December 2005
BIZ NEWS

Foreign Aid Plummets 43 %

Signaling acute resource crunch to the government, Nepal Rastra Bank (NRB) has revealed that the foreign aid flow during the first four months of the current fiscal year has plummeted 43 percent compared to the same period last year.

According to NRB, foreign aid in the first four months of this FY has been Rs. 1674.8 million while it was Rs. 2960.2 million in the same period last FY.

On the other hand, the general expenditure of the government has increased significantly, according to NRB. In the first four months this FY, the general expenditure has amounted to Rs.17159.6 million up from Rs. 15293.6 million. This is accompanied by a substantial reduction in the development expenditure.

The World Bank, the Asian Development Bank and International Monetary Fund including donor nations Norway, Denmark, Finland, to name a few, have suspended their aid flow after the Febuary 1 move of the King.

Ace Finance to Become a Development Bank

Ace Finance Company has merged its subsidiary Ace Investment Company and has announced that it is soon to become a development bank.

The decision for the merger was made by the Special AGM of Ace Finance convened recently. The AGM has also decided to raise the authorized capital to 500 million rupees and the issues capital to 320 million rupees.

The company informs that by mid-November, the company’s operating profit stood at Rs. 7 million. The deposit collection for the period was Rs. 784 million and lending stood at Rs. 721.2 million.

Plan for Excise Stickers on Beer, Liquors & Cigarettes Failed

To the dismay of the government and relief of the liquor, beer and cigarette manufacturers the attempt to label excise stickers on each liquor bottles and cigarette packs by mid-November has gone haywire, at least for now. The stickers have not arrived yet and there is a speculation that the authorities at the Ministry of Finance and Inland Revenue Department are now trying to break the agreement with the Indonesian state-owned security printing firm Peruri which was supposed to have supplied stickers by mid-October.

In the government's budget statement in mid-July 2005, the Finance Minister had announced the plan to start putting excise stickers on each of the bottles of liquor and beer and packets of cigarettes by mid-November and it had asked the businessmen to make arrangement on their part accordingly. An agreement was reached with an Indonesian printing company that it would supply the various 13 types of stickers by mid-October.

The reason why the stickers have not yet arrived is still unknown. Acting Director General of IRD says that the printing firm has delayed the delivery. Though he was firm that the stickers will be put at any cost, he is not sure when.

Stunned by the meager collection from excise, the government had started the homework long ago for this purpose. Accordingly, also the budget statement for the last fiscal year had announced the plan to use excise stickers in each of the liquor and beer bottles and cigarette packs in order to stop leakages in excise duty collection.

At present, the excise stickers are labeled on the cartons of the liquor bottles and cigarette packs and the stickers are printed in Nepal itself at the Department of Printing and Janak Educational Material Centre.

SAFTA to Be Really Effective From January 1

The Committee of Experts (CoE) on SAFTA, in its 12 th meeting held recently, resolved the pending issues of the regional free trade accord paving way for its implementation on Jan 1, 2006. SAARC region will now become the largest free trade area in terms of the population size.

The meet of the CoE held in Kathmandu recently cleared the differences on the issues of rules of origin, compensation of revenue loss to the least developed countries in the region, sensitive list of items and technical assistance to the least developed countries.

The SAFTA framework agreement was approved by the Islamabad Summit of the Heads of the state and government of the SAARC region in 2004 with a plan to implement it from Jan 1, 2006 and to be fully operational by 2016.

Under the agreement, the customs on the goods moving between the SAARC countries will be lowered to 0-5% by 2016. By 2008, the developing countries India, Pakistan and Sri Lanka have to lower the customs rates to below 20% and the least developed countries Nepal, Bangladesh, Bhutan and Maldives will have to bring down these rates below 30%. India and Pakistan will then have to get these rates below 0 – 5% by 2013, Sri Lanka by 2014 and the other countries by 2016.

However, each country can maintain its sensitive list of goods for which the customs rates can be set higher. The list differs from country to country. Nepal has 23% of its tradable goods in its sensitive list. This list has 1335 items for trade with the developing countries and 1299 for the least developed countries in the region. The sensitive goods’ list is maintained so that people who depend on these goods for their livelihood do not suffer from the lowering of the customs rates.

Corporate Kaleidoscope

l Surya Nepal (P) Ltd. has changed its corporate logo indicating further business expansion on the cards. The new corporate logo has 'surya' (sun) rising from behind a mountain. The rising sun symbolizes the company's passion for excellence, its optimism and its expanding horizons, says the company. Likewise, the mountain in the logo stands for the company's roots in Nepal, it informs.

l Lumbini Bank Ltd. has opened a branch in Biratnagar increasing the number of its branches to five.

l Gorkha brewery has received this year's NS Quality Award, presented on the occasion of International Quality Day. Last year, the Award was presented to Nebico Biscuit Company. The Award is presented to one company among those who have received NS Quality Mark.

l Nabil Bank Ltd. has entered into an alliance with Mary Ward School of Lubhu, Lalitpur as part of fulfilling its corporate social responsibility. Under the alliance, the bank is supporting the education of all the children studying in grade 8, 9 and 10 in this charitable school. As an initiation of the alliance, bank's chairman, directors and senior managers presented education materials to the students on December 6. The bank has identified health, sports and education as the three focused areas of its initiatives in community services. Accordingly, it has been supporting Tilganga Eye Hospital's Glucoma Centre and sponsored Nabil Three Star Club to promote sports.