Possibility of Manufacturing Mobile Phones in Nepal

SANTA CLARA (California)

Experts have said that mobile phones can be manufactured in Nepal itself by using skilled yet cheaper technical manpower available in the country.

“The market of mobile set in Nepal is growing. We can produce mobile sets in our own homeland,” Pramod Paudel, a Nepali engineer working with Intel Corporation, said. Speaking at a program organized jointly by Computer Association of Nepal (CAN) USA and American Society of Nepali Engineers, Paudel smartphones can be produced in Nepal at the cost of US$ 25-45 per set.

“Around five thousand IT engineers are graduating from different colleges in Nepal every year. Smartphones can be manufactured in Nepal itself by utilizing their skills expertise,” added Poudel. He, however, added that the government should create environment conducive for firms interested to manufacture smartphones.
Nepalis are paying a minimum of Rs 7,000 for smartphones.

Other speakers at the program said there is a huge prospect for app developers in Nepal.
According to conservative estimate, Nokia enjoys 48 percent share in Nepal´s mobile phone market followed by Samsung, Apple and HTC with market shares of 25, 10 and 5 percent, respectively. Sony, LG, Blackberry and Chinese sets are also available in Nepal.

Source: Republica, 30th June 2013
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Five Star Hotel Nans Opening in Belhiya, Nepal

KATHMANDU, NEPAL

Construction of five-star hotel Nans that is being built in the Indo-Nepal border area of Belhiya targeting tourists visiting the birthplace of Lord Buddha Lumbini is nearing completion.

Promoter Chandra Prasad Shrestha said that the hotel that is targeting foreigners entering from Sunauli will come into operation from November. There are currently no five-star hotels outside Kathmandu Valley apart from Pokhara. Soaltee, Hyatt Regency, Yak and Yeti, Annapurna, Everest, Radisson, Malla and Shangrila hotels in Kathmandu, and Fulbari Resort and Grand Hotel in Pokhara are the only five-star hotels in Nepal. Shrestha said he is opening the five-star hotel as tourists seek five-star facilities though there are three-star hotels in and around Bhairahawa. He has been operating a three-star hotel in Bhairahawa in the same name for the past three years.

“I have mustered courage to open a five-star hotel as the tourists coming to my hotel demand five-star facilities, and over three-dozen Indian travel agencies dealing with me have also encouraged me to start a standard hotel,” he added. He revealed the total investment in the hotel is expected to reach Rs 350 million, apart from 55 katthas of land it occupies, though he had planned to complete it with Rs 320 million.

Shrestha, who is also a realtor, said he has managed to keep the cost of construction low as he had procured the land earlier, there were fewer obstructions in construction as it is in the border area, and the construction materials were also cheap. The hotel, that will have 76 rooms in the first stage, will have a casino, restaurants and swimming pool that a five-star hotel is expected to have.

Local entrepreneurs have been complaining that arranging accommodations for high-profile guests is tough in Lumbini region in lack of quality hotels. Local media person Chetan Pant said that bad message was sent to the rest of the world last year when former prime minister of Thailand and billionaire businessman Thaksin Shinawatra had to stay in a three-star hotel during his Lumbini visit. “There will no longer be shortage of standard hotels to keep high-profile guests after Nans Hotel is completed,” he stated.

Shrestha sees potential for other five-star hotels in Lumbini region. “The local hotels have not been able to withstand the pressure of tourists during the peak season even now. Another three-four five-star hotels can survive in Bhairahawa and Lumbini region,” he added. He revealed that entrepreneurs from Kathmandu and Pokhara have even bought land in the region for hotels and claimed that additional competition in the hotel sector will further boost business.

He said the main building of the hotel will be two-story. There will be 14 VIP suites out of the 76 rooms and the remaining will be deluxe rooms. It will have two restaurants, tennis court, swimming pool and all the facilities that modern hotels provide. The hotel, which plans to provide employment to locals, will itself conduct training programs to train the required work force and even send them abroad for training. The hotel was initially set to be named Deep Prakash International but will now be operated as Nans after the partners parted ways. 

Source: Karobar Daily, 26th June 2013
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Bank of Asia and NIC Bank Merge in Nepal's first Commercial Bank Merger

KATHMANDU, NEPAL

NIC Bank and the Bank of Asia Nepal (BoAN) have combined to become NIC Asia Bank in the first ever case of a merge r between commercial banks. Nepal Rastra Bank (NRB) governor Yubaraj Khatiwada inaugurated the new entity and gave it his blessings amid a programme held on Sunday.

The two banks, promoted by largely the same group, had signed a memorandum of understanding (MoU) to come together on June 28, 2012. The central bank gave its go-ahead on April 26, 2013. NIC Asia Bank is now headquartered at the Trade Tower at Thapathali.

The merge d bank has joined the league of the top five commercial banks in the country in terms of the size of its balance sheet which is Rs 50 billion. Its total capital base including paid-up capital and reserves come to Rs 5 billion.

Addressing the inaugural ceremony, governor Khatiwada said that the bank now had a challenge to prove that the merge r has been a success. “This merge r has added responsibility to the management of NIC Asia,” Khatiwada said. “The management should be able to set an example by efficiently operating the new entity.”He added that NRB would improve the merge r directives to make it easier for financial institutions to merge . The governor also praised the bank for its success in managing issues related to employees, ownership structure and data transfer and software.

Chief executive officer of NIC Asia Bank Sashin Joshi said that the merge r had added strength to the bank, and this initiative would help to achieve newer heights at a time when the country’s economy isn’t doing so well. He expressed satisfaction that a merge r as big as the one that took place between NIC and the Bank of Asia has been possible through the use of local manpower. “Despite the merge r, there has been no layoffs and the employees from both the banks will be treated equally,” said Joshi.

