Views of a Nepali Economist

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Use of internet bandwidth increasing

*Consumers of data and internet services have reached to 3,111,858 with overall 10.89 per cent internet penetration rate by mid-July
*Nepal Telecom has a total of 1,133,876 data and internet subscribers
*Ncell has 1,874,078
*UTL has 51,377 internet subscribers
*ISPs have 52,527
*There are 42 Internet Service Providers (ISPs) in Nepal currently

Banks' shareholders return decreases

In the last quarter of the fiscal year, the commercial banks’ return on equity recorded decline from that of third quarter when the average return on equity of the commercial banks stood at 15.56 per cent. Generally, the return on equity between 15 per cent and 20 per cent are considered desirable.

Among the 21 banks that have published Return on Equity in their financials, 12 commercial banks’ return on equity is above the average while nine commercial banks’ return on equity is less than the industrial average of 14.4 per cent.

Governor calls for investment in agriculture‚ service sectors

Banks' interest income rising

The higher lending interest rate due to tight liquidity situation pushed the interest income of the commercial banks by Rs 10 billion in the last fiscal year compared to a fiscal year ago. The total interest income of the commercial banks stood at Rs 37.8 billion by the end of fiscal year 2010-11, while the commercial banks had recorded Rs 27.8 billion a fiscal year ago, according to the unaudited financial report of fourth quarter released by the commercial banks.

In the last fiscal year (2010-11), the average net interest income of the commercial banks stood at Rs 1.21 billion while a fiscal year ago, the average net interest income of the whole banking sector was at Rs 896 million. Even discounting the four new commercial banks that were not in existence a fiscal year before, the average interest income of the old 27 commercial banks amount to Rs 1.38 billion in last fiscal year. In the preceding fiscal year these 27 banks had recorded Rs 1.03 billion as the average net interest income.

The old commercial banks’ interest income — that is income from interest on lending — rose to Rs 42 billion which was almost half at Rs 27 billion a fiscal year ago. The interest expense — that is interest paid for the depositors — also surged from Rs 57.5 billion to Rs 80.5 billion in fiscal year 2010-11.

The interest rate offered by the banks for deposit ranges from mere two per cent to 12 per cent, according to Nepal Rastra Bank (NRB) data

Garments demand in Europe up

...export of Nepali ready made garments has increased by 11.5 per cent compared to same period last year in the first eleven month of the last fiscal year...

PM to set up Economic Cell

Four Dharan drug makers close factories...unions to blame?

Nepal Telecom slashes data tariff by 33 percent

NT data uses will now have to pay just 10 paisa for 100 KB of data. Earlier, the state-owned telecom operator was charging 15 paisa per 100 KB. The tariff is applicable for subscribers using via from GPRS, PDSN, EVDO and 3G technologies.

NT has also slashed inter-zone voice tariff from VSAT, PSTN and fixed CDMA to GSM and CDMA to Rs 1 per minute. It was charging Rs 2 per minute for the service.

The state-owned telecom operator has also slashed subscription charge for CDMA Skyphone to Rs 600 with the talk value of Rs 500. Previously, it was charging Rs 1,135 as service charge for CDM Skyphone.

Two-wheelers registration slumps

...4,761 units of two-wheelers were registered in the first month of the current fiscal year in Bagmati zone...In the fiscal year 2010/11, about 53,960 units of bikes were registered in the Bagmati zone...Currently, Nepali customers pay 80 percent tax on two-wheelers and 238 percent tax on four-wheelers

Industries’ closure hits women the most

...around 20,000 workers lost their jobs in the past seven years in the Morang-Sunsari corridor. Of them, around 60 percent were women. The seven years saw more than two dozen industries of readymade garment products, ghee, jutes and zinc plate, shut down.

