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Biz News July 2014

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Dugar Appointed Honourary Consul of Mexico to Nepal
Naresh Dugar, the Vice Chairman of KL Dugar Group, has been appointed the Honorary Consul of Mexico to Nepal by the Mexican Ministry of Foreign Affairs. For the formal announcement of Dugar's appointment, the Mexican Ministry of Foreign Affairs organised a programme in Nepal on June 4 to inaugurate the office of the Mexican Consulate and organised the flag hoisting ceremony.
 
Mexican Ambassador to Nepal, Jaime Nualart was present on the occasion. Nualart, who is also Mexico’s ambassador to India and resides in New Delhi, had arrived in Kathmandu on the very same day for the programme. The Consulate has been set up on the KL Dugar Group office premises in Charkhaal Dillibazaar.
 
After his appointment, Dugar said that he would work to further consolidate Nepal-Mexico ties. “Establishment of Mexico’s Consulate Office in Kathmandu is the beginning of a new era in Nepal-Mexico relationship. The Consulate will actively work to boost trade and commerce between the two countries,” said Dugar.
 
Similarly, the Mexican ambassador said that the opening of Mexico’s Consulate Office in Kathmandu has brought the two countries further closer and hoped that the Consulate will work for the mutual benefit of the two countries. “Appointment of a young entrepreneur like Naresh Dugar as Mexico’s Honourary Consul to Nepal is sure to ease and enhance the business relation between Nepal and Mexico,” said Nualart. 
 
KL Dugar Group is one of the major business groups of Nepal running manufacturing companies in the sectors of food grain, edible oil, cement, hydropower, herbal extraction. The Group is also involved in the construction and banking & finance sectors.
 
StanChart Organises Seminar on RMB Usage
Standard Chartered Bank Nepal Limited (SCBNL) organized a knowledge sharing seminar on Renminbi (RMB) usage in Kathmandu on June 17. The seminar was led by Frankie Shu On Au, director of Product Management Transaction Banking at Standard Chartered Bank (Hong Kong) Ltd. The objective of the seminar was to share StanChart’s expertise on RMB Internationalisation and how the redenomination of trade into RMB can generate pricing and competitive advantages for Nepali institutions, the organizers said.
 
“As trade volume between Nepal and China is growing, the direct usage of RMB for payment and trade settlement could simplify the documentation requirements in China as well as reduce the cost of trade,” said Au, adding that the Chinese currency has gone mainstream and gaining global significance.
 
Au cited data of SWIFT Watch RMB Tracker which said that RMB was ranked 7th in the list of top payment currencies globally in March 2014, up from 35th position in January 2011. Likewise, RMB global payment value increased by 14 times as of February 2014. 
 
“While the RMB is becoming mainstream with 100 countries using the currency and also observing rapid growth of the usage of the currency, Nepal should also directly settle the payment with the base currency rather than paying through an intermediary currency that is the US dollar,” he said.
 
According to the data, cross-border trade between Nepal and China stood at Rs 60 billion in fiscal year 2012/13. Nepal´s export to China grew 46.5 per cent in 2012/13, while export to the rest of the world dropped by 8.8 percent. Similarly, Nepal´s import from China grew by 12.3 percent in the same period while the import from rest of the world grew by 8 percent only. 
 
Au also said that the corporates could save 2-3 per cent on average by using the RMB in trade settlements. “The RMB usage makes it easier for the corporates in China to get banks to issue letter of credit (LC) in RMB as LC beyond 90 days normally consume foreign debt quota for foreign currencies but not for RMB,” he said, adding, “Nepal has established real economic relationship based on long-standing trade links to China. RMB as a choice of currency for trade and investment provides value proposition for corporate and institutions.”
 
TVET is Solution to Unemployment: Experts
Employment experts have stressed on technical education and vocational training (TVET) for developing efficient workforce and fighting rising unemployment in the country. Speaking at a roundtable discussion titled “If workforce development is a problem, what is the solution?” organized by the Youth Employment Project (YEP)  of Swisscontact in Nepal on June 26,  they also urged the government as well as the private sector to work in partnership to promote TVET.
 
Addressing the discussion, Swisscontact CEO Samuel Bon said that vocational training plays a fundamental role in providing employment in any country. “TVET could be the solution to the rising unemployment in any country, Bon said, “The unemployment rate in Switzerland and Germany was below 10 per cent even after the onset of the global economic crisis of 2008. This was possible as both countries had invested hugely in technical education and vocational training in the past,” Bon said.
 
