow self interests then they can do so in the short term only. This is where NRBâ€™s role of being a regulatory agency becomes critically important.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">You accept that NRBâ€™s role is of paramount importance. What best can it do to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB ought to develop a sub agency whose sole focus would be to manage and supervise the oversight of the â€˜Aâ€™ class commercial banks because they are the biggest ones and they have roots in the economy everywhere. They are the real conduit or the pipeline for the monetary policies of NRB so they need special attention. They need tight grouping but I donâ€™t know how that is being accomplished at this point of time.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What are your recommendations for Nepal to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB is doing all it can to avoid the crisis. It does lot of good things such as giving the money, regulating and supervising, encouraging merger of weak banks with strong banks, etc. The difficulty I see is that of the assets portfolio. The loans that the BFIs have made are weakening, in other words, they are becoming non-performing. This kind of a situation puts a lot of stress on the capital structure and the flow of credit to the economy. No matter what NRB does, the problem doesnâ€™t seem to go away. There are different ways of handling the problem. The bad loans must be taken over from the banks and passed on to NRB. It is a question of how much the central bank can do because they have other goals in mind such as ensuring price stability and looking after the development of the economic sectors etc. The ultimate challenge is that of supervising the BFIs and making them do the right things which require exceedingly tight control.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How do you view the consequences for Nepal and its people in the event of a financial crisis?</span></span></strong></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">I have gathered that only about 35 per cent of the population in Nepal has access to banking services. So, the rest 65 per cent of the population will not be directly affected if, god forbid, a financial crisis was to happen here. But what is really interesting here is: most people under this 65 per cent population are barely maintaining a subsistence level anyway. The commercial sector which depends on the BFIs and the development of different industries, agriculture, construction etc will be severely affected in the event of a financial crisis. Even though we may say that the population at large might not be affected, the large chunk of the economic activity could very well be affected and that is the problem. Therefore, even the poorest of the poor will be affected indirectly. Nepal is in a very strong position because of huge amount of remittance it receives every year which is a very nice safety net. But the question is should we rely only on a safety net. Instead, we must rely on a good machine so that we donâ€™t have to use the safety net. And so, my concern is mainly from that perspective. We are trying very hard for economic development so letâ€™s not derail it by letting one little sector of the economy cause problems for the others. We need to study as to what per cent of the real economy depends on the financial sector. Look at the difference between the interest rates that people get on their deposits in the banks and the inflation rate. There is no incentive to save because the purchasing power is constantly decreasing. So, we do not need to have that sort of control in the economy to help save. Savings are to be used to increase the size of the economy for which we need good investments that can generate more income for the country. Finding good investment opportunities is key to bringing the whole economy together. Therefore, if the BFIs donâ€™t do their job well, then we are bound to face major problems.</span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
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			'description' => 'Dr Gautam Vora, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques,......',
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	(int) 7 => array(
		'Article' => array(
			'id' => '428',
			'article_category_id' => '40',
			'title' => 'Economic Policy Deflections (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><img align="left" alt="economic" border="1" height="316" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover(1).jpg" style="width: 315px; height: 316px;margin:10px;padding:10px;" vspace="10" width="315" />By Achyut Wagle</i></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">A</span><span style="letter-spacing: -0.05pt;">t present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is veering more towards the replay of 19th century model of state-controlled, putatively self-sufficient â€˜nationalistâ€™ and thus effectively an isolationist paradigm. The policy shift seems to have completed a full-circle from the campaign of self-sufficiency, trumpeting of fulfilling basic needs, then open-market-oriented liberal policies to the present one marred with confusion but decidedly intended to execute state-controlled economy. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Apparently, as elsewhere, the vicissitudes in the Nepali economic policy has been analogues to the nature of the political dispensation the country adopted in different points in history. The externalities too have their share of influence in shaping these policies. Such an influence is surely growing with the changing world order, shifting of epicentres of economic activities and, of course, with dramatically increased communication and transportation connectivities. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Vicissitudes</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal presented its first national budget in 1952. Until the fall of Rana oligarchy in 1951, Nepal remained primarily a vassal state. Any economic policy under a 104-year long Rana rule used to be based on the whims of the ruler and that too, related only to the land tax and management of major temple trusts or â€˜Guthisâ€™. Back then, almost cent per cent people relied on agriculture of subsistence nature. State hardly spent for developing infrastructure, public delivery and services systems. The fall of Rana rule and dawn of democracy in 1951 February definitely heralded a new era both politically as well as economically. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first budget had three prime policy focuses â€“ expansion of education, promotion of co-operative like structures at the village level to increase agricultural productivity and monetising the economy to the extent possible. This also welcomed the American aid in the country thus far remained largely closed, except for British and Indian diplomats, for the outside world.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Those initial policies were fairly realistic to Nepal given the socio-economic realities of that time. But, the political squabbles and power struggles overshadowed the implementation of them for at least a decade to come.&nbsp;However, despite politically a fluid situation, mid 1950s marked as a major milestone â€“ mainly in two respects â€“ in 1955 Nepal Rastra Bank (NRB) was established and in 1956 Nepal adopted its first five-year plan. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">One of the major objectives of the NRB was to replace the Indian currency, which was widely circulated in Nepal, by the Nepali currency. Second one was to speed up the process of monetising the economy in place of widely practised barter system in goods and labour.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first plan focused on transport and communication infrastructures. A substantial allocation was made in developing the administrative structure all across the country. But before the completion of the first five year plan due 1961, political coup dâ€™Ã©tat by the then King changed the whole economic paradigm, development priorities and naturally their outcomes.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Flip-Flops of Panchayat</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The second plan was only for three years by lapsing a year. It was prepared by the National Planning Commission, a Russian style central planning mechanism, which still exists with very little variation.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">From the third five-year plan on, the partyless panchayat system under the direct rule of the King imposed a guided development policy. The economic policies were rather random mix of socialistic and capitalistic overtures. The state heavily invested in setting up state-enterprises of all sorts â€“ manufacturing, services and deliveries. This was an era of â€˜generousâ€™ foreign aid and Nepal was opened to all hues of them, albeit, with caution not to politically destabilise the largely totalitarian panchayat polity. Local panchayats were the political-administrative channels employed to carry out economic and development activities. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The seventh five-year plan (1985-90), the last of panchayat era, made two major policy departures. First, the plan categorically pronounced to work towards meeting the basic needs of the people, under the slogan coined as â€˜elevating the peopleâ€™s living to Asian standardsâ€™. And, second, it adopted a ground-breaking policy flexibility of inviting foreign direct investment and improving the performance of the state enterprises as recommended by Structural Adjustment Programme (SAP) piloted by the International Monetary Fund (IMF). During this period, apart from several foreign investments in tourism related industries, two foreign joint-venture banks, Nepal Arab Bank (Nabil) and Nepal Indosuez Bank were established. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Openness</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The reinstatement of multi-party democracy in 1990 began an era of economic liberalisation in Nepal too. The political change delayed the eighth plan by two years. But the eighth plan (1992-97) firmly advocated the privatisation of and divestment from the State Owned Enterprises (SOEs) and open market policies across all sectors. Undoubtedly, the forces of globalisation and international trend of reclaimed openness through democratic governance in former USSR and Eastern Europe contributed to these developments. Whatsoever, this is perhaps the â€˜golden eraâ€™ in terms of economic policy formulation and growth in Nepal. During this period, private sector investment was impressive. Airlines, hospitals, educational institutions, banks and manufacturing units were set-up by private investment. Public investment in infrastructures, mainly roads provided firm basis for urban access to villages. The ninth plan was generally continuation of the eighth plan. But the growth spirit was dampened by the armed insurgency initiated by the CPN-Maoist in 1996 February. Amidst fear and uncertainty, the economy dragged on. But the growth path was already truncated before the end of this plan in 2002 due to spread of violence in the country-wide scale, destruction of infrastructure and absence of any substantive private investment. Despite all odds, the GDP growth in the 1990s was about five per cent annual average.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Poverty Focus</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The tenth five-year plan was adopted through wider consultations with donor community led by the World Bank and other stakeholders. The whole plan was baptised as Poverty Reduction Strategy Paper (PRSP). True to its name, its focus was on poverty reduction with added dimensions like putting women in the forefront of rural poverty reduction strategies. An interesting policy link was introduced between the structural and legal reforms and the poverty reduction. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">At the very beginning of the plan, Nepal Development Forum was organised for the first time in Nepal. As the Maoist insurgency had become widespread, it also tried to look into the links of the factors like poverty, unemployment and social unrest or insurgency. Interestingly, however, the main policy basis adopted in 1992 that emphasised on the free market economy continued till the tenth plan that ended in 2007. One of the highlights of the tenth plan was Financial Sector Reform Programme (FSRP) that aimed to achieve the central bank autonomy and efficiency, reform in public sector banks, Rastriya Banaijya Bank, Nepal Bank Ltd and Agricultural Development Bank. Several other institutional set-ups like Credit Information Bureau, Debt Recovery Tribunal etc were added. Substantive legislative reforms were made, including a composite Bank and Financial Institutions Act 2007 (BAFIA). Reform in the capital market was another important agenda which has only partially achieved.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Some of highly ambitious reform agenda like bringing the financial giants like Employeeâ€™s Provident Fund and Citizen Investment Trust under an effective regulatory and supervisory ambit and establishing an Asset Management Company remained untouched. Despite generally appropriate policy directions in the later years of the tenth plan, the focus on implementation got immensely diluted. Among many other things, the process of privatising SOEs did not go ahead as expected.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">On the Reverse Gear </span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After signing of Comprehensive Peace Agreement with the Maoists in 2007, the discourse on economic policy has taken a backseat. The Agreement and the election for the Constituent Assembly both established the apparent dominance of the communist forces in Nepali politics. This not only changed but reversed the very orientation of national economic policy. Since then, no five year plan has been formulated. Two interim plans of three-year each were adopted in view of the prolonged political transition.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Contrary to the general expectation that the post-CPA period would create more conducive atmosphere for economy to grow, the economic performance has gone from bad to worse. The policy confusion is at its core. The communist forces, particularly the UCPN- Maoist is oscillating between proletarian dogma of state-controlled, distributive economy and present day global realities that demand openness and interdependence. The partyâ€™s heavy political reliance on its trade unions have made them unruly and major source of industrial disturbances.&nbsp;This has telling adverse effect of spatial nature on manufacturing and exports, new investments and employment generation. In a nutshell, Nepali economy is again going back to the era of â€œeverything done by the state.â€ Recently it has created new state-owned corporations like Hydropower Development Bank. No government policies assertively talk about privatisation and reform. In a bid to balance the international realities and communist indoctrination, the racing horse of growth has turned into a camel.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">For the last couple of years, the Maoist-UML coalition is in power. It has vehemently pushed a three-pillar â€“ government, cooperatives and private sector â€“ concept of economy which has irked and made apprehensive to the private sector regarding its role and treatment from the state. The private sector is unwilling to consider the cooperatives a separate sectors but the subsector of the private. Given nature, scale and GDP contribution, this proposition seems justifiable. But the more left-oriented policy makers have seen cooperatives as the substitute to the â€˜commune styleâ€™ operation of the economy, thus the emphasis. The cooperativesâ€™ contribution to the national GDP is estimated to be meagre 2 to 3 per cent.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Of late, the donor community and the potential investors â€“ both foreign and domestic â€“ seem to have lost interest in Nepali economy owing largely to absolute lack of policy predictability, growing apprehension of infringement on private property rights and disturbed industrial peace at the hands of ruling-party hoodlums and even stateâ€™s failure to bring them to&nbsp;justice.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Future</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal apparently does not stand at a point of immediate course correction so as it could regain the lost trust and re-ignite the growth engine. There are two main reasons for this: first, the communists, particularly the Maoists are still essentially against the concept of giving the private sector a lead role in economy.&nbsp;Not only that, their anti-private sector rhetorics is often repeated in this or that form. Recently, they have announced that â€˜allâ€™ party leaders would pull-out their children from private schools; purely a futile and demonstrative move. Therefore, until, the party recognises the private sector as major player in the economy and reflects the same in both â€“ policies and actions, economy is unlikely to come out of present sluggish pace of growth â€“ 3.5 per cent in the last fiscal year.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The second is the complete absence of the economic policy debate in all major political parties. Any economic policy introduced so far by any party or the government is not an outcome of all through meaningful debate from the local to the central bodies in a manner a democratic outfit should ensure for ownership and the implementation of these policies. Only adoption of this practice can bring the economic agenda to the forefront of the national debate and the policy predictability could also be ensured. </span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '2012-08-23',
			'keywords' => '',
			'description' => 'At present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is.....',
			'sortorder' => '342',
			'image' => null,
			'article_date' => '0000-00-00 00:00:00',
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			'breaking_news' => false,
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	(int) 8 => array(
		'Article' => array(
			'id' => '427',
			'article_category_id' => '40',
			'title' => 'Sorry State Of SOEs (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;"><strong>By Pinaki Roy</strong><br />
	Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government will provide over Rs 1.77 billion to the state-owned enterprises (SOEs) as subsidies in the current financial year while another Rs 1 billion will come in as foreign grant and loan. The subsidies to the SOEs for FYs 2009-10 and 2010-11 stood at Rs 1.54 billion and Rs 1.97 billion, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Most SOEs in Nepal are in loss for a long time now. Even the ones that are making profits are because of their monopolistic nature of business. However, itâ€™s inevitable that they too stand to come under pressure once competition intensifies. For example, Nepal Telecommunications Corporation (NTC) is being increasingly challenged by Ncell, a leading mobile telephony brand in Nepal. Most SOEs that are registering mounting losses year after year owe it mainly to political interference and corruption within these public corporations. The high profile Nepal Electricity Authority (NEA), Nepal Oil Corporation (NOC) and Nepal Airlines Corporation (NAC) are among the notable SOEs that have been making losses for as long as one can remember. Suresh Kumar Regmi, Under Secretary at Corporation Coordination and Privatisation Division of the Ministry of Finance (MoF) says, â€œThe corporations must try to become profit making entities on their own instead of expecting help from the government all the time.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Keeping these SOEs alive and kicking essentially means that the state has to dig deeper into its coffers to provide for them. The same money could have been invested otherwise on development. Among the most glaring failures are those of NEA and NOC that have miserably failed to adjust prices in accordance with evolving market dynamics. NEA sells electricity to its consumers at Rs 6.57 per unit as against its cost of Rs 8.97 per unit resulting in a loss of Rs 2.40 per unit. Its accumulated loss of around Rs 19.47 billion exceeds several folds to its total asset value. Similarly, NOC is under Rs 15 billion deficit currently due to heavy losses on petrol, diesel, kerosene and liquefied petroleum gas (LPG) prices. To make matters worse, it is plagued with corruption, political interference and poor governance. The government has no choice but to bailout these SOEs year after year because electricity and fuel are basic services that people of this country cannot be expected to live without. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The question arises as to how long can the state rescue the loss-making SOEs by compromising on development expenditure. NAC â€“ once the pride of the nation â€“ has gone from bad to worse with losses amounting over Rs 2 billion. Boasting a sizeable fleet of 21 aircraft at one point of time, it is left with only three small aircraft that fly domestic routes and two medium sized jets. Among the biggest foreign currency earners not too long ago, NAC today merely watches in despair other domestic and international airlines snatching away its market share. Never-ending controversies on aircraft purchasing, political meddling with appointment of staff and loans have hit the corporation hard in the recent past. The employees appointed by the public enterprises (PEs) stood at 33,603 in FY 2008-09, while this figure dropped slightly to 33,526 in the succeeding fiscal year. The average monthly expenditure of these employees reached Rs 34,126 in FY 2009-10.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The taxpaying populace is infuriated because its money is funnelled into these failed enterprises while development activities and service delivery are taking a beating due to, among others, inadequate funding. Furthermore, there has been a lack of genuine intent to reform or privatise the loss making enterprises. The SOEsâ€™ survival now stands purely for political reasons. Their existence does not add significant value to the countryâ€™s productive capacity. During FY 2009/10, 22 PEs earned net profit, whereas 14 PEs recorded loss; some of them had negative net worth. The governmentâ€™s investment in these SOEs has reached a whopping Rs 84.91 billion. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The total operating income of these enterprises in FY 2009-10 registered an increase of 21.63 per cent over the previous FY and reached Rs 130.98 billion. While the operating income of service sector enterprises increased by 70.2 per cent, the industrial sector enterprises registered the least increase in operating income at 4.2 per cent. The net fixed assets of 36 enterprises that totalled Rs 133.740 billion in the fiscal year 2008-09, reached Rs 139.365 billion by the end of the fiscal year 2009-10, an increase of 4.2 percent. While analysing the entire profit and loss of the 36 PEs, the net profit of Rs. 10.55 billion they had earned in fiscal year 2009-10 grew by Rs 8.3 million in the fiscal year 2010-11. However, if three major profit making SOEs are taken out, these statistics cut a sorry figure in itself. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Akin to the case in other countries, the state enterprises in Nepal too are present in areas that could be more successfully occupied by the private sector. Incompetent SOEs have blocked private dynamism completely and, at the same time, necessitated an insurmountable financial and administrative burden. In contrast, privatisation promises to free up public assets for activities of urgent attention and facilitate improved and inexpensive services besides unlocking prospects for private sector growth. However, the Privatisation Cell of the MoF has no immediate plans to privatise SOEs anytime soon. â€œWe are not in a position to close loss making enterprises either as they provide employment to thousands of people,â€ Regmi informs on a rather helpless note. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Nepalâ€™s privatisation programme articulated in the 9th plan envisions promoting private sector participation in the economy. A number of enterprises, mostly agricultural and industrial, have been privatised since the programme began in 1992 with the government playing the role of a catalyst. However, a number of productive SOEs such as Bansbari Leather and Shoes Factory (BSLF) and Agricultural Tools Factory (ATF) have ceased to function after being privatised owing to governmentâ€™s thoughtlessness in selection modality and consultation process, and lack of proper homework while selling them. Over the last decade or so, the privatisation drive has slowed down considerably to the extent of coming to a virtual standstill.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The delicate financial health of the SOEs and their failure to adequately gratify market demands is a persistent problem that cannot be resolved by gifting subsidies and granting loans. Mismanagement, overstaffing, poor governance and accountability, competition from private players and most importantly, politics prevailing over economic imperatives have destroyed these SOEs and led them to their present dismal state. One can safely assume that unless there are radical and wholesome practices pursued such as privatisation (save the ones that are strategically linked to critical security and national interests) of these ailing enterprises, the SOEs will continue to be resigned to their fate and the taxpayers of this country will keep on bearing their burden. Worse, bailing out the SOEs of their financial chaos time and again only makes them more inefficient. Itâ€™s but tragic that the sick enterprises are encouraged to take the state and the nation at large for granted. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The Loss-making SOEs</span></div>
<table border="0" cellpadding="0" cellspacing="0" style="margin-left: 4pt; border-collapse: collapse; width: 321px; height: 678px;">
	<tbody>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border: 1pt solid white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Name of the SOE</span></b></span></div>
			</td>
			<td style="width: 59.9pt; border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: white white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Total Loss </span></b></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Dairy Development Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 325.1 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Herbs Production and Processing Company Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 136.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Hetauda Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 619.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Janakpur Cigarette Factory Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 800.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Drugs Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 485.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Udaypur Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.773 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oriental Magnesite </span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 3.597 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Food Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.107 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oil Corporation Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 8.418 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Airlines Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.557 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Gorkhapatra Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 89.7 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Television</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 760.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Water Supply Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 391.4 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Electricity Authority</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 18.230 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Agricultural Development Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 4.391 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rastriya Banijya Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 11.228 billion</span></span></div>
			</td>
		</tr>
	</tbody>
</table>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>Source</i>: Ministry of Finance Report, Ashad 2068</span></div>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government.....',
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	(int) 9 => array(
		'Article' => array(
			'id' => '426',
			'article_category_id' => '40',
			'title' => 'Policy Twists For Public Enterprises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: 0.05pt;">T</span><span style="letter-spacing: 0.05pt;">he budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and ensure efficiency of public enterprises. However, this yearâ€™s budget has also mentioned a policy to disinvest the government shares among general public.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The latest budget is a step backward on privatisation policy adopted by previous governments. The budget presented by Dr Ram Sharan Mahat for the fiscal year 2007/08 had proposed a gradual privatisation of the state-owned enterprises. Then, the budget of 2008/09 presented by Dr Baburam Bhattarai of the UCPN-Maoist led government reversed the policy of privatisation. Next yearâ€™s budget by Surendra Pandey gave continuity to Bhattaraiâ€™s agenda to increase investments in government corporations. Economic experts had argued against increasing the investment in state-owned enterprises instead of taking up privatisation measures.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Though there were attempts of privatisation during the Panchayat system, they were unsuccessful.. The concept of socialism faded and liberalisation came into picture after the fall of communism in Eastern Europe. Nepal could not avoid the influences of the global change. There was massive change in Nepali economic policy with the restoration of democracy as the process of privatisation of public enterprises began after 1991. Experts have it that the new initiative was taken mainly because of the pressure from IMF, The World Bank and other donors. The change was incorporated in the White Paper published by the Girija Prasad Koirala government in 1991. The policy tried to balance the public and private sectors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Koirala government emphasised on selling the shares of public enterprises at the stock market. That was aimed at widening the ownership of the newly-privatised corporations and also to ensure competition for companies as well as consumers. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Harisiddhi Brick and Tile Factory, Bhrikuti Paper and Pulp Factory and Bansbari Leather and Shoe Factory were privatised in the first phase. In 1993 and 1994, 14 companies were selected for privatisation. Seven of them were wholly government-owned while the rest had joint-ownership with the private sector. Similarly, in the second phase, Balaju Textile Factory, Nepal Film Development Corporation, Nepal Lube Oil, Bitumen and Barrel Industry and Raw Hide Collection and Development Corporation were privatised. Likewise, Jute Development and Trading Corporation and Tobacco Development Company were liquidated.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The policy took a different turn when the Communist Party of Nepal (UML) came to power in 1994. Unlike the Nepali Congress, the UML government favoured public enterprises. The budget speech of the same year read, â€œTo lessen the financial burden of the government, a privatisation program based on economic policies of the government will be implemented. There will be separate listing of corporations that are to be privatised and those that will not be privatised. The privatisation programme will be expedited for those corporations included in the privatisation lists.â€ However the government policy could not take off as the government did not even list the companies for privatisation. Further privatisation was certainly out of question. The budget of 2001/02 tried to be most intensive and aggressive towards public enterprises. The budget presented by Dr Ram Sharan Mahat promised to set up a separate unit in the Ministry of Industry, Commerce and Supplies to coordinate and monitor the price, quality and quantity of goods and services produced by the public sector. This budget also decided to prepare strategic and organisational planning to reform managerial, accounting and financial systems of the public enterprises. Most remarkably, it also decided to convert state-owned enterprises into companies curtailing the number of board members, their functions and duties to ensure professionalism.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On minimising the cost to government, the budget presented by Dr Mahat read, â€œThe tendency of increasing short-term benefits by neglecting social security in public enterprises and development boards will be discouraged.â€ He proposed the provision to manage pension and gratuity compulsorily through Citizen Investment Trust. Likewise, the executive chief was made liable for creating any new financial liabilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Another significant proposition by Dr Mahat was to encourage the private sector investment where the involvement of the government is deemed unnecessary and where there existed a high possibility of attracting private sector.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">After 2001, 17 companies have been either liquidated or privatised. Nepal Telecommunication Company was the latest one to join the list in 2008 when its some shares were sold to the public. However, the privatisation process stalled completely after 2009/10 except for the sale of government shares of Small Farmer Development Bank to Small Farmers Cooperatives&nbsp; in 2010/11.</span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'The budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and.....',
			'sortorder' => '340',
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	(int) 10 => array(
		'Article' => array(
			'id' => '425',
			'article_category_id' => '40',
			'title' => 'What’s Wrong With Public Enterprises? (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	<span style="font-size: 14px;"><span>T</span><span>he government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by Bharat Mohan Adhikari. The promise made in the budget 2010/11 to form the committee has however remained unfulfilled.&nbsp;The board is expected to manage and run the corporations effectively and efficiently. Suresh Kumar Regmi, Under Secretary of Corporation Coordination and Privatisation Division at the Ministry of Finance, said the proposal to constitute the board has been sent to the cabinet for approval.</span><br />
	</span></p>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of the government to act as a referee for the development of economy seems to be neglected by the new budget. Rather, it has proposed the concept of an economy led by cooperatives. Obviously, private sector is thoroughly dissatisfied with the government move. Dr Ram Sharan Mahat, former Finance Minister and Nepali Congress Leader, said, â€œThe proposal of the government-owned cooperatives is not an alternative. Rather, they are against the self-help spirit of the cooperatives.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the new budget, the government has tried to democratise the selection of Chief Executive Officers and General Managers of public enterprises. Merit-based selection is expected to welcome capable and qualified leadership. Often, it is alleged that poor leadership in the corporations led to their deterioration.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Similarly, this yearâ€™s budget says, â€œA policy of disinvesting the share of the public enterprises to the public will be implemented.â€ The share of the government was Rs 82.76 billion in 2009/10 while its total loan investment in 36 public enterprises remained at Rs 84.92 billion. In the previous fiscal year, the figures stood at Rs 86.13 billion and Rs 74.60 billion respectively. According to the economic survey of 2010/11, share investment of the government decreased by 3.9 per cent while loan investment rose by 13.8 per cent.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the name of reforms, the government is funnelling billions of rupees from the state coffers as subsidy to public enterprises which are constantly failing to show their competency in comparison with the private sector. This year, an estimated Rs 2.77 billion is being provided as subsidy. Similarly, the subsidy was Rs 1.97 billion in 2010/11 and Rs 1.54 billion in 2009/10. Regmi said, â€œThe corporations will not progress if they remain dependent on the government. Rather, they must manage their operations on their own.â€ â€œWhen the private companies in the same sector can do well, why canâ€™t the government-owned companies make profit,â€ he asked.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the last fiscal year, out of the 36 public enterprises, 22 were in profit while 14 were bearing losses. None of the corporations engaged in production are in profit. The economic survey shows that the net profit of Rs 10.55 billion in fiscal year 2009/10 grew by Rs 8.3 million in the fiscal year 2010/11. The share of net operating income of the public enterprises has been 11.2 per cent of the GDP. Regmi said though the number of profit-making companies has increased in recent years, the combined profit of the corporations has not increased. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although Nepal Tourism Year 2011 is going on, national carrier Nepal Airlines Corporation (NAC) is in the worst possible condition. Similarly, Hetauda Cement and the first cigarette factory of the nation, Janakpur Cigarette Factory, are also in dire straits. Despite a monopoly in the market, it is unfortunate to see Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA) in heavy losses. Stories of other 14 corporations are no different. Poor management, inefficiency, corruption, weak leadership, skewed policies are to be blamed for their failure.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Likewise, the net fixed asset of the 36 public enterprises was Rs 133.740 billion in the fiscal year 2008/09 which increased to Rs 139.365 billion by the end of the fiscal year 2009/10, up 4.2 per cent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the liberalisation policy on economy introduced after the restoration of democracy in Nepal, the government initiated the process of privatisation, liquidation and termination of state-owned enterprises in 1993. Ever since, 30 companies have been divested of which 18 corporations have been privatised while 11 have been liquidated and one, Nepal Transport Corporation, was dissolved. The disinvestment has been carried out through the sale of businesses assets, partial disinvestment of shares, sale of current assets, leasing of buildings and land, management contract, liquidation, and termination. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The private sector and some economists are complaining that the government has taken a regressive step by reverting to state-controlled economy from the currently liberal economic regime. Mahat said the proposal of the government brought through the budget 2011/12 is suspicious and non-transparent. â€œThe government has failed to bring any concrete policy for the state-owned enterprises. It lacks an action plan for the corporations,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Experts opine that the government should play the role of a referee. It should work for the development of the real sector and the economy but it should not involve in doing business. They say competitive market entities should be handed over to the private sector. Dr Prakash Chandra Lohani, former Finance Minister and Co-president of Rastriya Janasakti Party, says the government and the private sector must complement each other. He opines without ensuring law and order and a strong policy framework, the private sector cannot prosper. â€œFor that, competitive regulation is necessary and the government should try to minimise the risk of the private sector. However, this yearâ€™s budget does not talk about vision and roadmap for the private sector,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although much criticised, the public enterprises have been the source of employment to 33,603 people at executive level appointed by the management in 2008/09. However, the figure dropped to 33,526 in the succeeding fiscal years. Regmi also accepts that public enterprises&nbsp;are overstaffed. Experts opine that the number of staff in sick corporations can be lowered, which may lower their cost of operation and.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">According to Regmi, the government does not have a list of public enterprises that they want to privatise or a policy framework to privatise them in the near future. He suggests that the policy should be made in coordination with line ministries to give such companies the right direction. â€œTrying to save them by the finance ministry alone will not work,â€ said Regmi. â€œA political decision can choose either to close down or keep operating the public enterprises. However, as thousands of people are getting employment even in sick public enterprises, they cannot be abruptly closed.â€ </span><br />
	</span></p>',
			'published' => true,
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			'modified' => '2012-08-23',
			'keywords' => '',
			'description' => 'The government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by.....',
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	(int) 11 => array(
		'Article' => array(
			'id' => '424',
			'article_category_id' => '40',
			'title' => 'International Privatisation Trend (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">M</span><span style="letter-spacing: -0.05pt;">otivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation programmes in the last twenty-five years or so. Decades of poor performance and inefficient operations by SOEs led the governments to embrace privatisation. Thousands of SOEs have been given away to the private sector in Africa, Asia, Latin America, and Eastern and Western Europe. Throughout the world, annual revenues from privatisation soared during the late 1990s, peaking in 1998 at over US $100 billion.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Widespread privatisation in recent decades has generated a reasonable hype concerning the effects of ownership on performance. Most studies find that privatisation has a positive impact on profitability and efficiency of business firms. However, very little is known about the effects of partial privatisation where the government remains the controlling owner. Indiaâ€™s privatisation programme has followed a pattern of partial privatisation through share offerings but at a particularly slow rate. Between 1991 and 1999, the Indian government raised about $9 billion in privatisation revenues, compared to nearly $71 billion raised in Brazil and $21 billion in China over the same period, according to Global Development Finance Report 2001.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Since both ownership and control shift to the private sector at the same time, full privatisation makes it difficult to distinguish between the political and the managerial perspectives. In contrast, under partial privatisation, the shares of the firm are traded on the stock market while the firm remains under government control and subject to political interference. Letâ€™s have a look at the following examples of how some countries and regions responded to privatisation in the last two to three decades. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">India</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The state intervention in SOEs has been undergoing a close scrutiny in many developing countries including India since 1980. The argument was that excessive political interference and lack of managerial interest (autonomy) hampered the performance of SOEs. Economic policy and state-owned sector in the post-independent India can be divided into four phases: (i) 1950-1965, (ii) 1966-1984, (iii) 1984-91 and (iv) post-1991 policy regime. The second sub-period of the second phase i.e. 1973-84 recorded a slow process towards liberalisation, which culminated into an irreversible process of liberalisation of the economy through the third (1984-91) and during final phase (1991 onwards). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Concepts such as liberalisation, privatisation, disinvestment and market-friendly approach replaced the old concepts of socialism and mixed economy. The period of 1966-84 culminated in a total transformation in the economic policy where economy was made predominantly dependent on market forces rather than on the state. The attempt, it seemed, was to depoliticise economic decisions as far as possible. The industrial policy that was initiated in 1985 was the culmination of the process of drifting away, which started during the second phase of the economic policy in India. The 7th Plan (1985-90) proposed larger planned outlays for the private sector as compared to the state-owned sector for the first time in the planning history of India.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India witnessed a major policy reform programme consisting of considerable deregulation of industrial sector as well as liberalisation of foreign investment and technology imports since July 1991. The 8th, 9th and 10th Plan documents suggested many policy initiatives towards restructuring, modernisation, rationalisation of capacity, product-mix changes, privatisation, autonomy, performance accountability and disinvestments policy. The movement of denouncing socialism that started in many parts of the world influenced Indiaâ€™s policy makers as well. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India undertook sweeping economic reforms that included deregulation and privatisation in response to the foreign exchange crisis in 1991. Since the Industrial Policy Resolution of 1991, which outlined the economic reforms, nearly every governmentâ€™s annual budget has declared that the privatisation goal is to reduce government ownership to 26 per cent of equity. In the decade following the launch of the privatisation programme, the government sold minority shares through a variety of methods including auctions and public offerings in domestic markets, and through global depository receipts in international markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The share of state-owned sector in total investment continuously declined since the 1980s is illustrated in the following table. The relative shares of the state-owned and private sectors during 7th, 8th, 9th and 10th plans clearly signal the rising importance of the latter at the cost of the former.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The 9th Plan divided SOEs into three categories (i) profit-making PSEs (Public Sector Enterprises); (ii) PSEs making marginal profits and losses; and (iii) PSEs incurring substantial losses. Accordingly, all PSEs were placed in suitable categories. Disinvestment Commission, started in 1996, primarily to discipline PSEs and make them result oriented was developed into a full-fledged Ministry for Disinvestment, thereby institutionalising the process of reforms and restructuring of PSEs. Once it was established that privatisation of SOEs was no longer a choice but an imperative, the stage was set for privatisation of SOEs. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Privatisation Trend</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The emphasis of Indian privatisation from 1991 to 2000 was on disinvestment through offloading of governmentâ€™s shares to the state-owned or financial institutions. During this period, the government offloaded shares in as many as 39 SOEs. However, since March 2000, the emphasis has increasingly been on strategic sales of identified SOEs. The table below briefly summarises the amount realised and the number of SOEs disinvested or privatised till November 30, 2003.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Modern Foods Industries Limited (MFIL) was the first SOE to be strategically sold followed by Bharat Aluminium Company (BALCO). Fifty one per cent of BALCOâ€™s shares were sold to Sterlite Industries for Rs 5,515 million. Following this sale, the government was quick to proceed with strategic sales in important firms by divesting 51 per cent of the shares in Computer Maintenance Corporation (CMC) to Tata Sons and 74 per cent of the shares in HTL, PPL and Jessop (for Rs 550 million, Rs 1,520 million and Rs 180 million respectively) to Himachal Futuristic Corporations. Nineteen hotels of Indian Tourism Development Corporation (ITDC) and three hotels of Hotel Corporation of India Ltd (HCIL) collectively contributed Rs 6,866 million towards divestiture or disinvestment proceeds. For all these 19 hotels, 100 per cent of the equity was sold. In terms of individual sales, maximum proceeds (Rs 37 billion) were collected by selling 25 per cent of the equity in Videsh Sanchaar Nigam Limited (VSNL), followed by the contributions made by selling 27.5 per cent equity of Maruti Udyog Limited (MUL â€“ Rs 24 billion) and Indian Petrochemicals Corporation Limited (IPCL â€“ Rs 15 billion). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Post-liberalisation era</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The government was forced to revise its economic policies following the exceptionally severe balance of payments and fiscal crisis in 1991 which resulted in disinvestment of government equity in the PSEs. The government steadily paved the way for a level playing field and competition with the private sector and thus resulted in PSEs being envisioned as revenue earning ventures of the government. Thirty individual Central PSEs were divested to select financial institutions namely Life Insurance Corporation (LIC) of India, General Insurance Corporation and Unit Trust of India (UTI) in bundles. Post-1996, sale through the global depository receipt route was also permitted and PSEs capitalised this opportunity to access international financial markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">There was a strategic shift in the government policies between FY 2000 and FY 2004 that facilitated â€˜Strategic Saleâ€™ or disinvestment of government stake in PSEs. The process involved transfer of big blocks of shares and management control to the strategic partners that were identified through competitive bidding. Post-FY 2005, disinvestment realisations were primarily through the sale of small equity stakes. The government realised an amount of Rs 534.23 billion as disinvestment proceeds between April 1992 and May 2008.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In recent times, several government-owned companies have either started disinvestment process or are planning to begin so including the Steel Authority of India Ltd (SAIL) and Oil and Natural Gas Corporation Limited (ONGC). According to Disinvestment Secretary Sumit Bose, Follow on Public Offer (FPO) in SAIL was expected to raise Rs 7-8,000 crores while divestment of five per cent stake in ONGC will fetch the government around Rs 13,000 crores based on present market valuations. The government has proposed a disinvestment target of Rs 95,000 crores from the sale of shares in public sector companies over the next three fiscals, including Rs 40,000 crores in the current fiscal. Last fiscal, the government had raised Rs 22,400 crores through disinvestment in PSU companies by coming out with three Initial Public Offerings (IPOs) and three FPOs. The value of Indian governmentâ€™s stakes in listed SOEs is estimated at about US$ 320 billion and if unlisted companies are included as well, the total value would be approximately US$ 460 billion. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Russia</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The world learnt from the Russian experience that introduction of the â€˜shock therapyâ€™ or rapid mass privatisation can also lead to massive corruption. It underlined the fact that good governance mechanism is vital. Historically, private ownership of production facilities, financial companies and land was absent in the Union of Soviet Socialist Republics (USSR) for over 70 years starting 1917. As per the constitution of the Russian Socialist Federative Soviet Republic of 1918, land was transferred to farming units for management; all production units to â€˜labour collectivesâ€™; and the ownership of forests, natural resources, etc to the state. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Russian government spontaneously introduced a mass privatisation process in 1991 and introduced what was termed as â€˜shock therapyâ€™ â€“ instant price decontrols and rapid opening up of markets. This large scale movement of ownership transfer brought with it massive corruption in the auction process. The mortgage auctions in 1995 were some of the worst cases. Finally in 1997, a new model of privatisation was instituted under which companies were sold rather than distributed. Further, in 1998, the government also introduced processes of asset valuation by international advisors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Current Scenario</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The SOEs continue to play an integral role in the Russian economy even though the role of private sector is ever expanding in Russia. The Russian government believes in the state role through ownership for industrial growth, economic diversification and energy security. The fraction of firms with 100 percent state and mixed (state and private domestic ownership) as per 2007 data is as follows: </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; All firms and organisations: <br />
	11 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Employment: 39 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Capital investment: 32 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Fixed assets (state ownership greater than 50 percent): 23 percent. </span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hong Kong</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong is a relative newcomer to the global club of countries opting for privatisation. It has actually missed some opportunities to learn about and avoid certain problems of privatisation experienced in other countries. There have also been socio-political issues that are unique to Hong Kong. Its experience needs to be seen in the context of the long established worldwide phenomenon of SOEs and the trend of privatisation from early 1980s.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Despite being a British colony, Hong Kong didnâ€™t join the global trend of privatisation during 1980s and 1990s. Some ideas about privatisation were addressed in the government report for Public Sector Reform in 1989 but not followed up for two main reasons. First, there was no strong practical need to privatise public enterprises. Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), had once acknowledged that the erstwhile colony had little external, political or budgetary pressure to reform its public sector. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong recorded public budget surpluses year after year in the post-war period, much envied by other governments. The second reason for â€˜no privatisationâ€™ was political. During the long political transition till 1997, China opposed any colonial government proposal to privatise government assets in fear of a British plot to sell out the interests of the future HKSAR administration. However, the arguments about privatisation in Hong Kong have been reversed after 1997.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Divestment Plans</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Before the return of sovereignty to China in 1997, the Hong Kong government did not divest public assets because of Chinaâ€™s opposition and an absence of budgetary pressure. During the political transition, the colonial government was regarded as fairly competent in dealing with public confidence crises. However, after 1997, these conditions changed quite dramatically. The new conditions in HKSAR prompted the government to formulate divestment plans, but at the same time they raised potential problems for the implementation of the plans. After the political transition, China no longer opposed privatisation proposals of the HKSAR government.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Three Divestment Exercises</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Hong Kong community is generally receptive to the ideas of small government and privatisation compared to many other developed communities. The general acceptance in Hong Kong is partly due to the fact that the government uses public offers as the main strategy of divestment. The popular belief is that citizens will make good profits once they are allocated shares from the governmentâ€™s IPOs. Although the public generally favours public listing, the divestment exercises in Hong Kong were not without controversy. Fundamental conflicts of public interest in privatisation have had to be resolved from time to time. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">MTRC</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Mass Transit Railway Corporation (MTRC) was the first target of divestment in Hong Kong. In late 1999, the government introduced new legislation to replace the MTRC ordinance and to grant a proposed new MTRC company the right to operate the subway system. In October 2000, 24 percent of the MTRC shareholding (US$1.28 billion in value) was divested by way of listing in Hong Kong, London and New York. The offer was 18 times over-subscribed and broke the local record for an initial offering. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Tunnels and Bridge</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After the Legislative Council approved the relevant grant of power, the government divested the future revenues from five toll tunnels and a toll bridge in August 2004 under a securitisation scheme involving the listing of government notes worth US$ 770 million. The offer to individual investors was two times over-subscribed, and the portion earmarked for institutional investors was heavily subscribed. The assets themselves continue to be government-owned through a new government company, Hong Kong Link 2004 Limited. The day-to-day operation of the tunnels and bridge as managed by franchised private firms remains unchanged.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Link-REIT</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">The Housing Authority (HA â€” a statutory corporation) announced in July 2003 that it planned to divest most of its retail and car-parking facilities in public housing estates. The plan was that the government would first set up a new asset-owning and management company, Link Limited, and then divest its ownership entitlement to the companyâ€™s future revenue streams in full by way of the listing of a real estate investment trust fund, Link-REIT. The trust fund, REIT, was chosen as a vehicle for divestment partly because it would restrict the scope of Link Limitedâ€™s business initiatives and partly because the government wanted to promote REIT as a new type of financial product. The HA planned to transfer the retail and car-parking assets to Link Limited after the scheduled listing had been completed. In due time, Link Limited took over the day-to-day management of the HAâ€™s retail and car-parking facilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Latin America</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Latin American countries have been very active in privatisation. Even against the backdrop of massive economic transformations in transition economies, the privatisation record of Latin America seems remarkable. To facilitate their shift to a market economy, most Latin American countries launched mass privatisation programmes that resulted in dramatic reductions of state ownership. Latin America accounted for 55 percent of total privatisation revenues in the developing world in the 1990s followed by transition economies in Eastern Europe and Central Asia at 21 percent. The decline in the economic activity of SOEs has been more substantial in Latin America than in Asia and Africa, bringing levels close to those of industrialised countries. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">Dramatic differences in the extent of privatisation are also evident within regions. In Latin America, for example, countries with large state owned sectors, such as Ecuador, Nicaragua, and Uruguay, barely privatised at all in the 1990s, while others such as Argentina, Bolivia, Guyana, Panama, and Peru raised revenues from comprehensive privatisation programmes that amount to over 10 percent of GDP. The difference in the extent of privatisation across countries and the large amount of assets in the hands of the state heightened the importance of understanding the privatisation record and of developing lessons for future privatisation programmes. However, Latin America has virtually halted its privatisation process in recent years after being the most active region in the 1990s. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><b><i>References</i></b></span></div>
<div style="margin-top: 5.65pt; text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>1&nbsp;&nbsp; Madhu Bala (2006) â€˜Economic Policy and State Owned Enterprises: Evolution towards Privatisation in Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>2&nbsp;&nbsp; â€œKPMG Internationalâ€ (2010) â€˜Resurgent PSUs Vibrant Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>3&nbsp;&nbsp; Nandini Gupta (2005) â€˜Partial Privatization and Firm Performanceâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>4&nbsp;&nbsp; Rikkie L K Yeung (2005) â€˜Divestment in Hong Kong: Critical Issues and Lessonsâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>5&nbsp;&nbsp; Alberto Chong &amp; Florencio LÃ³pez de Silanes (2004) â€˜Privatization in Latin America: What Does the Evidence Say?â€™</i></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>',
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			'description' => 'Motivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation.....',
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		'Article' => array(
			'id' => '423',
			'article_category_id' => '38',
			'title' => 'Brand Buzz (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/sajag(1).jpg" style="width: 123px; height: 153px;" vspace="10" />By Sajag Karki</span></i></span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">''Buy two get one freeâ€. â€œSurprise gifts with every purchaseâ€. These are common taglines used by companies in Nepal to attract potential customers. Except for a handful of ads of reputed multinationals along with some local companies that actually communicate brand personality via branding, Nepali advertisements typically focus only on a specific scheme or promotion. They have nothing much to offer except to lure customers into buying the product by providing them with monetary reward or somekind of freebie. Advertising has been around just for a few decades in a developing country like Nepal. Though there has been significant development, there is lot of room for improvement to meet international standards. In this turbulent phase of progress, ethics still comes in question. Nepali media whether TV or print has been flooded with Indian ads with Nepali voiceover. Big B Amitabh Baachan can be seen endorsing more than a dozen ads at the same time. People are confused and tired of seeing the same person over and over again for most products. Due to his popularity, it is also hard to ignore his presence keeping in mind the commercial success celebrities bring about. However, there must be a match between the personality of the brand with that of the celebrity. Same celebrity endorsing multiple products can hamper the image of the product.&nbsp;Are promotional schemes and celebrity endorsers a good way to communicate a companyâ€™s product to its customers? Also, the use of celebrities for products that donâ€™t suit their personality is controversial. The importance and relevance of ethics in advertising in the Nepalese context has been a debatable issue. Ethics is something that is usually not compatible with advertising in Nepal. The fact about advertising is that in most cases it is hard to sell products without offending anybody. Another harsh reality is that a single ad cannot please everybody. Such customers can go for customised products rather than standardised ones in order to fulfil their needs. Since there is always a target group of people that a company caters to, an ad cannot be made that is liked by everybody.&nbsp;Who is responsible for influencing young people for drinking or smoking? Is it important to be ethical while creating ads of oneâ€™s organisation or should they be more concerned with just adding value of the firm while ignoring the ethical and moral issues of advertising and business as a whole?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The topic of ethics in advertising is such that it is never black and white. It is impossible to paint a rosy picture by just claiming yes or no to ethics. There are subtle shades of grey in which arguments from both sides are viable. Practically speaking, the direct adaptation of moral philosophy principles in marketing communication is unsuitable. However, this doesnâ€™t mean that ethics should be completely neglected. The parameters for judging ads cannot be the same as judging the morality and ethics of society.&nbsp;Hence, marketing must develop its own philosophy of ethics. In the advertising world, some puffery is allowed since no company can sell anything by saying just the mere truth. A bit of dramatisation and an element of excitement (buzz) are added deliberately to give maximum mileage to the brand. Only this makes it possible for people to bear up with advertisements. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Advertisers are selective about the values and attitudes to be fostered and encouraged, promoting some while ignoring others. Ads cash in on the popular culture while targeting the younger audience. Ads encouraging dark people to use whitening creams to look fair are targeted especially to the young so that they are easily influenced. Can such advertisements that portray dark as ugly and unacceptable be called ethical or unethical? If it is unethical than what would be a better way to communicate the productâ€™s attributes in an ethical manner?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">On the other hand, advertisers cannot completely forget ethics while delivering their creative piece.&nbsp;I am by no means saying that false advertising should be encouraged or that ethics should completely be neglected. The fact is that even though advertisements are verisimilitude, ethical threshold should always be maintained to depict a clean picture to the audience. A striking reality to consider is that negative words spread way faster than positive ones. It is like a wildfire that spreads so fast that itâ€™s almost impossible to extinguish it right away. Similarly, negative opinion of the ad due to unethical content will spread in such a way that it will be almost impossible to mitigate the damage created. Only a handful of unsatisfied viewers who find some ads unethical can spread negative word of mouth to a whole lot of people around them. In no time, such ads will be called phony ultimately resulting in adverse effect on the brand equity of the advertised product.&nbsp;Ethics is specially of top priority while showing comparative ads as there must be sufficient evidence backing the superiority of the product against competitors. Along with ethics, rational judgment should also be used so that they do not have to face legal issues.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">No brand can be built in a jiffy. It not only takes creative heads along with deep pockets to gain a worldwide recognition of the brand but also a whole lot of time. Coke would not have been the most popular brand in the world if its advertising was not sculpted with ethical standards right from the beginning hundreds of years ago. Hence, it would not be a good idea for any company to ruin its image in no time by showing unethical ads just for the sake of money making or for cheap publicity. This kind of debate can go on and on and on. Books have been written and issues have been raised over the topic of ethics in advertising but without a tangible conclusion. To simplify this I would say that ad makers should come up with only such ads that they would accept as an audience. A little empathy towards audience and use of intuitive judgment by advertisers would probably help address this intrinsic advertising issue to an extent.&nbsp;</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Karki is currently associated with KIST Bank.)</span></i></span></div>',
