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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Nepali Business Delegation leave for Egypt to Boost Trade Ties

KATHMANDU, NEPAL

To increase trade activities an 18-member business delegation led by the senior vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Bhaskar Raj Rajkarnikar has left for Cairo, Egypt.

The three-day official visit arranged by Nepali embassy in Cairo will focus on increasing trade and bilateral relationships between Nepal and Egypt. The FNCCI team will meet representatives of Cairo Chamber of Commerce, on Monday, it said, adding that the team will also attend a programme to be organised by Federation of Chamber of Industry and Businessman’s Association the same day. Similarly, representatives of Federation of Egyptian Chamber of Commerce will hold bilateral trade talks with the FNCCI team on May 28.

The talks will be mostly focused on bringing foreign direct investment in the country in sectors like infrastructure development, energy generation, commercial agriculture, tourism and service sector, FNCCI said.
  
Source: The Himalayan Times, 27th May 2013
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Nepal Foreign Reserves Rises to over Rs.474 billion 

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Price of Gold drops Again

KATHMANDU, NEPAL:

The price of gold once again dropped today to reach a year low of Rs 49,099 per tola (11.664 gram).

On the first day of trading today, the domestic market witnessed a fall of Rs 651 per tola in gold price, according to Nepal Gold and Silver Dealers’ Association. On Friday, the precious yellow metal was traded at Rs 49,750 per tola in the domestic market.

The gold price is fixed in

the domestic market on the basis of international market price. “A drop of $20 per ounce today in the international market has pulled the price down in the domestic market,” the association added.

The international market is expected to witness a fall in gold price to $1,320 per ounce, which will further bring down the price in the domestic market, it said, adding that the strong dollar has also contributed to the lowering of the price of gold.

The price started to drop from mid-April. On April 15 and 16, prices dropped by Rs 6,300 per tola — on April 15 it dropped by Rs 3,300 and on April 16 it further plunged by Rs 3,000 — due to prices decreasing in the international market. The price of the precious yellow metal had touched a record high of Rs 62,000 per tola in the domestic market on September 14, 2012.

Source: The Himalayan Times, 20th May 2013

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Nepal's foreign reserves rises to over Rs.474 billion

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Nepal's foreign reserves rises to over Rs.474 billion

KATHMANDU: The total foreign currency reserve has increased by 7.9 per cent to Rs 474.16 billion during the first nine months of the current fiscal year, according to the Nepal Rastra Bank (NRB).

Earlier, the foreign currency reserve was Rs 439.46 billion during the same period of the fiscal year 2068/069.

Of the total reserve, the NRB owns Rs 387.56 billion which is 3.2 percent more than of the last fiscal year.

Likewise, the reserve of Indian currency reached 64.52 billion with an increase by 6.8 percent against the same period of the last fiscal year.

According to the NRB, the reserve of the foreign exchange is sufficient to import goods and service of 9.2 months.

Similarly, the revenue mobilisation of the government during the review period has reached Rs 210.47 billion increasing by 22.3 per cent, thanks to rise in exports. The revenue mobilization was Rs 172.9 billion in the last fiscal year.

Likewise, value added tax (VAT) revenue has reached Rs 60.64 billion increasing by 15.7 per cent as compared to the last fiscal year.

During the review period, customs tax contributed Rs 41.64 billion which is more by nearly 39 percent than the review period of the last fiscal year.

According to the central bank, the income tax revenue has also increased by 31.1 percent contributing a total of Rs 48.26 billion due to reform in income tax administration and positive impact of taxpayer education.

Similarly, the excise duty revenue collection has reached Rs 26.19 billion during the review period contributing 20.5 percent increase than the same period of the last fiscal year.

However, the non-tax revenue has deceased to Rs 23.82 billion in the review period against Rs 25.25 billion of the same period of the last fiscal year, according to the NRB.

Source: The Himalayan Times, 14th May 2013
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Nepal's Inflation comes down to 9.5 percent

KATHMANDU, NEPAL

Inflation moderated to 10-month low of 9.5 percent in April, as prices of non-food items and services rose at a slower pace in the month. Inflation last hovered at this level in May 2012.

Consumer price hike eased on the back of deceleration in rise in prices of clothes, footwear, furniture and household equipment, the latest macroeconomic report of Nepal Rastra Bank shows. Slower hike in transport and health costs also helped inflation to ease in the month, the report states.

