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The price of gold has increased by Rs 800 per tola in the domestic market on Wednesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 111, 000 per tola today. The gold was traded at Rs 100, 400 per tola on Tuesday. Meanwhile, tejabi gold is being traded at Rs 100, 700 per tola. Similarly, the price of silver has increased by Rs 25 and is being traded at Rs 1,400 per tola today.

With government policies favoring the sales of 100kW electric vehicles (EVs) in the market, Nepali EV dealers are now importing more vehicles of this motor capacity. The success of NETA V in the market along with the government tax policy has forced EV dealers to go for 100 kW vehicles. First, Paramount Motors, the authorized dealer of MG Motors in Nepal, recently requested the Chinese manufacturer of MG to manufacture EVs below 100 kW. Now, Cimex Inc, the authorized dealer of BYD in Nepal has also started the process to import Atto-3. Paramount Motors, which logged strong sales in the last fiscal year, has been struggling to maintain that position following the government’s decision to change the customs tariff on electric vehicles (EVs) import. The company has been selling two variants of MG EV – 114 kW and 124 kW in the domestic market. With the new tariff structure, which came into effect in mid-July this year, importers of EVs above 100 kW capacity have struggled to sell the EVs. The government levied excise duty on top of the existing customs duty on electric vehicles above 100 kW capacity. This, according to automobile importers, has made electric vehicles costlier for buyers. In the Finance Bill for the current fiscal year, the government has imposed a 30 percent excise duty on vehicles with 100-200 kW motors. Similarly, the government has imposed a 45 percent excise duty on importing electric vehicles with electric motors of 201-300 kW capacity. For vehicles with more than 300 KW motor capacity, excise duty has been maintained at 60 percent. The data from the Department of Customs shows the import of up to 100kW EVs has increased by a whopping 371.42 percent in the current fiscal year. Nepali EV dealers have imported 990 units of 100kW EVs in the first four months of the current fiscal year. However, there has been a sharp decline in imports above 100kW. The overall market share of EVs was 3-4 percent in the fiscal year 2019/2020. It dropped significantly to one percent in FY2020/2021, due to the Covid-19 pandemic and revision in the taxation by the government. In FY2021/2022, the market share of EVs bounced to 7-8 percent. Automobile dealers predict that the overall market share of EVs by the end of the current fiscal year would be 20 percent.

While the pace of digitization of the economy is accelerating rapidly, government agencies and private businesses still lag in terms of the adoption of digital services. The gaps in access to affordable broadband internet have limited the ability of many people and businesses to use digital technologies, states a new study by the World Bank. Compared to other South Asian countries, broadband internet usage is yet to gather significant momentum. Higher data prices, unreliable coverage, and higher mobile handset prices have hindered the use of broadband services. The World Bank study titled 'South Asia’s Digital Opportunity: Accelerating Growth, Transforming Lives' states that an entry-level mobile broadband package is about 2.75 percent of the gross national income (GNI) per capita in Nepal, which is higher than the 2 percent threshold for affordability. "The cost for a fixed-broadband basket with monthly data usage of (a minimum of) 5 GB stands at 2.30 percent of GNI per capita, which is also beyond the affordability threshold of 2 percent," reads the World Bank report. In addition, handset market prices are expensive with Nepal ranking 115th out of 134 countries in terms of device affordability. The high price of devices, especially smartphones, high customs tariffs, and lack of digital literacy has contributed to these digital access gaps, according to the report. With limited players in the market, the development of the broadband market in Nepal has also been curtailed as there is limited competitive pressure on the market to drive investment and innovation. While Nepal has six national mobile network operators, the lion’s share of the market (94.5 percent) is held by just two operators, namely Nepal Telecom and Ncell, which has effectively created a duopoly in the domestic telecommunications market. Despite having a larger number of players in the internet service providers (ISP) business, internet service is primarily concentrated in urban areas. "This is due to the potential of better returns in urban areas and also due to persistent barriers to market entry," reads the report. According to the World Bank, the limited infrastructure sharing and coordination between telecom network providers and other linear infrastructure providers have discouraged new players from entering the market. The report points out that the limited reach of middle-mile fiber networks affects the quality and affordability of services, especially internet services. As a landlocked country, Nepal faces some additional costs in connecting to global telecommunications networks; prices of wholesale data services are much higher than in neighboring countries. According to the report, the absence of cable landing stations on the northeast coast of India is particularly challenging for Nepal and Bhutan, as the international bandwidth they procure needs to be routed over 2200 km to the border. "Improving the capacity and quality of key fixed network transmission routes within India that transport this bandwidth, in addition to expanding access to international connectivity via Bangladesh, can improve access to greater international capacity for Nepal and Bhutan," states the report. The lack of a national payment switch in Nepal has forced banks and financial institutions (BFIs) to pay a hefty price for digital transactions through international payment gateways. Nepal is still in the process of developing a National Payment Switch, which would make payment systems interoperable. Experts say Nepal needs to develop a national payment switch as early as possible. "Establishing the national payment switch is crucial," said Sanjib Subba, CEO of Nepal Electronic Payment System (NEPS), adding, "Once established, we can have our own domestic card like India's RuPay." Currently, the Nepal Clearing House Limited (NCHL) is working on establishing and operating the national payment switch. NCHL has divided the payment switch project into two phases. The first phase will enhance the Retail Payment Switch for enabling non-card-based transaction interoperability through the enhancement of the existing National Payment Interface (NPI) and connectIPS Retail payment switch for routing and settlement of transactions along with establishing a QR scheme. In the second phase, NCHL plans to implement interoperability of card-based transactions through the rollout of the Interoperable Card Switch and Domestic Card Scheme for Nepal. Despite the proliferation of digital businesses, especially new technology startups focusing on areas like education, fintech, and e-commerce, Nepal scores lower than India, Pakistan, Sri Lanka, and marginally higher than Bangladesh, in the Digital Entrepreneurship Index. According to the report, the growth of digital start-ups is expected to accelerate in the next five years. Nepal’s e-commerce sector is valued at close to US$30 million and is experiencing a growth of more than 40 percent per year. "Even so, e-commerce is still nascent, with limited retail infrastructure to support digitization and few digital payment options," says the report. The lack of a large digitally skilled workforce, difficulty in establishing operations, and issues relating to remittances and international payments have created barriers to the entry of large multinational digital firms in Nepal. The report states