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			'description' => '''Buy two get one freeâ€. â€œSurprise gifts with every purchaseâ€. These are common taglines used by companies in Nepal to attract potential customers. Except for a.....',
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			'article_category_id' => '38',
			'title' => 'HR Audit (august 2011)',
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			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/rabindra%20karna%282%29.jpg" style="width: 112px; height: 151px;" vspace="10" /></span></span><strong><span style="font-size: 14px;"><span bright="" color:="" letter-spacing:="" lucida="" serif="" style="line-height: 120%;">By <span style="color: rgb(178, 34, 34);">Dr Rabindra Karna</span></span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">H</span>uman Resources function in addition to its routines regardless of the size of business operation is also expected to demonstrate competitive intelligence and benchmark comparatives at least with direct market competition. This is done for depicting HR initiatives towards sales and people productivity enhancement that can be utilised as a comprehensive tool to improve their own effective engagement into the business. It is imminent to identify and realise strengths and opportunities for improvements around specific HR areas.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">Businesses are currently moving under heavily regulated and turmoil employee environment dealing with most uncertain industrial relation under complex legislative framework. Human Resources function has been emerging as most essential organ of organisation which is mainly engaged in establishing and practising policies, legal compliance that has huge impact over productivity and profitability of business in total. This is why Human Resources function these days is considered as most valuable strategic business partner within the Organisation. Efficient, effective and active HR practices in any organisation are as essential as the well functioning organs in human body. Investment in building Human Asset is considered a key to the measurement of systematic alignment with organisational goals helping HR become strong strategic partner that it is deemed to be. The HR Audit can be a powerful element driving change in HR and organisation. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The financial audit is mandatory which examines the past on the basis of practices and procedures for identifying issues that ensure compliance to sound accounting principles. Similarly, HR audit is aimed to future and meant to examine the health of Human Resources function to establish best practices that are productive to the business activities. HR Audit supports companies to determine gap and reason behind lack in system productivity and suggests the way forward. Currently, most of the businesses have plans for systems, targets and compliance that are driven by HR functions wherein HR audit becomes useful to compare these plans with actual implementations. The outcome of audit and feedback is found very helpful in decision making around corrective measures pertaining to improvement plans. Human resources audits play vital role around legal compliance that helps to avoid regulatory liabilities resulting from policies and practices. It also helps to identify legal risk and serves information about efficiency of HR strategies through benchmarking â€œbest practicesâ€ of similar businesses. It is also handy in finding solutions to problems prior to escalation. It also suggests how things might be done in more efficient and effective way with efficient cost economy.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Concerns in relation to employee risks have been the reason for the emergence of a wing within HR function to look after the working conditions and associated risks that enable implementation of preventive measures that perfectly aligns to the legal approach of HR. The application of Occupational Health &amp; Safety program is now associated with quality of life at workplace that is most important for human capital being the prime strategic element that explains the differentiation ability of company. This is where HR audit goes beyond the traditional concept of accounts audit i.e. simple investigation to logical measurement of efforts being put.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">HR audit in general is suggested to structure based upon size of organization i.e. number of people employed, time constraints, budgets and risk areas e.g. discipline, performance, compliance, hiring etc. However, there are some areas wherein companies are vulnerable to additional risks which must be reviewed carefully:</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">a.&nbsp;&nbsp;&nbsp; Personal record:&nbsp;A detailed and accurate personal records of employees are essential to prevent the business from undesired dispute especially in the areas of insufficient documentation pertaining to discipline, service record, compensation, health issues etc. An audit of personnel files reveals exposure to this type of risk and enables preventive measures to safeguard interest of the company beforehand. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">b.&nbsp;&nbsp;&nbsp; Legal Compliance: A review focusing over companyâ€™s compliance to the local laws and regulation at the same time incorporated codes of best practices and other essentials; allows company to take corrective measure in area of concerns e.g. over-time eligibility, classification of Job, payroll, records retention, compensation and benefits etc.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">c.&nbsp;&nbsp;&nbsp; Attendance System: The biggest concern for most of the employer as of today is absenteeism. In many cases it has been noticed that companies have their own attendance policies (In addition to the countryâ€™s Labor Law) in support of absenteeism control which might be unacceptable because of conflict with law of the land as well lack of clarity in need of proper communication around these. Since this aspect has immediate vulnerability to dispute and risks; audit prescribes the remedial action in such conflicting situation and enables the organisation to take corrective measure in support of absenteeism control i.e. fully aligned with law of the land.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">d.&nbsp;&nbsp;&nbsp; HR Strategies: Strategic alignments among each business units (Functions) are equally important in view of increasing value of employees to the business. This part of HR management mainly consists of organization structure, job design, employment policies, HRIS and employee relations management etc. Audit review of strategies helps business to determine whether strategic alignment exists there or not and supports planning and action to improvise areas of concerns on this important aspect.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">e.&nbsp;&nbsp;&nbsp; Cost Efficiency:&nbsp;One of the important financial roles of HR is to ensure people management in the most cost-effective way. This inculcates financial ratios and scorecard measures such as headcount planning, orientation and disciplinary cost per employee, people development cost, people productivity etc. A detailed review of this aspect of HR throws light on equipping HR practitioners of the company with knowledge per formulation of HR metrics.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Thus HR audit<span calibri="" sans-serif="" style=""> is</span> meant for verification of job design and analysis, employee welfare, industrial relations, conflict resolution, improved communication mechanism, orientation and job evaluation etc useful and supportive to achieve business destination through effective engagement of HR Function as one of the key business performance driver. It has been noticed from recent HR developments that there is an increasing demand for HR associates to contribute to profitability drive of the organisation through active participation in business decisions. The audit findings can be of great use to improve HR business plan, identify risks and control over traditional approaches, cost-economy and facilitate change in management initiatives. It also plays an important role in relation to motivation through clarified roles and responsibilities. HR audit helps to identify HR KPIs (Key Performance Indicators) and adds value to the organisation defining relevant activities. It also supports placement of management in a better position fulfilling expectation that instills trust and respect from all stakeholders.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hence, it is important to ensure that HR audit is planned and carried out under clear understanding of HR connectivity on overall business objectives, HR related opportunities and their engagement around sustainable people productivity and outcomes that are intended to achieve.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span aldine401="" bt="" italic="" style="">(Dr Karna is the Executive Chairman of MARK Business Solutions Pvt Ltd and Ad Abhyas Marketing &amp; Communications Pvt Ltd. The article is based on various research reports and his practical experiences as management practitioner.)</span></i></span></div>',
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			'title' => 'Feedback August 2011',
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			'content' => '<div style="text-align: justify;">
	<strong><br />
	Shadow Of Energy </strong><br />
	<br />
	<img align="left" alt="august 201" border="1" height="473" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover july.jpg" style="width: 355px; height: 473px;margin:10px;padding:10px;" vspace="5" width="355" /></div>
<div>
	<br />
	Although Nepal is bestowed with immense resources, people;s lives are crippled in the absence of their proper and optimal use. It is similar to a situation in which a person is stranded on a boat in sea, dying with thirst, because he does not know how to remove salt from the sea water. Nepal is the second richest country in the world in terms of water resources a hackneyed statement and has a huge potential for hydro power generation that can meet a large part of the demand in South Asia. Having a huge market in both north and south of the border, upon the failure of fishing the money in river that is flowing away every day, people are forced to live in the darkness. The rains could not wash away the power cut woes of Nepalis. Even during monsoon when the rivers are flooded, Nepalis are facing black-out every day. I blame the government and its failure to invite foreign investors for developing hydropower projects if it cannot generate electricity itself.</div>
<div>
	 </div>
<div>
	We don't have to roam around the globe to find an investor. There are a lot in our neighbouring countries that are willing to develop power projects in Nepal and sell the output in their countries. What they are demanding is a stable policy that welcomes and ensures their investment. But our statesmenâ are so professional player of the dirty game called politics that they tend to succeed every time in chasing away potential investors. As a result, they are seeking other appropriate destinations like Bhutan. Water flowing out of Nepal is money flowing away from the country. The more it flows the more we lose. And our policy makers are happy to see the beauty of waves in flowing water. They turn a blind eye to the resources being wasted.</div>
<div>
	 </div>
<div>
	The more we delay, the more we lose. What is the use if Nepal produces 40 thousand megawatts of electricity when India and china have developed enough power to meet their need? And, that time is not very far. Then, I think our country will be proud to import from these countries to minimise load-shedding hours. Without any delay, the government should welcome foreign investors with open arms to develop big projects in Nepal. When we are busy giving phony speeches on nationality, it will to too late to say, Now I am going to develop thousands of megawatts of hydroelectricity. By then, we will have no market to sell our products and politicians will be happy men.<br />
	 </div>
<div>
	<b>- Bishnu Sharma</b></div>
<div>
	<b>Kathmandu</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Tax it to Discourage it<br />
	<br />
	</span></div>
<div>
	When Nano, the cheapest car, was launched in Nepal many thought motoring will be affordable for middle class people too. So was the business motive of Tata while launching Nano in Nepal. The Nepal government's taxation policy has something else to tell. Every year the government is hiking the tax rate on the automobiles which make vehicles beyond the imagination of many middle-class people. When the cheapest car comes to Nepal, it is still expensive to majority of the people because of high taxation. While selling the car in Nepal, there is 240 per cent increment in the price over the price in India. This adds extra cost to those who dream to own a car.</div>
<div>
	 </div>
<div>
	Auto business personnel are expecting a decline of more than 40 per cent in the vehicle business compared to last year due to the crisis in the financial sector and the increasing tax rate. It is positive for a government to discourage non-productive investments and discouraging private vehicles, to some extent, helps in minimising the traffic on the narrow roads of cities like Kathmandu. However, the automobile sector is generating a huge chunk of revenue for the country and the government should seek an alternative source to make up that if it is serious about discouraging vehicles import in the country.<br />
	 </div>
<div>
	<b>- Rajan Dhoj Khadka</b></div>
<div>
	<b>Bhaktapur</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Budget Baggage to Complain<br />
	<br />
	</span></div>
<div>
	Right after the budget is presented in the parliament by the Finance Minister, nobody is satisfied without criticising it. Critiques forget to consider what is good in the budget. They rightly pick up the flaws. Obviously, the budget determines where the economy will be heading in the new fiscal year but it may not necessarily be a baggage of rubbish. It is rare to hear appreciation for what is good along with the criticism for what is not. Interestingly, everyone complains the one who does not benefit and even the ones who directly benefit for example through a hike in salary. Instead of spending time to give discourses on the budge, I believe it will be better to put pressure on the government to implement the right policies and make use of what is good in the budget for the welfare of the country.<br />
	 </div>
<div>
	<b>- Sarita Khanal</b></div>
<div>
	<b>Satdobato</b></div>',
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			'title' => 'Nepal’s Redoubtable Poverty Statistics September 2011',
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			'content' => '<div style="margin-bottom: 0.0001pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;">T</span><span style="font-size: 9.5pt;">he report of the Third Living Standard Survey (TLSS) a month ago declared that only 13 per cent of Nepali people now live under the so called absolute poverty line. Highly encouraging though, this news is the one extremely hard to believe instantly. There are reasons for this suspicion. With only 13 per cent of people below the poverty line, the data puts Nepal in better position than the countries like Russia, United Kingdom, South Korea, Belgium, Germany and Japan with 13.1, 14, 15, 15.2, 15.5 and 15.7 per cent of people below the poverty line, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Nepal's ground realities regarding the factors that could contribute to poverty reduction availability of foods, shelter and job opportunities to the social and economic safeties are in no way comparable to the countries mentioned above, as the examples. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	 </div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	 </div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;"><img alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/img1%283%29.jpg" style="width: 324px; height: 400px;" vspace="10" /></span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 9.5pt;"><br />
	Such drastic reduction of poverty from 12 per cent in 2004 to 13 per cent in 2011 has taken place during the most adverse political climate in the country's history. There was civil war of sorts until 2006. Since then, political instability has gravely affected the industrial and business climate. In absence of elected local governments for over a decade now, service delivery mechanism is in virtual ramshackle. No substantive FDI has flowed in. No other economic indicators are positive to cite under these adversities. Such an astonishing improvement in poverty situation is a real paradox. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Only reason attributed to the impressive improvement is the somewhat consistent inflow of the workers remittances. But, given the fact that majority of Nepali workers going abroad for meagrely paid jobs, it is hard to believe that this single phenomenon can make such a huge difference. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Therefore, the date catered to the people by the government agencies are either deliberate lies or, if that is not the case, we have adopted some highly flawed method in conducting the research for TLSS. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">In fact, the task of measuring poverty is in itself a very complex affair. It is more so in a country like Nepal where competent and independent research institutions are, in real terms, non-existent. And, citizenry and other stakeholders of economic activities have no alternative but to mime government agencies like the National Planning Commission and Central Bureau of Statistics.</span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Our universities and other independent institutions have so far failed to generate comparable, or at best, countering data on the various aspects of the country's economy, including poverty. <br />
	<br />
	</span></div>
<div>
	<span style="font-size: 9.5pt; line-height: 115%;">These factors have combined to raise serious questions on Nepal's credibility in international community. Culprits to this have been none other than the government agencies involved. The situation warrants more credible and pragmatic approach in counting our poverty. </span></div>',
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			'article_category_id' => '39',
			'title' => 'R K Associates: Aiming High - August 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><img align="left" alt="corporate focus" border="1" height="202" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cor.jpg" style="margin: 10px; padding: 10px;" vspace="10" width="350" />The business journey of R K Associates dates back to 1978 when Dr Rajesh Kazi Shrestha, an energetic, young and pro-active entrepreneur established Rajesh Concern with the objective of focusing on hospitality and trading business. It imported various kinds of goods from around the world and helped promote Nepal to strengthen its trade relations with many countries.<br />
	<br />
	Today, R K Associates has diversified manifold and has stakes in every business segment. With its over three decades of experience in trading and services sectors, it manages various assignments and projects in automobiles, banking, insurance, information technology, flooring, medical equipment and supplies, fast moving consumer goods and many more. The group is behind the presence of many leading household, home decor and high-end products in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group is now among the most trusted names in Nepal and has forged, nurtured and maintained global alliances over the last 33 years. Its founder Dr Shrestha was honoured by International Journal of Non-Aligned Countries and Foreign Policy Research Institute (FPRI), New Delhi, with an honorary PhD in February 2010. He says, I attribute our growth to the deep understanding of local markets, people and customs </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">It currently has a turnover of USD 20 million. It&nbsp;has contributed to the national economy and promoted infrastructural and entrepreneurial capability of Nepal. It is closely associated with prestigious domestic and international federations and associations. A former Assistant Minister of Industry, Commerce and Supplies, Dr Shrestha holds several prestigious positions. He is Chairman of Nepal-China Chamber of Commerce &amp; Industry and International Chamber of Commerce, Nepal. He is also a Past President of Nepal Chamber of Commerce. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Group Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group looks at integrating dealers, distributors, retailers, suppliers and joint venture partners into the R K Associates family. It is currently focusing on branding of its products and consolidating them in the market. It is looking forward to NADA (Nepal Automobiles Dealers Association) Expo in September 2011 for showcasing different vehicles from its stable. Dr Shrestha says, Through our hard work, we want to reach as high as possible and prove our worth in the market. The group also plans to help orphanages and sponsor underprivileged students as part of its CSR (corporate social responsibility) activities. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">R K Associates aims to recruit, develop, motivate and retain the best talents within the country and provide them a challenging and demanding environment. It fosters a strong emotive feeling of oneness and ownership among the employees within the company. The group aspires to transform into a model corporate institution and make its employees proud to be part of the group. It provides employment to close to 250 people out of which 38 people work for Constant Business Group alone.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Management Style</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Dr Shrestha believes in giving employees the liberty and opportunity to prove themselves. He says, Instead of me telling them what to do, they should come and update me on the latest information. He says he is most happy working as the link and let his employees do all the work. He goes to great lengths to ensure that the employees feel at home and treat the group as their own. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">He strongly feels that political stability and government's economic policies are key to nation's prospects. We are going through the most difficult phase now. If the government policies are good, I am sure businesses will prosper and generate employment for hundreds of thousands of youth who are leaving the country due to lack of opportunities. Dr Shrestha believes that the government would do better if it consults the private sector before taking decisions or implementing them, in the larger interest of the nation. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">He says it is the government's duty to reduce taxes on automobiles so that the industry is saved from a certain collapse. He also recommends that the government should focus on phasing out the vehicles that are over 20 years old. The government's policies have had an adverse impact on the industry as it has experienced a huge market slump. This has obviously resulted in reduced revenue for the government, he says. </span></span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Teamwork among partners</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Hard-working staff</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Honesty</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Trust</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Inability to penetrate the market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Lack of aggression</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Possibility of a favourable government policy</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Over import by all vehicle distributors</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">More supply than demand</span></span></li>
</ul>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><i>Sister Concerns</i></span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Constant Business Group Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">Established in January 2007, this company distributes vehicles from China (Zotye, Lifan, Jonway, Grand Tiger and Lobo), Malaysia (Proton) and South Korea (Ssangyong). R K Associates was awarded the best distributor for Zotye in 2009. The company has sold over 300 units of Zotye so far out of which 75 units were sold in the last one year. Among other vehicle products, 50 units of Ssangyong have been sold, so far. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Nepal International Business Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">A trading house established 17 years ago, it imports tower crane, film faced plywood, commercial plywood and hotel supplies. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Status Trading Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">This trading house that started 3 years ago imports furnishing, flooring carpets, laminated flooring and PVC. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Alliance Insurance Company Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">R K Associates is affiliated with this insurance company as a promoter which has Dr Shrestha on its Board of Directors. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Rajesh Concern</span></span></div>
<div>
	<span style="font-size: 14px;">It's the first entrepreneurial venture of R K Associates and imports food items, readymade garments, carpets, PVC etc. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Soaltee Hotel Limited</span></span></div>
<div>
	<span style="font-size: 14px;">Dr Shrestha features in the Board of Directors of Soaltee Hotel Limited.</span></div>',
			'published' => true,
			'created' => '2011-09-24',
			'modified' => '2012-10-04',
			'keywords' => '',
			'description' => 'The business journey of R K Associates dates back to 1978 when Dr Rajesh Kazi Shrestha, an energetic, young and pro-active entrepreneur established Rajesh.......',
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	(int) 2 => array(
		'Article' => array(
			'id' => '434',
			'article_category_id' => '39',
			'title' => 'Explore Asia Pacific: Satisfying Customers - August 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="line-height: 120%;"><br />
	Neeraj Sharma</span></b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="line-height: 120%;">Managing Director</span></span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">Explore Asia Pacific Pvt Ltd</span></span></div>
<div style="text-align: justify; text-indent: 0in;">
	<span style="font-size: 14px;">Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal.<br />
	<br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product basket. In mid-2010, it also ventured into the business of solar panels and desktop components from Simmtronics. Currently headquartered in Kathmandu, the company registered an annual turnover of Rs 120 million in 2010. Having gradually enhanced its product basket, it aims at a 300 percent growth in 2011. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific is known for its ethical business practices and value-added approach which is solution-centric and vertically focused. Neeraj Sharma, Managing Director of the company, says, Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal. It seems set to meet this objective as it already has a strong presence in the up-country regions and possesses management skills with proven controls and processes.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company claims it is fortunate to have dedicated partners as part of its organised distribution system. Sharma says, Along with the modern marketing and branding concepts, our knowledge and hold in the Nepali market has held us in good stead. It plans to invest in infrastructure and technology in the long term and aspires to establish sound performance in a short period of time, though of course, with a long term commitment. </span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Company Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific aims to have leading market shares for all products it deals with. It also envisions to have satisfied and loyal customers through value-added before and after sales services. Creating high recall brands is high on its agenda as it helps customers association by being reliable and trustworthy. Sharma says, We want to be the first choice as a distribution partner for both the vendor and the reseller by adding value to the supply chain through efficient logistics, high level of product knowledge, value-added marketing services and demand creation activities. The company is working hard to ensure wide and deep presence through an effective distribution system. It also wants to be able to create a profitable business proposition for all stake holders. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Brands and Products</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company is proud to be associated with reputed and well known brands such as ADATA, Simmtronics, Genius, Panda, Jetway and Samsung among others. It deals in well-received products like classic pen drives, pen drives superior, Simtronics desktop, external HDD, memory card, monitors, graphics card, motherboard, RAM etc. Explore Asia Pacific also plans to launch its own brand and manufacture cabinets, PSUs, keyboards, speakers and headphones etc. The tremendous market potential has propelled us to think along these lines. Once the liquidity problem gets settled, the market situation will definitely receive a boost, Sharma reasons. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company boasts of having a strong human capital and talent pool. It has among the best talents in the industry with professionals from different sectors and proven experience levels. We perform best practices in place like in-depth induction programmes, in-house training, performance management systems and employee satisfaction surveys, informs Sharma. The strong sense of bonding that exists in the company has ensured a very low attrition rate. The company currently has a workforce of 18 employees at its corporate office and plans to increase it to 35 from the new fiscal year once it unveils its expansion plans. Sharma believes in dealing with his staff in an honest manner which has paid rich dividends as he has got positive results from them. He thinks that Ajay Sadewra joining Explore Asia Pacific as Director-Operation in March 2011 was a major turning point for the company's fortunes. Sadewra was earlier associated with Neoteric Nepal. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Immediate Plans</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Expanding with Explore Digital, an independent and retail chain, the company plans to open 10 retail outlets in the country. There will be four outlets at prime locations in Kathmandu alone. We will geographically divide channels for our 18 distributors beginning Shrawan, informs Sharma. The company plans to advertise its upcoming retail outlets in major national dailies as well as the distribution channels. Having established its credibility with the consumer segment, Explore Asia Pacific now wants to focus on the enterprise sector and spread its wings to cater to government organisations, NGOs and INGOs and Banking and Financial Institutions among others. The company that has already made its foray into the energy sector with solar equipment also plans to provide complete solutions from this fiscal year. It is slated to start production of solar items such as the lighting system which the company says holds a big potential in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">Sharma attributes Explore Asia Pacific's success to a number of factors including trust, profitability concern of the channel partners, adequate service mechanism and honesty. He adds, We have come this far because of our hard work, vision and market understanding. Among its competitors, Neoteric Nepal is doing well, he says. The company was awarded for good performance by ADATA during Computex held in Taipei earlier this year in June. It seeks to reach new heights demonstrating its value added services (VAS) through its envied network and ensuring price transparency, uniformity and dedicated service among others. </span></span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths </span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Experienced Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Channel Strength</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Brand Image</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Product Range</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Technical Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Countrywide Presence</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inability to incorporate MNCs</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inadequate Product Basket</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Being a fairly new company</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unorganised ICT market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unprofessional Distribution Channels</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Marketing growth in various pockets</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Government embracing e-governance</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Financial sector growth</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable political scenario</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable government</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">&nbsp;&nbsp; Unethical price cutting<br />
		<br />
		</span></span></li>
</ul>',
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			'created' => '2011-09-24',
			'modified' => '2012-10-04',
			'keywords' => '',
			'description' => 'Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product...',
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	(int) 3 => array(
		'Article' => array(
			'id' => '433',
			'article_category_id' => '37',
			'title' => 'Monetary Policy And Question Of Financial Stability (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;">By Nara Bahadur Thapa</span></i></span></strong></div>
<div style="margin-bottom: 0.0001pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress in Nepal has added pressure on using monetary policy instruments for securing financial stability. The question asked is: should financial stability be in the domain of monetary policy or should it be pursued as an objective of regulatory policy? Although the debate remains still inconclusive, views on either side of the debate have sharpened.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Undoubtedly, safeguarding financial stability has become an increasingly dominant objective in economic policy. Hence, it is argued that monetary policy should also take care of it. In light of this, besides maintaining price stability and supporting economic growth, Monetary Policy often has the task of preserving financial stability. Monetary variables such as the quantum of money, bank credit, liquidity and the level of interest rates are used to attain monetary policy objectives.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">These monetary variables - the quantum of money, bank credit, liquidity and the level of interest rates - affect financial stability in one way or the other. This is the basis of the argument that monetary policy should be used to safeguard financial stability. In this context, it should be noted that the NRB Act 2002 does not state financial stability as an objective of monetary policy. Monetary policy objectives, as enshrined in the NRB Act 2002, are maintaining low and stable rate of inflation and the external sector stability. These two objectives are supposed to ensure the sustainable development of the economy. Nevertheless, the Act does indicate that the role of the central bank in promoting banking and financial stability as well as developing a secure, healthy and efficient domestic payment system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">We should seek the answer to the question as to why the law of the central bank has not assigned the financial stability as an objective of monetary policy. This implies that the NRB Act has visualized instruments that can be used to ensure monetary and financial stability differently.&nbsp;&nbsp; </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Financial architecture </span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The way monetary policy is conducted and financial stability is pursued should be discussed in the context of the financial architecture that exists at the global as well as the domestic level. The current international financial architecture is rooted in the McKinnon-Shah hypothesis (1973) that argues for the removal of financial repression and the introduction of financial deregulation. The major elements of financial deregulation are: (i) the elimination of credit controls, (ii) the deregulation of interest rates, (iii) free entry into the banking sector/financial services industry, (iv) central bank autonomy, (v) private ownership of banks and (vi) liberalization of international capital flows.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">International organizations such as International Monetary Fund (IMF) and the World Bank supported the McKinnon-Shaw hypothesis and in the process encouraged member nations to adopt liberal financial policies. Many developing countries including Nepal deregulated their financial sector. Even in the USA, the comprehensive regulations introduced in 1933 in the wake of the Great Depression in the form of the Glass-Steagall Act which had ensured financial stability were removed in 1999, ushering in a complete deregulation of the financial sector. The Glass-Steagal Act kept different types of financial institutions separate and dictated the activities they could and could not engage in. It was argued that Glass-Steagall Act prevented banks from diversifying risk. Following this, an agreement was reached at the global level for the international financial architecture. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b>&nbsp;</b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="color: black;">The major elements of which are: </span></b></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">i.&nbsp;Simple rules for monetary and fiscal policy would&nbsp;guarantee macro stability,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">ii. Deregulation and privatization would unleash growth and prosperity,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iii.Financial markets would channel resources to the most productive areas and polish themselves effectively, and</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iv. The rising tide of globalization would lift all economies.</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The agreement on these elements spearheaded by the IMF and the World Bank is known as the Washington Consensus. The spirit is that the adoption of standards and codes on macro-financial policies, transparency, good corporate governance and internationally designed accounting and auditing rules would ensure financial stability. Given these standards, it was thought that market would ensure financial stability. With no restriction on the portfolio, free entry and exit of financial institutions could ensure the dynamic financial stability. There was no need for government intervention, including financial bailout. In keeping with this framework, Lehman Brothers was allowed to fail in September 2008.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the economic liberalization initiated in the mid-1980s, the Nepali financial system has experienced significant developments. The NRB Act 2002 aims at consolidating the foundation for the new domestic financial architecture. The new NRB Act provides an autonomous central bank answerable to parliament. The Act curtails the unlimited lender of last resort (LOLR) facility for both the government of Nepal and the banking sector as the facility has a danger of creating a perpetual financial instability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Prudential regulation and supervision for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Now the question that arises is: What instruments does the NRB Act 2002 envisage to ensure financial stability? The current international financial architecture underscores the importance of prudential regulation and supervision for achieving financial stability. The NRB Act 2002, BAFIA 2004, Debt Recovery Act (DRA) 2002 and Credit Information Bureau (CIB) underpin the new domestic financial architecture. The NRB Act 2002 grants the autonomy to the central bank aimed at strengthening the banking supervision. The BAFIA lays down the framework for banks to operate. The DRA establishes creditors rights. The CIB offers a venue for information sharing among banks with a view to help reduce non-performing loans (NPL). This is key to ensure financial stability over the period. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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	<strong><span style="font-size: 14px;">The case for the use of monetary policy for financial stability</span></strong></div>
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	<span style="font-size: 14px;">The recent global crisis showed that prudential regulation and supervision alone did not guarantee financial stability. Hence, a case is made for using monetary policy in support of financial stability. In the wake of the recent global crisis, the IMF urged member nations to use monetary policy as the first line of defense. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the importance of financial sector stability for the overall functioning of macro economy in general and the transmission mechanism of monetary policy in particular, the NRB is cognizant of the role of monetary policy in attaining financial stability in recent years. Accordingly, monetary policy instruments have been used in support of financial stability. For instance, the bank rate, which was as high as 9 percent some years ago, was gradually reduced to 5.5 percent. Currently, it is 7 percent. Recently, the penal rate of 3 percent has been added to it for the LOLR facility to banks. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Besides the bank rate, concessional refinancing rates have been lowered to 1.5 percent for exporters, sick industries, small and medium scale industries and targeted people for foreign employment.&nbsp;The NRB has been making a provision for refinancing banks for their sick industry loans over the last several years. The objective is to help financial institutions and thereby achieve financial stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The cut in CRR has been consistently and systematically aimed at reducing the financial intermediation cost. The argument in this case is that monetary policy in no way should be a factor responsible for a higher financial intermediation cost measured in terms of interest rate spread. For this reason, CRR has been systematically reduced from 12 percent a few years ago to the current level of 5.5 percent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of flexible open market operations aimed at modulating liquidity has been put in place since 2004/05. Open market monetary instruments such as sale, purchase, repo and reverse repo auctions are being used either to inject or drain liquidity from the system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of standing liquidity facility (SLF) has been introduced for counterparties. The purpose of the SLF is to provide a safety valve for domestic payments system. Under this facility, counterparties can make an automatic and hassle - free access to funds from the central bank.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">The case against overly use of monetary policy for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There are counter arguments for overly use of monetary policy for financial stability. First, it is argued that the mixed role of the central bank, namely securing banking stability and maintaining monetary stability, at times, creates policy tensions. For example, the use of accommodative monetary stance aimed at supporting financial stability could be counterproductive to price and external stability in the face of pressures on inflation front and a deficit in country's BOP position. As such, the central bank faces policy tensions of using soft interest rate policy for securing financial stability or hard interest rate policy for keeping inflation low and maintaining external stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Second, as per Tinbergin's rule (one instrument - one target), monetary policy, which is one instrument, can not be used for two policy goals - monetary stability and financial stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">&nbsp;Third, rescuing financial institutions by way of soft interest rate policy or the protracted use of quantitative easing through the LOLR facility will only prolong financial imbalances, posing risks to financial stability over the medium term. This will only postpone financial distress leading to a bursting of financial crisis in some points of time in the future. In this context, Greenspan's prolonged low interest rate policy is cited as one of the causes of the financial crisis in the US in 2008.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fourth, it is argued that the expectation of monetary authorities stepping in to defuse a crisis undermines market discipline and creates moral hazard problem in that it weakens the incentive for market participants to act prudently.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fifth, as Greenspan argued, the cleaning up the mess after the bubble bursts would be technically easier and less interfering with the market and more cost effective. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Back home in Nepal, it is argued that excessive monetary injection by way of repo and SLF lending helped perpetuate low interest rate regime in the past. This encouraged banks to indulge in financial excesses, leading to the recent financial distress in Nepal, including a deficit in country's BOP. It must be noted that the deficit in BOP during the last two years is not on account of the government budgetary imbalances, it is due to the private sector excesses and imbalances.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Of the various facts of financial stability, the question of monetary policy taking care of real estate and share prices has remained controversial. The question often asked is as to what should be the role of monetary policy in keeping these prices stable. This question is asked because stock market developments generate wealth effects, which have monetary policy implications. Likewise, stock market developments have implication for NPA level and, at times, threaten banking sector stability. Foreign portfolio investment in stocks has implication for external stability, for a greater volatility in share prices causes a sudden capital outflow, leading to BOP and exchange rate crises. Since foreign portfolio investment in the Nepalese stock market does not exist, this kind of tension does not arise in Nepal as for now. The consensus so far reached is that monetary authorities should be watchful of these prices. However, it is argued that monetary policy should not be overly used in containing these prices.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Macro prudential regulation</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Micro prudential regulation does not make a distinction between growth enhancing credit and speculative ones. The consensus is also not to use monetary policy overly for financial stability. Hence, the focus has now shifted on macro prudential regulation.&nbsp;It is argued that macro prudential regulation is needed to deal with the issue of pro-cyclicality and build defenses against emerging structural vulnerability in the financial sector. Pro-cyclicality and structural vulnerability are manifested in terms of real estate bubbles, common exposure to asset price bubbles, excessive leverage and low level of liquidity. To deal with these problems, macro prudential measures such as capital ratios, capital buffers, dynamic (forward looking) provisioning, liquidity ratios and prudent collateral valuation are applied. According to Blanchard, in case, excessive leverage emerges, regulatory capital ratio should be raised. If liquidity is low, regulatory liquidity ratio should be increased. If housing prices are rising, loan-to-value (LTV) ratio should be lowered. If stock prices are rising, margin requirements (haircuts) should be raised. In the wake of emerging financial distress, the NRB has introduced a number of macro prudential measures. For example, sectoral loan limit for housing sector is capped at 25 percent and real estate at 10 percent. C-D ratio for banks and financial institutions is fixed at 80 percent. The LTV ratio for shares has been fixed at 60 percent. Similarly, the LTV ratio has been fixed at 60 percent for both real estate and housing.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although macro prudential regulation could act as the first line of defense and be an important element of new financial architecture in the wake of the recent global financial crisis, there is a possibility of strong political pressure against the use of it. In the US, the delay in adopting the Volcker plan which aims at separating functions of different financial institutions is an example of it. Back home in Nepal, the strong pressure for the removal of LTV ratio for shares and strong lobby for the relaxation of capping real estate and housing loans are cases in point. This suggests that the existing domestic financial architecture will remain intact, implying that only micro prudential norms and market discipline will remain instruments for financial stability. There will be growing demand for the excessive use of monetary policy for securing financial stability. However, the latter will not help safeguard the long term financial stability. If it is used, it will be only at the peril of macroeconomic stability. </span></div>
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<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Tentative conclusions</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There is no doubt that financial stability is a public good which must be secured through preventive and remedial measures. Micro - macro prudential and deposit insurance measures can be applied to maintain financial stability. Keeping monetary conditions at an appropriate level is also key to securing financial stability. For example, easy liquidity conditions would encourage banks to take excessive risks by overindulging in lending. This happened in Nepal in the recent past. Likewise, overly tight liquidity conditions would lead to financial distress. Both of these monetary conditions should be avoided.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Therefore, going forward, the NRB will, in due course of time, appropriately streamline monetary operations. For example, there are ample instruments for the injection of liquidity. However, there are few to drain it. Sale and reverse repo auctions fall short of draining liquidity due to various reasons. Hence, the NRB will seek rationale in introducing standing deposit facility for banks as and when situation warrants.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The creation of standing deposit facility entails bearing financial costs by the central bank. Therefore, it requires strengthening the financial position of the central bank. It is especially important in relation to the growing size of counterparties and liquidity that would be needed to drain. One way of improving financial position of the central bank for the operation of deposit facility is increasing its paid up capital from the current three billion rupees to five billion rupees. This will help the NRB to absorb possible losses arising from monetary operations.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The exchange rate and the interest rate are the fundamental macro variables. As the current exchange rate regime as being used as the nominal anchor for macroeconomic management, there is no question of disturbing it at this stage. Therefore, given the depth and breadth of the domestic financial sector development so far, the interest rate is slowly emerging as key policy variable for macro-financial management. In this context, a need has been felt for using short term interest rate instead of the quantity of liquidity as an operating target. The NRB will pursue this in due course of time.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of monetary policy becomes crucial when preventive measures fail to ensure financial stability. Therefore, the role of monetary policy should come at the remedial stage. This is the market failure stage. When this stage comes, as the past intervention indicates, the NRB is extremely cautious to distinguish between those having solvency problem and those with liquidity problem. The LOLR facility should be provided to those solvent but with liquidity problem. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the current financial architecture, the NRB's intervention will take place only when market fails to ensure financial stability. Therefore, the NRB intervention, for that matter, will come with strings such as merger, management change, improvement in corporate governance etc. If financial institutions with solvency problem are systemic, the government should intervene by way of either injecting capital or guaranteeing deposits. Otherwise as per the spirit of the current domestic financial architecture, such financial institutions should be liquidated.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In case, the financial distress continues and additional LOLR facility is called for, Nepal will have to negotiate for the IMF program. This will be inevitable to deal with the possible adverse impact of LOLR facility on international reserves and BOP.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Summing up</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The kind of domestic financial architecture we have chosen is key to consider the role of monetary policy for financial stability. If we were to adopt liberal licensing policy and allow banks to have portfolio of their choice, micro prudential, self regulation and market discipline should be key for financial stability. The focus of monetary policy should be on inflation, BOP and foreign exchange. These are crucial areas for attaining macroeconomic stability including financial stability. The role of monetary policy should be marginal and come at the remedial stage. Those financial institutions which cannot survive on their own under the liberal framework of financial architecture should be allowed to disappear. If we were to seek a larger role of monetary policy in ensuring financial stability we will have to be willing to change the current financial architecture including readiness to adopt macro prudential regulation. Given the existing framework of the financial architecture, any lobbying for political interference for the change in monetary policy is construed as an attack on professionalism and autonomy of the central bank. This does not bode well for market discipline, a crucial element for financial stability either.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Thapa is the Chief Manager at Biratnagar Office of Nepal Rastra Bank (NRB). He was earlier the Director of Research Department at NRB's central office in Baluwatar, Kathmandu. He also spent two years between 2008 and 2010 as Advisor to the Executive Director at International Monitory Fund (IMF), Washington DC, prior to returning to Nepal.)<br />
	<br />
	<br />
	</span></i></span></div>',
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			'created' => '2011-09-24',
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			'description' => 'Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress.......',
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		'Article' => array(
			'id' => '432',
			'article_category_id' => '37',
			'title' => 'Monetary Policy2011/12:Hard To Realise The Promises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size:12px;"><strong><i><span style="line-height: 120%;">By Hom Nath Gaire<br />
	<br />
	<br />
	</span></i></strong></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size:12px;">The Monetary Policy for the fiscal year 2011/12 has made an attempt to be balanced with the expansionary fiscal policy of the government of Nepal despite fears of inflationary pressure, apart from reducing the Cash Reserve Ratio (CRR) by 50 basis points to five per cent. At the same time, NRB, the country's monetary authority, has accepted the ground reality that the monetary management of the economy is getting tough due to high inflation and unfavourable external sector accompanied by the deepening liquidity crisis in the financial system of the country.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">To ease the liquidity situation in the economy, the policy has reduced CRR by 0.5 percentage point to five per cent. The policy document said, The revised CRR is estimated to instantly release around Rs 4 billion in the financial system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">This fiscal year too, the policy has targeted seven per cent inflation. To support the fiscal policy aim of&nbsp;five per cent growth rate, the central bank is planning to increase the broad money supply by 12.5 per cent but the policy is ignoring its implications on general price level. However, NRB has attributed rising consumer price to supply constraints, defending its failure to contain the inflation to seven percent according to the target of its last year's monetary policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the central bank data, the broad money supply including the balance sheet of commercial banks, development banks and finance companies enlarged by 7.3 per cent but the consumer price increased by an average of around 10 per cent in the last fiscal year's first 10 months. The 7 per cent target of consumer inflation for the current fiscal year is a big challenge due to the adverse impact of expansionary fiscal policy on which the government is planning to finance the capital as well as the recurrent expenditure through deficit financing. The overall macroeconomic policies have to be revisited as the Monetary Policy could not achieve inflation and Balance of Payment (BoP) target, the policy accepted, Apart from that managing liquidity and maintaining financial stability is an immense challenge for effective execution of the policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the policy, BoP that was Rs 11.67 billion deficit in the first 10 months of the fiscal year, has however, recorded an unexpected surplus of around Rs 1 billion by the end of 2010-11, attributing surprise surplus to foreign grants and aids released in the eleventh month.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">For the current fiscal year, the Monetary Policy has targeted Rs 5 billion BoP surplus. In such unpredictable and volatile cash flow situation, the BOP target for the current fiscal year may also be hard to realise. Because, as the Monetary Policy has brought no change in the bank rate, refinancing rate and Statutory Liquidity Ratio (SLR), the debt servicing of the private sector may remain higher and the production of exportable goods will be affected adversely, which in turn will result in wider trade deficit and unfavorable BoP. However, the central bank has stated that refinancing will be revised according to liquidity need. This alone may not be sufficient to meet the demand for credit in the productive sector and boost the exports. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The foreign exchange policy for individuals has become more as a Nepali willing to visit abroad can get foreign exchange up to $2,500 for once or a maximum of $5000 in a fiscal year, revising the facility from last fiscal year's $2,000 and $4,000 respectively. Similarly, NRNs can open foreign currency bank accounts and special arrangements will be made for Nepalis to open NOSTRO accounts in foreign countries. Likewise, the policy allowed the banks to exchange foreign currency up to $1,000 provided the beneficiary supplies credible source of foreign exchange with identity. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The policy has increased provision of deprived sector lending to 3.5 per cent and asked banks and financial institutions (BFIs) to raise this ratio by 0.5 percentage point for two years. This provision will be helpful in directing lending towards productive sector as well as deprived sector and supportive to achieve the economic growth of 5 percent, revealed the policy. The targeted economic growth is also hard to achieve in the situation of deteriorating investment climate and low investor confidence due to government's tilt towards a socialist economic system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the monetary policy, the deposit mobilisation of BFIs will be increased at the rate of 13 percent by the end of the current fiscal year and will add around Rs 100 billion to the country's banking system. To achieve this target, the policy tries to address the crisis of trust in the banking system by extending deposit insurance up to Rs 200,000 to commercial banks as well so that small depositors feel safe. Earlier, the deposit insurance was mandatory only for the B and C class BFIs. By the end of last fiscal year, the deposits of BFIs increased 8.2 per cent to Rs 788.72 billion and the foreign exchange reserve increased by a mere Rs 2 billion to Rs 270 billion from a fiscal year ago's Rs 268 billion.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size:12px;"><span style="line-height: 115%;">Apart from encouraging BFIs to open branches in select nine districts, where there is less access to formal source of finance, the policy directed BFIs to include a collateral-free loan of up to Rs 200,000 for the study of technical education under deprived sector lending.<br />
	<br />
	<br />
	</span></span></div>',
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			'id' => '431',
			'article_category_id' => '31',
			'title' => ''We Want To Target Corporates On A Much Bigger Way' (august 2011)',