In one-year period to April, prices of clothes and footwear went up by 10 percent than 15.1 percent recorded in the same period last year. Hike in prices of furniture and household equipment also eased to 12.1 percent in the one-year period, as against 13.6 percent registered in the same period a year ago.

Similarly, transport and health costs rose by 7.6 percent and 5.4 percent, respectively, in one-year period to April, in comparison to hike of 17.8 percent and 7.7 percent seen a year ago.

During the period, prices of most of the food items, however, surged, exerting pressure on low-income group which spends significant portion of disposable income to purchase rice, lentil, vegetables, cooking oil and spices.

In the period, prices of cereal grains and their products surged by 13.5 percent, while prices of legume varieties shot up by 11.8 percent. Similarly, prices of meat and fishes climbed by 16.2 percent and prices of ghee and oil rose by 10.3 percent in the period.

Price hike in Nepal is generally attributed to rise in prices of commodities in India, from where Nepal imports most of the goods.

Imports from India went up by 22.9 percent in the first nine months of the current fiscal year, shows the report, as against the increment of 13.1 percent recorded in the same period last year. Similarly, imports from other countries rose by 15.5 percent in the nine-month period compared to a hike of 28.3 percent reported in the same period a year ago.

Overall, Nepal´s merchandise imports surged by 20.3 percent to Rs 408.83 billion in the first nine months of the current fiscal year.

In contrast, Nepal´s exports in the period went up by marginal 3.5 percent to Rs 57.16 billion, the report shows. In the same period last fiscal year, exports had gone up by 15.9 percent to Rs 55.24 billion.

Nepal´s total exports grew at a tepid pace as exports to India increased by a marginal 0.4 percent during the period, as against a rise of 18.4 percent recorded in the same period last year.

Exports to other countries, on the other hand, went up by 10 percent in the nine-month period.

As imports surpassed exports, Nepal´s trade deficit surged by 23.6 percent to Rs 351.67 billion in the period. This, in turn, played a major role in causing the country´s current account surplus-difference between exports and imports of goods and services and transfers from the country and aboard-to shrink to Rs 22.23 billion in the nine-month period as against a surplus of Rs 41.95 billion recorded in the same period last year.

Nepal managed to post a current account surplus despite widening trade deficit because of 21.9-percent growth in workers´ remittances to Rs 302.58 billion. In the same period last year, workers remittance had surged by 36.5 percent, indicating lower growth rate this year.

At the same time, the net service income posted a surplus of Rs 4.56 billion in the nine-month period compared to a surplus of Rs 12.49 billion in the same period last year.

As current account surplus shrank due to widening trade deficit, the overall balance of payments -- the country´s total transaction with other nations -- surplus narrowed to Rs 30.77 billion in the first nine months as against Rs 92.55 billion recorded in the same period last year.

Source: myrepublica, May 13th 2013

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NRB has relaxed KYC provisions for small depositors

KATHMANDU,NEPAL

 The Know Your Client (KYC) provision for banks and financial institutions has been relaxed for small depositors with bank accounts of up to Rs 500,000.

The banks and financial institutions had been urging the Nepal Rastra Bank (NRB) to think on the issue stating that it is creating problems in opening new accounts and updating the existing ones. But those with deposits of over Rs 500,000 will have to provide citizenship certificate number of three generations, profession, estimated annual income and other information while opening a bank account or have to update their existing accounts by mid-June. The central bank, however, has stated that the banks and financial institutions can also seek information from small depositors if deemed necessary.

The bankers claimed that the NRB’s definition of small depositors is not practical and argued that this alternative is not suitable as even the small depositors will have to fulfill the KYC provision if they come with big deposits. “These provisions are impractical when the banks and financial institutions are already informing NRB about suspicious transactions,” a banker told Karobar. But NRB Spokesperson Bhaskar Mani Gyawali stated that the banks and financial institutions will not have any problem to expand their client base when it has already exempted the deposits of up to Rs 500,000.

The banks and financial institutions had been claiming that they were facing problems in making clients in newly opened branches due to the KYC provision. NRB had issued the KYC directive to the banks and financial institutions to discourage money laundering and financial investment in terrorism.