Similarly, speaking at the discussion, Prof Dr Suresh Raj Sharma, Vice Chancellor of Kathmandu University, stressed on better coordination among various government agencies including ministries to create jobs. 
“The National Planning Commission needs to assess each sector of employment and figure out how many people are needed where. Similarly, the finance ministry needs to allocate more budget for vocational training as the training cost of skill development is higher than that of normal education,” he added. Around 30 high officials from government, CTEVT & TITI officials, professionals, skill development project leaders and managers of training-providing organizations participated in the discussion.
 
FNCCI Holds Special AGM
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) organized a special Annual General Meeting recently in Kathmandu. Inaugurating the programme, Constituent Assembly (CA) Chairman Subash Chandra Nembang urged private the sector to unite for boosting economic growth in the country. 
 
He urged the private sector actors to mount pressure on concerned bodies for registering all bills related to nation’s economic development in the parliament. He pledged his support to such efforts and to address energy crisis. Speaking on the occasion, FNCCI President Pradeep Jung Pandey urged the government to address the issues raised by the private sector. The programme was attended by various CA members, ministers, and ambassadors, and present and former FNCII officials, among others.
 
Banks must Invest Additional Rs 56.5 bn in Agriculture and Energy by July 2015
Commercial banks have to make an additional investment of Rs 56.5 billion in the agriculture and energy sectors within July 2015 to meet the minimum requirement set by Nepal Rastra Bank (NRB). After considering the investments made by commercial banks in the sectors until April this year, NRB said that they need to pump in around Rs 4.5 billion every month till April next year. This is expected to enhance the investment made in agriculture and energy sectors. 
 
Experts claim that it is very difficult for the commercial banks to meet this target within the said time. “Because investment in hydropower sector is taking a long time, it is difficult for banks to follow NRB’s directive,” says Sashin Joshi, CEO of NIC Asia Bank. Banks have requested NRB to consider the commitment, Letter of Credit and the amount paid as guarantee for the hydropower as a part of investment in the agriculture and energy sector. “If the investment commitment, LC opened for the construction and money paid as guarantee are also considered as part of the investment, the banks will be able to meet the set requirement,” he said.
 
According to Upendra Poudyal, Vice-president of Nepal Bankers’ Association and CEO of NMB Bank, banks are going to have a hard time in meeting the 12 per cent minimum target of their total loan portfolio as recommended by NRB. “It is difficult for banks even if they want to do it,” he said. However, if the commitment of investment in hydropower is considered by NRB, it will be a big relief to the banks, he added. 
 
 As per NRB’S directive, 'A' graded financial institution must invest 20 per cent of its total investment in productive sectors (agriculture, energy, tourism, small and cottage industries) by the end of July 2015. Out of this, banks must invest a minimum of 12 per cent in agriculture and energy sectors.
 
FDI in Five Hydropower Projects 
Five hydropower projects are presently under construction with foreign direct investment (FDI). The investors are from India, China and Brazil. According to the Department of Electricity Development (DoED)  the total estimated project cost of these totals Rs 91 billion, of which 80 per cent (Rs 73 billion) is FDI. While confirming the report, Gokarna Raj Pantha, senior divisional engineer at DoED, said that these projects would be completed within the next seven years.
 
Foreign companies are investing in 50 MW Upper Marsyangdi ‘A’, 25 MW Upper Modi, 52 MW Likhu-4, 400 MW Lower Arun and 82 MW Lower Solu projects. China has 90 per cent of investment in Upper Marsyangdi ‘A’ and 80 per cent in Upper Modi Hydropower projects. According to Pantha, one third of Upper Modi’s construction works have already been completed.
 
Similarly, Karna Adhikari, assistant manager of the project informed that one-fourth of the construction work of Upper Marsyangdi ‘A’ project has also been completed and it aims to produce electricity from September this year. The project’s estimated cost is around Rs 13 billion.
 
52 MW Likhu-4 Project has investments of Indian companies. According to the information provided by the department, the link road to the project has already been built. India’s Bhilwara Group has investment in this project. Similarly, 82 MW Lower Solu hydropower project too has investment of Indian companies. Likewise, Lower Arun which has already got the permission to produce electricity has investment of a Brazilian company, Brass Power.
 
