Govt issues Foreign Investment and One Door Policy

RUDRA PANGENI Names five priority sectors for foreign investment KATHMANDU, Feb 28: The government on Friday issued Foreign Investment and One-Window Policy 2015, defining priority sectors to bring in foreign investment and introducing one-window service center to cater betters services to foreign investors. The policy has named hydropower, transportation infrastructure, agro-based and herbal processing industries, tourism, and mines and manufacturing industries are the prioritized sector for foreign investment. The Cabinet Committee on Financial Infrastructure and Development led by Finance Minister Ram Sharan Mahat on Friday approved the much-awaited policy with some minor corrections. Officials privy to the issue told Republica that the corrections include explanation of mass media industry which has been listed as a prohibited industry. Similarly, a provision has been added in the annex in which the government will remove or add priority industries listed in prohibited list by publishing a notice in Nepal Gazette. The objectives of the policy is achieving sustainable and higher economic growth, and creating jobs by mobilizing foreign investment, technology, skills and knowledge in the prioritized sectors. The policy replaces the Foreign Investment Policy of 1992 with an elaborate document which assures short-term and long-term visa for investors and their family members, their representatives as well as for manpower not available in the country. Similarly, the policy states that the government will facilitate foreign investors in land acquisition, industrial security and repatriation of investment and profits. It has clearly defined mediation and dispute resettlement process, among others. The policy states that foreign and domestic investors will be treated on par and that the government will not nationalize industries run by foreign investors. If such industries have to be acquired for the sake of public interest, the policy states that the government will do so by paying appropriate compensation. According to a statement issued by Ministry of Industry, Minister for Industry Mahesh Basnet said that the policy will be a base to trigger industrial revolution in the country by attracting foreign investment. The policy has also opened retail trading to foreign firms. However, the government needs to draft necessary laws to open the sector for foreign investors. The government is in the process of drafting Foreign Investment and Technology Transfer Act. The act is likely to be tabled in the parliament for approval within this fiscal year. The policy has not included any investment threshold for foreign investors. Government officials say such threshold will be included in the new act. Likewise, the policy has barred foreign investment in basic agricultural activities and limited such investments in herbal-based industries. Companies with foreign investment can also buy securities in the secondary market, according to the policy. As per the policy, the Ministry of Industry will restructure the existing Industrial Promotion Board as Foreign Investment Promotion Board. Priority sectors for foreign investment • Hydro-electricity (generation and transmission) • Transport infrastructure (expressway, railway, tunnel highway, cable car, metro rail, flyover and international airports) • Agro-based, food processing and herb processing industries • Tourism industry • Mining and manufacturing industries Prohibited sectors for foreign investment • Micro-enterprise and traditional cottage industries (except for technology transfer) • Arms and ammunition industry, and weaponry, explosives and gunpowder industries • Currencies and coinage business, and security printing • Real estate • Multi-brand retail trade with investment of less than Rs 500 million in fixed capital. (For larger investment, traders should have operations in more than two countries) • Owning or operating provider of tour guides, trekking and mountaineering guide, porters (also horse, mule and yak), cook for tourists • Priority sectors in agriculture including poultry, fishery, beekeeping • Industries involving radioactive material • Mass media industry

Indicators show grim picture of economy

RUDRA PANGENI KATHMANDU, Feb 24: Despite timely budget and improving investment environment, the government is missing expectations on almost all economic indicators. The mid-term review of fiscal policy unveiled on Monday says economic growth will hover above 5 percent. The budget had targeted economic growth of 6 percent. In the last fiscal year, national economy had grown by 5.2 percent. Trade deficit is widening at an alarming rate, and there has not been expected growth on capital spending. The government is sitting on cash pile of more than Rs 90 million allocated for development spending. The government has managed to spend only 12 percent of the allocated fund so far, according to the report. The mid-term review report says growth rate in industry and service industry is improving, but untimely monsoon and floods have affected agriculture production. Inflation currently stands at 7.3 percent, compared to 10 percent recorded in the last fiscal year. Similarly, revenue collection stands at a little above the target of Rs 185 billion set for the period. "Authorization for spending was issued on the first day of the fiscal year," Minister for Finance Ram Sharan Mahat said, unveiling the report on Monday. "But the tendency to wait for budget approval from the parliament and lack of serious planning and budgeting as well as lack of zeal in designing programs and spending affected developing spending in the first half of the current fiscal year." Mahat, however, said the government was cautiously monitoring budget spending and added that ministries have been told to sign multi-year contract for projects approved by National Planning Commission (NPC). "The finance ministry has clearly stated that such projects will not face any resource crunch," he added. Vice chairman of NPC Govind Raj Pokhrel said ministries were not serious about seeking timely approval of budget programs. "That is why we have introduced a fast-track mode for approval of development programs," he added. From left, Finance Secretary Suman Prasad Sharma, Minister for Finance Ram Sharan Mahat and National Planning Commission Vice-chairman Govind Raj Pokhrel at the unveiling of the mid-term review of the government’s fiscal policy held at the Ministry of Finance in Singha Durbar, Kathmandu on Monday.(Dipesh Shrestha/Republica) Spending progress of 21 priority projects stands very low except the Pushpalal Rajmarg (Mid-Hills Highway) and Upper Tamakoshi Hydropower projects. Commenting on slow capital spending, Pradip Jung Pandey, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said even the government seems to be in need of investment environment. "Government spending of, say Rs 5, induces investment of R 10 from the private sector," he said. "Rise in revenue collection shows private sector is doing its bit. Demand for bank loans is on the rise and private sector investment in hydropower and other sectors is growing." The mid-term review report, however, estimates that capital spending will increasing in the second half of the fiscal year. It has projected that capital spending will stand at 92 percent (Rs 558 billion) of the allocated Rs 618 billion. Minister Mahat said reducing the alarmingly widening trade deficit, which is expected to reach Rs 700 billion by the end of the current fiscal year, would be a big challenge. Nepal imported goods worth Rs 378.22 billion in the first six months of 2014/15 ending mid-January. Export income in the review period stood at Rs 43.39 billion. After assuming office a year ago, Minister Mahat had told media persons that he would initiate second-tier economic reforms. But on Monday, he did not speak about any such reforms. He simply said half a dozen financial laws, including amendments to Nepal Rastra Bank Bill, Industrial Enterprise Bill, Banking Offence and Punishment Bill, Public Procurement Bill, were in the process of getting cabinet nod. The government had announced plan to enact half a dozen new laws and amend existing laws to give a boost to economy. But no such law has been tabled in the parliament. Minister Mahat, however, boasted of rise in foreign assistance commitments in his term. "The country as received a record high foreign aid commitment of Rs 217 billion in the review period which was only Rs 55 billion in the corresponding period of last fiscal yea”," he added.

