The gambling houses may have to put up collateral to obtain licence
SANGAM PRASAIN
KATHMANDU, FEB 21 -
Delay in paying royalty to the government could prove costly for casinos henceforth.
With Parliament’s Public Account Committee (PAC) instructing the government to come up with regulatory framework to regulate casinos, the Ministry of Tourism and Civil Aviation (MoTCA) has prepared a draft guidelines on casinos which says that casinos have to put up a collateral worth equivalent to the two years’ royalty while acquiring operating licence.As casinos were found to be reluctant in paying royalty and other dues to the government, the proposal of collateral was floated, said a ministry official. “The rationale behind the new provision is to ensure royalty compliance,” said a ministry official. “If a casino defaults on royalty payment, the government will seize its collateral.” Currently, casinos have to pay an annual royalty of Rs 20 million.
The guidelines, which are currently under discussion, say that the operating license can be renewed every two years. The government, through the budget, has made it mandatory for casinos to get their licences renewed every year. As per the Finance Bill, casinos failing to clear their royalties by mid-January will lose their licences. A gambling house that loses its licence will have to start afresh to obtain a new one.
The new guidelines also talk about allowing Nepali citizens in casinos. However, only big taxpayers (those having an annual turnover of Rs 250 million) will be allowed in casinos. The Department of Revenue Investigation will provide data of those big taxpayers. Casinos should issue memberships to these people, says the proposed guideline. However, they have to pay an entry fee of Rs 5,000 for 24 hours.
According to the draft guidelines, casino operators have to submit their detailed business and investment plan to the government to obtain licence. With most of the casinos relying on Nepali citizens, the guidelines say that casinos should come up with tourism packages to attract foreign clients. Casinos should register their infrastructure —from furniture to gaming machines at the ministry and should have ministry’s stickers pasted on them.
The ministry will supervise casinos every three months and will be entrusted with the whole job of monitoring them, according to the guideline. In order to regulate and enforce the guidelines, plain-cloth police personnel will also be mobilised in casinos. Hotels had been complaining that surprise police raids had terrified their clients.
The DRI had recommended the ministry to shut eight casinos failing to pay their royalty dues on time. The ministry has not been able to take a decision in this regard because of the delay in the Cabinet formation.
The DRI on Feb. 13 had dispatched a letter to the ministry asking it to shut down Casino Rad, Casino Venus, Casino Grand, Casino Royale, Casino Anna, Casino Shangri-La, Fulbari Casino and Casino Nepal after they failed to clear their outstanding royalties and dues within the 35-day deadline set by the department.
Of the 10 casinos currently operating in the country, only two—Casino Tara at Hotel Hyatt Regency and Casino Everest at Hotel Everest—have cleared their dues.
In a bid to regulate the casino business, PAC issued a series of directives to the government—from drafting a Casino Act and working procedure for casinos to amending the existing Gambling Act. PAC had directed the government on Dec. 28 to scrap operating licences of casinos that fail to clear their dues within 35 days. The DRI, based on PAC’s directive, had issued a strong notice to all the defaulting casinos asking them to either clear their dues or face cancellation of their operating licenses.
Following the PAC directives, five casinos—Casino Tara, Casino Rad, Casino Venus, Casino Grand and Casino Shangri-La—paid their royalties for the current fiscal year. However, except for Casino Tara, the other four have been recommended for action by the DRI. Three casinos—Casino Venus, Casino Rad and Casino Grand—have been recommended for action as they have not cleared their interest payment for the current fiscal year even though they paid the royalty for the current fiscal year.
According to the DRI, these eight casinos still owe Rs 355 million to the government. Despite constant pressure of revenue enforcement agencies, Casino Anna and Casino Nepal have not settled their dues. These two casinos owe Rs 244 million. Likewise, Casino Fulbari still has to pay Rs 62.1 million.
The government, for the last six months, has been tightening the screw against casinos after their repeated failure to clear royalties and dues. Continued defiance by casinos of government orders to clear their dues and bar Nepalis from entering their premises forced the government and PAC even to explore the possibility of moving them out of Kathmandu.
Sunday, February 20, 2011
Health is wealth
Hospitals and medical colleges are big investment opportunities for the private sector
SANGAM PRASAIN
KATHMANDU, FEB. 18
Nepali business houses have stayed away from investing in the health sector for many years. Presently, some of the leading names in Nepal's private sector, the Khetan Group, NE Group and Upendra Mahato, have announced plans to enter the health sector in a big way.