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			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="right" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/altaf.jpg" style="width: 415px; height: 346px;" vspace="10" />Altaf Halde</strong> joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of Kaspersky antivirus. For Nepal, Sagar Infosys is the sole authorised distributor for Kaspersky products. Halde revealed the company will soon release the enterprise version of the antivirus in the Nepali market. In an interview with <i>New Business Age</i>, Halde shared his views on the latest product and Nepal as the market for Kaspersky. Excerpts:</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How do you see the market for Kaspersky products in Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I was pleasantly surprised to know about the market potentials of Nepal which I visited after Bangladesh where also we have a very good market share. In Nepal, we have more than 70 to 75 per cent market share. Based on what I hear from dealers, I think there is definitely a big potential over here. I can see a lot of educational institutes coming up, IT initiatives happening, and increasing penetration of laptops and desktops. That automatically translates that you need protection for your computers or laptops and that is where Kaspersky comes on the scene.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Most people use pirated software and operating system at home. What will be the extent of risk to such users from security viewpoint?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Risk is a lot. When you google the key â€˜free antivirusâ€™, you can find a lot of them that you can download. The download shows it is installing but you donâ€™t know whether it is actually installing. It might be downloading some malwares too. Nothing comes for free. People are using free software and they are not sure if that is the best thing. Secondly, people use pirated software. In this region, piracy is a big problem. In India, it was similar many years back but now customers realise that just using a process, the solution does not end; you also need support. You get the support&nbsp;by using a licensed product. That will take some time but it will gradually improve over a certain period of time because that is the way our markets are. On the question of risk, there is definitely the risk because you donâ€™t know what you are using. It might have malware, spyware, or some other kind of threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How can Kaspersky minimise such risks and protect users?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Kaspersky Lab which is centrally located in Moscow detects 35 thousand threats every day. You can imagine the number of threats. When a person is on the Internet, it does not matter whether he is sitting in Nepal, India or America. So, what Kaspersky does is that it keeps coming up with&nbsp;regular updates because the threats are increasing. That is how we are able to protect users from such threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Users often complain that Kaspersky requires powerful machine to operate, which slows down their system. How has Kaspersky addressed this issue in its latest version?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In 2012 version, we have come up with a hybrid technology â€“ cloud-based system. With this system, when you are using the desktop and you are not connected to the Internet, you donâ€™t need to have a lot of signature database on your machine. When you have a lot of signature database updates searching on a machine, it takes up your resources and the machine becomes slower. With the hybrid technology we are using cloud-based protection. So, the signatures of the threats are stored in the cloud. Once the user is in the Internet, computing power of the machine is not touched. That will happen in real-time across the Internet. That is how we have been able to address this particular problem. However, if you look in comparison with other products, we are much faster even in the existing version. We do understand that in emerging markets like India, Sri Lanka, Bangladesh and Nepal, computing is not very powerful. That is why this hybrid technology will prove very good technology for us.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In Nepal, Internet bandwidth is lower and majority of users do not have access to high speed Internet. Donâ€™t you think the cloud-based system will be a challenge?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On the consumer level, this could be definitely a challenge because of the Internet speed and probably the bandwidth will be affected but this cloud-based computing will still help reduce this particular problem because the computing is not happening on machine but in real-time in the cloud. We have tested our product with various Internet bandwidth types during the development stage and did not face problem. We will definitely be able to address this particular problem as time progresses. Once the users start using the product they will realise it is actually a good product by making use of good bandwidth.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What is the volume your are looking at in terms of sales for Kaspersky products in Nepal? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I wouldnâ€™t be in a position to give you the target from the sales perspective but we have got very good market share at around 70 to 75 per cent with the previous version. This year, we should definitely look at a market share of 80 to 85 per cent. That is what we would want to achieve.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Who do you think are major competitors for Kaspersky in Nepali market? How is Kaspersky different from&nbsp;other products in the market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;I wouldnâ€™t say only about Nepal but globally, Symantec and McAfee are our competitors. There might be a lot of other products but on a global perspective, Gartner have listed three of us as top three security vendors â€“ Symantec, McAfee and Kaspersky. I would say that they are our real competitors.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">We are using hybrid technology while others are only talking about it. When we set up parameters, we are technically quite advanced in terms of updates size and faster scanning compared to other products. Even in this cloud-based technology, we have come up with a small sized update a day rather than making a big update like other products. We understand, in a country like Nepal, bandwidth rate is a problem. With a big update at once, users will not be able to update in time and will be open to threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How is the response of users to your products in South Asia in comparison&nbsp; with western markets? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Our biggest market is Europe, followed by America. Over there, the split is approximately 65 to 70 per cent in consumer segment and the balance in the enterprise segment which is a matured market for Kaspersky. In South Asia, we are very strong in the consumer space and in the enterprise space we have not yet been able to take it to the next level. So, if you put both of them together, I would say in south Asia, we are probably at the number three position, Symantec and McAfee probably being the leaders.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In small countries like ours, price of software is excessively higher which is sometimes even costlier than buying a pc. How does your new version compare with other products on this count?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;We have retained the same pricing as of the 2011 version. A single user pack of antivirus comes for Rs 1,000 for a year. If you look at the per-day basis, itâ€™s less than what a cup of tea would cost. So, that is the amount you are paying to protect the data or yourself. With the market share of 70 to 75 per cent, a lot of users are using Kaspersky 2011. We have also provided the user of 2011 version a free upgrade. That will come free of cost, if the users still have valid license period.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are the challenges you are facing&nbsp; in the Nepali market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Based on what I have seen in my first exposure to the Nepali market, piracy is rampant. Then, there are a lot of other products that come into the market with a lower price to dump their stock. They achieve their sales but there is no support. So, the consumers feel they are cheated. We see that as a challenge. While other products come to dump but we are there in the market with a proper focus. Sagar Infosys is Kaspersky products since 2008 and also providing support and there is our focus. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are your future plans for Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.2pt;">We plan to keep coming here more often for developing consumer awareness because for us awareness is the key. If consumers donâ€™t know about the threats they will not look for protection. We want to make sure about the awareness on the threats and product developments. So, we want to have many such marketing events where we can go and address the threat scenario to consumers as well as corporate houses. We want to target corporates on a much bigger way in the Nepali market. We want to keep coming to Nepal with more and more solutions which are technically advanced. Everybody was talking about this cloud-based technology but nobody came up with a solution. So, whatever the technology or threats, Kaspersky will be the first to come with a solution.</span></span></div>',
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			'created' => '2011-09-17',
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			'description' => 'Altaf Halde  joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of ......',
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		'Article' => array(
			'id' => '430',
			'article_category_id' => '31',
			'title' => ''I Refuse To Call This A Liquidity Crisis' (august 2011)',
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			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/dr gautam vora.jpg" style="width: 283px; height: 328px;" vspace="10" />Dr Gautam Vora</strong><span style="letter-spacing: -0.05pt;">, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques, interest-rate modeling, investment strategies and mathematical modeling of financial plans.&nbsp;Dr Vora is also a Visiting Professor with Kathmandu University School of Management (KUSOM), and during his recent visit to Kathmandu, he addressed issues at a talk programme titled â€˜Financial Crisis: Will Nepal Join It or Avoid It?â€™ organised by KUSOM. In an interview with </span><i>New Business Age</i><span style="letter-spacing: -0.05pt;">, he discusses the likely consequences for Nepal and its people in the event of a financial crisis, among other issues. Excerpts:</span></span></span></div>
<div style="text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><br />
	</span></span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How, do you think, the current liquidity crunch in Nepal can be set right?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">First of all, â€˜liquidity crunchâ€™ is a wrong phrase to use. Secondly, the problem is not that of liquidity because there is enough money in circulation including the so-called monetary supply. It is actually credit crunch. The people who need to repay the money arenâ€™t able to manage credit to repay quickly. So, primarily, it affects them. The people who speculated are the ones unable to borrow more to make payments on their loans. I have been told that land prices in Kathmandu soared outrageously but have come down drastically in recent times. The BFIs lent against those lands as collateral at higher prices and everybody got large amounts as loans. Now that the value of same land holdings has come down immensely, the borrowers cannot sell off the land to repay the loans. So, these people are looking elsewhere for more money. The impact of this situation on the banks is that they were expecting certain cash inflow of interest and repayment of the principal on the loan but they are not getting it. The BFIs have stopped getting money from the borrowers while they still have to pay interests to their depositors. It is a small world and everybody knows whatâ€™s happening. The depositors the world over stand in the queue immediately to withdraw all their cash the minute they panic. In such an event, the bank has to find money from somewhere to pay cash to the depositors. We can call it insolvency on the bankâ€™s part because it may have the assets but not enough cash. I refuse to call this a liquidity crisis in technical terms: itâ€™s a cash problem. This is precisely the case when the NRB is forced to bail out such BFIs by supplying them bundles of cash to pay the depositors. </span></span></div>
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<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;">&nbsp;You have labeled the global financial crisis a â€˜group of crisesâ€™. What is your logic behind this observation?</span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">Itâ€™s because the complete picture on global financial crisis is not only about impacting financial markets but also the path it treaded to reach there. It is for everyone to see that there is a crisis but most people are unaware of the real causes behind it. The problems are deep within the system due to which many commentators started calling it a systemic failure. The system was designed and modified over the years in such a manner that it led us to this problem. Thatâ€™s why I call it a group of crises because it took us a long time to get there. The whole story was in the making for 10 â€“ 15 years in the US and before the people could realise, it carried over to other countries as well. It started during the Clinton (Former US President Bill Clinton) administration when the liberalisation policies were implemented and the government agencies were indirectly asked to do certain things for the society. But it slowly increased in size and intensity and ultimately developed into a major crisis.</span></div>
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<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What, in your opinion, should be the conduct of Nepal Rastra Bank as well as the Banking and Financial Institutions (BFIs) to ensure smooth running of the economy?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">It seems to me that Nepal Rastra Bank (NRB) is currently the only organisation in Nepal which can look after the financial sector as well as the economy. That makes it a very important agency. I did have the opportunity to speak to a few NRB officials and realised that they are exceedingly competent and have the countryâ€™s interest at heart. The problem is that when you overwhelm a small group of people with too much work, they cannot handle it. You also need regulatory and legal structures backing these people up. The decision of classifying commercial banks, development banks, finance companies, etc as part of the financial sector is definitely very important but it is equally important to set limits for them. It would have been useful to categorise the scope of work for these institutions and spare them interference from the ruling structure of the country as well as the promoters of respective companies. Everybody has a stake in the institutional well being but the ultimate goal for these institutions should be to promote the national economy. If they are going to look at their own narrow self interests then they can do so in the short term only. This is where NRBâ€™s role of being a regulatory agency becomes critically important.</span></div>
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<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">You accept that NRBâ€™s role is of paramount importance. What best can it do to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB ought to develop a sub agency whose sole focus would be to manage and supervise the oversight of the â€˜Aâ€™ class commercial banks because they are the biggest ones and they have roots in the economy everywhere. They are the real conduit or the pipeline for the monetary policies of NRB so they need special attention. They need tight grouping but I donâ€™t know how that is being accomplished at this point of time.</span></div>
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<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What are your recommendations for Nepal to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB is doing all it can to avoid the crisis. It does lot of good things such as giving the money, regulating and supervising, encouraging merger of weak banks with strong banks, etc. The difficulty I see is that of the assets portfolio. The loans that the BFIs have made are weakening, in other words, they are becoming non-performing. This kind of a situation puts a lot of stress on the capital structure and the flow of credit to the economy. No matter what NRB does, the problem doesnâ€™t seem to go away. There are different ways of handling the problem. The bad loans must be taken over from the banks and passed on to NRB. It is a question of how much the central bank can do because they have other goals in mind such as ensuring price stability and looking after the development of the economic sectors etc. The ultimate challenge is that of supervising the BFIs and making them do the right things which require exceedingly tight control.</span></div>
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<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How do you view the consequences for Nepal and its people in the event of a financial crisis?</span></span></strong></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">I have gathered that only about 35 per cent of the population in Nepal has access to banking services. So, the rest 65 per cent of the population will not be directly affected if, god forbid, a financial crisis was to happen here. But what is really interesting here is: most people under this 65 per cent population are barely maintaining a subsistence level anyway. The commercial sector which depends on the BFIs and the development of different industries, agriculture, construction etc will be severely affected in the event of a financial crisis. Even though we may say that the population at large might not be affected, the large chunk of the economic activity could very well be affected and that is the problem. Therefore, even the poorest of the poor will be affected indirectly. Nepal is in a very strong position because of huge amount of remittance it receives every year which is a very nice safety net. But the question is should we rely only on a safety net. Instead, we must rely on a good machine so that we donâ€™t have to use the safety net. And so, my concern is mainly from that perspective. We are trying very hard for economic development so letâ€™s not derail it by letting one little sector of the economy cause problems for the others. We need to study as to what per cent of the real economy depends on the financial sector. Look at the difference between the interest rates that people get on their deposits in the banks and the inflation rate. There is no incentive to save because the purchasing power is constantly decreasing. So, we do not need to have that sort of control in the economy to help save. Savings are to be used to increase the size of the economy for which we need good investments that can generate more income for the country. Finding good investment opportunities is key to bringing the whole economy together. Therefore, if the BFIs donâ€™t do their job well, then we are bound to face major problems.</span><br />
	</span></p>',
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			'description' => 'Dr Gautam Vora, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques,......',
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			'id' => '428',
			'article_category_id' => '40',
			'title' => 'Economic Policy Deflections (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><img align="left" alt="economic" border="1" height="316" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover(1).jpg" style="width: 315px; height: 316px;margin:10px;padding:10px;" vspace="10" width="315" />By Achyut Wagle</i></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">A</span><span style="letter-spacing: -0.05pt;">t present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is veering more towards the replay of 19th century model of state-controlled, putatively self-sufficient â€˜nationalistâ€™ and thus effectively an isolationist paradigm. The policy shift seems to have completed a full-circle from the campaign of self-sufficiency, trumpeting of fulfilling basic needs, then open-market-oriented liberal policies to the present one marred with confusion but decidedly intended to execute state-controlled economy. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
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<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Apparently, as elsewhere, the vicissitudes in the Nepali economic policy has been analogues to the nature of the political dispensation the country adopted in different points in history. The externalities too have their share of influence in shaping these policies. Such an influence is surely growing with the changing world order, shifting of epicentres of economic activities and, of course, with dramatically increased communication and transportation connectivities. </span></span></div>
<div style="text-align: justify;">
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<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Vicissitudes</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal presented its first national budget in 1952. Until the fall of Rana oligarchy in 1951, Nepal remained primarily a vassal state. Any economic policy under a 104-year long Rana rule used to be based on the whims of the ruler and that too, related only to the land tax and management of major temple trusts or â€˜Guthisâ€™. Back then, almost cent per cent people relied on agriculture of subsistence nature. State hardly spent for developing infrastructure, public delivery and services systems. The fall of Rana rule and dawn of democracy in 1951 February definitely heralded a new era both politically as well as economically. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
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<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first budget had three prime policy focuses â€“ expansion of education, promotion of co-operative like structures at the village level to increase agricultural productivity and monetising the economy to the extent possible. This also welcomed the American aid in the country thus far remained largely closed, except for British and Indian diplomats, for the outside world.</span></span></div>
<div style="text-align: justify;">
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	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Those initial policies were fairly realistic to Nepal given the socio-economic realities of that time. But, the political squabbles and power struggles overshadowed the implementation of them for at least a decade to come.&nbsp;However, despite politically a fluid situation, mid 1950s marked as a major milestone â€“ mainly in two respects â€“ in 1955 Nepal Rastra Bank (NRB) was established and in 1956 Nepal adopted its first five-year plan. </span></span></div>
<div style="text-align: justify;">
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<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">One of the major objectives of the NRB was to replace the Indian currency, which was widely circulated in Nepal, by the Nepali currency. Second one was to speed up the process of monetising the economy in place of widely practised barter system in goods and labour.</span></span></div>
<div style="text-align: justify;">
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	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first plan focused on transport and communication infrastructures. A substantial allocation was made in developing the administrative structure all across the country. But before the completion of the first five year plan due 1961, political coup dâ€™Ã©tat by the then King changed the whole economic paradigm, development priorities and naturally their outcomes.</span></span></div>
<div style="text-align: justify;">
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<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Flip-Flops of Panchayat</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The second plan was only for three years by lapsing a year. It was prepared by the National Planning Commission, a Russian style central planning mechanism, which still exists with very little variation.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">From the third five-year plan on, the partyless panchayat system under the direct rule of the King imposed a guided development policy. The economic policies were rather random mix of socialistic and capitalistic overtures. The state heavily invested in setting up state-enterprises of all sorts â€“ manufacturing, services and deliveries. This was an era of â€˜generousâ€™ foreign aid and Nepal was opened to all hues of them, albeit, with caution not to politically destabilise the largely totalitarian panchayat polity. Local panchayats were the political-administrative channels employed to carry out economic and development activities. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
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<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The seventh five-year plan (1985-90), the last of panchayat era, made two major policy departures. First, the plan categorically pronounced to work towards meeting the basic needs of the people, under the slogan coined as â€˜elevating the peopleâ€™s living to Asian standardsâ€™. And, second, it adopted a ground-breaking policy flexibility of inviting foreign direct investment and improving the performance of the state enterprises as recommended by Structural Adjustment Programme (SAP) piloted by the International Monetary Fund (IMF). During this period, apart from several foreign investments in tourism related industries, two foreign joint-venture banks, Nepal Arab Bank (Nabil) and Nepal Indosuez Bank were established. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
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<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Openness</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The reinstatement of multi-party democracy in 1990 began an era of economic liberalisation in Nepal too. The political change delayed the eighth plan by two years. But the eighth plan (1992-97) firmly advocated the privatisation of and divestment from the State Owned Enterprises (SOEs) and open market policies across all sectors. Undoubtedly, the forces of globalisation and international trend of reclaimed openness through democratic governance in former USSR and Eastern Europe contributed to these developments. Whatsoever, this is perhaps the â€˜golden eraâ€™ in terms of economic policy formulation and growth in Nepal. During this period, private sector investment was impressive. Airlines, hospitals, educational institutions, banks and manufacturing units were set-up by private investment. Public investment in infrastructures, mainly roads provided firm basis for urban access to villages. The ninth plan was generally continuation of the eighth plan. But the growth spirit was dampened by the armed insurgency initiated by the CPN-Maoist in 1996 February. Amidst fear and uncertainty, the economy dragged on. But the growth path was already truncated before the end of this plan in 2002 due to spread of violence in the country-wide scale, destruction of infrastructure and absence of any substantive private investment. Despite all odds, the GDP growth in the 1990s was about five per cent annual average.</span></span></div>
<div style="text-align: justify;">
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<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Poverty Focus</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The tenth five-year plan was adopted through wider consultations with donor community led by the World Bank and other stakeholders. The whole plan was baptised as Poverty Reduction Strategy Paper (PRSP). True to its name, its focus was on poverty reduction with added dimensions like putting women in the forefront of rural poverty reduction strategies. An interesting policy link was introduced between the structural and legal reforms and the poverty reduction. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">At the very beginning of the plan, Nepal Development Forum was organised for the first time in Nepal. As the Maoist insurgency had become widespread, it also tried to look into the links of the factors like poverty, unemployment and social unrest or insurgency. Interestingly, however, the main policy basis adopted in 1992 that emphasised on the free market economy continued till the tenth plan that ended in 2007. One of the highlights of the tenth plan was Financial Sector Reform Programme (FSRP) that aimed to achieve the central bank autonomy and efficiency, reform in public sector banks, Rastriya Banaijya Bank, Nepal Bank Ltd and Agricultural Development Bank. Several other institutional set-ups like Credit Information Bureau, Debt Recovery Tribunal etc were added. Substantive legislative reforms were made, including a composite Bank and Financial Institutions Act 2007 (BAFIA). Reform in the capital market was another important agenda which has only partially achieved.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Some of highly ambitious reform agenda like bringing the financial giants like Employeeâ€™s Provident Fund and Citizen Investment Trust under an effective regulatory and supervisory ambit and establishing an Asset Management Company remained untouched. Despite generally appropriate policy directions in the later years of the tenth plan, the focus on implementation got immensely diluted. Among many other things, the process of privatising SOEs did not go ahead as expected.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">On the Reverse Gear </span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After signing of Comprehensive Peace Agreement with the Maoists in 2007, the discourse on economic policy has taken a backseat. The Agreement and the election for the Constituent Assembly both established the apparent dominance of the communist forces in Nepali politics. This not only changed but reversed the very orientation of national economic policy. Since then, no five year plan has been formulated. Two interim plans of three-year each were adopted in view of the prolonged political transition.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Contrary to the general expectation that the post-CPA period would create more conducive atmosphere for economy to grow, the economic performance has gone from bad to worse. The policy confusion is at its core. The communist forces, particularly the UCPN- Maoist is oscillating between proletarian dogma of state-controlled, distributive economy and present day global realities that demand openness and interdependence. The partyâ€™s heavy political reliance on its trade unions have made them unruly and major source of industrial disturbances.&nbsp;This has telling adverse effect of spatial nature on manufacturing and exports, new investments and employment generation. In a nutshell, Nepali economy is again going back to the era of â€œeverything done by the state.â€ Recently it has created new state-owned corporations like Hydropower Development Bank. No government policies assertively talk about privatisation and reform. In a bid to balance the international realities and communist indoctrination, the racing horse of growth has turned into a camel.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">For the last couple of years, the Maoist-UML coalition is in power. It has vehemently pushed a three-pillar â€“ government, cooperatives and private sector â€“ concept of economy which has irked and made apprehensive to the private sector regarding its role and treatment from the state. The private sector is unwilling to consider the cooperatives a separate sectors but the subsector of the private. Given nature, scale and GDP contribution, this proposition seems justifiable. But the more left-oriented policy makers have seen cooperatives as the substitute to the â€˜commune styleâ€™ operation of the economy, thus the emphasis. The cooperativesâ€™ contribution to the national GDP is estimated to be meagre 2 to 3 per cent.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Of late, the donor community and the potential investors â€“ both foreign and domestic â€“ seem to have lost interest in Nepali economy owing largely to absolute lack of policy predictability, growing apprehension of infringement on private property rights and disturbed industrial peace at the hands of ruling-party hoodlums and even stateâ€™s failure to bring them to&nbsp;justice.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Future</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal apparently does not stand at a point of immediate course correction so as it could regain the lost trust and re-ignite the growth engine. There are two main reasons for this: first, the communists, particularly the Maoists are still essentially against the concept of giving the private sector a lead role in economy.&nbsp;Not only that, their anti-private sector rhetorics is often repeated in this or that form. Recently, they have announced that â€˜allâ€™ party leaders would pull-out their children from private schools; purely a futile and demonstrative move. Therefore, until, the party recognises the private sector as major player in the economy and reflects the same in both â€“ policies and actions, economy is unlikely to come out of present sluggish pace of growth â€“ 3.5 per cent in the last fiscal year.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The second is the complete absence of the economic policy debate in all major political parties. Any economic policy introduced so far by any party or the government is not an outcome of all through meaningful debate from the local to the central bodies in a manner a democratic outfit should ensure for ownership and the implementation of these policies. Only adoption of this practice can bring the economic agenda to the forefront of the national debate and the policy predictability could also be ensured. </span><br />
	</span></p>',
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			'description' => 'At present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is.....',
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			'id' => '427',
			'article_category_id' => '40',
			'title' => 'Sorry State Of SOEs (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;"><strong>By Pinaki Roy</strong><br />
	Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government will provide over Rs 1.77 billion to the state-owned enterprises (SOEs) as subsidies in the current financial year while another Rs 1 billion will come in as foreign grant and loan. The subsidies to the SOEs for FYs 2009-10 and 2010-11 stood at Rs 1.54 billion and Rs 1.97 billion, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Most SOEs in Nepal are in loss for a long time now. Even the ones that are making profits are because of their monopolistic nature of business. However, itâ€™s inevitable that they too stand to come under pressure once competition intensifies. For example, Nepal Telecommunications Corporation (NTC) is being increasingly challenged by Ncell, a leading mobile telephony brand in Nepal. Most SOEs that are registering mounting losses year after year owe it mainly to political interference and corruption within these public corporations. The high profile Nepal Electricity Authority (NEA), Nepal Oil Corporation (NOC) and Nepal Airlines Corporation (NAC) are among the notable SOEs that have been making losses for as long as one can remember. Suresh Kumar Regmi, Under Secretary at Corporation Coordination and Privatisation Division of the Ministry of Finance (MoF) says, â€œThe corporations must try to become profit making entities on their own instead of expecting help from the government all the time.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Keeping these SOEs alive and kicking essentially means that the state has to dig deeper into its coffers to provide for them. The same money could have been invested otherwise on development. Among the most glaring failures are those of NEA and NOC that have miserably failed to adjust prices in accordance with evolving market dynamics. NEA sells electricity to its consumers at Rs 6.57 per unit as against its cost of Rs 8.97 per unit resulting in a loss of Rs 2.40 per unit. Its accumulated loss of around Rs 19.47 billion exceeds several folds to its total asset value. Similarly, NOC is under Rs 15 billion deficit currently due to heavy losses on petrol, diesel, kerosene and liquefied petroleum gas (LPG) prices. To make matters worse, it is plagued with corruption, political interference and poor governance. The government has no choice but to bailout these SOEs year after year because electricity and fuel are basic services that people of this country cannot be expected to live without. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The question arises as to how long can the state rescue the loss-making SOEs by compromising on development expenditure. NAC â€“ once the pride of the nation â€“ has gone from bad to worse with losses amounting over Rs 2 billion. Boasting a sizeable fleet of 21 aircraft at one point of time, it is left with only three small aircraft that fly domestic routes and two medium sized jets. Among the biggest foreign currency earners not too long ago, NAC today merely watches in despair other domestic and international airlines snatching away its market share. Never-ending controversies on aircraft purchasing, political meddling with appointment of staff and loans have hit the corporation hard in the recent past. The employees appointed by the public enterprises (PEs) stood at 33,603 in FY 2008-09, while this figure dropped slightly to 33,526 in the succeeding fiscal year. The average monthly expenditure of these employees reached Rs 34,126 in FY 2009-10.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The taxpaying populace is infuriated because its money is funnelled into these failed enterprises while development activities and service delivery are taking a beating due to, among others, inadequate funding. Furthermore, there has been a lack of genuine intent to reform or privatise the loss making enterprises. The SOEsâ€™ survival now stands purely for political reasons. Their existence does not add significant value to the countryâ€™s productive capacity. During FY 2009/10, 22 PEs earned net profit, whereas 14 PEs recorded loss; some of them had negative net worth. The governmentâ€™s investment in these SOEs has reached a whopping Rs 84.91 billion. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The total operating income of these enterprises in FY 2009-10 registered an increase of 21.63 per cent over the previous FY and reached Rs 130.98 billion. While the operating income of service sector enterprises increased by 70.2 per cent, the industrial sector enterprises registered the least increase in operating income at 4.2 per cent. The net fixed assets of 36 enterprises that totalled Rs 133.740 billion in the fiscal year 2008-09, reached Rs 139.365 billion by the end of the fiscal year 2009-10, an increase of 4.2 percent. While analysing the entire profit and loss of the 36 PEs, the net profit of Rs. 10.55 billion they had earned in fiscal year 2009-10 grew by Rs 8.3 million in the fiscal year 2010-11. However, if three major profit making SOEs are taken out, these statistics cut a sorry figure in itself. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Akin to the case in other countries, the state enterprises in Nepal too are present in areas that could be more successfully occupied by the private sector. Incompetent SOEs have blocked private dynamism completely and, at the same time, necessitated an insurmountable financial and administrative burden. In contrast, privatisation promises to free up public assets for activities of urgent attention and facilitate improved and inexpensive services besides unlocking prospects for private sector growth. However, the Privatisation Cell of the MoF has no immediate plans to privatise SOEs anytime soon. â€œWe are not in a position to close loss making enterprises either as they provide employment to thousands of people,â€ Regmi informs on a rather helpless note. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Nepalâ€™s privatisation programme articulated in the 9th plan envisions promoting private sector participation in the economy. A number of enterprises, mostly agricultural and industrial, have been privatised since the programme began in 1992 with the government playing the role of a catalyst. However, a number of productive SOEs such as Bansbari Leather and Shoes Factory (BSLF) and Agricultural Tools Factory (ATF) have ceased to function after being privatised owing to governmentâ€™s thoughtlessness in selection modality and consultation process, and lack of proper homework while selling them. Over the last decade or so, the privatisation drive has slowed down considerably to the extent of coming to a virtual standstill.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The delicate financial health of the SOEs and their failure to adequately gratify market demands is a persistent problem that cannot be resolved by gifting subsidies and granting loans. Mismanagement, overstaffing, poor governance and accountability, competition from private players and most importantly, politics prevailing over economic imperatives have destroyed these SOEs and led them to their present dismal state. One can safely assume that unless there are radical and wholesome practices pursued such as privatisation (save the ones that are strategically linked to critical security and national interests) of these ailing enterprises, the SOEs will continue to be resigned to their fate and the taxpayers of this country will keep on bearing their burden. Worse, bailing out the SOEs of their financial chaos time and again only makes them more inefficient. Itâ€™s but tragic that the sick enterprises are encouraged to take the state and the nation at large for granted. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The Loss-making SOEs</span></div>
<table border="0" cellpadding="0" cellspacing="0" style="margin-left: 4pt; border-collapse: collapse; width: 321px; height: 678px;">
	<tbody>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border: 1pt solid white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Name of the SOE</span></b></span></div>
			</td>
			<td style="width: 59.9pt; border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: white white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Total Loss </span></b></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Dairy Development Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 325.1 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Herbs Production and Processing Company Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 136.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Hetauda Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 619.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Janakpur Cigarette Factory Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 800.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Drugs Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 485.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Udaypur Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.773 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oriental Magnesite </span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 3.597 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Food Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.107 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oil Corporation Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 8.418 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Airlines Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.557 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Gorkhapatra Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 89.7 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Television</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 760.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Water Supply Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 391.4 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Electricity Authority</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 18.230 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Agricultural Development Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 4.391 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rastriya Banijya Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 11.228 billion</span></span></div>
			</td>
		</tr>
	</tbody>
</table>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>Source</i>: Ministry of Finance Report, Ashad 2068</span></div>',
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			'description' => 'Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government.....',
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		'Article' => array(
			'id' => '426',
			'article_category_id' => '40',
			'title' => 'Policy Twists For Public Enterprises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: 0.05pt;">T</span><span style="letter-spacing: 0.05pt;">he budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and ensure efficiency of public enterprises. However, this yearâ€™s budget has also mentioned a policy to disinvest the government shares among general public.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The latest budget is a step backward on privatisation policy adopted by previous governments. The budget presented by Dr Ram Sharan Mahat for the fiscal year 2007/08 had proposed a gradual privatisation of the state-owned enterprises. Then, the budget of 2008/09 presented by Dr Baburam Bhattarai of the UCPN-Maoist led government reversed the policy of privatisation. Next yearâ€™s budget by Surendra Pandey gave continuity to Bhattaraiâ€™s agenda to increase investments in government corporations. Economic experts had argued against increasing the investment in state-owned enterprises instead of taking up privatisation measures.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Though there were attempts of privatisation during the Panchayat system, they were unsuccessful.. The concept of socialism faded and liberalisation came into picture after the fall of communism in Eastern Europe. Nepal could not avoid the influences of the global change. There was massive change in Nepali economic policy with the restoration of democracy as the process of privatisation of public enterprises began after 1991. Experts have it that the new initiative was taken mainly because of the pressure from IMF, The World Bank and other donors. The change was incorporated in the White Paper published by the Girija Prasad Koirala government in 1991. The policy tried to balance the public and private sectors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Koirala government emphasised on selling the shares of public enterprises at the stock market. That was aimed at widening the ownership of the newly-privatised corporations and also to ensure competition for companies as well as consumers. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Harisiddhi Brick and Tile Factory, Bhrikuti Paper and Pulp Factory and Bansbari Leather and Shoe Factory were privatised in the first phase. In 1993 and 1994, 14 companies were selected for privatisation. Seven of them were wholly government-owned while the rest had joint-ownership with the private sector. Similarly, in the second phase, Balaju Textile Factory, Nepal Film Development Corporation, Nepal Lube Oil, Bitumen and Barrel Industry and Raw Hide Collection and Development Corporation were privatised. Likewise, Jute Development and Trading Corporation and Tobacco Development Company were liquidated.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The policy took a different turn when the Communist Party of Nepal (UML) came to power in 1994. Unlike the Nepali Congress, the UML government favoured public enterprises. The budget speech of the same year read, â€œTo lessen the financial burden of the government, a privatisation program based on economic policies of the government will be implemented. There will be separate listing of corporations that are to be privatised and those that will not be privatised. The privatisation programme will be expedited for those corporations included in the privatisation lists.â€ However the government policy could not take off as the government did not even list the companies for privatisation. Further privatisation was certainly out of question. The budget of 2001/02 tried to be most intensive and aggressive towards public enterprises. The budget presented by Dr Ram Sharan Mahat promised to set up a separate unit in the Ministry of Industry, Commerce and Supplies to coordinate and monitor the price, quality and quantity of goods and services produced by the public sector. This budget also decided to prepare strategic and organisational planning to reform managerial, accounting and financial systems of the public enterprises. Most remarkably, it also decided to convert state-owned enterprises into companies curtailing the number of board members, their functions and duties to ensure professionalism.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On minimising the cost to government, the budget presented by Dr Mahat read, â€œThe tendency of increasing short-term benefits by neglecting social security in public enterprises and development boards will be discouraged.â€ He proposed the provision to manage pension and gratuity compulsorily through Citizen Investment Trust. Likewise, the executive chief was made liable for creating any new financial liabilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Another significant proposition by Dr Mahat was to encourage the private sector investment where the involvement of the government is deemed unnecessary and where there existed a high possibility of attracting private sector.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">After 2001, 17 companies have been either liquidated or privatised. Nepal Telecommunication Company was the latest one to join the list in 2008 when its some shares were sold to the public. However, the privatisation process stalled completely after 2009/10 except for the sale of government shares of Small Farmer Development Bank to Small Farmers Cooperatives&nbsp; in 2010/11.</span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
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			'description' => 'The budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and.....',
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	(int) 10 => array(
		'Article' => array(
			'id' => '425',
			'article_category_id' => '40',
			'title' => 'What’s Wrong With Public Enterprises? (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	<span style="font-size: 14px;"><span>T</span><span>he government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by Bharat Mohan Adhikari. The promise made in the budget 2010/11 to form the committee has however remained unfulfilled.&nbsp;The board is expected to manage and run the corporations effectively and efficiently. Suresh Kumar Regmi, Under Secretary of Corporation Coordination and Privatisation Division at the Ministry of Finance, said the proposal to constitute the board has been sent to the cabinet for approval.</span><br />
	</span></p>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of the government to act as a referee for the development of economy seems to be neglected by the new budget. Rather, it has proposed the concept of an economy led by cooperatives. Obviously, private sector is thoroughly dissatisfied with the government move. Dr Ram Sharan Mahat, former Finance Minister and Nepali Congress Leader, said, â€œThe proposal of the government-owned cooperatives is not an alternative. Rather, they are against the self-help spirit of the cooperatives.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the new budget, the government has tried to democratise the selection of Chief Executive Officers and General Managers of public enterprises. Merit-based selection is expected to welcome capable and qualified leadership. Often, it is alleged that poor leadership in the corporations led to their deterioration.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Similarly, this yearâ€™s budget says, â€œA policy of disinvesting the share of the public enterprises to the public will be implemented.â€ The share of the government was Rs 82.76 billion in 2009/10 while its total loan investment in 36 public enterprises remained at Rs 84.92 billion. In the previous fiscal year, the figures stood at Rs 86.13 billion and Rs 74.60 billion respectively. According to the economic survey of 2010/11, share investment of the government decreased by 3.9 per cent while loan investment rose by 13.8 per cent.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the name of reforms, the government is funnelling billions of rupees from the state coffers as subsidy to public enterprises which are constantly failing to show their competency in comparison with the private sector. This year, an estimated Rs 2.77 billion is being provided as subsidy. Similarly, the subsidy was Rs 1.97 billion in 2010/11 and Rs 1.54 billion in 2009/10. Regmi said, â€œThe corporations will not progress if they remain dependent on the government. Rather, they must manage their operations on their own.â€ â€œWhen the private companies in the same sector can do well, why canâ€™t the government-owned companies make profit,â€ he asked.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the last fiscal year, out of the 36 public enterprises, 22 were in profit while 14 were bearing losses. None of the corporations engaged in production are in profit. The economic survey shows that the net profit of Rs 10.55 billion in fiscal year 2009/10 grew by Rs 8.3 million in the fiscal year 2010/11. The share of net operating income of the public enterprises has been 11.2 per cent of the GDP. Regmi said though the number of profit-making companies has increased in recent years, the combined profit of the corporations has not increased. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although Nepal Tourism Year 2011 is going on, national carrier Nepal Airlines Corporation (NAC) is in the worst possible condition. Similarly, Hetauda Cement and the first cigarette factory of the nation, Janakpur Cigarette Factory, are also in dire straits. Despite a monopoly in the market, it is unfortunate to see Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA) in heavy losses. Stories of other 14 corporations are no different. Poor management, inefficiency, corruption, weak leadership, skewed policies are to be blamed for their failure.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Likewise, the net fixed asset of the 36 public enterprises was Rs 133.740 billion in the fiscal year 2008/09 which increased to Rs 139.365 billion by the end of the fiscal year 2009/10, up 4.2 per cent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the liberalisation policy on economy introduced after the restoration of democracy in Nepal, the government initiated the process of privatisation, liquidation and termination of state-owned enterprises in 1993. Ever since, 30 companies have been divested of which 18 corporations have been privatised while 11 have been liquidated and one, Nepal Transport Corporation, was dissolved. The disinvestment has been carried out through the sale of businesses assets, partial disinvestment of shares, sale of current assets, leasing of buildings and land, management contract, liquidation, and termination. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The private sector and some economists are complaining that the government has taken a regressive step by reverting to state-controlled economy from the currently liberal economic regime. Mahat said the proposal of the government brought through the budget 2011/12 is suspicious and non-transparent. â€œThe government has failed to bring any concrete policy for the state-owned enterprises. It lacks an action plan for the corporations,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Experts opine that the government should play the role of a referee. It should work for the development of the real sector and the economy but it should not involve in doing business. They say competitive market entities should be handed over to the private sector. Dr Prakash Chandra Lohani, former Finance Minister and Co-president of Rastriya Janasakti Party, says the government and the private sector must complement each other. He opines without ensuring law and order and a strong policy framework, the private sector cannot prosper. â€œFor that, competitive regulation is necessary and the government should try to minimise the risk of the private sector. However, this yearâ€™s budget does not talk about vision and roadmap for the private sector,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although much criticised, the public enterprises have been the source of employment to 33,603 people at executive level appointed by the management in 2008/09. However, the figure dropped to 33,526 in the succeeding fiscal years. Regmi also accepts that public enterprises&nbsp;are overstaffed. Experts opine that the number of staff in sick corporations can be lowered, which may lower their cost of operation and.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">According to Regmi, the government does not have a list of public enterprises that they want to privatise or a policy framework to privatise them in the near future. He suggests that the policy should be made in coordination with line ministries to give such companies the right direction. â€œTrying to save them by the finance ministry alone will not work,â€ said Regmi. â€œA political decision can choose either to close down or keep operating the public enterprises. However, as thousands of people are getting employment even in sick public enterprises, they cannot be abruptly closed.â€ </span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '2012-08-23',
			'keywords' => '',
			'description' => 'The government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by.....',
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			'breaking_news' => false,
			'main_news' => false,
			'in_scroller' => false,
			'user_id' => '0'
		)
	),
	(int) 11 => array(
		'Article' => array(
			'id' => '424',
			'article_category_id' => '40',
			'title' => 'International Privatisation Trend (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">M</span><span style="letter-spacing: -0.05pt;">otivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation programmes in the last twenty-five years or so. Decades of poor performance and inefficient operations by SOEs led the governments to embrace privatisation. Thousands of SOEs have been given away to the private sector in Africa, Asia, Latin America, and Eastern and Western Europe. Throughout the world, annual revenues from privatisation soared during the late 1990s, peaking in 1998 at over US $100 billion.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Widespread privatisation in recent decades has generated a reasonable hype concerning the effects of ownership on performance. Most studies find that privatisation has a positive impact on profitability and efficiency of business firms. However, very little is known about the effects of partial privatisation where the government remains the controlling owner. Indiaâ€™s privatisation programme has followed a pattern of partial privatisation through share offerings but at a particularly slow rate. Between 1991 and 1999, the Indian government raised about $9 billion in privatisation revenues, compared to nearly $71 billion raised in Brazil and $21 billion in China over the same period, according to Global Development Finance Report 2001.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Since both ownership and control shift to the private sector at the same time, full privatisation makes it difficult to distinguish between the political and the managerial perspectives. In contrast, under partial privatisation, the shares of the firm are traded on the stock market while the firm remains under government control and subject to political interference. Letâ€™s have a look at the following examples of how some countries and regions responded to privatisation in the last two to three decades. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">India</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The state intervention in SOEs has been undergoing a close scrutiny in many developing countries including India since 1980. The argument was that excessive political interference and lack of managerial interest (autonomy) hampered the performance of SOEs. Economic policy and state-owned sector in the post-independent India can be divided into four phases: (i) 1950-1965, (ii) 1966-1984, (iii) 1984-91 and (iv) post-1991 policy regime. The second sub-period of the second phase i.e. 1973-84 recorded a slow process towards liberalisation, which culminated into an irreversible process of liberalisation of the economy through the third (1984-91) and during final phase (1991 onwards). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Concepts such as liberalisation, privatisation, disinvestment and market-friendly approach replaced the old concepts of socialism and mixed economy. The period of 1966-84 culminated in a total transformation in the economic policy where economy was made predominantly dependent on market forces rather than on the state. The attempt, it seemed, was to depoliticise economic decisions as far as possible. The industrial policy that was initiated in 1985 was the culmination of the process of drifting away, which started during the second phase of the economic policy in India. The 7th Plan (1985-90) proposed larger planned outlays for the private sector as compared to the state-owned sector for the first time in the planning history of India.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India witnessed a major policy reform programme consisting of considerable deregulation of industrial sector as well as liberalisation of foreign investment and technology imports since July 1991. The 8th, 9th and 10th Plan documents suggested many policy initiatives towards restructuring, modernisation, rationalisation of capacity, product-mix changes, privatisation, autonomy, performance accountability and disinvestments policy. The movement of denouncing socialism that started in many parts of the world influenced Indiaâ€™s policy makers as well. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India undertook sweeping economic reforms that included deregulation and privatisation in response to the foreign exchange crisis in 1991. Since the Industrial Policy Resolution of 1991, which outlined the economic reforms, nearly every governmentâ€™s annual budget has declared that the privatisation goal is to reduce government ownership to 26 per cent of equity. In the decade following the launch of the privatisation programme, the government sold minority shares through a variety of methods including auctions and public offerings in domestic markets, and through global depository receipts in international markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The share of state-owned sector in total investment continuously declined since the 1980s is illustrated in the following table. The relative shares of the state-owned and private sectors during 7th, 8th, 9th and 10th plans clearly signal the rising importance of the latter at the cost of the former.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The 9th Plan divided SOEs into three categories (i) profit-making PSEs (Public Sector Enterprises); (ii) PSEs making marginal profits and losses; and (iii) PSEs incurring substantial losses. Accordingly, all PSEs were placed in suitable categories. Disinvestment Commission, started in 1996, primarily to discipline PSEs and make them result oriented was developed into a full-fledged Ministry for Disinvestment, thereby institutionalising the process of reforms and restructuring of PSEs. Once it was established that privatisation of SOEs was no longer a choice but an imperative, the stage was set for privatisation of SOEs. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Privatisation Trend</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The emphasis of Indian privatisation from 1991 to 2000 was on disinvestment through offloading of governmentâ€™s shares to the state-owned or financial institutions. During this period, the government offloaded shares in as many as 39 SOEs. However, since March 2000, the emphasis has increasingly been on strategic sales of identified SOEs. The table below briefly summarises the amount realised and the number of SOEs disinvested or privatised till November 30, 2003.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Modern Foods Industries Limited (MFIL) was the first SOE to be strategically sold followed by Bharat Aluminium Company (BALCO). Fifty one per cent of BALCOâ€™s shares were sold to Sterlite Industries for Rs 5,515 million. Following this sale, the government was quick to proceed with strategic sales in important firms by divesting 51 per cent of the shares in Computer Maintenance Corporation (CMC) to Tata Sons and 74 per cent of the shares in HTL, PPL and Jessop (for Rs 550 million, Rs 1,520 million and Rs 180 million respectively) to Himachal Futuristic Corporations. Nineteen hotels of Indian Tourism Development Corporation (ITDC) and three hotels of Hotel Corporation of India Ltd (HCIL) collectively contributed Rs 6,866 million towards divestiture or disinvestment proceeds. For all these 19 hotels, 100 per cent of the equity was sold. In terms of individual sales, maximum proceeds (Rs 37 billion) were collected by selling 25 per cent of the equity in Videsh Sanchaar Nigam Limited (VSNL), followed by the contributions made by selling 27.5 per cent equity of Maruti Udyog Limited (MUL â€“ Rs 24 billion) and Indian Petrochemicals Corporation Limited (IPCL â€“ Rs 15 billion). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Post-liberalisation era</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The government was forced to revise its economic policies following the exceptionally severe balance of payments and fiscal crisis in 1991 which resulted in disinvestment of government equity in the PSEs. The government steadily paved the way for a level playing field and competition with the private sector and thus resulted in PSEs being envisioned as revenue earning ventures of the government. Thirty individual Central PSEs were divested to select financial institutions namely Life Insurance Corporation (LIC) of India, General Insurance Corporation and Unit Trust of India (UTI) in bundles. Post-1996, sale through the global depository receipt route was also permitted and PSEs capitalised this opportunity to access international financial markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">There was a strategic shift in the government policies between FY 2000 and FY 2004 that facilitated â€˜Strategic Saleâ€™ or disinvestment of government stake in PSEs. The process involved transfer of big blocks of shares and management control to the strategic partners that were identified through competitive bidding. Post-FY 2005, disinvestment realisations were primarily through the sale of small equity stakes. The government realised an amount of Rs 534.23 billion as disinvestment proceeds between April 1992 and May 2008.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In recent times, several government-owned companies have either started disinvestment process or are planning to begin so including the Steel Authority of India Ltd (SAIL) and Oil and Natural Gas Corporation Limited (ONGC). According to Disinvestment Secretary Sumit Bose, Follow on Public Offer (FPO) in SAIL was expected to raise Rs 7-8,000 crores while divestment of five per cent stake in ONGC will fetch the government around Rs 13,000 crores based on present market valuations. The government has proposed a disinvestment target of Rs 95,000 crores from the sale of shares in public sector companies over the next three fiscals, including Rs 40,000 crores in the current fiscal. Last fiscal, the government had raised Rs 22,400 crores through disinvestment in PSU companies by coming out with three Initial Public Offerings (IPOs) and three FPOs. The value of Indian governmentâ€™s stakes in listed SOEs is estimated at about US$ 320 billion and if unlisted companies are included as well, the total value would be approximately US$ 460 billion. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Russia</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The world learnt from the Russian experience that introduction of the â€˜shock therapyâ€™ or rapid mass privatisation can also lead to massive corruption. It underlined the fact that good governance mechanism is vital. Historically, private ownership of production facilities, financial companies and land was absent in the Union of Soviet Socialist Republics (USSR) for over 70 years starting 1917. As per the constitution of the Russian Socialist Federative Soviet Republic of 1918, land was transferred to farming units for management; all production units to â€˜labour collectivesâ€™; and the ownership of forests, natural resources, etc to the state. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Russian government spontaneously introduced a mass privatisation process in 1991 and introduced what was termed as â€˜shock therapyâ€™ â€“ instant price decontrols and rapid opening up of markets. This large scale movement of ownership transfer brought with it massive corruption in the auction process. The mortgage auctions in 1995 were some of the worst cases. Finally in 1997, a new model of privatisation was instituted under which companies were sold rather than distributed. Further, in 1998, the government also introduced processes of asset valuation by international advisors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Current Scenario</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The SOEs continue to play an integral role in the Russian economy even though the role of private sector is ever expanding in Russia. The Russian government believes in the state role through ownership for industrial growth, economic diversification and energy security. The fraction of firms with 100 percent state and mixed (state and private domestic ownership) as per 2007 data is as follows: </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; All firms and organisations: <br />