• The gaps in access to affordable broadband have limited the ability of many people and businesses to use digital technologies.

• The higher broadband prices, poor as well as unreliable coverage, and higher mobile handset prices have hindered broadband usage.

• The entry-level mobile broadband package is about 2.75 percent of GNI per capita, which is higher than the 2 percent threshold for affordability.

• Nepal is ranked 115th out of 134 countries in terms of device affordability.

• The lack of a national payment switch in Nepal has forced banks and financial institutions (BFIs) to pay a hefty price for digital transactions through international payment gateways.

• Nepal scores lower than India, Pakistan, Sri Lanka, and marginally higher than Bangladesh in the Digital Entrepreneurship Index.

• The lack of a large digitally skilled workforce, difficulty in establishing operations, and issues relating to remittances and international payments have created barriers to the entry of large multi-national digital firms in Nepal.

The Social Security Fund (SSF) on Tuesday enforced a new working guideline to provide coverage to workers from the informal sector, foreign employment, and self-employed people. Kapil Mani Gyawali, Executive Director at SSF, said the rule is aimed at managing funds for pension and security against accident and physical disability for the workers of the three categories. “Workers from these sectors will receive similar benefits as those from formal sectors,” he said. This is the first time that SSF is making an official attempt to bring migrant workers into its cover. Gyawali said these workers will be provided with long-term pensions after they are included in the social security scheme. “We will include migrant workers under the scheme while they receive the permit for employment abroad,” he added. While considering the informal and outbound workers, SSF will maintain the minimum wage fixed by the government for the contributions of the workers in the fund. “They will have to pay a certain percentage of the minimum wage as defined by our guideline,” mentioned Gyawali. For the workers from domestic informal sectors, SSF has categorized them into four types—household, agriculture, construction and transport. Those falling under these categories will be identified as recommended by local governments. An analytical report on the informal sector published by the Central Bureau of Statistics shows that out of the total of 923,027 business establishments operating in Nepal, about half (460,422 firms) are not registered, and have been kept under informal enterprises. According to the report, out of the 3.22 million individuals employed in the country, 25.8 percent or 832,187 individuals are employed in the informal sector. The contribution-based Social Security Scheme is one of the most ambitious programs launched by the government in 2019. Under this, a contributor will receive cash in social security on a monthly basis after s/he retires at the age of 60. According to Gyawali, apart from the pension, the contributors’ spouse will also get medical expenses and the contributors will also get medical expenses for chronic disease. In the past three years, many public sector companies have joined the SSF. By enacting Social Security Act 2018, the government has made it mandatory also for private firms to join SSF. However, a large number of private organizations in particular are still reluctant in joining SSF, claiming a number of provisions in the SSF law are ‘impractical.’ According to them, the scheme is still not clear in terms of double taxation and the payment mechanism, among others. In July 2021, employees of banks and financial institutions even launched protests after SSF's attempt to force banks to join the fund. Later on, the trade unions of 22 commercial banks filed a case at the Supreme Court against the SSF. According to Gyawali, the case is now under the purview of the apex court. Citing the low participation of the private sector, the government revised the SSF working guideline for the first time in December 2020. As of now, the SSF has incorporated 381,000 employees from around 18,000 formal sector organizations and has collected over Rs 26 billion in contributions from them.