The private sector has a strong presence in the domestic health sector through medical institutions like Om Hospital, B&B Hospital, Medicare Hospital, Kathmandu Medical College and Manipal Medical College. However, the latest wave of investments from the private sector shows that health is now turning into an investment area for them.
The Chaudhary Group was perhaps the first business house in Nepal to make a foray into the health sector in an institutional way. The group established Norvic International Hospital (then known as Norvic Health Care and Research Centre) in 1994. It is now operating with 100 beds. Two leading private hospitals, Om Hospital and Medicare Hospital, were upgraded from nursing homes to hospitals.
The expansion and success of private hospitals in India, ever growing need of quality health service and poor performance of public sector health outlets has provided immense opportunities for the private sector. Khetan Group chairman Rajendra Khetan said, "There is a huge gap between demand and supply in domestic health service." Khetan thinks the domestic market is large enough for private players to survive and make profits.
Cash-rich Khetan Group is currently looking for land for its foray into the health sector. According to Rajendra Khetan, the group will invest Rs 3 billion in its health project that includes hospital, medical college and nursing college.
After investing in Medicare Hospital, Upendra Mahato, former president of the Non-Resident Nepali Association (NRNA), is now gearing up for yet another venture into health. Mahato is working to start a medical college and hospital in Kathmandu. The proposed Ashwini Medical College and Hospital is a Rs 7 billion project. The college will have 100 seats and has already received permission from the Ministry of Education. According to sources, the medical college will be affiliated to Tribhuvan University or Kathmandu University.
CE Construction in a tie-up with another company has invested in Grande International Hospital at Dhapasi, Kathmandu with 200 beds. The Rs 1.2 billion project will be completed by February 2012, according to Vijay Rajbhandary, chairman of CE Construction. "The hospital will be a multi-disciplinary one to cater to the growing needs of patients," said Rajbhandary. "The hospital will be expanded to 500 beds within a decade along with a medical college and nursing college."
Of late, foreign joint ventures are slowly making inroads into the Nepali health sector. Norvic Hospital has recently entered into an agreement with India’s Medanta Medicity, one of the leading hospitals in India, for technology transfer and expertise in the medical field. Super Religare Laboratories (SRL), one of India’s leading diagnostic networks, opened a Super Religare Reference Laboratories (Nepal) in a joint venture with the NE Group.
The laboratory is a partnership between SRL and Life Care Services, a subsidiary of the NE Group. Each has a 50 percent stake in Super Religare Reference Laboratories which has a total investment of Rs 50 million. SRL is the largest and most trusted pathology laboratory network in India, servicing nearly 4,000 hospitals/path labs and over 50,000 doctors.
This JV, according to Ravi Bhakta Shrestha, vice chairman of the NE Group, is now mulling opening a boutique hospital in Nepal. "We're currently under negotiation with Fortis Healthcare Limited, one of SRL's promoters," said Shrestha. Though it is still not decided about the equity structure, Shrestha says the NE Group is keen to invest up to 50 percent in this venture. The boutique hospital will have 100 beds with world class health services.
Norvic is also going for a big expansion drive with an investment of Rs 1 billion. Apart from expanding its existing hospital at Thapathali by adding 100 beds, it is establishing a medical college at Lubhu, Lalitpur. There will be a 100-bed community hospital at Lubhu that will provide health service at relatively cheaper prices.
With the public health service still not being effective despite the government pumping in billions of rupees, the private sector's entry into it is believed to make health services better, professional and reliable. However, there is also the question of affordability. Will the common people have access to these high-end medical facilities? Will they be able to get services? These are some pertinent questions.
Khetan believes that with an increase in supply, the cost of health services will drop. "There is a huge gap between demand and supply. If we can manage to increase supply, we'll have a higher turnover, which will eventually allow us to provide health services at affordable prices," says Khetan.
Health entrepreneurs say that if properly developed, Nepal can attract patients from India due to cheaper medical costs and agreeable climate.
Reaching for the sky
The economy may have slowed to a crawl, but Nepal's aviation sector is taking off
SANGAM PRASAIN
The economy may not be growing by leaps and bounds, but it hasn't stopped domestic airlines from expanding. The domestic aviation sector is seeing new companies entering the scene and carriers expanding their fleets and spreading their wings beyond Nepal's borders.