	11 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Employment: 39 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Capital investment: 32 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Fixed assets (state ownership greater than 50 percent): 23 percent. </span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hong Kong</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong is a relative newcomer to the global club of countries opting for privatisation. It has actually missed some opportunities to learn about and avoid certain problems of privatisation experienced in other countries. There have also been socio-political issues that are unique to Hong Kong. Its experience needs to be seen in the context of the long established worldwide phenomenon of SOEs and the trend of privatisation from early 1980s.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Despite being a British colony, Hong Kong didnâ€™t join the global trend of privatisation during 1980s and 1990s. Some ideas about privatisation were addressed in the government report for Public Sector Reform in 1989 but not followed up for two main reasons. First, there was no strong practical need to privatise public enterprises. Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), had once acknowledged that the erstwhile colony had little external, political or budgetary pressure to reform its public sector. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong recorded public budget surpluses year after year in the post-war period, much envied by other governments. The second reason for â€˜no privatisationâ€™ was political. During the long political transition till 1997, China opposed any colonial government proposal to privatise government assets in fear of a British plot to sell out the interests of the future HKSAR administration. However, the arguments about privatisation in Hong Kong have been reversed after 1997.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Divestment Plans</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Before the return of sovereignty to China in 1997, the Hong Kong government did not divest public assets because of Chinaâ€™s opposition and an absence of budgetary pressure. During the political transition, the colonial government was regarded as fairly competent in dealing with public confidence crises. However, after 1997, these conditions changed quite dramatically. The new conditions in HKSAR prompted the government to formulate divestment plans, but at the same time they raised potential problems for the implementation of the plans. After the political transition, China no longer opposed privatisation proposals of the HKSAR government.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Three Divestment Exercises</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Hong Kong community is generally receptive to the ideas of small government and privatisation compared to many other developed communities. The general acceptance in Hong Kong is partly due to the fact that the government uses public offers as the main strategy of divestment. The popular belief is that citizens will make good profits once they are allocated shares from the governmentâ€™s IPOs. Although the public generally favours public listing, the divestment exercises in Hong Kong were not without controversy. Fundamental conflicts of public interest in privatisation have had to be resolved from time to time. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">MTRC</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Mass Transit Railway Corporation (MTRC) was the first target of divestment in Hong Kong. In late 1999, the government introduced new legislation to replace the MTRC ordinance and to grant a proposed new MTRC company the right to operate the subway system. In October 2000, 24 percent of the MTRC shareholding (US$1.28 billion in value) was divested by way of listing in Hong Kong, London and New York. The offer was 18 times over-subscribed and broke the local record for an initial offering. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Tunnels and Bridge</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After the Legislative Council approved the relevant grant of power, the government divested the future revenues from five toll tunnels and a toll bridge in August 2004 under a securitisation scheme involving the listing of government notes worth US$ 770 million. The offer to individual investors was two times over-subscribed, and the portion earmarked for institutional investors was heavily subscribed. The assets themselves continue to be government-owned through a new government company, Hong Kong Link 2004 Limited. The day-to-day operation of the tunnels and bridge as managed by franchised private firms remains unchanged.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Link-REIT</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">The Housing Authority (HA â€” a statutory corporation) announced in July 2003 that it planned to divest most of its retail and car-parking facilities in public housing estates. The plan was that the government would first set up a new asset-owning and management company, Link Limited, and then divest its ownership entitlement to the companyâ€™s future revenue streams in full by way of the listing of a real estate investment trust fund, Link-REIT. The trust fund, REIT, was chosen as a vehicle for divestment partly because it would restrict the scope of Link Limitedâ€™s business initiatives and partly because the government wanted to promote REIT as a new type of financial product. The HA planned to transfer the retail and car-parking assets to Link Limited after the scheduled listing had been completed. In due time, Link Limited took over the day-to-day management of the HAâ€™s retail and car-parking facilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Latin America</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Latin American countries have been very active in privatisation. Even against the backdrop of massive economic transformations in transition economies, the privatisation record of Latin America seems remarkable. To facilitate their shift to a market economy, most Latin American countries launched mass privatisation programmes that resulted in dramatic reductions of state ownership. Latin America accounted for 55 percent of total privatisation revenues in the developing world in the 1990s followed by transition economies in Eastern Europe and Central Asia at 21 percent. The decline in the economic activity of SOEs has been more substantial in Latin America than in Asia and Africa, bringing levels close to those of industrialised countries. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">Dramatic differences in the extent of privatisation are also evident within regions. In Latin America, for example, countries with large state owned sectors, such as Ecuador, Nicaragua, and Uruguay, barely privatised at all in the 1990s, while others such as Argentina, Bolivia, Guyana, Panama, and Peru raised revenues from comprehensive privatisation programmes that amount to over 10 percent of GDP. The difference in the extent of privatisation across countries and the large amount of assets in the hands of the state heightened the importance of understanding the privatisation record and of developing lessons for future privatisation programmes. However, Latin America has virtually halted its privatisation process in recent years after being the most active region in the 1990s. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><b><i>References</i></b></span></div>
<div style="margin-top: 5.65pt; text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>1&nbsp;&nbsp; Madhu Bala (2006) â€˜Economic Policy and State Owned Enterprises: Evolution towards Privatisation in Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>2&nbsp;&nbsp; â€œKPMG Internationalâ€ (2010) â€˜Resurgent PSUs Vibrant Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>3&nbsp;&nbsp; Nandini Gupta (2005) â€˜Partial Privatization and Firm Performanceâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>4&nbsp;&nbsp; Rikkie L K Yeung (2005) â€˜Divestment in Hong Kong: Critical Issues and Lessonsâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>5&nbsp;&nbsp; Alberto Chong &amp; Florencio LÃ³pez de Silanes (2004) â€˜Privatization in Latin America: What Does the Evidence Say?â€™</i></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '2011-09-17',
			'keywords' => '',
			'description' => 'Motivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation.....',
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	(int) 12 => array(
		'Article' => array(
			'id' => '423',
			'article_category_id' => '38',
			'title' => 'Brand Buzz (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/sajag(1).jpg" style="width: 123px; height: 153px;" vspace="10" />By Sajag Karki</span></i></span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">''Buy two get one freeâ€. â€œSurprise gifts with every purchaseâ€. These are common taglines used by companies in Nepal to attract potential customers. Except for a handful of ads of reputed multinationals along with some local companies that actually communicate brand personality via branding, Nepali advertisements typically focus only on a specific scheme or promotion. They have nothing much to offer except to lure customers into buying the product by providing them with monetary reward or somekind of freebie. Advertising has been around just for a few decades in a developing country like Nepal. Though there has been significant development, there is lot of room for improvement to meet international standards. In this turbulent phase of progress, ethics still comes in question. Nepali media whether TV or print has been flooded with Indian ads with Nepali voiceover. Big B Amitabh Baachan can be seen endorsing more than a dozen ads at the same time. People are confused and tired of seeing the same person over and over again for most products. Due to his popularity, it is also hard to ignore his presence keeping in mind the commercial success celebrities bring about. However, there must be a match between the personality of the brand with that of the celebrity. Same celebrity endorsing multiple products can hamper the image of the product.&nbsp;Are promotional schemes and celebrity endorsers a good way to communicate a companyâ€™s product to its customers? Also, the use of celebrities for products that donâ€™t suit their personality is controversial. The importance and relevance of ethics in advertising in the Nepalese context has been a debatable issue. Ethics is something that is usually not compatible with advertising in Nepal. The fact about advertising is that in most cases it is hard to sell products without offending anybody. Another harsh reality is that a single ad cannot please everybody. Such customers can go for customised products rather than standardised ones in order to fulfil their needs. Since there is always a target group of people that a company caters to, an ad cannot be made that is liked by everybody.&nbsp;Who is responsible for influencing young people for drinking or smoking? Is it important to be ethical while creating ads of oneâ€™s organisation or should they be more concerned with just adding value of the firm while ignoring the ethical and moral issues of advertising and business as a whole?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The topic of ethics in advertising is such that it is never black and white. It is impossible to paint a rosy picture by just claiming yes or no to ethics. There are subtle shades of grey in which arguments from both sides are viable. Practically speaking, the direct adaptation of moral philosophy principles in marketing communication is unsuitable. However, this doesnâ€™t mean that ethics should be completely neglected. The parameters for judging ads cannot be the same as judging the morality and ethics of society.&nbsp;Hence, marketing must develop its own philosophy of ethics. In the advertising world, some puffery is allowed since no company can sell anything by saying just the mere truth. A bit of dramatisation and an element of excitement (buzz) are added deliberately to give maximum mileage to the brand. Only this makes it possible for people to bear up with advertisements. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Advertisers are selective about the values and attitudes to be fostered and encouraged, promoting some while ignoring others. Ads cash in on the popular culture while targeting the younger audience. Ads encouraging dark people to use whitening creams to look fair are targeted especially to the young so that they are easily influenced. Can such advertisements that portray dark as ugly and unacceptable be called ethical or unethical? If it is unethical than what would be a better way to communicate the productâ€™s attributes in an ethical manner?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">On the other hand, advertisers cannot completely forget ethics while delivering their creative piece.&nbsp;I am by no means saying that false advertising should be encouraged or that ethics should completely be neglected. The fact is that even though advertisements are verisimilitude, ethical threshold should always be maintained to depict a clean picture to the audience. A striking reality to consider is that negative words spread way faster than positive ones. It is like a wildfire that spreads so fast that itâ€™s almost impossible to extinguish it right away. Similarly, negative opinion of the ad due to unethical content will spread in such a way that it will be almost impossible to mitigate the damage created. Only a handful of unsatisfied viewers who find some ads unethical can spread negative word of mouth to a whole lot of people around them. In no time, such ads will be called phony ultimately resulting in adverse effect on the brand equity of the advertised product.&nbsp;Ethics is specially of top priority while showing comparative ads as there must be sufficient evidence backing the superiority of the product against competitors. Along with ethics, rational judgment should also be used so that they do not have to face legal issues.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">No brand can be built in a jiffy. It not only takes creative heads along with deep pockets to gain a worldwide recognition of the brand but also a whole lot of time. Coke would not have been the most popular brand in the world if its advertising was not sculpted with ethical standards right from the beginning hundreds of years ago. Hence, it would not be a good idea for any company to ruin its image in no time by showing unethical ads just for the sake of money making or for cheap publicity. This kind of debate can go on and on and on. Books have been written and issues have been raised over the topic of ethics in advertising but without a tangible conclusion. To simplify this I would say that ad makers should come up with only such ads that they would accept as an audience. A little empathy towards audience and use of intuitive judgment by advertisers would probably help address this intrinsic advertising issue to an extent.&nbsp;</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Karki is currently associated with KIST Bank.)</span></i></span></div>',
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			'description' => '''Buy two get one freeâ€. â€œSurprise gifts with every purchaseâ€. These are common taglines used by companies in Nepal to attract potential customers. Except for a.....',
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	(int) 13 => array(
		'Article' => array(
			'id' => '422',
			'article_category_id' => '38',
			'title' => 'HR Audit (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/rabindra%20karna%282%29.jpg" style="width: 112px; height: 151px;" vspace="10" /></span></span><strong><span style="font-size: 14px;"><span bright="" color:="" letter-spacing:="" lucida="" serif="" style="line-height: 120%;">By <span style="color: rgb(178, 34, 34);">Dr Rabindra Karna</span></span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">H</span>uman Resources function in addition to its routines regardless of the size of business operation is also expected to demonstrate competitive intelligence and benchmark comparatives at least with direct market competition. This is done for depicting HR initiatives towards sales and people productivity enhancement that can be utilised as a comprehensive tool to improve their own effective engagement into the business. It is imminent to identify and realise strengths and opportunities for improvements around specific HR areas.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">Businesses are currently moving under heavily regulated and turmoil employee environment dealing with most uncertain industrial relation under complex legislative framework. Human Resources function has been emerging as most essential organ of organisation which is mainly engaged in establishing and practising policies, legal compliance that has huge impact over productivity and profitability of business in total. This is why Human Resources function these days is considered as most valuable strategic business partner within the Organisation. Efficient, effective and active HR practices in any organisation are as essential as the well functioning organs in human body. Investment in building Human Asset is considered a key to the measurement of systematic alignment with organisational goals helping HR become strong strategic partner that it is deemed to be. The HR Audit can be a powerful element driving change in HR and organisation. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The financial audit is mandatory which examines the past on the basis of practices and procedures for identifying issues that ensure compliance to sound accounting principles. Similarly, HR audit is aimed to future and meant to examine the health of Human Resources function to establish best practices that are productive to the business activities. HR Audit supports companies to determine gap and reason behind lack in system productivity and suggests the way forward. Currently, most of the businesses have plans for systems, targets and compliance that are driven by HR functions wherein HR audit becomes useful to compare these plans with actual implementations. The outcome of audit and feedback is found very helpful in decision making around corrective measures pertaining to improvement plans. Human resources audits play vital role around legal compliance that helps to avoid regulatory liabilities resulting from policies and practices. It also helps to identify legal risk and serves information about efficiency of HR strategies through benchmarking â€œbest practicesâ€ of similar businesses. It is also handy in finding solutions to problems prior to escalation. It also suggests how things might be done in more efficient and effective way with efficient cost economy.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Concerns in relation to employee risks have been the reason for the emergence of a wing within HR function to look after the working conditions and associated risks that enable implementation of preventive measures that perfectly aligns to the legal approach of HR. The application of Occupational Health &amp; Safety program is now associated with quality of life at workplace that is most important for human capital being the prime strategic element that explains the differentiation ability of company. This is where HR audit goes beyond the traditional concept of accounts audit i.e. simple investigation to logical measurement of efforts being put.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">HR audit in general is suggested to structure based upon size of organization i.e. number of people employed, time constraints, budgets and risk areas e.g. discipline, performance, compliance, hiring etc. However, there are some areas wherein companies are vulnerable to additional risks which must be reviewed carefully:</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">a.&nbsp;&nbsp;&nbsp; Personal record:&nbsp;A detailed and accurate personal records of employees are essential to prevent the business from undesired dispute especially in the areas of insufficient documentation pertaining to discipline, service record, compensation, health issues etc. An audit of personnel files reveals exposure to this type of risk and enables preventive measures to safeguard interest of the company beforehand. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">b.&nbsp;&nbsp;&nbsp; Legal Compliance: A review focusing over companyâ€™s compliance to the local laws and regulation at the same time incorporated codes of best practices and other essentials; allows company to take corrective measure in area of concerns e.g. over-time eligibility, classification of Job, payroll, records retention, compensation and benefits etc.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">c.&nbsp;&nbsp;&nbsp; Attendance System: The biggest concern for most of the employer as of today is absenteeism. In many cases it has been noticed that companies have their own attendance policies (In addition to the countryâ€™s Labor Law) in support of absenteeism control which might be unacceptable because of conflict with law of the land as well lack of clarity in need of proper communication around these. Since this aspect has immediate vulnerability to dispute and risks; audit prescribes the remedial action in such conflicting situation and enables the organisation to take corrective measure in support of absenteeism control i.e. fully aligned with law of the land.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">d.&nbsp;&nbsp;&nbsp; HR Strategies: Strategic alignments among each business units (Functions) are equally important in view of increasing value of employees to the business. This part of HR management mainly consists of organization structure, job design, employment policies, HRIS and employee relations management etc. Audit review of strategies helps business to determine whether strategic alignment exists there or not and supports planning and action to improvise areas of concerns on this important aspect.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">e.&nbsp;&nbsp;&nbsp; Cost Efficiency:&nbsp;One of the important financial roles of HR is to ensure people management in the most cost-effective way. This inculcates financial ratios and scorecard measures such as headcount planning, orientation and disciplinary cost per employee, people development cost, people productivity etc. A detailed review of this aspect of HR throws light on equipping HR practitioners of the company with knowledge per formulation of HR metrics.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Thus HR audit<span calibri="" sans-serif="" style=""> is</span> meant for verification of job design and analysis, employee welfare, industrial relations, conflict resolution, improved communication mechanism, orientation and job evaluation etc useful and supportive to achieve business destination through effective engagement of HR Function as one of the key business performance driver. It has been noticed from recent HR developments that there is an increasing demand for HR associates to contribute to profitability drive of the organisation through active participation in business decisions. The audit findings can be of great use to improve HR business plan, identify risks and control over traditional approaches, cost-economy and facilitate change in management initiatives. It also plays an important role in relation to motivation through clarified roles and responsibilities. HR audit helps to identify HR KPIs (Key Performance Indicators) and adds value to the organisation defining relevant activities. It also supports placement of management in a better position fulfilling expectation that instills trust and respect from all stakeholders.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hence, it is important to ensure that HR audit is planned and carried out under clear understanding of HR connectivity on overall business objectives, HR related opportunities and their engagement around sustainable people productivity and outcomes that are intended to achieve.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span aldine401="" bt="" italic="" style="">(Dr Karna is the Executive Chairman of MARK Business Solutions Pvt Ltd and Ad Abhyas Marketing &amp; Communications Pvt Ltd. The article is based on various research reports and his practical experiences as management practitioner.)</span></i></span></div>',
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			'article_category_id' => '50',
			'title' => 'Feedback August 2011',
			'sub_title' => '',
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			'content' => '<div style="text-align: justify;">
	<strong><br />
	Shadow Of Energy </strong><br />
	<br />
	<img align="left" alt="august 201" border="1" height="473" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover july.jpg" style="width: 355px; height: 473px;margin:10px;padding:10px;" vspace="5" width="355" /></div>
<div>
	<br />
	Although Nepal is bestowed with immense resources, people;s lives are crippled in the absence of their proper and optimal use. It is similar to a situation in which a person is stranded on a boat in sea, dying with thirst, because he does not know how to remove salt from the sea water. Nepal is the second richest country in the world in terms of water resources a hackneyed statement and has a huge potential for hydro power generation that can meet a large part of the demand in South Asia. Having a huge market in both north and south of the border, upon the failure of fishing the money in river that is flowing away every day, people are forced to live in the darkness. The rains could not wash away the power cut woes of Nepalis. Even during monsoon when the rivers are flooded, Nepalis are facing black-out every day. I blame the government and its failure to invite foreign investors for developing hydropower projects if it cannot generate electricity itself.</div>
<div>
	 </div>
<div>
	We don't have to roam around the globe to find an investor. There are a lot in our neighbouring countries that are willing to develop power projects in Nepal and sell the output in their countries. What they are demanding is a stable policy that welcomes and ensures their investment. But our statesmenâ are so professional player of the dirty game called politics that they tend to succeed every time in chasing away potential investors. As a result, they are seeking other appropriate destinations like Bhutan. Water flowing out of Nepal is money flowing away from the country. The more it flows the more we lose. And our policy makers are happy to see the beauty of waves in flowing water. They turn a blind eye to the resources being wasted.</div>
<div>
	 </div>
<div>
	The more we delay, the more we lose. What is the use if Nepal produces 40 thousand megawatts of electricity when India and china have developed enough power to meet their need? And, that time is not very far. Then, I think our country will be proud to import from these countries to minimise load-shedding hours. Without any delay, the government should welcome foreign investors with open arms to develop big projects in Nepal. When we are busy giving phony speeches on nationality, it will to too late to say, Now I am going to develop thousands of megawatts of hydroelectricity. By then, we will have no market to sell our products and politicians will be happy men.<br />
	 </div>
<div>
	<b>- Bishnu Sharma</b></div>
<div>
	<b>Kathmandu</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Tax it to Discourage it<br />
	<br />
	</span></div>
<div>
	When Nano, the cheapest car, was launched in Nepal many thought motoring will be affordable for middle class people too. So was the business motive of Tata while launching Nano in Nepal. The Nepal government's taxation policy has something else to tell. Every year the government is hiking the tax rate on the automobiles which make vehicles beyond the imagination of many middle-class people. When the cheapest car comes to Nepal, it is still expensive to majority of the people because of high taxation. While selling the car in Nepal, there is 240 per cent increment in the price over the price in India. This adds extra cost to those who dream to own a car.</div>
<div>
	 </div>
<div>
	Auto business personnel are expecting a decline of more than 40 per cent in the vehicle business compared to last year due to the crisis in the financial sector and the increasing tax rate. It is positive for a government to discourage non-productive investments and discouraging private vehicles, to some extent, helps in minimising the traffic on the narrow roads of cities like Kathmandu. However, the automobile sector is generating a huge chunk of revenue for the country and the government should seek an alternative source to make up that if it is serious about discouraging vehicles import in the country.<br />
	 </div>
<div>
	<b>- Rajan Dhoj Khadka</b></div>
<div>
	<b>Bhaktapur</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Budget Baggage to Complain<br />
	<br />
	</span></div>
<div>
	Right after the budget is presented in the parliament by the Finance Minister, nobody is satisfied without criticising it. Critiques forget to consider what is good in the budget. They rightly pick up the flaws. Obviously, the budget determines where the economy will be heading in the new fiscal year but it may not necessarily be a baggage of rubbish. It is rare to hear appreciation for what is good along with the criticism for what is not. Interestingly, everyone complains the one who does not benefit and even the ones who directly benefit for example through a hike in salary. Instead of spending time to give discourses on the budge, I believe it will be better to put pressure on the government to implement the right policies and make use of what is good in the budget for the welfare of the country.<br />
	 </div>
<div>
	<b>- Sarita Khanal</b></div>
<div>
	<b>Satdobato</b></div>',
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			'id' => '436',
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			'title' => 'Nepal’s Redoubtable Poverty Statistics September 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;">T</span><span style="font-size: 9.5pt;">he report of the Third Living Standard Survey (TLSS) a month ago declared that only 13 per cent of Nepali people now live under the so called absolute poverty line. Highly encouraging though, this news is the one extremely hard to believe instantly. There are reasons for this suspicion. With only 13 per cent of people below the poverty line, the data puts Nepal in better position than the countries like Russia, United Kingdom, South Korea, Belgium, Germany and Japan with 13.1, 14, 15, 15.2, 15.5 and 15.7 per cent of people below the poverty line, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Nepal's ground realities regarding the factors that could contribute to poverty reduction availability of foods, shelter and job opportunities to the social and economic safeties are in no way comparable to the countries mentioned above, as the examples. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	 </div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	 </div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;"><img alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/img1%283%29.jpg" style="width: 324px; height: 400px;" vspace="10" /></span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 9.5pt;"><br />
	Such drastic reduction of poverty from 12 per cent in 2004 to 13 per cent in 2011 has taken place during the most adverse political climate in the country's history. There was civil war of sorts until 2006. Since then, political instability has gravely affected the industrial and business climate. In absence of elected local governments for over a decade now, service delivery mechanism is in virtual ramshackle. No substantive FDI has flowed in. No other economic indicators are positive to cite under these adversities. Such an astonishing improvement in poverty situation is a real paradox. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Only reason attributed to the impressive improvement is the somewhat consistent inflow of the workers remittances. But, given the fact that majority of Nepali workers going abroad for meagrely paid jobs, it is hard to believe that this single phenomenon can make such a huge difference. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Therefore, the date catered to the people by the government agencies are either deliberate lies or, if that is not the case, we have adopted some highly flawed method in conducting the research for TLSS. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">In fact, the task of measuring poverty is in itself a very complex affair. It is more so in a country like Nepal where competent and independent research institutions are, in real terms, non-existent. And, citizenry and other stakeholders of economic activities have no alternative but to mime government agencies like the National Planning Commission and Central Bureau of Statistics.</span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Our universities and other independent institutions have so far failed to generate comparable, or at best, countering data on the various aspects of the country's economy, including poverty. <br />
	<br />
	</span></div>
<div>
	<span style="font-size: 9.5pt; line-height: 115%;">These factors have combined to raise serious questions on Nepal's credibility in international community. Culprits to this have been none other than the government agencies involved. The situation warrants more credible and pragmatic approach in counting our poverty. </span></div>',
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			'description' => 'The report of the Third Living Standard Survey (TLSS) a month ago declared that only 13 per cent of Nepali people now live under the so called absolute poverty line.',
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			'title' => 'R K Associates: Aiming High - August 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><img align="left" alt="corporate focus" border="1" height="202" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cor.jpg" style="margin: 10px; padding: 10px;" vspace="10" width="350" />The business journey of R K Associates dates back to 1978 when Dr Rajesh Kazi Shrestha, an energetic, young and pro-active entrepreneur established Rajesh Concern with the objective of focusing on hospitality and trading business. It imported various kinds of goods from around the world and helped promote Nepal to strengthen its trade relations with many countries.<br />
	<br />
	Today, R K Associates has diversified manifold and has stakes in every business segment. With its over three decades of experience in trading and services sectors, it manages various assignments and projects in automobiles, banking, insurance, information technology, flooring, medical equipment and supplies, fast moving consumer goods and many more. The group is behind the presence of many leading household, home decor and high-end products in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group is now among the most trusted names in Nepal and has forged, nurtured and maintained global alliances over the last 33 years. Its founder Dr Shrestha was honoured by International Journal of Non-Aligned Countries and Foreign Policy Research Institute (FPRI), New Delhi, with an honorary PhD in February 2010. He says, I attribute our growth to the deep understanding of local markets, people and customs </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">It currently has a turnover of USD 20 million. It&nbsp;has contributed to the national economy and promoted infrastructural and entrepreneurial capability of Nepal. It is closely associated with prestigious domestic and international federations and associations. A former Assistant Minister of Industry, Commerce and Supplies, Dr Shrestha holds several prestigious positions. He is Chairman of Nepal-China Chamber of Commerce &amp; Industry and International Chamber of Commerce, Nepal. He is also a Past President of Nepal Chamber of Commerce. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Group Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group looks at integrating dealers, distributors, retailers, suppliers and joint venture partners into the R K Associates family. It is currently focusing on branding of its products and consolidating them in the market. It is looking forward to NADA (Nepal Automobiles Dealers Association) Expo in September 2011 for showcasing different vehicles from its stable. Dr Shrestha says, Through our hard work, we want to reach as high as possible and prove our worth in the market. The group also plans to help orphanages and sponsor underprivileged students as part of its CSR (corporate social responsibility) activities. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">R K Associates aims to recruit, develop, motivate and retain the best talents within the country and provide them a challenging and demanding environment. It fosters a strong emotive feeling of oneness and ownership among the employees within the company. The group aspires to transform into a model corporate institution and make its employees proud to be part of the group. It provides employment to close to 250 people out of which 38 people work for Constant Business Group alone.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Management Style</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Dr Shrestha believes in giving employees the liberty and opportunity to prove themselves. He says, Instead of me telling them what to do, they should come and update me on the latest information. He says he is most happy working as the link and let his employees do all the work. He goes to great lengths to ensure that the employees feel at home and treat the group as their own. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">He strongly feels that political stability and government's economic policies are key to nation's prospects. We are going through the most difficult phase now. If the government policies are good, I am sure businesses will prosper and generate employment for hundreds of thousands of youth who are leaving the country due to lack of opportunities. Dr Shrestha believes that the government would do better if it consults the private sector before taking decisions or implementing them, in the larger interest of the nation. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">He says it is the government's duty to reduce taxes on automobiles so that the industry is saved from a certain collapse. He also recommends that the government should focus on phasing out the vehicles that are over 20 years old. The government's policies have had an adverse impact on the industry as it has experienced a huge market slump. This has obviously resulted in reduced revenue for the government, he says. </span></span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Teamwork among partners</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Hard-working staff</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Honesty</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Trust</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Inability to penetrate the market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Lack of aggression</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Possibility of a favourable government policy</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Over import by all vehicle distributors</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">More supply than demand</span></span></li>
</ul>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><i>Sister Concerns</i></span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Constant Business Group Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">Established in January 2007, this company distributes vehicles from China (Zotye, Lifan, Jonway, Grand Tiger and Lobo), Malaysia (Proton) and South Korea (Ssangyong). R K Associates was awarded the best distributor for Zotye in 2009. The company has sold over 300 units of Zotye so far out of which 75 units were sold in the last one year. Among other vehicle products, 50 units of Ssangyong have been sold, so far. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Nepal International Business Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">A trading house established 17 years ago, it imports tower crane, film faced plywood, commercial plywood and hotel supplies. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Status Trading Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">This trading house that started 3 years ago imports furnishing, flooring carpets, laminated flooring and PVC. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Alliance Insurance Company Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">R K Associates is affiliated with this insurance company as a promoter which has Dr Shrestha on its Board of Directors. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Rajesh Concern</span></span></div>
<div>
	<span style="font-size: 14px;">It's the first entrepreneurial venture of R K Associates and imports food items, readymade garments, carpets, PVC etc. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Soaltee Hotel Limited</span></span></div>
<div>
	<span style="font-size: 14px;">Dr Shrestha features in the Board of Directors of Soaltee Hotel Limited.</span></div>',
			'published' => true,
			'created' => '2011-09-24',
			'modified' => '2012-10-04',
			'keywords' => '',
			'description' => 'The business journey of R K Associates dates back to 1978 when Dr Rajesh Kazi Shrestha, an energetic, young and pro-active entrepreneur established Rajesh.......',
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	(int) 2 => array(
		'Article' => array(
			'id' => '434',
			'article_category_id' => '39',
			'title' => 'Explore Asia Pacific: Satisfying Customers - August 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="line-height: 120%;"><br />
	Neeraj Sharma</span></b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="line-height: 120%;">Managing Director</span></span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">Explore Asia Pacific Pvt Ltd</span></span></div>
<div style="text-align: justify; text-indent: 0in;">
	<span style="font-size: 14px;">Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal.<br />
	<br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product basket. In mid-2010, it also ventured into the business of solar panels and desktop components from Simmtronics. Currently headquartered in Kathmandu, the company registered an annual turnover of Rs 120 million in 2010. Having gradually enhanced its product basket, it aims at a 300 percent growth in 2011. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific is known for its ethical business practices and value-added approach which is solution-centric and vertically focused. Neeraj Sharma, Managing Director of the company, says, Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal. It seems set to meet this objective as it already has a strong presence in the up-country regions and possesses management skills with proven controls and processes.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company claims it is fortunate to have dedicated partners as part of its organised distribution system. Sharma says, Along with the modern marketing and branding concepts, our knowledge and hold in the Nepali market has held us in good stead. It plans to invest in infrastructure and technology in the long term and aspires to establish sound performance in a short period of time, though of course, with a long term commitment. </span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Company Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific aims to have leading market shares for all products it deals with. It also envisions to have satisfied and loyal customers through value-added before and after sales services. Creating high recall brands is high on its agenda as it helps customers association by being reliable and trustworthy. Sharma says, We want to be the first choice as a distribution partner for both the vendor and the reseller by adding value to the supply chain through efficient logistics, high level of product knowledge, value-added marketing services and demand creation activities. The company is working hard to ensure wide and deep presence through an effective distribution system. It also wants to be able to create a profitable business proposition for all stake holders. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Brands and Products</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company is proud to be associated with reputed and well known brands such as ADATA, Simmtronics, Genius, Panda, Jetway and Samsung among others. It deals in well-received products like classic pen drives, pen drives superior, Simtronics desktop, external HDD, memory card, monitors, graphics card, motherboard, RAM etc. Explore Asia Pacific also plans to launch its own brand and manufacture cabinets, PSUs, keyboards, speakers and headphones etc. The tremendous market potential has propelled us to think along these lines. Once the liquidity problem gets settled, the market situation will definitely receive a boost, Sharma reasons. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company boasts of having a strong human capital and talent pool. It has among the best talents in the industry with professionals from different sectors and proven experience levels. We perform best practices in place like in-depth induction programmes, in-house training, performance management systems and employee satisfaction surveys, informs Sharma. The strong sense of bonding that exists in the company has ensured a very low attrition rate. The company currently has a workforce of 18 employees at its corporate office and plans to increase it to 35 from the new fiscal year once it unveils its expansion plans. Sharma believes in dealing with his staff in an honest manner which has paid rich dividends as he has got positive results from them. He thinks that Ajay Sadewra joining Explore Asia Pacific as Director-Operation in March 2011 was a major turning point for the company's fortunes. Sadewra was earlier associated with Neoteric Nepal. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Immediate Plans</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Expanding with Explore Digital, an independent and retail chain, the company plans to open 10 retail outlets in the country. There will be four outlets at prime locations in Kathmandu alone. We will geographically divide channels for our 18 distributors beginning Shrawan, informs Sharma. The company plans to advertise its upcoming retail outlets in major national dailies as well as the distribution channels. Having established its credibility with the consumer segment, Explore Asia Pacific now wants to focus on the enterprise sector and spread its wings to cater to government organisations, NGOs and INGOs and Banking and Financial Institutions among others. The company that has already made its foray into the energy sector with solar equipment also plans to provide complete solutions from this fiscal year. It is slated to start production of solar items such as the lighting system which the company says holds a big potential in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">Sharma attributes Explore Asia Pacific's success to a number of factors including trust, profitability concern of the channel partners, adequate service mechanism and honesty. He adds, We have come this far because of our hard work, vision and market understanding. Among its competitors, Neoteric Nepal is doing well, he says. The company was awarded for good performance by ADATA during Computex held in Taipei earlier this year in June. It seeks to reach new heights demonstrating its value added services (VAS) through its envied network and ensuring price transparency, uniformity and dedicated service among others. </span></span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths </span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Experienced Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Channel Strength</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Brand Image</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Product Range</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Technical Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Countrywide Presence</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inability to incorporate MNCs</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inadequate Product Basket</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Being a fairly new company</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unorganised ICT market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unprofessional Distribution Channels</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Marketing growth in various pockets</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Government embracing e-governance</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Financial sector growth</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable political scenario</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable government</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">&nbsp;&nbsp; Unethical price cutting<br />
		<br />
		</span></span></li>
</ul>',
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			'created' => '2011-09-24',
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			'description' => 'Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product...',
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	(int) 3 => array(
		'Article' => array(
			'id' => '433',
			'article_category_id' => '37',
			'title' => 'Monetary Policy And Question Of Financial Stability (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;">By Nara Bahadur Thapa</span></i></span></strong></div>
<div style="margin-bottom: 0.0001pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress in Nepal has added pressure on using monetary policy instruments for securing financial stability. The question asked is: should financial stability be in the domain of monetary policy or should it be pursued as an objective of regulatory policy? Although the debate remains still inconclusive, views on either side of the debate have sharpened.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Undoubtedly, safeguarding financial stability has become an increasingly dominant objective in economic policy. Hence, it is argued that monetary policy should also take care of it. In light of this, besides maintaining price stability and supporting economic growth, Monetary Policy often has the task of preserving financial stability. Monetary variables such as the quantum of money, bank credit, liquidity and the level of interest rates are used to attain monetary policy objectives.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">These monetary variables - the quantum of money, bank credit, liquidity and the level of interest rates - affect financial stability in one way or the other. This is the basis of the argument that monetary policy should be used to safeguard financial stability. In this context, it should be noted that the NRB Act 2002 does not state financial stability as an objective of monetary policy. Monetary policy objectives, as enshrined in the NRB Act 2002, are maintaining low and stable rate of inflation and the external sector stability. These two objectives are supposed to ensure the sustainable development of the economy. Nevertheless, the Act does indicate that the role of the central bank in promoting banking and financial stability as well as developing a secure, healthy and efficient domestic payment system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">We should seek the answer to the question as to why the law of the central bank has not assigned the financial stability as an objective of monetary policy. This implies that the NRB Act has visualized instruments that can be used to ensure monetary and financial stability differently.&nbsp;&nbsp; </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Financial architecture </span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The way monetary policy is conducted and financial stability is pursued should be discussed in the context of the financial architecture that exists at the global as well as the domestic level. The current international financial architecture is rooted in the McKinnon-Shah hypothesis (1973) that argues for the removal of financial repression and the introduction of financial deregulation. The major elements of financial deregulation are: (i) the elimination of credit controls, (ii) the deregulation of interest rates, (iii) free entry into the banking sector/financial services industry, (iv) central bank autonomy, (v) private ownership of banks and (vi) liberalization of international capital flows.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">International organizations such as International Monetary Fund (IMF) and the World Bank supported the McKinnon-Shaw hypothesis and in the process encouraged member nations to adopt liberal financial policies. Many developing countries including Nepal deregulated their financial sector. Even in the USA, the comprehensive regulations introduced in 1933 in the wake of the Great Depression in the form of the Glass-Steagall Act which had ensured financial stability were removed in 1999, ushering in a complete deregulation of the financial sector. The Glass-Steagal Act kept different types of financial institutions separate and dictated the activities they could and could not engage in. It was argued that Glass-Steagall Act prevented banks from diversifying risk. Following this, an agreement was reached at the global level for the international financial architecture. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b>&nbsp;</b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="color: black;">The major elements of which are: </span></b></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">i.&nbsp;Simple rules for monetary and fiscal policy would&nbsp;guarantee macro stability,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">ii. Deregulation and privatization would unleash growth and prosperity,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iii.Financial markets would channel resources to the most productive areas and polish themselves effectively, and</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iv. The rising tide of globalization would lift all economies.</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The agreement on these elements spearheaded by the IMF and the World Bank is known as the Washington Consensus. The spirit is that the adoption of standards and codes on macro-financial policies, transparency, good corporate governance and internationally designed accounting and auditing rules would ensure financial stability. Given these standards, it was thought that market would ensure financial stability. With no restriction on the portfolio, free entry and exit of financial institutions could ensure the dynamic financial stability. There was no need for government intervention, including financial bailout. In keeping with this framework, Lehman Brothers was allowed to fail in September 2008.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the economic liberalization initiated in the mid-1980s, the Nepali financial system has experienced significant developments. The NRB Act 2002 aims at consolidating the foundation for the new domestic financial architecture. The new NRB Act provides an autonomous central bank answerable to parliament. The Act curtails the unlimited lender of last resort (LOLR) facility for both the government of Nepal and the banking sector as the facility has a danger of creating a perpetual financial instability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Prudential regulation and supervision for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Now the question that arises is: What instruments does the NRB Act 2002 envisage to ensure financial stability? The current international financial architecture underscores the importance of prudential regulation and supervision for achieving financial stability. The NRB Act 2002, BAFIA 2004, Debt Recovery Act (DRA) 2002 and Credit Information Bureau (CIB) underpin the new domestic financial architecture. The NRB Act 2002 grants the autonomy to the central bank aimed at strengthening the banking supervision. The BAFIA lays down the framework for banks to operate. The DRA establishes creditors rights. The CIB offers a venue for information sharing among banks with a view to help reduce non-performing loans (NPL). This is key to ensure financial stability over the period. </span></div>
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	<strong><span style="font-size: 14px;">The case for the use of monetary policy for financial stability</span></strong></div>
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	<span style="font-size: 14px;">The recent global crisis showed that prudential regulation and supervision alone did not guarantee financial stability. Hence, a case is made for using monetary policy in support of financial stability. In the wake of the recent global crisis, the IMF urged member nations to use monetary policy as the first line of defense. </span></div>
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the importance of financial sector stability for the overall functioning of macro economy in general and the transmission mechanism of monetary policy in particular, the NRB is cognizant of the role of monetary policy in attaining financial stability in recent years. Accordingly, monetary policy instruments have been used in support of financial stability. For instance, the bank rate, which was as high as 9 percent some years ago, was gradually reduced to 5.5 percent. Currently, it is 7 percent. Recently, the penal rate of 3 percent has been added to it for the LOLR facility to banks. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Besides the bank rate, concessional refinancing rates have been lowered to 1.5 percent for exporters, sick industries, small and medium scale industries and targeted people for foreign employment.&nbsp;The NRB has been making a provision for refinancing banks for their sick industry loans over the last several years. The objective is to help financial institutions and thereby achieve financial stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The cut in CRR has been consistently and systematically aimed at reducing the financial intermediation cost. The argument in this case is that monetary policy in no way should be a factor responsible for a higher financial intermediation cost measured in terms of interest rate spread. For this reason, CRR has been systematically reduced from 12 percent a few years ago to the current level of 5.5 percent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of flexible open market operations aimed at modulating liquidity has been put in place since 2004/05. Open market monetary instruments such as sale, purchase, repo and reverse repo auctions are being used either to inject or drain liquidity from the system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of standing liquidity facility (SLF) has been introduced for counterparties. The purpose of the SLF is to provide a safety valve for domestic payments system. Under this facility, counterparties can make an automatic and hassle - free access to funds from the central bank.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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	<strong><span style="font-size: 14px;">The case against overly use of monetary policy for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There are counter arguments for overly use of monetary policy for financial stability. First, it is argued that the mixed role of the central bank, namely securing banking stability and maintaining monetary stability, at times, creates policy tensions. For example, the use of accommodative monetary stance aimed at supporting financial stability could be counterproductive to price and external stability in the face of pressures on inflation front and a deficit in country's BOP position. As such, the central bank faces policy tensions of using soft interest rate policy for securing financial stability or hard interest rate policy for keeping inflation low and maintaining external stability.</span></div>
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Second, as per Tinbergin's rule (one instrument - one target), monetary policy, which is one instrument, can not be used for two policy goals - monetary stability and financial stability.</span></div>
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">&nbsp;Third, rescuing financial institutions by way of soft interest rate policy or the protracted use of quantitative easing through the LOLR facility will only prolong financial imbalances, posing risks to financial stability over the medium term. This will only postpone financial distress leading to a bursting of financial crisis in some points of time in the future. In this context, Greenspan's prolonged low interest rate policy is cited as one of the causes of the financial crisis in the US in 2008.</span></div>
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fourth, it is argued that the expectation of monetary authorities stepping in to defuse a crisis undermines market discipline and creates moral hazard problem in that it weakens the incentive for market participants to act prudently.</span></div>
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fifth, as Greenspan argued, the cleaning up the mess after the bubble bursts would be technically easier and less interfering with the market and more cost effective. </span></div>
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Back home in Nepal, it is argued that excessive monetary injection by way of repo and SLF lending helped perpetuate low interest rate regime in the past. This encouraged banks to indulge in financial excesses, leading to the recent financial distress in Nepal, including a deficit in country's BOP. It must be noted that the deficit in BOP during the last two years is not on account of the government budgetary imbalances, it is due to the private sector excesses and imbalances.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Of the various facts of financial stability, the question of monetary policy taking care of real estate and share prices has remained controversial. The question often asked is as to what should be the role of monetary policy in keeping these prices stable. This question is asked because stock market developments generate wealth effects, which have monetary policy implications. Likewise, stock market developments have implication for NPA level and, at times, threaten banking sector stability. Foreign portfolio investment in stocks has implication for external stability, for a greater volatility in share prices causes a sudden capital outflow, leading to BOP and exchange rate crises. Since foreign portfolio investment in the Nepalese stock market does not exist, this kind of tension does not arise in Nepal as for now. The consensus so far reached is that monetary authorities should be watchful of these prices. However, it is argued that monetary policy should not be overly used in containing these prices.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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	<strong><span style="font-size: 14px;">Macro prudential regulation</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Micro prudential regulation does not make a distinction between growth enhancing credit and speculative ones. The consensus is also not to use monetary policy overly for financial stability. Hence, the focus has now shifted on macro prudential regulation.&nbsp;It is argued that macro prudential regulation is needed to deal with the issue of pro-cyclicality and build defenses against emerging structural vulnerability in the financial sector. Pro-cyclicality and structural vulnerability are manifested in terms of real estate bubbles, common exposure to asset price bubbles, excessive leverage and low level of liquidity. To deal with these problems, macro prudential measures such as capital ratios, capital buffers, dynamic (forward looking) provisioning, liquidity ratios and prudent collateral valuation are applied. According to Blanchard, in case, excessive leverage emerges, regulatory capital ratio should be raised. If liquidity is low, regulatory liquidity ratio should be increased. If housing prices are rising, loan-to-value (LTV) ratio should be lowered. If stock prices are rising, margin requirements (haircuts) should be raised. In the wake of emerging financial distress, the NRB has introduced a number of macro prudential measures. For example, sectoral loan limit for housing sector is capped at 25 percent and real estate at 10 percent. C-D ratio for banks and financial institutions is fixed at 80 percent. The LTV ratio for shares has been fixed at 60 percent. Similarly, the LTV ratio has been fixed at 60 percent for both real estate and housing.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although macro prudential regulation could act as the first line of defense and be an important element of new financial architecture in the wake of the recent global financial crisis, there is a possibility of strong political pressure against the use of it. In the US, the delay in adopting the Volcker plan which aims at separating functions of different financial institutions is an example of it. Back home in Nepal, the strong pressure for the removal of LTV ratio for shares and strong lobby for the relaxation of capping real estate and housing loans are cases in point. This suggests that the existing domestic financial architecture will remain intact, implying that only micro prudential norms and market discipline will remain instruments for financial stability. There will be growing demand for the excessive use of monetary policy for securing financial stability. However, the latter will not help safeguard the long term financial stability. If it is used, it will be only at the peril of macroeconomic stability. </span></div>