Following the merge r, BoAN shareholders will be issued new share certificates on the basis of two BoAN shares for one NIC share, according to the bank. Meanwhile, a nine-member board of directors, headed by chairman Jagadish Prasad Agrawal, has also been formed at the merge d entity.

NIC Asia Bank now has 53 branches and a customer base of 270,000. NIC Bank had 36 branches and BoAN had 29. Among them, 13 branches were adjusted and a new corporate entity was added. As for ATM outlets, NIC Asia Bank now has a countrywide network of 57 ATMs. The number of shareholders stands at 90,000. NIC Asia Bank has a total of 630 employees. 

The bank’s consolidated operating profit for the first 11 months of the current year to mid-June 2013 stands at Rs 1.43 billion while the net profit stands at Rs 520.96 million. The combined deposit base is Rs 38 billion while loan issue is worth Rs 33 billion.

Banks told to keep ‘reasonable’ spread
Nepal Rastra Bank (NRB) Governor Yubaraj Khatiwada asked bankers on Sunday to keep the spread rate at a reasonable level saying that it was still on the higher side. The spread rate is the difference between the interest rates on deposits and loans.

According to NRB, the spread rate of commercial banks rose to 7.01 percent from 7 percent during the period mid-April to mid-May. The average interest rate on deposits was 5.36 percent while it was 12.37 percent on lending during the review period.

Speaking at the inaugural ceremony of NIC Asia Bank, Khatiwada asked bankers to maintain the spread rate at a level that ensures minimum profits so that industrialists would not suffer. He  asked bankers not to expect concessions from NRB for forever for implementing its directives. “Initially, NRB has been giving certain concessions, and it has been implementing the directive effectively after sometime,” he said.

Source: ekantipur,1st July 2013
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Gold Price in Nepal falls to Rs.50,500 per tola

KATHMANDU, NEPAL

Gold price went down by Rs 2,500 per tola (11.664 grams) on Sunday compared to price recorded on June 11 when bullion dealers last fixed gold and silver prices.
Bullion traders returned to business only on Saturday, ending their 10-day protest. They were on warpath, demanding that the government incorporate their suggestions in the market monitoring guidelines and not initiate action against jewelers who were found cheating consumers during market monitoring conducted by the government.

On Sunday, the yellow metal was traded at Rs 50,5000.
Tej Ratna Shakya, past president of Federation of Nepal Gold and Silver Dealers´ Association said that the drop in gold price is in line with the international price drop.
“Ten days ago, gold price was hovering over US$ 1,344 per troy ounce in the international market. Now, it has gone down to $1,276.19 per troy ounce,” he said, adding, “Had rupee not weakened to this level, gold price would have come down below Rs 50,000 per tola.”

According to Reuters, gold price went down to $1,276.19 per troy ounce on Thursday - the lowest since September 21, 2010. “Gold prices plunged over 5 percent to the lowest, leading a global market rout one day after the US Federal Reserve gave its most explicit signal yet that it plans to wind down the era of easy money,” said Reuters.

According to Nepal Bankers´ Association, commercial banks have around 300 kg of gold in stock as bullion dealers did not purchase the yellow metal for 10 days because of their protest. Banks did not release gold on Sunday as international market is closed on the day.
Meanwhile, two federations of gold, silver and gems dealers are preparing to start issue recommendations for gold purchase from Monday. “We have decided to issue recommendation to wholesalers as per their need as commercial banks have enough gold in stock,” said Ramesh Maharjan, president of Federation of Nepal Gold, Silver, Gems and Jewelry Association.

As per the provision of Nepal Rastra Bank, traders can issue recommendation for the past stocks but cannot issue recommendation for the future needs. “As we can issue recommendation for all the accumulated gold, there should not be any problem in getting gold from banks, said Shakya, projecting that price will drop further down. “International market trend shows, gold price is on the decline.”

As the market opened after a hiatus of 10 days, traders said demand for gold climbed to as high as 40 kg on Sunday.
On Sunday, price of silver also went down by Rs 50 per tola to Rs 825 per tola.

Source: myrepublica, 24th June 2013
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Jewellery Shops in Nepal open for Business

KATHMANDU, NEPAL

Bullion traders, who have closed their shops since the last 10 days, have called off their protest after the government formed a seven-member taskforce to formulate monitoring guidelines.

Bullion traders were on a nationwide strike since last Wednesday to pressure the government to formulate market monitoring guidelines and to protest government action against three jewelery shops.

A meeting held between bullion traders and the government at the Department of Commerce and Supply Management (DoCSM) has agreed on a three-point deal.

"The meeting formed a seven-member taskforce with authority to formulate market monitoring guidelines and address the issues raised by bullion traders. With this, the gold traders have agreed to call off all their protests," said Narayan Prasad Bidari, director general of DoCSM.

The seven-member taskforce formed under the leadership of Nuta Raj Pokharel, under-secretary at the Ministry of Commerce and Supplies, includes representatives from DoCSM, Nepal Bureau of Standards and Metrology, the Ministry of Finance and the Ministry of Law and Justice from the government side, and one representatives each from the Federation of Nepal Gold and Silver Dealers Associations (FNGSDA) and the Federation of Nepal Gold, Silver, Gems and Jewelry Associations (FNGSGJA). Besides, there will also be two technical assistants from each federation.

Mani Ratna Shakya, president of FNGSDA, said that with the agreement, all their protest programs have ended and they will reopen the shops from Saturday. "We will open our shops from tomorrow, start issuing recommendations to banks from Sunday to buy gold and also fix the bullion prices, something that has been stopped since June 11", said Shakya.