NRB had issued the circular as per the clause 79 of the NRB Act, 2002 which provides all regulatory authority to the central bank. NRB has also allowed Nepali commercial banks to open their branch abroad. The banks that have maintained paid-up capital as fixed by the central bank and for the past one year also maintained a buffer capital of additional one percent can open contact office abroad.

Source: Karobar Daily, April 6th 2013

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Nepal's Commodity Market expected to remain Unregulated

KATHMANDU, NEPAL

 The commodity market is unlikely to be regulated anytime soon as the Law Ministry has rejected the idea of controlling it by issuing a regulation. Speculative trading in commodity like precious and industrial metals, petroleum products and agricultural goods, among others, has been the major highlight of the commodity exchange.

Prompted by reports of gullible investors being deceived in the unregulated market, the government has been working to monitor the sector through a regulation as there is no act and there is no Parliament to pass legislation. According to a study conducted by the Securities Board of Nepal (Sebon), 80 percent of the investors in the commodity market have lost money.

However, the Law Ministry has told the Finance Ministry that there should be a separate act to regulate the sector as a regulation would not be strong enough to keep the market in line.

The Finance Ministry had suggested preparing a draft of the regulation based on the rights bestowed by Administrative Procedures (Regulation) Act 1956 which allows the government to frame rules to smoothly regulate administrative matters adopted by various government offices related to finance, accounts and auditing.

The Law Ministry’s joint secretary Tek Prasad Dhungana said that this act only allows the government to frame working procedures to ease service delivery. “As the commodity market needs a strong supervisory and licensing body, and there should be a provision for penalty for unlawful acts, we told the Finance Ministry that only an act would be effective,” Dhungana said. He added that there was a need for a separate act to regulate the sector as commodity were different from stocks.
The Finance Ministry had sent a draft of the regulation to the Law Ministry after  Sebon made an initial draft which would allow it to regulate the commodity market by introducing the regulation under the Administrative Procedures (Regulation) Act.

According to a Finance Ministry official, the Law Ministry had rejected an earlier draft of the regulation that sought to open the door through clause 116 of the Securities Act enabling the Securities Board of Nepal (Sebon) to regulate the sector. The clause has given Sebon the power to frame rules stating that it may, in order to implement the objectives of this act, frame necessary rules with the approval of the government.

Although this clause has given Sebon the authority to frame regulations for various tasks related to securities trade, it has not mentioned anything about the commodity market. “The Law Ministry has rejected framing the regulation based on this clause in the Securities Act as it does not say anything about the commodity market,” said the Finance Ministry official involved in drafting the regulation.

 The Sebon study also found that the commodity market had been conducting transactions in foreign exchange without the central bank’s approval as required by the Foreign Exchange Regulation Act. It also pointed out that there was high probability of capital flight and high chances of investors suffering losses.

Source:ekantipur.com May 13th 2013

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Nepali Consumers paying more than stated price for Fizzy drinks

KATHMANDU, Nepal

 Consumers have been forced to pay more despite the Bottlers Nepal advertizing that the retail price of a 250 ml bottle of Coca Cola, Fanta and Sprite has been reduced by Rs 5 to Rs 20.

Consumers are forced to pay Rs 25-30 for a bottle of these cold drinks at different places. Neither the retailers have answers for this, nor has the company, or consumer rights groups for that matter, shown interest about it. Coca Cola SABCO, through Bottlers Nepal, had received rights for bottling the beverages of the multi-national company in Nepal in 1971. The retailers claimed that the company charges Rs 20 per 250 ml bottle with them. “The company sells to us at Rs 20. How can we sell at that price? We also have to add the cost of running the refrigerator round the clock to keep it cold,” a retailer in Baneshwore said.  Not just him but all the retailers across the Kathmandu Valley charge Rs 25-30 for every 250 ml bottle of these beverages.

Botlers Nepal has been claiming through big hoarding boards and advertisements in all forms of the media that the retail price of 250 ml bottle of Coca Cola, Fanta and Sprite has been reduced by Rs 5 to Rs 20. “We must get it a lower rate to be able to sell at Rs 20,” a retailer at Thamel fumed. “The price is above Rs 30 in many small/big shops in Thamel,” he added. All retailers, with a few exceptions, are selling these beverages charging at least Rs 5 more for every 250 ml bottle. Owner of one Shiva Shakti Store in Buddha Nagar stated that he is selling at Rs 20 per bottle as he gets two bottles free while buying a crate (24 bottles). “I get a bottle at Rs 18 if I also account for the two bottles received for free. Though all retailers around here are selling at Rs 25, I am not doing so. I can sell more at a lower rate,” he explained.  