With the country celebrating 2011 as Nepal Tourism Year with the aim of bringing one million tourists, the bustle in the aviation sector is understandable. The latest entrant is Goma Air that has two single-engine Cessna Caravan aircraft in its fleet. There are now nine domestic airlines and five helicopter services operating in the country.
Domestic airlines have been eyeing international operations. Their success in the domestic arena has made them confident of starting international flights. Buddha Air, after establishing itself strongly in the domestic domain, started international operations last year.
With the national flag carrier Nepal Airlines Corporation in a state of perpetual stupor, five domestic airlines have been inspired to join hands to start international operations by establishing a new company. Buddha Air, Yeti Airlines, Guna Airlines, Agni Air and Simrik Air plan to start international operations by May 2011.
Another indication of the country's aviation sector taking off is the 62 percent surge in domestic passenger movement and 36 percent rise in aircraft movement in the last 10 years (2000-09).
Remote areas: Next business prospect
Difficult geographical terrain and lack of roads in many parts of the country have provided the aviation sector huge business prospects. Single-engine aircraft are back in Nepal's skies. Many aviation entrepreneurs say the next big business for domestic aviation would be remote areas. Buddha Air's managing director Birendra Basnet is one of them. "The next big business scope for domestic airlines is remote areas," said Basnet. "As this sector is less competitive and the cost of operation is also less, there is profitability in this sector."
Unlike ‘trunk routes’ – long distance routes -- where there is stiff competition, the remote sector is still a virgin market. With single-engine aircraft relatively cheaper to acquire and operate, domestic airlines are now opting for them. In a country where flying is not only a luxury but also a supply and communication lifeline for remote areas, availability of more air seats and cargo space is in itself a major development.
Domestic carriers that were reluctant to fly in remote areas are now taking the lead in remote area service. As of now, four airlines -- Tara Air, Air Kasthamandap, Makalu Air and Goma Air -- are operating services with single-engine aircraft. Recently, Akash Bhairav Aviation has been issued an AOC for single-engine operation. The airline plans to bring two single-engine planes.
Known for their short take-off and landing (STOL) capabilities, single engine aircraft are perfect for Nepal's mountainous terrain. These planes are best suited to transport essential goods to remote places that do not have access to roads or infrastructure to handle double-engine aircraft.
Except for Tara Air, the other three airlines flying single-engine aircraft have made Surkhet their base, targeting remote areas of the Mid-West and Far West. According to Goma Air's chairman Upendra Bhattarai, the carrier is planning to provide services to Mugu, Bajhang, Bajura and Doti in the first phase before expanding to other remote areas. Air Kasthamandap has been operating flights to Jumla, Dolpa, Mugu and Humla districts from its base in Surkhet.
Infrastructure development: An urgent need
Despite bright prospects, infrastructure bottlenecks could undermine the success achieved so far. Hence, urgent steps are needed to upgrade and develop aviation infrastructure. The country's only international airport, Tribhuvan International, is overstretched with a rise in international and domestic aircraft.
Birendra Bahadur Deuja, an aviation expert and former director general of the Civil Aviation Authority of Nepal (CAAN), said business prospects in the aviation sector are bright. "However, there should be more investment by the government as the current investment in the aviation sector is very nominal," said Deuja.
According to CAAN Deputy Director Tri Ratna Manandhar, there is a dire need to improve airport technology in line with international standards. “The government should increase investment in the air navigation and surveillance system as Nepal has been receiving pressure from ICAO to improve airport standards," said Manandhar.
The government has been working to establish a second international airport and three regional international airports. South Korea’s Landmark Worldwide Company that was assigned to do a detailed feasibility study for the airport has already presented its report to the government. According to the report, a single-runway airport at Nijgadh can be finished in 2015 if construction is started this year. Landmark's feasibility study stated that the proposed international airport could handle five to 15 million passengers annually and even accommodate the super jumbo Airbus 380 after the first phase of construction.
The government has also been working to develop Janakpur, Pokhara and Bhairahawa airports as regional international airports. The expansion of these three airports would open the way for more cross-border flights between Nepal and India. The expansion of Janakpur airport into a regional international airport can attract a large number of Hindu pilgrims while Bhairahawa's expansion could give a boost to Buddhist pilgrimage.
