Thursday, March 16, 2017

Government committed to fight flow of dirty money

The government is fully committed to combating the flow of dirty money that propagates financial crime, according to a central bank official.
Speaking at a learning event ‘Anti-Money Laundering and Terrorist Financing (AML/TF) in Nepal’ for young entrepreneurs, organised by the Entrepreneurs’ Organisation (EO) Nepal in Kathmandu today, deputy director of Financial Information Unit under the central bank Hari Kumar Nepal said that government was fully committed to control any form of financial crime including money laundering and tax evasion.
The government is mulling over introducing more stringent rules in the near future to minimise chances of money laundering, he said, adding that the central bank will soon have regulations like prohibition of cash transaction higher than Rs 1 million and prohibit use of savings account for business transactions. "We hope that this will contribute in controlling money laundering."
Money Laundering and Terrorist Financing is no longer the issue of Nepal only, it has drawn attention of governments all over the world and other international organisations,” he said, adding that the government was serious on the issue and that it will leave no stone unturned to eradicate such practices.
He also said that money laundering has worsened not only the business sector, but also politics and administration. The event basically focused on demarcation between money laundering and tax evasion, legal frameworks and contribution of business sector to control it.
“Surveys show that more than 3.6 per cent of global GDP is earned through criminal activities,” Nepal said, adding, "If we add amount of tax evasion to it, the result is shockingly high. But one has to be aware of the fact that each and every business started with black money is a crime. And, one cannot get peace of mind with black money."
He also said that tax evasion supported by corruption is the biggest challenge of Nepal.
“It starts right from a general landlord to show low rental charge to evade tax," Nepal added. "So, it is very much difficult to bring this all in track."
Stating that though the country still lacks stringent rules to tackle financial crimes, Nepal said it is unlikely for anyone engaged in such illegal activities to go scot-free.
The event was followed by an interaction session where young entrepreneurs and EO members shared their view on how business sector can work together with government to implement the measures to control financial crimes.

Wednesday, March 15, 2017

National Geographic lists Pokhara as Best Spring Trips 2017

Pokhara has made it to the list of the destinations not to be missed in the spring of 2017.
The National Geographic travel magazine has recommended 12 destinations around the world to visit in this spring and Lake City Pokhara of Nepal finds its place on its list of Best Spring Trips 2017.
The UK-based popular travel publication with a theme ‘Hit a travel high in the beauty of this Himalayan city’ has described Pokhara as a hidden gem for adventurous travellers.
“Soaring over the Pokhara City delivers adrenaline-junkie Himalaya views without the hiking,” it writes, adding that Pokhara – a gateway to Nepal’s Annapurna region – is considered one of the world’s top spots for paragliding due, in part, to jaw-dropping views of glaciers, lakes, and snow-covered peaks. "No experience is required to ride on a sunrise paragliding tandem flight."
Options include the relatively tame Cloud Buster (20- to 30-minute) scenic flight, a longer (45- to 60-minute) Cross-Country tour, and the spinning-and-spiraling Acrobatic Flight, it further writes. "Before launching from Sarangkot (2,000 feet above the Pokhara Valley), snap a picture of Pokhara's majestic mountain triple crown-26,795-foot Dhaulagiri, 26,040-foot Annapurna II, and 26,781-foot Manaslu," it adds.
The other destinations that are made it to the list include Cape Town of South Africa, Eastern Europe, Central Park, Olympic National Park, Philadelphia of USA, Suzhou of China, Great Barrier Reef of Australia, Balloon Rally of Washington, USA, Los Glaciers National park of Argentina, Aogashima of Japan and Bubble Lodges of France.