Market Manager of Bottlers Nepal Pranaya Sthapit also claimed that the company has set the retail price providing a profit margin to the retailers. “We are providing every bottle to retailers for Rs 18 at most. We have, therefore, requested them to sell to consumers at Rs 20. We have not deceived the consumers from our side,” he elaborated. He opined that the consumers themselves have to be aware about that. “We have provided such margins precisely because using refrigerator to cool it increases the cost as it is sold only after being cooled. No one can sell at a rate higher than that printed on bottles,” he stated.

 General Secretary of the Consumers’ Rights Protection Forum Jyoti Baniya claimed that consumers cannot be forced to pay more if the company has mentioned Rs 20 as the maximum retail price on the bottle or packet. “The consumers have asked even us about this. If the company as not been able to provide it to the consumers at the stated price, it cannot broadcast such misleading advertisements,” he stated. If the company has fixed the retail price at Rs 20 providing any profit margin to the retailers, he added, and the retailers are maintaining a bigger margin raising the price, the retailers are guilty.

Source: Karobar Daily, May 9th 2013

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Jewellers claim 85 percent of Gold from Black Market

CHITWAN, Nepal
Jewelers in Chitwan have audaciously declared that 85 percent of the gold comes through black marketing and challenged the state to investigate and take action if it can at a time when there have been widespread accusations of black marketing in bullion trade.

 Organizing a press conference in Narayangadh they claimed that they are forced to buy gold from the black market due to the imposition of quota system in gold by the state. “The government is giving less gold imposing the quota system. It is natural for black marketing to rise in scarcity,” reasoned central member of the Nepal Gold and Silver Dealers’ Association Arjun Rasaily. The jewelers even reached the district administration office and submitted a memorandum to the government.  

The Gold and Silver Dealers’ Association, Chitwan revealed that Chitwan gets just two kilograms of gold a day through the quota system while the daily demand is seven kilograms. The entrepreneurs are still selling gold to the customers. “85 percent of gold comes from the black market and even the government knows that,” was Rasaily’s straightforward answer to the journalists question as to where the rest of the gold comes from. President of the association in Chitwan Bipin Ramudamu went further and accused the government of encouraging the entrepreneurs to indulge in black marketing. “Not giving gold is tantamount to asking one to do black marketing. Why would one buy gold from outside if adequate quantity is to come legally?” he argued.

The entrepreneurs cannot freely buy gold now with the government imposing a national quota of 15 kilograms a day. There is a huge demand of the yellow metal now due to the wedding season. Stating that the entrepreneurs have to pay Rs 2,000- 3,000 more in purchase of every kilogram of gold from commercial banks according to the quota system, they have asked the government to make arrangements to ensure that every entrepreneur can easily get up to 100 grams of gold a day. “Black marketing will not stop if that is not done and the state must pay attention to it,” central member of the association Gyanendra Man Shakya said.

The association sent a memorandum including these demands to the government through the district administration office. They also demanded modern equipment for measuring the quality of gold and fixing the standards for measuring it, establishment of a body for measuring weight and quality in Chitwan, and security for the entrepreneurs. Ramdamu said a meeting of the presidents of the district chapters across the country has been called in Chitwan on Wednesday for discussions on the problems in their trade. “We will decide how to move forward in the coming days in that meeting. The remaining protest programs will also be decided,” he added. The entrepreneurs already have threatened to shut down all the jewelry stores if their demands are not met by Wednesday. “No jewelry stores will open from Thursday if our demands are not fulfilled,” Rasaily said.

 

Source: Karobar Daily, 30th April 2013

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Trishuli River set to become a major hydropower site

NUWAKOT: Trishuli River is set to become a major hydropower corridor in the country in the next three years if implementation of all the projects goes smoothly.

About a dozen hydropower projects are planned to be implemented along Trishuli River, between Rasuwagadhi of Rasuwa and Galchhi of Nuwakot, by the end of 2016. Upon completion, these projects are estimated to generate a total of 1,500 MW of electricity. Of them, Chilime, Trishuli and Debighat have already started power generation.