A joint team of DoCSM and Nepal Bureau of Standards and Metrology had inspected 12 jewelry shops in the capital over the past two months. Lab tests on jewelry samples collected from the shops showed that the traders were cheating customers in terms of the quality and weight of gold, silver and diamond.

Though the Ministry of Commerce and Supplies has prepared a draft proposal to standardize the price and quality of gold, silver, diamond and items made from these, bullion traders were against this, arguing that it does not address their demands and that it was very impractical.

"Now, as the taskforce will formulate new guidelines, the old draft is automatically cancelled," said Bidari.

Source: Himalayan Times, 22nd June 2013
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Price of Land in Kathmandu continues to fall

KATHMANDU, NEPAL

Industrialist Shashikant Agrawal procured 11 ropanis of land in Naxal from investor Nirmal Pradhan at Rs 2.70 million per anna. Pradhan had put the price of his land at Rs 7 million per anna just a year ago.
Agrawal had also purchased 43 annas of land in Thamel from Sahadev Kakshapatu at Rs 3.70 million per anna a year ago to construct a three-star hotel under the Marriott chain. The price of that land was around Rs 10 million per anna when the price of land was at its peak around five years ago. CE Construction has procured land of Vibor Development bank in Bansbari, that was traded at around Rs 2.50 million an anna until last year, at Rs 1 million per anna. Prakash Thapa of Balkot, Bhaktapur sold five annas of land, that would cost up to Rs 1.40 million around five years ago, at Rs 800,000 per anna last week.

These are just a few examples of the falling price of commercial and residential land in Kathmandu Valley that had risen unnaturally a few years ago. Entrepreneurs claim that price of the big plots of land that were procured for commercial purpose has fallen by up to 50 percent while smaller pieces by around 20 percent. The debtors are trying to repay the loans by selling the land, like Pradhan did, as banks are preparing to auction off the land kept as collateral. The banks help find the customers for expensive plots that cannot be found easily.  Secretary of the Nepal Land and Housing Developers Association Bhojraj Lohani stated that the price of land, that has been on a downward spiral for the past three years, has started to fall still drastically in the past one year. “The price must have fallen by 20-50 percent in the last one year,” he claimed.

There have been dozens of transactions to prove his claims. Realtors, who had procured plots by borrowing from banks, are trying to sell land at a lower price instead of bearing the burden of debt. Even smaller pieces are also sold at a cheaper rate due to the pressure of interest of bank loans. Bijesh Joshi sold two ropanis of land in Dhobhighat at Rs 2.30 million an anna a few months ago. The value of that land was around Rs 4 million per anna until a year ago. Lohani said that the price of land in the Valley had risen unnaturally from 2007 to 2010 and it can no longer be traded at that price.

He revealed that the realtors currently have two type of mindsets with some improvement in transaction since the last year. “Some are preferring to wait and watch while others are selling at a cheaper rate. This is the right time to procure land as the price has started to fall,” he opined. But the buyers feel that the price will drop further. “The price of land had increased unnaturally as it was traded through unorganized and unregistered persons and institutions. The realty sector is in the hands of the actual buyers only now,” President of the Professional Real-Estate Agents Association Dilip Neupane stated.

The Department of Land Reforms and Management data shows that realty transactions started to rise from the fiscal year 062/63. While the government had targeted to raise Rs 4.80 billion in revenues from realty transactions 065/66, Rs 7.49 billion was raised. This is the highest revenues collected from transactions of land till date as the price was at its peak then. “The price of land in the capital will never rise to that level again,” section officer at the department Raju Basnet said.  The number of permissions acquired for land planning, joint residency and collective residences was also the highest then.

The sector has been on a downward spiral since the Nepal Rastra Bank (NRB) brought a provision on December 17, 2010 that stipulated that the loan amount should not exceed 60 percent of the value of the land that is kept as collateral. Vice President of the Nepal Bankers Association Upendra Poudel said the valuation of land by the banks has also dropped with the falling market price. The price of land and the bank valuation both have fallen, according to him, as the realtors are in problem.

Major govt/NRB decisions on realty sector
December 17, 2009: Banks stopped from investing more than 40 percent of the total loans in the sector
August 21, 2010: Those who have taken personal home loans have to repay 30 percent of the loan until mid-July 2011, and another 25 percent until mid-July 2012.
March 18, 2011: Ceiling of Rs 6 million for personal home loans.

Budget for 068/69: Ceiling of personal home loans pushed to Rs 8 million from Rs 6 million. The loans can be renewed only if all the accrued interest is cleared until mid-July 2012.

January 8, 2012: Ceiling of personal home loans pushed to Rs 10 million from Rs 8 million. The banks have to recover all the loans by mid-July, 2013 if more than 25 percent of loans have been invested in the sector.

Source:Karobar Daily, 22nd June 2013
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Nepalese Rupee drops to Rs.95.99 against the US Dollar

KATHMANDU, NEPAL

Nepali rupee has plunged to another record low against the US dollar, making it one of the worst performing currencies in Asia.

Nepal Rastra Bank, the central bank, has fixed Friday´s exchange rate at Rs 95.99 per US dollar, down Rs 1.74 from Thursday´s Rs 94.25.

Nepali rupee´s slump has continued unabated due to weakening of the Indian rupee with which Nepali currency is pegged.

Indian rupee had fallen to as low as 59.98 per US dollar on Thursday before closing at 59.57, according to Reuters. Since exchange rates in Nepal are fixed on the basis of Indian rupee´s exchange rate vis-à-vis the greenback, any fluctuation in the value of Indian currency affects exchange rates in the country as well.

Indian rupee has lately been losing ground as foreign institutional investors are pulling out of the country due to concerns over tapering of quantitative easing in the US which had funneled billions of dollars into the global financial system.

Although India tried to curb freefall of the currency on Thursday by saying “the government was not short of options to tackle the rupee´s fall”, its inability to explain “how” triggered further selloff.