Government releases Rs 5 million each to 744 local units

The Finance Ministry has released Rs 5 million each to the 744 new local units. A cabinet meeting last week had decided to provide at least Rs 10 million each to the local units.
Talking to journalists at the ministry today, deputy Prime minister and finance minister Krishna Bahadur Mahara said the ministry has released Rs 5 million as the seed money for the basic infrastructure of the local units. "The newly formed 744 local units will each get Rs 10 million,” he said, adding that Rs 5 million has been immediately released, and the remaining amount will be released on the basis of budget usage.
The ministry has released Rs 3.5 billion from the 'miscellaneous budget head' under the Finance Ministry. "The seed money will help the newly-formed local bodies manage their staff, and construct physical infrastructure,” he said, adding that the amount is a grant to the local units. “Though the metropolises have their own resources for such works, the rural municipalities, currently do not have resources also to set up new structure too.”
The government has – in order to implement federalism – formed a total of 744 local units including 4 metropolises, 13 sub metropolises, 246 municipalities, and 481 rural municipalities, and they have started setting up their offices from Monday.
The government has sent joint secretaries to the metropolises, under secretaries to the sub metropolises and municipalities, and section officers to head the rural municipalities, he informed.
Mahara, on the occasion also informed that the ministry has already released Rs 10 billion for the Election Commission for the local election, and Rs 10 billion will be provided to the Home Ministry. "Though the Home Ministry has asked for Rs 31.75 billion for security arrangements for the local election, we are trying to add more budget for them according to the need,” he added.
The government has allocated Rs 20 billion for the local election that is slated for May 14 this year.

Government delaying action against tax cheaters

Despite clear direction of the Parliamentary Accounts Committee (PAC) to investigate and penalise responsible authorities for not recovering capital gains tax (CGT) from the seller of GSM operator Ncell, concerned authorities, after 10 months of the shares transfer, are arguing on who should pay the CGT.
According to domestic and international laws, the CGT has to be paid by the seller.
Though PAC, on May 29, wrote to the Commission for the Investigation of Abuse of Authority (CIAA) to investigate the transaction from the very beginning and penalise the officials responsible, neither the CIAA nor the government has heeded the PAC directive.
The government could lose the CGT, if the dilemma and misinterpretation of the law continues any further.
Albeit late, the cabinet last week decided to recover capital gains tax (CGT) from the seller ie Swedish telecom operator TeliaSonera on the basis of decision of the Public Accounts Committee (PAC) of May 29 and Finance Committee of June 3.
Malaysian telecom giant Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from TeliaSonera at around US$ 1.03 billion in April last year. Reynolds Holding was TeliaSonera's wholly-owned subsidiary registered at Saint Kitts and Nevis, a tax haven.
The TeliaSonera had sold its entire stakes in Ncell as part of its strategy to exit Asian and former Soviet markets to focus on Europe and its home Nordic region. The Swedish firm had sold a 60 per cent stake in Ncell and also dissolved its interest in an additional 20 per cent stake owned by local partner in December 2015. Ncell officially became a part of Axiata Group Bhd on April 12, 2016.
But the Nepali taxmen started an initiative to tax the transaction only after TeliaSonera exited Nepal.
The largest transaction in Nepali corporate history has been in news – affecting Ncell's plan to rollout 4G services – also due to some of the responsible government officials, including director general of Inland Revenue Department Chudamani Sharma and chief of the Large Tax payers' Office (LTO) Shovakanta Poudel. Sharma has been claiming that TeliaSonera does not need to pay CGT in Nepal, whereas Poudel has not yet calculated how much CGT the government owns to the TeliaSonera, currently Telia.
TeliaSonera has been however claiming that there is no need to pay CGT in Nepal since the transaction had taken place elsewhere. Responding to an email query press officer of TeliaSonera Johanna Hansson said that recent reports in Nepali media do not change TeliaSonera's view on the tax situation. "We are still of the firm belief that Telia should not pay CGT on the international part of the transaction relating to the sale of Ncell," she added.