Similarly, other projects such as Bhotekoshi, Trishuli-3A and Trishuli-3B are in the process of generating power.

“Investors are interested to put money in hydropower projects in Nuwakot. We only need to create environment conducive for investment and boost confidence of the investors,” Saran Utsuk Sapkota, president of Nuwakot Chamber of Commerce and Industry (NCCI), said.

Source:myrepublica.com, 7th May 2013.

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Real Estate Expo in Kathmandu attracts huge crowd

KATHMANDU-
Visitors thronged the NLHDA Kantipur Real Estate Expo at Bhrikuti Mandap on Friday, pulled by the promise of “unbelievable prices” for homes and apartments.

Most of the companies which had half a dozen personnel at their stalls on day one were forced to assign more staff on Friday due to a surge in the number of visitors. “The number of interactive visitors has gone up massively this year. This is why all the stalls are packed with enthusiasts enquiring about real estate,” said Om Rajbhandary, coordinator of the expo. 

As many as 16 realty property developers, who make up 80 percent of the total in the country, have featured apartments at prices ranging from Rs 1.79 million to Rs 42 million, and stand-alone houses for Rs 4.9 million to Rs 30 million at the expo. Apart from this attractive price range, there are various extra facilities on offer.

Mero City Apartment has offered a flat discount of 10 percent on the purchase of apartments. Apartments at Mero City start from Rs 1.79 million.

Likewise, another prominent developer Brihat Investment has come up with a scheme that offers buyers of stand-alone houses a hefty cash discount or a four-wheeler equal in value. Customers buying homes costing up to Rs 10 million at the project situated at Ramkot, Sitapaila will receive a flat discount of Rs 1 million or a Tata Nano car. Likewise, those purchasing property worth Rs 1.5 million or more will receive a cash discount of Rs 1.5 million or a Hyundai Eon car and discount of Rs 2 million or a Hyundai i10 car respectively.

Another name in the domestic real estate market, Civil Homes, has also offered a flat discount of 10 percent to those making bookings or purchases during the expo. “We will offer an additional discount of 15 percent to those making full cash payment while buying,” said a Civil Homes official. She added that the company has featured stand-alone houses ranging from Rs 6.9 million to Rs 30 million and apartments in the range of Rs 4.7 million to Rs 7 million. Meanwhile, a monthly management charge of Rs 1.65 per sq ft will be levied for the various facilities available at the residential location.

Likewise, Ambe Housing, which has two apartment projects located at Chabahil and Kuleshwor, is offering a cash discount of 5 percent. Apart from this, a modular kitchen will be given away free. As for the monthly maintenance cost, the company will charge Rs 300,000 at the beginning to establish a community welfare fund which will be mobilized for all the necessities.

Westar Residency too is giving away a modular kitchen that costs Rs 200,000 to Rs 250,000. It is the only property in the country to have facilities such as cinema hall with a capacity of 100 seats, gym hall, swimming pool and restaurant, among others. “Rs 200,000 will be charged as maintenance fee,” said a company employee.

These facilities will also be available to the general people. They will be charged a certain amount which will be put into the community welfare fund. A Westar employee said that the property would be managed by a star hotel management company. Downtown Apartment has offered a modular kitchen along with exclusive pricing during the expo period, while Comfort Housing has offered a 10 percent discount on its entire product range.

Apart from attractive prices, various new initiatives at this year’s expo like Property Tour and Property Clinic have helped to pull in the crowds. “We had to arrange additional vehicles for the property tour,” Rajbhandary said.

Organised by the Nepal Land and Housing Developers’ Association and Kantipur Publications, the expo will conclude on Sunday. Tickets for the event have been priced at Rs 50. One lucky winner will get an apartment costing Rs 1.8 million at Mero City Apartment as a bumper prize through a lucky draw on Sunday.

Source: ekantipur.com, 4th May 2013

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Rastriya Banijya Bank to hire young employees

KATHMANDU: Rastriya Banijya Bank is looking forward to hiring more young employees in order to transform the bank into a more competitive and modern structure.