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	<strong><span style="font-size: 14px;">Tentative conclusions</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There is no doubt that financial stability is a public good which must be secured through preventive and remedial measures. Micro - macro prudential and deposit insurance measures can be applied to maintain financial stability. Keeping monetary conditions at an appropriate level is also key to securing financial stability. For example, easy liquidity conditions would encourage banks to take excessive risks by overindulging in lending. This happened in Nepal in the recent past. Likewise, overly tight liquidity conditions would lead to financial distress. Both of these monetary conditions should be avoided.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Therefore, going forward, the NRB will, in due course of time, appropriately streamline monetary operations. For example, there are ample instruments for the injection of liquidity. However, there are few to drain it. Sale and reverse repo auctions fall short of draining liquidity due to various reasons. Hence, the NRB will seek rationale in introducing standing deposit facility for banks as and when situation warrants.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The creation of standing deposit facility entails bearing financial costs by the central bank. Therefore, it requires strengthening the financial position of the central bank. It is especially important in relation to the growing size of counterparties and liquidity that would be needed to drain. One way of improving financial position of the central bank for the operation of deposit facility is increasing its paid up capital from the current three billion rupees to five billion rupees. This will help the NRB to absorb possible losses arising from monetary operations.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The exchange rate and the interest rate are the fundamental macro variables. As the current exchange rate regime as being used as the nominal anchor for macroeconomic management, there is no question of disturbing it at this stage. Therefore, given the depth and breadth of the domestic financial sector development so far, the interest rate is slowly emerging as key policy variable for macro-financial management. In this context, a need has been felt for using short term interest rate instead of the quantity of liquidity as an operating target. The NRB will pursue this in due course of time.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of monetary policy becomes crucial when preventive measures fail to ensure financial stability. Therefore, the role of monetary policy should come at the remedial stage. This is the market failure stage. When this stage comes, as the past intervention indicates, the NRB is extremely cautious to distinguish between those having solvency problem and those with liquidity problem. The LOLR facility should be provided to those solvent but with liquidity problem. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the current financial architecture, the NRB's intervention will take place only when market fails to ensure financial stability. Therefore, the NRB intervention, for that matter, will come with strings such as merger, management change, improvement in corporate governance etc. If financial institutions with solvency problem are systemic, the government should intervene by way of either injecting capital or guaranteeing deposits. Otherwise as per the spirit of the current domestic financial architecture, such financial institutions should be liquidated.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In case, the financial distress continues and additional LOLR facility is called for, Nepal will have to negotiate for the IMF program. This will be inevitable to deal with the possible adverse impact of LOLR facility on international reserves and BOP.</span></div>
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	<strong><span style="font-size: 14px;">Summing up</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The kind of domestic financial architecture we have chosen is key to consider the role of monetary policy for financial stability. If we were to adopt liberal licensing policy and allow banks to have portfolio of their choice, micro prudential, self regulation and market discipline should be key for financial stability. The focus of monetary policy should be on inflation, BOP and foreign exchange. These are crucial areas for attaining macroeconomic stability including financial stability. The role of monetary policy should be marginal and come at the remedial stage. Those financial institutions which cannot survive on their own under the liberal framework of financial architecture should be allowed to disappear. If we were to seek a larger role of monetary policy in ensuring financial stability we will have to be willing to change the current financial architecture including readiness to adopt macro prudential regulation. Given the existing framework of the financial architecture, any lobbying for political interference for the change in monetary policy is construed as an attack on professionalism and autonomy of the central bank. This does not bode well for market discipline, a crucial element for financial stability either.</span></div>
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<div>
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Thapa is the Chief Manager at Biratnagar Office of Nepal Rastra Bank (NRB). He was earlier the Director of Research Department at NRB's central office in Baluwatar, Kathmandu. He also spent two years between 2008 and 2010 as Advisor to the Executive Director at International Monitory Fund (IMF), Washington DC, prior to returning to Nepal.)<br />
	<br />
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	</span></i></span></div>',
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			'created' => '2011-09-24',
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			'description' => 'Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress.......',
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		'Article' => array(
			'id' => '432',
			'article_category_id' => '37',
			'title' => 'Monetary Policy2011/12:Hard To Realise The Promises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size:12px;"><strong><i><span style="line-height: 120%;">By Hom Nath Gaire<br />
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<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size:12px;">The Monetary Policy for the fiscal year 2011/12 has made an attempt to be balanced with the expansionary fiscal policy of the government of Nepal despite fears of inflationary pressure, apart from reducing the Cash Reserve Ratio (CRR) by 50 basis points to five per cent. At the same time, NRB, the country's monetary authority, has accepted the ground reality that the monetary management of the economy is getting tough due to high inflation and unfavourable external sector accompanied by the deepening liquidity crisis in the financial system of the country.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">To ease the liquidity situation in the economy, the policy has reduced CRR by 0.5 percentage point to five per cent. The policy document said, The revised CRR is estimated to instantly release around Rs 4 billion in the financial system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">This fiscal year too, the policy has targeted seven per cent inflation. To support the fiscal policy aim of&nbsp;five per cent growth rate, the central bank is planning to increase the broad money supply by 12.5 per cent but the policy is ignoring its implications on general price level. However, NRB has attributed rising consumer price to supply constraints, defending its failure to contain the inflation to seven percent according to the target of its last year's monetary policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the central bank data, the broad money supply including the balance sheet of commercial banks, development banks and finance companies enlarged by 7.3 per cent but the consumer price increased by an average of around 10 per cent in the last fiscal year's first 10 months. The 7 per cent target of consumer inflation for the current fiscal year is a big challenge due to the adverse impact of expansionary fiscal policy on which the government is planning to finance the capital as well as the recurrent expenditure through deficit financing. The overall macroeconomic policies have to be revisited as the Monetary Policy could not achieve inflation and Balance of Payment (BoP) target, the policy accepted, Apart from that managing liquidity and maintaining financial stability is an immense challenge for effective execution of the policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the policy, BoP that was Rs 11.67 billion deficit in the first 10 months of the fiscal year, has however, recorded an unexpected surplus of around Rs 1 billion by the end of 2010-11, attributing surprise surplus to foreign grants and aids released in the eleventh month.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">For the current fiscal year, the Monetary Policy has targeted Rs 5 billion BoP surplus. In such unpredictable and volatile cash flow situation, the BOP target for the current fiscal year may also be hard to realise. Because, as the Monetary Policy has brought no change in the bank rate, refinancing rate and Statutory Liquidity Ratio (SLR), the debt servicing of the private sector may remain higher and the production of exportable goods will be affected adversely, which in turn will result in wider trade deficit and unfavorable BoP. However, the central bank has stated that refinancing will be revised according to liquidity need. This alone may not be sufficient to meet the demand for credit in the productive sector and boost the exports. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The foreign exchange policy for individuals has become more as a Nepali willing to visit abroad can get foreign exchange up to $2,500 for once or a maximum of $5000 in a fiscal year, revising the facility from last fiscal year's $2,000 and $4,000 respectively. Similarly, NRNs can open foreign currency bank accounts and special arrangements will be made for Nepalis to open NOSTRO accounts in foreign countries. Likewise, the policy allowed the banks to exchange foreign currency up to $1,000 provided the beneficiary supplies credible source of foreign exchange with identity. </span></div>
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	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The policy has increased provision of deprived sector lending to 3.5 per cent and asked banks and financial institutions (BFIs) to raise this ratio by 0.5 percentage point for two years. This provision will be helpful in directing lending towards productive sector as well as deprived sector and supportive to achieve the economic growth of 5 percent, revealed the policy. The targeted economic growth is also hard to achieve in the situation of deteriorating investment climate and low investor confidence due to government's tilt towards a socialist economic system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the monetary policy, the deposit mobilisation of BFIs will be increased at the rate of 13 percent by the end of the current fiscal year and will add around Rs 100 billion to the country's banking system. To achieve this target, the policy tries to address the crisis of trust in the banking system by extending deposit insurance up to Rs 200,000 to commercial banks as well so that small depositors feel safe. Earlier, the deposit insurance was mandatory only for the B and C class BFIs. By the end of last fiscal year, the deposits of BFIs increased 8.2 per cent to Rs 788.72 billion and the foreign exchange reserve increased by a mere Rs 2 billion to Rs 270 billion from a fiscal year ago's Rs 268 billion.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size:12px;"><span style="line-height: 115%;">Apart from encouraging BFIs to open branches in select nine districts, where there is less access to formal source of finance, the policy directed BFIs to include a collateral-free loan of up to Rs 200,000 for the study of technical education under deprived sector lending.<br />
	<br />
	<br />
	</span></span></div>',
			'published' => true,
			'created' => '2011-09-24',
			'modified' => '2012-09-20',
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			'description' => 'The Monetary Policy for the fiscal year 2011/12 has made an attempt to be balanced with the expansionary fiscal policy of the government of Nepal despite fears of inflationary pressure, apart from reducing the Cash Reserve....',
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	(int) 5 => array(
		'Article' => array(
			'id' => '431',
			'article_category_id' => '31',
			'title' => ''We Want To Target Corporates On A Much Bigger Way' (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="right" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/altaf.jpg" style="width: 415px; height: 346px;" vspace="10" />Altaf Halde</strong> joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of Kaspersky antivirus. For Nepal, Sagar Infosys is the sole authorised distributor for Kaspersky products. Halde revealed the company will soon release the enterprise version of the antivirus in the Nepali market. In an interview with <i>New Business Age</i>, Halde shared his views on the latest product and Nepal as the market for Kaspersky. Excerpts:</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How do you see the market for Kaspersky products in Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I was pleasantly surprised to know about the market potentials of Nepal which I visited after Bangladesh where also we have a very good market share. In Nepal, we have more than 70 to 75 per cent market share. Based on what I hear from dealers, I think there is definitely a big potential over here. I can see a lot of educational institutes coming up, IT initiatives happening, and increasing penetration of laptops and desktops. That automatically translates that you need protection for your computers or laptops and that is where Kaspersky comes on the scene.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Most people use pirated software and operating system at home. What will be the extent of risk to such users from security viewpoint?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Risk is a lot. When you google the key â€˜free antivirusâ€™, you can find a lot of them that you can download. The download shows it is installing but you donâ€™t know whether it is actually installing. It might be downloading some malwares too. Nothing comes for free. People are using free software and they are not sure if that is the best thing. Secondly, people use pirated software. In this region, piracy is a big problem. In India, it was similar many years back but now customers realise that just using a process, the solution does not end; you also need support. You get the support&nbsp;by using a licensed product. That will take some time but it will gradually improve over a certain period of time because that is the way our markets are. On the question of risk, there is definitely the risk because you donâ€™t know what you are using. It might have malware, spyware, or some other kind of threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How can Kaspersky minimise such risks and protect users?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Kaspersky Lab which is centrally located in Moscow detects 35 thousand threats every day. You can imagine the number of threats. When a person is on the Internet, it does not matter whether he is sitting in Nepal, India or America. So, what Kaspersky does is that it keeps coming up with&nbsp;regular updates because the threats are increasing. That is how we are able to protect users from such threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Users often complain that Kaspersky requires powerful machine to operate, which slows down their system. How has Kaspersky addressed this issue in its latest version?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In 2012 version, we have come up with a hybrid technology â€“ cloud-based system. With this system, when you are using the desktop and you are not connected to the Internet, you donâ€™t need to have a lot of signature database on your machine. When you have a lot of signature database updates searching on a machine, it takes up your resources and the machine becomes slower. With the hybrid technology we are using cloud-based protection. So, the signatures of the threats are stored in the cloud. Once the user is in the Internet, computing power of the machine is not touched. That will happen in real-time across the Internet. That is how we have been able to address this particular problem. However, if you look in comparison with other products, we are much faster even in the existing version. We do understand that in emerging markets like India, Sri Lanka, Bangladesh and Nepal, computing is not very powerful. That is why this hybrid technology will prove very good technology for us.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In Nepal, Internet bandwidth is lower and majority of users do not have access to high speed Internet. Donâ€™t you think the cloud-based system will be a challenge?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On the consumer level, this could be definitely a challenge because of the Internet speed and probably the bandwidth will be affected but this cloud-based computing will still help reduce this particular problem because the computing is not happening on machine but in real-time in the cloud. We have tested our product with various Internet bandwidth types during the development stage and did not face problem. We will definitely be able to address this particular problem as time progresses. Once the users start using the product they will realise it is actually a good product by making use of good bandwidth.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What is the volume your are looking at in terms of sales for Kaspersky products in Nepal? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I wouldnâ€™t be in a position to give you the target from the sales perspective but we have got very good market share at around 70 to 75 per cent with the previous version. This year, we should definitely look at a market share of 80 to 85 per cent. That is what we would want to achieve.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Who do you think are major competitors for Kaspersky in Nepali market? How is Kaspersky different from&nbsp;other products in the market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;I wouldnâ€™t say only about Nepal but globally, Symantec and McAfee are our competitors. There might be a lot of other products but on a global perspective, Gartner have listed three of us as top three security vendors â€“ Symantec, McAfee and Kaspersky. I would say that they are our real competitors.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">We are using hybrid technology while others are only talking about it. When we set up parameters, we are technically quite advanced in terms of updates size and faster scanning compared to other products. Even in this cloud-based technology, we have come up with a small sized update a day rather than making a big update like other products. We understand, in a country like Nepal, bandwidth rate is a problem. With a big update at once, users will not be able to update in time and will be open to threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How is the response of users to your products in South Asia in comparison&nbsp; with western markets? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Our biggest market is Europe, followed by America. Over there, the split is approximately 65 to 70 per cent in consumer segment and the balance in the enterprise segment which is a matured market for Kaspersky. In South Asia, we are very strong in the consumer space and in the enterprise space we have not yet been able to take it to the next level. So, if you put both of them together, I would say in south Asia, we are probably at the number three position, Symantec and McAfee probably being the leaders.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In small countries like ours, price of software is excessively higher which is sometimes even costlier than buying a pc. How does your new version compare with other products on this count?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;We have retained the same pricing as of the 2011 version. A single user pack of antivirus comes for Rs 1,000 for a year. If you look at the per-day basis, itâ€™s less than what a cup of tea would cost. So, that is the amount you are paying to protect the data or yourself. With the market share of 70 to 75 per cent, a lot of users are using Kaspersky 2011. We have also provided the user of 2011 version a free upgrade. That will come free of cost, if the users still have valid license period.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are the challenges you are facing&nbsp; in the Nepali market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Based on what I have seen in my first exposure to the Nepali market, piracy is rampant. Then, there are a lot of other products that come into the market with a lower price to dump their stock. They achieve their sales but there is no support. So, the consumers feel they are cheated. We see that as a challenge. While other products come to dump but we are there in the market with a proper focus. Sagar Infosys is Kaspersky products since 2008 and also providing support and there is our focus. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are your future plans for Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.2pt;">We plan to keep coming here more often for developing consumer awareness because for us awareness is the key. If consumers donâ€™t know about the threats they will not look for protection. We want to make sure about the awareness on the threats and product developments. So, we want to have many such marketing events where we can go and address the threat scenario to consumers as well as corporate houses. We want to target corporates on a much bigger way in the Nepali market. We want to keep coming to Nepal with more and more solutions which are technically advanced. Everybody was talking about this cloud-based technology but nobody came up with a solution. So, whatever the technology or threats, Kaspersky will be the first to come with a solution.</span></span></div>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '2011-09-28',
			'keywords' => '',
			'description' => 'Altaf Halde  joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of ......',
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	(int) 6 => array(
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			'id' => '430',
			'article_category_id' => '31',
			'title' => ''I Refuse To Call This A Liquidity Crisis' (august 2011)',
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			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/dr gautam vora.jpg" style="width: 283px; height: 328px;" vspace="10" />Dr Gautam Vora</strong><span style="letter-spacing: -0.05pt;">, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques, interest-rate modeling, investment strategies and mathematical modeling of financial plans.&nbsp;Dr Vora is also a Visiting Professor with Kathmandu University School of Management (KUSOM), and during his recent visit to Kathmandu, he addressed issues at a talk programme titled â€˜Financial Crisis: Will Nepal Join It or Avoid It?â€™ organised by KUSOM. In an interview with </span><i>New Business Age</i><span style="letter-spacing: -0.05pt;">, he discusses the likely consequences for Nepal and its people in the event of a financial crisis, among other issues. Excerpts:</span></span></span></div>
<div style="text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><br />
	</span></span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How, do you think, the current liquidity crunch in Nepal can be set right?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">First of all, â€˜liquidity crunchâ€™ is a wrong phrase to use. Secondly, the problem is not that of liquidity because there is enough money in circulation including the so-called monetary supply. It is actually credit crunch. The people who need to repay the money arenâ€™t able to manage credit to repay quickly. So, primarily, it affects them. The people who speculated are the ones unable to borrow more to make payments on their loans. I have been told that land prices in Kathmandu soared outrageously but have come down drastically in recent times. The BFIs lent against those lands as collateral at higher prices and everybody got large amounts as loans. Now that the value of same land holdings has come down immensely, the borrowers cannot sell off the land to repay the loans. So, these people are looking elsewhere for more money. The impact of this situation on the banks is that they were expecting certain cash inflow of interest and repayment of the principal on the loan but they are not getting it. The BFIs have stopped getting money from the borrowers while they still have to pay interests to their depositors. It is a small world and everybody knows whatâ€™s happening. The depositors the world over stand in the queue immediately to withdraw all their cash the minute they panic. In such an event, the bank has to find money from somewhere to pay cash to the depositors. We can call it insolvency on the bankâ€™s part because it may have the assets but not enough cash. I refuse to call this a liquidity crisis in technical terms: itâ€™s a cash problem. This is precisely the case when the NRB is forced to bail out such BFIs by supplying them bundles of cash to pay the depositors. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;">&nbsp;You have labeled the global financial crisis a â€˜group of crisesâ€™. What is your logic behind this observation?</span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">Itâ€™s because the complete picture on global financial crisis is not only about impacting financial markets but also the path it treaded to reach there. It is for everyone to see that there is a crisis but most people are unaware of the real causes behind it. The problems are deep within the system due to which many commentators started calling it a systemic failure. The system was designed and modified over the years in such a manner that it led us to this problem. Thatâ€™s why I call it a group of crises because it took us a long time to get there. The whole story was in the making for 10 â€“ 15 years in the US and before the people could realise, it carried over to other countries as well. It started during the Clinton (Former US President Bill Clinton) administration when the liberalisation policies were implemented and the government agencies were indirectly asked to do certain things for the society. But it slowly increased in size and intensity and ultimately developed into a major crisis.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What, in your opinion, should be the conduct of Nepal Rastra Bank as well as the Banking and Financial Institutions (BFIs) to ensure smooth running of the economy?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">It seems to me that Nepal Rastra Bank (NRB) is currently the only organisation in Nepal which can look after the financial sector as well as the economy. That makes it a very important agency. I did have the opportunity to speak to a few NRB officials and realised that they are exceedingly competent and have the countryâ€™s interest at heart. The problem is that when you overwhelm a small group of people with too much work, they cannot handle it. You also need regulatory and legal structures backing these people up. The decision of classifying commercial banks, development banks, finance companies, etc as part of the financial sector is definitely very important but it is equally important to set limits for them. It would have been useful to categorise the scope of work for these institutions and spare them interference from the ruling structure of the country as well as the promoters of respective companies. Everybody has a stake in the institutional well being but the ultimate goal for these institutions should be to promote the national economy. If they are going to look at their own narrow self interests then they can do so in the short term only. This is where NRBâ€™s role of being a regulatory agency becomes critically important.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">You accept that NRBâ€™s role is of paramount importance. What best can it do to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB ought to develop a sub agency whose sole focus would be to manage and supervise the oversight of the â€˜Aâ€™ class commercial banks because they are the biggest ones and they have roots in the economy everywhere. They are the real conduit or the pipeline for the monetary policies of NRB so they need special attention. They need tight grouping but I donâ€™t know how that is being accomplished at this point of time.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What are your recommendations for Nepal to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB is doing all it can to avoid the crisis. It does lot of good things such as giving the money, regulating and supervising, encouraging merger of weak banks with strong banks, etc. The difficulty I see is that of the assets portfolio. The loans that the BFIs have made are weakening, in other words, they are becoming non-performing. This kind of a situation puts a lot of stress on the capital structure and the flow of credit to the economy. No matter what NRB does, the problem doesnâ€™t seem to go away. There are different ways of handling the problem. The bad loans must be taken over from the banks and passed on to NRB. It is a question of how much the central bank can do because they have other goals in mind such as ensuring price stability and looking after the development of the economic sectors etc. The ultimate challenge is that of supervising the BFIs and making them do the right things which require exceedingly tight control.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How do you view the consequences for Nepal and its people in the event of a financial crisis?</span></span></strong></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">I have gathered that only about 35 per cent of the population in Nepal has access to banking services. So, the rest 65 per cent of the population will not be directly affected if, god forbid, a financial crisis was to happen here. But what is really interesting here is: most people under this 65 per cent population are barely maintaining a subsistence level anyway. The commercial sector which depends on the BFIs and the development of different industries, agriculture, construction etc will be severely affected in the event of a financial crisis. Even though we may say that the population at large might not be affected, the large chunk of the economic activity could very well be affected and that is the problem. Therefore, even the poorest of the poor will be affected indirectly. Nepal is in a very strong position because of huge amount of remittance it receives every year which is a very nice safety net. But the question is should we rely only on a safety net. Instead, we must rely on a good machine so that we donâ€™t have to use the safety net. And so, my concern is mainly from that perspective. We are trying very hard for economic development so letâ€™s not derail it by letting one little sector of the economy cause problems for the others. We need to study as to what per cent of the real economy depends on the financial sector. Look at the difference between the interest rates that people get on their deposits in the banks and the inflation rate. There is no incentive to save because the purchasing power is constantly decreasing. So, we do not need to have that sort of control in the economy to help save. Savings are to be used to increase the size of the economy for which we need good investments that can generate more income for the country. Finding good investment opportunities is key to bringing the whole economy together. Therefore, if the BFIs donâ€™t do their job well, then we are bound to face major problems.</span><br />
	</span></p>',
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			'created' => '2011-09-17',
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			'description' => 'Dr Gautam Vora, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques,......',
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	(int) 7 => array(
		'Article' => array(
			'id' => '428',
			'article_category_id' => '40',
			'title' => 'Economic Policy Deflections (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><img align="left" alt="economic" border="1" height="316" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover(1).jpg" style="width: 315px; height: 316px;margin:10px;padding:10px;" vspace="10" width="315" />By Achyut Wagle</i></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">A</span><span style="letter-spacing: -0.05pt;">t present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is veering more towards the replay of 19th century model of state-controlled, putatively self-sufficient â€˜nationalistâ€™ and thus effectively an isolationist paradigm. The policy shift seems to have completed a full-circle from the campaign of self-sufficiency, trumpeting of fulfilling basic needs, then open-market-oriented liberal policies to the present one marred with confusion but decidedly intended to execute state-controlled economy. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Apparently, as elsewhere, the vicissitudes in the Nepali economic policy has been analogues to the nature of the political dispensation the country adopted in different points in history. The externalities too have their share of influence in shaping these policies. Such an influence is surely growing with the changing world order, shifting of epicentres of economic activities and, of course, with dramatically increased communication and transportation connectivities. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Vicissitudes</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal presented its first national budget in 1952. Until the fall of Rana oligarchy in 1951, Nepal remained primarily a vassal state. Any economic policy under a 104-year long Rana rule used to be based on the whims of the ruler and that too, related only to the land tax and management of major temple trusts or â€˜Guthisâ€™. Back then, almost cent per cent people relied on agriculture of subsistence nature. State hardly spent for developing infrastructure, public delivery and services systems. The fall of Rana rule and dawn of democracy in 1951 February definitely heralded a new era both politically as well as economically. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first budget had three prime policy focuses â€“ expansion of education, promotion of co-operative like structures at the village level to increase agricultural productivity and monetising the economy to the extent possible. This also welcomed the American aid in the country thus far remained largely closed, except for British and Indian diplomats, for the outside world.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Those initial policies were fairly realistic to Nepal given the socio-economic realities of that time. But, the political squabbles and power struggles overshadowed the implementation of them for at least a decade to come.&nbsp;However, despite politically a fluid situation, mid 1950s marked as a major milestone â€“ mainly in two respects â€“ in 1955 Nepal Rastra Bank (NRB) was established and in 1956 Nepal adopted its first five-year plan. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">One of the major objectives of the NRB was to replace the Indian currency, which was widely circulated in Nepal, by the Nepali currency. Second one was to speed up the process of monetising the economy in place of widely practised barter system in goods and labour.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first plan focused on transport and communication infrastructures. A substantial allocation was made in developing the administrative structure all across the country. But before the completion of the first five year plan due 1961, political coup dâ€™Ã©tat by the then King changed the whole economic paradigm, development priorities and naturally their outcomes.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Flip-Flops of Panchayat</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The second plan was only for three years by lapsing a year. It was prepared by the National Planning Commission, a Russian style central planning mechanism, which still exists with very little variation.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">From the third five-year plan on, the partyless panchayat system under the direct rule of the King imposed a guided development policy. The economic policies were rather random mix of socialistic and capitalistic overtures. The state heavily invested in setting up state-enterprises of all sorts â€“ manufacturing, services and deliveries. This was an era of â€˜generousâ€™ foreign aid and Nepal was opened to all hues of them, albeit, with caution not to politically destabilise the largely totalitarian panchayat polity. Local panchayats were the political-administrative channels employed to carry out economic and development activities. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The seventh five-year plan (1985-90), the last of panchayat era, made two major policy departures. First, the plan categorically pronounced to work towards meeting the basic needs of the people, under the slogan coined as â€˜elevating the peopleâ€™s living to Asian standardsâ€™. And, second, it adopted a ground-breaking policy flexibility of inviting foreign direct investment and improving the performance of the state enterprises as recommended by Structural Adjustment Programme (SAP) piloted by the International Monetary Fund (IMF). During this period, apart from several foreign investments in tourism related industries, two foreign joint-venture banks, Nepal Arab Bank (Nabil) and Nepal Indosuez Bank were established. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Openness</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The reinstatement of multi-party democracy in 1990 began an era of economic liberalisation in Nepal too. The political change delayed the eighth plan by two years. But the eighth plan (1992-97) firmly advocated the privatisation of and divestment from the State Owned Enterprises (SOEs) and open market policies across all sectors. Undoubtedly, the forces of globalisation and international trend of reclaimed openness through democratic governance in former USSR and Eastern Europe contributed to these developments. Whatsoever, this is perhaps the â€˜golden eraâ€™ in terms of economic policy formulation and growth in Nepal. During this period, private sector investment was impressive. Airlines, hospitals, educational institutions, banks and manufacturing units were set-up by private investment. Public investment in infrastructures, mainly roads provided firm basis for urban access to villages. The ninth plan was generally continuation of the eighth plan. But the growth spirit was dampened by the armed insurgency initiated by the CPN-Maoist in 1996 February. Amidst fear and uncertainty, the economy dragged on. But the growth path was already truncated before the end of this plan in 2002 due to spread of violence in the country-wide scale, destruction of infrastructure and absence of any substantive private investment. Despite all odds, the GDP growth in the 1990s was about five per cent annual average.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Poverty Focus</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The tenth five-year plan was adopted through wider consultations with donor community led by the World Bank and other stakeholders. The whole plan was baptised as Poverty Reduction Strategy Paper (PRSP). True to its name, its focus was on poverty reduction with added dimensions like putting women in the forefront of rural poverty reduction strategies. An interesting policy link was introduced between the structural and legal reforms and the poverty reduction. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">At the very beginning of the plan, Nepal Development Forum was organised for the first time in Nepal. As the Maoist insurgency had become widespread, it also tried to look into the links of the factors like poverty, unemployment and social unrest or insurgency. Interestingly, however, the main policy basis adopted in 1992 that emphasised on the free market economy continued till the tenth plan that ended in 2007. One of the highlights of the tenth plan was Financial Sector Reform Programme (FSRP) that aimed to achieve the central bank autonomy and efficiency, reform in public sector banks, Rastriya Banaijya Bank, Nepal Bank Ltd and Agricultural Development Bank. Several other institutional set-ups like Credit Information Bureau, Debt Recovery Tribunal etc were added. Substantive legislative reforms were made, including a composite Bank and Financial Institutions Act 2007 (BAFIA). Reform in the capital market was another important agenda which has only partially achieved.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Some of highly ambitious reform agenda like bringing the financial giants like Employeeâ€™s Provident Fund and Citizen Investment Trust under an effective regulatory and supervisory ambit and establishing an Asset Management Company remained untouched. Despite generally appropriate policy directions in the later years of the tenth plan, the focus on implementation got immensely diluted. Among many other things, the process of privatising SOEs did not go ahead as expected.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">On the Reverse Gear </span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After signing of Comprehensive Peace Agreement with the Maoists in 2007, the discourse on economic policy has taken a backseat. The Agreement and the election for the Constituent Assembly both established the apparent dominance of the communist forces in Nepali politics. This not only changed but reversed the very orientation of national economic policy. Since then, no five year plan has been formulated. Two interim plans of three-year each were adopted in view of the prolonged political transition.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Contrary to the general expectation that the post-CPA period would create more conducive atmosphere for economy to grow, the economic performance has gone from bad to worse. The policy confusion is at its core. The communist forces, particularly the UCPN- Maoist is oscillating between proletarian dogma of state-controlled, distributive economy and present day global realities that demand openness and interdependence. The partyâ€™s heavy political reliance on its trade unions have made them unruly and major source of industrial disturbances.&nbsp;This has telling adverse effect of spatial nature on manufacturing and exports, new investments and employment generation. In a nutshell, Nepali economy is again going back to the era of â€œeverything done by the state.â€ Recently it has created new state-owned corporations like Hydropower Development Bank. No government policies assertively talk about privatisation and reform. In a bid to balance the international realities and communist indoctrination, the racing horse of growth has turned into a camel.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">For the last couple of years, the Maoist-UML coalition is in power. It has vehemently pushed a three-pillar â€“ government, cooperatives and private sector â€“ concept of economy which has irked and made apprehensive to the private sector regarding its role and treatment from the state. The private sector is unwilling to consider the cooperatives a separate sectors but the subsector of the private. Given nature, scale and GDP contribution, this proposition seems justifiable. But the more left-oriented policy makers have seen cooperatives as the substitute to the â€˜commune styleâ€™ operation of the economy, thus the emphasis. The cooperativesâ€™ contribution to the national GDP is estimated to be meagre 2 to 3 per cent.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Of late, the donor community and the potential investors â€“ both foreign and domestic â€“ seem to have lost interest in Nepali economy owing largely to absolute lack of policy predictability, growing apprehension of infringement on private property rights and disturbed industrial peace at the hands of ruling-party hoodlums and even stateâ€™s failure to bring them to&nbsp;justice.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Future</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal apparently does not stand at a point of immediate course correction so as it could regain the lost trust and re-ignite the growth engine. There are two main reasons for this: first, the communists, particularly the Maoists are still essentially against the concept of giving the private sector a lead role in economy.&nbsp;Not only that, their anti-private sector rhetorics is often repeated in this or that form. Recently, they have announced that â€˜allâ€™ party leaders would pull-out their children from private schools; purely a futile and demonstrative move. Therefore, until, the party recognises the private sector as major player in the economy and reflects the same in both â€“ policies and actions, economy is unlikely to come out of present sluggish pace of growth â€“ 3.5 per cent in the last fiscal year.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The second is the complete absence of the economic policy debate in all major political parties. Any economic policy introduced so far by any party or the government is not an outcome of all through meaningful debate from the local to the central bodies in a manner a democratic outfit should ensure for ownership and the implementation of these policies. Only adoption of this practice can bring the economic agenda to the forefront of the national debate and the policy predictability could also be ensured. </span><br />
	</span></p>',
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			'created' => '2011-09-17',
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			'description' => 'At present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is.....',
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	(int) 8 => array(
		'Article' => array(
			'id' => '427',
			'article_category_id' => '40',
			'title' => 'Sorry State Of SOEs (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;"><strong>By Pinaki Roy</strong><br />
	Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government will provide over Rs 1.77 billion to the state-owned enterprises (SOEs) as subsidies in the current financial year while another Rs 1 billion will come in as foreign grant and loan. The subsidies to the SOEs for FYs 2009-10 and 2010-11 stood at Rs 1.54 billion and Rs 1.97 billion, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Most SOEs in Nepal are in loss for a long time now. Even the ones that are making profits are because of their monopolistic nature of business. However, itâ€™s inevitable that they too stand to come under pressure once competition intensifies. For example, Nepal Telecommunications Corporation (NTC) is being increasingly challenged by Ncell, a leading mobile telephony brand in Nepal. Most SOEs that are registering mounting losses year after year owe it mainly to political interference and corruption within these public corporations. The high profile Nepal Electricity Authority (NEA), Nepal Oil Corporation (NOC) and Nepal Airlines Corporation (NAC) are among the notable SOEs that have been making losses for as long as one can remember. Suresh Kumar Regmi, Under Secretary at Corporation Coordination and Privatisation Division of the Ministry of Finance (MoF) says, â€œThe corporations must try to become profit making entities on their own instead of expecting help from the government all the time.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Keeping these SOEs alive and kicking essentially means that the state has to dig deeper into its coffers to provide for them. The same money could have been invested otherwise on development. Among the most glaring failures are those of NEA and NOC that have miserably failed to adjust prices in accordance with evolving market dynamics. NEA sells electricity to its consumers at Rs 6.57 per unit as against its cost of Rs 8.97 per unit resulting in a loss of Rs 2.40 per unit. Its accumulated loss of around Rs 19.47 billion exceeds several folds to its total asset value. Similarly, NOC is under Rs 15 billion deficit currently due to heavy losses on petrol, diesel, kerosene and liquefied petroleum gas (LPG) prices. To make matters worse, it is plagued with corruption, political interference and poor governance. The government has no choice but to bailout these SOEs year after year because electricity and fuel are basic services that people of this country cannot be expected to live without. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The question arises as to how long can the state rescue the loss-making SOEs by compromising on development expenditure. NAC â€“ once the pride of the nation â€“ has gone from bad to worse with losses amounting over Rs 2 billion. Boasting a sizeable fleet of 21 aircraft at one point of time, it is left with only three small aircraft that fly domestic routes and two medium sized jets. Among the biggest foreign currency earners not too long ago, NAC today merely watches in despair other domestic and international airlines snatching away its market share. Never-ending controversies on aircraft purchasing, political meddling with appointment of staff and loans have hit the corporation hard in the recent past. The employees appointed by the public enterprises (PEs) stood at 33,603 in FY 2008-09, while this figure dropped slightly to 33,526 in the succeeding fiscal year. The average monthly expenditure of these employees reached Rs 34,126 in FY 2009-10.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The taxpaying populace is infuriated because its money is funnelled into these failed enterprises while development activities and service delivery are taking a beating due to, among others, inadequate funding. Furthermore, there has been a lack of genuine intent to reform or privatise the loss making enterprises. The SOEsâ€™ survival now stands purely for political reasons. Their existence does not add significant value to the countryâ€™s productive capacity. During FY 2009/10, 22 PEs earned net profit, whereas 14 PEs recorded loss; some of them had negative net worth. The governmentâ€™s investment in these SOEs has reached a whopping Rs 84.91 billion. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The total operating income of these enterprises in FY 2009-10 registered an increase of 21.63 per cent over the previous FY and reached Rs 130.98 billion. While the operating income of service sector enterprises increased by 70.2 per cent, the industrial sector enterprises registered the least increase in operating income at 4.2 per cent. The net fixed assets of 36 enterprises that totalled Rs 133.740 billion in the fiscal year 2008-09, reached Rs 139.365 billion by the end of the fiscal year 2009-10, an increase of 4.2 percent. While analysing the entire profit and loss of the 36 PEs, the net profit of Rs. 10.55 billion they had earned in fiscal year 2009-10 grew by Rs 8.3 million in the fiscal year 2010-11. However, if three major profit making SOEs are taken out, these statistics cut a sorry figure in itself. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Akin to the case in other countries, the state enterprises in Nepal too are present in areas that could be more successfully occupied by the private sector. Incompetent SOEs have blocked private dynamism completely and, at the same time, necessitated an insurmountable financial and administrative burden. In contrast, privatisation promises to free up public assets for activities of urgent attention and facilitate improved and inexpensive services besides unlocking prospects for private sector growth. However, the Privatisation Cell of the MoF has no immediate plans to privatise SOEs anytime soon. â€œWe are not in a position to close loss making enterprises either as they provide employment to thousands of people,â€ Regmi informs on a rather helpless note. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Nepalâ€™s privatisation programme articulated in the 9th plan envisions promoting private sector participation in the economy. A number of enterprises, mostly agricultural and industrial, have been privatised since the programme began in 1992 with the government playing the role of a catalyst. However, a number of productive SOEs such as Bansbari Leather and Shoes Factory (BSLF) and Agricultural Tools Factory (ATF) have ceased to function after being privatised owing to governmentâ€™s thoughtlessness in selection modality and consultation process, and lack of proper homework while selling them. Over the last decade or so, the privatisation drive has slowed down considerably to the extent of coming to a virtual standstill.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The delicate financial health of the SOEs and their failure to adequately gratify market demands is a persistent problem that cannot be resolved by gifting subsidies and granting loans. Mismanagement, overstaffing, poor governance and accountability, competition from private players and most importantly, politics prevailing over economic imperatives have destroyed these SOEs and led them to their present dismal state. One can safely assume that unless there are radical and wholesome practices pursued such as privatisation (save the ones that are strategically linked to critical security and national interests) of these ailing enterprises, the SOEs will continue to be resigned to their fate and the taxpayers of this country will keep on bearing their burden. Worse, bailing out the SOEs of their financial chaos time and again only makes them more inefficient. Itâ€™s but tragic that the sick enterprises are encouraged to take the state and the nation at large for granted. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The Loss-making SOEs</span></div>
<table border="0" cellpadding="0" cellspacing="0" style="margin-left: 4pt; border-collapse: collapse; width: 321px; height: 678px;">
	<tbody>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border: 1pt solid white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Name of the SOE</span></b></span></div>
			</td>
			<td style="width: 59.9pt; border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: white white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Total Loss </span></b></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Dairy Development Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 325.1 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Herbs Production and Processing Company Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 136.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Hetauda Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 619.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Janakpur Cigarette Factory Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 800.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Drugs Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 485.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Udaypur Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.773 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oriental Magnesite </span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 3.597 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Food Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.107 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oil Corporation Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 8.418 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Airlines Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.557 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Gorkhapatra Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 89.7 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Television</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 760.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Water Supply Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 391.4 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Electricity Authority</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 18.230 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Agricultural Development Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 4.391 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rastriya Banijya Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 11.228 billion</span></span></div>
			</td>
		</tr>
	</tbody>
</table>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>Source</i>: Ministry of Finance Report, Ashad 2068</span></div>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government.....',
			'sortorder' => '341',
			'image' => null,
			'article_date' => '0000-00-00 00:00:00',
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	),
	(int) 9 => array(
		'Article' => array(
			'id' => '426',
			'article_category_id' => '40',
			'title' => 'Policy Twists For Public Enterprises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: 0.05pt;">T</span><span style="letter-spacing: 0.05pt;">he budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and ensure efficiency of public enterprises. However, this yearâ€™s budget has also mentioned a policy to disinvest the government shares among general public.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The latest budget is a step backward on privatisation policy adopted by previous governments. The budget presented by Dr Ram Sharan Mahat for the fiscal year 2007/08 had proposed a gradual privatisation of the state-owned enterprises. Then, the budget of 2008/09 presented by Dr Baburam Bhattarai of the UCPN-Maoist led government reversed the policy of privatisation. Next yearâ€™s budget by Surendra Pandey gave continuity to Bhattaraiâ€™s agenda to increase investments in government corporations. Economic experts had argued against increasing the investment in state-owned enterprises instead of taking up privatisation measures.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Though there were attempts of privatisation during the Panchayat system, they were unsuccessful.. The concept of socialism faded and liberalisation came into picture after the fall of communism in Eastern Europe. Nepal could not avoid the influences of the global change. There was massive change in Nepali economic policy with the restoration of democracy as the process of privatisation of public enterprises began after 1991. Experts have it that the new initiative was taken mainly because of the pressure from IMF, The World Bank and other donors. The change was incorporated in the White Paper published by the Girija Prasad Koirala government in 1991. The policy tried to balance the public and private sectors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Koirala government emphasised on selling the shares of public enterprises at the stock market. That was aimed at widening the ownership of the newly-privatised corporations and also to ensure competition for companies as well as consumers. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Harisiddhi Brick and Tile Factory, Bhrikuti Paper and Pulp Factory and Bansbari Leather and Shoe Factory were privatised in the first phase. In 1993 and 1994, 14 companies were selected for privatisation. Seven of them were wholly government-owned while the rest had joint-ownership with the private sector. Similarly, in the second phase, Balaju Textile Factory, Nepal Film Development Corporation, Nepal Lube Oil, Bitumen and Barrel Industry and Raw Hide Collection and Development Corporation were privatised. Likewise, Jute Development and Trading Corporation and Tobacco Development Company were liquidated.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The policy took a different turn when the Communist Party of Nepal (UML) came to power in 1994. Unlike the Nepali Congress, the UML government favoured public enterprises. The budget speech of the same year read, â€œTo lessen the financial burden of the government, a privatisation program based on economic policies of the government will be implemented. There will be separate listing of corporations that are to be privatised and those that will not be privatised. The privatisation programme will be expedited for those corporations included in the privatisation lists.â€ However the government policy could not take off as the government did not even list the companies for privatisation. Further privatisation was certainly out of question. The budget of 2001/02 tried to be most intensive and aggressive towards public enterprises. The budget presented by Dr Ram Sharan Mahat promised to set up a separate unit in the Ministry of Industry, Commerce and Supplies to coordinate and monitor the price, quality and quantity of goods and services produced by the public sector. This budget also decided to prepare strategic and organisational planning to reform managerial, accounting and financial systems of the public enterprises. Most remarkably, it also decided to convert state-owned enterprises into companies curtailing the number of board members, their functions and duties to ensure professionalism.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On minimising the cost to government, the budget presented by Dr Mahat read, â€œThe tendency of increasing short-term benefits by neglecting social security in public enterprises and development boards will be discouraged.â€ He proposed the provision to manage pension and gratuity compulsorily through Citizen Investment Trust. Likewise, the executive chief was made liable for creating any new financial liabilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Another significant proposition by Dr Mahat was to encourage the private sector investment where the involvement of the government is deemed unnecessary and where there existed a high possibility of attracting private sector.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">After 2001, 17 companies have been either liquidated or privatised. Nepal Telecommunication Company was the latest one to join the list in 2008 when its some shares were sold to the public. However, the privatisation process stalled completely after 2009/10 except for the sale of government shares of Small Farmer Development Bank to Small Farmers Cooperatives&nbsp; in 2010/11.</span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'The budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and.....',
			'sortorder' => '340',
			'image' => null,
			'article_date' => '0000-00-00 00:00:00',
			'homepage' => false,
			'breaking_news' => false,
			'main_news' => false,
			'in_scroller' => false,
			'user_id' => '0'
		)
	),
	(int) 10 => array(
		'Article' => array(
			'id' => '425',
			'article_category_id' => '40',
			'title' => 'What’s Wrong With Public Enterprises? (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	<span style="font-size: 14px;"><span>T</span><span>he government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by Bharat Mohan Adhikari. The promise made in the budget 2010/11 to form the committee has however remained unfulfilled.&nbsp;The board is expected to manage and run the corporations effectively and efficiently. Suresh Kumar Regmi, Under Secretary of Corporation Coordination and Privatisation Division at the Ministry of Finance, said the proposal to constitute the board has been sent to the cabinet for approval.</span><br />