Energy experts opine that stability and peace in the country could attract more FDI. They say that hydropower projects should be prioritised in the country and it should be declared as a strike-free zone, which will help increase FDI in hydropower.
 
35 Hydropower Companies in Search of Investors
Thirty-five hydropower companies are in search of investors for the construction of different hydropower projects. The search was initiated following the government’s directive to these companies to arrange the required amount for construction of their respective projects and to complete their construction within a year.
 
Gokarna Raj Pantha, senior divisional engineer at the Department of Electricity Development (DoED), informed that some of these companies have already started making financial arrangements and collecting necessary funds. Government directives make it mandatory for any hydropower company to make all the necessary financial arrangements before starting the construction of a hydropower project.
 
The projects under these companies have a total capacity of generating 902 MW of electricity. However, due to inability of these companies to make necessary financial arrangements, construction works have not gone full-swing. 
 
So far, the government has granted permission to 92 companies for constructing hydroelectricity projects, which will produce a total of 2407 MW of electricity. Of these, 57 projects have already made necessary financial arrangements and have started the construction. “These projects, which have started construction, will generate 1500 MW of electricity in the coming five years,” said Pantha.
 
The Nepal Electricity Authority has already signed PPA with companies which have been granted the permission to produce electricity. The PPA rate of the electricity will be Rs 8.40 in winter and Rs 4.80 in monsoon.
 
RBS Breaks into Life and Non-life Insurance Companies
The Rastriya Beema Sansthan (RBS) has formally separated into two different institutions – life and non-life insurance. The separation was formalized following the registration of a nonlife insurance company at the Company Registrar’s Office recently. The formal separation process was initiated following a decision in this regard by the Cabinet, said Ram Bahadur Khadka, the administrator of RBS. 
 
“The new institution will start its operation after the approval from the Beema Samiti (Insurance Board),” Khadka said. The non-life insurance company has been registered under the names ‘Rastriya Beema Company Ltd’.
 
Although the corporation has been divided, some internal management issues still remain and this has been preventing both companies from working independently. Even though RBS had both non-life and life insurance under the same corporation, the accounting of the two wings was maintained since the day RBS started its operation, Khadka informed.
 
The Board of Directors will remain the same for Rastriya Beema Sansthan whereas a new board has been formed for Rastriya Beema Company Ltd, under the chairmanship of Ram Ojha, joint secretary of the finance ministry. Presently, only four members have been appointed to the seven-member board. Among the remaining three members, two will be appointed from the public shareholders while one member will be an insurance expert.
Following the separation, Rastriya Beema Company Ltd has decided to issue 30 per cent of its shares to the public. This also includes the three percent share sold by Nepal Rastra Bank (NRB) some months back. However, the general public does not have any shareholding  in the life insurance business of RBS.
 
Yeti Airline’s Facebook Contest
Yeti Airlines has announced a Facebook contest named ‘Your Team Wins, You Win Too’ celebrating FIFA World Cup 2014. In this contest, participants have to take a picture wearing a jersey of the team they support and inbox it to the official Facebook page of Yeti Airlines at www.facebook.com/Yetiairlines. The participants are then required to collect likes for their picture and if their team wins, they will get a complimentary return air ticket to Bharatpur for a couple along with one night stay at Kasara Resort. The contest started from 11th June and will run till the end of the world cup.
 
We have been supporting Yeti Himalayan Sherpa club for the last 4 years, so “Football is a game which is very close to us. We wanted to engage our fans by doing something exciting for this mega event; this is where this idea came along,” said Saral SJB.Rana, Deputy Director, Sales and Marketing- Yeti Airlines. 
 
Qatar Airways Launches ‘My Q-Tag’ 
Qatar Airways has developed a new online system for passengers who wish to print their own baggage tags before arrival at the airport. My Q-Tag enables customers to arrive at the airport and proceed directly to the web check-in bag drop counter, where a Customer Service representative will process their already labelled baggage.
 
Currently available to 103 destinations for those passengers exiting Doha, the process adds a further layer of customer service to the online check-in process by enabling customers to proceed quickly into the departures area where they can avail of more time to relax before boarding their flights.
 
 “Qatar Airways passengers will be thrilled to take advantage of our new My Q-Tag service, along with the comfort and functional design of the new Hamad International airport, and the exceptional shopping and dining choices it offers,” said Qatar Airways Chief Executive Officer Akbar Al Baker. 
 