...the Surya Nepal’s garment division was employing 550 women...JD Apparels that was shut down one-and-a-half years ago had 1,300 women working...700 women lost their jobs when Easy Wear was closed

Airlines raise frequency for peak tourist season

Bhutan’s national carrier Druk Air, which currently operates daily flights between Kathmandu and Paro, has applied for six additional flights weekly under the temporary operating permit (TOP) from Sept 29

Air China and China Southern Airlines...have added three and four flights per week respectively, increasing their frequency to seven per week...Fly Dubai has been granted seven additional flights under the TOP for a total of 14 flights per week...Qatar Airways has upped its flight frequency to 28 flights per week from 21 which will be operational from Oct 1...Hong Kong-based Dragonair has increased its Kathmandu-Hong Kong flights to seven per week from thrice a week...Gulf Air is planning to add two flights per week due to strong demand from the European market

Bahrain Air and Arke Fly have announced resumption of their operations to Nepal. Bahrain Air resumed its flights from Sept 2 while Netherlands-based Arke Fly is scheduled to start service from Sept 23. Arke Fly will be operating a weekly flight while Bahrain Air operates a daily flight....Low-cost Indian carrier IndiGo will be the 28th international airline in Nepal’s skies when it starts its daily service from the second week of October

Labels: airlines, banks, garment, internet, labor unions, nepal telecom, nepal tourism year

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1. Public Accounts Committee recommends liquidation of Public Enterprises

...the PAC suggested the liquidation of National Construction Company, Nepal Engineering Consultancy Service Centre and Timber Corporation of Nepal

The report has asked the government to merge Krisi Samagri Company and National Seed Company, Industrial Estate Management Ltd with National Productivity and Economic Development Centre, and Herbs Production and Processing Corporation with Nepal Medicine Ltd and Singhdurbar Baidhyakhana, and Rural Housing Company with Nepal Housing and Finance.

...it has recommended the government to convert Nepal Television and Gorkhapatra Santhan into company to make them more competent.

2. Ilam's remarkable rise in milk production

*In 2009, they produced 96,342 metric tons
*In 2010, they produced 99,200 metric tons
*Ilam is the second largest milk producer district after Kavre in the country
*140,000 cows including hybrid-cows and 2,768 hybrid buffaloes have been reared in the district
*80 percent of milk produced in Ilam is sold in Biratnagar

3. Build roads, and they'll overcome poverty. An exmaple from Myagdi district.

4. Govt apathy puts lives of people in danger. An example from the Nepalese LP gas industry.

5. Bahrain Air resumes Ktm flights

6. Department of Labor to study, and record foreign workers in Nepal

...around 7,000 foreigners are currently working in the private sector with work permits...but DoL estimates that more than 20,000 foreign nationals are working with NGOs and INGOs alone...government and private sector organizations estimate the actual number of foreign nationals working in Nepal to be over 50,000

7. Israel's Prime Minister's wife accused of ill-treating the Nepali nurse hired to take care of her elderly father.

8. Some basic health indicators of Nepal and its neighbors

Labels: airlines, Bahrain, DoL, health, Ilam, Israel, LP gas, migration, milk, myagdi, PAC, ring road

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The BIG NEWS: Baburam Bhattarai becomes the 35th (and the most educated) Prime Minister of Nepal. Here is his short profile.

1. Half of households have one member abroad

...52.8 per cent of the total households have at least one member away from home...indicating the startling rise in loss of human capital in the country

...32 per cent families have members away in foreign countries...55 per cent of the total households receive remittance from the members abroad

...Over 354,000 Nepalis left the country last fiscal year to work in foreign destinations...and...that has created dearth in agricultural and industrial labour back home

...Nepal earns about Rs 210 billion from remittance coming in from abroad annually...but...79 per cent of total remittance is spent on daily consumption...and...only a meagre 2.4 per cent of the remittance contributes to capital formation

Although there are people in Nepal that praise remittance for its role in reducing poverty and inequality (both of which have NOT been proven empirically by any studies), there are some aspects of this heavy role of remittance that do not bode well for the country in the long run, especially because:

...empirical evidences also show that the development process of the economy that is dependent on remittance is relatively slower by about 1.5 percent