Capt. Rameshwar Thapa, President of the Airlines Operators Association Nepal, and Otsuka Hiroshi, Director General of The Scheduled Airlines Association of Japan, held a meeting on Wednesday. During the meeting, the duo discussed ways to explore mutual cooperation between the associations of the two countries. Nepal’s Ambassador to Japan Durga Bahadur Subedi was also present in the meeting. On the occasion, Capt. Thapa talked about promoting direct flights and enhancing the service quality. Thapa extended an invitation to Shinichi Inoue, chairman, TSAAJ and team to participate in AEROSUMMIT NEPAL 2023 which will take place in March next year. The meeting also discussed bilateral exchanges, sharing best practices and working together on flight safety management. Thapa highlighted on promoting Nepal as a global destination of aviation related endurance tests. Welcoming the initiative taken by AOAN, Otskua assured that the need to add Japanese airlines to Nepal will be communicated to all the member operators of the association. He underlined the need to add more flights to promote tourism. Ambassador Subedi underscored the need to add flights between Nepal and Japan. He recommended AOAN to facilitate the process in cooperation with fellow associations. The Ambassador assured that the embassy will cooperate for the AEROSUMMIT. On the same program, Motoyuki Odachi, former Member of Parliament, said that one of the top three agendas of the delegation of Japan-Nepal Parliamentary Friendship League to be held in Kathmandu will be of adding flights to Nepal. The meeting was held at the office of The Scheduled Airlines Association in Siba,Tokyo. Santosh Poudel, advisor, NRNA-Japan and Sanat Neupane, Group CEO, Simrik Ventures, were also present in the meeting.  

Nepali Congress President Sher Bahadur Deuba has been elected as the party’s Parliamentary Party leader. He defeated his rival candidate General Secretary Gagan Thapa by a margin of 39 votes in the election that took place at the Parliamentary Party Office in Singha Durbar on Wednesday morning. Out of a total 89 votes, Deuba secured 64 votes while Thapa got 25 votes. Senior leader Ram Chandra Paudel had thrown his weight behind Deuba in the election while Thapa was backed by Pradeep Poudel and General Secretary Bishwa Prakash Sharma. Deuba’s political journey Born in 1946 in a socially and economically backward far-western region, Deuba began his political career as a student leader.  He became the chairman of the party’s far-western students’ committee from 1965 to 1968.  In 1994, he was elected as PP leader for the first time, which paved the way for him to become prime minister. Deuba went on to cement his position in the party, and in the 10th general convention of the NC held in 2001, he contested for party presidency. In 2002, he broke away from the party due to the differences with the then party president, Girija Prasad Koirala. In the process, around 40 percent of leaders and cadres joined the Deuba-led Nepali Congress (Democratic). The incident showed Deuba’s influence in the party. Deuba returned to NC in 2006, taking 40 percent share in all party organizations. His ambition to become the party president materialized in 2016. After Deuba failed to garner 51 percent votes to win the presidency outright in the 13th general convention, a second round of vote was conducted. And this time, he received 58 percent of the vote with the support of the Krishna Prasad Sitaula faction. Deuba’s marriage with Arzoo Rana also helped him strengthen his position in national politics as well as in the party. It was Arzoo who helped Deuba connect with the monarchy. In the late 1990s, when the monarchy had a powerful influence in politics, Deuba became prime minister for two terms in 2004-2005, and 2001-2002.

US Ambassador to Nepal Dean R Thompson paid a courtesy call on Prime Minister Sher Bahadur Deuba at the latter’s official residence in Baluwatar on Tuesday. During the meeting, the duo discussed contemporary political issues, Parliamentary Party election and possible power sharing among other issues. The United States, India and China have been expressing concern over the possible power sharing in Nepal. The ambassadors of those countries are closely monitoring the latest political situation of Nepal.