Turkish Airlines Flies to Benin 
Turkish Airlines has added Cotonou, Benin to its list of African destinations. 
 
With this, the airlines’ Africa network now encompasses 39 destinations within 26 countries.  Benin is the airline’s 107th nation and 256th destination served across the globe. According to a press statement, with this addition, Turkish Airlines has expanded its already substantial African network. 
 
The airline operates roundtrip flights between Istanbul and Cotonou four times per week on Mondays, Wednesdays, Fridays and Sundays in both directions. Introductory roundtrip fares are available from Istanbul to Cotonou starting at 420 Euros, including taxes and fees. 
 
NCME 2011/12 : Rupandehi Becomes Leading Industrial District
Rupandehi has become Nepal’s top industrial district, leaving behind Kathmandu, in terms of the number of manufacturing establishments, according to the latest (10th) National Census of Manufacturing Establishments (NCME). Conducted by the Central Bureau of Statistics (CBS), NCME 2011/12 says that there are 320 industries (manufacturing establishments) in Rupandehi whereas Kathmandu, the capital city, has 318 industries.
 
The previous industrial census, NCME 2006/07, had put the number of manufacturing establishments in Kathmandu at 480. However, the latest census shows that the number of industrial units has declined in Kathmandu over the last five years. Rupandehi was at the third position in NCME 2006/07 in terms of the number of manufacturing establishments.
 
According to the latest census, other districts which have more than 200 industries are Morang, Sunsari, Parsa and Bara. Similarly, about 88 per cent of the country’s industries are concentrated in 23 districts.
 
The NCME 2011/12 has put the number of industries in Nepal at 4076 while, according to the previous census, there were 3446 industries in the country. 
 
The latest industrial census has revealed that though the number of industries has grown by 18.28 per cent, the number of districts with operational industries has gone down by three. According to the ninth NCME, industries were operational in 67 districts but this number has decreased to 64 in the 10th NCME. The three districts which no more have manufacturing establishments, according to NCME 2010/11, are Rasuwa, Solukhumbu and Okhaldhunga.
According to the previous as well as the latest census, there are no manufacturing establishments in eight districts - Dolpa, Mugu, Achham, Dadeldhura, Humla, Salyan, Manang and Singhuli.
 
In the NCME, the CBS has counted every manufacturing establishment which has employed at least 10 persons. According to the latest NCME, the number of industries manufacturing food and beverages, bakery, cement, concrete and plaster, plastic and wooden materials has increased while the number of industries manufacturing readymade garment, books and stationeries, metals and those processing petroleum products has gone down.
With a total investment of Rs 242 billion, the manufacturing industries in Nepal have produced goods and services worth Rs 323 billion between 2006/07 and 2011/12. Based on this statistics, industries have made a value addition of Rs 81 billion to the national economy.
 
Together, though the industries have employed 204,360 workers, only 194,979 of them get a salary, according to NCME 2011/12. Load-shedding has negatively affected 87 per cent of the industries while 37 per cent industries find it hard to get raw material. Similarly, 22 per cent industries are facing labour-related problems. Of the total industries, nearly 41 per cent (1,160) have not been able to produce as per market demand.         
 
Trademark Directives in the Pipeline
The government is planning to issue trademark directives that will include all the aspects of trademark and intellectual property management. Complaints about trademark registration have been increasing every year and the new directives are designed to address such rising issues. 
 
Dhruba Lal Rajbanshi, Director at the Department of Industries (DOI) said, “There are various issues related to intellectual property management. To address those recurrent issues, directives are being issued.” He further said that the directives will not contradict the existing Patent, Design and Trademark Act 2022. According to the DOI, the directives will be implemented from coming fiscal year. 
 
Trademark is one of the most frequently used intellectual properties in Nepal. The DOI is preparing the directives that will address existing problems of trademark registration process. The department is discussing those issues that must be included in the new directives.
 
The existing law does not include the international practices regarding trademark and the directives are designed to include those practices, said Rajbanshi. The DOI has also identified that the five decades old act has also failed to address the issues common in Nepal. The soon to be issued directives is also said to ease the trademark registration process. The new directives will also clearly mention provisions regarding similarity in the name of two trademarks, size of the trademark and font, duration of trademark and resolving cases regarding trademark among various other issues.
 
There are 600 trademark related cases that are yet to be decided. As of now, 30,000 domestic and international trademarks are registered in Nepal.

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