International operations: Still cautious
The new Air Service Agreement (ASA) signed between Nepal and India in September 2009 has opened the way for cross-border flights between the two countries. The ASA has increased the number of weekly flight seats to 30,000 and opened 10 new destinations for Nepali airlines permitting them to fly to 21 destinations in India.
Buddha Air has already planned to connect seven Indian cities by the end of 2011. In the first phase, it plans to link Lucknow, Kolkata and Patna. In the second phase, it plans to extend its service to Varanasi, Guwahati, Derhadun and Gorakhpur.
Despite having started international operations to Bhutan and Lucknow, Birendra Basnet sounds cautious about Nepali airlines going international. Before Buddha, four Nepali private airlines -- the now defunct Necon Air, Cosmic Air, Air Nepal International and Fly Yeti -- started international operations which were subsequently discontinued. "Given our capacity, we should not go forward aggressively," said Basnet. "Instead, we should look at capitalising on markets where there are large numbers of Nepali migrant workers."
The new international airline being promoted by five domestic carriers is eying major tourist hubs in the region for its business. “As per our plan, we will serve the Gulf countries, Malaysia, India, China and Singapore,” said one of the promoters. They are hiring an international management team including the chief executive officer to run the five-airline consortium.
Despite having more than a dozen fixed-wing and helicopter companies, sustainability has been the major issue. The demise of Necon, Cosmic, Shangri-La, Everest, Nepal Airways, Lumbini, Gorkha and other carriers are some of the unsuccessful stories in Nepal's domestic aviation. But entrepreneurs now seem determined to take lesions from the past.
Domestic passenger movement
Year No. of Passengers Change
2007 91,6429 3.8%
2008 1,036,586 13.1%
2009 1,377,868 32.9%
2010 1,073,391 (Jan-Sept) -----
Domestic flight movement
Year No. of Passengers Change
2007 65443 6.8%
2008 69286 5.9%
2009 76191 10%
2010 55,345 (Jan-Sept) ------
SANGAM PRASAIN
The economy may not be growing by leaps and bounds, but it hasn't stopped domestic airlines from expanding. The domestic aviation sector is seeing new companies entering the scene and carriers expanding their fleets and spreading their wings beyond Nepal's borders.
With the country celebrating 2011 as Nepal Tourism Year with the aim of bringing one million tourists, the bustle in the aviation sector is understandable. The latest entrant is Goma Air that has two single-engine Cessna Caravan aircraft in its fleet. There are now nine domestic airlines and five helicopter services operating in the country.
Domestic airlines have been eyeing international operations. Their success in the domestic arena has made them confident of starting international flights. Buddha Air, after establishing itself strongly in the domestic domain, started international operations last year.
With the national flag carrier Nepal Airlines Corporation in a state of perpetual stupor, five domestic airlines have been inspired to join hands to start international operations by establishing a new company. Buddha Air, Yeti Airlines, Guna Airlines, Agni Air and Simrik Air plan to start international operations by May 2011.
Another indication of the country's aviation sector taking off is the 62 percent surge in domestic passenger movement and 36 percent rise in aircraft movement in the last 10 years (2000-09).
Remote areas: Next business prospect
Difficult geographical terrain and lack of roads in many parts of the country have provided the aviation sector huge business prospects. Single-engine aircraft are back in Nepal's skies. Many aviation entrepreneurs say the next big business for domestic aviation would be remote areas. Buddha Air's managing director Birendra Basnet is one of them. "The next big business scope for domestic airlines is remote areas," said Basnet. "As this sector is less competitive and the cost of operation is also less, there is profitability in this sector."
Unlike ‘trunk routes’ – long distance routes -- where there is stiff competition, the remote sector is still a virgin market. With single-engine aircraft relatively cheaper to acquire and operate, domestic airlines are now opting for them. In a country where flying is not only a luxury but also a supply and communication lifeline for remote areas, availability of more air seats and cargo space is in itself a major development.
Domestic carriers that were reluctant to fly in remote areas are now taking the lead in remote area service. As of now, four airlines -- Tara Air, Air Kasthamandap, Makalu Air and Goma Air -- are operating services with single-engine aircraft. Recently, Akash Bhairav Aviation has been issued an AOC for single-engine operation. The airline plans to bring two single-engine planes.
