Weekly Economic Bulletin for the week 17th June to 23rd June, 2022

Nepal’s freshly built mega-infrastructures fails to attract participants

Recently launched Chobhar Dry Port and Gautam Buddha International Airport have both failed to attract participants.

Since being launched in April, the much-hyped Chobhar Dry Port has only been able to draw in less than twenty container trucks. The national pride project; Gautam Buddha International Airport, is also going through the same fate.?

Since being inaugurated after a decade of making on May 16, the second international airport of the country has been able to attract only one foreign airline so far i.e., Jazeera Airways, which flies thrice a week to Kuwait.?

Foreign-bound students breathe a sigh of relief as court lifts collateral restrictions

In a bid to stop haphazard use of land, the Ministry of Land Management recently issued a 12-point decision to facilitate the enforcement of the Land Use Act 2019 and Land Use Regulations 2022. Among many other things, the legislation mandated classification of land into different categories and sub-categories, and prohibited using land in any other ways than classified for its specific purpose.?

Citing lands hadn’t been classified yet, the Government had therefore prevented borrowers from putting up land as collateral in order to take loans.

However, stating that the stipulation violated the fundamental rights of citizens, the supreme court on June 20 issued an interim order to not implement the government’s decision.?

The apex court’s decision will undoubtedly provide respite to thousands of citizens, and especially to foreign-bound students that couldn’t get a bank loan upon which they heavily depend upon to pay for their studies.

Nepal Oil Corporation (NOC) hikes petroleum prices by record level

The Nepal Oil Corporation (NOC) has increased prices of petroleum products by record levels.?

NOC has?increased the prices?of petrol by a steep Rs21 per liter and diesel and kerosene by Rs27 per liter. With this highest ever increment made by the state-owned oil monopoly, the price of petrol will cost Rs199 per liter, diesel Rs192 per liter and kerosene Rs192 per liter.

Similarly, NOC has also increased aviation fuel sold to domestic airlines by Rs19 per liter to Rs185 per liter. For the international airlines, fuel price has been increased by $100 per kiloliter to $1,645 per kiloliter.

FDI pledges in IT sector nosedives

Foreign investors don’t seem too keen to invest money in the information and technology sector.?

According to the Department of Industry, Foreign direct investment (FDI) pledges in the IT sector plunged 409 percent year-on-year in the first 11 months of the current fiscal year ended mid-June.

Nepal received six small-scale FDI commitments in the information and technology sector worth Rs.81.75 million in the review period, compared to last year when FDI commitments in this sector totaled Rs.3 billion for 16 projects.

Cabinet gives ‘green-signal’ to the Government to sign labor pact with Britain

The Government, next week, is all set to sign one of the finest proposals that Nepal has received in the labor sector.

A cabinet meeting held on June 14 gave the green signal to the government to sign a bilateral labor agreement with Britain under which Nepali nurses will be permitted to work in the United Kingdom.

The details, including the qualifications for Nepali nurses to be eligible to work in the UK, is yet to be disclosed. However, nurses that are selected will receive the same salary as their British counterparts, which is estimated to be ￡33,384, or Rs5.07 million.

CAAN seeks to displace paragliding in Pokhara

Nepal’s aviation watchdog has sought to displace paragliding from Pokhara, thereby, putting the entire tourism sector at risk.

As the Pokhara Regional International airport nears its completion, Civil Aviation Authority of Nepal (CAAN) has directed the entrepreneurs concerned to shift the popular aerial adventure sport to some other place from January, citing it is not possible for civil flights and paragliding to take place in the same sky at the same time.?

Paragliding is the backbone of not only Pokhara but the entire tourism sector. In fact, Pokhara is the third most popular among the top five destinations for paragliding in the world due to its suitable weather condition that enables paragliding year around. As a large volume of tourists come to Pokhara solely for paragliding, entrepreneurs opine that instead of displacing the adventure sport, the Government should find a way out so that both paragliding and civil flights can take place in the same sky.

Government launches ‘SuTRA’ at all local levels

Public financial management is on track to become less costly, convenient and transparent, as the Government seeks to upgrade the current traditional single account system with the help of SuTRA.

Targeting to improve the financial management system in the local bodies, with support of the UK government, the Government officially launched the Sub-national Treasury Regulatory Application (SuTRA); an online portal-based financial management system, on June 23.

The SuTRA mechanism, under which 210 local governments are connected so far, provides up-to-date information on budget balances and prevents payments unless an adequate fund remains with the local levels. It enables municipalities to generate financial statements quickly and easily, thereby saving time and cost. The system also enables the government to monitor the transfer of fiscal grants along with their utilizations at the local levels. By making the government transaction at the local levels more transparent SuTRA makes the local governments more accountable.?

Government suspends NAC chief until further notice

The Government in recent times seem to have developed an unwarranted taste for flexing its muscles as one after other high ranking government officials are getting ‘suspended’ under various pretexts for personal gain.

After the April 9 suspension (later overturned) of the Nepal Rastra Bank governor, Maha Prasad Adhikari, the Government has now suspended Executive Chairman of Nepal Airlines Corporation, Ubaraj Adhikari, on April 20 until further notice.?

The Government’s decision comes on the heels of the June 8 proposal submitted by Minister for Culture, Tourism and Civil Aviation Prem Bahadur Ale to suspend Adhikari, whom Minister Ale has had personal differences . Just recently, in a leaked audio, Minister Ale was even caught threatening Adhikari with obscene words in his own chamber.

Regular flights resume as airline operators withdraw their protest

After the Civil Aviation Authority of Nepal (CAAN) warned of strict action against the protestors, the Airline Operators Association of Nepal (AOAN) has withdrawn its decision to suspend domestic flights from June 22.

Citing lack of sufficient space at the Tribhuvan International Airport, on June 19, CAAN had unveiled an ad-hoc mandatory provision that required fixed-wings operators and helicopter companies to shift more than 60 percent of their aircraft to other airports as their operating base.

Stating that the decision was taken in haste and without their consultation, AOAN on June 21 had announced to suspend all domestic flights for an indefinite time until their five-point demands were met.

In response, the aviation watchdog had stated in a press conference that the law forbids calling a strike in the aviation industry. Stating that it was the need of the hour CAAN had warned airline operators to comply or risk facing strict action.?

‘Staff adjustment issue’ throws Nabil Bank’s plan to acquire NBB in limbo

After a rift surfaced in the settlement of human resources of these two entities, the much-awaited unification of Nabil Bank and Nepal Bangladesh Bank (NBB) now hangs in the balance.

After Nabil Bank and NBB signed an agreement for the latter’s acquisition on January 13, 2022, the NBB Chief Executive Officer Gyanendra Prasad Dhungana, on behalf of the bank’s staff, had agreed for demotion of the NBB staff to merge with Nabil Bank.

But dissatisfied with Dhungana’s decision, NBB employees took the issue to NRB — the sector’s regulator, that too decided in favor of not demoting any NBB staff member after the acquisition. Following the development, Nabil Bank staffers then launched a protest accusing NBB of randomly giving promotion to its staff to secure higher positions in the entity to be formed after the acquisition.

Nepal Rastra Bank (NRB), in this regard, called on the board of directors and high-level officials of both these banks on June 22, to talk over the issues.