The Nepali Government has failed to auction the seized vehicles that were brought to the Gaur Customs Office during different times.

Due to the untimely auction, hundreds of vehicles that have been confiscated for the past four years have become useless.

A timely auction of these vehicles could fetch the Nepali Government billions of rupees in revenue.

According to an official at the Customs Office, around 800 motorcycles, 60 four-wheelers and a big truck were dumped in and around the Gaur Customs Office premises.

“A number of vehicles have been turned into junk as the auction process has not progressed yet,” said the spokesperson of the Gaur Customs Office, Abhijit Kumar Singh.

He also said that millions of rupees could be collected if the government completes auction process on time.

Likewise, the illegally imported parts of the vehicles that were seized and brought to the customs office have started becoming unserviceable. Moreover, some parts have been stolen from the premises.

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The post Vehicles Worth Billions Left to Rot as Nepal Govt Fails to Auction! appeared first on Nepali Sansar.

As the findings cover the pre-pandemic period, the market experts fear that industrial capacity utilization worsens in the pandemic period.

According to the Economic Activities Study Report 2019-20 (Half Yearly) by Nepal Rastra Bank, the industries utilized only 40% of the installed capacity in the six months between Mid-July 2019 to mid-January 2020, a 20% slump from 60% utilization in the corresponding period of previous fiscal 2018/19.

Though the overall industrial capacity utilization has dropped significantly, some industries have enjoyed positive growth in capacity utilization.

Among the 154 surveyed industries, the liquor industry had registered the highest capacity utilization at 92.1%.

Industries that witnessed a rise in capacity utilization:

• Mustard oil, soybean oil, chocolates, rice, noodles, flour, liquor, jute goods, synthetic clothes, paint, cement, and medicines

Industries that witnessed a drop in capacity utilization:

• Ghee, processed milk, biscuits, processed tea, animal feed, beer, cigarettes, garments, processed leather, threads, soaps, plastic items, paper, concrete, bricks, steel rods, aluminum, and tires and tubes

However, as per the study, the credit flow to various industries in the review period increased to 17.3% and reached NPR 1.06 trillion. The credit flow had stood at 12.6% in the corresponding period last fiscal.

Industry-wise Credit Flow Details:

• Non-food items production industry- 35.3%
• Construction materials manufacturing industry – 31.4%
• Agriculture, forests, and beverages Industry – 15.9%
• Electricity, gas, and water Industry – 12.9%
• Mining Industry – 0.7%

Moreover, the study has emphasized the need to boost industrial production and increase capacity utilization. It has also recommended training programs for the employees in the industries to enhance their skills.

Likewise, the Nepal Rastra Bank also mentioned the vital role of non-resident Nepalis in developing industries.

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According to data from the Department of Customs, Nepal imported commodities worth NPR 1.42 trillion in the last fiscal, whereas it’s revenue earned from exports stood at NPR 97.11 billion.

Even though the export rate – 19.36 percent exceeded the country’s import rate – 13.93 percent in the last year, Nepal’s increasing trade deficit is become a matter of serious concern.

Nepal exports to imports ratio fell to 1:14:6 in the last fiscal year while the export earnings were NPR 97.11 billion. This amounts to an import of goods worth NPR 14.6 for every rupee earned on exports.

Of trade done with 157 countries, Nepal has a trade deficit with 134 countries and a positive trade balance with 23 countries including Afghanistan NPR 14.29 million, Central African Republic NPR 275.85 million and Maldives NPR 6.2 million.

On the other hand, Nepal has projected the highest trade deficit with India and China, NPR 855.19 billion and 203.4 billion, respectively.

Nepal imports and exports with India stood at NPR 917.92 billion and NPR 62.73 billion, respectively. While with China, the imports and exports stood at NPR 2.1 billion and NPR 205.52 billion respectively.

Even though the government has adopted the measure of restricting imports, the trade deficit has further deepened in the last few months.

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The post Nepal Rising Trade Deficit Jumps By 14.26 Pc appeared first on Nepali Sansar.

In its new decision, the government has set a limit for withdrawals made on Nepali debit or credit cards in India.

The Nepal Rastra Bank (NRB), in its notification on December 25, 2018, has set NPR 1 lakh per month limit for almost all payments directly or part of rendering services in India.

However, the new rule exempts transactions involving hotel bills, hospitals and pharmaceutical stores.

The Central Bank considered this as a move to curtail cash spending on unproductive purchases in India, which are usually made on Point of Sale (POS) systems.

The new policy that applies to all payments on goods and services was reportedly implemented to tackle Nepal’s widening current account deficit and covers all types of prepaid, credit and debit cards of all Nepali banks.

The new decision has been taken to address the growing current account deficit and the balance of payment crisis, says Central Bank Spokesperson Narayan Prasad Paudel.