“At present, the average employee age of the bank is 49, and the bank is planning to bring new and young manpower that will bring down the average employee age to 37 within three years,” said CEO of Rastriya Banijya Bank (RBB) Krishna Prasad Sharma during a training programme for the bank staff.

“We have to emerge as a strong and modern bank in terms of technology, financial resources and manpower,” he said.

RBB had recently hired five financial analysts, 15 deputy financial analysts, agriculture officers and

legal officers through open competition.

“When other banks are suffering from high credit to deposit ratio, ours stands at around 50 per cent,” pointed out Sharma.

“We have enough disposable financial resources to expand credit, and due to low cost of fund we can offer credit at competitive rates as well,” said Sharma, informing that RBB will

focus on quality and productive projects to finance.

RBB — a wholly government owned bank — had undergone a decade-long financial restructuring programme for being on the verge of a meltdown. The bank’ non-performing assets, which was higher than 60 per cent a decade back, has finally come down to six per cent and its net worth has become positive.

The bank, which has 141 branches, has collected

deposits worth Rs 85 billion and floated loans worth

Rs 43 billion along with

investments of Rs 24 billion till first quarter end.

Source: The Himalayan Times, 3rd May 2013

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Gold Price falls by Rs.800 per tola

KATHMANDU: Gold prices retreated by Rs 800 a tola (11.664 grams), today, after rising through the week in the domestic market.

Its price was fixed at Rs 52,000 a tola, which stood at Rs 52,800 yesterday. In the international bullion market, gold fell to $1,455 per troy ounce after HSBC cut its gold forecast for the coming years.

Moreover, the sudden cashing in on gold prices two weeks back has supposedly hit the safe haven appeal of the yellow metal and investors do not seem to be lured by gold at the moment.

Likewise, profit booking by investors on the eve of the US’ Federal Open Market Committee (FOMC) meeting and European Central Bank meeting also affected the price of gold. FOMC meeting will decide whether to cut back the Quantitative Easing programme and will help in gold prices further dwindling.

On April 16, the price of gold in the domestic market dropped to Rs 49,500 a tola. However, Nepali consumers were not able to take advantage of the drop as bullion traders decided to shut shop instead of selling gold jewellery at a lowered rate.

Following the closure of shops, on April 21, the Department of Commerce and Supply Management and Nepal Bureau of Standards and Metrology inspected jewellery shops in Kathmandu.

The inspection found that the weighing machines and quality of gold and silver

in many of the well-known shops were substandard.

However, gold traders affiliated to Nepal Gold, Silver, Gem and Jewellery Federation closed their shops to protest the inspection. They asked the government bodies to prepare a standard mechanism to regulate and inspect jewellery shops. They withdrew the strike on Friday after the government assured them of forming a task force to formulate regulation.

Source: The Himalayan Times, 3rd May 2013

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Everest Bank slashes interest rate on Home Loans

KATHMANDU, MAY 03 -
Everest Bank is providing home loans at a minimum interest rate of 10 percent to customers planning to buy homes at the NLHDA Kantipur Real Estate Expo which started in Kathmandu on Thursday. The Nepal Land and Housing Developers' Association (NLHDA) and Kantipur Publications are  the organisers of the event.

The bank's usual interest rate for home loans is 10.5 percent. The bank said it would provide loans at 10 percent interest for up to five years, 10.5 percent from five to 10 years and 11 percent from 10-15 years. Similarly, Standard Chartered Bank Nepal is providing home loans at 9.49 percent interest during the expo with a 0.5 percent concession on the service charge.

Banks and financial institutions (BFIs) which are still reluctant to lend to real estate developers are increasing their lending to end users. Laxmi Bank, NIC Bank and Himalayan Bank, among others, all have brought down the interest rate to 10-12 percent. Under home loans, they offer credit to purchase land, construct homes or buy apartments.

"As home loans are provided based on the income assessment of an individual, there is no risk at all as long as the assessment is good," said Diwakar Poudel, corporate affairs chief at Standard Chartered. "The home loan portfolio is exciting, attractive and inspiring. We see a good future in this sector," he added. Standard Chartered currently has a 25 percent exposure to home loans.
Likewise, Everest Bank's chief executive officer PK Mohapatra said his bank had given high priority to home loans. During last Dashain, the bank provided home loans at a fixed interest rate of 9.99 percent for three years.