	</span></p>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of the government to act as a referee for the development of economy seems to be neglected by the new budget. Rather, it has proposed the concept of an economy led by cooperatives. Obviously, private sector is thoroughly dissatisfied with the government move. Dr Ram Sharan Mahat, former Finance Minister and Nepali Congress Leader, said, â€œThe proposal of the government-owned cooperatives is not an alternative. Rather, they are against the self-help spirit of the cooperatives.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the new budget, the government has tried to democratise the selection of Chief Executive Officers and General Managers of public enterprises. Merit-based selection is expected to welcome capable and qualified leadership. Often, it is alleged that poor leadership in the corporations led to their deterioration.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Similarly, this yearâ€™s budget says, â€œA policy of disinvesting the share of the public enterprises to the public will be implemented.â€ The share of the government was Rs 82.76 billion in 2009/10 while its total loan investment in 36 public enterprises remained at Rs 84.92 billion. In the previous fiscal year, the figures stood at Rs 86.13 billion and Rs 74.60 billion respectively. According to the economic survey of 2010/11, share investment of the government decreased by 3.9 per cent while loan investment rose by 13.8 per cent.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the name of reforms, the government is funnelling billions of rupees from the state coffers as subsidy to public enterprises which are constantly failing to show their competency in comparison with the private sector. This year, an estimated Rs 2.77 billion is being provided as subsidy. Similarly, the subsidy was Rs 1.97 billion in 2010/11 and Rs 1.54 billion in 2009/10. Regmi said, â€œThe corporations will not progress if they remain dependent on the government. Rather, they must manage their operations on their own.â€ â€œWhen the private companies in the same sector can do well, why canâ€™t the government-owned companies make profit,â€ he asked.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the last fiscal year, out of the 36 public enterprises, 22 were in profit while 14 were bearing losses. None of the corporations engaged in production are in profit. The economic survey shows that the net profit of Rs 10.55 billion in fiscal year 2009/10 grew by Rs 8.3 million in the fiscal year 2010/11. The share of net operating income of the public enterprises has been 11.2 per cent of the GDP. Regmi said though the number of profit-making companies has increased in recent years, the combined profit of the corporations has not increased. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although Nepal Tourism Year 2011 is going on, national carrier Nepal Airlines Corporation (NAC) is in the worst possible condition. Similarly, Hetauda Cement and the first cigarette factory of the nation, Janakpur Cigarette Factory, are also in dire straits. Despite a monopoly in the market, it is unfortunate to see Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA) in heavy losses. Stories of other 14 corporations are no different. Poor management, inefficiency, corruption, weak leadership, skewed policies are to be blamed for their failure.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Likewise, the net fixed asset of the 36 public enterprises was Rs 133.740 billion in the fiscal year 2008/09 which increased to Rs 139.365 billion by the end of the fiscal year 2009/10, up 4.2 per cent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the liberalisation policy on economy introduced after the restoration of democracy in Nepal, the government initiated the process of privatisation, liquidation and termination of state-owned enterprises in 1993. Ever since, 30 companies have been divested of which 18 corporations have been privatised while 11 have been liquidated and one, Nepal Transport Corporation, was dissolved. The disinvestment has been carried out through the sale of businesses assets, partial disinvestment of shares, sale of current assets, leasing of buildings and land, management contract, liquidation, and termination. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The private sector and some economists are complaining that the government has taken a regressive step by reverting to state-controlled economy from the currently liberal economic regime. Mahat said the proposal of the government brought through the budget 2011/12 is suspicious and non-transparent. â€œThe government has failed to bring any concrete policy for the state-owned enterprises. It lacks an action plan for the corporations,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Experts opine that the government should play the role of a referee. It should work for the development of the real sector and the economy but it should not involve in doing business. They say competitive market entities should be handed over to the private sector. Dr Prakash Chandra Lohani, former Finance Minister and Co-president of Rastriya Janasakti Party, says the government and the private sector must complement each other. He opines without ensuring law and order and a strong policy framework, the private sector cannot prosper. â€œFor that, competitive regulation is necessary and the government should try to minimise the risk of the private sector. However, this yearâ€™s budget does not talk about vision and roadmap for the private sector,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although much criticised, the public enterprises have been the source of employment to 33,603 people at executive level appointed by the management in 2008/09. However, the figure dropped to 33,526 in the succeeding fiscal years. Regmi also accepts that public enterprises&nbsp;are overstaffed. Experts opine that the number of staff in sick corporations can be lowered, which may lower their cost of operation and.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">According to Regmi, the government does not have a list of public enterprises that they want to privatise or a policy framework to privatise them in the near future. He suggests that the policy should be made in coordination with line ministries to give such companies the right direction. â€œTrying to save them by the finance ministry alone will not work,â€ said Regmi. â€œA political decision can choose either to close down or keep operating the public enterprises. However, as thousands of people are getting employment even in sick public enterprises, they cannot be abruptly closed.â€ </span><br />
	</span></p>',
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			'created' => '2011-09-17',
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			'description' => 'The government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by.....',
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	(int) 11 => array(
		'Article' => array(
			'id' => '424',
			'article_category_id' => '40',
			'title' => 'International Privatisation Trend (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">M</span><span style="letter-spacing: -0.05pt;">otivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation programmes in the last twenty-five years or so. Decades of poor performance and inefficient operations by SOEs led the governments to embrace privatisation. Thousands of SOEs have been given away to the private sector in Africa, Asia, Latin America, and Eastern and Western Europe. Throughout the world, annual revenues from privatisation soared during the late 1990s, peaking in 1998 at over US $100 billion.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Widespread privatisation in recent decades has generated a reasonable hype concerning the effects of ownership on performance. Most studies find that privatisation has a positive impact on profitability and efficiency of business firms. However, very little is known about the effects of partial privatisation where the government remains the controlling owner. Indiaâ€™s privatisation programme has followed a pattern of partial privatisation through share offerings but at a particularly slow rate. Between 1991 and 1999, the Indian government raised about $9 billion in privatisation revenues, compared to nearly $71 billion raised in Brazil and $21 billion in China over the same period, according to Global Development Finance Report 2001.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Since both ownership and control shift to the private sector at the same time, full privatisation makes it difficult to distinguish between the political and the managerial perspectives. In contrast, under partial privatisation, the shares of the firm are traded on the stock market while the firm remains under government control and subject to political interference. Letâ€™s have a look at the following examples of how some countries and regions responded to privatisation in the last two to three decades. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">India</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The state intervention in SOEs has been undergoing a close scrutiny in many developing countries including India since 1980. The argument was that excessive political interference and lack of managerial interest (autonomy) hampered the performance of SOEs. Economic policy and state-owned sector in the post-independent India can be divided into four phases: (i) 1950-1965, (ii) 1966-1984, (iii) 1984-91 and (iv) post-1991 policy regime. The second sub-period of the second phase i.e. 1973-84 recorded a slow process towards liberalisation, which culminated into an irreversible process of liberalisation of the economy through the third (1984-91) and during final phase (1991 onwards). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Concepts such as liberalisation, privatisation, disinvestment and market-friendly approach replaced the old concepts of socialism and mixed economy. The period of 1966-84 culminated in a total transformation in the economic policy where economy was made predominantly dependent on market forces rather than on the state. The attempt, it seemed, was to depoliticise economic decisions as far as possible. The industrial policy that was initiated in 1985 was the culmination of the process of drifting away, which started during the second phase of the economic policy in India. The 7th Plan (1985-90) proposed larger planned outlays for the private sector as compared to the state-owned sector for the first time in the planning history of India.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India witnessed a major policy reform programme consisting of considerable deregulation of industrial sector as well as liberalisation of foreign investment and technology imports since July 1991. The 8th, 9th and 10th Plan documents suggested many policy initiatives towards restructuring, modernisation, rationalisation of capacity, product-mix changes, privatisation, autonomy, performance accountability and disinvestments policy. The movement of denouncing socialism that started in many parts of the world influenced Indiaâ€™s policy makers as well. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India undertook sweeping economic reforms that included deregulation and privatisation in response to the foreign exchange crisis in 1991. Since the Industrial Policy Resolution of 1991, which outlined the economic reforms, nearly every governmentâ€™s annual budget has declared that the privatisation goal is to reduce government ownership to 26 per cent of equity. In the decade following the launch of the privatisation programme, the government sold minority shares through a variety of methods including auctions and public offerings in domestic markets, and through global depository receipts in international markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The share of state-owned sector in total investment continuously declined since the 1980s is illustrated in the following table. The relative shares of the state-owned and private sectors during 7th, 8th, 9th and 10th plans clearly signal the rising importance of the latter at the cost of the former.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The 9th Plan divided SOEs into three categories (i) profit-making PSEs (Public Sector Enterprises); (ii) PSEs making marginal profits and losses; and (iii) PSEs incurring substantial losses. Accordingly, all PSEs were placed in suitable categories. Disinvestment Commission, started in 1996, primarily to discipline PSEs and make them result oriented was developed into a full-fledged Ministry for Disinvestment, thereby institutionalising the process of reforms and restructuring of PSEs. Once it was established that privatisation of SOEs was no longer a choice but an imperative, the stage was set for privatisation of SOEs. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Privatisation Trend</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The emphasis of Indian privatisation from 1991 to 2000 was on disinvestment through offloading of governmentâ€™s shares to the state-owned or financial institutions. During this period, the government offloaded shares in as many as 39 SOEs. However, since March 2000, the emphasis has increasingly been on strategic sales of identified SOEs. The table below briefly summarises the amount realised and the number of SOEs disinvested or privatised till November 30, 2003.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Modern Foods Industries Limited (MFIL) was the first SOE to be strategically sold followed by Bharat Aluminium Company (BALCO). Fifty one per cent of BALCOâ€™s shares were sold to Sterlite Industries for Rs 5,515 million. Following this sale, the government was quick to proceed with strategic sales in important firms by divesting 51 per cent of the shares in Computer Maintenance Corporation (CMC) to Tata Sons and 74 per cent of the shares in HTL, PPL and Jessop (for Rs 550 million, Rs 1,520 million and Rs 180 million respectively) to Himachal Futuristic Corporations. Nineteen hotels of Indian Tourism Development Corporation (ITDC) and three hotels of Hotel Corporation of India Ltd (HCIL) collectively contributed Rs 6,866 million towards divestiture or disinvestment proceeds. For all these 19 hotels, 100 per cent of the equity was sold. In terms of individual sales, maximum proceeds (Rs 37 billion) were collected by selling 25 per cent of the equity in Videsh Sanchaar Nigam Limited (VSNL), followed by the contributions made by selling 27.5 per cent equity of Maruti Udyog Limited (MUL â€“ Rs 24 billion) and Indian Petrochemicals Corporation Limited (IPCL â€“ Rs 15 billion). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Post-liberalisation era</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The government was forced to revise its economic policies following the exceptionally severe balance of payments and fiscal crisis in 1991 which resulted in disinvestment of government equity in the PSEs. The government steadily paved the way for a level playing field and competition with the private sector and thus resulted in PSEs being envisioned as revenue earning ventures of the government. Thirty individual Central PSEs were divested to select financial institutions namely Life Insurance Corporation (LIC) of India, General Insurance Corporation and Unit Trust of India (UTI) in bundles. Post-1996, sale through the global depository receipt route was also permitted and PSEs capitalised this opportunity to access international financial markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">There was a strategic shift in the government policies between FY 2000 and FY 2004 that facilitated â€˜Strategic Saleâ€™ or disinvestment of government stake in PSEs. The process involved transfer of big blocks of shares and management control to the strategic partners that were identified through competitive bidding. Post-FY 2005, disinvestment realisations were primarily through the sale of small equity stakes. The government realised an amount of Rs 534.23 billion as disinvestment proceeds between April 1992 and May 2008.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In recent times, several government-owned companies have either started disinvestment process or are planning to begin so including the Steel Authority of India Ltd (SAIL) and Oil and Natural Gas Corporation Limited (ONGC). According to Disinvestment Secretary Sumit Bose, Follow on Public Offer (FPO) in SAIL was expected to raise Rs 7-8,000 crores while divestment of five per cent stake in ONGC will fetch the government around Rs 13,000 crores based on present market valuations. The government has proposed a disinvestment target of Rs 95,000 crores from the sale of shares in public sector companies over the next three fiscals, including Rs 40,000 crores in the current fiscal. Last fiscal, the government had raised Rs 22,400 crores through disinvestment in PSU companies by coming out with three Initial Public Offerings (IPOs) and three FPOs. The value of Indian governmentâ€™s stakes in listed SOEs is estimated at about US$ 320 billion and if unlisted companies are included as well, the total value would be approximately US$ 460 billion. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Russia</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The world learnt from the Russian experience that introduction of the â€˜shock therapyâ€™ or rapid mass privatisation can also lead to massive corruption. It underlined the fact that good governance mechanism is vital. Historically, private ownership of production facilities, financial companies and land was absent in the Union of Soviet Socialist Republics (USSR) for over 70 years starting 1917. As per the constitution of the Russian Socialist Federative Soviet Republic of 1918, land was transferred to farming units for management; all production units to â€˜labour collectivesâ€™; and the ownership of forests, natural resources, etc to the state. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Russian government spontaneously introduced a mass privatisation process in 1991 and introduced what was termed as â€˜shock therapyâ€™ â€“ instant price decontrols and rapid opening up of markets. This large scale movement of ownership transfer brought with it massive corruption in the auction process. The mortgage auctions in 1995 were some of the worst cases. Finally in 1997, a new model of privatisation was instituted under which companies were sold rather than distributed. Further, in 1998, the government also introduced processes of asset valuation by international advisors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Current Scenario</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The SOEs continue to play an integral role in the Russian economy even though the role of private sector is ever expanding in Russia. The Russian government believes in the state role through ownership for industrial growth, economic diversification and energy security. The fraction of firms with 100 percent state and mixed (state and private domestic ownership) as per 2007 data is as follows: </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; All firms and organisations: <br />
	11 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Employment: 39 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Capital investment: 32 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Fixed assets (state ownership greater than 50 percent): 23 percent. </span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hong Kong</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong is a relative newcomer to the global club of countries opting for privatisation. It has actually missed some opportunities to learn about and avoid certain problems of privatisation experienced in other countries. There have also been socio-political issues that are unique to Hong Kong. Its experience needs to be seen in the context of the long established worldwide phenomenon of SOEs and the trend of privatisation from early 1980s.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Despite being a British colony, Hong Kong didnâ€™t join the global trend of privatisation during 1980s and 1990s. Some ideas about privatisation were addressed in the government report for Public Sector Reform in 1989 but not followed up for two main reasons. First, there was no strong practical need to privatise public enterprises. Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), had once acknowledged that the erstwhile colony had little external, political or budgetary pressure to reform its public sector. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong recorded public budget surpluses year after year in the post-war period, much envied by other governments. The second reason for â€˜no privatisationâ€™ was political. During the long political transition till 1997, China opposed any colonial government proposal to privatise government assets in fear of a British plot to sell out the interests of the future HKSAR administration. However, the arguments about privatisation in Hong Kong have been reversed after 1997.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Divestment Plans</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Before the return of sovereignty to China in 1997, the Hong Kong government did not divest public assets because of Chinaâ€™s opposition and an absence of budgetary pressure. During the political transition, the colonial government was regarded as fairly competent in dealing with public confidence crises. However, after 1997, these conditions changed quite dramatically. The new conditions in HKSAR prompted the government to formulate divestment plans, but at the same time they raised potential problems for the implementation of the plans. After the political transition, China no longer opposed privatisation proposals of the HKSAR government.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Three Divestment Exercises</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Hong Kong community is generally receptive to the ideas of small government and privatisation compared to many other developed communities. The general acceptance in Hong Kong is partly due to the fact that the government uses public offers as the main strategy of divestment. The popular belief is that citizens will make good profits once they are allocated shares from the governmentâ€™s IPOs. Although the public generally favours public listing, the divestment exercises in Hong Kong were not without controversy. Fundamental conflicts of public interest in privatisation have had to be resolved from time to time. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">MTRC</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Mass Transit Railway Corporation (MTRC) was the first target of divestment in Hong Kong. In late 1999, the government introduced new legislation to replace the MTRC ordinance and to grant a proposed new MTRC company the right to operate the subway system. In October 2000, 24 percent of the MTRC shareholding (US$1.28 billion in value) was divested by way of listing in Hong Kong, London and New York. The offer was 18 times over-subscribed and broke the local record for an initial offering. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Tunnels and Bridge</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After the Legislative Council approved the relevant grant of power, the government divested the future revenues from five toll tunnels and a toll bridge in August 2004 under a securitisation scheme involving the listing of government notes worth US$ 770 million. The offer to individual investors was two times over-subscribed, and the portion earmarked for institutional investors was heavily subscribed. The assets themselves continue to be government-owned through a new government company, Hong Kong Link 2004 Limited. The day-to-day operation of the tunnels and bridge as managed by franchised private firms remains unchanged.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Link-REIT</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">The Housing Authority (HA â€” a statutory corporation) announced in July 2003 that it planned to divest most of its retail and car-parking facilities in public housing estates. The plan was that the government would first set up a new asset-owning and management company, Link Limited, and then divest its ownership entitlement to the companyâ€™s future revenue streams in full by way of the listing of a real estate investment trust fund, Link-REIT. The trust fund, REIT, was chosen as a vehicle for divestment partly because it would restrict the scope of Link Limitedâ€™s business initiatives and partly because the government wanted to promote REIT as a new type of financial product. The HA planned to transfer the retail and car-parking assets to Link Limited after the scheduled listing had been completed. In due time, Link Limited took over the day-to-day management of the HAâ€™s retail and car-parking facilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Latin America</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Latin American countries have been very active in privatisation. Even against the backdrop of massive economic transformations in transition economies, the privatisation record of Latin America seems remarkable. To facilitate their shift to a market economy, most Latin American countries launched mass privatisation programmes that resulted in dramatic reductions of state ownership. Latin America accounted for 55 percent of total privatisation revenues in the developing world in the 1990s followed by transition economies in Eastern Europe and Central Asia at 21 percent. The decline in the economic activity of SOEs has been more substantial in Latin America than in Asia and Africa, bringing levels close to those of industrialised countries. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">Dramatic differences in the extent of privatisation are also evident within regions. In Latin America, for example, countries with large state owned sectors, such as Ecuador, Nicaragua, and Uruguay, barely privatised at all in the 1990s, while others such as Argentina, Bolivia, Guyana, Panama, and Peru raised revenues from comprehensive privatisation programmes that amount to over 10 percent of GDP. The difference in the extent of privatisation across countries and the large amount of assets in the hands of the state heightened the importance of understanding the privatisation record and of developing lessons for future privatisation programmes. However, Latin America has virtually halted its privatisation process in recent years after being the most active region in the 1990s. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><b><i>References</i></b></span></div>
<div style="margin-top: 5.65pt; text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>1&nbsp;&nbsp; Madhu Bala (2006) â€˜Economic Policy and State Owned Enterprises: Evolution towards Privatisation in Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>2&nbsp;&nbsp; â€œKPMG Internationalâ€ (2010) â€˜Resurgent PSUs Vibrant Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>3&nbsp;&nbsp; Nandini Gupta (2005) â€˜Partial Privatization and Firm Performanceâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>4&nbsp;&nbsp; Rikkie L K Yeung (2005) â€˜Divestment in Hong Kong: Critical Issues and Lessonsâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>5&nbsp;&nbsp; Alberto Chong &amp; Florencio LÃ³pez de Silanes (2004) â€˜Privatization in Latin America: What Does the Evidence Say?â€™</i></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>',
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			'description' => 'Motivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation.....',
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			'id' => '423',
			'article_category_id' => '38',
			'title' => 'Brand Buzz (august 2011)',
			'sub_title' => '',
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			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/sajag(1).jpg" style="width: 123px; height: 153px;" vspace="10" />By Sajag Karki</span></i></span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">''Buy two get one freeâ€. â€œSurprise gifts with every purchaseâ€. These are common taglines used by companies in Nepal to attract potential customers. Except for a handful of ads of reputed multinationals along with some local companies that actually communicate brand personality via branding, Nepali advertisements typically focus only on a specific scheme or promotion. They have nothing much to offer except to lure customers into buying the product by providing them with monetary reward or somekind of freebie. Advertising has been around just for a few decades in a developing country like Nepal. Though there has been significant development, there is lot of room for improvement to meet international standards. In this turbulent phase of progress, ethics still comes in question. Nepali media whether TV or print has been flooded with Indian ads with Nepali voiceover. Big B Amitabh Baachan can be seen endorsing more than a dozen ads at the same time. People are confused and tired of seeing the same person over and over again for most products. Due to his popularity, it is also hard to ignore his presence keeping in mind the commercial success celebrities bring about. However, there must be a match between the personality of the brand with that of the celebrity. Same celebrity endorsing multiple products can hamper the image of the product.&nbsp;Are promotional schemes and celebrity endorsers a good way to communicate a companyâ€™s product to its customers? Also, the use of celebrities for products that donâ€™t suit their personality is controversial. The importance and relevance of ethics in advertising in the Nepalese context has been a debatable issue. Ethics is something that is usually not compatible with advertising in Nepal. The fact about advertising is that in most cases it is hard to sell products without offending anybody. Another harsh reality is that a single ad cannot please everybody. Such customers can go for customised products rather than standardised ones in order to fulfil their needs. Since there is always a target group of people that a company caters to, an ad cannot be made that is liked by everybody.&nbsp;Who is responsible for influencing young people for drinking or smoking? Is it important to be ethical while creating ads of oneâ€™s organisation or should they be more concerned with just adding value of the firm while ignoring the ethical and moral issues of advertising and business as a whole?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The topic of ethics in advertising is such that it is never black and white. It is impossible to paint a rosy picture by just claiming yes or no to ethics. There are subtle shades of grey in which arguments from both sides are viable. Practically speaking, the direct adaptation of moral philosophy principles in marketing communication is unsuitable. However, this doesnâ€™t mean that ethics should be completely neglected. The parameters for judging ads cannot be the same as judging the morality and ethics of society.&nbsp;Hence, marketing must develop its own philosophy of ethics. In the advertising world, some puffery is allowed since no company can sell anything by saying just the mere truth. A bit of dramatisation and an element of excitement (buzz) are added deliberately to give maximum mileage to the brand. Only this makes it possible for people to bear up with advertisements. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Advertisers are selective about the values and attitudes to be fostered and encouraged, promoting some while ignoring others. Ads cash in on the popular culture while targeting the younger audience. Ads encouraging dark people to use whitening creams to look fair are targeted especially to the young so that they are easily influenced. Can such advertisements that portray dark as ugly and unacceptable be called ethical or unethical? If it is unethical than what would be a better way to communicate the productâ€™s attributes in an ethical manner?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">On the other hand, advertisers cannot completely forget ethics while delivering their creative piece.&nbsp;I am by no means saying that false advertising should be encouraged or that ethics should completely be neglected. The fact is that even though advertisements are verisimilitude, ethical threshold should always be maintained to depict a clean picture to the audience. A striking reality to consider is that negative words spread way faster than positive ones. It is like a wildfire that spreads so fast that itâ€™s almost impossible to extinguish it right away. Similarly, negative opinion of the ad due to unethical content will spread in such a way that it will be almost impossible to mitigate the damage created. Only a handful of unsatisfied viewers who find some ads unethical can spread negative word of mouth to a whole lot of people around them. In no time, such ads will be called phony ultimately resulting in adverse effect on the brand equity of the advertised product.&nbsp;Ethics is specially of top priority while showing comparative ads as there must be sufficient evidence backing the superiority of the product against competitors. Along with ethics, rational judgment should also be used so that they do not have to face legal issues.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">No brand can be built in a jiffy. It not only takes creative heads along with deep pockets to gain a worldwide recognition of the brand but also a whole lot of time. Coke would not have been the most popular brand in the world if its advertising was not sculpted with ethical standards right from the beginning hundreds of years ago. Hence, it would not be a good idea for any company to ruin its image in no time by showing unethical ads just for the sake of money making or for cheap publicity. This kind of debate can go on and on and on. Books have been written and issues have been raised over the topic of ethics in advertising but without a tangible conclusion. To simplify this I would say that ad makers should come up with only such ads that they would accept as an audience. A little empathy towards audience and use of intuitive judgment by advertisers would probably help address this intrinsic advertising issue to an extent.&nbsp;</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Karki is currently associated with KIST Bank.)</span></i></span></div>',
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		'Article' => array(
			'id' => '422',
			'article_category_id' => '38',
			'title' => 'HR Audit (august 2011)',
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			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/rabindra%20karna%282%29.jpg" style="width: 112px; height: 151px;" vspace="10" /></span></span><strong><span style="font-size: 14px;"><span bright="" color:="" letter-spacing:="" lucida="" serif="" style="line-height: 120%;">By <span style="color: rgb(178, 34, 34);">Dr Rabindra Karna</span></span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">H</span>uman Resources function in addition to its routines regardless of the size of business operation is also expected to demonstrate competitive intelligence and benchmark comparatives at least with direct market competition. This is done for depicting HR initiatives towards sales and people productivity enhancement that can be utilised as a comprehensive tool to improve their own effective engagement into the business. It is imminent to identify and realise strengths and opportunities for improvements around specific HR areas.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">Businesses are currently moving under heavily regulated and turmoil employee environment dealing with most uncertain industrial relation under complex legislative framework. Human Resources function has been emerging as most essential organ of organisation which is mainly engaged in establishing and practising policies, legal compliance that has huge impact over productivity and profitability of business in total. This is why Human Resources function these days is considered as most valuable strategic business partner within the Organisation. Efficient, effective and active HR practices in any organisation are as essential as the well functioning organs in human body. Investment in building Human Asset is considered a key to the measurement of systematic alignment with organisational goals helping HR become strong strategic partner that it is deemed to be. The HR Audit can be a powerful element driving change in HR and organisation. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The financial audit is mandatory which examines the past on the basis of practices and procedures for identifying issues that ensure compliance to sound accounting principles. Similarly, HR audit is aimed to future and meant to examine the health of Human Resources function to establish best practices that are productive to the business activities. HR Audit supports companies to determine gap and reason behind lack in system productivity and suggests the way forward. Currently, most of the businesses have plans for systems, targets and compliance that are driven by HR functions wherein HR audit becomes useful to compare these plans with actual implementations. The outcome of audit and feedback is found very helpful in decision making around corrective measures pertaining to improvement plans. Human resources audits play vital role around legal compliance that helps to avoid regulatory liabilities resulting from policies and practices. It also helps to identify legal risk and serves information about efficiency of HR strategies through benchmarking â€œbest practicesâ€ of similar businesses. It is also handy in finding solutions to problems prior to escalation. It also suggests how things might be done in more efficient and effective way with efficient cost economy.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Concerns in relation to employee risks have been the reason for the emergence of a wing within HR function to look after the working conditions and associated risks that enable implementation of preventive measures that perfectly aligns to the legal approach of HR. The application of Occupational Health &amp; Safety program is now associated with quality of life at workplace that is most important for human capital being the prime strategic element that explains the differentiation ability of company. This is where HR audit goes beyond the traditional concept of accounts audit i.e. simple investigation to logical measurement of efforts being put.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">HR audit in general is suggested to structure based upon size of organization i.e. number of people employed, time constraints, budgets and risk areas e.g. discipline, performance, compliance, hiring etc. However, there are some areas wherein companies are vulnerable to additional risks which must be reviewed carefully:</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">a.&nbsp;&nbsp;&nbsp; Personal record:&nbsp;A detailed and accurate personal records of employees are essential to prevent the business from undesired dispute especially in the areas of insufficient documentation pertaining to discipline, service record, compensation, health issues etc. An audit of personnel files reveals exposure to this type of risk and enables preventive measures to safeguard interest of the company beforehand. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">b.&nbsp;&nbsp;&nbsp; Legal Compliance: A review focusing over companyâ€™s compliance to the local laws and regulation at the same time incorporated codes of best practices and other essentials; allows company to take corrective measure in area of concerns e.g. over-time eligibility, classification of Job, payroll, records retention, compensation and benefits etc.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">c.&nbsp;&nbsp;&nbsp; Attendance System: The biggest concern for most of the employer as of today is absenteeism. In many cases it has been noticed that companies have their own attendance policies (In addition to the countryâ€™s Labor Law) in support of absenteeism control which might be unacceptable because of conflict with law of the land as well lack of clarity in need of proper communication around these. Since this aspect has immediate vulnerability to dispute and risks; audit prescribes the remedial action in such conflicting situation and enables the organisation to take corrective measure in support of absenteeism control i.e. fully aligned with law of the land.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">d.&nbsp;&nbsp;&nbsp; HR Strategies: Strategic alignments among each business units (Functions) are equally important in view of increasing value of employees to the business. This part of HR management mainly consists of organization structure, job design, employment policies, HRIS and employee relations management etc. Audit review of strategies helps business to determine whether strategic alignment exists there or not and supports planning and action to improvise areas of concerns on this important aspect.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">e.&nbsp;&nbsp;&nbsp; Cost Efficiency:&nbsp;One of the important financial roles of HR is to ensure people management in the most cost-effective way. This inculcates financial ratios and scorecard measures such as headcount planning, orientation and disciplinary cost per employee, people development cost, people productivity etc. A detailed review of this aspect of HR throws light on equipping HR practitioners of the company with knowledge per formulation of HR metrics.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Thus HR audit<span calibri="" sans-serif="" style=""> is</span> meant for verification of job design and analysis, employee welfare, industrial relations, conflict resolution, improved communication mechanism, orientation and job evaluation etc useful and supportive to achieve business destination through effective engagement of HR Function as one of the key business performance driver. It has been noticed from recent HR developments that there is an increasing demand for HR associates to contribute to profitability drive of the organisation through active participation in business decisions. The audit findings can be of great use to improve HR business plan, identify risks and control over traditional approaches, cost-economy and facilitate change in management initiatives. It also plays an important role in relation to motivation through clarified roles and responsibilities. HR audit helps to identify HR KPIs (Key Performance Indicators) and adds value to the organisation defining relevant activities. It also supports placement of management in a better position fulfilling expectation that instills trust and respect from all stakeholders.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hence, it is important to ensure that HR audit is planned and carried out under clear understanding of HR connectivity on overall business objectives, HR related opportunities and their engagement around sustainable people productivity and outcomes that are intended to achieve.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span aldine401="" bt="" italic="" style="">(Dr Karna is the Executive Chairman of MARK Business Solutions Pvt Ltd and Ad Abhyas Marketing &amp; Communications Pvt Ltd. The article is based on various research reports and his practical experiences as management practitioner.)</span></i></span></div>',
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			'description' => 'Human Resources function in addition to its routines regardless of the size of business operation is also expected to demonstrate competitive intelligence and.....',
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			'article_category_id' => '50',
			'title' => 'Feedback August 2011',
			'sub_title' => '',
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			'content' => '<div style="text-align: justify;">
	<strong><br />
	Shadow Of Energy </strong><br />
	<br />
	<img align="left" alt="august 201" border="1" height="473" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover july.jpg" style="width: 355px; height: 473px;margin:10px;padding:10px;" vspace="5" width="355" /></div>
<div>
	<br />
	Although Nepal is bestowed with immense resources, people;s lives are crippled in the absence of their proper and optimal use. It is similar to a situation in which a person is stranded on a boat in sea, dying with thirst, because he does not know how to remove salt from the sea water. Nepal is the second richest country in the world in terms of water resources a hackneyed statement and has a huge potential for hydro power generation that can meet a large part of the demand in South Asia. Having a huge market in both north and south of the border, upon the failure of fishing the money in river that is flowing away every day, people are forced to live in the darkness. The rains could not wash away the power cut woes of Nepalis. Even during monsoon when the rivers are flooded, Nepalis are facing black-out every day. I blame the government and its failure to invite foreign investors for developing hydropower projects if it cannot generate electricity itself.</div>
<div>
	 </div>
<div>
	We don't have to roam around the globe to find an investor. There are a lot in our neighbouring countries that are willing to develop power projects in Nepal and sell the output in their countries. What they are demanding is a stable policy that welcomes and ensures their investment. But our statesmenâ are so professional player of the dirty game called politics that they tend to succeed every time in chasing away potential investors. As a result, they are seeking other appropriate destinations like Bhutan. Water flowing out of Nepal is money flowing away from the country. The more it flows the more we lose. And our policy makers are happy to see the beauty of waves in flowing water. They turn a blind eye to the resources being wasted.</div>
<div>
	 </div>
<div>
	The more we delay, the more we lose. What is the use if Nepal produces 40 thousand megawatts of electricity when India and china have developed enough power to meet their need? And, that time is not very far. Then, I think our country will be proud to import from these countries to minimise load-shedding hours. Without any delay, the government should welcome foreign investors with open arms to develop big projects in Nepal. When we are busy giving phony speeches on nationality, it will to too late to say, Now I am going to develop thousands of megawatts of hydroelectricity. By then, we will have no market to sell our products and politicians will be happy men.<br />
	 </div>
<div>
	<b>- Bishnu Sharma</b></div>
<div>
	<b>Kathmandu</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Tax it to Discourage it<br />
	<br />
	</span></div>
<div>
	When Nano, the cheapest car, was launched in Nepal many thought motoring will be affordable for middle class people too. So was the business motive of Tata while launching Nano in Nepal. The Nepal government's taxation policy has something else to tell. Every year the government is hiking the tax rate on the automobiles which make vehicles beyond the imagination of many middle-class people. When the cheapest car comes to Nepal, it is still expensive to majority of the people because of high taxation. While selling the car in Nepal, there is 240 per cent increment in the price over the price in India. This adds extra cost to those who dream to own a car.</div>
<div>
	 </div>
<div>
	Auto business personnel are expecting a decline of more than 40 per cent in the vehicle business compared to last year due to the crisis in the financial sector and the increasing tax rate. It is positive for a government to discourage non-productive investments and discouraging private vehicles, to some extent, helps in minimising the traffic on the narrow roads of cities like Kathmandu. However, the automobile sector is generating a huge chunk of revenue for the country and the government should seek an alternative source to make up that if it is serious about discouraging vehicles import in the country.<br />
	 </div>
<div>
	<b>- Rajan Dhoj Khadka</b></div>
<div>
	<b>Bhaktapur</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Budget Baggage to Complain<br />
	<br />
	</span></div>
<div>
	Right after the budget is presented in the parliament by the Finance Minister, nobody is satisfied without criticising it. Critiques forget to consider what is good in the budget. They rightly pick up the flaws. Obviously, the budget determines where the economy will be heading in the new fiscal year but it may not necessarily be a baggage of rubbish. It is rare to hear appreciation for what is good along with the criticism for what is not. Interestingly, everyone complains the one who does not benefit and even the ones who directly benefit for example through a hike in salary. Instead of spending time to give discourses on the budge, I believe it will be better to put pressure on the government to implement the right policies and make use of what is good in the budget for the welfare of the country.<br />
	 </div>
<div>
	<b>- Sarita Khanal</b></div>
<div>
	<b>Satdobato</b></div>',
			'published' => true,
			'created' => '2011-09-06',
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			'id' => '436',
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			'title' => 'Nepal’s Redoubtable Poverty Statistics September 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;">T</span><span style="font-size: 9.5pt;">he report of the Third Living Standard Survey (TLSS) a month ago declared that only 13 per cent of Nepali people now live under the so called absolute poverty line. Highly encouraging though, this news is the one extremely hard to believe instantly. There are reasons for this suspicion. With only 13 per cent of people below the poverty line, the data puts Nepal in better position than the countries like Russia, United Kingdom, South Korea, Belgium, Germany and Japan with 13.1, 14, 15, 15.2, 15.5 and 15.7 per cent of people below the poverty line, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Nepal's ground realities regarding the factors that could contribute to poverty reduction availability of foods, shelter and job opportunities to the social and economic safeties are in no way comparable to the countries mentioned above, as the examples. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	 </div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	 </div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 11.5pt;"><img alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/img1%283%29.jpg" style="width: 324px; height: 400px;" vspace="10" /></span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 9.5pt;"><br />
	Such drastic reduction of poverty from 12 per cent in 2004 to 13 per cent in 2011 has taken place during the most adverse political climate in the country's history. There was civil war of sorts until 2006. Since then, political instability has gravely affected the industrial and business climate. In absence of elected local governments for over a decade now, service delivery mechanism is in virtual ramshackle. No substantive FDI has flowed in. No other economic indicators are positive to cite under these adversities. Such an astonishing improvement in poverty situation is a real paradox. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Only reason attributed to the impressive improvement is the somewhat consistent inflow of the workers remittances. But, given the fact that majority of Nepali workers going abroad for meagrely paid jobs, it is hard to believe that this single phenomenon can make such a huge difference. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Therefore, the date catered to the people by the government agencies are either deliberate lies or, if that is not the case, we have adopted some highly flawed method in conducting the research for TLSS. </span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">In fact, the task of measuring poverty is in itself a very complex affair. It is more so in a country like Nepal where competent and independent research institutions are, in real terms, non-existent. And, citizenry and other stakeholders of economic activities have no alternative but to mime government agencies like the National Planning Commission and Central Bureau of Statistics.</span></div>
<div style="margin-bottom: 0.0001pt; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<br />
	<span style="font-size: 9.5pt;">Our universities and other independent institutions have so far failed to generate comparable, or at best, countering data on the various aspects of the country's economy, including poverty. <br />
	<br />
	</span></div>
<div>
	<span style="font-size: 9.5pt; line-height: 115%;">These factors have combined to raise serious questions on Nepal's credibility in international community. Culprits to this have been none other than the government agencies involved. The situation warrants more credible and pragmatic approach in counting our poverty. </span></div>',
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			'title' => 'R K Associates: Aiming High - August 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><img align="left" alt="corporate focus" border="1" height="202" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cor.jpg" style="margin: 10px; padding: 10px;" vspace="10" width="350" />The business journey of R K Associates dates back to 1978 when Dr Rajesh Kazi Shrestha, an energetic, young and pro-active entrepreneur established Rajesh Concern with the objective of focusing on hospitality and trading business. It imported various kinds of goods from around the world and helped promote Nepal to strengthen its trade relations with many countries.<br />
	<br />
	Today, R K Associates has diversified manifold and has stakes in every business segment. With its over three decades of experience in trading and services sectors, it manages various assignments and projects in automobiles, banking, insurance, information technology, flooring, medical equipment and supplies, fast moving consumer goods and many more. The group is behind the presence of many leading household, home decor and high-end products in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group is now among the most trusted names in Nepal and has forged, nurtured and maintained global alliances over the last 33 years. Its founder Dr Shrestha was honoured by International Journal of Non-Aligned Countries and Foreign Policy Research Institute (FPRI), New Delhi, with an honorary PhD in February 2010. He says, I attribute our growth to the deep understanding of local markets, people and customs </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">It currently has a turnover of USD 20 million. It&nbsp;has contributed to the national economy and promoted infrastructural and entrepreneurial capability of Nepal. It is closely associated with prestigious domestic and international federations and associations. A former Assistant Minister of Industry, Commerce and Supplies, Dr Shrestha holds several prestigious positions. He is Chairman of Nepal-China Chamber of Commerce &amp; Industry and International Chamber of Commerce, Nepal. He is also a Past President of Nepal Chamber of Commerce. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Group Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The group looks at integrating dealers, distributors, retailers, suppliers and joint venture partners into the R K Associates family. It is currently focusing on branding of its products and consolidating them in the market. It is looking forward to NADA (Nepal Automobiles Dealers Association) Expo in September 2011 for showcasing different vehicles from its stable. Dr Shrestha says, Through our hard work, we want to reach as high as possible and prove our worth in the market. The group also plans to help orphanages and sponsor underprivileged students as part of its CSR (corporate social responsibility) activities. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">R K Associates aims to recruit, develop, motivate and retain the best talents within the country and provide them a challenging and demanding environment. It fosters a strong emotive feeling of oneness and ownership among the employees within the company. The group aspires to transform into a model corporate institution and make its employees proud to be part of the group. It provides employment to close to 250 people out of which 38 people work for Constant Business Group alone.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Management Style</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Dr Shrestha believes in giving employees the liberty and opportunity to prove themselves. He says, Instead of me telling them what to do, they should come and update me on the latest information. He says he is most happy working as the link and let his employees do all the work. He goes to great lengths to ensure that the employees feel at home and treat the group as their own. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">He strongly feels that political stability and government's economic policies are key to nation's prospects. We are going through the most difficult phase now. If the government policies are good, I am sure businesses will prosper and generate employment for hundreds of thousands of youth who are leaving the country due to lack of opportunities. Dr Shrestha believes that the government would do better if it consults the private sector before taking decisions or implementing them, in the larger interest of the nation. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">He says it is the government's duty to reduce taxes on automobiles so that the industry is saved from a certain collapse. He also recommends that the government should focus on phasing out the vehicles that are over 20 years old. The government's policies have had an adverse impact on the industry as it has experienced a huge market slump. This has obviously resulted in reduced revenue for the government, he says. </span></span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Teamwork among partners</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Hard-working staff</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Honesty</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp; Trust</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Inability to penetrate the market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Lack of aggression</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Possibility of a favourable government policy</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">Over import by all vehicle distributors</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">More supply than demand</span></span></li>
</ul>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><i>Sister Concerns</i></span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Constant Business Group Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">Established in January 2007, this company distributes vehicles from China (Zotye, Lifan, Jonway, Grand Tiger and Lobo), Malaysia (Proton) and South Korea (Ssangyong). R K Associates was awarded the best distributor for Zotye in 2009. The company has sold over 300 units of Zotye so far out of which 75 units were sold in the last one year. Among other vehicle products, 50 units of Ssangyong have been sold, so far. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Nepal International Business Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">A trading house established 17 years ago, it imports tower crane, film faced plywood, commercial plywood and hotel supplies. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Status Trading Pvt Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">This trading house that started 3 years ago imports furnishing, flooring carpets, laminated flooring and PVC. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Alliance Insurance Company Ltd</span></span></div>
<div>
	<span style="font-size: 14px;">R K Associates is affiliated with this insurance company as a promoter which has Dr Shrestha on its Board of Directors. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Rajesh Concern</span></span></div>
<div>
	<span style="font-size: 14px;">It's the first entrepreneurial venture of R K Associates and imports food items, readymade garments, carpets, PVC etc. </span></div>
<div style="margin-top: 5.65pt;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">Soaltee Hotel Limited</span></span></div>
<div>
	<span style="font-size: 14px;">Dr Shrestha features in the Board of Directors of Soaltee Hotel Limited.</span></div>',
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			'id' => '434',
			'article_category_id' => '39',
			'title' => 'Explore Asia Pacific: Satisfying Customers - August 2011',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="line-height: 120%;"><br />
	Neeraj Sharma</span></b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 120%; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="line-height: 120%;">Managing Director</span></span></div>
<div>
	<span style="font-size: 14px;"><span style="line-height: 115%;">Explore Asia Pacific Pvt Ltd</span></span></div>
<div style="text-align: justify; text-indent: 0in;">
	<span style="font-size: 14px;">Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal.<br />
	<br />
	</span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product basket. In mid-2010, it also ventured into the business of solar panels and desktop components from Simmtronics. Currently headquartered in Kathmandu, the company registered an annual turnover of Rs 120 million in 2010. Having gradually enhanced its product basket, it aims at a 300 percent growth in 2011. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific is known for its ethical business practices and value-added approach which is solution-centric and vertically focused. Neeraj Sharma, Managing Director of the company, says, Our ultimate objective is to become the number one in Solar and ICET distribution in Nepal. It seems set to meet this objective as it already has a strong presence in the up-country regions and possesses management skills with proven controls and processes.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company claims it is fortunate to have dedicated partners as part of its organised distribution system. Sharma says, Along with the modern marketing and branding concepts, our knowledge and hold in the Nepali market has held us in good stead. It plans to invest in infrastructure and technology in the long term and aspires to establish sound performance in a short period of time, though of course, with a long term commitment. </span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Company Mission</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Explore Asia Pacific aims to have leading market shares for all products it deals with. It also envisions to have satisfied and loyal customers through value-added before and after sales services. Creating high recall brands is high on its agenda as it helps customers association by being reliable and trustworthy. Sharma says, We want to be the first choice as a distribution partner for both the vendor and the reseller by adding value to the supply chain through efficient logistics, high level of product knowledge, value-added marketing services and demand creation activities. The company is working hard to ensure wide and deep presence through an effective distribution system. It also wants to be able to create a profitable business proposition for all stake holders. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Brands and Products</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company is proud to be associated with reputed and well known brands such as ADATA, Simmtronics, Genius, Panda, Jetway and Samsung among others. It deals in well-received products like classic pen drives, pen drives superior, Simtronics desktop, external HDD, memory card, monitors, graphics card, motherboard, RAM etc. Explore Asia Pacific also plans to launch its own brand and manufacture cabinets, PSUs, keyboards, speakers and headphones etc. The tremendous market potential has propelled us to think along these lines. Once the liquidity problem gets settled, the market situation will definitely receive a boost, Sharma reasons. </span></div>
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	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Human Resource</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The company boasts of having a strong human capital and talent pool. It has among the best talents in the industry with professionals from different sectors and proven experience levels. We perform best practices in place like in-depth induction programmes, in-house training, performance management systems and employee satisfaction surveys, informs Sharma. The strong sense of bonding that exists in the company has ensured a very low attrition rate. The company currently has a workforce of 18 employees at its corporate office and plans to increase it to 35 from the new fiscal year once it unveils its expansion plans. Sharma believes in dealing with his staff in an honest manner which has paid rich dividends as he has got positive results from them. He thinks that Ajay Sadewra joining Explore Asia Pacific as Director-Operation in March 2011 was a major turning point for the company's fortunes. Sadewra was earlier associated with Neoteric Nepal. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; text-align: justify; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Immediate Plans</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Expanding with Explore Digital, an independent and retail chain, the company plans to open 10 retail outlets in the country. There will be four outlets at prime locations in Kathmandu alone. We will geographically divide channels for our 18 distributors beginning Shrawan, informs Sharma. The company plans to advertise its upcoming retail outlets in major national dailies as well as the distribution channels. Having established its credibility with the consumer segment, Explore Asia Pacific now wants to focus on the enterprise sector and spread its wings to cater to government organisations, NGOs and INGOs and Banking and Financial Institutions among others. The company that has already made its foray into the energy sector with solar equipment also plans to provide complete solutions from this fiscal year. It is slated to start production of solar items such as the lighting system which the company says holds a big potential in the market. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">Sharma attributes Explore Asia Pacific's success to a number of factors including trust, profitability concern of the channel partners, adequate service mechanism and honesty. He adds, We have come this far because of our hard work, vision and market understanding. Among its competitors, Neoteric Nepal is doing well, he says. The company was awarded for good performance by ADATA during Computex held in Taipei earlier this year in June. It seeks to reach new heights demonstrating its value added services (VAS) through its envied network and ensuring price transparency, uniformity and dedicated service among others. </span></span></div>
<div>
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 0in 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; vertical-align: middle;">
	<span style="font-size: 14px;">SWOT Analysis</span></div>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Strengths </span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Experienced Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Channel Strength</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Brand Image</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Product Range</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Technical Team</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Countrywide Presence</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Weaknesses</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inability to incorporate MNCs</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Inadequate Product Basket</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Being a fairly new company</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Opportunities</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unorganised ICT market</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unprofessional Distribution Channels</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Marketing growth in various pockets</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Government embracing e-governance</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Financial sector growth</span></span></li>
