Salt Trading Corp to foray into Biodiesel
While the petroleum price in international market reached zenith, Salt Trading Corporation is going ahead with its plan to help farmers in commercial cultivation of Jatropha which can be a source of biodiesel.
Jatropha is a plant well known in Nepal with its local names Kadam, Sanjeevan etc. and used mainly for fencing of farmyard while the oil from its seeds is being used for healing wounds. Oil extracted from its seed can be mixed into petroleum product like Kerosene and diesel up to 50 percent.
According to Corporation’s CEO, Parameshwor Mahaseth, technicians from India are already conducting studies for commercial cultivation of Jatropha in Nepal .
In fact, some farmers near Bhairahawa have already started Jatropha cultivation on their own though they have not been able as yet to fully commercialize it.
Meanwhile, the corporation, specialized in trading on salt, sugar, flour and the like and fast diversifying into various fields, has finalized plan for commercial cultivation of Stevia, a plant that can be used as an alternative for cane and beet sugar. According to Mahaseth, stevia will be cultivated by the corporation itself while encouraging farmers to cultivate it under contract with the corporation. Indian technicians are studying different places of Nepal for feasibility of stevia cultivation as well, he said.
Now Plastic Solar Dryer
Agricultural Scientists of Nepal have been successful in fabricating a plastic solar dryer, which, they say, can help save 15 percent on drying expenses and can be easily taken to remote parts of the country.
According to senior Scientist Srimat Shrestha of Nepal Agricultural Research Council, the plastic solar dryer has already been tested successfully and ten farmers of Jumla have already demanded it. With a drying capacity of 10 to 15 Kgs, this modern dryer costs approximately 10 to 12 thousand rupees. Whereas a glass dryer costs about 40 thousand at Jumla due to high transportation costs, the plastic dryer would not cost more than 25,000 in Jumla. “Moreover if locally available material are used, it can be fabricated at around Rs. 15,000 at Jumla,” assure Shrestha.
Disappearing Exports
Biratnagar’s exporters are getting worried after repeated incidents of trucks loaded with export goods disappearing in India . In a recent incident, a truck carrying brass plates from Hulas Wire Industry worth 13 million meant for a buyer in Hariyana , India , disappeared together with the cargo and truck owner, driver and helper.
Meanwhile, Hulas Wire has filed a case about this incident at Jogbani police station across the border and reported it to Indian Embassy at Kathmandu . Indian police have arrested Suvash Jha, Proprietor of New India Roadlines, and started further investigation.
Four years back, Reliance Spinning also faced similar situation when a truck loaded with thread disappeared in India . The case is sill a mystery.
Similarly, also the vegetable ghee cargo from various units of Biratnagar have disappeared on their way to the destinations in India. Similar problem is faced time and again also in goods to Nepal from Kolkata port.
Malaysia 's DXN Coming to Nepal
Malaysian company DXN, specialized in food supplements based on herbs is planning to set up a unit also in Nepal .
The company is planning to invest Rs. 60 million in the initial phase to produce 752 kg of Reishi Gano capsules and 9504 kg of Ganoselium capsules per year. Reishi Gano is a rare mushroom of red colour believed to have miraculous nutritional properties, according to the Chinese medical traditions. Though it is found only in the wild including in Nepal , DXN says it has developed methods to farm it.
In the later phase, the company is also planning to process other Nepali herbs including yarsagumba.
IMF-WORLD BANK MEETINGS
Slim Hopes for Nepal By Binod Bhattarai from Singapore
The governors of the International Monetary Fund and the World Bank meeting in Singapore approved an increase in quotas for four countries, including two in Asia . These four – China , Korea , Mexico and Turkey – are among those countries that remain under-represented in the Fund despite their growing influence in the global economy.
Approval of the proposal by the members on September 18, marks beginning of structural reforms within the IMF, which was set up in 1945. The existing arrangement gave disproportional powers to its founder members in terms of votes, borrowing rights and contributions to the Fund. The IMF also wants its members to give more voice to “low-income countries” by increasing the basic votes that are allocated to all members regardless of size.