Paudel further added that Nepal continues to handle demonetization after-effects and is waiting for India’s response on demonetized Indian currency notes.

The new policy is coming exactly two weeks after Nepal Government announced complete ban on high-value Indian currency notes on account of demonetization.

What Economists Say?
Senior Nepali economists opine that the new policy is the result of India’s demonetization effect on Nepal and is coming after a series of issues following the announcement of demonetization in 2016.

Kathmandu-based Achyut Wagle says that the demonetization policy has sent negative signals to Nepalis and Kathmandu is now taking measures to secure itself from any similar moves from India in the future.

Wagle says that the new decision also echoes Nepal Government’s readiness to stay prepared to similar situations in the future.

“India’s demonetization affected Nepal negatively and has been criticized in recent months. Tuesday’s decision is an independent move by Nepal and our government decided to go ahead without really holding consultation with India,” reads Wagle’s statement.

“The last time India went for demonetization we were left holding huge amount of Indian currency that has not been exchanged so far by Delhi. So, this time we are trying to minimize the risks in advance just in case India plans to repeat a similar exercise as there are continuous rumors in the Nepali bazaar about one more possible demonetization by Mr. Modi,” Wagle added.

Besides affecting spending patterns, the new policy is also expected to impact trade-related business across the Indo-Nepal border areas, where Nepali businessmen usually transact in Indian currency.

The post After Currency Ban, Nepal Limits INR Spending in India appeared first on Nepali Sansar.

In its latest update, IMF revised Nepal’s economic growth to 6.5 percent in the current fiscal i.e. more than what it said in its last review. The earlier IMF projections in its World Economic Outlook report show only 5 percent growth for Nepali economy.

“Following a prolonged period of subdued growth, economic activities in Nepal have picked up in recent years. Supported by greater political stability and reliable supply of electricity, the growth is expected to reach 6.5 per cent in 2018-19, on expanding post-earthquake reconstruction activity, services and manufacturing,” reads a statement in the Article IV Consultation Report of IMF released on December 13, 2018.

An IMF team led by Geert Almekinders visited Nepal on December 2, 2018 for discussions on the 2018 Article IV consultation.

The new outlook recommended Nepal to balance its economic growth trajectory, alongside keeping a close watch on the rising fiscal and current deficits that increased outflow of foreign reserves.

IMF also recommends tight policy measures to keep up with the current economic scenario, deal with the internal & external pressure and achieve a durable economic expansion; it suggests higher interest rates, smaller fiscal deficit and tighter macro-prudential policies (than the budgeted).

It also cautions the government to ensure that the general budget won’t increase further in the process of implementing fiscal federalism.

Lauding the government for its efforts towards taxation and consolidation of expenditure through the Public Expenditure Review Commission, IMF suggests to slow-down on distribution of resources and responsibilities to the provinces and state governments.

IMF urged the government to also control the credit growth stating, “while credit growth has helped spur growth over the past several years, high pace of expansion raises stability concerns,” and also suggested to deny any measures that cause credit rise.

The post IMF Revises Nepal’s Economic Growth Trend, Says Positive! appeared first on Nepali Sansar.

Joint Secretary at the Consumer Affairs Ministry Nawaraj Dhakal informed this in a statement, where he said they were holding discussions with related stakeholders to prepare guidelines.

“As the ministry lacks information technology equipment and manpower to keep track of e-commerce platforms, we are seeking the help of other government agencies,” said Dhakal.

This decision is coming in the backdrop of growing eCommerce portals and raising concerns over business misconduct by some of them.

Nepal currently has many eCommerce players selling wide range of products, but the government lacks a monitoring mechanism that can track eCommerce activity in the country. Nepali eCommerce sector is generating a USD 25 million business annually.

Along with the sector’s growth, there is also a rise is the cases of business misconduct deceiving customers, say the consumer rights activists of Nepal.

According to them, late product delivery, exchange and refund, selling of substandard and second-hand products and overcharging continue to be some of the serious issues in the Nepali eCommerce sector.

“It took me three months to get a refund from the company,” says one of the local sellers named Adish Prasain. This raises questions over rules put forth by the Consumer Protection Act 2018, which mandates every seller to ensure refund is done within seven days of the order return.

In contrast, Yogendra Gauchan, Director General of the Department of Supply Management and Protection of Consumers Interest said that they haven’t received any complaint against sellers.

“We have started work to develop a separate modality for market inspection. The existing laws contain adequate provisions to check e-commerce,” Gauchan added.

Consumer rights activists deny with Gauchan’s statements in saying that there is a growing number of complaints against online stores.

“Most of them have to do with overcharging and sales of duplicate products,” says Prem Lal Maharjan, President of the National Consumers Forum of Nepal.

