News Digest: Economy & Development (03 – 09 June, 2021)

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NRB brings new regulations for FDI inflow-

Nepal Rastra Bank (NRB) has issued the ‘Foreign Investment and Foreign Loan Regulations 2078’, which mandates for no prior approval to attract foreign direct investment (FDI) or remit foreign currency to Nepal after obtaining foreign investment approval from foreign investment sanctioning body. The new regulation also states that-

  1. Prior approval of NRB will not be made mandatory for foreign investors sending/receiving foreign currency through banking system for feasibility study expenses including registration of companies and pre-operating expenses.
  2. Expenditure (in foreign investment) to be calculated as certified by the auditor so as not to exceed 3 percent of the paid-up capital of the foreign invested company and its accounting to be done in accordance to Regulation 5.
  3. Prior approval of NRB required to send or remit foreign currency to Nepal for foreign investment made by changing share ownership.
  4. Company/industry with foreign investment to submit the tender within 6 months of foreign currency investment by enclosing the prescribed documents.
  5. NRB approval not required for foreign exchange facility required for the payment of capital and interest mentioned in the payment schedule of Regulation 8.
  6. For the foreign currency exchange facility required for repayment of foreign loan, concerned borrower to submit the application to the bank and financial institution by enclosing the prescribed documents.

Government to sign 5-year fertilizer deal with India-

The government has decided to sign a 5-year government-to-government agreement with India to ensure uninterrupted supply of vital plant nutrients. The agreement will allow Nepal to buy up to 200,000 tonnes of chemical fertilizers without requiring global tendering process; with price to be negotiated at below-cost quoted or tendering of that year. To be bought by the state-owned Agriculture Inputs Company, the agreement is expected to fulfill 30 percent of Nepal’s annual fertilizer requirement.

NEPSE increases by 53.44 points-

Following days of decrease in its index, Nepal Stock Exchange (NEPSE) reached 2960.14 points on June 08. Shares of all groups excluding hotels, microfinance, and investment have increased; with shares of 36 companies increasing by nearly 10 percent. A total of 35.7 million shares of 217 companies were traded, resulting in a turnover of NPR 16.95 billion this, by the third trading day of the week.

Supreme court issues order for allowing of e-delivery services-

The supreme court has issued an order to the government to allow online delivery of essential services by e-commerce businesses. With online delivery platforms like sastodeal, daraz, thulo, mero kirana receiving bulk orders from consumers, e-commerce entrepreneurs had appealed to the supreme court to allow for delivery of essentials with standard health inspections and protocols in place.

Labourers at Sunsari-Morang industrial corridor laid off-

More than 20,000 labourers in the Sunsari-Morang industrial corridor have been laid-off since the announcement of restrictive orders. While the government had allowed factories to operate by housing their labourers whithin the premises; feeding and housing, maintaining physical distancing and checking health status of workers, and ensuring regular use of masks and sanitizers proved to be a hassle for industries; prompting them to lay-off labourers.

Finance Ministry clarifies policy on Chure-

The Ministry of Finance has clarified its commitment towards the protection of the Chure region after being criticized in its budget announcement of reducing trade deficit by extracting and exporting river products from the region. The ministry has clarified that extraction will be done only in suitable areas of Chure and Shivalik river systems as identified by the Department of Mines and Geology. The Ministry has also stated that proper procedures, guidelines, criteria and legal arrangements shall be made based on suggestions from expert bodies to avoid adverse impact on the environment and livelihood of the region.

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