On September 14th the IMF said global economic growth had been fairly resilient in 2005, and it is expected to continue to grow, despite a projected slowdown in the US . However, the projection could be offset should there be sharper-than-predicted slowdown of its economy, inflation risks and higher oil prices. The Fund projects the global economy to grow by 5.1% this year and by 4.9% in 2007.
The trend, however, would exclude “Developing Asia”. Led by China and India , real Gross Domestic Product (GDP) in the group had grown by 9% in 2005 and is expected to remain robust in 2006 ( 8.7%). The Fund said Chinese and Indian economies could grow 8.6% in 2007.
The possibility of this growth in the neighborhood rubbing-off on Nepal , however, remains slim. The lack of focus – typical to a transition that Nepal is going through – remains the critical factor that would determine its growth prospects, not to mention the poor infrastructure and the need for agriculture, the main productive sector, to depend on seasonal rains.
“There is not too much that Nepal can do (to benefit from the change in the neighborhood,” said Shantayanan Devarajan, the chief economist of the World Bank’s South Asia region. “I do think internal stability and careful management of the domestic economy working with the private sector for stabilizing the financial sector (can help).”
Nepal ’s growth averaged around 2 percent after 2001, which is far short of the growth it had attained in the 1990s, and well below the South Asian average. However, even though Nepal is still limping towards recovering from a 10-year-old conflict, it remains in the shadow of the international development focus.
“I believe that Sub-Saharan Africa has to be the first priority of the World Bank – not the only priority but the first priority,” said Paul Wolfowitz, the bank’s president, before the formal meet of the governors started. He added that even though 400 million people from East Asia had escaped poverty in the past 25 years, 600 million in Sub-Saharan Africa were heading backwards into poverty.
Asked what chances Nepal stood for gaining a share of Bank support Wolfowitz said its support would be aimed at “reinforcing success” in countries that were performing well. Nepal, on that count has very little to show, especially in terms of the stalled financial sector reforms and the hiccups the in implementation of the Poverty Reduction Strategy – which now stands poised to be replaced by an interim three-year plan.
The World Bank president added that he was aware that Nepal like Africa did not have the infrastructure it needed to grow, but developing it – which the Bank could restart to support – would have to be done on a regional and not “country specific” basis.
Corporate Kaleidoscope
l Everest Bank Ltd. has launched its own brand for handling remittance business. Started in association with Thomas Cook Al Rostamani Exchange and Asia Exchange Centre, Dubai , this web-based online product “Everest Remit” enablespeople from the Middle East to remit their savings to their families in Nepal . This facility is also available from Trust Exchange Co., Doha , says the bank.
For remittance payments at various locations in Nepal , the bank has entered into agency arrangement with Agricultural Development Bank and has also appointed sub-agents at various locations with coverage of more than 50 payout locations.
l Vijaya Motors has launched in Nepal two new models from General Motors: Chevrolet Tavera, a multiutility vehicle with claim for best-in-class fuel efficiency, and Chevrolet SRV, the first premium sports-back vehicle from Chevrolet launched in Asia .
l Lumbini Bank Ltd. has reported a massive recovery of ‘loss’ graded non-performing loans. According to a press release, the bank has informed that since the management of the bank was taken over by a professional team on mid-February early this year, the bank has recovered more than Rs 222.70 million on cash out of the portfolio classified as bad.
corporate scorecard
The Non Performing Loan (NPL) of most of the banks and finance companies decreased in the fourth quarter of the fiscal year 2005-06 over the previous quarter. The trend speaks of improving efficiency of the financial system. A paper recently presented by Bhisma Raj Dhungana, Director in Bank and Financial Institution Regulation Department of Nepal Rastra Bank (NRB), also showed a decreasing trend of overall NPL level of Nepali banking system, though it has not come down to the acceptable level (that is below 5 percent). The NPL of banking system was 19 percent in July 2005 and it has come down to 13.8 percent in July 2006.
The major problem of NPL is in the state owned two commercial banks, Nepal Bank Ltd. (NBL) and Rastriya Banijya Bank (RBB). The NPL of NBL decreased to 25.11 percent at the end of fourth quarter of the fiscal year 2005-06 from 42.40 percent in the previous quarter. It can be seen that the foreign management has made wonderful recovery of the bad loan but it is achieved by writing off significant amount of bad loan which reduced the profit of the shareholders. On the other hand, the NPL of RBB has decreased to 45.34 percent in the fourth quarter of the fiscal year 2005-06 from 50.96 percent in the previous quarter. This is still the highest level of NPL among the banks and finance companies.