The latest fall in value of Nepali rupee is expected to fuel inflation as Nepal is virtually a net importing country. This means Nepali traders will have to spend more of the domestic currency while purchasing US dollars to settle trade payments.

However, Nepal Rastra Bank (NRB), the central bank, has said consumers prices will not go up in a significant manner as Nepal imports most its goods from India.

“Nepal imports around two-thirds of goods from India, payments of which are made in Indian currency. Since the central bank will make Indian currency available at the same old rate to traders, we don´t think import payments will go up and cause consumer prices to rise,” NRB Spokesperson Bhaskar Mani Gnawali had told Republica on Wednesday.

Although what Gnawali said is valid, prices of goods imported by India and exported to Nepal, like petroleum products, will go up.

However, weaker Nepali currency is expected to benefit exporters and remittance receivers, as they will get more Nepali rupee while exchanging US dollars.

Source: myrepublica, 21st June 2013
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Load Shedding in Nepal will not drop below 6 hours a day

KATHMANDU, NEPAL

Load-shedding will not decrease below six hours a day this year despite all projects operating at full capacity as the national grid still is short of demand by 350 MW. Load-shedding had also remained six hours a day during the last monsoon.

 While the current demand of electricity is 1000 MW, supply is just 650 MW including around 100 MW imported from India. All the projects including Kaligandaki A (144 MW), Mid Marsyangdi (70 MW), Marsyangdi (69 MW), Khimti (60 MW), Bhotekoshi (45 MW) are operating at full capacity, according to the Nepal Electricity Authority (NEA). “All the run of the river projects are operating at full capacity,” Manager of the System Operation Department of NEA Bhuwan Kumar Chhetri confirmed.

“Power cuts can be reduced by up to one hour a day if the water level at the Kulekhani Reservoir rises. It will remain as it is, otherwise,” he said and added that will be confirmed in the next one week. He, however, said that there is little chance of load-shedding decreasing further due to Kulekhani. He revealed that the water level at Kulekhani currently is 1,512 meters and 200,000 units of electricity a day is being generated from the project now. The demand of electricity rises by 100 MW a year and 35.5 MW has already been added to the national grid this year. NEA said that another 17 MW will soon be added but there is no chance of more import from India for now.

NEA, meanwhile, has urged the Ministry of Energy to compensate for the loss of Rs 444.40 million suffered through import of electricity from India in the 11 months of this fiscal year. The Load-Shedding Minimization Work Plan brought last September has stated that the government will compensate the losses suffered thus. NEA said 643.66 million units of electricity has been imported from India this fiscal year while it is expecting to import 1.05 billion units in the coming year.

The work plan had stated that load-shedding will be limited to 12 hours a day but it had risen to up to 14 hours a day due to the huge gap between demand and supply. Though NEA had targeted to reduce leakage, that was 27 percent at the start of the year, by three percent it is still 25 percent. NEA’S income has increased by Rs 500 million due to the two-percent fall in leakage. NEA has been losing around Rs 6.25 billion from leakages alone. Meanwhile, NEA has reduced load-shedding in the industrial areas by one hour to seven hours a day.

Source: Karobar Daily, 20th June 2013
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Jewellery Shops in Nepal still remain closed for the 9th Day

KATHMANDU, NEPAL

Nepali consumers did not get to buy gold despite the international price of the yellow metal dropping to the lowest in the past two and half years. The domestic price of gold has not even been fixed with the traders shutting down their shops for the past one week protesting the government’s action against cheating traders.

They have more reasons to not open their shops due to the fall in price of gold internationally. The traders, who were complaining that the government did not supply enough gold when the price was high, have not even bought gold from the banks now. The international price of gold dropped by 3.4 percent on Thursday to US$ 1,304 per ounce (28.349 grams), the lowest in the past 30 months. The price has fallen as the investors opted for government bonds instead of gold after the US Federal Reserve Bank changed its interest rates. The fall in international price ahs also affected the India market with the price falling by IRs 400 per 10 grams to IRs 28,000.

The Nepali price would have been fixed at around Rs 52,000 per tola (11.663 grams) but it has not been fixed since last Wednesday due to the ongoing protest by traders. The Nepal Gold and Silver Dealers’ Association fixes the daily price of gold and silver based on the international price. It has not set the price after fixing it at Rs 53,000 per tola on June 11. Transaction of gold and silver and other metals and gems has been brought to a grinding halt after the Nepal Gold and Silver Dealers’ Association and the Nepal Gem and Jewelry Association shut down the shops on June 12 to put pressure on the government to not take action against the traders that were found to be cheating during monitoring.

The dispute between the government and the traders had also started once the price started to fall drastically. The government had started monitoring after the traders did not sell gold when the international price fell significantly in the third week of April. The entrepreneurs have been protesting ever since. General Secretary of the Nepal Gold and Silver Dealers’ Association Manik Ratna Shakya claimed that the consumers have not been able to buy gold at the decreased price due to the government’s apathy. “We are ready to open the shops if the government were to meet our demands,” he said. There has been no dialogue after the entrepreneurs put an unreasonable demand of ending monitoring. The government is not in a mood to step back as the traders have technically demanded that the cheaters should not be punished.

Government officials said that discussions can be held about the standards for trading of gold and monitoring if the entrepreneurs were to come for dialogue opening the shops. “There will be no dialogue until they open the shops,” Director General of the Department of Commerce and Supply Management Narayan Prasad Bidari sated. “We are ready to hold dialogue about the monitoring standards while continuing the process of action,” he added. The government had monitored 10 jewelry stores in Kathmandu Valley in April and May. The entrepreneurs have been protesting after the government initiated action against three of those involved in serious offenses.

