Export Quota: Ghee Industry Divided
A dispute has erupted among the members of the Nepal Vegetable Ghee and Oil Association on the question of how to divide the 100,000 MT of annual quota available for the Nepali ghee industry for export to India under the duty concession.
The dispute erupted after the executive committee of the Association in a meeting held on July 19 decided to divide the quota equally among all the 18 members of the association.
The dissatisfied minority protested against the decision at the Ministry of Industry, commerce and Supplies. They include the seven units that are the largest exporters of ghee to India in the recent years. They have argued that the quota has to be divided on the basis of past performance of the units, thus demanding higher quota for themselves while denying the facility to those four units which are now closed down.
However, the majority faction has argued that all 18 units would be under operation and there will be higher employment if all the units are provided with equal quota. They point out that under the previous system of quota distribution, which was based on the principle of "first come, first served", only the units which had access to the power centres were benefiting. They also argued that if the quota is distributed on the basis of equality, there will be no surge in ghee exports, a problem India has been raising frequently as a pretext to control the import of Nepali ghee in India .
They also decided that if a unit fails to fully utilise its quota the same will be distributed again on the basis of equality among the rest of the units.
Powdered milk: Another proposal for Chitwan
Diary farmers in and around Chitwan are again promised respite from the milk holidays, the days of the week when the dairy processing units do not buy milk from the farmers, particularly during the flush season. The promise comes from 15,000 MT per year capacity Manakamana Powder Milk Industry planned to be set up there with about a Rs. 600 million investment.
Similar big dairy processing unit equipped also with powdered milk plant was planned about a decade ago in Chitwan with investment from the District Development Committee, local milk cooperatives and foreign assistance. However, the plan was abandoned due to failure to manage dispute among the promoters.
Nepal imports about 30,000 MT of powdered milk per annum to meet the demand of the sweets and confectionery industry and to produce liquid milk during the lean season.
The new unit is being promoted by the owners of Manakamana Cable Car and construction company Chitwan Co-E.
India Waives 4 % Additional Duty
India has finally notified waiver of the 4 per cent additional duty levied on Nepali manufactured goods exported to India . However, the waiver is applicable only for notified items which do not include readymade garments, among others.
Nepali exporters were complaining that this duty imposed by the Indian budget for the current fiscal year announced early this year, had been making Nepali exports uncompetitive in India .
Though this duty was imposed on all the Nepali exports by the Indian budget, it was waived in June 2006 on primary goods during the India visit by PM Girija Prasad Koirala.
Mama Brand Dispute: Heading to the Court
The ongoing dispute between two of the prominent business houses Chaudhary Group and Sarada Group over the right to use 'Mama' brand on a product that they describe as 'Bhujiya', seems to be heading to the court for a final decision.
At the root of the dispute is the controversial decision of the Department of Industry under which it granted the Mama brand to both groups. The brand was first granted about 20 years ago to Khaja Khadya Udyog (KKU) to use it for snacks made of corn and rice and about six months later to Chaudhary Group's unit Nepal Thai Foods (P) Ltd. (NTF) to use it on noodles, without specifying the raw material. KKU was later taken over by Asian Thai Foods (P) Ltd. (ATF), a unit of Sarada Group, while NTF was renamed CG Foods.
Now both ATF and CG Foods are producing and selling Bhujiya with the Mama brand. While ATF objected to CG Foods' use of Mama brand on Bhujiya pointing out that CG Foods can use the brand only on noodles, CG Foods is objecting to the use of Mama brand by ATF on a product that is made of wheat flour, not corn or rice.
Clearly, the dispute is centred on the definition of Bhujiya. About this, CG Foods is arguing that ATF is selling broken noodles by calling them Bhujiya, while ATF says it has a specialised machine to make Bhujiya, thus claiming that it has not infringed on the brand of CG Foods. However, CG Foods is asking the Department of Industry to check the factories and find out the truth.
Chaudhary Group people say they are considering taking the case to court after the Department of Industry decided late June in favour of Sarada Group.
Two Biz Laws in the Parliament
The government has moved two bills in the parliament to enact competition and multimodal transport laws. While the competition bill seeks to protect the consumer interests by prohibiting formation of monopolies and cartels, the multimodal transport bill lays down rules to use different modes of transport for moving commercial goods.
The competition bill is also to fulfil Nepal ’s commitment to its trading partners made while gaining entry into World Trade Organisation. The multimodal transport bill is meant to facilitate optimal operation of the dry port at Birgunj which is expected to reduce the transport cost of Nepal ’s imports and exports.
Meanwhile, trade experts have voiced concern about the proposal of the Competition Bill to form a Competition Board under the leadership of the Secretary of the Ministry of Industry to oversee the implementation of the law. They say, as the government is still operating various business units, leadership of the Secretary in the Board will create a situation of conflict of interest when the dispute to be decided involves a government undertaking.
Four Big Banks on the Offing
Despite complains from the existing banks that they are not finding sufficient proposals to invest their funds, four big banks are readying to enter the competition the moment the central bank grants them permission.
This follows a revision by the central bank in its existing policy paving the way for more banks to start operation.
Among the proposed new big banks, International Chartered Bank and Annapurna Bank will have their head office in Kathmandu with Rs. 1 billion each as the paid-up capital while Global Bank is to base itself in Birgunj and operate as a regional bank. Clean Energy Bank is planning to operate as a development bank with its head office in Kathmandu , registering itself as a "B" category financial institute.
The International Chartered Bank is being promoted by retired senior officials of government bodies and Arzoo Rana, wife of former prime minister Sher Bahadur Deuba. Former Vice Chairman of National Planning Commission Dr. Shanker Sharma is going to be the Chairman of the bank while among the other promoters are former chief secretary of the government Dr. Bimal Koirala, Executive Director of Nepal Rastra Bank Rajan Singh Bhandari and Managing Director of President Travels Bhola Bickram Thapa.
The Annapurna Bank is being promoted by a group which includes Narendra Bajracharya, former President of Hotel Association of Nepal , Shyam Bahadur Panday, Chairman of Hotel Shangri-La and Umesh Shrestha, who owns premium educational institutes.
The Global Bank is promoted by businessmen involved in handling inward remittances and operating industries and vehicles trading business. Among the promoters of Clean Energy Bank has career bankers like former CEOs of the Bank of Kathmandu and Sanima Financial Institute Manoj Goyal and Anal Raj Bhattarai.