Known for their short take-off and landing (STOL) capabilities, single engine aircraft are perfect for Nepal's mountainous terrain. These planes are best suited to transport essential goods to remote places that do not have access to roads or infrastructure to handle double-engine aircraft.
Except for Tara Air, the other three airlines flying single-engine aircraft have made Surkhet their base, targeting remote areas of the Mid-West and Far West. According to Goma Air's chairman Upendra Bhattarai, the carrier is planning to provide services to Mugu, Bajhang, Bajura and Doti in the first phase before expanding to other remote areas. Air Kasthamandap has been operating flights to Jumla, Dolpa, Mugu and Humla districts from its base in Surkhet.
Infrastructure development: An urgent need
Despite bright prospects, infrastructure bottlenecks could undermine the success achieved so far. Hence, urgent steps are needed to upgrade and develop aviation infrastructure. The country's only international airport, Tribhuvan International, is overstretched with a rise in international and domestic aircraft.
Birendra Bahadur Deuja, an aviation expert and former director general of the Civil Aviation Authority of Nepal (CAAN), said business prospects in the aviation sector are bright. "However, there should be more investment by the government as the current investment in the aviation sector is very nominal," said Deuja.
According to CAAN Deputy Director Tri Ratna Manandhar, there is a dire need to improve airport technology in line with international standards. “The government should increase investment in the air navigation and surveillance system as Nepal has been receiving pressure from ICAO to improve airport standards," said Manandhar.
The government has been working to establish a second international airport and three regional international airports. South Korea’s Landmark Worldwide Company that was assigned to do a detailed feasibility study for the airport has already presented its report to the government. According to the report, a single-runway airport at Nijgadh can be finished in 2015 if construction is started this year. Landmark's feasibility study stated that the proposed international airport could handle five to 15 million passengers annually and even accommodate the super jumbo Airbus 380 after the first phase of construction.
The government has also been working to develop Janakpur, Pokhara and Bhairahawa airports as regional international airports. The expansion of these three airports would open the way for more cross-border flights between Nepal and India. The expansion of Janakpur airport into a regional international airport can attract a large number of Hindu pilgrims while Bhairahawa's expansion could give a boost to Buddhist pilgrimage.
International operations: Still cautious
The new Air Service Agreement (ASA) signed between Nepal and India in September 2009 has opened the way for cross-border flights between the two countries. The ASA has increased the number of weekly flight seats to 30,000 and opened 10 new destinations for Nepali airlines permitting them to fly to 21 destinations in India.
Buddha Air has already planned to connect seven Indian cities by the end of 2011. In the first phase, it plans to link Lucknow, Kolkata and Patna. In the second phase, it plans to extend its service to Varanasi, Guwahati, Derhadun and Gorakhpur.
Despite having started international operations to Bhutan and Lucknow, Birendra Basnet sounds cautious about Nepali airlines going international. Before Buddha, four Nepali private airlines -- the now defunct Necon Air, Cosmic Air, Air Nepal International and Fly Yeti -- started international operations which were subsequently discontinued. "Given our capacity, we should not go forward aggressively," said Basnet. "Instead, we should look at capitalising on markets where there are large numbers of Nepali migrant workers."
The new international airline being promoted by five domestic carriers is eying major tourist hubs in the region for its business. “As per our plan, we will serve the Gulf countries, Malaysia, India, China and Singapore,” said one of the promoters. They are hiring an international management team including the chief executive officer to run the five-airline consortium.
Despite having more than a dozen fixed-wing and helicopter companies, sustainability has been the major issue. The demise of Necon, Cosmic, Shangri-La, Everest, Nepal Airways, Lumbini, Gorkha and other carriers are some of the unsuccessful stories in Nepal's domestic aviation. But entrepreneurs now seem determined to take lesions from the past.
Domestic passenger movement
Year No. of Passengers Change
2007 91,6429 3.8%
2008 1,036,586 13.1%
2009 1,377,868 32.9%
2010 1,073,391 (Jan-Sept) -----
Domestic flight movement
Year No. of Passengers Change
2007 65443 6.8%
2008 69286 5.9%
2009 76191 10%
2010 55,345 (Jan-Sept) ------
Subscribe to:
Posts (Atom)