News of the Week: Signs of Recovery in Economy

American Ambassador Moriarty: “????????? ????????? ????? ??? ????????? ?? ? ??????? ??????? ???????????? ????? ??????? ?????? ?? ???????? ????? ????? ????????? ??????? ????????????????? ???????? ??? ? ?, ?? ???????? ??????? ????? ?????? ? ?” (here is the speech)

By Prem Khanal in the Kathmandu Post

[The news we like in the media!]

KATHMANDU- As the prospect of lasting peace rapidly materializes in the country, a glimmer of light in the conflict-wracked economy has started flickering, albeit with some black spots still remaining. As an early indication of the revival of the market, which has been in deep recession for the last two years, there has been an increase in the number of shoppers and more sales, ushering a ray of hope in the fragile economy.

Though the country has no reliable measurement to gauge consumers’ confidence, market activities show that demand for goods, the main stimulator of economic revival, has improved encouragingly in recent months.

“Yes, sales are picking up and the responses of consumers are also encouraging,’ said Binod Tuladhar, executive director of Bluebird Department Store, one of the leading retailers in the capital. Ramesh Shrestha, chief of LG marketing of Chaudhary Group told the Post that sales of durable electronic goods, mainly television and refrigerators, has gone up by around 20 percent lately, a major indicator of rising consumer confidence.

The positive signals are not just with the big outlets, it also has trickled down to the retail level. Pabitra Bajracharya, president of Nepal Retailers’ Association echoed Tuladhar’s tone and added that the market is highly optimistic. The latest unprecedented boom in the share market is another strong indication reflecting improving investor confidence. The NEPSE index, which was hovering around 300 marks a year ago, has rallied to 500 points and market capitalization has also doubled during the last one year.

Latest government statistics also clearly indicate that the major pillars of the economy are warming up to take bold steps towards economic recovery. The total revenue of the government recorded a robust growth of 20 percent during the first four months of the current fiscal year to Rs 21.52 billion. The revenue growth rate is higher than the budgetary target of around 15 percent.

Impressively, the robust growth of 35 percent in Value Added Tax (VAT), which is mainly levied on consumption of goods and services, is a testimony to the fact that consumer confidence is improving and consumers are spending more money. “Healthy revival of domestic consumption due to prospects of peace has pushed up revenue collection,” said Rameshore Khanal, revenue secretary at the Ministry of Finance.

Financial institutions have also started feeling the changing economic scenario. The increase in flow of aspiring borrowers indicates that the market is highly positive, Radhesh Pant, president of Nepal Bankers’ Association said. Along with increased customers, new and innovative projects, which had become a rare case in the financial market in recent years, are again emerging, said Sudhir Khatri, CEO of Development Credit Bank Limited.

However, not all sectors show the same twinkling. Shrinking capital expenditure, which is mainly used to finance development activities, is a concern that has towered above all. Latest government figures show that actual development expenditure during the first four months of the current fiscal year contracted by over 17 percent to Rs 1.81 billion, as compared to the same period last year.

The amount expended during the period was 4 percent of the capital budget planned for current year. Vice Chairman of the National Planning Commission, Dr Jagadish Chandra Pokharel, blamed the delay in materializing of the proposed all-party committee at the local level as the main cause in low volume of expenditure.

And here is another report: 979,227 is the number of Mobile phones in Nepal

Mobile phone lines overtake fixed lines

Nov 29- The number of mobile phone subscribers has surpassed the number of customers subscribing to fixed line service, thanks to easy availability of cell phone lines at affordable prices. A total of around 979,227 mobile phone lines were distributed all over the country till the first three months of the current fiscal year, compared to around 576,693 fixed phone lines issued during the same period.

With this, total number of telephone subscribers, including cell phone and fixed phone, has reached 1,555,920. This has increased combined teledensity of the country to 6.038, meaning that 6 in every hundred people in average have phone connectivity.

Statistics show that of the total lines distributed till date, more than 77 percent or 1,203,920 lines were issued by NT. The state owned telecom issued a total of 675,884 pre-paid and post-paid lines, operating on GSM technology and 3,343 pre-paid lines with limited mobility, operating on CDMA technology all over the country till the first three months of the current fiscal year. NT is currently providing cell phone service in 40 different districts of the country, of which, more than 50 percent are operational in Kathmandu Valley.

The state owned telecom also distributed a total of 491,506 PSTN (public switched telephone network) lines, 33,022 fixed phone lines operating on CDMA technology and 165 lines operating on wireless local loop (WLL) technology all over the country.