However, BFIs have been reluctant to lend to developers despite continued lobbying by them citing risks highlighted by the crisis in the sector in the last four years. "We are much conservative in providing loans to the real estate sector," said Mohapatra whose bank's lending to the pure real estate sector amounts to Rs 2 billion.

However, developers say that despite reluctance on the part of banks to lend to developers, home loans have helped them too. "Those wishing to buy apartments are getting loans which has helped to clear stocks of unsold apartments," said Min Man Shrestha, general secretary of the Nepal Land and Housing Developers' Association. He added that banks would have to lend to developers after all the apartments and housing units currently under construction are sold.

With the central bank increasing the threshold of realty loans to Rs 10 million, a majority of apartment projects could be sold with bank financing, according to developers. Shrestha said a majority of apartments available have price tags of below Rs 10 million which can be sold.
According to the NLHDA, from April 2005 to March 2013, around 65 apartment projects having 6,330 apartment units were implemented. Of the total, 12 apartment projects have acquired completion certificates, making 870 units of apartments ready to move in for buyers, according to realty developers. There are around 1,200 stand-alone housing projects going on currently, according to realty developers. Since the central bank capped realty lending at 25 percent, BFIs have been reducing their exposure to the realty sector.

BFIs have lent Rs 88.19 billion to the realty sector as of mid-February, down from Rs 98.81 billion one and a half years ago, according to Nepal Rastra bank (NRB). This is close to 10 percent of the total loan portfolio of BFIs. As of mid-February this year, BFIs had lent a total of Rs 882.31 billion.
Commercial banks have the highest lending to the realty sector with Rs 65.63 billion, followed by development banks with Rs 12.29 billion and finance companies with Rs 10.27 billion. "Lending to the realty sector came down due to both recovery of loans and NRB's increasing the threshold of real estate loans," said NRB spokesperson Bhaskarmani Gnawali.

Many financial institutions that landed in trouble in recent years had a history of overexposure to the realty sector besides bad corporate governance. However, Gnawali said that the situation had improved much in recent days. "The current situation of the realty sector is satisfactory. Houses and apartments are being sold after developers reduced prices," he added.

 Meanwhile, Sashin Joshi, chief executive officer of NIC Bank, said that there was no panic situation in the sector like until last year. "Borrowers have been repaying their loans by selling their other properties," he said.

Developers said that there was growing demand for low-cost apartments, and that banks' increased interest in lending to end users was helping the sector to recover. They added that they had been selling apartments with fewer facilities but at affordable prices for this reason.

"We ran after various facilities in the past which increased the cost of the apartments," said Shrestha. "Now we have realised that we should focus on affordability."

The central bank, however, had long been asking developers to slash prices so that apartments could be sold. "Apartments in the price range of Rs 1.5 million to Rs 5 million are affordable for Nepalis," said Gnawali. "The housing expo's focus on affordability is praiseworthy."

Source: ekantipur.com, 3rd May 2013

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Merger not really a solution for all financial problems

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Merger not really a solution for all financial problems

KATHMANDU: Despite being touted as a miracle cure for all ailments troubling financial institutions, mergers have failed to improve the performance of almost a dozen financial institutions.

Among the 12 sets of mergers completed in the domestic financial sector within the last two years, only four have so far succeeded in registering profits. Likewise, share prices of half of the listed merged entities are also below face value at Nepal Stock Exchange.

“A merger does not translate to miraculous profits immediately. It takes time for the merged entity to become profitable as they have to deal with additional issues such as effectively managing human resources along with its operations,” said chief executive of Synergy Finance Rajendra Man Shakya.

Synergy Finance that was formed in November 2012 following a merger between Alpic Everest Finance, Butwal Finance and CMB Finance, has recorded a net loss of Rs 35.65 million in the second quarter of the current fiscal year.

“Problems such as low rate of loan recovery and absence of proper projects to finance remain the same even after a merger as it used to be with the concerned individual institutions before the merger,” said Shakya, who is also president of Nepal Finance Companies’ Association. “We have observed that merged companies need to be given time to recover and become profitable.”

However, Narayani National Finance, which was formed after a merger between Narayani Finance and National Finance in November, 2010, has fared well. It has earned Rs 25.74 million in the second quarter. Moreover, the company was able to earn 33 per cent more operational profit even before first year of merger was over.

