Friday, June 22, 2018

Kerung-Kathmandu railway, cartelish NBA and dysfunctional ICP


From The Kathmandu Post: Nepal and China have signed a landmark accord to develop a cross-border railway line that will connect the Tibetan town of Kerung with Kathmandu, calling the Cooperation for Railway Connectivity “as the most significant initiative in the history of bilateral cooperation”. The two sides signed the memoranda of understanding on Thursday following hour-long delegation-level talks at the Great Hall of the People.

This follows nine agreements signed by Nepali and Chinese public and private sector companies on Wednesday, with major ones being: Investment Board Nepal (IBN) and Huaxin Cement Company of China to develop a Rs15-billion Huaxin Narayani Cement; Butwal Power Company and Sichuan Investment Group (SCIG) to work together on Marsyangdi Cascade to produce 1,000 megawatt electricity; Nepal Electricity Authority and China’s State Grid Corporation will construct a 159-km Kerung-Galchhi transmission line.

In a visit where connectivity was the political buzzword, the two sides agreed to encourage Nepali and Chinese airlines to operate additional direct flights between the two countries. They will also speed up the construction of the Pokhara International Airport.

Though it was not explicitly stated which of the China-assisted projects fall under BRI, the two sides agreed to intensify implementation of the MoU on Cooperation under the Belt and Road Initiative to enhance connectivity, encompassing such vital components as ports, roads, railways, aviation and communications within the overarching framework of trans-Himalayan Multi-Dimensional Connectivity Network.

**Here is an excerpt from joint statement between Nepal and the PRC:
The two sides agreed to intensify implementation of the Memorandum of Understanding on Cooperation under the Belt and Road Initiative to enhance connectivity, encompassing such vital components as ports, roads, railways, aviation and communications within the overarching framework of trans-Himalayan Multi-Dimensional Connectivity Network. The two sides also agreed to take practical measures to promote cooperation in all fields contained in the MOU. The Nepali side conveyed its readiness to facilitate more Chinese investment in infrastructure building and in other productive sectors. In this regard, the Nepali side expressed its willingness to welcome further investment from Chinese enterprises and, in accordance with Nepali laws and regulations, simplify the related approval procedures on applications related to land, taxes and visas in an efficient manner, and create a favourable investment climate and business environment for Chinese enterprises.
Both sides agreed to reopen the Zhangmu/Khasa port at an early date; improve the operation of the Jilong/Keyrung port; ensure the sound operation of Araniko Highway; and carry out the repair,maintenance and improvement of Syaphrubesi-Rasuwagadhi Highway and push forward the construction of a bridge over Karnali river at Hilsa of Pulan/Yari port at an early date. To ensure the inter-connectivity and smooth running of the infrastructures above, the Nepali side will complete the disaster treatment around the Tatopani Port and along the Arniko Highway, maintain Kathmandu-Syaphrubesi Highway in operational condition.
Both sides expressed happiness over the signing of the MOU on Cooperation for Railway Connectivity. They underscored it as the most significant initiative in the history of bilateral cooperation and believed that it would herald a new era of cross-border connectivity between the two countries. Both sides agreed to make good use of the long-term communication mechanism on railway cooperation between government departments and promote railway cooperation. The Chinese side agreed to provide such support as in technology and personnel training.
The two sides agreed to encourage Chinese and Nepali airlines to launch/operate more direct flights between the two countries in accordance with provisions of the bilateral air service agreement between the two countries. Both sides will coordinate closely to speed up the construction of the Pokhara International Airport so that it would start operation at an early date.
The two sides expressed satisfaction over the successful commercial operation of China-Nepal cross-border optical fiber cable and agreed to further strengthen cooperation on information and communications for mutual benefit.

Birgunj ICP fails to please importers

From MyRepublica: Importers claim that the transportation of goods through the ICP has been inefficient and costlier than before. Although the replica infrastructures were constructed in both sides of the Nepal-India border so as to ease and advance trade and customs, the experience importers have faced transporting goods through the ICP is far from what was expected.

Om Prakash Sharma, president of Birgunj Chamber of Commerce stated: “The ICP has created more problems and the entry process of vehicles is very slow. As a result, containers are lined up for up to 25 kilometers.” He added, “Besides, the Indian security forces are not well-behaved. Entering the ICP, which was built to strengthen mutual trade relations, gives people the feeling as if they are entering an army camp and drivers are thus not willing to enter the ICP. Extortion of funds by Indian security forces is prevalent and at an increasing trend outside the ICP. Those who do not give the demanded money have to wait for an entire week and have also faced manhandling by the security forces outside the ICP. However those who pay between IRs 500 to IRs 1,000 per vehicle, are easily allowed to enter the ICP. 


From The Himalayan Times: The Nepal Bankers’ Association (NBA) has once again decided to regulate deposit rates without providing assurance of reining in runaway lending rates. This is an indication that commercial banks are more interested in reducing their expenses by forcefully lowering deposit rates, while maximising their income by keeping lending rates high.

The NBA today barred all 28 commercial banks from offering annual interest of over 11 per cent to retail depositors who park money in fixed deposit accounts. The interest threshold on funds deposited by institutional depositors in fixed accounts has been set at 10.5 per cent. The NBA has also said yields on money parked in savings deposit accounts should not exceed seven per cent.

Here is my earlier pieces on interest rate volatility, slack NRB, and cartelish NBA.

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