Of the total PSTN lines issued till date, almost 54 percent or 264,042 lines are operational in Kathmandu valley. NT currently has a capacity of distributing up to 317,624 PSTN lines in the valley. The telecom, at present, is distributing PSTN lines through 226 exchanges located in 72 districts. If the official data is anything to go by Spice Nepal Private Limited (SNPL), the first private cell phone service provider of the country, is slowly emerging as an aggressive competitor to NT. The company, which started providing cell phone service from September 17, 2005, distributed a total of around 280,000 pre-paid and post-paid lines till the review period, of which around 2,600 were post-paid and the rest pre-paid.

United Telecom Limited (UTL), first private basic phone service provider, which was given permission to issue mobile phone lines with limited mobility earlier this year, also distributed a total of 20,000 handsets operating on CDMA technology till the first three months of the current fiscal year. It also succeeded in raising fixed phone client base to 52,000 till the review period.

Mobile phone 675,884 (NT), 280,000 (Mero)
Fixed telephone 524,693 (NT), 52,000 (UTL)
Limited mobility 3,343(NT), 20,000(UTL)

Advertisements

8 thoughts on “News of the Week: Signs of Recovery in Economy”

  1. Well, I feel there is sense of recovery even in our mindset. Earlier we used to feel ‘I can’t do anything in Nepal, it’s conflict every where, no investment coming into the country’ etc. But now I think the peace process has re-installed that confidence in general public. Still there are small problems like protests in city almost daily that disrupt traffic but I think we are going in the right direction. I think so.

    Like

  2. sorry brothers
    people are always talking about politics
    there are also other issues here
    we are not talking about them
    yeah politics is the main thing but lets not highlight it more so that others are lowlighted
    lets talk about economics,sports,culture etc
    and i am here to make u guys aware about the running league in nepal………
    please talk about it ,love nepalese football
    make help flourish nepalese football
    Thats all

    Like

  3. Mr. Khanal:
    You write:
    “The increase in flow of aspiring borrowers indicates that the market is highly positive, Radhesh Pant, president of Nepal Bankers’ Association said.”

    I am not sure if you took that quote out of context but it doesn’t make sense. Currently in Nepal we have a very big problem with loan defaulters which is having a very negative impact on lending. Our weak and ineffective judicial system is becoming a major bottleneck for economic progress. Now this goes back to politics. Until you sort of the mess at the top its hard to get tangible benefits to trickle down.
    If the things you have mentioned above are true it is a good sgin. But I think it will take more time to see where the economy is going.

    Like

  4. I wonder what sort of impact the Maoists coming into the mainstream will have on the economic policies to come. That is the key.

    Like

  5. Bhudai,

    While I understand your point, I think you are over analyzing the statement. I think, all it means is that people are more hopeful of succeeding in a venture now that things are a tad more stable than before. At the same time, lenders are more hopeful of lent money being returned back due to the same stability. The only common line and message I see in the statement is a hope, which had been lacking for some time. A hope that things might be stable enough for people to get a fair chance at success. Although the point you are trying to make is much more holistic and practical, it is far to analytical for this statement. Right now we rely on hope maybe soon we will be statistics.

    Like

  6. Mr Khannal,

    What you are suggesting as surefire indicators of increasing consumer confidence is somewhat shallow. And that does not indicate signs of economic recovery. By your standard, remittance flowing into Nepal can be taken as parameter of economic recovery.

    Another aspect is that most of the consumption goods are imported, not produced in Nepal. Even if consumption increases, that will lead to higher imports and not increased economic activity.

    Thirdly, what you have quoted is urban centric data where about 15% of Nepal resides. You have missed out on rural Nepal where 85% of Nepal lives.

    Fourthly, rather than this stupid statistics you have quoted, you should have taken investment parameter that too in industrial sector. Are investors investing in the productive sector such as agriculture and industries. If they are not, then signs of recovery is a hogwash.

    The urban spending that you have quoted may be, at best, release of ‘pent-up’ demand after the Maoists signed peace deal. Telephone figures may have increased because of ‘peer pressure’ – if my friends have it, why not me.

    Do not equate things in an offhand manner. If you do not know something, do not be expert and reveal your stupidity.

    Like

  7. Shaman,

    You make some good points. Yes, nepalese economy will take some time to gather strength, but the figures that the author quoted can be taken into a positive light. Once businesses figure that there is positive consumer attitude, there will surely be a surge in investment.

    Businesses need the stable political condition to operate profitably, lets hope that they get that condition.

    Like

Post your views

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s