Non Performing Loan Percentage of Finance Cos |
Company |
2005-06
Fourth
Quarter |
Third
Quarter |
2004-05
Fourth
Quarter |
Crystal Finance Ltd. |
0.44 |
3.69 |
4.70 |
Kist Merchant Banking & Fin. Ltd. |
0.88 |
1.93 |
- |
Om Finance Ltd. |
1.16 |
5.67 |
0.69 |
Premier Finance Ltd. |
1.38 |
4.99 |
3.11 |
People's Finance Ltd. |
1.62 |
5.82 |
3.15 |
Central Finance Ltd. |
1.66 |
4.98 |
3.84 |
Mahalaxmi Finance Ltd. |
1.78 |
3.01 |
3.37 |
United Finance Ltd. |
1.80 |
3.84 |
3.00 |
Standard Finance Ltd. |
1.81 |
4.72 |
3.35 |
Capital Merchant Banking & Fin. Ltd. |
1.84 |
- |
- |
Ace Finance Ltd. |
1.97 |
7.00 |
4.30 |
Shree Investment & Fin. Ltd. |
2.04 |
2.06 |
2.62 |
Narayani Finance Ltd. |
2.90 |
3.49 |
3.20 |
Union Finance Ltd. |
3.07 |
5.79 |
6.06 |
Guheswori Merchant Banking & Fin. Ltd. |
3.13 |
- |
- |
Lalitpur Finance Ltd. |
3.55 |
5.84 |
6.79 |
Royal Merchant Banking & Fin. Ltd. |
3.79 |
5.28 |
5.13 |
General Finance Ltd. |
3.98 |
6.11 |
14.46 |
Nawadurga Finance Ltd. |
4.60 |
4.94 |
5.36 |
Nepal Merchant Banking & Fin. Ltd. |
4.65 |
5.67 |
4.07 |
Bhajuratna Finance & Saving Ltd. |
4.67 |
8.29 |
4.45 |
Nepal Share Markets & Fin. Ltd. |
4.69 |
4.43 |
5.57 |
Pokhara Finance Ltd. |
4.82 |
5.46 |
7.40 |
Annapurna Finance Ltd. |
4.90 |
9.94 |
2.94 |
International Leasing & Fin. Ltd. |
5.66 |
6.95 |
5.47 |
Alpic Everest Finance Ltd. |
5.76 |
6.50 |
7.00 |
Cosmic Merchant Banking & Fin. Ltd. |
5.98 |
4.72 |
4.72 |
Goodwill Finance Ltd. |
6.51 |
15.96 |
8.30 |
Patan Finance Ltd. |
7.02 |
10.34 |
29.52 |
Nepal Housing & Merchant Fin. Ltd. |
7.32 |
10.79 |
5.53 |
Kathmandu Finance Ltd. |
7.74 |
10.81 |
7.20 |
Siddhartha Finance Ltd. |
8.50 |
8.50 |
6.00 |
Universal Finance Ltd. |
8.58 |
9.55 |
10.05 |
National Finance Ltd. |
9.24 |
7.29 |
7.88 |
Lumbini Fin. & Leasing Ltd. |
9.97 |
14.56 |
7.73 |
NIDC Capital Markets Ltd. |
10.35 |
22.17 |
17.90 |
Nepal Finance & Saving Ltd. |
11.25 |
19.84 |
10.01 |
Merchant Finance Ltd. |
11.63 |
32.31 |
4.65 |
| Nepal Bangladesh Fin. & Leasing Ltd. |
30.36 |
33.87 |
20.18 |
Source: Fourth Quarterly Reports |
Non Performing Loan Percentage of Commercial & Development Banks |
Company |
2005-06
Fourth
Quarter |
Third
Quarter |
2004-05
Fourth
Quarter |
Commercial Banks |
Machhapuchchhre Bank Ltd. |
0.28 |
0.65 |
0.39 |
Laxmi Bank Ltd. |
0.65 |
1.34 |
1.63 |
Kumari Bank Ltd. |
0.90 |
1.11 |
0.95 |
Everest Bank Ltd. |
1.20 |
1.23 |
1.63 |
Nabil Bank Ltd. |
1.25 |
3.63 |
1.32 |
Siddhartha Bank Ltd. |
1.34 |
2.15 |
2.58 |
Standard Chartered Bank Nepal Ltd. |
2.12 |
2.81 |
2.69 |
Nepal Investment Bank Ltd. |
2.30 |
2.40 |
2.70 |
Bank of Kathmandu Ltd. |
2.52 |
4.82 |
4.99 |
NIC Bank Ltd. |
2.60 |
3.10 |
3.80 |
Himalayan Bank Ltd. |
6.14 |
9.26 |
7.44 |
Nepal SBI Bank Ltd. |
6.32 |
6.86 |
6.54 |
NCC Bank Ltd |
11.09 |
12.99 |
8.64 |
Nepal Bangladesh Bank Ltd. |
12.27 |
22.93 |
19.04 |
Nepal Bank Ltd. |
25.11 |
43.40 |
49.64 |
Lumbini Bank Ltd. |
31.97 |
40.54 |
15.23 |
Rastriya Banijya Bank |
45.34 |