Govt told to probe Rs 5 billion in Swiss banks
Rudra Pangeni 

KATHMANDU, Feb 16 : Parliament´s Finance Committee on Sunday decided to direct the government to immediately begin investigations into the wealth parked by Nepalis in Swiss banks. 

Following discussions with the governor of Nepal Rastra Bank and officials of the Department of Money Laundering Investigation (DMLI) and the Ministry of

Finance on Sunday, the committee concluded that cash amounting to Rs 5 billion is parked in HSBC bank in Switzerland and this should be be investigated.

Following revelations by the International Consortium of Investigative Journalists (ICIJ) on Feb. 9 that some eight Nepalis have parked money in banks in Switzerland, NRB and DMLI have shown interest in investigating the matter.

But officials say that collecting information about the bank accounts of such people and assessing the source of the money is no cakewalk. Nepal has not signed any mutual legal assistance agreement, which is vital for exchanging such information at a bilateral level.
The parliamentary committee has now directed the government to initiate the signing of such an agreement with Switzerland. 

Following the endorsement by parliament of the anti-money laundering act last year, a plan extending to 2017 has been devised, with division of work among various government institutions. The task of assessing countries for signing such an agreement and making needful preparations goes to the Ministry of Foreign Affairs.

Talking to Republica, Director General of DMLI, Kebal Prasad Bhandari, said that at present they can only seek information on the basis of mutual understanding. “The money stashed away can be repatriated through a lengthy process if it is found to have been acquired through any illegal process,” said Bhandari, adding that the authorities first need to acquire the account information and carry out investigations before a case can be filed at court.

 

Nepal Rastra Bank Governor Yuvaraj Khatiwada (second from right) answers to the parliamentary Finance Committee at Singha Durbar on Sunday about the Rs 5.4 billion deposited by Nepali citizens in HSBC bank.(Dipesh Shrestha/Republica)

“Nepal can claim the money in those bank accounts only with a court order,” added Bhandari.

A Nepali can open a bank account in a foreign country only with permission from Nepal Rastra Bank, and on valid grounds. NRB Governor Yuvaraj Khatiwada informed the parliamentary committee that they have checked the list of names given permission to open accounts in foreign countries and the names of the eight are not found in the list.

Governor Khatiwada and DG Bhandari said that the information on money stashed away abroad has drawn their attention. “We only know that countries like Switzerland, Cyprus, the British Virgin Islands, Mauritius and even Singapore and Hong Hong, which have less strict laws, are havens for such money,” added Khatiwada.

The committee, in its decision, also directed the government to counter any trend of stashing money in foreign banks and to make arrangements for utilizing it in developmental work.
In 2012, upon a request by the Nepal Trust for information about Swiss bank accounts of members of the royal family, the Swiss government had responded that there was no account in any Swiss bank in the name of royalty from Nepal.

Billions from Vingin Islands under question

KATHMANDU, Feb 16:  Governor of Nepal Rastra Bank Yuvaraj Khatiwada has clearly indicated that Rs 3.5 billion from the British Virgin Islands now deposited in different banks is under question. Speaking at the Finance Committee of parliament, Khatiwada said, "I would not name them, but the money was received in some banks as loan investment from the Virgin Islands and the loan receiver has no registration of a company or industry."

Expressing surprise at investors sending their money even without any name of the company or the business they are to engage in, Governor Khatiwada said that foreign investment should not simply be taken for granted in the name of foreign investment.