NEA plans six cross-border interconnection corridors

Nepal Electricity Authority (NEA) has identified six cross-border interconnection corridors and 11 transmission lines with 22,000 MW generation capacity added within 2035.
Speaking at an interaction on Transmission Network System of Nepal organised by Energy Development Council (EDC) in Kathmandu today, managing director of NEA Kul Man Ghising said that the power utility has identified and planned six cross-border
Interconnection corridors and 11 transmission lines with a proposed 22,000 MW generation within 2035, as part of its strategy to optimise the energy grid.
Saying that a robust transmission and distribution system is the need of the hour for reliable power supply he informed that NEA was also going to study the requirements and feasibility of major transmission projects such as East-West transmission highway of 400 kV and 765 kV, Mid-hill transmission corridors of 400 and 220 kV, and North-South corridors of 220 and 400 kV.
He, on the occasion, also highlighted the current structure of transmission network in Nepal.
The discussion that featured talks from various stakeholders in the energy sector of Nepal saw officials from NEA and Independent Power Producers (IPPs) brainstorm on an outline on the current power scenario of Nepal.
On the occasion, IPPs also lamented discrimination by NEA while evacuating power. They said that compensation rate is different for different hydropower projects – from 45 per cent to 90 per cent. “Therefore, NEA has to be transparent and equal to power producer companies,” they said, adding that there was a special provision for transmission line for foreign producers but not to domestic producers.
The IPPs also stressed the need for a stable policy and more coherent approach from NEA. Giving an example where the construction of double-circuit instead of single-circuit could have evacuated more energy, they further said that IPP are ready to adopt Build-Own-Operate-Transfer (BOOT) model or even take the responsibility in land acquisition and procurement if allows. “IPPs are ready to adopt any favorable modality and are open to help the NEA to build transmission line,” they said, asking the government power utility to end the discrimination on transmission line construction. "There is a special provision for transmission line for foreign producers but not for national producers and that needs to end," they added
On the occasion, managing director of Liberty Energy Atma Ram Ghimire stressed the need for a stable policy and more coherent approach from NEA. Giving an example, where construction of double circuit instead of a single circuit transmission line could evacuate more energy and avoid duplication, he said that NEA has to synchronise the effort and have better coordination.
NEA has given top priority to install double circuit high capacity transmission network to enhance the quality of power supply.

Tuesday, March 14, 2017

Low-spending projects to be told to surrender budget

The Finance Ministry has started the process to withdraw budget from projects that have failed to spend till the end of the eighth month – by March 13 – of the current fiscal year.
Chief of Budget Division under the ministry Madhu Marasini said that the Finance Ministry has written all the ministries to submit the reports of the progres of the projects under them within a week. "After we get their reply, the ministry will decide whether to direct them to surrender funds," he added.
Though, the Finance Ministry is responsible for the resource mobilisation only, the low progress of some of the big ticket projects have defamed the government pressuring it to transfer the budget to the projects that have been performing better.
According to the Financial Comptroller General's Office (FCGO), the government has, by Monday, been able to spend only 38.15 per cent or Rs 400.16 billion, out of the total budget of Rs 1048.92 billion for the current fiscal year.
Of the total spending, capital spending stands at Rs 67.82 billion or 21.74 per cent, which reveals the pathetic condition of the perfromances of the development projects.
The Finance Ministry has told all the ministries to either expedite the development projects or surrender the budget and it will transfer the budget to the projects like Rani-Jamara-Kulariya Irrigation project that is performing better.
According to the ministry, some national pride projects like second International Airport Nijgadh, Kathmandu Nijgadh Expressway are not peforming well. The government had in the budget for the current fiscal year earmarked some Rs 10 billion for these projects but they have not been able to spend.
The ministry attributes the lower performance of the national pride projects and other projects as they have been allocated budget without enough homework, detail project report and study.
The three ministries that have received almost half of the total capital budget have utilised only a quarter of available funds so far, according to the FCGO.
The Ministry of Physical Infrastructure and Transport, the Office of Prime Minister and Council of Ministers, and the Ministry of Federal Affairs and Local Development were allocated a capital budget of Rs 135.9 billion – which is 44 per cent of the total capital budget of Rs 312 billion – for the current fiscal year.
But they, however, have spent only Rs 34.6 billion – which is only 25 percent of the total allocation – in the first eight months of the fiscal year, the latest data of the FCGO revealed.
"The worst performer was the Prime Minister’s Office, which was allocated a capital budget of Rs 35.3 billion which is 11.3 per cent of the total capital budget, has spent only Rs 2.7 billion or 7.8 per cent," the data revealed.
Prime Minister’s Office couldn’t spend capital budget because of low fund absorptive capacity of the National Reconstruction Authority (NRA), said joint secretary and spokesperson of the Prime Minister’s Office Damodar Regmi.
Though the authority has expedited the process of extending housing grants to earthquake survivors, it has not been able to utilise the allocated capital budget, he added.
The government’s capital budget includes funds allocated for the purpose of executing civil works, and purchasing land, building, furniture, vehicles, plants and machinery, among others.
Likewise, the Physical Infrastructure Ministry, for instance, was allocated a capital budget of Rs 72.7 billion, which is almost a quarter of total capital budget. The ministry, however, has spent only Rs 24 billion or 33 per cent of the total budget, in the eight-month period.
The performance of the Local Development Ministry has been even worse, with capital spending standing at Rs 7.8 billion or 28 per cent of the total allocation.