50.96 |
50.70 |
Development Banks |
Gorkha Development Bank Ltd. |
- |
8.00 |
- |
Sanima Bikas Bank Ltd. |
0.00 |
0.00 |
0.00 |
Malika Bikas Bank Ltd. |
0.07 |
0.20 |
0.06 |
Development Credit Bank Ltd. |
0.82 |
0.80 |
0.70 |
United Development Bank Ltd. |
3.37 |
2.07 |
4.99 |
Annapurna Development Bank Ltd. |
3.45 |
8.43 |
0.00 |
Nepal CSI Development Bank Ltd. |
32.80 |
22.57 |
5.07 |
Source: Fourth Quarterly Reports |
The bad loan problem is not only in state owned banks, it is increasing in the private bank and finance companies as well. Among the private sector commercial banks, the bad loan is the worst in Lumbini Bank Ltd. It ranked second among 18 commercial banks and stood first among 16 private commercial banks. Most importantly the NPL of companies owned by NB Group is significantly high. The NPL of Nepal Bangladesh Bank (NBB) is 12.27 percent in the fourth quarter whereas that of NCC Bank is 11.09 percent. The Nepal Bangladesh Finance and Leasing Company has 30.36 percent and this is the highest one among the finance companies. All these three companies belong to NB Group
In the development bank sector, the NPL level of Nepal CSI Development Bank is the highest one at the end of the fourth quarter of the fiscal year 2005-06 reaching 32.80 percent. It was 22.57 percent in the previous quarter and 5.07 percent in the fourth quarter of previous year 2004-05.
The level of bad loan must decrease to an acceptable level and the greater effort must be put by the financial institutions themselves and regulator also must be serious to monitor and regulate the market. It is very difficult to change the negative attitude of the borrowers and recover the loan when it becomes bad. Let’s hope that the current effort of the Nepal government will be fruitful to reduce it significantly as was the result the effort made by South East Asian Nations in year 2002. A study of Fungel and others (2004) showed that China, in year 2002, reduced NPL to 20 percent from the peak level of 42 percent, Indonesia to 8.1 percent from peak level of 48.6 percent, Korea to 3.9 percent from 35 percent, Malaysia to 8 percent from a peak of 30.1 percent, Thailand to 10.1 percent from a peak level of 51.6 percent. These results were achieved mainly by establishment of Asset Management Companies (AMCs), initiation of corporate debt restructuring programs, bank capitalization program and enforcement of bankruptcy law.
(By Rabindra Bhattarai)
Nepal Participating in Sigma 2006
Garment Association Nepal is participating in Sigma 2006, a garment machinery and accessories fair being held in Shanghai of China during October 20-23.
Being organised by Shanghai Hualian Serving Equipment Co. Ltd. and sponsored by China National Garment Association, China Sewing Machinery Association and government bodies, the fair is to attract garment industry delegates also from India, Bangladesh, Lao, Mongolia, Cambodia, Sri Lanka and Mexico as well, say the organisers.