But at the other end is H&B Development Bank that was formed following a merger between Himchuli Bikas Bank and Birgunj Finance in 2011. The class ‘B’ bank that was performing fairly is now in trouble due to the large scale fraud committed with the involvement of its employees.

Investors are also apprehensive about investing in shares of merged entities and their prices have taken a plunge of late. Among 10 listed merged financial institutions, share prices of only six firms are above Rs 100 — the face value.

“If the merged financial institutions are good then they will perform better and investors will also be willing to bid a higher price,” said acting president of Nepal Investors’ Forum Raj Kumar Timilsina.

Global IME Bank that was formed after merger between Global Bank, IME Financial Institution and Lord Buddha Finance, and Machhapuchchhre Bank following its merger with Standard Finance have been able to increase their profit and subsequently their share prices have also almost doubled in the past six months.

“In most cases, mergers have been taking place just to avoid the regulator’s action when the particular company’s financial health is deteriorating due to which the merger becomes forced and creates more problems,” pointed out Timilsina, adding that investors look forward to mergers between promising companies such as the ongoing merger process between NIC Bank and Bank of Asia Nepal.

According to central bank, 28 financial institutions have already got approval to merge into 13 institutions, and 24 financial institutions have received Letter of Intent (LoI) to merge into 10 institutions.

Source: The Himalayan Times,  2nd May 2013

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Nepal Government to Offer Guidelines on Cooperatives Mergers

The Nepalese government is set to issue guidelines on cooperatives' merger by mid-January with a view to further managing and strengthening the cooperatives sector.

Currently, there are around 26,000 cooperatives operating across Nepal.

The guidelines are being prepared under the leadership of the Cooperatives Department with the objective of integrating the saving and cooperatives organizations in the urban areas and preventing them from financial bankruptcy.

Kedar Neupane, Registrar of the Department, said it was a working procedure rather than guidelines and the department was at the stage of issuing it within two weeks. Almost all processes for the cooperatives merger guidelines have been concluded, he added.

He said the big cooperative organizations have invested large amounts of their capital in the land and housing sector and the working procedure is expected to minimize the risk of financial crisis in these organizations.

There are some 11,000 cooperatives based in the urban areas and among those, around 5,000 are operational in Kathmandu, Lalitpur, and Bhaktapur districts.

As many as 60,000 people are directly employed by the cooperatives whereas around 600,000 have benefited from them. The total capital of the cooperatives has currently reached Rs. 250 billion.

Source: The Himalayan Times (29th Jan, 2013)

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US-based companies set to invest in Nepal

A New York-based company promoted by Nepalis has joined hands with a Chicago-based company to provide clean and sustainable energy in Nepal.

The New York-based Nepal Infrastructure Consult (NIC) and Chicago-based renewable energy company New Generation Power (NGP) have signed a Memorandum of Understanding (MoU) aiming at enhancing infrastructure and clean energy projects in Nepal.

The New Generation Power aims at providing clean and alternative energy across the world, whereas Nepal Infrastructure Consult will represent the project and liaison with appropriate government, non-government and bi-lateral agencies on behalf of NGP in Nepal, according to president of NIC Suman Neupane.

The New Generation Power and its partners — Panasonic, Martifer Solar, Patriot Solar, Jones Lang LaSalle, Eaton Corporation, Toshiba and Talesun — have commissioned renewable energy projects in the fields of solar, biomass, wind, hydro, waste to energy and geo-thermal energy in various parts of the world.

Over 200 MW of renewable energy projects constructed by them are currently in operation, whereas over 3,000 MW of renewable energy projects are its pipeline in many parts of the world. The NGP, in partnership with Wanxiang America Corp, is also developing a 62MW solar facility adjacent to the Rockford International Airport in Rockford, Illinois in the US.

Likewise, Nepal Infrastructure Consult — established with an objective of bringing potential small, medium and big investors in the United States linking project holders, entrepreneurs in Nepal — aims at helping its clients bridge the gap between their infrastructure needs and financial resources by focusing on public private partnerships and innovative capital financing.

Chairman Dr Chirinjeev Kathuria and senior vice-president (International) Nisha Joshi of NGP and president of NIC Suman Neupane signed the MoU on behalf of their respective institutions.

Source: The Himalayan Times (Jan 27th 2013)

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