"The country has to manage the foreign currency to return interest on the investment, putting pressure on foreign currency reserves," added Khatiwada, indicating that the source of investment would be entertained only for long term investment and only in the priority sectors like hydropower and infrastructure, and under due legal process. Foreign loan investment or direct investment can be brought in either with approval from the Department of Industry and the Industrial Promotion Board, an authority headed by the industry minister, or through the Investment Board Nepal (IBN).

Foreign investment from the Virgin Islands has increased significantly, making the islands the fifth highest source of such investment for Nepal last year. The committee has also directed the Ministry of Industry to inform the committee about details of the foreign investors, as well as drawing the attention of IBN to bring in only investment that is in the country´s interest. - Republica See more at: http://myrepublica.com/portal/index.php?action=news_details&news_id=92271#sthash.DtZzoLO7.dpuf - 

Commission formed to settle tax-related cases

RUDRA PANGENI KATHMANDU, Feb 12: The government has formed Tax Settlement Commission (TSC) led by Lumba Dhwaj Mahat to settle long-pending tax-related disputes and collect unpaid taxes. Mahat was also the member of Tax Settlement Commission that the government had formed in 2007. According to Ministry of Finance (MoF) officials, Director General of Inland Revenue Department (IRD) Chudamani Sharma and former director of Office of the Auditor General Umesh Dhakal are the members in the commission. The commission will serve till mid-July. But its term can be extended if needed. MoF officials say the commission has been mandated to assess and recover outstanding taxes and settle tax-related disputes filed till mid-April, 2013. The commission has been formed after a gap of seven years. Private sector has been demanding that the government form the commission to resolve problems of genuine taxpayers. According to Tax Settlement Commission Act 1976, the commission will assess and recover the due and outstanding taxes to be assessed and recovered pursuant to the Nepal laws in force in order to maintain the convenience and economic interests of the general public. It´s office will be set up at Inland Revenue Department. But it will not be allowed to look into fake VAT bill scam. Officials say unsettled tax-related cases are worth around Rs 40 billion. With the increasing number of applicants for administrative review at IRD and appeals at Revenue Tribunal, dispute settlement process is taking lot of time. In many cases, applicants are not in capacity to post deposits for legal remedy in courts. The commission will be of great help to such applicants. According to the law, the commission can even withdraw sub judice cases from IRD and tribunal and assess the problem and can settle the disputes. The commission will settle cases on a fast track mode if it finds applicants are genuinely unable to pay taxes as per the law. MoF officials say that the commission will also settle disputes arising from tax collection administered by tax officials as per tenets of laws irrespective of the taxpayer´s ability to pay tax. The government has so far formed six temporary commissions. Such alternative dispute resolution mechanisms, however, are set up as permanent bodies in the foreign countries. Talking to Republica, Pradeep Jung Pandey, president of Federation of Nepalese Chambers of Commerce, recently had said that the commission can assess tax related issues of an estimated 12,000 businesspeople and businesses.

Commission formed to settle tax-related cases

RUDRA PANGENI KATHMANDU, Feb 12: The government has formed Tax Settlement Commission (TSC) led by Lumba Dhwaj Mahat to settle long-pending tax-related disputes and collect unpaid taxes. Mahat was also the member of Tax Settlement Commission that the government had formed in 2007. According to Ministry of Finance (MoF) officials, Director General of Inland Revenue Department (IRD) Chudamani Sharma and former director of Office of the Auditor General Umesh Dhakal are the members in the commission. The commission will serve till mid-July. But its term can be extended if needed. MoF officials say the commission has been mandated to assess and recover outstanding taxes and settle tax-related disputes filed till mid-April, 2013. The commission has been formed after a gap of seven years. Private sector has been demanding that the government form the commission to resolve problems of genuine taxpayers. According to Tax Settlement Commission Act 1976, the commission will assess and recover the due and outstanding taxes to be assessed and recovered pursuant to the Nepal laws in force in order to maintain the convenience and economic interests of the general public. It´s office will be set up at Inland Revenue Department. But it will not be allowed to look into fake VAT bill scam. Officials say unsettled tax-related cases are worth around Rs 40 billion. With the increasing number of applicants for administrative review at IRD and appeals at Revenue Tribunal, dispute settlement process is taking lot of time. In many cases, applicants are not in capacity to post deposits for legal remedy in courts. The commission will be of great help to such applicants. According to the law, the commission can even withdraw sub judice cases from IRD and tribunal and assess the problem and can settle the disputes. The commission will settle cases on a fast track mode if it finds applicants are genuinely unable to pay taxes as per the law. MoF officials say that the commission will also settle disputes arising from tax collection administered by tax officials as per tenets of laws irrespective of the taxpayer´s ability to pay tax. The government has so far formed six temporary commissions. Such alternative dispute resolution mechanisms, however, are set up as permanent bodies in the foreign countries. Talking to Republica, Pradeep Jung Pandey, president of Federation of Nepalese Chambers of Commerce, recently had said that the commission can assess tax related issues of an estimated 12,000 businesspeople and businesses.