Deepak Malhotra is the Chairman of IMS Group, a business group with diversified interests in various sectors including technology, e-commerce, automobile, real estate, healthcare, and financial services, among others. Malhotra is also the President of the Mobile Phone Importers Association as well as Vice President of the Nepal Chamber of Commerce. ApEx caught up with Malhotra to talk about the current economic slowdown, the impacts of higher interest rates on business operations and problems surrounding the business sector. Excerpts: Many businesspersons say that the current economic slowdown is the deepest in their living memory. How severe is the crisis for the private sector? The policies of the government and the central bank created the current crisis. The exorbitantly high borrowing rates, unnecessary tightening of working capital loans and the credit-to-deposit (CD) ratio of banks, among others, have impacted businesses very much. The current borrowing rates have made doing business unsustainable. We are facing double problems; there is a sharp decline in market demand for goods and services, whereas BFIs have been pressurizing us to pay the loans and interests. We have repeatedly urged the Ministry of Finance and the Nepal Rastra Bank to bail out the crisis-hit businesses. But, they have turned a deaf ear to our demands. While many businessmen complain of BFIs charging high-interest rates, the same individuals are also the promoters of many banks. In this situation, is it fair for them to complain against the policies of banks and the central bank?  This is a valid issue. There are businesspersons on the board of many banks. Ideally, there should have been a separation of bankers and businessmen in the banking system. Banks have not reduced the premium on interest rates despite repeated requests from private sector organizations. The influential businessmen who should have been vocal against the interest rates issue have chosen to remain silent during this crisis. I think it is because their personal interests are playing a role in this context. My point is, business community members need to raise a united voice. As the President of the Mobile Phones Importers' Association, how do you see the policies of the government affecting the mobile handset business? As the official importer of Samsung mobile phones, IMS used to import mobile phones worth Rs 10 billion annually. Until four years back, mobile importers used to get a 40 percent VAT rebate on the import of handsets. This has made mobile phones cheaper in the market as well as helped to check illegal imports. The abolishment of the VAT rebate in the federal budget of FY2019/20 has already hit our business. In addition, the government also imposed excise duty on handset imports. Making the matter worse, the government enforced import restrictions on mobiles above $300 from April this year. The sudden imposition of import restrictions has hit mobile businesses very hard. While we were left with no mobile phones to sell, we were not in a position to reduce our expenses. Mobile importers and dealers operate on a relatively thin sales margin; there is only a five percent gross profit in the mobile business. People may not believe it but the mobile phone business has now turned into a loss-making venture. The ineffective implementation of the management device management system (MDMS) as well as a surge in illegal imports also posed serious issues to the domestic mobile phone business. What do you think are the factors hindering the effective implementation of MDMS?  We have been regularly asking the authorities to implement the MDMS effectively. The problem came when there was a discussion about identifying the legality of mobile phones. Neither mobile phone importers nor the government had any issue with the Nepalis working abroad bringing phones for their personal use. But the issue here is, a few traders have been using migrant workers to import mobile phones illegally. It is estimated that around 100,000 such illegal phones have already arrived in the Nepali market. Once the Nepal Telecommunication Authority (NTA) implements the MDMS system effectively, such phones will not be activated. What do you suggest for Nepalis who buy phones abroad to use them in Nepal? People should not buy mobile phones in foreign markets to use such handsets here. It is because genuine mobile phones can be brought from the Nepali market at affordable prices. Customers will also get an official warranty/guarantee and a few high-end handset models available in the market even come with insurance coverages. As the government has recently lifted the ban on mobile phone imports, when Nepali market see new models of Samsung phones? With the lifting of import restrictions, we have started the process of opening a Letter of Credit (LC). IMS will introduce flagship models of Samsung mobile in the Nepali market in months or two. We have not been able to launch the Samsung Galaxy Z Fold 4 in the market due to import restrictions. Along with Fold 4, the Galaxy S22 series phones will also be reintroduced to the market. How much time do you think it will take for the Nepali mobile phone business to rebound? Not only mobile phones, but the market of every product/sector has weakened over the last couple of months. With the lifting of import restrictions, we will now start importing mobile phones. But, we are not sure whether there will be buyers. If the government works to improve the business environment and resolve all our problems, then only the mobile phone market can bounce back.