Source: Karobar Daily, 20th June 2013
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Nepalese Rupee at an all time low against the US Dollar at Rs.94.25

KATHMANDU, NEPAL

The Nepali rupee plunged to another record low on Wednesday with the central bank fixing the exchange rate at Rs 94.25 per US dollar for Thursday. The Nepali rupee’s freefall is an effect of the steady depreciation of the Indian rupee with which it is pegged.

According to the Indian media, the rupee began going downhill after foreign investors in India, concerned by bleak growth prospects, switched to the greenback.

Meanwhile, spokesman of Nepal Rastra Bank (NRB) Bhaskar Mani Gnawali said the sharp drop of the Nepali rupee could be the result of demand for the dollar outstripping supply in the Indian market. “Indian companies which have to make payments on a huge scale have pushed up demand for the US dollar in the Indian market,” he said.

However, Gnawali said that the fast rise of the US dollar was a temporary phenomenon. “The exchange market will be fairly stable in the long run through demand and supply mechanism,” he added.

A depreciation of the US dollar would raise the cost of debt servicing and third country imports for Nepal. As the country is heavily dependent on imports, this will give rise to inflation. Regarding the beneficial aspect, exports of domestic goods will go up as they will become cheaper in the international market. Similarly, the value of the remittance sent home by Nepali migrant workers will increase in rupee terms.

Meanwhile, banks have said that the number of letters of credit being opened for imports has come down while remittance inflow has soared in recent days. Traders said they were in a wait and see mode with regard to placing import orders for goods from third countries.

Despite the fall in the value of the Nepali rupee vis-à-vis the greenback making domestic products cheaper for foreign buyers, there has been no increase in exports as Nepal’s export basket is too small. The country shipped goods worth Rs 63 billion while imports swelled to a staggering Rs 458 billion as of the first eight months of this fiscal year.

Source: ekantipur, 20th June 2013
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World Class Complex with 5-star hotel to be built at Thamel

KATHMANDU, NEPAL

A shopping complex, Chhaya Center, including a five-star hotel will be constructed in the tourist hub of Thamel with investment of Rs 3 billion by seven entrepreneurs. Construction of the Chhaya Center has been started with an aim of completing it within three years and it will include five-star hotel The Thamel Palace, shops, restaurants, cinema halls, food courts, banquet and other facilities.

“We are building the most modern hotel and a tourism complex with a concept of Thamel within Thamel,” Suman Pandey, one of the promoters of the center that is being constructed in 15 ropanis of land, said. “It will add a new dimension to the country’s tourism sector apart from being the feather on Thamel’s cap,” he claimed. Share investor Nirmal Pradhan, realtor Kalu Gurung, tourism entrepreneur Yogendra Shakya, Suman Pandey and Maheshwore Shrestha, and automobile and housing entrepreneur Suhrid Ghimire led by Chairman of Nepal Investment Bank Prithvi Bahadur Pandey have invested in the center. Suman Pandey and Shrestha will oversee its construction and management. Half a dozen banks led by Everest Bank have mobilized loans for the center that will be built in the area adjoining Bhagwanbahal.

Suman Pandey said there is every chance that the center will be completed before the scheduled three years. He said the main building of the center will be 15-story and include a two-story underground parking area that will accommodate around 450 vehicles at a time. There will be shops in the first floor, corporate offices of different groups and banks in the third floor, food court and multiplex in the fourth and fifth floor. He revealed that an understanding has already been reached with multi-national Sheraton Four Points for the five-star hotel that will be built in the top 10 floors. The hotel will have 200 rooms, and preparations are on to also include a casino and a discotheque.

There will be 250 shops, seven restaurants, three theaters, five conference halls, and a banquet hall that will seat 1,000 persons. He claimed that the center will give priority to established brands for shops and a branch of Nanglo has already been confirmed. He said the center that will open round the clock will have facilities targeting both the tourists and Nepali customers. “We will take special precautions to ensure that tourists are not cheated in the center,” he stated. “We will survey the market outside and will have only the shops of Asian standard,” he added. ConTech Pvt Ltd is building the center that has been designed by Nepali engineers on the basis of Nepali style of architecture.

Attraction of Thamel

Entrepreneurs wish to open big hotels in Thamel that does not have big and modern hotels despite being the main tourist center of Nepal. Australian millionaire of Nepali origin Shesh Ghale is also constructing five-star Hotel Kathmandu with an investment of Rs 2.50 billion. The hotel, to be constructed in Keshar Mahal, will be part of the chain of Sheraton Hotels. Domestic entrepreneur Shashikant Agrawal is also constructing three-star Marriott Kathmandu in Thamel at an estimated cost of Rs 800 million. It is expected to be completed within 22 months.

Entrepreneurs claim that tourism has developed in Thamel as Nepali tourism has traditionally been palace-centric. “Narayanhiti Palace is the epicenter of Nepali tourism. Tourism activities are centered in all four directions of the palace and more in Thamel that lies in the west,” tourism entrepreneur Shakya said. He added that since the new hotels are being constructed in Keshar Mahal area, it is being developed as New Thamel. He said this shows that investors now want to focus on New Thamel coming out of the narrow Thamel.

“The wish of many entrepreneurs that standard hotels should be constructed in Thamel as most of the tourists coming here have to travel far for accommodation will now be fulfilled,” Chairman of Asian Trekking and former president of Nepal Mountaineering Association Ang Tshering Sherpa said. “Thamel can provide full package to tourists after completion of these new hotels.”

Source:Karobar Daily, 17th June 2013
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Jewellery Outlets across Nepal remain closed for the 6th Day

KATHMANDU, NEPAL

Bullion traders organized a protest rally in the capital on Monday to draw the attention of the government toward their demand.