Maharajan blames government for their inability to take necessary measures against business misconduct. Maharajan says that many online sellers are already collecting hefty delivery fees from consumers instead of giving them free delivery option.

Winter Boost to eCommerce Trend
eCommerce shopping is witnessing a good market in Nepal driven by the demand for purchase of winter commodities and products.

To attract more customers, eCommerce players are also announcing luring offers and winter schemes on a variety of products such as electronics, home appliances, mobiles, beauty and health products, among others.

Nepal’s leading eCommerce player is also offering free nationwide delivery services on purchase of specific-branded groceries.

According to winter traders, wear and consumer durables goods are the most-selling products in winter season.

“With festivities like Christmas and New Year arriving soon, we are working on exciting gift options, with special offers on electronics, decoration items, cakes, liquors and groceries,” said a senior executive of another eCommerce firm.

The post Nepal Eyes Regulatory for eCommerce Sector appeared first on Nepali Sansar.

As the latest reports say, the country’s trade deficit widened 40.3 percent in the first four months of the current fiscal year, majorly attributed to the rise of imports by the agriculture and fuel goods.

According to Nepal Trade Export Promotion Council, the trade deficit was measured at NPR 454.47 billion as of mid-November 2018, with exports of tariff-targeted goods balancing the trade.

While the import bill is soaring at NPR 483.75 billion, showing a 38.1 percent rise over the previous record, the export earnings showed a little rise of 10.6 percent up to NPR 29.28 billion.

Overall, the export-to-import earning ratio shows exports standing at NPR 1 /- against import expenses of NPR 16.5/-.

Over dependence on imported goods, as a result of challenges in production and supply, resulted in this widening trade deficit, says Suyash Khanal, Deputy Executive Director, TEPC.

“Although exports of yarn, carpet, iron products, tea and textile are getting better, they are not enough to balance the ever-increasing trade deficit,” Suyash adds.

Fuel, the Biggest Contributor to Deficit
Fuel stands out to be the biggest contributor the trade deficit. Nepal’s petroleum product imports in the first four months of the current fiscal amounted to NPR 69.07 billion in revenues, showing a rise over 68.2 percent, year-on-year.

Iron & related products are second in the list accounting to NPR 58.2 billion worth imports during the four-month period, up 62 percent Y-o-Y, majorly due to high infrastructure & reconstruction activity across the nation, adds Khanal.

Nepal’s agricultural imports are next in the list growing in costlier. According to TEPC, the share of agro & petroleum imports was 30 percent of the total import bill during the review period of the current fiscal.

Export Earnings
Yarn exports witnessed a new high of 19 percent to NPR 2.93 billion during the first four months of the fiscal year, with around 13 percent contribution to the export basket. Woolen carpet exports also increased 17.9 percent to result in NPR 2.76 billion earnings.

Readymade garment is another area that contributed to export earnings with 12.1 percent rise to NPR 2.40 billion in revenue.

Import aside, iron & related products also contributed to exports by showing a 47 percent rise to NPR 2.21 billion.

According to Khanal, Nepal needs to make strategies for promotion of its products in the international market for good incomes and balanced trade. He reports positive signs in promoting tariff-targeted goods.

“We must diversify our export basket, particularly handmade goods which are in high demand in the overseas market, so that our export shipments increase rapidly,” adds Khanal.

Meanwhile, Posh Raj Pandey, Executive Chairman of the South Asia Watch on Trade, Economics and Environment, noted that the country should start exploring niche markets to expand their export earnings.

“Nepal needs to sign bilateral agreements to promote export of specific goods to the countries where their demand is growing,” Pandey adds.

The post Rising Imports Cause Trade Deficit to Nepal appeared first on Nepali Sansar.

As the reports say, Nepali banks are facing serious liquidity crunch over the last few weeks, stopping them from offering business loans to enterprises.

According to local bankers, the cash crunch is majorly due to high expenditure in the early months of the current fiscal compared to revenue earnings. This is stopping many banks from meeting local businesses’ credit requirements.

“There is a lot of demand for loans due to boost in business confidence as Nepal has a stable government after the three-tier elections in 2017. But, we are facing difficulty to lend to the enterprises as per their demands due to lack of adequate fund,” NMB Bank CEO Sunil K.C said on November 26, 2018.

According to Nepal Bankers’ Association, deposits in the commercial banks grew by only 3.7 percent compared to lending that saw 7.7 percent rise, leading to credit expansion in line with the regulatory limit.

While the banks are supposed to maintain 80 percent Core Capital combined with Credit To Deposit (CCD) ratio, the number stands at 78 percent giving only 2 percent scope for further lending, informed Nepal Rastra Bank (NRB).

“It means, if a large-scale withdrawal of deposit takes place, the banks will no longer be in the position to lend further,” says Ashoke Rana, CEO of Nepal’s leading commercial bank, Himalayan Bank.

