News Roundup: Inflation continues to wreck havoc

Roundup of Nepali Economic and Business News for Jan 18-20
By NepaliEconomy.com

Inflation continues to wreck havoc in the economy. In December 2009 it was up 11.3 percent. Food prices which make up two-thirds of CPI weight went up 17.8 percent. Fortunately for wage earners, wages have gone up 17.3 percent during the same period. A little bit of good news; improved supplies have led to lower of prices of vegetables by around 8 percent in Kathmandu.

National Planning Commission (NPC) targets 6 percent annual growth and 200K jobs a year in its 3-year plan (2010/11-2012/13). However, Professor Bishwambher Pyakuryal, Board Member of Nepal Rastra Bank gives a very bleek prognosis of Nepal's economy in his OpEd, 2010: Nepal's macroeconomic outlook .

Looks like the super-hot real estate sector in the capital is starting to cool down following NRB's directive on curtailing real estate lending. Rising interest rates due to shortage of liquidity is affecting Micro Finance Institutions (MFIs). NRB has further tightened rules on import of gold. Liquidation of Nepal Development Bank (NDB) has started. It collapsed following a cumulative loss of Rs. 690 million.

The government collected Rs 79.68 billion in revenue in the first half of fiscal year 2009/10, up 34 percent versus last year and 6 percent above target with all sectors contributing. The top three contributors were VAT (24.30 billion), custom duties (16 billion) and income tax (15 billion). Birgunj custom alone collected a whopping Rs. 20 billion.

NEPSE plans to allow share trading in six cities outside Kathmandu (Biratnagar, Birgunj, Pokhara, Butwal, Nepalgunj and Narayanghat) starting February. Maximum of two brokers in each city will man the operation; currently there are 23 licensed stock brokers in the country. Securities Board of Nepal (SEBON) will allow local people to own as much public shares as they want in hydro and manufacturing over-riding its earlier rule that capped at 5 percent.

31,500 Nepalese hold credit cards. Himalayan Bank, Nabil Bank and Standard Chartered dominate the market with each controlling one-third share.

Nepal and South Korea, which first signed agreement in July 23, 2003 to send Nepali workers to Korea in agriculture, service, fishery, manufacturing and construction under Employment Permit System (EPS) renewed the agreement to be valid for the next two years. They have also agreed on a number of technical issues affecting individual workers. On other foreign labor news, Nepal's government wants to boost minimum wages of Nepalese workers in Saudi Arabia, Kuwait, Oman, Lebanon, the UAE, Bahrain and Malaysia, the destinations for 90 percent of Nepalese gonig overseas from current US$ 125 per month.

Agriculture Inputs Company (AIC), the state owned fertilizer distributor is finding difficult to recruit transporters of fertilizers from overseas. The reason being that transport companies don't want to take risks of delay in delivery that could result in fines. This could affect availability of subsidized fertilizer for summer crops.

Fiber-based handicraft are doing brisk business. Chandan Sapkota analyzes the "Demise of garment industry".

Cosmic Air, Yeti International and Impro Airways have lost their Air Operation Certificate (AOC). They have not been in service for at least a year.

In a bizarre news, the the Supreme Court (SC) has annulled the government plan, part of 2009/10 budget, to provide an incentive of Rs 50,000 to those who marry single women.