Jewelry outlets across the country have remained shut since Wednesday due to protest called by Federation of Nepal Gold and Silver Dealers Associations and Federation of Nepal Gold, Silver, Gems and Jewelry Association. Both the federations have stopped fixing rates of gold and silver. They have also stopped issuing recommendations for dealers to purchase gold from commercial banks.

“Closing the shops is not our choice but a compulsion,” Mani Ratna Shakya, president of Federation of Nepal Gold and Silver Dealers´ Associations, said. “We are closing shops even though we have to face losses because the government is turning deaf ear to our demand.”
Both the federations have been demanding that the government withdraw cases against gold, silver and diamond dealers who were found involved in cheating customers during market monitoring conducted by several government agencies. The dealers, however, have been maintaining that market monitoring is being carried out without any guidelines.

According to Shakya, more than 15,000 traders and 55,000 workers are directly involved in gold, silver and diamond industry. “Around 1.5 million people are dependent on this trade,” he added.

However, Narayan Prasad Bidari, director general of Department of Commerce and supply Management (DoCSM), made it clear that the government won´t withdraw cases against the wrongdoers. “Those found guilty will be punished at any cost,” he maintained.

He also said the government has invited officials of both the federations for talks on Tuesday. “In the meeting, we will ask the dealers what they really want from the government,” said Bidari.

Ealier the Ministry of Commerce and Supplies had invited bullion traders for talks on Friday. But the talks couldn´t take place as the government had appointed new commerce secretary the same day.

Shakya also demanded that the government incorporate their suggestions in the guidelines.

After the Ministry of Commerce and Supplies prepared draft of a proposal to standardize the price and quality of gold, silver, diamond and items made from these, bullion traders have proposed their own guidelines saying that the government proposed draft does not address their demands and that it is not applicable at all.

 “If the government prepares the guidelines for monitoring that is acceptable to us, we will definitely help the government to find out the wrongdoers,” said Shakya, adding that closure of jewelry outlets is inflicting revenue loss of Rs 15 million a day on the government.
According to Shakya, daily transaction of gold, silver and diamond in the country hovers around Rs 200 million.

Source: myrepublica, 18th June 2013
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Insider Lending Destroying the Nepalese Banking Sector

KATHMANDU, NEPAL

Officials of seven development banks faced the Nepal Rastra Bank’s (NRB) action for insider lending. These seven are among the 12 development banks that faced the central bank action in the last fiscal year for governance-related issues.

Senior Officials of Narayani Development Bank, Kabeli Development Bank, Pathibhara Development Bank, Infrastructure Development Bank, Uddyam Development Bank, Excel Development Bank and Khadbari Development Bank were taken action after finding their involvement in insider lending, according to the NRB’s Development Bank Supervision Report.

Also, a majority of the 11 finance companies that faced the NRB action last year were found involved in insider lending against the banking norms, according to the NRB. Some of the finance companies include Crystal Finance, Capital Merchant and Finance, Kuber Finance, General Finance, Baibhav Finance and Progressive Finance.

The report also showed that 11 financial institutions that were declared crisis-ridden were the victims of insider lending.

This reflects how insider lending is taking its toll on the banking sector . In the latest incident at Siddhartha Development Bank, insider lending led to the arrest of former Kist Bank Managing Director Kamal Gyawali’s wife Gauri Khanal, while Gyawali himself had to resign from his post.

According to the Central Investigation Bureau (CIB) of Nepal Police, a loan worth Rs 130 million provided by Siddhartha to Jamko Publication was deposited in Khanal’s account in Prime Bank on the same day.
Jamko’s proprietor Jishor Dhakal also took an additional Rs 120 million loan from Kist Bank, which Dhakal has claimed to have gone to Gyawali, according to NRB officials.

The Bank and Financial Institution Act (BAFIA) has barred directors, chief executive officers and promoters having more than 1 percent stake in any bank or financial institution (FI) from taking loans from their own institution.

However, the practice of taking such loans by creating fake loans in collusion with directors of other financial institutions and from the inter-bank deposits has been prevalent.

In some cases, even the central bank is unknown about extent of the trouble in FIs and continues to put its deposits in them. The NRB had deposits in Nepal Share Market and Finance (NSMF) when it landed in trouble.

The NSMF, which was in the process of upgrading itself into a commercial bank, increased its paid-up capital to Rs 2 billion from Rs 400 million within a short period. “Surprised by the sudden increment in the capital, we sent our team to find out how it was achieved. But they didn’t cooperate with our team,” said a senior NRB official. “Then, we demanded the details of loans, but we were provided with fake loan files created by using photocopies of citizenship certificates of depositors.”

As much as 98 percent the capital added was created from deposits just to monopolise the rights shares by Yogendra Shrestha, immediate executive chairman of NSMF. Later, the company’s due diligence audit identified that Rs 1.72 billion was embezzled by creating 96 fake loanees.

Similar was the case in Capital Merchant and Finance, which was also gearing up to increase its capital to become a commercial bank.

NRB Spokesperson Bhaskar Mani Gyawali said it is natural that the central bank knows about insider lending in FIs only after incidents take place. He, however, said increased penetration of BFIs amid limited supervisory capacity of the central bank also aided insider lending.

According to Gyawali, as BFI directors wanted to invest in the real estate sector when it was booming, a majority of them took loans from their own financial institutions by creating fake loanees or by other means.
Bank directors and chief executives used different methods to get loans from their own financial institutions. For example, Laxmi Bahadur Shrestha, former director of Nepal Bangladesh Bank received loans from NCC Bank by creating a fake loanee in the name of Dipak Nar Singh Shrestha which remained unpaid for long, according to a banker in knowledge of the matter.