While the government is looking at an 8 percent economic growth target, bankers opine that the continuation of liquidity crunch will hurt the growth of overall economy in the days to come.

“But, the extent of impact would depend on whether credits have been extended to the productive sector,” says Nara Bahadur Thapa, Executive Director of NRB.

Addressing Nepal Cash Crunch
Addressing the concern to some extent, NRB offered banks the flexibility to lend more by garnering loans from international institutions up to 50 percent of their core capital.

Himalayan Bank has recently taken USD 15 million loan from the International Finance Corporation(IFC). “We have also initiated the process of borrowing another USD 15 million from a British financial institution. Once we get this fund from abroad, it will help ease liquidity in our bank,” adds Sunil.

According to bankers, the recovery can happen if government spending can increase in the months to come driving more revenues to the treasury and further to banks.

Cash crunch is a common trend for Nepali banks usually in the last months of the financial year.

The post Nepali Banks Face Cash Crunch, Limit Loan Offering appeared first on Nepali Sansar.

Government made this statement condemning the sector’s remarks on government’s efforts in creating an investor-friendly environment in Nepal.

Speaking at a program held to mark the Industry Day on November 25, 2018, the Minister for Industry, Commerce and Supplies Matrika Yadav urged the sector to come up for a discussion in this regard to shed light on key issues.

Yadav confirmed that the government stands committed to bringing in a favorable environment to sell the country’s own products rather than promoting others.

In this regard, he extended government’s openness to work with the private sector and also his ministry’s willingness to collaborate with any other ministry to address challenges in the local industrial development.

Secretaries at the Commerce Ministry, Chandra Kumar Ghimire and Yam Kumari Khatiwada called for development of collective initiatives to safeguard the Nepali economy and highlighted industry’s role in achieving overall development of the country.

On the occasion, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Bhawani Rana stated that that the country could draw foreign investment only after formulation of relevant favorable policies.

Chairman of Confederation of Nepalese Industries Hari Bhakta Sharma pointed at the lack of any conducive environment to establish new industries.

Former president of FNCCI Pashupati Murarka and other industrialists including Sumit Kediya and Krishna Adhikari stressed on the need to bring in relevant policies in line with the current needs.

Director General of the Department of Industries Binod Prakash Singh briefed the session about the current status of Nepali industries.

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The post Govt. Welcomes Private Sector for Industrial Development appeared first on Nepali Sansar.

The report titled ‘Current Microeconomic and Financial Situation of the Country’ assessed the country’s remittance flows in the first three months of the current fiscal.

According to the report, remittance inflows into Nepal have grown by a record 37.3 percent to
Rs 242.17 billion over the first three months of FY 2018-19.

The remittance growth rate was only 2.6 percent during the corresponding period of the last year.

This growth continues to exist despite a significant decline in the rate of Nepali workers migrating abroad for jobs or any other purpose. This is majorly attributed to stopping of workers to Malaysia, says NRB.

According to the Central Bank, around 58,713 Nepalis left the country for foreign jobs during the three-month period, however, showing a 36.7 percent decline in the overall worker migration rate.

Rise in remittances was majorly attributed to the rise in USD value vis-à-vis Nepali Rupee besides money sent by migrant Nepalis to their local family members for festival celebrations, adds the report.

Despite this positive trend in remittances, the country’s Balance of Payment (BoP) continues to be high at NPR 35.42 billion in the review period compared to BoP surplus of NPR 4.27 billion year-on-year.

According to government reports, rise in imports has impacted key macroeconomic indicators.

On the other side, the current account also saw a deficit of NPR 81.96 billion in the review period, compared to NPR 25.52 billion, year-on-year.

The country has received a capital transfer of NPR 3.55 billion, down from NPR 4.96 billion in the review period, while its Foreign Direct Investment (FDI) has also declined to Rs 1.54 billion from
Rs 6.07 billion in the review period.

Total government expenditure during the review period stands at NPR 170.95 billion, more than from NPR 138.84 billion year-on-year. Capital expenditure went on to NPR 18.78 billion from NPR 11.64 billion, year-on-year.

The recurrent expenditure was at Rs 149.57 billion in the first three months of the FY 2018-19, down from Rs 126.35 billion, year-on-year.

Adding to the concerns, imports have also grown highly despite the government’s announcement to control. Goods and Services imports increased 43.6 percent to Rs 373.59 billion during the review period compared to the year-on-year rise of 17.9 percent. Whereas, the export growth remains low.

Surprisingly, the statistics remain in contrast to the Nepal Government’s claims over improvement in ‘ease of doing business’!

The post Remittances to Nepal On Rise, Other Deficits Continue! appeared first on Nepali Sansar.