SANGAM

Nepalese business affected by political instability



Finally the PM admitted that political instability is taking toll on business. Nepal Bandh has become an essential part of Nepal's political landscape. Everyone is doing their parts to make it a "success" - Maoists affiliated trade union, tanker drivers, Transportation workers, doctors at TUTH. Industrialists are fed up with government's inaction in addressing this issue and have threatened to do a "lock-down" of their companies. The cabinet has responded by agreeing in principle to mobilize 2500 Armed Police Force for industrial security. This is probably lip-service than anything.

As reported earlier, political strife is affecting imports of fertilizer from third countries. As a result, Ministry of Agriculture and Co-operatives (MoAC) is requesting India to supply 100,000 tons of Urea and DAP but India has agreed to supply only half that amount.

According MoAC, 80 percent of maize cultivation in Bara, 70 percent in Parsa, 55 percent in Rautahat, 40 percent in Sarlahi and 20 percent in Nawalparasi has failed due to fake hybrid seeds. The government has decided to provide Rs. 200 million compensation to the affected farmers. Food shortage is rearing its ugly head in mid and far-western Nepal due to 30-35 percent drop in summer crop production. Chick should cost Rs. 65 but the going rate is Rs. 90. Hatchery entrepreneurs and farmers accuse each other. Public transport fare is going up by 10 percent, the last hike was on March 3, 2009. The government is mulling amending Consumer Protection Act of 1997 to curtail soaring prices essential commodities.

Despite incessant political instability, government is doing its duty to collect revenues. In the first eight months of fiscal year 2009/10, it raised Rs. 105 billion or 26 percent higher than during same the period in the previous year. The top three categories were VAT (Rs. 33.6 billion), custom duties (Rs. 21.9 billion) and income tax (Rs. 17.5 billion). Nepal Telecom was the largest tax payer in the country because it earned a whopping Rs. 10.2 billion during 2008/09. Nepal Airline Corporation is apparently also profitable with revenue of Rs. 60 billion and loses of Rs. 220 million on domestic flights.

Government has increased its budget for road construction to Rs. 23 billion and has allocated another Rs. 15 billion for maintenance.

Remittance, the bedrock of Nepal's economy is wobbling. For the first six months of 2009/10, it was up 18.6 percent versus up 65.7 percent during the same period last year. Now Mauritius wants Nepalese workers.

While Nepal's stock market is trading at 40-month low, Commodity and Metal Exchange Nepal is expanding its product line to include trading of "crude oil" and "natural gas".