</ul>
<div style="margin: 5.65pt 0in 0.0001pt 11pt; text-align: justify; text-indent: -11pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Threats</span></div>
<ul>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable political scenario</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="color: black;">&nbsp;&nbsp; Unstable government</span></span></li>
	<li>
		<span style="font-size: 14px;"><span style="line-height: 115%; color: black;">&nbsp;&nbsp; Unethical price cutting<br />
		<br />
		</span></span></li>
</ul>',
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			'created' => '2011-09-24',
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			'description' => 'Starting off as a distributor in 2009, Explore Asia Pacific Pvt Ltd has come a long way over the last two years. With its registered office in Narayanghat, it started with a small product...',
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	(int) 3 => array(
		'Article' => array(
			'id' => '433',
			'article_category_id' => '37',
			'title' => 'Monetary Policy And Question Of Financial Stability (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;">By Nara Bahadur Thapa</span></i></span></strong></div>
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	<span style="font-size: 14px;"><br />
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<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress in Nepal has added pressure on using monetary policy instruments for securing financial stability. The question asked is: should financial stability be in the domain of monetary policy or should it be pursued as an objective of regulatory policy? Although the debate remains still inconclusive, views on either side of the debate have sharpened.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
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<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Undoubtedly, safeguarding financial stability has become an increasingly dominant objective in economic policy. Hence, it is argued that monetary policy should also take care of it. In light of this, besides maintaining price stability and supporting economic growth, Monetary Policy often has the task of preserving financial stability. Monetary variables such as the quantum of money, bank credit, liquidity and the level of interest rates are used to attain monetary policy objectives.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">These monetary variables - the quantum of money, bank credit, liquidity and the level of interest rates - affect financial stability in one way or the other. This is the basis of the argument that monetary policy should be used to safeguard financial stability. In this context, it should be noted that the NRB Act 2002 does not state financial stability as an objective of monetary policy. Monetary policy objectives, as enshrined in the NRB Act 2002, are maintaining low and stable rate of inflation and the external sector stability. These two objectives are supposed to ensure the sustainable development of the economy. Nevertheless, the Act does indicate that the role of the central bank in promoting banking and financial stability as well as developing a secure, healthy and efficient domestic payment system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">We should seek the answer to the question as to why the law of the central bank has not assigned the financial stability as an objective of monetary policy. This implies that the NRB Act has visualized instruments that can be used to ensure monetary and financial stability differently.&nbsp;&nbsp; </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Financial architecture </span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The way monetary policy is conducted and financial stability is pursued should be discussed in the context of the financial architecture that exists at the global as well as the domestic level. The current international financial architecture is rooted in the McKinnon-Shah hypothesis (1973) that argues for the removal of financial repression and the introduction of financial deregulation. The major elements of financial deregulation are: (i) the elimination of credit controls, (ii) the deregulation of interest rates, (iii) free entry into the banking sector/financial services industry, (iv) central bank autonomy, (v) private ownership of banks and (vi) liberalization of international capital flows.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">International organizations such as International Monetary Fund (IMF) and the World Bank supported the McKinnon-Shaw hypothesis and in the process encouraged member nations to adopt liberal financial policies. Many developing countries including Nepal deregulated their financial sector. Even in the USA, the comprehensive regulations introduced in 1933 in the wake of the Great Depression in the form of the Glass-Steagall Act which had ensured financial stability were removed in 1999, ushering in a complete deregulation of the financial sector. The Glass-Steagal Act kept different types of financial institutions separate and dictated the activities they could and could not engage in. It was argued that Glass-Steagall Act prevented banks from diversifying risk. Following this, an agreement was reached at the global level for the international financial architecture. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b>&nbsp;</b></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><b><span style="color: black;">The major elements of which are: </span></b></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">i.&nbsp;Simple rules for monetary and fiscal policy would&nbsp;guarantee macro stability,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">ii. Deregulation and privatization would unleash growth and prosperity,</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iii.Financial markets would channel resources to the most productive areas and polish themselves effectively, and</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><span style="color: black;">iv. The rising tide of globalization would lift all economies.</span></span></div>
<div style="margin: 0in 0in 0.0001pt 9pt; text-align: justify; text-indent: -9pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The agreement on these elements spearheaded by the IMF and the World Bank is known as the Washington Consensus. The spirit is that the adoption of standards and codes on macro-financial policies, transparency, good corporate governance and internationally designed accounting and auditing rules would ensure financial stability. Given these standards, it was thought that market would ensure financial stability. With no restriction on the portfolio, free entry and exit of financial institutions could ensure the dynamic financial stability. There was no need for government intervention, including financial bailout. In keeping with this framework, Lehman Brothers was allowed to fail in September 2008.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the economic liberalization initiated in the mid-1980s, the Nepali financial system has experienced significant developments. The NRB Act 2002 aims at consolidating the foundation for the new domestic financial architecture. The new NRB Act provides an autonomous central bank answerable to parliament. The Act curtails the unlimited lender of last resort (LOLR) facility for both the government of Nepal and the banking sector as the facility has a danger of creating a perpetual financial instability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Prudential regulation and supervision for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Now the question that arises is: What instruments does the NRB Act 2002 envisage to ensure financial stability? The current international financial architecture underscores the importance of prudential regulation and supervision for achieving financial stability. The NRB Act 2002, BAFIA 2004, Debt Recovery Act (DRA) 2002 and Credit Information Bureau (CIB) underpin the new domestic financial architecture. The NRB Act 2002 grants the autonomy to the central bank aimed at strengthening the banking supervision. The BAFIA lays down the framework for banks to operate. The DRA establishes creditors rights. The CIB offers a venue for information sharing among banks with a view to help reduce non-performing loans (NPL). This is key to ensure financial stability over the period. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
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	<strong><span style="font-size: 14px;">The case for the use of monetary policy for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The recent global crisis showed that prudential regulation and supervision alone did not guarantee financial stability. Hence, a case is made for using monetary policy in support of financial stability. In the wake of the recent global crisis, the IMF urged member nations to use monetary policy as the first line of defense. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the importance of financial sector stability for the overall functioning of macro economy in general and the transmission mechanism of monetary policy in particular, the NRB is cognizant of the role of monetary policy in attaining financial stability in recent years. Accordingly, monetary policy instruments have been used in support of financial stability. For instance, the bank rate, which was as high as 9 percent some years ago, was gradually reduced to 5.5 percent. Currently, it is 7 percent. Recently, the penal rate of 3 percent has been added to it for the LOLR facility to banks. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Besides the bank rate, concessional refinancing rates have been lowered to 1.5 percent for exporters, sick industries, small and medium scale industries and targeted people for foreign employment.&nbsp;The NRB has been making a provision for refinancing banks for their sick industry loans over the last several years. The objective is to help financial institutions and thereby achieve financial stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The cut in CRR has been consistently and systematically aimed at reducing the financial intermediation cost. The argument in this case is that monetary policy in no way should be a factor responsible for a higher financial intermediation cost measured in terms of interest rate spread. For this reason, CRR has been systematically reduced from 12 percent a few years ago to the current level of 5.5 percent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of flexible open market operations aimed at modulating liquidity has been put in place since 2004/05. Open market monetary instruments such as sale, purchase, repo and reverse repo auctions are being used either to inject or drain liquidity from the system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">A system of standing liquidity facility (SLF) has been introduced for counterparties. The purpose of the SLF is to provide a safety valve for domestic payments system. Under this facility, counterparties can make an automatic and hassle - free access to funds from the central bank.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">The case against overly use of monetary policy for financial stability</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There are counter arguments for overly use of monetary policy for financial stability. First, it is argued that the mixed role of the central bank, namely securing banking stability and maintaining monetary stability, at times, creates policy tensions. For example, the use of accommodative monetary stance aimed at supporting financial stability could be counterproductive to price and external stability in the face of pressures on inflation front and a deficit in country's BOP position. As such, the central bank faces policy tensions of using soft interest rate policy for securing financial stability or hard interest rate policy for keeping inflation low and maintaining external stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Second, as per Tinbergin's rule (one instrument - one target), monetary policy, which is one instrument, can not be used for two policy goals - monetary stability and financial stability.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">&nbsp;Third, rescuing financial institutions by way of soft interest rate policy or the protracted use of quantitative easing through the LOLR facility will only prolong financial imbalances, posing risks to financial stability over the medium term. This will only postpone financial distress leading to a bursting of financial crisis in some points of time in the future. In this context, Greenspan's prolonged low interest rate policy is cited as one of the causes of the financial crisis in the US in 2008.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fourth, it is argued that the expectation of monetary authorities stepping in to defuse a crisis undermines market discipline and creates moral hazard problem in that it weakens the incentive for market participants to act prudently.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Fifth, as Greenspan argued, the cleaning up the mess after the bubble bursts would be technically easier and less interfering with the market and more cost effective. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Back home in Nepal, it is argued that excessive monetary injection by way of repo and SLF lending helped perpetuate low interest rate regime in the past. This encouraged banks to indulge in financial excesses, leading to the recent financial distress in Nepal, including a deficit in country's BOP. It must be noted that the deficit in BOP during the last two years is not on account of the government budgetary imbalances, it is due to the private sector excesses and imbalances.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Of the various facts of financial stability, the question of monetary policy taking care of real estate and share prices has remained controversial. The question often asked is as to what should be the role of monetary policy in keeping these prices stable. This question is asked because stock market developments generate wealth effects, which have monetary policy implications. Likewise, stock market developments have implication for NPA level and, at times, threaten banking sector stability. Foreign portfolio investment in stocks has implication for external stability, for a greater volatility in share prices causes a sudden capital outflow, leading to BOP and exchange rate crises. Since foreign portfolio investment in the Nepalese stock market does not exist, this kind of tension does not arise in Nepal as for now. The consensus so far reached is that monetary authorities should be watchful of these prices. However, it is argued that monetary policy should not be overly used in containing these prices.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Macro prudential regulation</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Micro prudential regulation does not make a distinction between growth enhancing credit and speculative ones. The consensus is also not to use monetary policy overly for financial stability. Hence, the focus has now shifted on macro prudential regulation.&nbsp;It is argued that macro prudential regulation is needed to deal with the issue of pro-cyclicality and build defenses against emerging structural vulnerability in the financial sector. Pro-cyclicality and structural vulnerability are manifested in terms of real estate bubbles, common exposure to asset price bubbles, excessive leverage and low level of liquidity. To deal with these problems, macro prudential measures such as capital ratios, capital buffers, dynamic (forward looking) provisioning, liquidity ratios and prudent collateral valuation are applied. According to Blanchard, in case, excessive leverage emerges, regulatory capital ratio should be raised. If liquidity is low, regulatory liquidity ratio should be increased. If housing prices are rising, loan-to-value (LTV) ratio should be lowered. If stock prices are rising, margin requirements (haircuts) should be raised. In the wake of emerging financial distress, the NRB has introduced a number of macro prudential measures. For example, sectoral loan limit for housing sector is capped at 25 percent and real estate at 10 percent. C-D ratio for banks and financial institutions is fixed at 80 percent. The LTV ratio for shares has been fixed at 60 percent. Similarly, the LTV ratio has been fixed at 60 percent for both real estate and housing.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although macro prudential regulation could act as the first line of defense and be an important element of new financial architecture in the wake of the recent global financial crisis, there is a possibility of strong political pressure against the use of it. In the US, the delay in adopting the Volcker plan which aims at separating functions of different financial institutions is an example of it. Back home in Nepal, the strong pressure for the removal of LTV ratio for shares and strong lobby for the relaxation of capping real estate and housing loans are cases in point. This suggests that the existing domestic financial architecture will remain intact, implying that only micro prudential norms and market discipline will remain instruments for financial stability. There will be growing demand for the excessive use of monetary policy for securing financial stability. However, the latter will not help safeguard the long term financial stability. If it is used, it will be only at the peril of macroeconomic stability. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Tentative conclusions</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">There is no doubt that financial stability is a public good which must be secured through preventive and remedial measures. Micro - macro prudential and deposit insurance measures can be applied to maintain financial stability. Keeping monetary conditions at an appropriate level is also key to securing financial stability. For example, easy liquidity conditions would encourage banks to take excessive risks by overindulging in lending. This happened in Nepal in the recent past. Likewise, overly tight liquidity conditions would lead to financial distress. Both of these monetary conditions should be avoided.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Therefore, going forward, the NRB will, in due course of time, appropriately streamline monetary operations. For example, there are ample instruments for the injection of liquidity. However, there are few to drain it. Sale and reverse repo auctions fall short of draining liquidity due to various reasons. Hence, the NRB will seek rationale in introducing standing deposit facility for banks as and when situation warrants.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The creation of standing deposit facility entails bearing financial costs by the central bank. Therefore, it requires strengthening the financial position of the central bank. It is especially important in relation to the growing size of counterparties and liquidity that would be needed to drain. One way of improving financial position of the central bank for the operation of deposit facility is increasing its paid up capital from the current three billion rupees to five billion rupees. This will help the NRB to absorb possible losses arising from monetary operations.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The exchange rate and the interest rate are the fundamental macro variables. As the current exchange rate regime as being used as the nominal anchor for macroeconomic management, there is no question of disturbing it at this stage. Therefore, given the depth and breadth of the domestic financial sector development so far, the interest rate is slowly emerging as key policy variable for macro-financial management. In this context, a need has been felt for using short term interest rate instead of the quantity of liquidity as an operating target. The NRB will pursue this in due course of time.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of monetary policy becomes crucial when preventive measures fail to ensure financial stability. Therefore, the role of monetary policy should come at the remedial stage. This is the market failure stage. When this stage comes, as the past intervention indicates, the NRB is extremely cautious to distinguish between those having solvency problem and those with liquidity problem. The LOLR facility should be provided to those solvent but with liquidity problem. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Given the current financial architecture, the NRB's intervention will take place only when market fails to ensure financial stability. Therefore, the NRB intervention, for that matter, will come with strings such as merger, management change, improvement in corporate governance etc. If financial institutions with solvency problem are systemic, the government should intervene by way of either injecting capital or guaranteeing deposits. Otherwise as per the spirit of the current domestic financial architecture, such financial institutions should be liquidated.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In case, the financial distress continues and additional LOLR facility is called for, Nepal will have to negotiate for the IMF program. This will be inevitable to deal with the possible adverse impact of LOLR facility on international reserves and BOP.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin: 11pt 0in 0.0001pt; vertical-align: middle;">
	<strong><span style="font-size: 14px;">Summing up</span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The kind of domestic financial architecture we have chosen is key to consider the role of monetary policy for financial stability. If we were to adopt liberal licensing policy and allow banks to have portfolio of their choice, micro prudential, self regulation and market discipline should be key for financial stability. The focus of monetary policy should be on inflation, BOP and foreign exchange. These are crucial areas for attaining macroeconomic stability including financial stability. The role of monetary policy should be marginal and come at the remedial stage. Those financial institutions which cannot survive on their own under the liberal framework of financial architecture should be allowed to disappear. If we were to seek a larger role of monetary policy in ensuring financial stability we will have to be willing to change the current financial architecture including readiness to adopt macro prudential regulation. Given the existing framework of the financial architecture, any lobbying for political interference for the change in monetary policy is construed as an attack on professionalism and autonomy of the central bank. This does not bode well for market discipline, a crucial element for financial stability either.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div>
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Thapa is the Chief Manager at Biratnagar Office of Nepal Rastra Bank (NRB). He was earlier the Director of Research Department at NRB's central office in Baluwatar, Kathmandu. He also spent two years between 2008 and 2010 as Advisor to the Executive Director at International Monitory Fund (IMF), Washington DC, prior to returning to Nepal.)<br />
	<br />
	<br />
	</span></i></span></div>',
			'published' => true,
			'created' => '2011-09-24',
			'modified' => '2012-09-20',
			'keywords' => '',
			'description' => 'Recent global financial crisis has once again ignited the debate on the role of monetary policy in ensuring financial stability. Taking a cue from international trend, emerging financial distress.......',
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	(int) 4 => array(
		'Article' => array(
			'id' => '432',
			'article_category_id' => '37',
			'title' => 'Monetary Policy2011/12:Hard To Realise The Promises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size:12px;"><strong><i><span style="line-height: 120%;">By Hom Nath Gaire<br />
	<br />
	<br />
	</span></i></strong></span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size:12px;">The Monetary Policy for the fiscal year 2011/12 has made an attempt to be balanced with the expansionary fiscal policy of the government of Nepal despite fears of inflationary pressure, apart from reducing the Cash Reserve Ratio (CRR) by 50 basis points to five per cent. At the same time, NRB, the country's monetary authority, has accepted the ground reality that the monetary management of the economy is getting tough due to high inflation and unfavourable external sector accompanied by the deepening liquidity crisis in the financial system of the country.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">To ease the liquidity situation in the economy, the policy has reduced CRR by 0.5 percentage point to five per cent. The policy document said, The revised CRR is estimated to instantly release around Rs 4 billion in the financial system.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">This fiscal year too, the policy has targeted seven per cent inflation. To support the fiscal policy aim of&nbsp;five per cent growth rate, the central bank is planning to increase the broad money supply by 12.5 per cent but the policy is ignoring its implications on general price level. However, NRB has attributed rising consumer price to supply constraints, defending its failure to contain the inflation to seven percent according to the target of its last year's monetary policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the central bank data, the broad money supply including the balance sheet of commercial banks, development banks and finance companies enlarged by 7.3 per cent but the consumer price increased by an average of around 10 per cent in the last fiscal year's first 10 months. The 7 per cent target of consumer inflation for the current fiscal year is a big challenge due to the adverse impact of expansionary fiscal policy on which the government is planning to finance the capital as well as the recurrent expenditure through deficit financing. The overall macroeconomic policies have to be revisited as the Monetary Policy could not achieve inflation and Balance of Payment (BoP) target, the policy accepted, Apart from that managing liquidity and maintaining financial stability is an immense challenge for effective execution of the policy.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the policy, BoP that was Rs 11.67 billion deficit in the first 10 months of the fiscal year, has however, recorded an unexpected surplus of around Rs 1 billion by the end of 2010-11, attributing surprise surplus to foreign grants and aids released in the eleventh month.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">For the current fiscal year, the Monetary Policy has targeted Rs 5 billion BoP surplus. In such unpredictable and volatile cash flow situation, the BOP target for the current fiscal year may also be hard to realise. Because, as the Monetary Policy has brought no change in the bank rate, refinancing rate and Statutory Liquidity Ratio (SLR), the debt servicing of the private sector may remain higher and the production of exportable goods will be affected adversely, which in turn will result in wider trade deficit and unfavorable BoP. However, the central bank has stated that refinancing will be revised according to liquidity need. This alone may not be sufficient to meet the demand for credit in the productive sector and boost the exports. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The foreign exchange policy for individuals has become more as a Nepali willing to visit abroad can get foreign exchange up to $2,500 for once or a maximum of $5000 in a fiscal year, revising the facility from last fiscal year's $2,000 and $4,000 respectively. Similarly, NRNs can open foreign currency bank accounts and special arrangements will be made for Nepalis to open NOSTRO accounts in foreign countries. Likewise, the policy allowed the banks to exchange foreign currency up to $1,000 provided the beneficiary supplies credible source of foreign exchange with identity. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">The policy has increased provision of deprived sector lending to 3.5 per cent and asked banks and financial institutions (BFIs) to raise this ratio by 0.5 percentage point for two years. This provision will be helpful in directing lending towards productive sector as well as deprived sector and supportive to achieve the economic growth of 5 percent, revealed the policy. The targeted economic growth is also hard to achieve in the situation of deteriorating investment climate and low investor confidence due to government's tilt towards a socialist economic system. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;">According to the monetary policy, the deposit mobilisation of BFIs will be increased at the rate of 13 percent by the end of the current fiscal year and will add around Rs 100 billion to the country's banking system. To achieve this target, the policy tries to address the crisis of trust in the banking system by extending deposit insurance up to Rs 200,000 to commercial banks as well so that small depositors feel safe. Earlier, the deposit insurance was mandatory only for the B and C class BFIs. By the end of last fiscal year, the deposits of BFIs increased 8.2 per cent to Rs 788.72 billion and the foreign exchange reserve increased by a mere Rs 2 billion to Rs 270 billion from a fiscal year ago's Rs 268 billion.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size:12px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size:12px;"><span style="line-height: 115%;">Apart from encouraging BFIs to open branches in select nine districts, where there is less access to formal source of finance, the policy directed BFIs to include a collateral-free loan of up to Rs 200,000 for the study of technical education under deprived sector lending.<br />
	<br />
	<br />
	</span></span></div>',
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			'created' => '2011-09-24',
			'modified' => '2012-09-20',
			'keywords' => '',
			'description' => 'The Monetary Policy for the fiscal year 2011/12 has made an attempt to be balanced with the expansionary fiscal policy of the government of Nepal despite fears of inflationary pressure, apart from reducing the Cash Reserve....',
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	(int) 5 => array(
		'Article' => array(
			'id' => '431',
			'article_category_id' => '31',
			'title' => ''We Want To Target Corporates On A Much Bigger Way' (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="right" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/altaf.jpg" style="width: 415px; height: 346px;" vspace="10" />Altaf Halde</strong> joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of Kaspersky antivirus. For Nepal, Sagar Infosys is the sole authorised distributor for Kaspersky products. Halde revealed the company will soon release the enterprise version of the antivirus in the Nepali market. In an interview with <i>New Business Age</i>, Halde shared his views on the latest product and Nepal as the market for Kaspersky. Excerpts:</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How do you see the market for Kaspersky products in Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I was pleasantly surprised to know about the market potentials of Nepal which I visited after Bangladesh where also we have a very good market share. In Nepal, we have more than 70 to 75 per cent market share. Based on what I hear from dealers, I think there is definitely a big potential over here. I can see a lot of educational institutes coming up, IT initiatives happening, and increasing penetration of laptops and desktops. That automatically translates that you need protection for your computers or laptops and that is where Kaspersky comes on the scene.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Most people use pirated software and operating system at home. What will be the extent of risk to such users from security viewpoint?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Risk is a lot. When you google the key â€˜free antivirusâ€™, you can find a lot of them that you can download. The download shows it is installing but you donâ€™t know whether it is actually installing. It might be downloading some malwares too. Nothing comes for free. People are using free software and they are not sure if that is the best thing. Secondly, people use pirated software. In this region, piracy is a big problem. In India, it was similar many years back but now customers realise that just using a process, the solution does not end; you also need support. You get the support&nbsp;by using a licensed product. That will take some time but it will gradually improve over a certain period of time because that is the way our markets are. On the question of risk, there is definitely the risk because you donâ€™t know what you are using. It might have malware, spyware, or some other kind of threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How can Kaspersky minimise such risks and protect users?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Kaspersky Lab which is centrally located in Moscow detects 35 thousand threats every day. You can imagine the number of threats. When a person is on the Internet, it does not matter whether he is sitting in Nepal, India or America. So, what Kaspersky does is that it keeps coming up with&nbsp;regular updates because the threats are increasing. That is how we are able to protect users from such threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Users often complain that Kaspersky requires powerful machine to operate, which slows down their system. How has Kaspersky addressed this issue in its latest version?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In 2012 version, we have come up with a hybrid technology â€“ cloud-based system. With this system, when you are using the desktop and you are not connected to the Internet, you donâ€™t need to have a lot of signature database on your machine. When you have a lot of signature database updates searching on a machine, it takes up your resources and the machine becomes slower. With the hybrid technology we are using cloud-based protection. So, the signatures of the threats are stored in the cloud. Once the user is in the Internet, computing power of the machine is not touched. That will happen in real-time across the Internet. That is how we have been able to address this particular problem. However, if you look in comparison with other products, we are much faster even in the existing version. We do understand that in emerging markets like India, Sri Lanka, Bangladesh and Nepal, computing is not very powerful. That is why this hybrid technology will prove very good technology for us.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In Nepal, Internet bandwidth is lower and majority of users do not have access to high speed Internet. Donâ€™t you think the cloud-based system will be a challenge?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On the consumer level, this could be definitely a challenge because of the Internet speed and probably the bandwidth will be affected but this cloud-based computing will still help reduce this particular problem because the computing is not happening on machine but in real-time in the cloud. We have tested our product with various Internet bandwidth types during the development stage and did not face problem. We will definitely be able to address this particular problem as time progresses. Once the users start using the product they will realise it is actually a good product by making use of good bandwidth.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What is the volume your are looking at in terms of sales for Kaspersky products in Nepal? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">I wouldnâ€™t be in a position to give you the target from the sales perspective but we have got very good market share at around 70 to 75 per cent with the previous version. This year, we should definitely look at a market share of 80 to 85 per cent. That is what we would want to achieve.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Who do you think are major competitors for Kaspersky in Nepali market? How is Kaspersky different from&nbsp;other products in the market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;I wouldnâ€™t say only about Nepal but globally, Symantec and McAfee are our competitors. There might be a lot of other products but on a global perspective, Gartner have listed three of us as top three security vendors â€“ Symantec, McAfee and Kaspersky. I would say that they are our real competitors.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">We are using hybrid technology while others are only talking about it. When we set up parameters, we are technically quite advanced in terms of updates size and faster scanning compared to other products. Even in this cloud-based technology, we have come up with a small sized update a day rather than making a big update like other products. We understand, in a country like Nepal, bandwidth rate is a problem. With a big update at once, users will not be able to update in time and will be open to threats.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">How is the response of users to your products in South Asia in comparison&nbsp; with western markets? </span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Our biggest market is Europe, followed by America. Over there, the split is approximately 65 to 70 per cent in consumer segment and the balance in the enterprise segment which is a matured market for Kaspersky. In South Asia, we are very strong in the consumer space and in the enterprise space we have not yet been able to take it to the next level. So, if you put both of them together, I would say in south Asia, we are probably at the number three position, Symantec and McAfee probably being the leaders.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In small countries like ours, price of software is excessively higher which is sometimes even costlier than buying a pc. How does your new version compare with other products on this count?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">&nbsp;We have retained the same pricing as of the 2011 version. A single user pack of antivirus comes for Rs 1,000 for a year. If you look at the per-day basis, itâ€™s less than what a cup of tea would cost. So, that is the amount you are paying to protect the data or yourself. With the market share of 70 to 75 per cent, a lot of users are using Kaspersky 2011. We have also provided the user of 2011 version a free upgrade. That will come free of cost, if the users still have valid license period.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are the challenges you are facing&nbsp; in the Nepali market?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Based on what I have seen in my first exposure to the Nepali market, piracy is rampant. Then, there are a lot of other products that come into the market with a lower price to dump their stock. They achieve their sales but there is no support. So, the consumers feel they are cheated. We see that as a challenge. While other products come to dump but we are there in the market with a proper focus. Sagar Infosys is Kaspersky products since 2008 and also providing support and there is our focus. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-top: 5.65pt; text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">What are your future plans for Nepal?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.2pt;">We plan to keep coming here more often for developing consumer awareness because for us awareness is the key. If consumers donâ€™t know about the threats they will not look for protection. We want to make sure about the awareness on the threats and product developments. So, we want to have many such marketing events where we can go and address the threat scenario to consumers as well as corporate houses. We want to target corporates on a much bigger way in the Nepali market. We want to keep coming to Nepal with more and more solutions which are technically advanced. Everybody was talking about this cloud-based technology but nobody came up with a solution. So, whatever the technology or threats, Kaspersky will be the first to come with a solution.</span></span></div>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '2011-09-28',
			'keywords' => '',
			'description' => 'Altaf Halde  joined Kaspersky Lab in April this year as the Managing Director, South Asia, responsible for companyâ€™s business in Nepal, Bangladesh and Sri Lanka. He was recently in Kathmandu to launch the latest version of ......',
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	(int) 6 => array(
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			'title' => ''I Refuse To Call This A Liquidity Crisis' (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><strong><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/dr gautam vora.jpg" style="width: 283px; height: 328px;" vspace="10" />Dr Gautam Vora</strong><span style="letter-spacing: -0.05pt;">, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques, interest-rate modeling, investment strategies and mathematical modeling of financial plans.&nbsp;Dr Vora is also a Visiting Professor with Kathmandu University School of Management (KUSOM), and during his recent visit to Kathmandu, he addressed issues at a talk programme titled â€˜Financial Crisis: Will Nepal Join It or Avoid It?â€™ organised by KUSOM. In an interview with </span><i>New Business Age</i><span style="letter-spacing: -0.05pt;">, he discusses the likely consequences for Nepal and its people in the event of a financial crisis, among other issues. Excerpts:</span></span></span></div>
<div style="text-align: justify;">
	<span style="color: rgb(178, 34, 34);"><span style="font-size: 14px;"><br />
	</span></span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How, do you think, the current liquidity crunch in Nepal can be set right?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">First of all, â€˜liquidity crunchâ€™ is a wrong phrase to use. Secondly, the problem is not that of liquidity because there is enough money in circulation including the so-called monetary supply. It is actually credit crunch. The people who need to repay the money arenâ€™t able to manage credit to repay quickly. So, primarily, it affects them. The people who speculated are the ones unable to borrow more to make payments on their loans. I have been told that land prices in Kathmandu soared outrageously but have come down drastically in recent times. The BFIs lent against those lands as collateral at higher prices and everybody got large amounts as loans. Now that the value of same land holdings has come down immensely, the borrowers cannot sell off the land to repay the loans. So, these people are looking elsewhere for more money. The impact of this situation on the banks is that they were expecting certain cash inflow of interest and repayment of the principal on the loan but they are not getting it. The BFIs have stopped getting money from the borrowers while they still have to pay interests to their depositors. It is a small world and everybody knows whatâ€™s happening. The depositors the world over stand in the queue immediately to withdraw all their cash the minute they panic. In such an event, the bank has to find money from somewhere to pay cash to the depositors. We can call it insolvency on the bankâ€™s part because it may have the assets but not enough cash. I refuse to call this a liquidity crisis in technical terms: itâ€™s a cash problem. This is precisely the case when the NRB is forced to bail out such BFIs by supplying them bundles of cash to pay the depositors. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;">&nbsp;You have labeled the global financial crisis a â€˜group of crisesâ€™. What is your logic behind this observation?</span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">Itâ€™s because the complete picture on global financial crisis is not only about impacting financial markets but also the path it treaded to reach there. It is for everyone to see that there is a crisis but most people are unaware of the real causes behind it. The problems are deep within the system due to which many commentators started calling it a systemic failure. The system was designed and modified over the years in such a manner that it led us to this problem. Thatâ€™s why I call it a group of crises because it took us a long time to get there. The whole story was in the making for 10 â€“ 15 years in the US and before the people could realise, it carried over to other countries as well. It started during the Clinton (Former US President Bill Clinton) administration when the liberalisation policies were implemented and the government agencies were indirectly asked to do certain things for the society. But it slowly increased in size and intensity and ultimately developed into a major crisis.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What, in your opinion, should be the conduct of Nepal Rastra Bank as well as the Banking and Financial Institutions (BFIs) to ensure smooth running of the economy?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">It seems to me that Nepal Rastra Bank (NRB) is currently the only organisation in Nepal which can look after the financial sector as well as the economy. That makes it a very important agency. I did have the opportunity to speak to a few NRB officials and realised that they are exceedingly competent and have the countryâ€™s interest at heart. The problem is that when you overwhelm a small group of people with too much work, they cannot handle it. You also need regulatory and legal structures backing these people up. The decision of classifying commercial banks, development banks, finance companies, etc as part of the financial sector is definitely very important but it is equally important to set limits for them. It would have been useful to categorise the scope of work for these institutions and spare them interference from the ruling structure of the country as well as the promoters of respective companies. Everybody has a stake in the institutional well being but the ultimate goal for these institutions should be to promote the national economy. If they are going to look at their own narrow self interests then they can do so in the short term only. This is where NRBâ€™s role of being a regulatory agency becomes critically important.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">You accept that NRBâ€™s role is of paramount importance. What best can it do to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB ought to develop a sub agency whose sole focus would be to manage and supervise the oversight of the â€˜Aâ€™ class commercial banks because they are the biggest ones and they have roots in the economy everywhere. They are the real conduit or the pipeline for the monetary policies of NRB so they need special attention. They need tight grouping but I donâ€™t know how that is being accomplished at this point of time.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">What are your recommendations for Nepal to avoid the financial crisis?</span></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;">NRB is doing all it can to avoid the crisis. It does lot of good things such as giving the money, regulating and supervising, encouraging merger of weak banks with strong banks, etc. The difficulty I see is that of the assets portfolio. The loans that the BFIs have made are weakening, in other words, they are becoming non-performing. This kind of a situation puts a lot of stress on the capital structure and the flow of credit to the economy. No matter what NRB does, the problem doesnâ€™t seem to go away. There are different ways of handling the problem. The bad loans must be taken over from the banks and passed on to NRB. It is a question of how much the central bank can do because they have other goals in mind such as ensuring price stability and looking after the development of the economic sectors etc. The ultimate challenge is that of supervising the BFIs and making them do the right things which require exceedingly tight control.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: 0pt;">How do you view the consequences for Nepal and its people in the event of a financial crisis?</span></span></strong></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">I have gathered that only about 35 per cent of the population in Nepal has access to banking services. So, the rest 65 per cent of the population will not be directly affected if, god forbid, a financial crisis was to happen here. But what is really interesting here is: most people under this 65 per cent population are barely maintaining a subsistence level anyway. The commercial sector which depends on the BFIs and the development of different industries, agriculture, construction etc will be severely affected in the event of a financial crisis. Even though we may say that the population at large might not be affected, the large chunk of the economic activity could very well be affected and that is the problem. Therefore, even the poorest of the poor will be affected indirectly. Nepal is in a very strong position because of huge amount of remittance it receives every year which is a very nice safety net. But the question is should we rely only on a safety net. Instead, we must rely on a good machine so that we donâ€™t have to use the safety net. And so, my concern is mainly from that perspective. We are trying very hard for economic development so letâ€™s not derail it by letting one little sector of the economy cause problems for the others. We need to study as to what per cent of the real economy depends on the financial sector. Look at the difference between the interest rates that people get on their deposits in the banks and the inflation rate. There is no incentive to save because the purchasing power is constantly decreasing. So, we do not need to have that sort of control in the economy to help save. Savings are to be used to increase the size of the economy for which we need good investments that can generate more income for the country. Finding good investment opportunities is key to bringing the whole economy together. Therefore, if the BFIs donâ€™t do their job well, then we are bound to face major problems.</span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
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			'description' => 'Dr Gautam Vora, a Professor of Finance at The Robert O Anderson Schools of Management, The University of New Mexico, US, has an active research programme and lately he has been focused on option-valuation techniques,......',
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	(int) 7 => array(
		'Article' => array(
			'id' => '428',
			'article_category_id' => '40',
			'title' => 'Economic Policy Deflections (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><img align="left" alt="economic" border="1" height="316" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover(1).jpg" style="width: 315px; height: 316px;margin:10px;padding:10px;" vspace="10" width="315" />By Achyut Wagle</i></span></strong></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">A</span><span style="letter-spacing: -0.05pt;">t present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is veering more towards the replay of 19th century model of state-controlled, putatively self-sufficient â€˜nationalistâ€™ and thus effectively an isolationist paradigm. The policy shift seems to have completed a full-circle from the campaign of self-sufficiency, trumpeting of fulfilling basic needs, then open-market-oriented liberal policies to the present one marred with confusion but decidedly intended to execute state-controlled economy. </span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Apparently, as elsewhere, the vicissitudes in the Nepali economic policy has been analogues to the nature of the political dispensation the country adopted in different points in history. The externalities too have their share of influence in shaping these policies. Such an influence is surely growing with the changing world order, shifting of epicentres of economic activities and, of course, with dramatically increased communication and transportation connectivities. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Vicissitudes</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal presented its first national budget in 1952. Until the fall of Rana oligarchy in 1951, Nepal remained primarily a vassal state. Any economic policy under a 104-year long Rana rule used to be based on the whims of the ruler and that too, related only to the land tax and management of major temple trusts or â€˜Guthisâ€™. Back then, almost cent per cent people relied on agriculture of subsistence nature. State hardly spent for developing infrastructure, public delivery and services systems. The fall of Rana rule and dawn of democracy in 1951 February definitely heralded a new era both politically as well as economically. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first budget had three prime policy focuses â€“ expansion of education, promotion of co-operative like structures at the village level to increase agricultural productivity and monetising the economy to the extent possible. This also welcomed the American aid in the country thus far remained largely closed, except for British and Indian diplomats, for the outside world.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Those initial policies were fairly realistic to Nepal given the socio-economic realities of that time. But, the political squabbles and power struggles overshadowed the implementation of them for at least a decade to come.&nbsp;However, despite politically a fluid situation, mid 1950s marked as a major milestone â€“ mainly in two respects â€“ in 1955 Nepal Rastra Bank (NRB) was established and in 1956 Nepal adopted its first five-year plan. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">One of the major objectives of the NRB was to replace the Indian currency, which was widely circulated in Nepal, by the Nepali currency. Second one was to speed up the process of monetising the economy in place of widely practised barter system in goods and labour.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The first plan focused on transport and communication infrastructures. A substantial allocation was made in developing the administrative structure all across the country. But before the completion of the first five year plan due 1961, political coup dâ€™Ã©tat by the then King changed the whole economic paradigm, development priorities and naturally their outcomes.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Flip-Flops of Panchayat</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The second plan was only for three years by lapsing a year. It was prepared by the National Planning Commission, a Russian style central planning mechanism, which still exists with very little variation.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">From the third five-year plan on, the partyless panchayat system under the direct rule of the King imposed a guided development policy. The economic policies were rather random mix of socialistic and capitalistic overtures. The state heavily invested in setting up state-enterprises of all sorts â€“ manufacturing, services and deliveries. This was an era of â€˜generousâ€™ foreign aid and Nepal was opened to all hues of them, albeit, with caution not to politically destabilise the largely totalitarian panchayat polity. Local panchayats were the political-administrative channels employed to carry out economic and development activities. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The seventh five-year plan (1985-90), the last of panchayat era, made two major policy departures. First, the plan categorically pronounced to work towards meeting the basic needs of the people, under the slogan coined as â€˜elevating the peopleâ€™s living to Asian standardsâ€™. And, second, it adopted a ground-breaking policy flexibility of inviting foreign direct investment and improving the performance of the state enterprises as recommended by Structural Adjustment Programme (SAP) piloted by the International Monetary Fund (IMF). During this period, apart from several foreign investments in tourism related industries, two foreign joint-venture banks, Nepal Arab Bank (Nabil) and Nepal Indosuez Bank were established. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Openness</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The reinstatement of multi-party democracy in 1990 began an era of economic liberalisation in Nepal too. The political change delayed the eighth plan by two years. But the eighth plan (1992-97) firmly advocated the privatisation of and divestment from the State Owned Enterprises (SOEs) and open market policies across all sectors. Undoubtedly, the forces of globalisation and international trend of reclaimed openness through democratic governance in former USSR and Eastern Europe contributed to these developments. Whatsoever, this is perhaps the â€˜golden eraâ€™ in terms of economic policy formulation and growth in Nepal. During this period, private sector investment was impressive. Airlines, hospitals, educational institutions, banks and manufacturing units were set-up by private investment. Public investment in infrastructures, mainly roads provided firm basis for urban access to villages. The ninth plan was generally continuation of the eighth plan. But the growth spirit was dampened by the armed insurgency initiated by the CPN-Maoist in 1996 February. Amidst fear and uncertainty, the economy dragged on. But the growth path was already truncated before the end of this plan in 2002 due to spread of violence in the country-wide scale, destruction of infrastructure and absence of any substantive private investment. Despite all odds, the GDP growth in the 1990s was about five per cent annual average.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Poverty Focus</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The tenth five-year plan was adopted through wider consultations with donor community led by the World Bank and other stakeholders. The whole plan was baptised as Poverty Reduction Strategy Paper (PRSP). True to its name, its focus was on poverty reduction with added dimensions like putting women in the forefront of rural poverty reduction strategies. An interesting policy link was introduced between the structural and legal reforms and the poverty reduction. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">At the very beginning of the plan, Nepal Development Forum was organised for the first time in Nepal. As the Maoist insurgency had become widespread, it also tried to look into the links of the factors like poverty, unemployment and social unrest or insurgency. Interestingly, however, the main policy basis adopted in 1992 that emphasised on the free market economy continued till the tenth plan that ended in 2007. One of the highlights of the tenth plan was Financial Sector Reform Programme (FSRP) that aimed to achieve the central bank autonomy and efficiency, reform in public sector banks, Rastriya Banaijya Bank, Nepal Bank Ltd and Agricultural Development Bank. Several other institutional set-ups like Credit Information Bureau, Debt Recovery Tribunal etc were added. Substantive legislative reforms were made, including a composite Bank and Financial Institutions Act 2007 (BAFIA). Reform in the capital market was another important agenda which has only partially achieved.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Some of highly ambitious reform agenda like bringing the financial giants like Employeeâ€™s Provident Fund and Citizen Investment Trust under an effective regulatory and supervisory ambit and establishing an Asset Management Company remained untouched. Despite generally appropriate policy directions in the later years of the tenth plan, the focus on implementation got immensely diluted. Among many other things, the process of privatising SOEs did not go ahead as expected.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">On the Reverse Gear </span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After signing of Comprehensive Peace Agreement with the Maoists in 2007, the discourse on economic policy has taken a backseat. The Agreement and the election for the Constituent Assembly both established the apparent dominance of the communist forces in Nepali politics. This not only changed but reversed the very orientation of national economic policy. Since then, no five year plan has been formulated. Two interim plans of three-year each were adopted in view of the prolonged political transition.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Contrary to the general expectation that the post-CPA period would create more conducive atmosphere for economy to grow, the economic performance has gone from bad to worse. The policy confusion is at its core. The communist forces, particularly the UCPN- Maoist is oscillating between proletarian dogma of state-controlled, distributive economy and present day global realities that demand openness and interdependence. The partyâ€™s heavy political reliance on its trade unions have made them unruly and major source of industrial disturbances.&nbsp;This has telling adverse effect of spatial nature on manufacturing and exports, new investments and employment generation. In a nutshell, Nepali economy is again going back to the era of â€œeverything done by the state.â€ Recently it has created new state-owned corporations like Hydropower Development Bank. No government policies assertively talk about privatisation and reform. In a bid to balance the international realities and communist indoctrination, the racing horse of growth has turned into a camel.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">For the last couple of years, the Maoist-UML coalition is in power. It has vehemently pushed a three-pillar â€“ government, cooperatives and private sector â€“ concept of economy which has irked and made apprehensive to the private sector regarding its role and treatment from the state. The private sector is unwilling to consider the cooperatives a separate sectors but the subsector of the private. Given nature, scale and GDP contribution, this proposition seems justifiable. But the more left-oriented policy makers have seen cooperatives as the substitute to the â€˜commune styleâ€™ operation of the economy, thus the emphasis. The cooperativesâ€™ contribution to the national GDP is estimated to be meagre 2 to 3 per cent.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Of late, the donor community and the potential investors â€“ both foreign and domestic â€“ seem to have lost interest in Nepali economy owing largely to absolute lack of policy predictability, growing apprehension of infringement on private property rights and disturbed industrial peace at the hands of ruling-party hoodlums and even stateâ€™s failure to bring them to&nbsp;justice.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<strong><span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Future</span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Nepal apparently does not stand at a point of immediate course correction so as it could regain the lost trust and re-ignite the growth engine. There are two main reasons for this: first, the communists, particularly the Maoists are still essentially against the concept of giving the private sector a lead role in economy.&nbsp;Not only that, their anti-private sector rhetorics is often repeated in this or that form. Recently, they have announced that â€˜allâ€™ party leaders would pull-out their children from private schools; purely a futile and demonstrative move. Therefore, until, the party recognises the private sector as major player in the economy and reflects the same in both â€“ policies and actions, economy is unlikely to come out of present sluggish pace of growth â€“ 3.5 per cent in the last fiscal year.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The second is the complete absence of the economic policy debate in all major political parties. Any economic policy introduced so far by any party or the government is not an outcome of all through meaningful debate from the local to the central bodies in a manner a democratic outfit should ensure for ownership and the implementation of these policies. Only adoption of this practice can bring the economic agenda to the forefront of the national debate and the policy predictability could also be ensured. </span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '2012-08-23',
			'keywords' => '',
			'description' => 'At present, Nepal stands at the crossroads, as perhaps never before in its history, in several respects â€“ political, economic, social, structural etc. In particular regard to economic policy, it is.....',
			'sortorder' => '342',
			'image' => null,
			'article_date' => '0000-00-00 00:00:00',
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			'breaking_news' => false,
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	(int) 8 => array(
		'Article' => array(
			'id' => '427',
			'article_category_id' => '40',
			'title' => 'Sorry State Of SOEs (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;"><strong>By Pinaki Roy</strong><br />
	Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government will provide over Rs 1.77 billion to the state-owned enterprises (SOEs) as subsidies in the current financial year while another Rs 1 billion will come in as foreign grant and loan. The subsidies to the SOEs for FYs 2009-10 and 2010-11 stood at Rs 1.54 billion and Rs 1.97 billion, respectively. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Most SOEs in Nepal are in loss for a long time now. Even the ones that are making profits are because of their monopolistic nature of business. However, itâ€™s inevitable that they too stand to come under pressure once competition intensifies. For example, Nepal Telecommunications Corporation (NTC) is being increasingly challenged by Ncell, a leading mobile telephony brand in Nepal. Most SOEs that are registering mounting losses year after year owe it mainly to political interference and corruption within these public corporations. The high profile Nepal Electricity Authority (NEA), Nepal Oil Corporation (NOC) and Nepal Airlines Corporation (NAC) are among the notable SOEs that have been making losses for as long as one can remember. Suresh Kumar Regmi, Under Secretary at Corporation Coordination and Privatisation Division of the Ministry of Finance (MoF) says, â€œThe corporations must try to become profit making entities on their own instead of expecting help from the government all the time.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Keeping these SOEs alive and kicking essentially means that the state has to dig deeper into its coffers to provide for them. The same money could have been invested otherwise on development. Among the most glaring failures are those of NEA and NOC that have miserably failed to adjust prices in accordance with evolving market dynamics. NEA sells electricity to its consumers at Rs 6.57 per unit as against its cost of Rs 8.97 per unit resulting in a loss of Rs 2.40 per unit. Its accumulated loss of around Rs 19.47 billion exceeds several folds to its total asset value. Similarly, NOC is under Rs 15 billion deficit currently due to heavy losses on petrol, diesel, kerosene and liquefied petroleum gas (LPG) prices. To make matters worse, it is plagued with corruption, political interference and poor governance. The government has no choice but to bailout these SOEs year after year because electricity and fuel are basic services that people of this country cannot be expected to live without. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The question arises as to how long can the state rescue the loss-making SOEs by compromising on development expenditure. NAC â€“ once the pride of the nation â€“ has gone from bad to worse with losses amounting over Rs 2 billion. Boasting a sizeable fleet of 21 aircraft at one point of time, it is left with only three small aircraft that fly domestic routes and two medium sized jets. Among the biggest foreign currency earners not too long ago, NAC today merely watches in despair other domestic and international airlines snatching away its market share. Never-ending controversies on aircraft purchasing, political meddling with appointment of staff and loans have hit the corporation hard in the recent past. The employees appointed by the public enterprises (PEs) stood at 33,603 in FY 2008-09, while this figure dropped slightly to 33,526 in the succeeding fiscal year. The average monthly expenditure of these employees reached Rs 34,126 in FY 2009-10.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The taxpaying populace is infuriated because its money is funnelled into these failed enterprises while development activities and service delivery are taking a beating due to, among others, inadequate funding. Furthermore, there has been a lack of genuine intent to reform or privatise the loss making enterprises. The SOEsâ€™ survival now stands purely for political reasons. Their existence does not add significant value to the countryâ€™s productive capacity. During FY 2009/10, 22 PEs earned net profit, whereas 14 PEs recorded loss; some of them had negative net worth. The governmentâ€™s investment in these SOEs has reached a whopping Rs 84.91 billion. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The total operating income of these enterprises in FY 2009-10 registered an increase of 21.63 per cent over the previous FY and reached Rs 130.98 billion. While the operating income of service sector enterprises increased by 70.2 per cent, the industrial sector enterprises registered the least increase in operating income at 4.2 per cent. The net fixed assets of 36 enterprises that totalled Rs 133.740 billion in the fiscal year 2008-09, reached Rs 139.365 billion by the end of the fiscal year 2009-10, an increase of 4.2 percent. While analysing the entire profit and loss of the 36 PEs, the net profit of Rs. 10.55 billion they had earned in fiscal year 2009-10 grew by Rs 8.3 million in the fiscal year 2010-11. However, if three major profit making SOEs are taken out, these statistics cut a sorry figure in itself. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Akin to the case in other countries, the state enterprises in Nepal too are present in areas that could be more successfully occupied by the private sector. Incompetent SOEs have blocked private dynamism completely and, at the same time, necessitated an insurmountable financial and administrative burden. In contrast, privatisation promises to free up public assets for activities of urgent attention and facilitate improved and inexpensive services besides unlocking prospects for private sector growth. However, the Privatisation Cell of the MoF has no immediate plans to privatise SOEs anytime soon. â€œWe are not in a position to close loss making enterprises either as they provide employment to thousands of people,â€ Regmi informs on a rather helpless note. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Nepalâ€™s privatisation programme articulated in the 9th plan envisions promoting private sector participation in the economy. A number of enterprises, mostly agricultural and industrial, have been privatised since the programme began in 1992 with the government playing the role of a catalyst. However, a number of productive SOEs such as Bansbari Leather and Shoes Factory (BSLF) and Agricultural Tools Factory (ATF) have ceased to function after being privatised owing to governmentâ€™s thoughtlessness in selection modality and consultation process, and lack of proper homework while selling them. Over the last decade or so, the privatisation drive has slowed down considerably to the extent of coming to a virtual standstill.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">The delicate financial health of the SOEs and their failure to adequately gratify market demands is a persistent problem that cannot be resolved by gifting subsidies and granting loans. Mismanagement, overstaffing, poor governance and accountability, competition from private players and most importantly, politics prevailing over economic imperatives have destroyed these SOEs and led them to their present dismal state. One can safely assume that unless there are radical and wholesome practices pursued such as privatisation (save the ones that are strategically linked to critical security and national interests) of these ailing enterprises, the SOEs will continue to be resigned to their fate and the taxpayers of this country will keep on bearing their burden. Worse, bailing out the SOEs of their financial chaos time and again only makes them more inefficient. Itâ€™s but tragic that the sick enterprises are encouraged to take the state and the nation at large for granted. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The Loss-making SOEs</span></div>
<table border="0" cellpadding="0" cellspacing="0" style="margin-left: 4pt; border-collapse: collapse; width: 321px; height: 678px;">
	<tbody>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border: 1pt solid white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Name of the SOE</span></b></span></div>
			</td>
			<td style="width: 59.9pt; border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: white white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><b><span style="color: white;">Total Loss </span></b></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Dairy Development Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 325.1 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Herbs Production and Processing Company Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 136.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Hetauda Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 619.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Janakpur Cigarette Factory Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 800.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Drugs Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 485.8 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Udaypur Cement Industry Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.773 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oriental Magnesite </span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 3.597 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Food Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.107 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Oil Corporation Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 8.418 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Airlines Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 1.557 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Gorkhapatra Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 89.7 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Television</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 760.2 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Water Supply Corporation</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 391.4 million</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Nepal Electricity Authority</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 18.230 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Agricultural Development Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 4.391 billion</span></span></div>
			</td>
		</tr>
		<tr style="height: 3pt;">
			<td style="width: 116.5pt; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: -moz-use-text-color white white; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="155">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rastriya Banijya Bank Ltd</span></span></div>
			</td>
			<td style="width: 59.9pt; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: -moz-use-text-color white white -moz-use-text-color; background: none repeat scroll 0% 0% rgb(134, 55, 59); padding: 4pt; height: 3pt;" valign="top" width="80">
				<div style="text-align: justify;">
					<span style="font-size: 14px;"><span style="color: rgb(255, 255, 255);">Rs 11.228 billion</span></span></div>
			</td>
		</tr>
	</tbody>
</table>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>Source</i>: Ministry of Finance Report, Ashad 2068</span></div>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'Public corporations in Nepal will receive subsidies in excess of Rs 2.77 billion in the fiscal year (FY) 2011-12. According to the budget announced on 15 July this year by Finance Minister Bharat Mohan Adhikari, the government.....',
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	(int) 9 => array(
		'Article' => array(
			'id' => '426',
			'article_category_id' => '40',
			'title' => 'Policy Twists For Public Enterprises (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: 0.05pt;">T</span><span style="letter-spacing: 0.05pt;">he budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and ensure efficiency of public enterprises. However, this yearâ€™s budget has also mentioned a policy to disinvest the government shares among general public.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The latest budget is a step backward on privatisation policy adopted by previous governments. The budget presented by Dr Ram Sharan Mahat for the fiscal year 2007/08 had proposed a gradual privatisation of the state-owned enterprises. Then, the budget of 2008/09 presented by Dr Baburam Bhattarai of the UCPN-Maoist led government reversed the policy of privatisation. Next yearâ€™s budget by Surendra Pandey gave continuity to Bhattaraiâ€™s agenda to increase investments in government corporations. Economic experts had argued against increasing the investment in state-owned enterprises instead of taking up privatisation measures.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Though there were attempts of privatisation during the Panchayat system, they were unsuccessful.. The concept of socialism faded and liberalisation came into picture after the fall of communism in Eastern Europe. Nepal could not avoid the influences of the global change. There was massive change in Nepali economic policy with the restoration of democracy as the process of privatisation of public enterprises began after 1991. Experts have it that the new initiative was taken mainly because of the pressure from IMF, The World Bank and other donors. The change was incorporated in the White Paper published by the Girija Prasad Koirala government in 1991. The policy tried to balance the public and private sectors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The Koirala government emphasised on selling the shares of public enterprises at the stock market. That was aimed at widening the ownership of the newly-privatised corporations and also to ensure competition for companies as well as consumers. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Harisiddhi Brick and Tile Factory, Bhrikuti Paper and Pulp Factory and Bansbari Leather and Shoe Factory were privatised in the first phase. In 1993 and 1994, 14 companies were selected for privatisation. Seven of them were wholly government-owned while the rest had joint-ownership with the private sector. Similarly, in the second phase, Balaju Textile Factory, Nepal Film Development Corporation, Nepal Lube Oil, Bitumen and Barrel Industry and Raw Hide Collection and Development Corporation were privatised. Likewise, Jute Development and Trading Corporation and Tobacco Development Company were liquidated.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">The policy took a different turn when the Communist Party of Nepal (UML) came to power in 1994. Unlike the Nepali Congress, the UML government favoured public enterprises. The budget speech of the same year read, â€œTo lessen the financial burden of the government, a privatisation program based on economic policies of the government will be implemented. There will be separate listing of corporations that are to be privatised and those that will not be privatised. The privatisation programme will be expedited for those corporations included in the privatisation lists.â€ However the government policy could not take off as the government did not even list the companies for privatisation. Further privatisation was certainly out of question. The budget of 2001/02 tried to be most intensive and aggressive towards public enterprises. The budget presented by Dr Ram Sharan Mahat promised to set up a separate unit in the Ministry of Industry, Commerce and Supplies to coordinate and monitor the price, quality and quantity of goods and services produced by the public sector. This budget also decided to prepare strategic and organisational planning to reform managerial, accounting and financial systems of the public enterprises. Most remarkably, it also decided to convert state-owned enterprises into companies curtailing the number of board members, their functions and duties to ensure professionalism.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">On minimising the cost to government, the budget presented by Dr Mahat read, â€œThe tendency of increasing short-term benefits by neglecting social security in public enterprises and development boards will be discouraged.â€ He proposed the provision to manage pension and gratuity compulsorily through Citizen Investment Trust. Likewise, the executive chief was made liable for creating any new financial liabilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Another significant proposition by Dr Mahat was to encourage the private sector investment where the involvement of the government is deemed unnecessary and where there existed a high possibility of attracting private sector.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">After 2001, 17 companies have been either liquidated or privatised. Nepal Telecommunication Company was the latest one to join the list in 2008 when its some shares were sold to the public. However, the privatisation process stalled completely after 2009/10 except for the sale of government shares of Small Farmer Development Bank to Small Farmers Cooperatives&nbsp; in 2010/11.</span><br />
	</span></p>',
			'published' => true,
			'created' => '2011-09-17',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'The budget for fiscal year 2011/12 has once again proposed the establishment of High-Level Public Enterprises Management Board. The board will try and.....',
			'sortorder' => '340',
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	(int) 10 => array(
		'Article' => array(
			'id' => '425',
			'article_category_id' => '40',
			'title' => 'What’s Wrong With Public Enterprises? (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	<span style="font-size: 14px;"><span>T</span><span>he government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by Bharat Mohan Adhikari. The promise made in the budget 2010/11 to form the committee has however remained unfulfilled.&nbsp;The board is expected to manage and run the corporations effectively and efficiently. Suresh Kumar Regmi, Under Secretary of Corporation Coordination and Privatisation Division at the Ministry of Finance, said the proposal to constitute the board has been sent to the cabinet for approval.</span><br />
	</span></p>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The role of the government to act as a referee for the development of economy seems to be neglected by the new budget. Rather, it has proposed the concept of an economy led by cooperatives. Obviously, private sector is thoroughly dissatisfied with the government move. Dr Ram Sharan Mahat, former Finance Minister and Nepali Congress Leader, said, â€œThe proposal of the government-owned cooperatives is not an alternative. Rather, they are against the self-help spirit of the cooperatives.â€</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the new budget, the government has tried to democratise the selection of Chief Executive Officers and General Managers of public enterprises. Merit-based selection is expected to welcome capable and qualified leadership. Often, it is alleged that poor leadership in the corporations led to their deterioration.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Similarly, this yearâ€™s budget says, â€œA policy of disinvesting the share of the public enterprises to the public will be implemented.â€ The share of the government was Rs 82.76 billion in 2009/10 while its total loan investment in 36 public enterprises remained at Rs 84.92 billion. In the previous fiscal year, the figures stood at Rs 86.13 billion and Rs 74.60 billion respectively. According to the economic survey of 2010/11, share investment of the government decreased by 3.9 per cent while loan investment rose by 13.8 per cent.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the name of reforms, the government is funnelling billions of rupees from the state coffers as subsidy to public enterprises which are constantly failing to show their competency in comparison with the private sector. This year, an estimated Rs 2.77 billion is being provided as subsidy. Similarly, the subsidy was Rs 1.97 billion in 2010/11 and Rs 1.54 billion in 2009/10. Regmi said, â€œThe corporations will not progress if they remain dependent on the government. Rather, they must manage their operations on their own.â€ â€œWhen the private companies in the same sector can do well, why canâ€™t the government-owned companies make profit,â€ he asked.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">In the last fiscal year, out of the 36 public enterprises, 22 were in profit while 14 were bearing losses. None of the corporations engaged in production are in profit. The economic survey shows that the net profit of Rs 10.55 billion in fiscal year 2009/10 grew by Rs 8.3 million in the fiscal year 2010/11. The share of net operating income of the public enterprises has been 11.2 per cent of the GDP. Regmi said though the number of profit-making companies has increased in recent years, the combined profit of the corporations has not increased. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although Nepal Tourism Year 2011 is going on, national carrier Nepal Airlines Corporation (NAC) is in the worst possible condition. Similarly, Hetauda Cement and the first cigarette factory of the nation, Janakpur Cigarette Factory, are also in dire straits. Despite a monopoly in the market, it is unfortunate to see Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA) in heavy losses. Stories of other 14 corporations are no different. Poor management, inefficiency, corruption, weak leadership, skewed policies are to be blamed for their failure.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Likewise, the net fixed asset of the 36 public enterprises was Rs 133.740 billion in the fiscal year 2008/09 which increased to Rs 139.365 billion by the end of the fiscal year 2009/10, up 4.2 per cent. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">With the liberalisation policy on economy introduced after the restoration of democracy in Nepal, the government initiated the process of privatisation, liquidation and termination of state-owned enterprises in 1993. Ever since, 30 companies have been divested of which 18 corporations have been privatised while 11 have been liquidated and one, Nepal Transport Corporation, was dissolved. The disinvestment has been carried out through the sale of businesses assets, partial disinvestment of shares, sale of current assets, leasing of buildings and land, management contract, liquidation, and termination. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The private sector and some economists are complaining that the government has taken a regressive step by reverting to state-controlled economy from the currently liberal economic regime. Mahat said the proposal of the government brought through the budget 2011/12 is suspicious and non-transparent. â€œThe government has failed to bring any concrete policy for the state-owned enterprises. It lacks an action plan for the corporations,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Experts opine that the government should play the role of a referee. It should work for the development of the real sector and the economy but it should not involve in doing business. They say competitive market entities should be handed over to the private sector. Dr Prakash Chandra Lohani, former Finance Minister and Co-president of Rastriya Janasakti Party, says the government and the private sector must complement each other. He opines without ensuring law and order and a strong policy framework, the private sector cannot prosper. â€œFor that, competitive regulation is necessary and the government should try to minimise the risk of the private sector. However, this yearâ€™s budget does not talk about vision and roadmap for the private sector,â€ he said.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Although much criticised, the public enterprises have been the source of employment to 33,603 people at executive level appointed by the management in 2008/09. However, the figure dropped to 33,526 in the succeeding fiscal years. Regmi also accepts that public enterprises&nbsp;are overstaffed. Experts opine that the number of staff in sick corporations can be lowered, which may lower their cost of operation and.</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<p style="text-align: justify;">
	<span style="font-size: 14px;"><span style="line-height: 115%;">According to Regmi, the government does not have a list of public enterprises that they want to privatise or a policy framework to privatise them in the near future. He suggests that the policy should be made in coordination with line ministries to give such companies the right direction. â€œTrying to save them by the finance ministry alone will not work,â€ said Regmi. â€œA political decision can choose either to close down or keep operating the public enterprises. However, as thousands of people are getting employment even in sick public enterprises, they cannot be abruptly closed.â€ </span><br />
	</span></p>',
			'published' => true,
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			'modified' => '2012-08-23',
			'keywords' => '',
			'description' => 'The government reiterated the proposal to establish a High Level Public Enterprises Management Board in the fiscal year 2011/12 in the budget presented by.....',
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	(int) 11 => array(
		'Article' => array(
			'id' => '424',
			'article_category_id' => '40',
			'title' => 'International Privatisation Trend (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59); letter-spacing: -0.05pt;">M</span><span style="letter-spacing: -0.05pt;">otivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation programmes in the last twenty-five years or so. Decades of poor performance and inefficient operations by SOEs led the governments to embrace privatisation. Thousands of SOEs have been given away to the private sector in Africa, Asia, Latin America, and Eastern and Western Europe. Throughout the world, annual revenues from privatisation soared during the late 1990s, peaking in 1998 at over US $100 billion.</span></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Widespread privatisation in recent decades has generated a reasonable hype concerning the effects of ownership on performance. Most studies find that privatisation has a positive impact on profitability and efficiency of business firms. However, very little is known about the effects of partial privatisation where the government remains the controlling owner. Indiaâ€™s privatisation programme has followed a pattern of partial privatisation through share offerings but at a particularly slow rate. Between 1991 and 1999, the Indian government raised about $9 billion in privatisation revenues, compared to nearly $71 billion raised in Brazil and $21 billion in China over the same period, according to Global Development Finance Report 2001.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Since both ownership and control shift to the private sector at the same time, full privatisation makes it difficult to distinguish between the political and the managerial perspectives. In contrast, under partial privatisation, the shares of the firm are traded on the stock market while the firm remains under government control and subject to political interference. Letâ€™s have a look at the following examples of how some countries and regions responded to privatisation in the last two to three decades. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">India</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The state intervention in SOEs has been undergoing a close scrutiny in many developing countries including India since 1980. The argument was that excessive political interference and lack of managerial interest (autonomy) hampered the performance of SOEs. Economic policy and state-owned sector in the post-independent India can be divided into four phases: (i) 1950-1965, (ii) 1966-1984, (iii) 1984-91 and (iv) post-1991 policy regime. The second sub-period of the second phase i.e. 1973-84 recorded a slow process towards liberalisation, which culminated into an irreversible process of liberalisation of the economy through the third (1984-91) and during final phase (1991 onwards). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Concepts such as liberalisation, privatisation, disinvestment and market-friendly approach replaced the old concepts of socialism and mixed economy. The period of 1966-84 culminated in a total transformation in the economic policy where economy was made predominantly dependent on market forces rather than on the state. The attempt, it seemed, was to depoliticise economic decisions as far as possible. The industrial policy that was initiated in 1985 was the culmination of the process of drifting away, which started during the second phase of the economic policy in India. The 7th Plan (1985-90) proposed larger planned outlays for the private sector as compared to the state-owned sector for the first time in the planning history of India.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India witnessed a major policy reform programme consisting of considerable deregulation of industrial sector as well as liberalisation of foreign investment and technology imports since July 1991. The 8th, 9th and 10th Plan documents suggested many policy initiatives towards restructuring, modernisation, rationalisation of capacity, product-mix changes, privatisation, autonomy, performance accountability and disinvestments policy. The movement of denouncing socialism that started in many parts of the world influenced Indiaâ€™s policy makers as well. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">India undertook sweeping economic reforms that included deregulation and privatisation in response to the foreign exchange crisis in 1991. Since the Industrial Policy Resolution of 1991, which outlined the economic reforms, nearly every governmentâ€™s annual budget has declared that the privatisation goal is to reduce government ownership to 26 per cent of equity. In the decade following the launch of the privatisation programme, the government sold minority shares through a variety of methods including auctions and public offerings in domestic markets, and through global depository receipts in international markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The share of state-owned sector in total investment continuously declined since the 1980s is illustrated in the following table. The relative shares of the state-owned and private sectors during 7th, 8th, 9th and 10th plans clearly signal the rising importance of the latter at the cost of the former.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The 9th Plan divided SOEs into three categories (i) profit-making PSEs (Public Sector Enterprises); (ii) PSEs making marginal profits and losses; and (iii) PSEs incurring substantial losses. Accordingly, all PSEs were placed in suitable categories. Disinvestment Commission, started in 1996, primarily to discipline PSEs and make them result oriented was developed into a full-fledged Ministry for Disinvestment, thereby institutionalising the process of reforms and restructuring of PSEs. Once it was established that privatisation of SOEs was no longer a choice but an imperative, the stage was set for privatisation of SOEs. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Privatisation Trend</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The emphasis of Indian privatisation from 1991 to 2000 was on disinvestment through offloading of governmentâ€™s shares to the state-owned or financial institutions. During this period, the government offloaded shares in as many as 39 SOEs. However, since March 2000, the emphasis has increasingly been on strategic sales of identified SOEs. The table below briefly summarises the amount realised and the number of SOEs disinvested or privatised till November 30, 2003.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Modern Foods Industries Limited (MFIL) was the first SOE to be strategically sold followed by Bharat Aluminium Company (BALCO). Fifty one per cent of BALCOâ€™s shares were sold to Sterlite Industries for Rs 5,515 million. Following this sale, the government was quick to proceed with strategic sales in important firms by divesting 51 per cent of the shares in Computer Maintenance Corporation (CMC) to Tata Sons and 74 per cent of the shares in HTL, PPL and Jessop (for Rs 550 million, Rs 1,520 million and Rs 180 million respectively) to Himachal Futuristic Corporations. Nineteen hotels of Indian Tourism Development Corporation (ITDC) and three hotels of Hotel Corporation of India Ltd (HCIL) collectively contributed Rs 6,866 million towards divestiture or disinvestment proceeds. For all these 19 hotels, 100 per cent of the equity was sold. In terms of individual sales, maximum proceeds (Rs 37 billion) were collected by selling 25 per cent of the equity in Videsh Sanchaar Nigam Limited (VSNL), followed by the contributions made by selling 27.5 per cent equity of Maruti Udyog Limited (MUL â€“ Rs 24 billion) and Indian Petrochemicals Corporation Limited (IPCL â€“ Rs 15 billion). </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Post-liberalisation era</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The government was forced to revise its economic policies following the exceptionally severe balance of payments and fiscal crisis in 1991 which resulted in disinvestment of government equity in the PSEs. The government steadily paved the way for a level playing field and competition with the private sector and thus resulted in PSEs being envisioned as revenue earning ventures of the government. Thirty individual Central PSEs were divested to select financial institutions namely Life Insurance Corporation (LIC) of India, General Insurance Corporation and Unit Trust of India (UTI) in bundles. Post-1996, sale through the global depository receipt route was also permitted and PSEs capitalised this opportunity to access international financial markets. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">There was a strategic shift in the government policies between FY 2000 and FY 2004 that facilitated â€˜Strategic Saleâ€™ or disinvestment of government stake in PSEs. The process involved transfer of big blocks of shares and management control to the strategic partners that were identified through competitive bidding. Post-FY 2005, disinvestment realisations were primarily through the sale of small equity stakes. The government realised an amount of Rs 534.23 billion as disinvestment proceeds between April 1992 and May 2008.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">In recent times, several government-owned companies have either started disinvestment process or are planning to begin so including the Steel Authority of India Ltd (SAIL) and Oil and Natural Gas Corporation Limited (ONGC). According to Disinvestment Secretary Sumit Bose, Follow on Public Offer (FPO) in SAIL was expected to raise Rs 7-8,000 crores while divestment of five per cent stake in ONGC will fetch the government around Rs 13,000 crores based on present market valuations. The government has proposed a disinvestment target of Rs 95,000 crores from the sale of shares in public sector companies over the next three fiscals, including Rs 40,000 crores in the current fiscal. Last fiscal, the government had raised Rs 22,400 crores through disinvestment in PSU companies by coming out with three Initial Public Offerings (IPOs) and three FPOs. The value of Indian governmentâ€™s stakes in listed SOEs is estimated at about US$ 320 billion and if unlisted companies are included as well, the total value would be approximately US$ 460 billion. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Russia</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The world learnt from the Russian experience that introduction of the â€˜shock therapyâ€™ or rapid mass privatisation can also lead to massive corruption. It underlined the fact that good governance mechanism is vital. Historically, private ownership of production facilities, financial companies and land was absent in the Union of Soviet Socialist Republics (USSR) for over 70 years starting 1917. As per the constitution of the Russian Socialist Federative Soviet Republic of 1918, land was transferred to farming units for management; all production units to â€˜labour collectivesâ€™; and the ownership of forests, natural resources, etc to the state. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Russian government spontaneously introduced a mass privatisation process in 1991 and introduced what was termed as â€˜shock therapyâ€™ â€“ instant price decontrols and rapid opening up of markets. This large scale movement of ownership transfer brought with it massive corruption in the auction process. The mortgage auctions in 1995 were some of the worst cases. Finally in 1997, a new model of privatisation was instituted under which companies were sold rather than distributed. Further, in 1998, the government also introduced processes of asset valuation by international advisors.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Current Scenario</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The SOEs continue to play an integral role in the Russian economy even though the role of private sector is ever expanding in Russia. The Russian government believes in the state role through ownership for industrial growth, economic diversification and energy security. The fraction of firms with 100 percent state and mixed (state and private domestic ownership) as per 2007 data is as follows: </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; All firms and organisations: <br />
	11 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Employment: 39 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Capital investment: 32 percent</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">â€¢ &nbsp;&nbsp;&nbsp; Fixed assets (state ownership greater than 50 percent): 23 percent. </span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hong Kong</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong is a relative newcomer to the global club of countries opting for privatisation. It has actually missed some opportunities to learn about and avoid certain problems of privatisation experienced in other countries. There have also been socio-political issues that are unique to Hong Kong. Its experience needs to be seen in the context of the long established worldwide phenomenon of SOEs and the trend of privatisation from early 1980s.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Despite being a British colony, Hong Kong didnâ€™t join the global trend of privatisation during 1980s and 1990s. Some ideas about privatisation were addressed in the government report for Public Sector Reform in 1989 but not followed up for two main reasons. First, there was no strong practical need to privatise public enterprises. Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region (HKSAR), had once acknowledged that the erstwhile colony had little external, political or budgetary pressure to reform its public sector. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Hong Kong recorded public budget surpluses year after year in the post-war period, much envied by other governments. The second reason for â€˜no privatisationâ€™ was political. During the long political transition till 1997, China opposed any colonial government proposal to privatise government assets in fear of a British plot to sell out the interests of the future HKSAR administration. However, the arguments about privatisation in Hong Kong have been reversed after 1997.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Divestment Plans</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Before the return of sovereignty to China in 1997, the Hong Kong government did not divest public assets because of Chinaâ€™s opposition and an absence of budgetary pressure. During the political transition, the colonial government was regarded as fairly competent in dealing with public confidence crises. However, after 1997, these conditions changed quite dramatically. The new conditions in HKSAR prompted the government to formulate divestment plans, but at the same time they raised potential problems for the implementation of the plans. After the political transition, China no longer opposed privatisation proposals of the HKSAR government.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Three Divestment Exercises</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Hong Kong community is generally receptive to the ideas of small government and privatisation compared to many other developed communities. The general acceptance in Hong Kong is partly due to the fact that the government uses public offers as the main strategy of divestment. The popular belief is that citizens will make good profits once they are allocated shares from the governmentâ€™s IPOs. Although the public generally favours public listing, the divestment exercises in Hong Kong were not without controversy. Fundamental conflicts of public interest in privatisation have had to be resolved from time to time. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">MTRC</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">The Mass Transit Railway Corporation (MTRC) was the first target of divestment in Hong Kong. In late 1999, the government introduced new legislation to replace the MTRC ordinance and to grant a proposed new MTRC company the right to operate the subway system. In October 2000, 24 percent of the MTRC shareholding (US$1.28 billion in value) was divested by way of listing in Hong Kong, London and New York. The offer was 18 times over-subscribed and broke the local record for an initial offering. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Tunnels and Bridge</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">After the Legislative Council approved the relevant grant of power, the government divested the future revenues from five toll tunnels and a toll bridge in August 2004 under a securitisation scheme involving the listing of government notes worth US$ 770 million. The offer to individual investors was two times over-subscribed, and the portion earmarked for institutional investors was heavily subscribed. The assets themselves continue to be government-owned through a new government company, Hong Kong Link 2004 Limited. The day-to-day operation of the tunnels and bridge as managed by franchised private firms remains unchanged.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.05pt;">Link-REIT</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">The Housing Authority (HA â€” a statutory corporation) announced in July 2003 that it planned to divest most of its retail and car-parking facilities in public housing estates. The plan was that the government would first set up a new asset-owning and management company, Link Limited, and then divest its ownership entitlement to the companyâ€™s future revenue streams in full by way of the listing of a real estate investment trust fund, Link-REIT. The trust fund, REIT, was chosen as a vehicle for divestment partly because it would restrict the scope of Link Limitedâ€™s business initiatives and partly because the government wanted to promote REIT as a new type of financial product. The HA planned to transfer the retail and car-parking assets to Link Limited after the scheduled listing had been completed. In due time, Link Limited took over the day-to-day management of the HAâ€™s retail and car-parking facilities.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Latin America</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.05pt;">Latin American countries have been very active in privatisation. Even against the backdrop of massive economic transformations in transition economies, the privatisation record of Latin America seems remarkable. To facilitate their shift to a market economy, most Latin American countries launched mass privatisation programmes that resulted in dramatic reductions of state ownership. Latin America accounted for 55 percent of total privatisation revenues in the developing world in the 1990s followed by transition economies in Eastern Europe and Central Asia at 21 percent. The decline in the economic activity of SOEs has been more substantial in Latin America than in Asia and Africa, bringing levels close to those of industrialised countries. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: 0.1pt;">Dramatic differences in the extent of privatisation are also evident within regions. In Latin America, for example, countries with large state owned sectors, such as Ecuador, Nicaragua, and Uruguay, barely privatised at all in the 1990s, while others such as Argentina, Bolivia, Guyana, Panama, and Peru raised revenues from comprehensive privatisation programmes that amount to over 10 percent of GDP. The difference in the extent of privatisation across countries and the large amount of assets in the hands of the state heightened the importance of understanding the privatisation record and of developing lessons for future privatisation programmes. However, Latin America has virtually halted its privatisation process in recent years after being the most active region in the 1990s. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><b><i>References</i></b></span></div>
<div style="margin-top: 5.65pt; text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>1&nbsp;&nbsp; Madhu Bala (2006) â€˜Economic Policy and State Owned Enterprises: Evolution towards Privatisation in Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>2&nbsp;&nbsp; â€œKPMG Internationalâ€ (2010) â€˜Resurgent PSUs Vibrant Indiaâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>3&nbsp;&nbsp; Nandini Gupta (2005) â€˜Partial Privatization and Firm Performanceâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>4&nbsp;&nbsp; Rikkie L K Yeung (2005) â€˜Divestment in Hong Kong: Critical Issues and Lessonsâ€™.</i></span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><i>5&nbsp;&nbsp; Alberto Chong &amp; Florencio LÃ³pez de Silanes (2004) â€˜Privatization in Latin America: What Does the Evidence Say?â€™</i></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>',
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			'description' => 'Motivated by the evidence on the failures of state-owned enterprises (SOEs), governments in more than a hundred countries have undertaken privatisation.....',
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		'Article' => array(
			'id' => '423',
			'article_category_id' => '38',
			'title' => 'Brand Buzz (august 2011)',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<strong><span style="font-size: 14px;"><i><span style="line-height: 120%;"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/sajag(1).jpg" style="width: 123px; height: 153px;" vspace="10" />By Sajag Karki</span></i></span></strong></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; vertical-align: middle;">
	<span style="font-size: 14px;">''Buy two get one freeâ€. â€œSurprise gifts with every purchaseâ€. These are common taglines used by companies in Nepal to attract potential customers. Except for a handful of ads of reputed multinationals along with some local companies that actually communicate brand personality via branding, Nepali advertisements typically focus only on a specific scheme or promotion. They have nothing much to offer except to lure customers into buying the product by providing them with monetary reward or somekind of freebie. Advertising has been around just for a few decades in a developing country like Nepal. Though there has been significant development, there is lot of room for improvement to meet international standards. In this turbulent phase of progress, ethics still comes in question. Nepali media whether TV or print has been flooded with Indian ads with Nepali voiceover. Big B Amitabh Baachan can be seen endorsing more than a dozen ads at the same time. People are confused and tired of seeing the same person over and over again for most products. Due to his popularity, it is also hard to ignore his presence keeping in mind the commercial success celebrities bring about. However, there must be a match between the personality of the brand with that of the celebrity. Same celebrity endorsing multiple products can hamper the image of the product.&nbsp;Are promotional schemes and celebrity endorsers a good way to communicate a companyâ€™s product to its customers? Also, the use of celebrities for products that donâ€™t suit their personality is controversial. The importance and relevance of ethics in advertising in the Nepalese context has been a debatable issue. Ethics is something that is usually not compatible with advertising in Nepal. The fact about advertising is that in most cases it is hard to sell products without offending anybody. Another harsh reality is that a single ad cannot please everybody. Such customers can go for customised products rather than standardised ones in order to fulfil their needs. Since there is always a target group of people that a company caters to, an ad cannot be made that is liked by everybody.&nbsp;Who is responsible for influencing young people for drinking or smoking? Is it important to be ethical while creating ads of oneâ€™s organisation or should they be more concerned with just adding value of the firm while ignoring the ethical and moral issues of advertising and business as a whole?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">The topic of ethics in advertising is such that it is never black and white. It is impossible to paint a rosy picture by just claiming yes or no to ethics. There are subtle shades of grey in which arguments from both sides are viable. Practically speaking, the direct adaptation of moral philosophy principles in marketing communication is unsuitable. However, this doesnâ€™t mean that ethics should be completely neglected. The parameters for judging ads cannot be the same as judging the morality and ethics of society.&nbsp;Hence, marketing must develop its own philosophy of ethics. In the advertising world, some puffery is allowed since no company can sell anything by saying just the mere truth. A bit of dramatisation and an element of excitement (buzz) are added deliberately to give maximum mileage to the brand. Only this makes it possible for people to bear up with advertisements. </span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">Advertisers are selective about the values and attitudes to be fostered and encouraged, promoting some while ignoring others. Ads cash in on the popular culture while targeting the younger audience. Ads encouraging dark people to use whitening creams to look fair are targeted especially to the young so that they are easily influenced. Can such advertisements that portray dark as ugly and unacceptable be called ethical or unethical? If it is unethical than what would be a better way to communicate the productâ€™s attributes in an ethical manner?&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">On the other hand, advertisers cannot completely forget ethics while delivering their creative piece.&nbsp;I am by no means saying that false advertising should be encouraged or that ethics should completely be neglected. The fact is that even though advertisements are verisimilitude, ethical threshold should always be maintained to depict a clean picture to the audience. A striking reality to consider is that negative words spread way faster than positive ones. It is like a wildfire that spreads so fast that itâ€™s almost impossible to extinguish it right away. Similarly, negative opinion of the ad due to unethical content will spread in such a way that it will be almost impossible to mitigate the damage created. Only a handful of unsatisfied viewers who find some ads unethical can spread negative word of mouth to a whole lot of people around them. In no time, such ads will be called phony ultimately resulting in adverse effect on the brand equity of the advertised product.&nbsp;Ethics is specially of top priority while showing comparative ads as there must be sufficient evidence backing the superiority of the product against competitors. Along with ethics, rational judgment should also be used so that they do not have to face legal issues.&nbsp;</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="margin-bottom: 0.0001pt; text-align: justify; text-indent: 14.15pt; line-height: 11pt; vertical-align: middle;">
	<span style="font-size: 14px;">No brand can be built in a jiffy. It not only takes creative heads along with deep pockets to gain a worldwide recognition of the brand but also a whole lot of time. Coke would not have been the most popular brand in the world if its advertising was not sculpted with ethical standards right from the beginning hundreds of years ago. Hence, it would not be a good idea for any company to ruin its image in no time by showing unethical ads just for the sake of money making or for cheap publicity. This kind of debate can go on and on and on. Books have been written and issues have been raised over the topic of ethics in advertising but without a tangible conclusion. To simplify this I would say that ad makers should come up with only such ads that they would accept as an audience. A little empathy towards audience and use of intuitive judgment by advertisers would probably help address this intrinsic advertising issue to an extent.&nbsp;</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span style="line-height: 115%;">(Karki is currently associated with KIST Bank.)</span></i></span></div>',
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			'description' => '''Buy two get one freeâ€. â€œSurprise gifts with every purchaseâ€. These are common taglines used by companies in Nepal to attract potential customers. Except for a.....',
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		'Article' => array(
			'id' => '422',
			'article_category_id' => '38',
			'title' => 'HR Audit (august 2011)',
			'sub_title' => '',
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			'content' => '<div style="margin-bottom: 0.0001pt; line-height: 120%; vertical-align: middle; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);"><img align="left" alt="" border="2" hspace="10" src="http://newbusinessage.com/ckfinder/userfiles/Images/rabindra%20karna%282%29.jpg" style="width: 112px; height: 151px;" vspace="10" /></span></span><strong><span style="font-size: 14px;"><span bright="" color:="" letter-spacing:="" lucida="" serif="" style="line-height: 120%;">By <span style="color: rgb(178, 34, 34);">Dr Rabindra Karna</span></span></span></strong></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><span style="color: rgb(134, 55, 59);">H</span>uman Resources function in addition to its routines regardless of the size of business operation is also expected to demonstrate competitive intelligence and benchmark comparatives at least with direct market competition. This is done for depicting HR initiatives towards sales and people productivity enhancement that can be utilised as a comprehensive tool to improve their own effective engagement into the business. It is imminent to identify and realise strengths and opportunities for improvements around specific HR areas.</span></div>
<div style="text-indent: 0in; text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span style="letter-spacing: -0.1pt;">Businesses are currently moving under heavily regulated and turmoil employee environment dealing with most uncertain industrial relation under complex legislative framework. Human Resources function has been emerging as most essential organ of organisation which is mainly engaged in establishing and practising policies, legal compliance that has huge impact over productivity and profitability of business in total. This is why Human Resources function these days is considered as most valuable strategic business partner within the Organisation. Efficient, effective and active HR practices in any organisation are as essential as the well functioning organs in human body. Investment in building Human Asset is considered a key to the measurement of systematic alignment with organisational goals helping HR become strong strategic partner that it is deemed to be. The HR Audit can be a powerful element driving change in HR and organisation. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">The financial audit is mandatory which examines the past on the basis of practices and procedures for identifying issues that ensure compliance to sound accounting principles. Similarly, HR audit is aimed to future and meant to examine the health of Human Resources function to establish best practices that are productive to the business activities. HR Audit supports companies to determine gap and reason behind lack in system productivity and suggests the way forward. Currently, most of the businesses have plans for systems, targets and compliance that are driven by HR functions wherein HR audit becomes useful to compare these plans with actual implementations. The outcome of audit and feedback is found very helpful in decision making around corrective measures pertaining to improvement plans. Human resources audits play vital role around legal compliance that helps to avoid regulatory liabilities resulting from policies and practices. It also helps to identify legal risk and serves information about efficiency of HR strategies through benchmarking â€œbest practicesâ€ of similar businesses. It is also handy in finding solutions to problems prior to escalation. It also suggests how things might be done in more efficient and effective way with efficient cost economy.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Concerns in relation to employee risks have been the reason for the emergence of a wing within HR function to look after the working conditions and associated risks that enable implementation of preventive measures that perfectly aligns to the legal approach of HR. The application of Occupational Health &amp; Safety program is now associated with quality of life at workplace that is most important for human capital being the prime strategic element that explains the differentiation ability of company. This is where HR audit goes beyond the traditional concept of accounts audit i.e. simple investigation to logical measurement of efforts being put.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">HR audit in general is suggested to structure based upon size of organization i.e. number of people employed, time constraints, budgets and risk areas e.g. discipline, performance, compliance, hiring etc. However, there are some areas wherein companies are vulnerable to additional risks which must be reviewed carefully:</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">a.&nbsp;&nbsp;&nbsp; Personal record:&nbsp;A detailed and accurate personal records of employees are essential to prevent the business from undesired dispute especially in the areas of insufficient documentation pertaining to discipline, service record, compensation, health issues etc. An audit of personnel files reveals exposure to this type of risk and enables preventive measures to safeguard interest of the company beforehand. </span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">b.&nbsp;&nbsp;&nbsp; Legal Compliance: A review focusing over companyâ€™s compliance to the local laws and regulation at the same time incorporated codes of best practices and other essentials; allows company to take corrective measure in area of concerns e.g. over-time eligibility, classification of Job, payroll, records retention, compensation and benefits etc.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">c.&nbsp;&nbsp;&nbsp; Attendance System: The biggest concern for most of the employer as of today is absenteeism. In many cases it has been noticed that companies have their own attendance policies (In addition to the countryâ€™s Labor Law) in support of absenteeism control which might be unacceptable because of conflict with law of the land as well lack of clarity in need of proper communication around these. Since this aspect has immediate vulnerability to dispute and risks; audit prescribes the remedial action in such conflicting situation and enables the organisation to take corrective measure in support of absenteeism control i.e. fully aligned with law of the land.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" letter-spacing:="" sans-serif="" style="">d.&nbsp;&nbsp;&nbsp; HR Strategies: Strategic alignments among each business units (Functions) are equally important in view of increasing value of employees to the business. This part of HR management mainly consists of organization structure, job design, employment policies, HRIS and employee relations management etc. Audit review of strategies helps business to determine whether strategic alignment exists there or not and supports planning and action to improvise areas of concerns on this important aspect.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><span calibri="" sans-serif="" style="">e.&nbsp;&nbsp;&nbsp; Cost Efficiency:&nbsp;One of the important financial roles of HR is to ensure people management in the most cost-effective way. This inculcates financial ratios and scorecard measures such as headcount planning, orientation and disciplinary cost per employee, people development cost, people productivity etc. A detailed review of this aspect of HR throws light on equipping HR practitioners of the company with knowledge per formulation of HR metrics.</span></span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Thus HR audit<span calibri="" sans-serif="" style=""> is</span> meant for verification of job design and analysis, employee welfare, industrial relations, conflict resolution, improved communication mechanism, orientation and job evaluation etc useful and supportive to achieve business destination through effective engagement of HR Function as one of the key business performance driver. It has been noticed from recent HR developments that there is an increasing demand for HR associates to contribute to profitability drive of the organisation through active participation in business decisions. The audit findings can be of great use to improve HR business plan, identify risks and control over traditional approaches, cost-economy and facilitate change in management initiatives. It also plays an important role in relation to motivation through clarified roles and responsibilities. HR audit helps to identify HR KPIs (Key Performance Indicators) and adds value to the organisation defining relevant activities. It also supports placement of management in a better position fulfilling expectation that instills trust and respect from all stakeholders.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;">Hence, it is important to ensure that HR audit is planned and carried out under clear understanding of HR connectivity on overall business objectives, HR related opportunities and their engagement around sustainable people productivity and outcomes that are intended to achieve.</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><br />
	</span></div>
<div style="text-align: justify;">
	<span style="font-size: 14px;"><i><span aldine401="" bt="" italic="" style="">(Dr Karna is the Executive Chairman of MARK Business Solutions Pvt Ltd and Ad Abhyas Marketing &amp; Communications Pvt Ltd. The article is based on various research reports and his practical experiences as management practitioner.)</span></i></span></div>',
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			'id' => '420',
			'article_category_id' => '50',
			'title' => 'Feedback August 2011',
			'sub_title' => '',
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			'content' => '<div style="text-align: justify;">
	<strong><br />
	Shadow Of Energy </strong><br />
	<br />
	<img align="left" alt="august 201" border="1" height="473" hspace="5" src="http://newbusinessage.com/ckfinder/userfiles/Images/cover july.jpg" style="width: 355px; height: 473px;margin:10px;padding:10px;" vspace="5" width="355" /></div>
<div>
	<br />
	Although Nepal is bestowed with immense resources, people;s lives are crippled in the absence of their proper and optimal use. It is similar to a situation in which a person is stranded on a boat in sea, dying with thirst, because he does not know how to remove salt from the sea water. Nepal is the second richest country in the world in terms of water resources a hackneyed statement and has a huge potential for hydro power generation that can meet a large part of the demand in South Asia. Having a huge market in both north and south of the border, upon the failure of fishing the money in river that is flowing away every day, people are forced to live in the darkness. The rains could not wash away the power cut woes of Nepalis. Even during monsoon when the rivers are flooded, Nepalis are facing black-out every day. I blame the government and its failure to invite foreign investors for developing hydropower projects if it cannot generate electricity itself.</div>
<div>
	 </div>
<div>
	We don't have to roam around the globe to find an investor. There are a lot in our neighbouring countries that are willing to develop power projects in Nepal and sell the output in their countries. What they are demanding is a stable policy that welcomes and ensures their investment. But our statesmenâ are so professional player of the dirty game called politics that they tend to succeed every time in chasing away potential investors. As a result, they are seeking other appropriate destinations like Bhutan. Water flowing out of Nepal is money flowing away from the country. The more it flows the more we lose. And our policy makers are happy to see the beauty of waves in flowing water. They turn a blind eye to the resources being wasted.</div>
<div>
	 </div>
<div>
	The more we delay, the more we lose. What is the use if Nepal produces 40 thousand megawatts of electricity when India and china have developed enough power to meet their need? And, that time is not very far. Then, I think our country will be proud to import from these countries to minimise load-shedding hours. Without any delay, the government should welcome foreign investors with open arms to develop big projects in Nepal. When we are busy giving phony speeches on nationality, it will to too late to say, Now I am going to develop thousands of megawatts of hydroelectricity. By then, we will have no market to sell our products and politicians will be happy men.<br />
	 </div>
<div>
	<b>- Bishnu Sharma</b></div>
<div>
	<b>Kathmandu</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Tax it to Discourage it<br />
	<br />
	</span></div>
<div>
	When Nano, the cheapest car, was launched in Nepal many thought motoring will be affordable for middle class people too. So was the business motive of Tata while launching Nano in Nepal. The Nepal government's taxation policy has something else to tell. Every year the government is hiking the tax rate on the automobiles which make vehicles beyond the imagination of many middle-class people. When the cheapest car comes to Nepal, it is still expensive to majority of the people because of high taxation. While selling the car in Nepal, there is 240 per cent increment in the price over the price in India. This adds extra cost to those who dream to own a car.</div>
<div>
	 </div>
<div>
	Auto business personnel are expecting a decline of more than 40 per cent in the vehicle business compared to last year due to the crisis in the financial sector and the increasing tax rate. It is positive for a government to discourage non-productive investments and discouraging private vehicles, to some extent, helps in minimising the traffic on the narrow roads of cities like Kathmandu. However, the automobile sector is generating a huge chunk of revenue for the country and the government should seek an alternative source to make up that if it is serious about discouraging vehicles import in the country.<br />
	 </div>
<div>
	<b>- Rajan Dhoj Khadka</b></div>
<div>
	<b>Bhaktapur</b></div>
<div>
	<b>&nbsp;</b></div>
<hr />
<div>
	<span style="font-size: 24px;"><br />
	Budget Baggage to Complain<br />
	<br />
	</span></div>
<div>
	Right after the budget is presented in the parliament by the Finance Minister, nobody is satisfied without criticising it. Critiques forget to consider what is good in the budget. They rightly pick up the flaws. Obviously, the budget determines where the economy will be heading in the new fiscal year but it may not necessarily be a baggage of rubbish. It is rare to hear appreciation for what is good along with the criticism for what is not. Interestingly, everyone complains the one who does not benefit and even the ones who directly benefit for example through a hike in salary. Instead of spending time to give discourses on the budge, I believe it will be better to put pressure on the government to implement the right policies and make use of what is good in the budget for the welfare of the country.<br />
	 </div>
<div>
	<b>- Sarita Khanal</b></div>
<div>
	<b>Satdobato</b></div>',
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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