2.Banks deposit growth rate slows down

...average deposit growth rate slowed down by more than two times compared to a fiscal year ago

Deposits in the commercial banks grew by:
32.25 percent in 2008/09
12.9 percent in 2009/10
10 percent in 2010/11

Deposits with Janata Bank saw surging by 300 percent...Rastriya Banijya Bank has the largest deposit base with Rs 74 billion...Nepal Investment Bank has Rs 50 billion deposits

...saving and credit cooperatives were found to be mobilising deposits worth Rs 122 billion

3. Strike cripples life in 9 eastern districts

...the demand is to make Taplejung, Panchthar, Ilam, Jhapa, Morang, Sunsari, Dhankuta, Sankhuwasabha and Terhathum districts...into the Federal autonomous Limbuwan state

4. Protesting Mustang folks warn of barring tourist entry

...unless the government allocates 60 percent of the tourist royalty for the development of the region

Upper Mustang has not received its share as provisioned by the Local Self Governance Act for the last 16 years...despite the government of Nepal collecting...Rs 770 million in revenue annually through tourism from Upper Mustang since 1993...The government only provides ...a nominal Rs 70 million to the district. As a result, the region still lacks electricity, roads, schools and hospitals. Food shortage is a perennial problem as the topography of Upper Mustang is unfavourable for crops.

2,162 tourists visited Upper Mustang in 2010, up by 30.3 percent compared to the previous year

5. Preparation for Dashain; NRB ups note circulation by 40pc

...Last Dashain saw use of notes worth Rs 20 billion...According to NRB, it is sending clean notes worth around Rs 28 billion for this year’s Dashain

6. Only 10 companies hold 56 percent of Nepal stock exchange's total market capitalization

Company// Share in total market capitalization(%)

Nepal Telecom// 19.43
Standard Chartered Bank// 8.95
Nabil Bank// 7.85
Nepal Investment Bank // 3.83
Himalayan Bank// 3.56
Nepal SBI Bank// 3.26
Everest Bank// 2.81
Bank of Kathmandu// 2.40
Butwal Power// 2.32
Chilime Hydropower// 1.85

7. NOC hikes diesel, kerosene price by Rs. 1.50 per litre

The price of the diesel and kerosene has now reached Rs. 75 per litre from Rs. 73.50 per litre....the price of petrol is constant at Rs. 102 per litre which was increased from Rs. 97 some two months ago

8. Buddha Air tops domestic carrier operations

...in the first half of 2011 with a market share of more than 40 percent

The airline recorded an increment of 21.73 percent in passenger carriage. Except for Buddha Air and Sita Air, all the domestic carriers posted a negative growth in their passenger movement in the first six months.

Buddha’s nearest competitor Yeti Airlines saw its passenger movement dip by 1.55 percent. However, the airline is still the second largest carrier in domestic aviation with 224,062 passengers flying it in the first half of 2011.

...domestic airlines carried 761,043 passengers in the first six months, up 36,160 from last year...

Rate of Growth in Passenger Movement in first-half of the year:
32.05 percent in 2009
19.82 percent in 2010
4.98 percent in 2011

9. Nepalese Internet ...some numbers

*65,000 subscribers at the end of 2009/10
*52,527 subscribers at the end of 2010/11
*Between 2009/10 and 2010/11, number of dial-up users lowered by 33 percent
*Between 2009/10 and 2010/11, number of wireless users increased by more than 70 percent
*Between 2009/10 and 2010/11, wireless users increased by 10,000

*Worldlink is the leading internet provider with 19,858 subscribers
*Broadlink is second with 11,792 subscribers
*Mercantile Communication has 9,445 users
*Subisu Cablenet has 5,276 users
*Web Surfer has 958 users

*Internet penetration of the country has reached 10. 89 percent as of mid-June 2011
*But, nearly 98 percent the total users are GPRS users

Labels: airlines, banks, cooperatives, dashain, internet, migration, mustang, NRB, petroleum, remittance, share market, shutdown