Nepal offers huge investment opportunities-Ambassador of UAE

Non-resident ambassador of the UAE to Nepal Mohamed Sultan Abdalla Al Owais, speaking at a programme here today, said that Nepal offers a lot of opportunity to investors.

“In the last four years of my tenure in New Delhi, UAE has doubled its trade volume with India,” he said, adding that the UAE wants to replicate the same in Nepal too.

The New Delhi-based envoy said that a team of United Arab Emirates businessmen will visit Nepal soon to explore business opportunities.

Though UAE is largely known as one of the key destinations for migrant workers, the trade volume between the two countries has also been increasing in recent years.

Nepal had exported merchandise worth Rs 326.300 million to UAE in fiscal year 2010-11, according to figures of the Trade and Export Promotion Centre (TEPC).

UAE — the 29th largest trading partner of Nepal — had exported merchandise worth Rs 13.61 billion to Nepal in the fiscal year, the data revealed, adding that Nepal’s trade deficit with UAE stood at Rs 13.28 billion in fiscal year 2010-11.

Likewise, Nepal’s exports to UAE in 2012 stood at Rs 322.99 million, whereas it imported merchandise worth Rs 37.66 billion, according to the TEPC data. “On the basis of export volume, UAE is the 19th largest export destination of the country.”

The United Arab Emirates (UAE) is the largest supplier of gold to Nepal.

Nepal imported some 87.6 per cent of gold from the UAE in fiscal year 2010-11, the TEPC data revealed, adding that the country had imported gold worth Rs 9.95 billion from the UAE, out of the total gold imports of Rs 11.35 billion.

Likewise, in fiscal year 2009-10, the country had imported 68.4 per cent — Rs 28.5 billion out of the total import of Rs 40 billion — gold from the UAE.

Besides gold, major imports from UAE include edible oil, beverage, fuel oil, petroleum bitumen, and polyethylene, whereas Nepal exports large cardamom, woolen shawls, scarves, and mufflers, among others to the UAE.

“There is a need to enhance trade relations in the interest of both the countries,” the envoy said.

Nepal and the UAE entered into diplomatic relations in January 1977.

Likewise, the then Royal Nepal Airlines started its flight to Dubai in 1985 in transit to its European destinations. Currently, Etihad Airlines, RAK Airways, and Fly Dubai are some of the airlines of UAE catering to the needs of travellers, mostly migrant Nepalis to and from UAE, which is also one of the key sources of remittance inflow to the country.

Source: The Himalayan Times (Feb 4th, 2013)

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Nepal Offers Massive Return for Investors

Despite its share of problems, Nepal is offering good returns to the investors, according to the president of FNCCI.

Inviting the potential investors to invest in Nepal during CII Partnership Summit organised by Confederation of Indian Industries (CII) in Agra, India today, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Suraj Vaidya said that Surya Nepal — the subsidiary of ITC — has continuously been the highest corporate tax payer in Nepal and has undertaken a massive expansion process.

“Unilever pays the highest dividends, whereas a Norwegian company — which was the first to invest in hydropower in Nepal — has taken back returns many times its original investment,” he said, citing an example of the Ncell — subsidiary of TeliaSonera — that has pumped $500 million investment in the last four years. “The Daburs, Asian Paints and Dansburgs all are doing exceptionally well in Nepal.”

Despite the region having huge potential for energy, it is still power-starved, Vaidya said, urging the South Asian regional leaders to join hands in harnessing sources of energy like hydropower and gas.

“The region cannot progress without harnessing hydropower that is estimated to have a shortfall of 50,000 Mega Watt (MW),” FNCCI president said, urging the SAARC states to join hands in exploiting power, connecting regional transmission grids and devising mechanisms that allow trade in power freely across the borders.

However, lack of seriousness on the part of governments of the Southasian countries to pursue regional cooperation and free flow of goods, capital and people has resulted in low share of intra regional trade, he added.

“The intra SAARC trade is still hovering around six per cent which is way below the similar figures for other regional blocks like ASEAN (28 per cent), European Union (58 per cent) and NAFTA (62 per cent),” he said, presenting a paper on ‘South Asia Economic Integration: On a New Path of Progress and Hope’, during the summit.

“It shows that the trade in the region over the last 15-20 years is almost stagnant,” he said, adding that South Asian Association for Regional Cooperation (SAARC) though came into existence in 1985, trade and economy were not in the forefront during the initial years pushing the intra-regional trade backwards.

“Still in many South Asian countries, there is widespread poverty, underdeveloped infrastructure, poor connectivity, visa woes, preoccupation with security anxieties and political instability that have hit our joint aim of creating a customs union and common currency eventually leading to a South Asian Union as envisaged by the leaders of SAARC member states.”

Vaidya said that the region’s efforts should focus on restructuring, revitalizing and re-energizing SAARC that could function as a common stage for hopes and aspirations of the people of South Asia as a symbol of an emerging, economically vibrant, politically important and strategically crucial region.

However, connectivity is key in the joint prosperity of the region, he opined, adding that building and upgrading connectivity between the South Asian member countries will be the first and foremost step towards the new path of common progress and hope.

“Connectivity through land, water and air is a must for any business to materialize as easy movement of people, goods and services across borders in South Asia would benefit the general mass with a real progress in trade and economy,” he added.

Source: The Himalayan Times (Jan 29th 2013)

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Gurkha Development Bank Seeking Investors

Gurkha Development Bank (GDB) on Thursday issued a 35-day notice to potential buyers of its promoter shares in a bid to reduce the stake of its original promoters. The move follows a takeover of its management by Nepal Rastra Bank (NRB) for failing to show improvements after it was declared crisis-ridden.

GDB’s three major promoters — DB Bamjan, Rakesh Adukiya and Nirmal Gurung, all of whom are facing charges of banking fraud — own 45 percent of the bank. They and the other promoters hold a 60 percent stake in the bank. “The notice to sell shares was issued as per the mandate given by the central bank to ensure that the present promoters would not have influence in the bank in the future,” said Mukti Sapkota, a member of NRB’s management team at Gurkha. The central bank had taken over the reins of the troubled development bank on Jan 3. It was declared crisis-ridden in March 2011.

Sapkota said that the bank had not fixed any specific ratio by which the shares of the present promoters would be reduced. “This will based on the proposals received from prospective buyers,” he added. According to him, the share price will be determined through negotiations based on the value fixed by the ongoing due diligent audit (DDA) report. The DDA is expected to be completed within the next 40 days.

GDB has stated in a notice that persons facing charges under the Banking Offence and Punishment Act would not be eligible to purchase its shares. NRB has given three instructions to its management at GDB. First, reduce the stake of the current promoters by bringing outside parties. Second, if outside parties cannot be brought, go for a merger. If both options fail, the team has been told to recommend appropriate alternatives. “The last option could be to liquidate the company,” said an NRB official.

The new management has also made efforts to recover loans from 20 major borrowers. It has given them until Jan 28th to repay their loans with the offer of concessions. “A few of them have shown interest to repay their loans,” said Sapkota. “Stringent action will be taken against defaulters including seizure of their passports as per the Bank and Financial Institution Act.”

These 20 debtors owe GDB Rs 1.17 billion including principal and interest. “Promoter related loans amount to Rs 700 million,” said Sapkota. Most of the loans issued to these borrowers have been recognized as bad loans. “There are good loans worth around Rs 400 million too,” added Sapkota. The bank currently holds deposits of around Rs 2.16 billion while its loans stand at Rs 2 billion. Its capital adequacy ratio has remained negative, according to the development bank.

Source:The Kathmandu Post (January 25th 2013)

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