“He also took many loans from Nepal Sri Lanka Merchant Bank (NSMB) indirectly by first putting NSMB’s deposits in other financial institutions and taking loans against those deposits,” said the NRB official.

In a similar case at Siddhartha Development Bank, one of the former directors received Rs 100 million loans from Prudential Finance by putting Siddhartha’s deposit in the finance company, according to an NRB official.

In order to control insider lending, the central bank has adopted a policy that requires CEOs and directors to submit their loan details to their banks and show the details to central bank supervisors. Earlier, it was provisioned that such loans should be disclosed in their audit reports. “We changed the policy later because disclosing personal information would not be practical as banks themselves vow not to make public about their client’s information,” said NRB’s Gnawali.

Source:ekantipur, 18th June 2013
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Nepalese Rupee Drops To An All Time Low Against the US Dollar

KATHMANDU, NEPAL

Nepali rupee has slumped to another historic low against the US dollar, as the Indian currency, with which Nepali rupee is pegged, further shed its value.

Nepal Rastra Bank, the central monetary authority, has fixed the exchange rate at Rs 93.79 per US dollar for Wednesday, marking a loss of 86 paisa against Tuesday´s exchange rate.

Nepali rupee has lately been losing its value due to weakening of the Indian currency. Indian rupee plunged to a record low of 58.38 against the dollar on Tuesday, down from 57.98 recorded on Monday.

The latest slump in the value of Nepali currency is expected to drive up import bills, while giving some relief to exporters. However, exporters, who manufacture products using imported goods, will not benefit from the latest fall of Nepali rupee.

But the depreciation in the value of Nepali rupee will bring smiles on the faces of remittance receivers as they will get more Nepali rupee while exchanging US dollars.

According to online portal of The Economic Times, the Indian currency has fallen more than eight percent since the beginning of May.

"Certainly we are not happy with it, but we certainly are not unduly worried," Arvind Mayaram, economics affairs secretary at the Indian Ministry of Finance, told reporters in New Delhi.

"This is a temporary phase," Mayaram further said, adding that the government´s expected foreign bond buying will give a lift to the rupee.

Source: republica, 11th June 2013
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Huge Response for Mega Bank's IPO-Oversubscribed 15 times

KATHMANDU, NEPAL

Mega Bank´s initial public offering (IPO) is said to have been oversubscribed by around 15 times, making it one of the most successful public floatations in the recent history of Nepal.

The bank, which floated its shares on the primary market on Sunday, had raised Rs 6.33 billion till Tuesday evening, recording oversubscription of around 10 times. “We estimate the IPO to have been oversubscribed by 15 times as of Wednesday evening (the last day for public floatation), raising close to Rs 9.5 billion,” Mega Bank CEO Anil Keshary Shah told Republica. “But final results will come only tomorrow (Thursday).”

The bank had floated 6.99 million units of common stocks worth Rs 100 each. It had appointed Citizens Investment Trust, Nabil Investment Banking Limited, NMB Capital Limited and NIBL Capital Markets Limited as issue managers for the IPO.

The bank had established 133 collection centers in 40 districts from where people could file application to purchase shares of Mega.
Earlier, Mega had said the IPO would be a barometer to measure the trust and confidence of the public won by the bank since its establishment in July 2010.

“We are pleased to know that we have been able to win public´s confidence in a very short period of time,” Shah said.
He further added that share allotment process would complete within this fiscal year and extra funds raised through the IPO would be refunded within first two weeks of the start of the new fiscal year in mid-July.

Source: myrepublica, 6th of June 2013
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Commercial Banks in Nepal post Massive Profits in Q3 of FY 2069/70

NEPAL

Despite gloomy economic outlook, commercial banks have done exceedingly well during the third quarter of fiscal year 2069/70, recording a rise in profit of 42.26 percent over the same quarter last year. The double digit growth is well beyond investors’ expectations and has been attributed to aggressive lending strategy adopted by banks, especially, among smaller consumable loans section.

The increasing gap between the interest charged on loans and advances and interest paid to depositors have fuelled banks’ income.  The net spread rate of banks has increased in this quarter compared to the corresponding period a year back, underscoring the increasing gap between deposit and lending rates at banks.

The total Net Profit of the overall banking sector stood at NPR 12.90 billion for the third quarter of fiscal year 2069/70 compared to NPR 9.07 billion the previous year.

It is the first times in history that the profits of three commercial banks  -- Nabil Bank, Nepal Investment Bank and Everest Bank -- have surged past the billion rupee threshold.

During the review period, Nabil Bank Limited had the highest net profit among all the commercial banks. Nabil topped the table with a whopping profit of NPR 1.54 billion.

Meanwhile, the market share of the top five commercial banks is 45.71 percent, which is a fall from 48.02 percent in the second quarter, indicating that new commercial banks have been chipping away at the market share of the large banks.

During the review period, Machhapuchchhre Bank Limited was able to increase its net profit by 1370 percent, whereas Century Commercial Bank showed a worst performance as its profit decreased by a massive 166.20 percent compared to the same period of the last fiscal year.

Kist Bank Limited and Century Commercial Bank showed a dismal performance with negative growth rate in terms of net profit.

Source: ShareSansar, 2nd June 2013
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Gold Price reaches Rs.52,350 per tola due to appreciating US dollar

KATHMANDU, NEPAL

A unit of the US dollar will fetch Rs 90 as the appreciating dollar has crossed the 11-month highest against the Nepali rupee. The appreciation in the dollar exchange rate also helped the price of gold surge by Rs 1,150 per tola in the domestic market.

The reference dollar exchange rate determined by Nepal Rastra Bank (NRB) stands at Rs 90 as buying rate for tomorrow based on today’s forex trading. Likewise, NRB fixed the selling rate for the dollar at Rs 90.6 for tomorrow. The dollar exchange rate was this high back on June 29, 2012, at Rs 90.80. Since then the dollar had not reached this level.