House approves amendment to Company Act

The Company Act Amendment Bill has finally been endorsed by the parliament.
The bill, which couldn’t get through the parliament on Friday due to lack of a quorum, was endorsed today. The new law is expected to simplify entry, operation and exit of companies in Nepal.
One of the key laws that could encourage prospective investors – both domestic and foreign – in Nepal, the amendment to the Company Act (2063 BS) has made things easier for companies, which are defunct for long and are looking to wind up their operations legally, according to industry minister Nabindra Raj Joshi.
The amendment has also relieved individuals and firms of liability to pay fees and fines piled up for several years. Such individuals and firms will have to pay only one per cent of their paid-up capital, according to a provision in the new law. Companies, which failed to report their operation details and pay liabilities for several years, can enjoy this facility for one time only.
“Around 50,000 defunct companies can benefit from this exit scheme,” according to the ministry.
According to the Act that has given exit chance to domestic and foreign firms in Nepal that are registered but are no longer in operation, any defunct firm can exist by paying 0.5 per cent of its paid-up capital or 0.5 per cent of due taxes that such companies owe to the government – whichever is less – in the next two years.
According to Joshi, the amendment, which started five years ago, has a number of provisions aimed at easing doing business and creating more jobs in the country.
“Apart from easy exit, the amendment has also made entry of a company easy,” Joshi said, adding that the amendments in the Company Act are expected to improve doing business environment and also attract private sector investments including foreign direct investments. "The Act has also given validity to online registration of companies and use of digital signatures."
With the introduction of online company registration three years ago, Nepal’s doing business indicator had progressed by five points.
The new law has also raised the threshold of paid-up capital of firms requiring compulsory formation of three-member auditors committee for auditing of their financial operations to Rs 100 million from existing Rs 30 million. Likewise, a firm can donate up to Rs 100,000 in a fiscal year up from Rs 50,000 in the existing law.
The legislature has also capped administrative cost of firms not distributing profit in the past year at 25 per cent of their annual expenditure. This measure is also believed to tighten screws on unscrupulous firms reporting loss by showing bloated meeting allowance and other unnecessary costs.
Similarly, the new Company Act has also increased the upper limit of number of promoters in a company from 50 to 101. The government has also introduced a provision whereby promoters of any company can participate in their annual general meeting (AGM) through video conference.

Telecommunication service providers must go public
Likewise, the new amendment has also made it mandatory for telecom companies having paid-up capital of Rs 50 million or above to float their shares to general public within the next two years. With such provision in the new law, private telecom operators will have to issue shares to the public in near future.
Except Nepal Telecom (NT), other five telecom service providers in Nepal are owned by the private sector. Among the private sector-owned telecom operators in the country, paid-up capital of United Telecom Ltd (UTL), Nepal Satellite Telecom and Ncell exceeds Rs 50 million. According to the Company Registrar Prem Kumar Shrestha, the provision is introduced for private telecom operators as they have comparatively higher direct every day linkage with the public.