As the Indian rupee (INR) — with which the Nepali currency (NPR) is pegged — dropped, hitting a 10-month low, NPR was taken along the plunge. According to Indian forex analysts, the Reserve Bank of India (RBI)’s governor’s remarks that dampened hopes regarding rate cuts worked against INR. RBI governor Duvvuri Subbarao had stressed that the Indian central bank was more concerned about containing inflation and current account gap.

Yesterday, NRB had fixed the reference dollar exchange rate at Rs 89.4 for buying and Rs 90.06 for selling. Commercial banks and money exchangers fix their own exchange rate based on their own dollar trading in the foreign exchange market.

The expensive dollar will inflate Nepal’s export and remittance receipts while it will make imports from third countries such as gadgets costlier. The domestic market saw the price of gold surge by Rs 1150 per tola due to the appreciation in the dollar exchange rate along with the improving price of the yellow metal in the international market.

Gold price reached Rs 52,350 per tola (11.664 grams) today here as it reached $1414 in the global bullion market. Gold was traded at Rs 51,200 per tola yesterday. Along with the increasing price of gold in the commodities market, the strong dollar also contributed to the surge in the price of the yellow metal here in the domestic market.

The exchange rate of the dollar has risen above Rs 90, making dollar denominated imported goods dearer in Nepal. The price of commodities such as that of gold and silver were continuously declining as the United States Federal Reserve is preparing to wrap up its bond buying programme — quantitative easing — soon. The improving US economy and statistics of better consumer confidence and absence of dreaded inflation has made the purchase of gold and silver — the most popular inflation hedge — unnecessary.

However, the latest data on the US economy being against expectations, and which showed less than the estimated expansion in the US economy in the first quarter and increased jobless claims, signalled that the US Fed is not in a position to scale down its asset purchase package in the near future. This has once again sparked the interest of investors in precious metals.

Meanwhile, in the domestic market, bullion traders are a bit relieved with the increased quota

of gold import to 20 kilo per day from the previous 15 kilo. General secretary of the Federation of Gold and Silver Traders Association Mani Ratna Shakya expressed that the additional five kilo has eased

the shortage in the market to an extent, but supply is yet to be smooth.

Source: The Himalayan Times, 1st June 2013
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Marriot International to Start Hotel Operations in Nepal

KATHMANDU, NEPAL

With domestic and inter-regional tourism aiding hotel demand, a range of leading global hotel chains have planned their presence in Nepal.

It was Sheraton at first, and now Marriott International, a leading hotel chain based in Maryland, US. The list does not stop here. A leading FMCG multinational is also planning to establish a five-star property in Kathmandu.

On Thursday, Nepal Hospitality Group (NHG) signed a management agreement with a subsidiary of Marriott International to open a four-star property dubbed—Fairfield by Marriott Kathmandu.
The international brand, Marriott, will look after the management of the Fairfield by Marriott Kathmandu. The NHG is a group company of the MS Group, one of Nepal’s leading business conglomerates.

The proposed 10-storey hotel under construction in Thamel will have 108 rooms and is spread over two-and-a-half ropanis of land. “The hotel will be commercially opened by the beginning of 2016,” said Shashi Kant Agrawal, the vice-president of the MS Group.

“Around Rs 650 million will be invested in the hotel that aims to cater to people who have Kathmandu on their travel agendas,” Agrawal said. “We also hope to attract additional demand for tourism in Nepal by offering the branded, quality and consistent hospitality excellence that the Fairfield by Marriott brand offers.”
With 700 Fairfield properties throughout North America, the Marriott International is continuing to expand into Asia and South America.

Marriott International is a leading lodging company based in Bethesda, Maryland, USA, with more than 3,800 properties in 74 countries and territories. It reported revenues of nearly $12 billion in the fiscal year 2012. The company operates and franchises hotels and licenses vacation ownership resorts under 18 brands.

Marriott International’s president and managing director, Asia, Simon Cooper, said, “We are delighted to have signed this new Fairfield hotel in Nepal with Nepal Hospitality Group. We have redesigned and configured the brand specifically for the South Asia market and we are excited that this will be our first hotel in Nepal when it opens in the beginning of 2016.”

The MS Group is also planning to open a five-star property in Naxal, Kathmandu. “We have acquired land for this,” said Agrawal, adding that the company gradually plans to make its presence felt outside the capital city.

A non-resident Nepali, Shesh Ghale, is also building a five-star hotel in Kathmandu. The property will be known as the Sheraton Kathmandu Hotel. Ghale’s MIT Group Holding Nepal recently signed an agreement with Starwood Hotels and Resort Worldwide Inc and set the project rolling. Slated to open in February 2018, the 225-room Sheraton Kathmandu Hotel will be managed by Starwood Hotels & Resorts.
Ghale, 54, is on the list of 200 wealthiest Australians with a fortune of $225 million. Ghale had said that he would invest AUS$ 75-80 million in the hotel. The Sheraton Kathmandu Hotel will be located near Kantipath.

The Sheraton Kathmandu Hotel marks the re-entry of the Sheraton brand in Nepal. It had earlier managed Hotel Everest as the Hotel Everest Sheraton in the 1980s. After Hyatt Regency, no other international hotel chain has come to Nepal.

In recent years, luxury hotels have also been established elsewhere in the country, mainly in Pokhara, Bhairahawa, Lumbini and Nepalgunj.

These investments make huge business sense as there is optimism in the hospitality industry after the record number of tourist arrivals in 2010. “We have planned investing in the hospitality sector as we see huge prospects in the near future, although the investment environment has not been so far good at present,” Agrawal said.

Source: ekantipur, 31st May 2013
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